COURT OF APPEAL FOR ONTARIO
LABROSSE, WEILER and CHARRON JJ.A.
B E T W E E N :
PEARL SOMERSALL, GWENDOLYN
SOMERSALL, and JANICE SOMERSALL
for the appellants
Plaintiffs
Appellants
- and -
Brian Brock,
for the respondent
JERRY FRIEDMAN and SCOTTISH & YORK INSURANCE CO. LIMITED
Defendants
Respondents
Heard: December 7, 1999
On appeal from the decision of Mr. Justice Harvey Spiegel reported at (1998), 1998 14920 (ON SC), 162 D.L.R. (4th) 229.
CHARRON J.A.:
1This appeal concerns the right of an insured person to claim
against his own insurer under the underinsured motorist coverage
of an Ontario Standard Automobile Policy when the right of the
insured to enforce a claim against the tortfeasor has been lost
or compromised.
2On January 29, 1989, the appellants, Pearl Somersall and
Gwendolyn Somersall, were involved in a motor vehicle accident
with the vehicle owned and operated by the respondent Jerry
Friedman. They both sustained serious bodily injury as a result
of the accident. On January 28, 1991, they issued a Statement of
Claim against Friedman. The appellant Janice Somersall joined the
action to claim damages under the Family Law Act, R.S.O. 1990,
c. F.3 on her behalf and on behalf of other family members. On
September 12, 1991, Friedman delivered a Statement of Defence.
3As a result of an exchange of various correspondence during
the months of October to December 1991, the following agreement
was concluded between the appellants’ solicitor and Friedman’s
solicitor:
Friedman would admit liability for the accident at trial;
the appellants would not make any claim against Friedman or
his insurer in excess of Friedman’s insurance policy limits
of $200,000.00; and
Friedman’s insurer would (and did) make an advance payment
of $50,000 to the appellants.
•
For the sake of convenience, this agreement will be referred to
as the “Limits Agreement.”
4On July 4, 1994, the appellants added their own insurer, the
respondent Scottish & York Insurance Co. Limited (“S & Y”), as a
defendant to the action. S & Y filed a Statement of Defence to
the action and cross-claimed against Friedman. Friedman amended
his Statement of Defence to plead the terms of the Limits
Agreement.
5Counsel for the appellants and S & Y both moved pursuant to
Rule 21.01 of the Rules of Civil Procedure, R.R.O. 1990,
Reg. 194, for the determination, before trial, of the following
question of law raised by the pleadings:
Does the agreement reached between counsel for the
plaintiffs and counsel for the defendant Friedman
limiting the plaintiffs' claim to that defendant’s
policy limits preclude the plaintiffs from advancing a
claim against Scottish & York pursuant to the
Underinsured Motorist Provisions of its policy?
6The appellants’ claim against S & Y is pursuant to the
underinsured coverage provisions, the S.E.F. 44 Family Protection
Endorsement, contained in an Ontario Standard Automobile Policy
issued to the appellant Pearl Somersall. Under these provisions,
S & Y is obligated to:
“indemnify each eligible claimant for the amount that
such eligible claimant is legally entitled to recover
from an inadequately insured motorist as compensatory
damages in respect of bodily injury or death sustained
by an insured person by accident arising out of the use
or operation of an automobile.” [Emphasis added.]
7The question for determination on the motion and on this
appeal turns on the interpretation of the words "legally entitled
to recover." These words appear repeatedly in the S.E.F. 44
endorsement, the relevant parts of which are appended to these
reasons for ease of reference.
8Spiegel J. held that the appellants, by reason of having
entered into the Limits Agreement, were no longer “entitled to
recover” damages from the underinsured motorist Friedman within
the meaning of the underinsured coverage provision. He therefore
answered the Rule 21.01 question in the affirmative. It was
agreed between the parties at the hearing of the motion that, if
the answer was in the affirmative, the action against S & Y
should be dismissed. Consequently, by order dated June 4, 1998,
the motions judge dismissed the appellants’ action against S & Y.
The appellants appeal against this order and S & Y is a
respondent on the appeal. Friedman did not participate in the
appeal.
9Although the precise question before Spiegel J. was novel,
it is my view that its answer was governed by existing
jurisprudence from this court and that the motions judge, on the
strength of those authorities, was bound to answer it in the
negative. The motions judge carefully considered these
authorities but distinguished them from the fact situation at
hand. With respect, it is my view that he erred in doing so.
10S & Y takes the position that the words “legally entitled to
recover” mean that the appellants must have a legally enforceable
right to recover compensatory damages from the tortfeasor in an
amount which is in excess of the tortfeasor’s insurance limits.
Since the Limits Agreement has effectively extinguished that
right, S & Y argues that the appellants’ claim under the S.E.F.
44 endorsement must fail. Alternatively, S & Y submits that, even
if the appellants are still “legally entitled to recover” from
the tortfeasor within the meaning of the insuring agreement, they
have significantly interfered with S & Y’s right of subrogation
by entering into the Limits Agreement and have therefore lost
their right to claim the benefits of the S.E.F. 44 endorsement.
11The appellants take the position that it has been
authoritatively determined by this court in Johnson v. Wunderlich
(1986), 1986 2618 (ON CA), 57 O.R. (2d) 600 (C.A.) and in Chambo v. Musseau (1993),
15 O.R. (2d) 305 (C.A.) that they have a direct right of action
in contract against S & Y under the S.E.F. 44 endorsement. They
submit that these authorities make it clear that this right of
action can accrue regardless of whether they commence an action
against the tortfeasor, obtain a judgment against him, or still
have an enforceable claim against him. The requirement that they
be “legally entitled to recover damages” against the tortfeasor,
as interpreted in those authorities, simply means that, in their
action against the S & Y, the appellants must establish (1) that
the tortfeasor is at fault and (2) the amount of damages caused
by such fault. Consequently, the appellants submit that, even if
they are precluded under the terms of the Limits Agreement from
claiming an amount against Friedman in excess of his policy
limits, they can still establish that he was at fault and the
amount of their damages and therefore are entitled to assert
their claim against S & Y under the S.E.F. 44 endorsement. With
respect to the subrogation issue, the appellants take the
position that the Limits Agreement does not interfere with S &
Y’s rights of subrogation. Alternatively, if the Limits Agreement
does interfere with S & Y’s rights, they submit, on the strength
of the same authorities, that this effect is not fatal to their
claim.
12In my view, the appellants’ position is correct. The
decision of the motions judge runs counter to the principles
established by this court in Johnson v. Wunderlich and in Chambo
v. Musseau. Spiegel J. held that the interpretation of the words
“legally entitled to recover” in those cases “should be
restricted to cases where the insured’s right to proceed against
the tortfeasor is barred by virtue of a limitation period.”1
Quite apart from the fact that this was not the fact situation in
Johnson v. Wunderlich (the insured had commenced an action
against the tortfeasor within the limitation period), I see no
principled reason to restrict the application of these
authorities to cases involving the expiry of a limitation period.
13In Johnson v. Wunderlich, the plaintiffs were involved in a
motor vehicle accident which occurred in June 1980. They
commenced an action against the tortfeasor in May 1982, within
the two-year limitation period contained in s.180(1) of the
Highway Traffic Act, R.S.O. 1980, c. 198. In October 1982, the
plaintiffs added their own insurer as defendant to the action in
order to claim under the uninsured motorist coverage of their
policy. By s.8(2) in the schedule to s.1 in R.R.O. 1980, Reg.535,
under the Insurance Act, R.S.O. 1980, c.218, "every action or
proceeding against the insurer for the recovery of a claim shall
be commenced within two years from the date on which the cause of
action against the insurer arose and not afterwards.” At the
commencement of the trial, the insurer brought a motion to
determine whether the plaintiffs’ action was statute-barred. The
trial judge held that the action was statute-barred because it
had not been commenced within two years of the accident. An
appeal to this court was allowed.
14In determining the appeal, Morden J.A., in writing for the
majority, thoroughly reviewed the relevant legislation and the
various options open to an insured person seeking to recover
under the uninsured motorist coverage provisions of an insurance
policy. In particular, he reviewed the provisions of s.4(1)(c) of
Regulation 535 (now R.R.O. Reg. 676), which provisions are also
applicable to the appellants’ claim in this case under the
underinsured motorist coverage provisions of the insurance
policy:
4(1) The determination as to whether the
person insured under the contract is legally
entitled to recover damages and, if so entitled,
the amount thereof shall be determined,
(a) by agreement between the person
insured under the contract and the insurer,
(b) at the request of the person insured
under the contract, and with the consent of
the insurer, by arbitration by some person to
be chosen by both parties, or if they cannot
agree on one person, then by two persons, one
to be chosen by the person insured under the
contract and the other by the insurer and a
third person to be appointed by the persons
so chosen; or
(c) by a court of competent jurisdiction
in Ontario in an action brought against the
insurer by the person insured under the
contract, and unless the determination has
been previously made in a contested action by
a court of competent jurisdiction in Ontario,
the insurer may include in its defence the
determination of liability and the amount
thereof.
15The parties before the court in Johnson v. Wunderlich,
including the Minister of Consumer and Commercial Relations as
intervener, took the position that it was open to an insured
under s.4(1)(c) to claim directly against the insurer without
first claiming against or obtaining a judgment against the
tortfeasor. Morden J.A. expressly agreed that s.4(1)(c) so
provided. He adopted this interpretation despite some
reservations which he expressed as follows at p. 608:
The reservation that I expressed about this is
primarily based on the concern that a claim confined
to the direct-action route could result in the
insurer’s subrogation rights being frustrated (see
Royal Ins. Co. of Canada v. Aguiar (1984), 48
O.R. (2d) 705, 1984 2099 (ON CA), 16 D.L.R. (4th) 477…) as well as the
insurer’s inability to confine its liability to the
balance of what is owed on a judgment obtained against
the tortfeasor (see s.5(2) of the Schedule). If,
however, my interpretation, and apparently that of
the parties, does not reflect the intention of the
drafters the necessary correction lies close to hand
in the form of an amendment to Reg. 535.
16Morden J.A. then defined the elements of the direct action
against the insurer (at 608-09):
Accepting, then, that a direct action for recovery is
authorized by s.4(1)(c) I think that the elements of
this cause of action are (1) a person insured (2) who
is legally entitled to recover damages from the owner
or driver of (3) an uninsured or unidentified automobile.
…The cause of action accrues when the plaintiff (the
person insured) has discovered these material facts or
ought to have discovered them by the exercise of
reasonable diligence: see Judy et al. v. Neal (1986),
1986 149 (ON CA), 57 O.R. (2d) 129 (C.A.)
…
The words “legally entitled to recover” do not
import a requirement that this issue must have
received a prior judicial determination but,
rather, simply that the person insured must
establish that the uninsured or unidentified
owner or driver is at fault and the amount of
damages: [authorities omitted.] [Emphasis added.]
17In the end result, the court in Johnson v. Wunderlich held
that the plaintiffs’ cause of action did not necessarily arise on
the date of the accident. It only arose when the plaintiffs
discovered, or ought to have discovered, the material facts
giving rise to the right of action, which included the fact that
the tortfeasor was uninsured. Since the facts set out in the
motion material did not reveal when the plaintiffs had discovered
all of the material facts, it could not be determined whether the
action was statute-barred. The order appealed from was set aside
and the matter remitted for trial.
18The recognition that an insured has a direct right of action
against his insurer which does not require a prior judicial
determination of liability against the tortfeasor is crucial in
the determination of the question on this appeal. It means that
the appellants can bring their action against S & Y without
exhausting their remedies against Friedman. The necessary
elements of the action are (1) an eligible claimant (2) who is
legally entitled to recover compensatory damages from a motorist
(3) who is inadequately insured. For the purposes of this appeal,
we can assume that the appellants are eligible claimants and that
Friedman is inadequately insured. As determined in Johnson v.
Wunderlich, in order to prove that they are legally entitled to
recover compensatory damages against Friedman, the appellants
need only establish that Friedman was at fault in the accident
and damages caused by such fault in excess of Friedman’s
insurance policy limits. If there was any doubt after Johnson v.
Wunderlich on the question whether it was necessary for the
insured to also establish that any right of action that he may
have against the tortfeasor was still subsisting, it is my view
that the issue was put to rest in Chambo v. Musseau.
19In Chambo v. Musseau, the plaintiff Chambo was injured in a
motor vehicle accident which she alleged was caused by the
negligence of David Musseau who was driving an uninsured car
owned by Albert Musseau. Two years and four days after the
accident, she commenced an action in negligence against the
Musseaus and against her own insurer under the uninsured motorist
coverage of her insurance policy. The insurer moved for summary
judgment under Rule 20 of the Rules of Civil Procedure on the
ground that the plaintiff’s failure to commence her action within
two years of the accident as prescribed under the Highway Traffic
Act was fatal to her action against the owner and the driver and,
consequently, also fatal to her claim against the insurer since
she could not establish that she was “legally entitled to recover
damages” against the uninsured owner and driver. The motions
judge accepted this argument and dismissed the plaintiff’s
action. On appeal, this court rejected the insurer’s argument and
held that the motions judge erred in dismissing the action
against the insurer.
20Osborne J.A., in writing for the court, referred extensively
to the judgment in Johnson v. Wunderlich and reiterated that an
insured person can make a claim directly against the insurer.
The court noted that the claim against the insurer is different
from that against the tortfeasor. It is based in contract and is
subject to its own limitation period. As in Johnson v.
Wunderlich, the judgment of the motions judge was set aside and
the matter was remitted for trial because the motion material did
not establish when the plaintiff discovered that the Musseau
vehicle was uninsured. Hence, it could not be determined on this
motion for summary judgment whether the action was statute-
barred.
21The court in Chambo v. Musseau reiterated that “the words
‘legally entitled to recover damages’ require the insured person
to establish only that the uninsured tortfeasor is at fault and
the quantum of the insured person's damages.” The court held
further, at p. 314, that:
[i]n relation to her direct action against the [insurer],
the appellant does not have to establish that her action
against the tortfeasors was commenced within the time
prescribed in s.180(1) of the Highway Traffic Act. That
is a non-issue in the direct action against the [insurer],
whether or not the uninsured tortfeasors were also named
as defendants in the action.
22Quite clearly, if this court in Chambo v. Musseau had been
of the view that it was necessary for the plaintiff to establish
that her right of action against the Musseaus was still
enforceable in order to succeed against the insurer, as the
insurer contends in this case, it would have reached the opposite
result. Based on the reasoning advanced by S & Y in this case,
the insurer in Chambo v. Musseau would have been entitled to a
dismissal of the action because the plaintiff’s claim against the
tortfeasors was prescribed by statute and no longer enforceable.
23I see no principled reason to distinguish this case from the
fact situation in Chambo v. Musseau. The fact that the appellants
have compromised their right of action against the tortfeasor by
entering into an agreement, as opposed to having missed a
limitation period, can be of no moment. Surely missing a
limitation period is the worst compromise of the action that can
be made. Even if the Limits Agreement was found to have
interfered with the insurer’s rights of subrogation, a question
which does not have to be determined on this appeal, it would not
advance the insurer’s position since the missing of a limitation
period by a plaintiff against a tortfeasor also defeats an
insurer’s subrogated claim: see Royal Insurance Co. of Canada v.
Aguiar (1984), 1984 2099 (ON CA), 48 O.R. (2d) 705 (C.A.).
24The appellants’ position is also supported by another
decision of this court in Beausoleil v. Canadian General
Insurance Co. (1992), 1992 8679 (ON CA), 8 O.R. (3d) 754 (C.A.). The plaintiff
Beausoleil was injured in a motor vehicle accident in
Massachusetts and suffered substantial damages. He commenced an
action against the tortfeasors in Massachusetts but the maximum
that he could expect to recover from the insurers of the
defendants in Massachusetts was $50,000. Beausoleil therefore
commenced an action against his own insurer under the
underinsured motorist coverage of his policy. A motion was
brought to determine whether the action against the insurer was
premature because Beausoleil had not first obtained a judgment
against the tortfeasors and exhausted his remedies against them.
The motions judge held that the action was premature and issued
judgment accordingly. The decision was reversed on appeal to this
court.
25This court in Beausoleil considered the provisions of the
applicable S.E.F. 42 endorsement, noting that the endorsement had
been replaced by S.E.F. 44 but that there was no essential
distinction in the terms, and concluded, at p. 758, that the
words “legally entitled to recover” did “not require a judgment
and most certainly [did] not require that the insured exhaust his
remedies under that judgment.” The court referred extensively to
the decision in Johnson v. Wunderlich and rejected the argument
that the case should be distinguished on the basis that it dealt
with the uninsured motorist coverage as opposed to the
underinsured motorist coverage. Grange J.A., in writing for the
court, noted Morden J.A.’s reservations as expressed in Johnson
v. Wunderlich on the issue of subrogation and stated as follows
(at p.760):
In any event, the concern over the insurer’s
subrogation rights cannot affect the rights of the
insured to recover under this policy. As Morden
J.A. put it “the necessary correction lies close
to hand in the form of an amendment to” S.E.F. 42.
I might just add here that the new
S.E.F. No. 44 does contain a specific clause
subrogating the insurer to the rights of the
insured. I am not sure why this was necessary
in light of the general subrogation rights
given by s.278 of the Insurance Act, R.S.O.
1990, c.I.8.
26I note further that s.278(6) of the Insurance Act, R.S.O.
1990, c. I.8 provides that “[a] settlement or release given
before or after an action is brought does not bar the rights of
the insured or the insurer, as the case may be, unless they have
concurred therein.” In any event, it is not necessary to decide
whether S & Y’s rights of subrogation have in any way been
compromised in this case. Further, it would not be appropriate
to decide this issue since Friedman did not participate in the
appeal.
27There is one further argument made by S & Y that I wish to
comment upon. S & Y submits that, if the appellants’ position is
correct, it could mean that even if a plaintiff’s claim against a
tortfeasor is barred for any reason, including the operation of
the various “no-fault” regimes in effect in Ontario since June of
1990, the plaintiff’s claim against an insurer under the
uninsured or the underinsured motorist coverage could still be
maintained, so long as the plaintiff could establish fault on the
part of the tortfeasor and damages. Hence, it is argued, a
decision of this court in favour of the appellants would serve to
defeat the statutory regime presently in place in Ontario in all
cases where there is an uninsured or underinsured motorist
involved. S & Y advanced the same argument in first instance, and
the appellants conceded before Spiegel J. (a position they no
longer maintain) that this result would be a logical extension of
the position they were advancing. The motions judge found the
argument compelling. He stated as follows:
This would result in a situation that a person injured by
the negligence of an uninsured or inadequately insured
tortfeasor would be in a better position than if the
tortfeasor was fully insured. I am not prepared to
interpret the words in question in a manner which would
create such an anomalous result.
28Consequently, the motions judge held that the interpretation
of the words “legally entitled to recover” adopted in Johnson v.
Wunderlich and reiterated in Chambo v. Musseau should be
restricted to cases where the insured’s right to proceed against
the tortfeasor is barred by virtue of a limitation period.
29I do not accept the argument advanced by S & Y. It ignores
the fact that, as discussed earlier, one of the elements that
must be established by the insured in a claim against the insurer
is that the uninsured or underinsured person is “at fault”. The
determination of “fault” must be made in the context of all
applicable laws. In my view, an insured could not successfully
argue that an uninsured or underinsured motorist is “at fault” if
the injuries caused by such alleged “fault” were sustained in a
motor vehicle accident occurring in a jurisdiction governed by a
“no-fault” regime, unless the insured can meet the requirements
under the particular regime. Indeed, one of the cases relied upon
by S & Y is consistent with this approach. See MacKenzie v.
Zurich Insurance Co. (1990), 1990 6837 (ON SC), 65 D.L.R. (4th) 765 (Ont. High Ct.)
where the court held that no claim lies in Ontario on an
underinsured motorist endorsement unless the person responsible
for the accident is “legally liable.” Since the accident occurred
in the Province of Quebec and Quebec law provided for a no fault
compensation scheme, the underinsured motorist was not liable and
the endorsement did not apply.
30Finally, I wish to make a few comments on those cases relied
upon by S. & Y that may appear to be in conflict with the
position advanced by the appellants.
31S & Y relies on two cases from Alberta, Fogarty v. Co-
operators Group Limited, [1990] ILR 1-2545 (Alta Q.B.) and
Nielson v. Co-operators General Insurance, [1997] A.J. No. 1108
(Alta. C.A.). In Fogarty, the plaintiff commenced an action
against the Estate of the deceased tortfeasor after the expiry of
a limitation period. She later agreed to discontinue her action
against the Estate and also consented to a judgment distributing
certain insurance proceeds amongst various claimants of the
Estate. The judgment expressly dismissed the plaintiff’s claim
and set out that her action had been commenced outside the
limitation period. The plaintiff then commenced an action against
her own insurer under the underinsured motorist endorsement of
her policy, the S.E.F. 42. The endorsement provided that the
determination of legal liability and amount of damages could be
made by agreement or by arbitration in language equivalent to
s.4(1)(a) and (b) of the Ontario Regulation 535, set out earlier
in this judgment. The court held, at p. 9908, that the plaintiff
could no longer maintain her action against the insurer for the
following reason:
I am respectfully of the view that once there has been a
final judicial decision dealing with the matter of
liability of the tort-feasor owner-operator vis-€-vis
the insured, it is no longer reasonably possible to
refer that judicially determined matter for agreement
or arbitration under s.4 of S.E.F. No. 42. In the case
at bar, the insured, having consented to a judgment-
which judgment was entered – dismissing the liability
claim of the insured against the tort-feasor owner and
driver, the insured has thereby foreclosed its opportunity
to prove by arbitration or otherwise that plaintiff is
“legally entitled to recover from the owner or operator”
under S.E.F. NO. 42.
32It is important to note that the Alberta S.E.F. No. 42 in
question did not provide that liability and the amount of damages
could also be determined “by a Court of competent jurisdiction in
Ontario in an action brought against the insurer by the person
insured under the contract…” as provided in s.4(1)(c) of the
Ontario regulation. It will be recalled that it is on the basis
of this court’s interpretation of s.4(1)(c) in Johnson v.
Wunderlich and in cases that follow that the principles relating
to the “direct action” were established. As evidenced by the case
in Fogarty, the Alberta provision does not contain the equivalent
to our s.4(1)(c). It follows that both the Fogarty and the
Nielson cases can be of limited assistance. I note further that
the Nielson decision is a nine-line memorandum of judgment
delivered orally by the Alberta Court of Appeal that provides no
analysis.
33For these reasons, I would allow the appeal, set aside
paragraph 1 of the order of Spiegel J. dated June 4, 1998, and
instead, declare that the question of law raised by the pleadings
be answered as follows:
Does the agreement reached between counsel for the
plaintiffs and counsel for the defendant Friedman
limiting the plaintiffs' claim to that defendant’s
policy limits preclude the plaintiffs from advancing a
claim against Scottish & York pursuant to the
Underinsured Motorist Provisions of its policy?
No.
34I would also allow the appellants their costs of the motion
and of the appeal.
(signed) "Louise Charron J.A."
(signed) "I agree J. M. Labrosse J.A."
(signed) "I agree K. M. Weiler J.A."
RELEASED: February 16, 2000
C30080
APPENDIX "A" TO JUDGMENT IN
PEARL SOMERSALL et al. v. JERRY FRIEDMAN et al.
Extracts of S.E.F. 44 Family Protection Endorsement
- INSURING AGREEMENT
In consideration of the premium charged and subject to the
provisions hereof, it is understood and agreed that the
Insurer shall indemnify each eligible claimant for the
amount that such eligible claimant is legally entitled to
recover from an inadequately insured motorist as
compensatory damages in respect of bodily injury or death
sustained by an insured person by accident arising out of
the use or operation of an automobile.
- LIMIT OF COVERAGE UNDER THIS ENDORSEMENT
(a) The Insurer's maximum liability under this endorsement,
regardless of the number of eligible claimants, or
number of insured persons injured or killed, or number
of automobiles insured under the policy shall be the
amount by which the Limit of Family Protection Coverage
exceeds the total of all limits of motor vehicle
liability insurance, or bonds, or cash deposits, or
other financial guarantees as required by law in lieu
of such insurance, of the inadequately insured motorist
and of any person jointly liable therewith.
(b) Where this endorsement applies as excess, the Insurer's
maximum liability under this endorsement is that amount
determined in accordance with paragraph 3(a) less the
amounts available to eligible claimants under any first
loss insurance as referred to in paragraph 7 of this
endorsement.
- AMOUNT PAYABLE PER ELIGIBLE CLAIMANT
(a) The amount payable under this endorsement to any
eligible claimant shall be ascertained by determining
the amount of damages the eligible claimant is legally
entitled to recover from the inadequately insured
motorist and deducting from that amount the aggregate
of the amounts referred to in paragraph 4(b), but in no
event shall the Insurer be obliged to pay any amount in
excess of the limit of coverage as determined under
paragraph 3 of this endorsement.
(b) The amount payable under this endorsement to any eligible
claimant is excess to any amount actually recovered by the
eligible claimant from any source (other than money payable
on death under a policy of insurance) and is excess to any
amounts the eligible claimant is entitled to recover (whether
such entitlement is pursued or not) from:
(i) the insurers of the inadequately insured motorist,
and from bonds, cash deposits or other financial
guarantees given on behalf of the inadequately
insured motorist;
(ii) the insurers of any person jointly liable with the
inadequately insured motorist for the damages
sustained by an insured person;
(iii) the R‰gie de l'assurance automobile du Qu‰bec;
(iv) an unsatisfied judgment fund or similar plan or
which would have been payable by such fund or plan
had this endorsement not been in effect;
(v) the uninsured motorist coverage of a motor
vehicle liability policy;
(vi) any automobile accident benefits plan applicable
in the jurisdiction in which the accident occurred;
(vii) any policy of insurance providing disability
benefits or loss of income benefits or medical
expense or rehabilitation benefits;
(viii) any Worker's Compensation Act or similar law
of the jurisdiction applicable to the injury or
death sustained;
(ix) any Family Protection Coverage of a motor
vehicle liability policy.
. . .
- DETERMINATION OF THE AMOUNT AN ELIGIBLE
CLAIMANT IS LEGALLY ENTITLED TO RECOVER
(a) The amount that an eligible claimant is legally
entitled to recover shall be determined in accordance
with the procedures set forth for determination of the
issues of quantum and liability by the uninsured
motorist coverage provisions of the policy.
(b) In determining the amount an eligible claimant is
legally entitled to recover from the inadequately
insured motorist, issues of quantum shall be decided in
accordance with the law of the province governing the
policy and issues of liability shall be decided in
accordance with the law of the place where the accident
occurred.
(c) In determining any amounts an eligible claimant is
legally entitled to recover, no amount shall be
included with respect to pre-judgment interest
accumulating prior to notice as required by this
endorsement.
. . .
- PROCEDURES
(a) The following requirements are conditions precedent to
the liability of the Insurer to the eligible claimant
under this endorsement:
(i) the eligible claimant shall promptly give written
notice, with all available particulars, of any
accident involving injury or death to an insured
person and of any claim made on account of the
accident,
(ii) the eligible claimant shall, if so required,
provide details of any policies of insurance,
other than life insurance, to which the eligible
claimant may have recourse,
(iii) the eligible claimant and the insured person
shall submit to examination under oath, and shall
produce for examination at such reasonable place
and time as is designated by the Insurer or its
representative, all documents in their possession
or control that relate to the matters in question,
and they shall permit extracts and copies thereof
to be made.
(b) Where an eligible claimant commences a legal action for
damages for bodily injury or death against any other
person owning or operating an automobile involved in
the accident, a copy of the Writ of Summons or other
initiating process shall be delivered or sent by
registered mail immediately to the chief agency or head
office of the Insurer in the province together with
particulars of the insurance and loss.
(c) Every action or proceeding against the Insurer for
recovery under this endorsement shall be commenced
within 12 months from the date upon which the eligible
claimant or his legal representatives knew or ought to
have known that the quantum of the claims with respect
to an insured person exceeded the minimum limits for
motor vehicle liability insurance in the jurisdiction
in which the accident occurred. No action which is
commenced within 2 years of the date of the accident
shall be barred by this provision.
. . .
- SUBROGATION
Where a claim is made under this endorsement, the Insurer is
subrogated to the rights of the eligible claimant by whom a
claim is made, and may maintain an action in the name of
that person against the inadequately insured motorist and
the persons referred to in paragraph 4(b).
- ASSIGNMENT OF RIGHTS OF ACTION
Where a payment is made under this endorsement, the Insurer
is entitled to receive from the eligible claimant, in
consideration thereof, an assignment of all rights of action
whether judgment is obtained or not, and the eligible
claimant undertakes to cooperate with the Insurer, except in
a pecuniary way, in the pursuit of any subrogated action or
any right of action so assigned.
1 Although S & Y plead in its Statement of Defence that the
plaintiffs’ claims are barred by the limitation period prescribed
under s.6(c) of the S.E.F. 44 endorsement, the issue is not
raised on this Rule 21 motion.