When a late-filed SEF 44 claim may still proceed: Avery v The Personal Insurance Company, 2026 NSSC 181
By Jennifer Taylor & Bushra Khadra
Introduction
In an important recent automobile insurance case, the Supreme Court of Nova Scotia considered when the limitation period for an SEF 44 underinsured motorist claim begins to run — and ultimately saved a claim that was filed nearly eight months late. The insured’s claim could therefore proceed, even though her lawyer had originally notified the wrong SEF 44 insurer.
The case, Avery v The Personal Insurance Company, has clarified several issues regarding the interaction between SEF 44 policies and the Limitation of Actions Act (“LAA”):
- the limitation period for an SEF 44 claim starts to run when the insured claimant (or their counsel) has enough evidence to give them a reasonable chance of persuading a judge that the quantum of their claim exceeds the tortfeasor’s limits;
- a 2-year limitation period applies; and
- an insurer’s limitations defence may be disallowed under section 12 of the LAA, if the claim is brought within 2 years of the limitation period expiring, and an analysis of relative hardship favours the claimant.
Part 1 reviews the limitation period for SEF 44 claims. Part 2 summarizes the facts of Avery. Part 3 examines section 12. The conclusion highlights some key takeaways for auto insurers.
Part 1: The Discoverability Framework for SEF 44 Claims
The Family Protection Endorsement, known in Nova Scotia as the “SEF 44”, is a common addition to automobile insurance policies in several Canadian jurisdictions. The SEF 44 indemnifies eligible insured persons “for any shortfall in the payment of a judgment for damages against an underinsured tortfeasor, subject to the deductions set out in the Endorsement” (Sabean v Portage La Prairie Mutual Insurance Co.).
The SEF 44 contains its own limitations provision in clause 6(c), which provides that an action against the insurer must “be commenced within 12 months from the date upon which the eligible claimant or his legal representatives knew or ought to have known that the quantum of the claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in which the accident occurred.”
This is essentially a “discoverability” provision: it specifies when an insured is said to “discover” their potential claim, which starts the clock on their limitation period. In the 2014 case of Oliver v Elite Insurance Company, the Court had interpreted clause 6(c) to mean that the limitation period will start running when the insured has “a body of evidence accumulated that would give [them] a ‘reasonable chance’ of persuading a judge that the quantum of [their] claims would exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.” But Oliver predated the coming-into-force of the LAA on September 1, 2015 — so, until Avery, it was unclear whether the LAA would change the analysis.
Justice Brothers in Avery said no; the analysis remains the same, and Oliver is still good law regarding when the clock starts ticking for an SEF 44 claim.
Notably, the clock does not wait for confirmation of the tortfeasor’s policy limits. Justice Brothers explained that, “Unlike in Ontario, tortfeasors in Nova Scotia are under no obligation to disclose their policy limits.” A claimant must therefore presume that the alleged tortfeasor carries only the statutory minimum of liability coverage ($500,000 in Nova Scotia).
Justice Brothers also confirmed that the limitation period runs for two years — not 12 months, as stated in clause 6(c) of the SEF 44. The LAA overrides the SEF 44 in this regard. Section 21 of the LAA prevents parties from agreeing to shorter limitation periods (unless their agreement was made before the LAA came into force). Because motor vehicle policies only have one-year terms, any policy renewed since the LAA came into force will be governed by the two-year statutory limitation period, not the shorter contractual period in clause 6(c).
Part 2: The Facts of Avery
The plaintiff was injured in a rear-end collision on June 12, 2017. At the time, she was a practicing lawyer, earning over $185,000. She stopped working in June 2018 on the advice of her physicians and never returned.
The plaintiff retained counsel in August 2017 and sued the at-fault driver in February 2019.
However, the plaintiff did not start her claim against her SEF 44 insurer, The Personal, until August 22, 2024. This was the first time The Personal was notified about the accident, or the underlying action against the tortfeasor (the SEF 44 requires the insured to “promptly” notify the insurer about any accident and potential claim).
There was a simple reason for the delay: in September 2021, the Plaintiff’s counsel had mistakenly notified the wrong SEF 44 insurer, TD/Primmum, which had issued the endorsement on the plaintiff’s partner’s policy. It was eventually determined that the plaintiff was not eligible to claim under that policy, and her action against TD was dismissed on consent.
The Personal defended the plaintiff’s claim and pleaded a limitations defence.
The Personal then brought a summary judgment motion for determination of its limitations defence, while the plaintiff brought her own motion, under section 12 of the LAA, to disallow the defence. Avery contains the Court’s decision on both motions.
Recall that the action was commenced on August 22, 2024. If the plaintiff had accumulated enough evidence to support her SEF 44 claim before August 22, 2022 — two years before the lawsuit against The Personal was commenced — then the action was out of time.
Indeed, Justice Brothers found that the limitation period started running on December 8, 2021. This was when the plaintiff had received a neurology report from Dr. Dale Robinson, who accepted that the plaintiff had ongoing post-concussive symptoms which were considered permanent, and opined that she was unlikely to return to her pre-accident employment or level of functioning. At this point, Justice Brothers found, the plaintiff could have reasonably persuaded a judge that her claim would exceed $500,000.
The limitation period therefore started running on December 8, 2021, and expired on December 8, 2023. The action against The Personal was filed approximately 8 months late.
Part 3: Application of Section 12
Section 12(3) of the LAA enables the court to disallow a limitations defence where it is “just” to do so, comparing the hardship to the claimant that would arise from enforcing the limitation period to the hardship it would cause the defendant if their defence were disallowed. The Court can only exercise this jurisdiction if the claim is brought within two years of the limitation period expiring (as it was in Avery).
Further, section 12 is only available within “claims brought to recover damages in respect of personal injuries.”
The defendant insurer in Avery argued that this criterion was not met, because the claim was in contract. Justice Brothers rejected that argument. While an SEF 44 claim is contractual, “it provides excess coverage for claims arising from bodily injuries caused by underinsured tortfeasors.” Such claims are therefore “in respect of” personal injuries, given the broad scope of that phrase.
Moreover, Justice Brothers noted the potential absurdity that would result if a “plaintiff who has Section D coverage and is injured by an uninsured driver could obtain relief from the LAA under s. 12(3),” as confirmed by the Court of Appeal in Barry v Halifax (Regional Municipality), “but could not receive such relief where the tortfeasor is underinsured and the plaintiff has access to SEF insurance.”
After confirming that section 12 was available, Justice Brothers then applied the factors listed in section 12(5).1 Overall, the 8-month delay was significant, but not extreme. The Personal was somewhat prejudiced by the delay, but offered no evidence of any other prejudice, and could still discover the plaintiff, obtain medical evidence, and require independent medical examinations. That the plaintiff could pursue a potential negligence claim against her counsel “for failing to commence the SEF 44 action against the correct insurer in a timely way” was not determinative.
On balance, the hardship analysis favoured the plaintiff, who had a relatively strong case on the merits. Justice Brothers thus exercised her discretion to disallow The Personal’s limitations defence and permit the claim to proceed.
Conclusion: Key Takeaways for Insurers
Avery is helpful on several fronts.
First, it reaffirms the Nova Scotia discoverability rule for SEF 44 claims: the limitation period runs from the point when the insured has accumulated a body of evidence giving them a reasonable chance of persuading a judge that their claim exceeds the statutory minimum. Waiting for disclosure of the tortfeasor’s policy limits does not suspend the clock.
Second, the two-year LAA limitation period, and not the shorter contractual period in the SEF 44, applies to annually renewed automobile policies entered into after September 1, 2015.
Third, Avery confirms that section 12(3) of the LAA is available for SEF 44 claims, which are still “in respect of” personal injuries despite their contractual nature.
It remains to be seen how the Court will apply section 12 in future SEF 44 cases where the delay is longer, the evidentiary record is thinner, or the insurer adduces evidence of actual prejudice.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact the authors, or a member of our Insurance Group.
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- These factors include:
“(a) the length of and the reasons for the delay on the part of the claimant;
(b) any information or notice given by the defendant to the claimant respecting the limitation period;
(c) the effect of the passage of time on (i) the ability of the defendant to defend the claim, and (ii) the cogency of any evidence adduced or likely to be adduced by the claimant or defendant;
(d) the conduct of the defendant after the claim was discovered, including the extent, if any, to which the defendant responded to requests reasonably made by the claimant for information or inspection for the purpose of ascertaining facts that were or might be relevant to the claim;
(e) the duration of any incapacity of the claimant arising after the date on which the claim was discovered;
(f) the extent to which the claimant acted promptly and reasonably once the claimant knew whether or not the act or omission of the defendant, to which the injury was attributable, might be capable at that time of giving rise to a claim;
(g) the steps, if any, taken by the claimant to obtain medical, legal or other expert advice and the nature of any such advice the claimant may have received;
(h) the strength of the claimant’s case; and
(i) any alternative remedy or compensation available to the claimant.” ↩︎