Gordyukova v. Certas Direct Insurance Company, 2012 ONCA 563 (C.A.)
The subject of this appeal is s. 281.1(1) of the Insurance Act, which provides that an insured shall commence a court proceeding or arbitration within two years of the insurer's refusal to pay benefits.
The plaintiff was in a motor vehicle accident in 2001. She applied for accident benefits and a dispute arose over certain medical benefits. After mediation failed, she issued a Statement of Claim in 2002. In 2005, the insurer advised her she had exhausted her non-catastrophic limits for medical and rehabilitation benefits. Her application for a catastrophic designation was rejected so she commenced an arbitration at FSCO in 2008. Certas brought a motion to stay the arbitration on the grounds that the CAT dispute should be added to the court action. The arbitrator ruled the plaintiff could not proceed with both the court action and the arbitration, but could proceed with arbitration if she discontinued the court action. The arbitrator ruled he was not ruling on the limitation issue. The plaintiff gave notice of her intention to discontinue the court action and proceed with arbitration, and the insurer brought a motion seeking a ruling on the limitation issue. The arbitrator ruled the plaintiff could add all of the matters pending before the Superior Court to the arbitration.
Certas appealed, arguing that the plaintiff could not re-elect the method of proceeding eight years after the court action was commenced. The matter was appealed to the Director 's Delegate then the Divisional Court.
The Court of Appeal held that the arbitration should be stayed. Section 281.1(1) of the Insurance Act requires an election between a court action and an arbitration. It provides that a proceeding shall be brought within two years. The insured has the choice of forum, but cannot switch forums after the expiry of the limitation period. Since the court proceeding included a claim for "continued accident benefits", it would necessarily include a determination of the CAT issue.