A leave to appeal on an Appeal Court ruling dismissed by the Supreme Court of Canada has raised the question of whether there is a limitation period on claims.
The Court of Appeal decision that spurred the leave to appeal to the Supreme Court had ruled that a policyholder making a claim under a family protection endorsement “suffers a loss ‘caused by’ the underinsured coverage insurer's omission in failing to satisfy the claim for indemnity the day after the demand for indemnification is made.”
However, that ruling was the subject of an article in an E-Counsel newsletter this year, published by law firm Dutton Brock LLP. The ruling against Lombard, in effect, “could mean that there no longer exists a limitation period on claims under the OPCF 44R.”
“The Court did leave an avenue of defence open for insurers,” Dutton Brock student Lauren Chen wrote. “The Court looked to section 14 of the OPCF 44R, which provides that the findings of a court are not binding on an insurer unless that insurer has had the opportunity to participate in the proceedings.”
On April 4, Lombard filed an application for leave to appeal with the Supreme Court of Canada. The highest court announced on Aug. 14 it dismissed Lombard's application, with costs. (continued.)
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The original court ruling against Lombard over the limitation period on claims can trace its beginnings back to July 2006, when – according to court records – Eckhart Schmitz was hit by a car driven by Ervin Bakonyi.
Schmitz had an auto policy, with an optional ‘family protection’ endorsement, with Lombard, (owned by Toronto-based
Northbridge Financial Corp.). The endorsement is essentially intended to cover a vehicle accident victim who sues a defendant whose liability limit is not enough to cover the losses.
In 2007, Schmitz and his family sued Bakonyi ‘for damages in excess of’ $1 million from injuries Schmitz suffered in the 2006 accident. Bakonyi's liability limit was $1 million.
In 2010, Schmitz sought coverage under his family protection endorsement with Lombard. But Lombard argued Schmitz sought coverage after the expiry of the 12-month limitation period, stipulated in section 17 of the family protection endorsement.
Under section 17, every action against an insurer under “shall be commenced within 12 months of the date” that claimant “knew or ought to have known that the quantum of claims with respect to an insured person exceeded the minimum limits for motor vehicle liability insurance in the jurisdiction in which the accident occurred.”
Schmitz argued on section 4 of Ontario's Limitations Act, which stipulates that a lawsuit shall not be commenced more than two years after a claim was ‘discovered,’ according to the Court of Appeal for Ontario ruling against Lombard.
