When does the limitation period begin to run for an indemnity claim under the optional OPCF-44R endorsement? As a reminder, the OPCF-44R endorsement provides coverage from a plaintiff’s own insurer, and protects a plaintiff or an eligible family member up to the same limits as available third-party liability coverage. This applies to motor vehicle accidents where the other involved motorist carries less insurance than the plaintiff or other eligible family member, no insurance, or they are an unidentified driver.
In Schmitz, the plaintiff was hit by a car driven by Bakonyi, whose coverage was limited to $1,000,000 as of June 2010. Before this, the Statement of Claim issued in June 2007 sought damages against Bakonyi for more than $1,000,000. As a result of this potential shortfall, Schmitz advanced a claim against his OPCF-44R insurer, Lombard, which provided a coverage limit of $2,000,000. Lombard pleaded in its Statement of Defence that the action against it was statute-barred since it was commenced after the expiry of the one year limitation period in section 17 of the OPCF-44R, which reads as follows:
17. Every action or proceeding against the insurer for recovery under this change form shall be commenced within 12 months of the date that the eligible claimant or his or her representative knew or ought to have known that the quantum of claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred, but this requirement is not a bar to an action which is commenced within 2 years of the date of the accident.
The Plaintiff brought a motion under Rule 21 of the Rules of Civil Procedure for a determination of the issue, relying on the two year limitation period in section 4 of theLimitations Act. Upon hearing the motion, Justice Martin S. James of the Superior Court of Justice held that the limitation period applicable to claims under the OPCF-44R endorsement started to run when a request for indemnification was made, as this met the requirement under subsections 5(1)(ii) – (iii) of the Limitations Act that the loss be “caused” by the “omission” of Lombard. Section 5(1) of the Limitations Act states as follows:
5. (1) A claim is discovered on the earlier of,
(a) the day on which the person with the claim first knew,
(i) that the injury, loss or damage had occurred,
(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,
(iii) that the act or omission was that of the person against whom the claim is made, and
(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and
(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a)
On appeal, Lombard argued that the definition of discoverability in section 17 of the OPCF 44R applied rather than the one specified by section 5 of the Limitations Act, and notwithstanding Lombard’s acknowledgment that the applicable limitation period was governed by section 4 of the Limitations Act. Lombard argued that the applicable definition of discoverability was contained in section 17 of the OPCF-44R, not section 5 of the Limitations Act. Alternatively, Lombard argued that even if section 5 governed the definition of discoverability, the unique circumstances involving claims against the OPCF-44R meant that the limitation period started when the plaintiff first knew or ought to know that the value of his claim exceeded $1,000,000.
In dismissing Lombard’s appeal, Justices Hoy, Cronk and Epstein of the Ontario Court of Appeal relied on the Court’s judgment in Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, a case which concerned the commencement of the limitation period applicable to a loss transfer claim between insurers for indemnity related to payments of statutory accident benefits. The Court adopted Markel, holding that the once it was accepted that section 4 of the Limitations Act applied, the plaintiff suffered a loss under section 5 from the moment the insurer failed to satisfy its legal obligation to indemnify under the OPCF-44R. Whereas the motion’s judge had held that the limitation period started on the day the request for indemnity was made, the Court of Appeal held that it was the day after the indemnity demand is made, pursuant toMarkel.
While on its face this decision may seem problematic for insurers because it seemingly gives a plaintiff more time to commence a claim against their own insurer for failure to indemnify under the OPCF-44R, what the decision does provide is a clearly identifiable deadline as to when the limitation period begins. If the court were to have held that it begins when the plaintiff knew or ought to have known that their damages exceed the amount of a defendant’s available third party liability insurance limits, this would have introduced more uncertainty into the process. What Schmitz provides is an exact starting point from which the limitation period begins to run, namely the day after a claim for indemnity is made under the OPCF-44R. Arguably, this will serve insurers well in the long run by saving the cost associated with dismissal motions which require vague interpretations of discoverability and the underlying quantification of a plaintiff’s potential damages.
NOTE: Lombard has applied for leave to appeal to the Supreme Court of Canada.