Rolling Limitation Periods: What Resets The Clock?

What will establish a "rolling" limitation period? In other words, why does the limitation clock start over again in one case, but not another?

The Ontario Court of Appeal casts some light on these questions in its recently released decision, Marvelous Mario's Inc. v. St. Paul Fire and Marine Insurance Co., 2019 ONCA 635 ("Marvelous Mario's").

The Marvelous Mario's case involved two actions in which the plaintiffs claimed insurance coverage under a commercial insurance policy. The first action was for indirect losses the plaintiffs claimed were suffered in their business. The trial judge dismissed the first action in its entirety, holding that indirect losses were not covered by the policy.

The second action was for business interruption losses. The trial judge allowed the claim, but only in part. The contract contained a one-year limitation period clause that is seen in many cases dealing with insurance policies:

ACTION: Every action or proceeding against the insurer for the recovery of any claim under or by virtue of this contract is absolutely barred unless commenced within one year next after the loss or damage occurs.

Although the policy contained this one-year limitation period, the action had not been commenced for almost two years. Nevertheless, the trial judge held that the claim for business interruption losses was an on-going claim, and, therefore, subject to a rolling limitation period. In the result, the trial judge found that losses which occurred within the one-year period leading up to the commencement of the second action could proceed. It was only the losses that predated one year before the commencement of the second action that were barred.

The plaintiffs appealed, claiming indemnification for all of their losses. The defendant cross-appealed, arguing that the trial judge erred in holding that there was a rolling limitation period allowing indemnification for even some of the plaintiffs' losses.

The Court of Appeal dismissed the appeal and allowed the cross-appeal. It agreed with the defendant that the trial judge erred on the issue of a rolling limitation period. The Court found that all of the plaintiffs' claims were time-barred.

Arguments about whether or not there is a rolling limitation period regularly arise in the context of claims under insurance policies, including claims for disability payments, no-fault accident benefits, and income replacement benefits. Such arguments also arise in the context of other...