Limitation Periods: Claims Against Insurers When You Don’t Know What Hit You
When an unidentified driver causes an accident, there may be no way to secure compensation for an injury, as the driver and the driver’s insurer may never be identified. This gap in coverage is addressed through mandatory uninsured/unidentified motorist coverage under s. 265 of the Insurance Act and optional OPCF-44R family protection coverage, both of which provide coverage in these circumstances. Writing for a unanimous three judge panel of the Ontario Court of Appeal in Rooplal v Fodor, 2021 ONCA 357, Justice Thorburn clarified the current state of the law on limitation periods in the context of suing insurers for unidentified motorist coverage.
The Respondent, Ms. Rooplal, was injured while riding a Toronto Transit Commission (“TTC”) bus, which braked sharply as a result of being cut off by an unidentified motorist. Shortly thereafter, Ms. Rooplal brought a claim for damages against the unidentified motorist, the TTC, the TTC bus driver, and her own insurer, Novex. Novex denied her claim, pleading that since Ms. Rooplal was the occupant of a vehicle insured by TTC Insurance, they should indemnify her for damages, not Novex. As a result, Ms. Rooplal sought to add TTC Insurance as a party defendant, 5 years after the accident. TTC Insurance argued that the statutory limitation period had passed.
S.4 of the Limitations Act provides that a proceeding must be commenced within two years of the day on which the claim was discovered. S. 5 determines that a claim is “discovered” when the plaintiff knows or ought to know: (i) she has suffered an injury, loss or damage, (ii) by an act or omission, (iii) that is that of the person against whom the claim is made, and (iv) it is appropriate to commence a legal proceeding.
The Divisional Court upheld the motion judge’s ruling that the claim against TTC Insurance could proceed – the two-year limitation period had not expired as it had not been two years since Ms. Rooplal “discovered” her claim against TTC Insurance.
The issue before the Ontario Court of Appeal was the determination of when the limitation period begins to run in a claim for indemnification against an insurer. TTC Insurance argued that the limitation period began to run when Ms. Rooplal knew or ought to have known that the motorist was at fault; in other words, when she received the police report of the accident. Otherwise, a plaintiff could potentially wait indefinitely before bringing a claim against the s. 265 insurer. Ms. Rooplal argued that the limitation period began to run when her own insurer, Novex, denied her claim for indemnification.
The Court focused on s. 5(1)(a)(iii) of the Limitations Act, which posits that a claim is discovered only when a plaintiff learns that their injury was caused by the acts or omissions of the person against whom the claim is made. Justice Thorburn wrote that the decisions in Markel Insurance Company v ING Insurance Company of Canada, 2012 ONCA 218 and Schmitz v Lombard General Insurance Company of Canada, 2014 ONCA 88 are binding in that respect. In Markel, which dealt with a loss-transfer claim between two insurers, the Court of Appeal held that the party demanding indemnification did not know it had a loss resulting from the second insurer’s wrongdoing until a demand for indemnification was made and not satisfied by the insurer. Only then was the claim “discovered”. Schmitz followed Markel, holding that the reasoning in the latter case was “dispositive” of the limitations issue, and meant that the claim for indemnity under the OPCF-44R did not begin to run until there was a demand for indemnity and a default of the insurer’s obligation to indemnify.
In considering the caselaw, the Court of Appeal explained that there is an important distinction between knowledge of the act or omission of the unidentified motorist, for which damages in tort may be sought, and knowledge of the act or omission of the insurer, for which indemnification pursuant to the insurance policy is sought. S. 5(1)(a)(iii) of the Limitations Act makes it clear that Ms. Rooplal only “discovered” her claim against TTC Insurance when she knew or ought to know that TTC Insurance did or omitted to do something that caused her loss or damage.
As for TTC Insurance’s public policy argument, Justice Thorburn remained unconvinced. First, the court is not free to depart from the clear wording of the Limitations Act simply because it may reflect poor policy. Second, although there is a presumption against absurdity, the consequences of the limitation analysis must be considered in harmony with the scheme of the Insurance Act. The latter requires a potential claimant for unidentified motorist coverage to provide the insurer with notice of the accident and claim in a timely fashion. As such, there are safeguards in place to ensure that a plaintiff does not wait indefinitely before bringing a claim against the s. 265 insurer.
For the above reasons, the Court of Appeal held that the limitation period for Ms. Rooplal to commence her claim against TTC Insurance had not expired, and the appeal was dismissed.
