OPCF 44R

Ontario: the limitation of uninsured motorist proceedings

Sarokin v. Zhang has a comprehensive summary of the limitation of uninsured motorist proceedings. It’s a good resource if you practice in the area:

[28]              Section 265 (1) of the Insurance Act (Ontario) sets out the mandatory provisions for uninsured automobile coverage to be contained in all Ontario automobile insurance policies:

 265 (1) Every contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile; and

(c) a person insured under the contract is legally entitled to recover from the identified owner or driver of an uninsured automobile as damages for accidental damage to the insured automobile or its contents, or to both the insured automobile and its contents, resulting from an accident involving an automobile,

subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations.

 [29]              Regulation 676 under the Insurance Act sets out the applicable terms, conditions, provisions, exclusions and limits to payments under an automobile insurance policy pursuant to s. 265(1) of the Insurance Act. Section 6 of Regulation 676 sets out the mandatory notice provisions for claims made under s. 265(1) of the Insurance Act:

 (1) A person entitled to make a claim in respect of the bodily injury or death of a person insured under the contract shall do so in accordance with this section.

(2) The claimant shall give the insurer written notice of the claim within thirty days after the accident or as soon as is practicable after that date.

(3) The claimant shall give the insurer, within ninety days after the accident or as soon as is practicable after that date, such proof as is reasonably possible in the circumstances of the accident, the resulting loss and the claim.

(4) The claimant shall provide the insurer upon request with a certificate of the medical or psychological advisor of the person insured under the contract stating the cause of the injury or death and, if applicable, the nature of the injury and the expected duration of any disability.

 [30]              The applicable limitation periods for claims under s. 265(1) are set out in section 8 of Regulation 676:

 (1) No person is entitled to bring an action to recover an amount provided for under the contract, as required by subsection 265 (1) of the Act, unless the requirements of this Schedule with respect to the claim have been complied with.

(2) An action or proceeding against an insurer in respect of loss or damage to the insured automobile or its contents shall be commenced within one year after the loss or damage occurs.

(3) An action or proceeding against an insurer in respect of bodily injury or death, or in respect of loss or damage to property other than the insured automobile or its contents, shall be commenced within two years after the cause of action arises.

 [31]              The leading case with respect the application of the Limitations Act to claims under OPCF 44R is Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 86. Following its decision in Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218, the Court of Appeal held that the limitation period for claims under OPCF 44R starts to run on the day after a demand for indemnity is made:

“[20] ….Once a legally valid claim for indemnification under the OPCF 44R is asserted, the underinsured coverage insurer is under a legal obligation to respond to it. To paraphrase and adapt Sharpe J.A.’s observations, at para. 27 of Markel, the claimant for indemnity under the OPCF 44R “suffers a loss from the moment [the insurer] can be said to have failed to satisfy its legal obligation [under the OPCF 44R]”. Thus, the claimant suffers a loss “caused by” the underinsured [page700] coverage insurer’s omission in failing to satisfy the claim for indemnity the day after the demand for indemnification is made.” (Schmitz at paras. 20 and 26)

[32]              Unlike the claim of an injured party against a tortfeasor, the cause of action for an insured’s claim against his or her own insurer for the insurer’s failure to indemnify pursuant to the unidentified motorist endorsement is for breach of contract which does not arise until the insurer breaches its insurance contract to indemnify by failing or refusing to pay the insured’s claim (Jones v. Doe et al, 2018 ONSC 4780 at paras. 25-26; Chahine v. Grybas, 2014 ONSC 4698 at paras. 34-35; Tucker v. Unknown Persons, 2015 NLCA 21 at paras. 38-39).

[33]              In Schmitz, the Court of Appeal rejected the insurer’s submission that the definition of discoverability in s. 17 of OPCF 44R applies, holding that both ss. 4-5 of the Limitations Act apply to determine the commencement of the limitation period for an OPCF 44R claim (Schmitz at para. 16). The Court of Appeal also held that insurers are not prejudiced as they could require that insureds provide timely notice pursuant to other provisions in OPCF 44R and other insurance contracts (Schmitz at para. 22). The Court of Appeal also rejected the insurer’s arguments that the limitation period should begin to run on the day a claimant accumulates a body of evidence that would permit it a reasonable chance of persuading a Judge that his or her claims will exceed the limits of their policy and that starting the limitation period when a demand for indemnification is made does not limit when the demand could or should be made such that an insured does not need to wait until the outcome of the trial is known (Schmitz at paras. 23-24).

[34]              Markel arose from a loss transfer claim made by one insurer against another seeking indemnification for statutory accident benefits paid to an insured. The Court of Appeal held that the earliest the limitation period can start to run is the date the first party insurer demands indemnification from the second party insurer (Markel at para. 36). However, the Court also held that a claim cannot be delayed for tactical or other reasons and must be commenced when it is “legally appropriate”:

“[34] This brings me to the question of when it would be “appropriate” to bring a proceeding within the meaning of s. 5(1)(a)(iv) of the Limitations Act. Here as well, I fully accept that parties should be discouraged from rushing to litigation or arbitration and encouraged to discuss and negotiate claims. In my view, when s. 5(1)(a)(iv) states that a claim is “discovered” only when “having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it”, the word “appropriate” must mean legally appropriate. To give “appropriate” an evaluative gloss, allowing a party to delay the commencement of proceedings for some tactical or other reason beyond two years from the date the claim is fully ripened and requiring the court to assess to tone and tenor of communications in search of a clear denial would, in my opinion, inject an unacceptable element of uncertainty into the law of limitation of actions.” (Markel at para. 34)

[35]              These issues were considered more recently by Justice LeMay in Howell v. Jatheeskumar, 2016 ONSC 1381, a case decided in the context of an OPCF 44R claim similar to the present case. In Howell, plaintiff’s counsel sent a third party notice letter to the defendant’s presumptive insurer 7.5 months after the accident. Plaintiff’s counsel did not follow up with the presumptive insurer for 2 years and 4 months. At that time, the presumptive insurer advised that it was not the defendant’s insurer. Five months later, the plaintiff brought a motion to add the plaintiff’s own automobile insurer, TD.

[36]              LeMay J. held that that there were 3 possible outcomes. The court could determine that: i.) there was insufficient due diligence on the part of the Plaintiff and no other reason to extend the time limits thereby defeating any claim the plaintiff may have to extend the time limits as a result of the principles of discoverability; ii.) there was a triable issue about the issues of discovery and whether the claim was timely as a result of the application of the discoverability principles which could include whether there was any other statute under which the limitations period could be extended; or iii.) on the materials filed there was clearly an issue of discoverability that made the claim timely (Howell at para. 35).

 [37]              LeMay J. concluded that it was clear from Schmitz and Markel that there were good arguments available to the plaintiff to defeat any limitations defence advanced by TD:

37  In this case, the Plaintiff has a reasonable argument that the claim against TD General Insurance was not discoverable until August of 2015. However, there may be issues relating to the Plaintiff’s due diligence that TD General Insurance may wish to raise. As a result, I am prepared to find that this claim falls at least into the second category, that there was a triable issue about discovery. As a result, the claim should be amended.

38  The Plaintiff is not required to plead any discoverability issues at this stage (see Collins v. Cortez, supra at paragraph 15). Instead, if TD General Insurance raises a Limitations Act issue in its defence, then the Plaintiff will be required to plead the relevant facts on discoverability in reply to TD’s defence. (Howell at paras. 37-38)

Ontario: the limitation of claims for unidentified motorist coverage

The decision in Sukhu v. Bascombe holds that the limitation period for a claim for the unidentified motorist coverage in OPCF 44R does not run until the responding insurer refuses to satisfy a demand to indemnify.

[17]      In Schmitz v. Lombard General Insurance Company of Canada, 2014 ONCA 88 (CanLII); leave to appeal refused, [2014] SCCA No. 143, the Court of Appeal was dealing with the question of when the limitation period began to run for an indemnity claim under the underinsured motorist coverage provided by OPCF 44R optional endorsement to the standard form automobile insurance policy in Ontario. The Court of Appeal applied the reasoning in Markel and concluded that the limitation period does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Schmitz at paragraphs 22 to 26.

[18]      The reasoning behind Markel and Schmitz was applied in the decision of Justice Lofchik in Chahine v. Grybas, 2014 ONSC 4698 (CanLII). Justice Lofchik was faced with a motion involving facts very similar to the facts before the court on this motion. The plaintiff was involved in an accident and sued the other driver. After the claim was issued, the defendant’s lawyer advised the plaintiff’s lawyer that there was an unidentified motorist involved who may have been responsible for the accident. The plaintiff later confirmed this by obtaining a complete copy of the police report.

[19]      The plaintiff then brought a motion to add his own insurer pursuant to the unidentified motorist coverage in OPCF 44R of his policy. Justice Lofchik considered the provisions of the Limitations Act and the decisions of the Court of Appeal in Markel and Schmitz. He concluded that the same reasoning applied to unidentified motorist coverage. The limitation period for unidentified motorist coverage does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. See Chahine at paragraphs 36 to 39.

[20]      The plaintiffs also rely on the decision of Justice Leitch in Platero v. Pollock, 2015 ONSC 2922 (CanLII) which followed the decision in Chahine and also relied on the analysis of the Court of Appeal in Markel and Schmitz. See Platero at paragraphs 33 to 35.

[21]      TTC Insurance relies primarily on four decisions of the Court of Appeal. Those decisions are July v. Neal, 1986 CanLII 149 (ON CA), [1986] OJ No. 1101 (CA); Johnson v. Wunderlich, 1986 CanLII 2618 (ON CA), [1986] OJ No. 1251 (CA); Hier v. Allstate Insurance Co. of Canada, 1988 CanLII 4741 (ON CA), [1988] OJ No. 657 (CA) and Chambo v. Musseau, 1993 CanLII 8680 (ON CA), [1993] OJ No. 2140 (CA). Those decisions stand for the proposition that the limitation period for a claim under the unidentified motorist coverage of a policy of insurance begins to run when a plaintiff knew or ought to have discovered the accident involved the negligence of an unidentified motorist. TTC Insurance argues that these cases are binding authority and have represented the law of Ontario for decades.

[22]      The difficulty I have with the argument of TTC Insurance is that all of the Court of Appeal cases it relies upon were decided prior to the enactment of the current Limitations Act. They were also obviously decided before the decisions of the Court of Appeal in Markel and Schmitz.

[23]      The decisions in Chahine and Platero considered specific provisions and language of the current Limitations Act within the context of the Markel and Schmitz decisions. Both judges came to the conclusion that the limitation period for unidentified motorist coverage indemnity claims does not begin to run until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. I am unable to distinguish those decisions from the case before the court on this motion. They appear to be binding on this court.

[24]      TTC Insurance cited the contrary decision of Justice Sosna in Wilkinson v. Braithwaite, 2011 ONSC 2356 (CanLII) which held that the limitation period began to run when the plaintiff knew or ought to have discovered that the accident involved the negligence of an unidentified motorist. Although that decision involved the application of the current Limitations Act, it was decided before the Court of Appeal made its decisions in Markel and Schmitz. For this reason, the decisions in Chahine and Platero are to be preferred.

[25]      TTC Insurance also relies on the decision of Master McAfee in Bhatt v. Doe, 2018 ONSC 950 (CanLII), 2018 ONSC 950 (Master) in which she applied the July decision. The decisions in Chahine and Platero are not mentioned by Master McAfee and nor are the Markel and Schmitz Court of Appeal rulings. I do not know whether those cases were considered by her. In any event, the decision of another master is of persuasive value only. I am not bound to follow it, especially in the face of contrary decisions of a judge.

[26]      Counsel for TTC Insurance also suggested that the Chahine and Platero decisions were simply incorrect. TTC Insurance submits that the judges hearing those motions did not have the benefit of the earlier Court of Appeal decisions cited by TTC Insurance on this motion. If they had those decisions, those cases might have been decided differently. That may or may not be the case. I do not know. However, it is not the role of this court to question those decisions or the basis on which they were decided. Justices Lofchik and Leitch decided precisely the same issue as the one before me, having regard to specific provisions of the current Limitations Act and within the context of Markel and Schmitz. Decisions of a judge are binding on a master. In my view, I am bound to follow the decisions of Justices Lofchik and Leitch.

The decision also underscores the futility of relying on s. 16(1)(a) to avoid a limitations defence.  This is not an especially clever argument, has been made many times, and I’m pretty sure never succesfully:

 [12]           I do not accept the plaintiffs’ first argument involving section 16 of the Limitations Act. Section 16(1)(a) states that there is no limitation period in respect of a proceeding for a declaration if no consequential relief is sought. This is not the situation on this motion. The proposed pleading states that TTC Insurance must pay Ms. Sukhu’s damages in the event they are found to have been caused by the negligence of the unidentified motorist. This is obviously consequential relief, namely the payment of damages. See Tapak v. Non-Marine Underwriters, Lloyd’s of London, 2018 ONCA 168 (CanLII) at paragraph 14. The Court of Appeal has also emphasized that declaratory relief must be read narrowly so that section 16(1)(a) is not used as a means to circumvent a limitation period. See Alguire v. Manufacturers Life Insurance Company (Manulife Financial), 2018 ONCA 202 (CanLII) at paragraph 28.