George Kanellakos

This appeal concerns priority for statutory accident benefits under Ontario's no-fault automobile insurance regime after a claimant declined optional rental-counter coverage and was injured in a single-vehicle accident.

The core issue was whether the insurer had a sufficient nexus to the claimant to qualify as an insurer obliged to respond under s. 268 of the Insurance Act and the inter-insurer priority framework.

The Court accepted the appellate reasons below that the arbitrator erred in excluding the insurer from the statutory scheme.

The appeal was allowed and costs were awarded to the appellant.

Two insurers disputed liability for indemnity arising from a motor vehicle accident and whether the plaintiff insurer’s claim against the defendant insurer was statute‑barred.

The issue was when the claim was discovered for the purposes of the two‑year limitation period under the Limitations Act, 2002.

The court held that discoverability occurs when the plaintiff knows or ought to know that the at‑fault driver was insured under a valid policy.

The plaintiff exercised reasonable diligence and did not discover the existence of applicable insurance until 2010 despite earlier related litigation.

The action commenced shortly thereafter was therefore within the limitation period.

Following a prior decision striking the claim against an insurer as an abuse of process, the successful defendant sought costs totaling $10,000 on a partial indemnity basis for the motion, the action, and written submissions.

The plaintiffs argued the award should reflect only the earlier bill of costs relating to the motion and challenged certain items claimed for the broader action as not properly recoverable on a party-and-party basis.

The court considered the range reflected in the competing bills of costs for the motion and the conduct underlying the abuse of process finding.

The court fixed costs for the motion at $5,400, added $300 for written costs submissions and $1,000 for the action.

Total costs were set at $6,700 inclusive of disbursements and HST.

The insurer brought a motion under rule 21.01(3) of the Rules of Civil Procedure to dismiss or strike portions of a Toronto action commenced after a prior Newmarket action arising from the same motor vehicle accident.

The plaintiffs had earlier attempted to add insurers as defendants in the Newmarket proceeding under Rule 26 but were directed to bring the motion on notice.

Instead of complying, they commenced a second action in Toronto asserting overlapping claims against the same defendants and the insurer.

The court held that commencing the new action circumvented the procedural requirements of Rule 26 and the court’s supervisory jurisdiction, thereby constituting an abuse of process.

The paragraphs of the Toronto statement of claim asserting claims against the moving insurer were struck without leave to amend.

Following a successful appeal that set aside an arbitrator’s decision, the court addressed the issue of costs between two insurers.

The applicant sought $15,587.26 in partial indemnity costs, arguing that the appeal involved complex statutory interpretation within the regulated insurance industry and required substantial legal analysis.

The respondent argued that the amount was excessive because much of the work had already been completed during the arbitration and that time spent by junior counsel was unnecessary.

Applying the principles governing costs under Rule 57.01 of the Rules of Civil Procedure and s. 131 of the Courts of Justice Act, the court found that some of the claimed time, particularly by junior counsel, was excessive but that a meaningful award was still warranted given the sophistication of the parties and the nature of the dispute.

Costs were fixed at $11,000 inclusive of fees and disbursements.

An insurer appealed an arbitrator’s ruling in a statutory accident benefits priority dispute under s. 268 of the Insurance Act and Ontario Regulation 283/95.

The arbitrator held that the respondent insurer was not an “insurer” for purposes of the scheme because there was no nexus between the accident victim and the respondent’s optional insurance policy offered through a rental car company.

The court applied the correctness standard of review and held the arbitrator erred by applying a remoteness analysis rather than the proper “arbitrariness” nexus test developed in the case law.

Even though the accident victim declined the optional policy, the connection through the rental vehicle and the insurer’s optional coverage was sufficient to establish a non-arbitrary nexus triggering the statutory scheme.

The arbitrator’s decision was set aside and the matter remitted for determination of the remaining priority dispute issues.