The respondent, Schmitz, was struck by a car driven by Bakonyi.
Schmitz sued Bakonyi for damages in excess of $1,000,000.
Bakonyi's coverage was limited to $1,000,000, so Schmitz
brought the action against Lombard for indemnity under the OPCF 44R
for those amounts owing in excess of $1,000,000.
Both parties agreed that the governing limitations legislation
was section 4 of the Limitation Act, 2002,2 and
not the 12-month limitation period in section 17 of the OPCF 44R.
As such, the issue was when the limitation period began to run for
underinsurance claims pursuant to OPCF 44R.
Section 17 of the OPCF 44R provides that:
Every action or proceeding against
the insurer for recovery under this change form shall be commenced
within 12 months of the date that the eligible claimant or his or
her representative knew or ought to have known that the quantum of
claims with respect to an insured person exceed the minimum limits
for motor vehicle liability insurance in the jurisdiction in which
the accident occurred, but this requirement is not a bar to an
action which is commenced within 2 years of the date of the
Additionally, section 5 of the Act provides that:
5. (1) A claim is discovered on the
(a) the day on which the person with
the claim first knew, ...
(ii) that the injury, loss of 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, ...
Lombard took the position that the limitation period began to
run the moment the Plaintiff knew or ought to have known the
quantum of their claim exceeded the Defendant's policy limits
The Court of Appeal rejected this argument, concluding that the
limitation period did not begin to run until the day after demand
for indemnity was made and the insurer failed to satisfy its
obligation. According to subsection 5(a)(ii) & (iii) of the
Act, a second party insurer cannot be said to have failed to
indemnify, and the claimant cannot be said to have suffered a loss,
if there was no request for indemnification in the first place.
Lombard further argued that such an interpretation would permit
a claimant to delay the limitation period indefinitely by not
filing the claim, thus eliminating the limitation period all
together. The Court rejected this argument stating that the insurer
was adequately protected by section 14 of the OPCF-44R which
For the purposes of this change
form, the findings of a court with respect to issues of quantum or
liability are not binding on the insurer unless the insurer was
provided with a reasonable opportunity to participate in those
proceedings as a party.
This decision may embolden plaintiffs to take a wait and see
approach, waiting to sue the OPCF-44R underinsurer until after
final judgment obtained as this is the only time they will know
whether they have a claim against the underinsurer. On the other
hand, by employing the wait and see approach, the plaintiff runs
the risk, pursuant to section 14, that the court's findings
will not be binding on the OPCF-44R underinsurer if it is deemed
that they were not provided a reasonable opportunity to
The meaning to be ascribed to a "reasonable opportunity to
participate" is a question that the courts will need to
address in the near future.
1 2014 ONCA 88 [Schmitz].
2 SO 2002, c 24 [Act].
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