The Court of Appeal recently considered the interplay of the Fault Determination Rules in a loss transfer context.
In State Farm Mutual Automobile Insurance Co. v. Old Republic Insurance Co. of Canada, 2015 ONCA 699 (C.A.), there was a multi-vehicle collision in which a Pepsi truck rear-ended a Dodge, which in turn rear-ended a Nissan. Old Republic insured the Pepsi truck and State Farm insured the Nissan. The driver of the Nissan collected accident benefits from State Farm, which in turn sought to be indemnified by Old Republic under the loss transfer provisions of the Insurance Act. The issue on appeal was whether the Pepsi truck was only responsible for the initial collision with the Dodge or whether it was responsible for the entire chain reaction.
The Court of Appeal held that the Pepsi truck (and its insurer, Old Republic) was 100% responsible only for the collision between it and the Dodge, not the entire chain reaction. As a result, Old Republic was not required to indemnify State Farm for accident benefits paid to its insured.
The Court's interpretation helps to clarify an area in which there was previously conflicting lines of case law.
A weekly update of cases pertaining to the practice of insurance defence.
Showing posts with label Loss Transfer. Show all posts
Showing posts with label Loss Transfer. Show all posts
November 11, 2015
June 18, 2014
Laches Applies to Loss Transfer Actions
Insurers dealing with loss transfers should be aware of the decision in Zurich Insurance Company v. TD General Insurance Company, 2014 ONSC 3191 (S.C.J), where the Court dismissed the claim.
The claim arose out of a motor vehicle accident that occurred July 14, 1999. In 2010, approximately 11 years after the accident, TD sent Zurich a Notice of Loss Transfer alleging Zurich's insured was 100% at fault. Shortly after, TD made two requests for indemnification. In 2011, TD brought an application requiring Zurich to participate in an arbitration. Zurich brought a motion to decide a preliminary issue as to whether the application was barred by the equitable doctrine of laches and the Limitations Act. The arbitrator dismissed the motion and Zurich appealed.
Justice Lederman held that TD's claim was not barred by the Limitation Act, relying on decision in Markel Insurance v. ING Insurance Company of Canada, 2012 ONCA 218 (CanLII), where the Court of Appeal held that the limitation period runs from the day the first party insurer requests loss transfer from the second party insurer.
However, Justice Lederman held that laches applied in the circumstances. Applying laches in the circumstances was consistent with the fusion of law and equity to achieve just results. He held that acquiescence is a stand-alone basis for laches, and there need not be prejudice for the doctrine to apply. The 11-year delay coupled with a directive that the first party insurer notify the second party insurer promptly and the fact the TD is a sophisticated insurer, gave rise to an inference that it had abandoned or waived its rights to the claim.
The claim arose out of a motor vehicle accident that occurred July 14, 1999. In 2010, approximately 11 years after the accident, TD sent Zurich a Notice of Loss Transfer alleging Zurich's insured was 100% at fault. Shortly after, TD made two requests for indemnification. In 2011, TD brought an application requiring Zurich to participate in an arbitration. Zurich brought a motion to decide a preliminary issue as to whether the application was barred by the equitable doctrine of laches and the Limitations Act. The arbitrator dismissed the motion and Zurich appealed.
Justice Lederman held that TD's claim was not barred by the Limitation Act, relying on decision in Markel Insurance v. ING Insurance Company of Canada, 2012 ONCA 218 (CanLII), where the Court of Appeal held that the limitation period runs from the day the first party insurer requests loss transfer from the second party insurer.
However, Justice Lederman held that laches applied in the circumstances. Applying laches in the circumstances was consistent with the fusion of law and equity to achieve just results. He held that acquiescence is a stand-alone basis for laches, and there need not be prejudice for the doctrine to apply. The 11-year delay coupled with a directive that the first party insurer notify the second party insurer promptly and the fact the TD is a sophisticated insurer, gave rise to an inference that it had abandoned or waived its rights to the claim.
January 9, 2013
Loss Transfer - Cost of Assessments
Early this year, we blogged on a decision by Justice Greer holding that the costs of insurer generated assessments under s. 42 of the SABS are not recoverable under the loss transfer provisions (Wawanesa v. Axa). The matter was appealed to the Court of Appeal.
The Court of Appeal decision is found at 2012 ONCA 592. The Court dismissed the appeal. Section 275(1) of the Insurance Act provides:
The insurer responsible under subsection 268(2) for the payment of statutory accident benefits to such classes of persons as may be named in the regulations is entitled, subject to such terms, conditions, provisions, exclusions and limits as may be prescribed, to indemnification in relation to such benefits paid by it from the insurers of such class or classes of automobiles as may be named in the regulations involved in the incident from which responsibility to pay the statutory accident benefits arose.
Justice Weiler held that the words "in relation to" convey a connection between two related subject matters. A "connection" must be between statutory benefits paid and the cost of the assessment, and only exists if the ABs were actually paid. If the assessment only saved some benefits from being paid unnecessarily there would be full indemnification, but no indemnification if no benefits were paid. The legislature could not have intended such an anomalous result. In addition, the connection should be between insurer generated assessments and ABs paid to the insured, whereas the cost of the assessment is paid to the doctor who conducts the assessment.
Justice Blair wrote a dissenting opinion, preferring a wide scope to the words "in relation to" that would include the cost of assessments.
Giving the dissenting opinion, perhaps this matter will be headed to the Supreme Court for final clarification, especially given the rising costs of assessments.
The Court of Appeal decision is found at 2012 ONCA 592. The Court dismissed the appeal. Section 275(1) of the Insurance Act provides:
The insurer responsible under subsection 268(2) for the payment of statutory accident benefits to such classes of persons as may be named in the regulations is entitled, subject to such terms, conditions, provisions, exclusions and limits as may be prescribed, to indemnification in relation to such benefits paid by it from the insurers of such class or classes of automobiles as may be named in the regulations involved in the incident from which responsibility to pay the statutory accident benefits arose.
Justice Weiler held that the words "in relation to" convey a connection between two related subject matters. A "connection" must be between statutory benefits paid and the cost of the assessment, and only exists if the ABs were actually paid. If the assessment only saved some benefits from being paid unnecessarily there would be full indemnification, but no indemnification if no benefits were paid. The legislature could not have intended such an anomalous result. In addition, the connection should be between insurer generated assessments and ABs paid to the insured, whereas the cost of the assessment is paid to the doctor who conducts the assessment.
Justice Blair wrote a dissenting opinion, preferring a wide scope to the words "in relation to" that would include the cost of assessments.
Giving the dissenting opinion, perhaps this matter will be headed to the Supreme Court for final clarification, especially given the rising costs of assessments.
May 2, 2012
Limitation Periods in Loss Transfer Claims
Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218 (C.A.);
The issue in this appeal was the date from which the limitation period begins to run in loss transfer claims.
The appeal arose out of two arbitration decisions that reached different conclusions on the start date for the limitation period. In Federation v. Kingsway, the arbitrator held the limitation period begins to run on the day after the request for loss transfer is made; in Markel v. ING, the arbitrator held the limitation period begins to run when the second insurer refuses to indemnify. On appeal to the Superior Court of Justice, the court favoured the Federation approach. The matter was appealed to the Court of Appeal.
The Court of Appeal dismissed the appeal. Justice Sharpe held that the limitation period begins to run on the day after the request for indemnification is made by the insurer who paid accident benefits.
Lawyers and insurance professionals should be aware of this decision when diarizing their files so that claims can be brought within the correct limitation period.
- Tara Pollitt
The issue in this appeal was the date from which the limitation period begins to run in loss transfer claims.
The appeal arose out of two arbitration decisions that reached different conclusions on the start date for the limitation period. In Federation v. Kingsway, the arbitrator held the limitation period begins to run on the day after the request for loss transfer is made; in Markel v. ING, the arbitrator held the limitation period begins to run when the second insurer refuses to indemnify. On appeal to the Superior Court of Justice, the court favoured the Federation approach. The matter was appealed to the Court of Appeal.
The Court of Appeal dismissed the appeal. Justice Sharpe held that the limitation period begins to run on the day after the request for indemnification is made by the insurer who paid accident benefits.
Lawyers and insurance professionals should be aware of this decision when diarizing their files so that claims can be brought within the correct limitation period.
- Tara Pollitt
February 8, 2012
Loss Transfer - Costs of Assessments
In Wawanesa v. Axa (2012), 107 O.R. (3d) 395 (S.C.J.), the issue was whether the cost of s. 42 assessments are recoverable in loss transfer, particularly in light of the legislative changes that came into effect March 1, 2006 (when DACs were eliminated). The underlying accidents occurred on August 21, 2006 and October 6, 2005.
The arbitrator held that the cost of s. 42 assessments are not recoverable under loss transfer. Justice Greer upheld the decision. The legislative changes had no impact on the principle that assessment expenses are not recoverable in loss transfer.
The arbitrator held that the cost of s. 42 assessments are not recoverable under loss transfer. Justice Greer upheld the decision. The legislative changes had no impact on the principle that assessment expenses are not recoverable in loss transfer.
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