Naipaul et al. v. State Farm Mutual Insurance Company, 2015 ONSC 2186

Naipaul et al. v. State Farm Mutual Insurance Company

[Indexed as: Naipaul v. State Farm Mutual Insurance Co.]

Ontario Reports

Ontario Superior Court of Justice,

Perell J.

April 8, 2015

125 O.R. (3d) 469 | 2015 ONSC 2186

Case Summary

Limitations — Discovery — Plaintiffs' lawyer notifying their insurer 89 days after motor vehicle accident that plaintiffs intended to sue insurer under uninsured motorist provisions of policy — Lawyer inadvertently failing to name insurer as defendant when he commenced action against uninsured driver — Lawyer's letter to insurer not triggering running of limitation period as there was insufficient evidence at that time that plaintiffs' injuries satisfied threshold in s. 267.5(5) of Insurance Act — Action against insurer not statute-barred as it was commenced within two years of discovery that injuries met threshold — Insurance Act, R.S.O. 1990, c. I.8, s. 267.5(5).

The plaintiffs were injured when their vehicle was rear-ended by an uninsured driver. Eighty-nine days after the accident, the plaintiffs' lawyer notified their insurer by letter that they intended to sue the insurer under the uninsured motorist provisions of their automobile insurance policy. The lawyer inadvertently failed to name the insurer as a defendant when he commenced an action against the uninsured driver. The plaintiffs brought an action against the insurer approximately two years and one month after their lawyer sent the letter to the insurer. The insurer brought a motion to dismiss the action as statute-barred.

Held, the motion should be dismissed.

The lawyer's letter did not trigger the running of the limitation period as there was insufficient evidence at that time that the plaintiffs' injuries satisfied the threshold in s. 267.5(5) of the Insurance Act. The action was commenced within two years of the discovery that the injuries met the threshold.

Cases referred to

Farhat v. Monteanu (2015), 125 O.R. (3d) 267, [2015] O.J. No. 1634, 2015 ONSC 2119 (S.C.J.); Johnson v. Wunderlich (1986), 1986 ONCA 2618, 57 O.R. (2d) 600, [1986] O.J. No. 1251, 34 D.L.R. (4th) 120, 18 O.A.C. 89, 21 C.C.L.I. 248, [1987] I.L.R. Â1-2155 at 8335, 45 M.V.R. 184, 2 A.C.W.S. (3d) 179 (C.A.); Somersall v. Friedman, [2002] 3 S.C.R. 109, [2002] S.C.J. No. 60, 2002 SCC 59, 215 D.L.R. (4th) 577, 292 N.R. 1, J.E. 2002-1464, 163 O.A.C. 201, [2002] R.R.A. 679, 39 C.C.L.I. (3d) 1, [2002] I.L.R. I-4114, 25 M.V.R. (4th) 1, 115 A.C.W.S. (3d) 695

Statutes referred to

Insurance Act, R.S.O. 1990, c. I.8, s. 267.5(5)

Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, ss. 4, 5 [as am.]

MOTION to dismiss an action as statute-barred.

William G. Scott, for plaintiffs.

Todd McCarthy, for defendant. [page470]

PERELL J.: —

A. Introduction

Introduction

1Relying on ss. 4 and 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, the defendant, State Farm Mutual Insurance Company, brings a summary judgment motion to have the claim of the plaintiffs, Roodal and Babuni Naipaul, dismissed as statute-barred. The Naipauls bring a cross-motion to amend their statement of claim to plead that the action was timely because it was commenced within two years of being determined that Mr. Roodal Naipaul's injuries met the requirements of s. 267.5(5) of the Insurance Act, R.S.O. 1990, c. I.8.

2For the reasons that follow, I grant the plaintiffs' cross-motion, I dismiss State Farm's motion and I declare that the Naipauls' action is not statute-barred.

B. Statutory Background

Statutory Background

3The statutory background for the motions now before the court is s. 267.5(5) of the Insurance Act and ss. 4 and 5 of the Limitations Act, 2002, which state:

INSURANCE ACT

267.5 . . .

Protection from liability; non-pecuniary loss

(5) Despite any other Act and subject to subsections (6) and (6.1), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, from bodily injury or death arising directly or indirectly from the use or operation of the automobile, unless as a result of the use or operation of the automobile the injured person has died or has sustained,

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important physical, mental or psychological function.

LIMITATIONS ACT, 2002

BASIC LIMITATION PERIOD

Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered. [page471]

Discovery

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).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1)(a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

C. Factual and Procedural Background

Factual and Procedural Background

4On May 21, 2010, Roodal and Babuni Naipaul were in a vehicle that stopped at a red light. While stopped, their vehicle was struck by a vehicle driven by Kwasi Badu. Mr. Badu was an uninsured driver. Both Naipauls were injured in the accident. How badly they were injured is a matter of dispute.

5Each Naipaul received statutory accident benefits from State Farm. One or the other or both of the Naipauls received medical and rehabilitation treatments, including medical examinations, psychological assessments, independent medical evaluations, medical/legal reports, neurological evaluations, chronic pain assessments and orthopaedic assessments.

6For reasons that will become apparent below, it is not necessary to discuss the details of their medical history or treatments. Nor is it necessary to discuss the extent of their injuries. For present purposes, it is sufficient to note that the unchallenged opinion of the Naipauls' lawyer was that before September 19, 2010, there was insufficient medical evidence to establish that either Roodal or Babuni Naipaul sustained an injury that met the requirements of s. 267.5(5) of the Insurance Act. In other words, as stated in para. 21 of the Naipauls' factum:

21. Prior to September 19, 2010, there was not a sufficient body of medical evidence with respect to either Plaintiff available to be placed before a judge that in counsel's opinion had a reasonable chance of persuading a judge on the balance of probabilities that either of the Plaintiffs' injuries qualified pursuant to s. 267.5 (5) of the Insurance Act and ss. 4.1, 4.2 and 4.3 of Ont. Reg. 461/96. [page472]

7The Naipauls are insured drivers with a motor vehicle policy issued by State Farm. On August 18, 2010, Rocco Lofranco, the Naipauls' lawyer, wrote State Farm. The letter written for Babuni Naipaul stated:

State Farm Insurance Company

. . . Attention: Claims Department

Dear Sir/Madam

Re:

Our Client:

Babuni Naipaul

Our File No.

Your Insured:

Roodal Naipaul

Policy No.:

Date of Loss:

May 21, 2010

Please be advised that we act for the above noted with respect to his claim for damages arising out of personal injuries sustained in a motor vehicle accident which occurred on Bovaird Dr. and Kennedy Road on May 21, 2010. The other vehicle involved in the action was owned and operated by Mr. Kwasi Badu.

Our investigation of the accident reveals that it occurred as a direct result of the negligence of Mr. Kwasi Badu. We enclose a copy of the Motor Vehicle Accident Report for your review.

It is our understanding that Mr. Kwasi Badu's vehicle was uninsured at the time of the accident. Accordingly, we are providing you with formal notice that our client will be making a claim against you for damages arising out of personal injuries sustained in the above noted motor vehicle accident.

Please treat this as a formal notice that a civil action for damages together with interest pursuant to the Courts of Justice Act will be commenced against you.

Pursuant to Section 258.4 of the Insurance Act, as amended, please immediately confirm coverage under the above noted policy, the liability limits under the policy and whether you will respond to the claim under the policy.

8A similar letter written for Roodal Naipaul had been sent the day before.

9On May 7, 2012, the Naipauls commenced an action against Mr. Badu. Through their lawyer's inadvertence, State Farm was not named as a defendant.

10When the error was noticed, the Naipauls commenced an action against State Farm for uninsured driver coverage on September 19, 2012, approximately two years and one month after Mr. Lofranco's letters to State Farm.

D. Discussion and Analysis

Discussion and Analysis

11There was no issue taken about this court's jurisdiction to decide State Farm's summary judgment motion about whether or not the Naipauls' action is statute-barred.

12When an insured motorist sues his or her insurance company for uninsured motorist coverage, the limitation period [page473] begins to run on the day that the insured motorist knew or ought to have known that he or she had a claim based on the fault of the uninsured motorist: Somersall v. Friedman, [2002] 3 S.C.R. 109, [2002] S.C.J. No. 60, 2002 SCC 59, at para. 22; Johnson v. Wunderlich (1986), 1986 ONCA 2618, 57 O.R. (2d) 600, [1986] O.J. No. 1251 (C.A.).

13Thus, in the immediate case, the issue to be determined is when did the Naipauls know or when ought they to have known that they had a claim based on the fault of Mr. Badu, the uninsured motorist.

14State Farm submits that Mr. Lofranco's letter to State Farm establishes that the Naipauls knew that they had a cause of action against Mr. Badu and hence against State Farm on August 18, 2010, and that the limitation period began to run on that date, with the result that the Naipauls had until August 18, 2012 to commence an action. Thus, State Farm submits that the Naipauls' action, which was commenced on September 19, 2012, is statute-barred.

15State Farm's argument is similar to the argument that I recently rejected in a similar type of case where the defendant brought a summary judgment motion to have the plaintiff's action dismissed as statute-barred. Like the case at bar, it was a motor vehicle accident claim for non-pecuniary damages, i.e., an action that is subject to the threshold set by s. 267.5(5) of the Insurance Act. See Farhat v. Monteanu (2015), 125 O.R. (3d) 267, [2015] O.J. No. 1634, 2015 ONSC 2119 (S.C.J.).

16In the Farhat case, the defendant argued that given that the plaintiff's lawyer had written a letter to the defendant very shortly (eight days) after the accident stating that the plaintiff had suffered a serious injury, it followed that the plaintiff knew that he had a claim that satisfied the threshold set by s. 267.5(5) of the Insurance Act. I concluded that it did not follow, as it might in a slip and fall case, that a serious injury equated to an injury that would trigger the commencement of the running of the limitation period for a motor vehicle accident claim.

17In the Farhat case, I stated, at paras. 32-34 and 39-40:

In Everding v. Skrijel, 2010 ONCA 437, approving Vosin v. Hartin, [2000] O.T.C. 931 (S.C.J.), the Court of Appeal held that in applying the discoverability principle of the Limitations Act, 2002, the court should consider the threshold requirements of the Insurance Act, and the Court of Appeal held that a plaintiff will not have discovered his or her claim before he or she knows they have a substantial chance to succeed in recovering a judgment for damages. A person cannot be expected to commence an action before he or she knows that the necessary elements as set out in the legislation can be established on the evidence: Hoffman v. Jekel, 2011 ONSC 1324 at para. 9.

In Lawless v. Anderson, 2011 ONCA 102, the Ontario Court of Appeal stated at para. 23: [page474]

23. Determining whether a person has discovered a claim is a fact-based analysis. The question to be posed is whether the prospective plaintiff knows enough facts on which to base an allegation of negligence against the defendant. If the plaintiff does, then the claim has been "discovered", and the limitation period begins to run: see Soper v. Southcott (1998), 1998 ONCA 5359, 39 O.R. (3d) 737 (C.A.) and McSween v. Louis (2000), 2000 ONCA 5744, 132 O.A.C. 304 (C.A.).

When a limitation period defence is raised, the onus is on the plaintiff to show that its claim is not statute-barred and that it behaved as a reasonable person in the same or similar circumstances using reasonable diligence in discovering the facts relating to the limitation issue: Durham (Regional Municipality) v. Oshawa (City), 2012 ONSC 5803 at paras. 35-41; Bolton Oak Inc. v. McColl-Frontenac Inc., 2011 ONSC 6657 at paras. 12-14; Bhaduria v. Persaud (1985), 1998 ONSC 14846, 40 O.R. (3d) 140 (Gen. Div.). The limitation period runs from when the prospective plaintiff has, or ought to have had, knowledge of a potential claim and the question is whether the prospective plaintiff knows enough facts to base a cause of action against the defendant, and, if so, then the claim has been discovered and the limitation period begins to run: Lawless v. Anderson, supra at para. 23; Soper v. Southcott (1998), 1998 ONCA 5359, 39 O.R. (3d) 737 (C.A.); McSween v. Louis, 2000 ONCA 5744, [2000] O.J. No. 2076 (C.A.); Gaudet v. Levy (1984), 1984 ONSC 2047, 47 O.R. (2d) 577 at p. 582 (H.C.J.).

No doubt much to the chagrin of the defence bar, s. 267.5 (5) of the Insurance Act introduces some slack into the apparent rigidity of the presumption found in s. 5(2) of the Limitations Act, 2002. A plaintiff, and in some instances his or her negligent lawyer, can take comfort from this slack because the limitation period only begins to run when a sufficient body of information is available to determine whether the plaintiff has a claim that may meet the threshold. In this regard, I adopt the observations of Justice Langdon in Ioannidis v. Hawkings (1998), 1998 ONSC 14822, 39 O.R. (3d) 427 at pp. 433-434 (Gen. Div.), where he stated:

. . . [N]o one can seriously argue that the decision whether a particular injury meets the statutory criteria is an easy one or, perhaps more important, that it will be easy to predict the outcome of a motion to dismiss a claim which the defendant asserts is unworthy. Even in such a motion, the onus is upon the plaintiff to demonstrate that his or her injuries meet the statutory criteria. When one is seeking to apply the discoverability rule to the plaintiff in a case such as this, it behooves the court to grant a degree of latitude to a plaintiff before declaring that the limitation period has begun to run. . . . In practical terms, the question is not whether the plaintiff believes that her injury meets the criteria but whether there is a sufficient body of evidence available to be placed before a judge that, in counsel's opinion, has a reasonable chance of persuading a judge, on the balance of probabilities that the injury qualifies. When such a body of material has been accumulated, then and only then should the limitation begin to run. This is not to say that the plaintiff is entitled to wait until he or she has an overwhelming case. It is only to say that the court must afford a degree of latitude to a plaintiff in making this very individual and complicated determination.

Ioannidis v. Hawkings, supra, was applied in: Fuller v. McCartney (2003), 2003 ONSC 3273, 63 O.R. (3d) 393 (S.C.J.); [page475] Simonelli v. Halifax Insurance Co., 2002 ONSC 79663, [2002] O.J. No. 1354 (S.C.J.); Hoffman v. Jekel, supra; Phung v. Mais, 2012 ONSC 7153; and Chan v. Abdo, 2013 ONSC 3017.

18In the circumstances of the case at bar, it does not follow that because Mr. Lofranco wrote letters indicating that his clients intended to sue State Farm that at the time of the writing of the letters, the Naipauls immediately knew or ought to have known that they actually had a claim that would satisfy the statutory threshold. It also does not follow that because Mr. Lofranco admitted that it was only through inadvertence that State Farm was not joined as a party defendant to what would have been a timely claim, that the claim that they did bring in September 2012 was untimely.

19In bringing its summary judgment motion, in the case at bar, State Farm relied entirely on Mr. Lofranco's letters as triggering the running of the limitation period, but at the time of writing of those letters, i.e., 89 days after the accident, there was not sufficient available evidence to be placed before a judge that, in counsel's opinion, had a reasonable chance of persuading a judge on the balance of probabilities that the injury satisfied the threshold set by s. 267.5(5) of the Insurance Act. The limitation period did not begin to run with the posting of Mr. Lofranco's letters.

E. Conclusion

Conclusion

20For the above reasons, I grant the Naipauls' motion, dismiss State Farm's motion, and declare that the Naipauls' claim is not statute-barred.

21If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Naipauls' submissions within 20 days of the release of these reasons for decision followed by State Farm's submissions within a further 20 days.