When is too late, too late? In Rooplal v. Fodor, the Court of Appeal for Ontario confirmed that a claim against an insurer for indemnification under s. 265 of the Insurance Act does not start to run until the insurer fails to satisfy a demand for indemnification.
Fact
In May 2012, Rooplal was a city bus passenger. Suddenly, an unidentified motorist cut the bus off, causing Rooplal to strike her head against a bar when the bus driver braked abruptly.
In March 2014, Rooplal brought a claim against the unidentified motorist, transit company and bus driver. She also brought a claim against her own insurer for declaratory relief and indemnification under s. 265 of the Insurance Act (uninsured automobile coverage provisions).
In 2018, Rooplal’s insurer amended its Statement of Defence to deny it was Rooplal’s insurer for the purposes of s. 265 of the Insurance Act. Instead, it claimed that the transit company’s insurer was the proper first loss insurer for the purpose of uninsured motorist coverage.
Rooplal promptly brought a motion to add the transit company’s insurer as a defendant. The transit company’s insurer opposed this motion, arguing that Rooplal’s claim was statute barred by ss. 4 and 5 of the Limitations Act, 2002. The Motion Judge and Divisional Court disagreed and allowed Rooplal to add the transit company’s insurer as a party defendant. The insurer appealed.
Issue
When does the limitation period begin to run on a claim for indemnification, pursuant to section 265 of the Insurance Act, start to run against a defendant’s insurer?
Reasons
Writing for a unanimous court, Thornburn JA held that the claim was not statute barred. Thornburn JA pointed to section 5(1)(a)(iii) of the Limitations Act, 2002 which provides as follows:
5(1) A claim is discovered on the earlier of,
- The day on which the person with the claim first knew,
(iii) that the act or omission was that of the person against whom the claim was made. (Emphasis added.)
Thornburn JA emphasized that s. 5(1)(a)(iii) must be considered with respect to the “person against whom the claim is made”. Therefore, there must be a distinction between the act or omission of an unidentified motorist for which damages in tort may be sought, and the act or omission of an insurer for which indemnification under an insurance policy may be sought.
With this distinction in mind, Rooplal only discovered her claim against the transit company’s insurer when it did or omitted to do something that caused her loss or damage. She did not know she had a loss resulting from the insurer’s wrongdoing until it failed to satisfy her demand for indemnification under s. 265 of the Insurance Act. In fact, the two-year limitation period had not even started yet because Rooplal had not yet made a demand for indemnification.
Interestingly, the insurer argued that the court’s interpretation would make for bad policy because it allows plaintiffs to control the limitation period by delaying their requests for indemnification. Thornburn JA explained that the Limitations Act, 2002 provides a comprehensive limitations scheme and courts are not free to depart from it “simply because it may reflect poor policy”. She pointed to several safeguards against this so called, “poor policy”, including:
- Regardless of whether a party chooses to commence a claim against the insurer, it must notify the insurer of the underlying accident by providing the facts required in Regulation 676 and the accompanying Schedule. Failure to do so disentitles the party from claiming indemnification under the uninsured motorist provisions.
- The insurer has an option to proactively refuse indemnification outright as soon as it receives notice under the Regulation. This starts the limitation period and allows the insurer to retain control.
Plaintiff counsel should keep these safeguards in mind and be proactive in ensuring that all requirements have been satisfied.