Actions by Insured against Insurer – Limitation Period not always Certain

Shaver v. Co-operators General Insurance Co. [2011] AJ No. 1411

Mr. Shaver was injured in a three vehicle accident on July 14, 2000 with one other identified driver. The Motor Vehicle Accident Claims Fund accepted liability for the accident and consented to a partial judgement in Mr. Shaver’s favour for $100,000.00. This judgement was entered on January 19, 2010.

Mr. Shaver found this compensation to be inadequate and issued a claim against his insurer, the Co-operators, on July 29, 2010 based on the SEF 44 endorsement in his policy:

Every action...against the insurer...under this endorsement shall be commenced [within 2 years] from the date upon which the eligible claimant...knew or ought to have known that the quantum of the claims with respect to an insured person exceed the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.

The Co-operators brought a summary judgment motion in Alberta arguing that Mr. Shaver was out of time as more than 10 years had passed since the claim arose. Mr. Shaver argued that his claim against the Co-operators arose only on January 19, 2010.

The court held that the limitation period in this endorsement allowed an injured person to sue later than the ultimate 10 year statutory limitation period in cases where the insured learned of inadequate insurance or of total claims exceeding the insurance limits after the expiry of that limitation period. The Co-operators appealed this decision to the Alberta Court of Appeal.

The Alberta Court of Appeal upheld the lower court’s decision, citing the principle provided by the Alberta Court of Appeal in Wawanesa Mutual Insurance Co., [1994] AJ No. 126:

An insured’s claim against his own insurer arises not at the time of the accident, but when he knows, or should have known, that the tortfeasor’s coverage will be inadequate to cover the insured’s damages.

In the case at hand, both parties agreed that it was not until January 19, 2010 that Mr. Shaver knew that the torfeasor’s coverage would not be sufficient.

- Kristen Dearlove, Student-at-Law

Unidentified Motorist - Corroborating Evidence

In our post of July 27, 2010, we blogged about the case of Pepe v. State Farm Mutual Automobile Insurance Co., [2010] O.J. No. 2138 (S.C.J.) and whether a passenger in an insured’s motor vehicle was an “independent witness” who can corroborate the insured’s evidence concerning the involvement of an unidentified motorist for the purposes of the OPCF 44R Family Protection Endorsement. The motions judge held that the passenger could corroborate the insured’s claim for the purpose of OPCF 44R coverage, despite the fact that she was the insured's girlfriend and was also suing State Farm for damages caused by an unidentified driver.

The Court of Appeal has upheld the motions judge's decision.

Doherty J.A. reviewed the history of requiring corroboration and cited Chief Justice Dickson, in Vetrovec v. The Queen, [1982] 1 S.C.R. 811 at 826, for identifying the rationale for a corroboration requirement:

"The reason for requiring corroboration is that we believe the witness has good reason to lie. We therefore want some other piece of evidence which tends to convince us that he is telling the truth."

Doherty J.A. held that State Farm’s assertion that it is the witness who must be independent, in the sense of neutral to the outcome, was wrong. The independence requirement in the context of corroboration has always referred to the independence of the evidence and not to the neutrality of the witness. The witness’s neutrality or lack thereof is relevant to the ultimate credibility of the witness’s evidence, which is for the trial judge to assess.

Definition of "Struck by" or "Hit by" in Auto Insurance

The Court of Appeal for Ontario has decided that coverage under one's own policy for being "struck by" or "hit by" an unidentified automobile includes walking into an unnoticed steel pole protruding from a parked truck. Lewis v. Economical Insurance Group, [2010] O.J. No. 3158 (C.A.).

The facts are described as follows: "On a spring day in 2003, Bonnie Lewis walked out of a variety store and struck her head on a steel pole protruding from a truck parked the wrong way on the street in front of the store. The pole was unmarked, grey and nearly invisible. Ms. Lewis did not see the pole until she hit it. The pole struck her above her right eye near her temple. She fell to the ground, unconscious. She suffered a serious head injury, which has left her cognitively impaired."

Since the truck could not be identified, Ms. Lewis sued her own insurance company for damages for personal injuries. Both her automobile policy and the OPCF Family Protection Endorsement, which was additional insurance she had purchased, provided coverage for personal injuries resulting from an accident involving an unidentified or uninsured automobile. As Ms. Lewis was not an occupant of an automobile when she was injured, she was entitled to coverage only if she was "struck by" or "hit by" an unidentified automobile.

A motions judge concluded that Ms. Lewis was not "struck" or "hit by" the truck, or the pole that protruded from it, because the truck was not moving at the time. Instead, it was Ms. Lewis who struck or hit the pole.

The Court of Appeal concluded otherwise and finds that she is entitled to coverage.

Laskin J.A. added that "my interpretation of these words [struck or hit by] would not open the floodgates to injury claims by persons who walk into unidentified parked cars. This is a case about coverage, not liability or negligence. If the owner or driver of a parked car was not negligent, the claimant would have no legal entitlement to damages."

Whether the plaintiff is now entitled to damages "depends on her being able to prove that the unidentified owner or driver of the truck was negligent."

It seems that the Court is saying that if the plaintiff is not entitled to damages then it should be determined on the issue of negligence and not coverage. Coverage should be interpreted broadly whereas negligence must be proven strictly.

Unidentified Vehicle: The Corroborating Evidence Rule

Is a passenger in an insured's motor vehicle an "independent witness" who can corroborate the insured's evidence concerning the involvement of an unidentified motorist for the purposes of the OPCF 44R Family Protection Endorsement? Is the passenger an "independent witness" if the passenger has also sued the insurer under the unidentified coverage provisions and therefore has an interest in the outcome?

D.A. Wilson J. recently said yes to these questions in Pepe v. State Farm Mutual Automobile Insurance Co., [2010] O.J. No. 2138 (S.C.J.).

Sections 1.5(c) and 1.5(d)(i) of the OPCF 44R, known as the Family Protection Endorsement, read as follows:

(c) where an eligible claimant alleges that both the owner and driver of an automobile referred to in clause 1.5(b) cannot be determined, the eligible claimant's own evidence of the involvement of such automobile must be corroborated by other material evidence; and

(d) "other material evidence" for the purposes of this section means (i) independent witness evidence, other than evidence of a spouse ... or a dependent relative ...; or (ii) physical evidence indicating the involvement of an unidentified automobile..


Wilson J. found that: "It is clear that the intention of this section is to limit the ability of individuals to make claims against their OPCF 44R policies for claims involving unidentified vehicles unless there is independent evidence to corroborate the involvement of a vehicle whose driver or owner cannot be ascertained. Further, the individual who corroborates the evidence of the claimant cannot be the spouse or a dependant of the claimant." (para. 10)

In the instance before Wilson J., the independent witness was a passenger in the plaintiff's vehicle and a girlfriend at the time of the accident but not at the time of the motion. Wilson J. concluded that this witness did not fit into the narrow class of persons excluded, namely a spouse or relative, and therefore she was an independent witness who could provide corroborating evidence.

It would seem that allowing a passenger, who has also sued the insurer under the unidentified coverage provisions and therefore has an interest in the outcome, to be the witness required under the Endorsement, defeats the intent of having "independent" corroborating evidence. On the other hand, it seems a correct finding on a plain and narrowly construed interpretation of the Endorsement's wording.

Court of Appeal: Injured Insureds Do Not Need to Sue Insured Joint Tortfeasors to Claim Uninsured Motorist Coverage

In a somewhat surprising decision, the Court of Appeal for Ontario has held that an insured motorist does not have to sue insured joint tortfeasors in order to collect on the uninsured coverage in her own automobile insurance policy. Also the insurer does not appear to have a right of subrogation against the joint tortfeasors but only against the uninsured motorist.

This decision is properly understood as providing reasonable coverage for an insured from her insurer. It is a first party claim, not third party claim. The insured purchased coverage for this very type of situation from her insurer. The insurer picked a bad set of facts in this case and should have waited for a better case to pursue this issue - namely, where the joint tortfeasor was at least 25% liable. In this instance it is not even certain that the joint tortfeasor was 1% liable.

The decision is Loftus v. Security National, 2009 ONCA 618 (decision released Aug 21, 2009). Click here for a copy of the decision.

The plaintiff was injured after being hit by an uninsured motorist. The uninsured motorist was being chased by the police when he entered an intersection, lost control and struck the plaintiff.
The plaintiff sued the uninsured motorist and her own insurer, Security National, under the uninsured coverage of her policy. The uninsured motorist did not defend.

At first instance, on a Rule 22 motion, MacDougall J. found that Security National was liable to pay the plaintiff under the uninsured provisions of the policy, even though she had not commenced an action against the police/joint tortfeasors and even if the police/joint tortfeasors are assumed to be negligent.

The Court of Appeal for Ontario reviewed the relevant wording of the Uninsured Automobile Coverage Schedule ("the Schedule") contained in R.R.O. 1990, Reg. 676:

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

(b) where a person insured under the contract is entitled to recover money under any valid policy of insurance other than money payable on death, except for the difference between such entitlement and the relevant minimum limits determined under clause (a);

(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;

The Court of Appeal then held that the key phrase herein is "entitled to recover money". The question then is whether the plaintiff is "entitled to recover money". If yes, then she cannot recover under the uninsured provisions of her own policy.

The Court of Appeal answered the question by finding that the phrase "entitled to recover" as it appears in ss. 2(1)(b) and (c) of the Schedule means entitled to recover "in fact" as opposed to entitled to recover "in law" and that an "injured insured is entitled to recover in fact only where a potential joint tortfeasor’s insurer admits liability to pay or where the injured insured obtains judgment against the insured joint tortfeasor."

The Court of Appeal went on to say that:

"We see no indication in the language of s. 265 of the Insurance Act or of the Schedule that it was the intention of the legislature to require victims of uninsured drivers to engage in potentially speculative and costly litigation against potential joint tortfeasors who may be insured rather than relying on the coverage paid for in their own policies of insurance."

The Court of Appeal also rejected submissions by Security National that this finding would result in double recovery by the insured. The Court of Appeal held that "recovery under the uninsured coverage is an alternative" and that obtaining judgment against her own insurer signifies an election not to subsequently pursue a claim against the joint tortfeasors.

The Courts in this instance simply did not want to find liability against the police for what was clearly the fault of the uninsured motorist and nor did the Courts want to punish the insured for refusing to pursue litigation against the police. The insured purchased auto insurance from the insurer for this very situation.

Walking into a parked auto is not being "struck" or "hit" by it

In Lewis v. Economical Insurance Group, [2009] O.J. No. 2853 (S.C.J.), Eberhard J. held that there is no coverage for walking into a parked car under the uninsured provisions of the Standard Automobile Policy (s. 265 Insurance Act) or under the Family Protection endorsement (OPCF 44R).

It seems to make sense.

The plaintiff suffered injuries when she struck her head on a steel pole that was protruding from a vehicle.

The defendant insurer brought a motion for summary judgment on the basis that (i) the plaintiff had failed to establish an unidentified vehicle had been involved or could not have been ascertained and (ii) that there is no coverage in any event under the uninsured provisions policy or under OPCF 44R. The insurer won the motion on the latter issue.

The wording of the OPCF 44R endorsement is that the plaintiff is only covered if the plaintiff is not "an occupant of an automobile who is struck by an automobile".

The wording of the policy is that the plaintiff is only covered "when not in an automobile ... if hit by an unidentified or uninsured automobile" (policy).

The Court held that the meaning of hit or struck is not ambiguous: the automobile did not hit or strike the plaintiff pedestrian. The pedestrian walked into the automobile.

Here are paragraphs 9 and 10 of the Court's endorsement:

"This is quite unlike the circumstance of being hit/struck by something hit by an automobile or falling out of a moving vehicle as it is the movement of the vehicle that applies the force that gives rise to the hit/strike."

"It is also unlike the interpretation of "hit/struck" where a moving automobile created a peril which caused the insured to take evasive action which resulted in his injury. There, the visual impact of the automobile caused the injury. In the present case the Plaintiff did not see the pole and walked into it. Nothing about the automobile impacted upon the situation."