OPCF 44R Limitation Period: Roque and Schmitz
Roque v. Pilot Insurance Company
In May of 2012, the Ontario Court of Appeal released its decision in Roque v. Pilot Insurance Company. In Roque, the Court held that a plaintiff’s limitation period against an underinsured insurer pursuant to an OPCF 44R endorsement begins to run when the plaintiff has enough evidence to give him a “reasonable chance” of persuading a judge that his claims would exceed the minimum limits $200,000. The Court’s decision was a departure from some previous cases that held that the limitation period only begins to run from the time when the plaintiff knows that the available insurance coverage under a defendant’s policy is less than that available under his or her own policy.
The facts of Roque are relatively straightforward. Fernando Roque was injured in a motor vehicle collision on December 5, 1996. He started a lawsuit against the at-fault driver within the two-year limitation period. By 1998, it was clear that the value of Mr. Roque’s claim was well in excess of $200,000. However, it was not until 2002, well after the after the expiry of the two-year limitation period, that Mr. Roque’s lawyer learned that the defendant only had $200,000 of insurance coverage, the minimum limits of motor vehicle liability coverage in Ontario.
Mr. Roque started a lawsuit against his insurer, Pilot Insurance, pursuant to his OPCF 44, within several months of learning of the defendant’s inadequate insurance coverage. Pilot brought a motion to dismiss Mr. Roque’s action on the basis that the limitation period had expired. Mr. Justice Russell Juriansz, writing for a unanimous Court upheld the motion’s judge decision dismissing Mr. Roque’s action. He held that the clear language of the OPCF 44 dictated that the limitation period begins to run when the plaintiff has a reasonable prospect of proving that his or her case exceeds the minimum limits of $200,000. The relevant language is set out in s. 17 of the OPCF 44, which is reproduced below:
Every action or proceeding against the insurer for recovery under this change form shall be commenced within 12 months of the date that the eligible claimant or his or her representative 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…. [Emphasis added]
The Court suggested that its decision will not result in a multiplicity of proceedings because s. 258.4 of the Insurance Act obligates an insurer to promptly inform the plaintiff of the existence of a motor vehicle liability policy, the liability limits of the policy, and whether the insurer will respond to the claim. On this view, a plaintiff need only commence an action against his or her own insurer where a defendant’s insurer does not comply with s. 258.4 or where the insurer specifically states that there is insufficient insurance available to respond to the plaintiff’s claim. However, this ignores the fact that Roque dictates that the limitation period will not be extended where a plaintiff initially receives information in accordance with s. 258.4 that suggests a defendant has sufficient liability insurance available to respond to the plaintiff’s claim and will respond, only to later learn that the defendant’s insurer has changed its position.
The Court’s decision in Roque would seem to leave plaintiffs’ counsel with three courses of action. First, counsel can give notice to the plaintiff’s insurer and secure an agreement that the insurer will waive a limitations defence in exchange for the plaintiff’s agreement not to issue a Statement of Claim until it becomes clear that there are insufficient insurance proceeds available from the tortfeasor’s liability insurer. Second, counsel can issue against the plaintiff’s insurer in every motor vehicle case and later discontinue the action after securing a similar limitation period waiver. Finally, counsel can operate as the Court of Appeal suggested by asking that defendants’ insurers comply with s. 258.4 of the Insurance Act and only issue claims against the plaintiff’s insurer where the insurer does not comply. However, this leaves plaintiffs to bear the risk of running out of time in cases where the defendant’s insurer is forthcoming with information but later reverses its coverage decision. The plaintiff may have a claim for negligent misrepresentation in such cases, but that will only be possible where the insurer did not have good reason to provide the initial information regarding coverage.
Schmitz v. Lombard General Insurance
The predicament created for plaintiffs’ counsel by Roque may have found a solution in the more recent case of Schmitz v. Lombard General Insurance. In Schmitz, Mr. Justice James considered the issue of whether the limitation period contained in the OPCF 44R continues in force or whether it has been displaced by s. 4 of the Limitations Act, 2002. The Ontario Court of Appeal did not consider this issue in Roque, presumably because the limitation period in the OPCF 44R dated back to 1996 and preceded the coming into force of the Limitations Act, 2002.
In Schmitz, the plaintiff argued that the limitation period in the OPCF 44R, being contractual, is governed by section 22 of the Limitations Act, 2002. That section states that “a limitation period under this Act applies despite any agreement to vary or exclude it,” if the agreement was made after 2004. Lombard argued that the agreement was made before January 1, 2004. The plaintiff argued that the annual renewal of automobile insurance contracts creates a new policy of insurance each year.
Justice James accepted the plaintiff’s submissions on the applicability of the Limitations Act, 2002. He distinguished Roque on the basis that this submission appeared not to have been made in that case, and noted that “discoverability is overarching policy consideration implicit in [the Limitations Act, 2002] even though tis application may occasionally be awkward”. Accordingly, he held that paragraph 17 of the OPCF 44R cannot operate as a limitation defence and that the applicable limitation period is determined by s. 4 of the Limitations Act, 2002.
To read the first part of the blog series click here.