Rooplal et al. v. Fodor et al.

[Indexed as: Rooplal v. Fodor]

Ontario Superior Court of Justice

Chiappetta J.

August 20, 2018

143 O.R. (3d) 149 | 2018 ONSC 4985

Counsel: Robert Patterson, for plaintiff. Chad Townsend, for defendants Leslie Patrick Fodor, Toronto Transit Commission and for proposed defendant TTC Insurance Company Limited. Maseeh Sidky, for defendant Novex Insurance Company.

CHIAPPETTA J. : —

Overview

[1] This matter is a de novo motion for an order granting the plaintiff leave to amend her statement of claim and to add TTC Insurance Company Limited ("TTCICL") as a defendant in this action. This matter is heard before me pursuant to my endorsement, the parties' consent, and in accordance with rules 5.04(2) and 26.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The defendants, Leslie Patrick Fodor, Toronto Transit Commission and the proposed defendant TTCICL (the "defendants"), oppose the motion. Novex Insurance Company takes no position on the motion.

[2] The issue before the court is narrow: is the claim against TTCICL for unidentified motorist coverage under the Insurance Act, R.S.O. 1990, c. I.8, s. 265 statute-barred in accordance with the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B? If so, the amendments are properly refused in accordance with the Court of Appeal's direction in Joseph v. Paramount Canada's Wonderland (2008), 90 O.R. (3d) 401, [2008] O.J. No. 2339, 2008 ONCA 469, at paras. 27 and 28.

[3] The Court of Appeal has considered a limitation period and unidentified motorist coverage issue before. However, the Court of Appeal's analysis took place before the Limitations Act entered into force (July v. Neal (1986), 57 O.R. (2d) 129, [1986] O.J. No. 1101, 32 D.L.R. (4th) 463 (C.A.); Johnson v. Wunderlich (1986), 57 O.R. (2d) 600, [1986] O.J. No. 1251, 34 D.L.R. (4th) 120 (C.A.); Hier v. Allstate Insurance Co. of Canada (1988), 65 O.R. (2d) 1, [1988] O.J. No. 657, 51 D.L.R. (4th) 1 (C.A.); Chambo v. Musseau (1993), 15 O.R. (3d) 305, [1993] O.J. No. 2140 (C.A.)). The Court of Appeal directed that limitation period time begins to run when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff's exercise of reasonable diligence.

[4] After the Limitations Act entered into force, the Court of Appeal considered the statute in the context of a loss transfer claim pursuant to Insurance Act, s. 275 and in the context of a claim for indemnity under the underinsured motorist coverage provided by an OPCF 44R optional endorsement to the standard form automobile insurance policy in Ontario (Markel Insurance Co. of Canada v. ING Insurance Co. of Canada (2012), 109 O.R. (3d) 652, [2012] O.J. No. 1505, 2012 ONCA 218; Schmitz (Litigation guardian of) v. Lombard General Insurance Co. of Canada (2014), 118 O.R. (3d) 694, [2014] O.J. No. 531, 2014 ONCA 88, leave to appeal to S.C.C. refused [2014] S.C.C.A. No. 143). In those circumstances, the Court of Appeal concluded that the limitation period does not begin until the plaintiff makes an indemnification demand and the responding insurer fails to satisfy that demand. The Superior Court has adopted the reasoning in Markel and Schmitz in the context of unidentified motorist coverage pursuant to Insurance Act, s. 265 (Chahine v. Grybas, [2014] O.J. No. 3739, 2014 ONSC 4698, 38 C.C.L.I. (5th) 282 (S.C.J.); Platero v. Pollock, [2015] O.J. No. 2663, 2015 ONSC 2922, 49 C.C.L.I. (5th) 212 (S.C.J.)). Chahine concluded that the limitation period for unidentified motorist coverage does not begin until the plaintiff makes an indemnification demand and the responding insurer fails to satisfy the claim (paras. 36-39). Platero followed Chahine's reasoning.

[5] The parties agree that the basic limitation period set out at Limitations Act, s. 4 applies: a proceeding for a claim shall not be commenced after the second anniversary of the day on which the claim was discovered. The parties disagree, however, about when a claim for indemnity pursuant to statutorily mandated unidentified motorist coverage is "discoverable". The defendants argue that the July line of cases sets out the proper discoverability analysis, while the plaintiff argues that the Markel line of cases sets out the proper analysis.

[6] Since the Limitations Act has entered into force, the determination of when a claim is "discovered" for a limitation period governed by Limitations Act, s. 4 depends entirely on examining the four criteria in Limitations Act, s. 5(1)(a). The Court of Appeal's discoverability analysis in Markel and Schmitz binds this court. The Markel and Schmitz reasoning applies equally to indemnity claims under Insurance Act, s. 265 for unidentified motorist coverage. It follows then that enumerated factors s. 5(1)(a)(ii) and (iii) of the Limitations Act cannot be satisfied until the plaintiff has asserted a claim against the unidentified insurer to trigger a legally enforceable obligation. Once the plaintiff asserts a legally valid claim for indemnification, the unidentified coverage insurer has a legal obligation to respond to the claim. The indemnity claimant only suffers a loss caused by the unidentified coverage insurer's omission in failing to satisfy the indemnity claim on the day after the demand for indemnification is made. Therefore, the limitation period begins on the first day of default after the indemnification demand is made.

Background

[7] On May 4, 2012, TTC vehicle #1007 applied its brakes after an unidentified vehicle attempted to change lanes and moved unexpectedly in front of the bus. The plaintiff passenger states that she slid forward and struck her face on an interior bar in the bus. The defendants' evidence is that the plaintiff was told on the day of the accident that a car cutting off the bus caused her injury. This evidence stands uncontradicted.

[8] On May 16, 2012, the plaintiff signed an accident benefits application stating that the bus stopped "as another car cut him off".

[9] On February 6, 2014, the plaintiff notified the bus driver and the TTC in writing that she intended to pursue a tort action.

[10] On February 24, 2014, plaintiff's counsel received the motor vehicle accident report from the Toronto Police Service (the "MVA report"). The MVA report states that an unidentified vehicle's actions caused the TTC bus to brake suddenly to avoid a collision.

[11] On March 26, 2014, the statement of claim was issued. The plaintiff sued the TTC and the bus driver. She also sued her personal insurer Novex Insurance Company ("Novex") for damages caused by an unidentified vehicle. At the time of the accident, the plaintiff had a valid motor vehicle liability insurance policy with Novex. The insurance policy includes a family protection coverage endorsement under the Ontario policy change form 44R ("OPCF 44R").

[12] The plaintiff claims relief for permanent and serious injuries totaling $800,000. Plaintiff's counsel's evidence is that for approximately one year prior to issuing the statement of claim, he made various attempts to obtain the occurrence report from the claims adjuster at the TTC. However, plaintiff's counsel's evidence is that the claims adjuster refused to provide the report.

[13] On July 28, 2014, the TTC defendants served their statement of defence.

[14] On September 11, 2014, Novex served their statement of defence and crossclaim.

[15] On May 7, 2015, examinations for discovery of the plaintiff and the defendant bus driver were completed.

[16] On March 21, 2017, Novex amended its defence. At paras. 5 and 6 of the amended defence, Novex denies that it is the plaintiff's insurer for the purposes of unidentified motorist coverage under Insurance Act, s. 265 and states that the TTC vehicle insurer, TTCICL, is the plaintiff's first loss insurer for that purpose. Insurance Act, s. 265 requires TTCICL to have insurance covering payment of all sums of money for bodily injury a passenger would be entitled to recover from the driver of an unidentified automobile. Shortly after March 21, 2017, the plaintiff first advised in writing of her intention to sue TTCICL.

[17] By notice of motion, dated May 3, 2017, the plaintiff brought a motion to amend her statement of claim to add TTCICL as a party defendant.

The Parties' Positions

[18] TTCICL argues that the plaintiff's claim against it for unidentified motorist coverage is statute barred by the Limitations Act. It submits that the limitation period for claims on statute mandated unidentified motorist coverage begins when the pleading's material facts are first known to the plaintiff. More particularly, the limitation period begins when the insured knew or ought to have known about the unidentified driver's involvement. The defendant argues that the plaintiff was aware of this fact at the time of the accident on May 4, 2012.

[19] The plaintiff disagrees with the defendant's position, submitting that the limitation period does not begin until a demand to indemnify has been made and the responding insurer has failed to satisfy the claim. Further, the plaintiff argues that the limitation period begins when the insured knew or ought to have known that there was a reasonable possibility that a court would find the unidentified vehicle solely liable for the accident. The plaintiff argues that despite her due diligence efforts this conclusion was not possible prior to evidence that the bus driver gave on his May 7, 2015 examination for discovery. Resultantly, the plaintiff submits that the limitation period has not expired.

[20] The plaintiff also argues that the limitation period does not apply because she is seeking only declaratory, and not consequential relief. By way of the proposed amended claim, the plaintiff seeks a declaration that she is a person insured under the TTCICL policy. The plaintiff therefore submits there is no limitation period applicable as she is seeking only declaratory and not consequential relief from TTCICL, relying on Limitations Act, s. 16(1). The plaintiff argues that her claim against TTCICL will only crystallize if and when a court determines that the unidentified vehicle is solely responsible for the accident. Therefore, the plaintiff argues, there is presently no claim against TTCICL for damages in tort. The defendants disagree and argue that the relief sought has a consequential component.

The Statutes

1. The Limitations Act

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.

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.

Demand obligations

(3) For the purposes of subclause (1)(a)(i), the day on which injury, loss or damage occurs in relation to a demand obligation is the first day on which there is a failure to perform the obligation, once a demand for the performance is made.

Same

(4) Subsection (3) applies in respect of every demand obligation created on or after January 1, 2004.

No limitation period

16(1) There is no limitation period in respect of,

(a) a proceeding for a declaration if no consequential relief is sought[.]

2. The Insurance Act

265(1) Every contract evidenced by a motor vehicle liability policy shall provide for payment of all sums that,

(a) a person insured under the contract is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injuries resulting from an accident involving an automobile;

(b) any person is legally entitled to recover from the owner or driver of an uninsured automobile or unidentified automobile as damages for bodily injury to or the death of a person insured under the contract resulting from an accident involving an automobile,

subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations.

3. The Insurance Act, R.R.O. 1990, Reg. 676

1. The terms, conditions, provisions, exclusions and limits set out in the following Schedule apply to payments under a motor vehicle liability policy under subsection 265(1) of the Act and shall be attached to or included in every motor vehicle liability policy, as a Schedule in or to the policy.

b. The Schedule referred to in s. 1 of Insurance Act, O. Reg. 676

APPLICATION

1. This Schedule applies to the payments provided for under every contract evidenced by a motor vehicle liability policy under subsection 265(1) of the Act.

LIMITS AND EXCLUSIONS

2(1) The insurer shall not be liable to make any payment,

(c) where the person insured under the contract is entitled to recover money under the third party liability section of a motor vehicle liability policy[.]

Analysis

[21] This court must decide whether the plaintiff's Insurance Act, s. 265(1) claim against TTCICL for unidentified motorist coverage is statute-barred in accordance with the Limitations Act.

A. Does s. 16(1)(a) of the Limitations Act apply to the plaintiff's claim?

[22] The plaintiff argues that she is not statute barred by the Limitations Act because s. 16(1)(a) of the statute applies to her claim. In my view, the subsection is not applicable to this motion's facts. The plaintiff's amended claim seeks a declaration that she is an insured person under the TTCICL policy but goes on to seek an order that TTCICL pay damages to her for injuries and losses resulting from the motor vehicle accident. The plaintiff is therefore seeking consequential relief in addition to declaratory relief. The plaintiff argues that the consequential relief only crystallizes after a determination that the TTC defendants are not liable. This does not negate that the plaintiff seeks a claim for consequential relief against TTCICL in the event of and in contemplation of such a finding.

B. Has the limitation period expired?

[23] The plaintiff argues that the claim for unidentified motorist coverage under the TTCICL policy is not statute barred as the limitation period does not begin until an indemnification demand is made and the responding insurer has failed to satisfy that demand. The defendant disagrees and submits that the limitation period begins when the insured knew or ought to have known about the unidentified driver's involvement. The defendant relies primarily on the Court of Appeal's decision in July.

I. Limitation period commencement for unidentified motorist coverage before the Limitations Act entered into force

[24] July was decided before the Limitations Act entered into force. It considered the limitation period applicable to unidentified motorist coverage. After considering the limitation provision of the unidentified motorist coverage regulation at the time, which limited claims to two years from the date on which the cause of action against the insurer arose, Mackinnon J. held, at pp. 468 and 469 D.L.R.:

Section 6 of the regulation refers to the date of the accident as the date for the time to run for the giving of notice and proof of claim. Section 8(2) states the time shall run from "the date on which the cause of action against the insurer arose . . . " (emphasis added). As counsel for the appellants submitted, if the Legislature intended time to run always and only from the date of the accident in cases such as the instant one, the section would have been worded as in s. 6. It would have been very simple to have worded the section in that fashion.

Although, as I have made clear, it is not without considerable difficulty, I have concluded that the time begins to run under such circumstances as the instant case, when the material facts on which the claim is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence: Central Trust Co. v. Rafuse et al. [reported, 31 D.L.R. (4th) 481], Supreme Court of Canada, released October 9, 1986 -- Le Dain J. (for the court) at p. 99 [p. 535 D.L.R.]. The former solicitor for the appellant, in an affidavit filed on the motion, stated it was not until the examinations for discovery of all parties on April 11, 1984, that it became apparent that a possibility existed that no liability would attach to the defendant, but rather that all of the liability would "rest" with the unidentified third vehicle. It will be the responsibility of the trial judge on hearing the evidence to determine whether the material facts, by the exercise of reasonable diligence, ought to have been discovered earlier, and the date from which the limitation period should run.

In coming to that conclusion I have had the following in mind. Insurance policies are statutory contracts and the wording of the terms as in the instant case normally are not the words of the insurer but the words of the statute or of the regulation. To such terms the contra proferentem rule does not apply. However, the insurance industry is consulted and does have input with regard to legislation affecting the industry. The individual insured has none. His role is to pay the premium for the expected indemnity. It appears to me that if there is doubt in the legislation establishing and governing the cover, and there are two possible interpretations of any aspect of the cover, the one more favourable to the insured should govern: Stevenson v. Reliance Petroleum Ltd. (1956), 5 D.L.R. (2d) 673 at p. 683, [1956] S.C.R. 936 at p. 949, [1956] I.L.R. D781998181-238; Watts v. Centennial Ins. Co. (1967), 65 D.L.R. (2d) 529 at pp. 533-4, 62 W.W.R. 175, [1969] I.L.R. D781998181-220.

[25] The Court of Appeal applied its July reasoning in Johnson, Hier and Chambo. The Court of Appeal decided these three cases before the Limitations Act entered into force.

II. Limitation period commencement for loss transfer claims after the Limitations Act entered into force

[26] After the Limitations Act entered into force, the Court of Appeal in Markel considered the commencement issue from the perspective of a loss transfer claim under Insurance Act, s. 275. The Court of Appeal was asked to determine when the limitation period begins for a loss transfer claim made by one insurer against another for indemnification for statutory accident benefits paid to an insured. The Court of Appeal posed the question: when does the first insurer know there is a loss "caused" by the second insurer's "omission"? It directed, at para. 24, that

Items (ii) and (iii) [of section 5(1)(a)] require that the second party insurer must have done or omitted to do something that can be said to have caused a loss. The second party insurer cannot be said to have omitted to indemnify if there was no request for indemnification. It follows that items (ii) and (iii) cannot be satisfied until the first party insurer has asserted the loss transfer claim against the second party insurer to trigger a legally enforceable claim or obligation.

[27] The Court of Appeal then concluded, at paras. 26 and 27, that,

Once a legally valid (i.e., apart from any issue as to limitations) claim is asserted by the first party insurer's Request for Indemnification, the second party insurer is under a legal obligation to satisfy it. All the facts are present to trigger the legal obligation of the part of the second party insurer to indemnify the first party insurer for the loss. The situation has crystallized into [a] complete and valid legal claim that is immediately enforceable against the second party insurer. There is nothing more that must happen to create the legal obligation of the second party insurer to pay the claim.

In my view, it must follow that the first party insurer suffers a loss from the moment the second party insurer can be said to have failed to satisfy its legal obligation to satisfy the loss transfer claim. I agree with the arbitrator in Federation v. Kingsway that the first party insurer suffers a loss caused by the second party insurer's omission in failing to satisfy the claim the day after the Request for Indemnification is made.

III. Limitation period commencement for uninsured motorist coverage after the Limitations Act entered into force

[28] In Schmitz, the Court of Appeal considered the commencement issue from the perspective of an indemnity claim made by the plaintiff against his own insurer pursuant to the underinsured motorist coverage contained in the Ontario OPCF 44R endorsement to the standard form automobile insurance policy. The Court of Appeal stated that its decision in Markel was dispositive of when the s. 5 limitation period begins in an OPCF 44R claim. The court held that once a legally valid claim for indemnification under the OPCF 44R is asserted, the underinsured coverage insurer is under a legal obligation to respond to it. In other words, the claimant suffers a loss "caused by" the underinsured coverage insurer's "omission" in failing to satisfy the claim for indemnity the day after the demand for indemnification is made.

IV. Reconciling the July discoverability doctrine with Markel and Schmitz

[29] July references and relies upon common law principles of discoverability as set out by the Supreme Court of Canada in Central Trust Co. v. Rafuse, [1986] 2 S.C.R. 147, [1986] S.C.J. No. 52. Rafuse directs, at para. 77, that the law has been and continues to be that "a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence". The Limitations Act discoverability provisions are based upon the common law principles of discoverability. However, the statute provides a discoverability definition that is much more nuanced and complex. The detailed discoverability definition was not before the Court of Appeal nor contemplated by it in July. While the general discoverability doctrine set out in July remains unchanged by the Limitations Act pronouncement, the discoverability definition in the test enunciated by Mackinnon J. must now be interpreted in accordance with the Limitations Act's definition of "discovered". In this regard, the Court of Appeal's analysis in Markel and Schmitz cannot be ignored. It is binding on this court.

V. Limitation period commencement for unidentified motorist coverage after the Limitations Act entered into force

[30] The case at bar considers the issue from the perspective of a statutorily regulated contract for unidentified motorist coverage. The underlying contractual provisions of the unidentified regime differ from those of the loss transfer regime and those of the OPCF 44R in ways that include, but are not limited to, how a party may initiate proceedings. The differences however fail to distinguish the issue before this court from the Markel and Schmitz analysis. For example, defendant's counsel argues that the unidentified motorist policy provisions are unique as they permit an immediate direct action against an insurer for all tort damages. Although this difference permits the claimant to trigger the limitation period commencement immediately, it remains irrelevant to the interpretation of the trigger itself.

[31] Following the Court of Appeal's analysis and direction, the claimant for indemnity cannot be said to know that there is a loss "caused" by an "omission" of the unidentified motorist insurer until she has asserted a claim against the unidentified insurer to trigger a legally enforceable obligation: see Limitations Act, s. 5(1)(a)(ii) and (iii). The indemnity claimant suffers a loss "caused by" the unidentified coverage insurer's omission in failing to satisfy the indemnity claim the day after the indemnification demand is made. The limitation period begins therefore on the first day of default after the demand for indemnification is made.

Conclusion

[32] In the case at bar, the limitation period would begin the day after the plaintiff made an indemnification claim which TTCICL failed to satisfy. Since the plaintiff made her motion to add TTCICL as a defendant before making a claim that TTCICL failed to satisfy, the limitation period has not expired. The plaintiff's motion is allowed.

Order

(1) The plaintiff is granted leave to amend the statement of claim to

(a) add TTC Insurance Company Limited ("TTCICL"), as a defendant in this action;

(b) amend the particulars of the statement of claim in accordance with the above as per the plaintiff's draft amended statement of claim attached as Schedule "A" to the plaintiff's motion record;

(2) the time allowed for TTCICL to deliver a statement of defence is extended to 30 days from the date of service of the amended statement of claim; and the plaintiff may deliver a reply thereto within 15 days after delivery of the said statement of defence; and

(3) the parties are encouraged to agree on an appropriate costs award for this motion. If the parties are unable to agree I will receive written submissions on costs of not more than two pages. The plaintiff may submit first within 30 days and the defendants within 30 days thereafter. A reply, if any, should be submitted within ten days of receipt of the defendant's submissions.

Motion granted.