Canada: When Does The Limitation Period Start Running For Uninsured Coverage?

Kaushal v. Ampabeng and Aviva Canada Inc., and the application of Schmitz v. Lombard General Insurance Co. of Canada

In Kaushal v. Ampabeng, a 2015 decision of Ontario Superior Court of Justice, the Plaintiff was seeking to have his own insurer added to the action as a defendant, given that the Defendant driver had no insurance at the time of the accident. The insurer Aviva brought a summary judgment motion to dismiss the Plaintiff's action. Aviva's position was that the Plaintiff's claim was statute barred by virtue of the Limitations Act and that the Plaintiff failed to add Aviva to the action as a defendant within the limitation period.

The Plaintiff's position was as follows:

1. The claim was not statute barred as it was commenced within the appropriate limitation period.

2. Alternatively, the claim was advanced once he discovered that his injury crossed the threshold requirement pursuant to section 267.5(5) of the Insurance Act.

3. Alternatively, the claim as against Aviva did not commence until the Plaintiff made a legally valid demand for payment.

In response, the Plaintiff brought a cross motion to obtain leave to deliver a Reply to Aviva's Statement of Defence and to amend the Amended Statement of Claim to plead discoverability pursuant to section 5 of the Limitations Act.

Tzimas J ordered that the motion for summary judgment be dismissed and the Plaintiff was granted leave regarding the pleadings.

Here is the chronology:

1. The Plaintiff was rear-ended on November 27th, 2007. The Plaintiff suffered soft tissue injuries to his neck and lower back. The Defendant driver Thompson Ampabeng indicated at the Collision Reporting Centre that he was insured through Unifund Assurance. A policy number was provided. However, it appears that the Plaintiff was under the impression that the defendant driver was charged for failure to be insured.

2. The Plaintiff saw his family doctor on December 6th, 2007 and an orthopaedist on December 12th, 2007. He was excused from work for 4-6 weeks.

3. He was a welder and he returned to work in March 2008 where he was on light duties and then left his employment in August 2008.

4. January – October 2008 – he continued to receive chiropractic care and physiotherapy. Both caregivers made recommendations for continued rehabilitation programs to develop core and spinal stability.

5. Aviva terminated coverage for physiotherapy on October 30th, 2008. However, the Plaintiff continued with physiotherapy. On July 7th, 2009, the Plaintiff was examined by another physiotherapist who concluded that the lower back symptoms had worsened. An MRI was done on September 28th, 2009 which demonstrated multi level degenerative disc and facet changes.

6. The Plaintiff then retained a lawyer on November 10th, 2009. Prior to this, he had the assistance of a paralegal.

7. On November 24th, 2009, the Plaintiff was assessed by Dr. Sawa, a neurologist who concluded that the Plaintiff's problems were caused by mechanical lower back pain. Anti inflammatories were prescribed and surgery was ruled out.

8. On November 26th, 2009, the Plaintiff issued a claim as against the Defendant driver, as counsel determined that there had been no conviction under the Highway Traffic Act, arising of the November 27th, 2007 accident.

9. On January 22nd, 2010, the Defendant's alleged insurer indicated that the Defendant did not possess valid insurance with the company at the time of the accident.

10. May 2010 – the Plaintiff was assessed by a vocation specialist who concluded that the Plaintiff suffered a substantial inability to perform the essential tasks of pre-accident employment

11. November 2010 – the Plaintiff had a follow up visit with Dr. Sawa who recommended physiotherapy and painkillers. It was at this point, that the Plaintiff appreciated that there would be no surgical solution to his condition and that his symptoms were permanent.

12. Aviva was added as a defendant to the action on September 22, 2011. Aviva noted that as early as January 27th, 2010, counsel for the Plaintiff gave instructions to his articling student to bring a motion to add Aviva as a defendant to the action pursuant to the uninsured motorist provisions. On February 24th, 2011, Plaintiff's counsel wrote to Aviva stating that the Plaintiff would be commencing an action as against Aviva pursuant to section 258.4 of the Insurance Act. The motion was not brought until August 30th, 2011. In the motion materials, the explanation provided to add Aviva was that in January 2010, the Plaintiff learned that the Defendant Driver was not insured.

It is interesting that Plaintiff's counsel made the demand for payment pursuant to section 258.4 of the Insurance Act, and not under OPCF 44R.

The Court found that the issue of the applicable limitation period is a genuine issue for trial. There appeared to be the possibility of at least 2 and possibly 3 discoverability dates that may apply to the limitation analysis and when the limitation period started to run.

Accordingly, the Court stated that even taking into consideration that the Plaintiff stopped working as of August 2008, that this did not start the clock running on the Limitation period. In terms of the threshold claim, the Court did determine that after the first visit with Dr. Sawa in November 2009, it is likely that this is when the Plaintiff should have known that injuries were of a serious and permanent nature. Therefore, adding Aviva to the action in September 2011 was within the permitted time period.

Conclusion

It is interesting that the Court does not comment on the argument that the claim as against Aviva did not commence until the Plaintiff made a legally valid demand for payment, which is one of the alternative arguments proposed by the Plaintiff in their response to the summary judgment motion. One wonders how this case is reconciled with the rationale in the recent Court of Appeal decision in Schmitz (Litigation guardian of) v. Lombard General Insurance Co. of Canada 2014 ONCA 88. In Schmitz, the Court of Appeal held that once a legally valid claim for indemnification under the endorsement was asserted, the underinsured coverage insurer was under a legal obligation to respond to it and that the limitation period applicable to a claim for indemnity did not start to run until the day after the demand for indemnity was made. Using the chronology in Kaushal, an argument can be made that Plaintiff's counsel did not make their demand to Aviva until February 24th, 2011. Accordingly, the two year limitation period would not have started running until February 25th, 2011. However, in Kaushal, no request for indemnification was being made under OPCF 44R. The claim was being made pursuant to section 258.4 which states:

258.4 An insurer that receives a notice under clause 258.3 (1) (b) shall promptly inform the plaintiff whether there is a motor vehicle liability policy issued by the insurer to the defendant and, if so,

(a) the liability limits under the policy; and

(b) whether the insurer will respond under the policy to the claim. 1996, c. 21, s. 22

Typically, claims under section 258.4 are made when trying to determine limits and coverage under the Defendant driver's policy. Perhaps in Kaushal, the demand for payment should have been made under OPCF 44R. If so, then the decision in Schmitz would have provided a quick response to this summary judgment motion regarding the limitation period.

Furthermore, based on Schmitz, the limitation period is only triggered with the demand for payment. A demand for payment to the Insurer can be brought at any point of time during the litigation, and the limitation period will only commence the day after the request was made. This will make for some interesting law going forward.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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