Failure to commence an action for income replacement benefits within 2 years of an accident may bar one’s ability to claim them

Appeal by insured from trial judgment finding that his claim for income benefits was statute barred and not awarding him post-judgment interest according to the Statutory Accident Benefits Schedule (SABS) was allowed. The amendment of the Statement of Defence did not constitute a refusal to pay an amount claimed within the meaning of s. 71(1) of the SABS  and therefore was not statute barred. With regard to post-judgment interest, section 68 of the SABS is not discretionary.

Close v. Dominion of Canada General Insurance Co., [2009] O.J. No. 3015, July 17, 2009, Ontario Court of Appeal, K.N. Feldman, J.M. Simmons and R.A. Blair JJ.A.

The insured was a self-employed businessman injured in a car accident and was thus entitled, under the SABS, to a weekly income replacement benefit (“IRB”) as well as to loss of income earning capacity benefits (“LECB”) after 104 weeks. The insurer paid the IRBs but would not pay the LECB. The insured commenced an action in 2001 for a declaration that he was entitled to a LECB amount. The insurer counterclaimed for a refund in respect of an overpayment of the IRB. The insured hired an accountant who discovered that the insurer had made an error in the calculation and payment of the IRBs. He therefore sought to amend his claim in 2006. The trial judge found that the IRB claim was statute barred. She found that the delivery of the Statement of Defence and Counterclaim constituted a refusal to pay any further benefits to the insured and thus triggered the two-year limitation period under s. 72(1) of the SABS and s. 281 of the Insurance Act. Lastly, she awarded pre-judgment interest in accordance with s. 68 of the SABS but post-judgment interest in accordance with s. 129 of the Courts of Justice Act, at a lower rate.

The Court of Appeal found that the trial judge erred in her finding the insured’s claim was statute barred. It found that, until the accountant became involved, the insurer was not aware of the error in calculation. Therefore, the insurer did not intend its Statement of Defence to constitute a refusal to pay the minimum IRB component of the IRB claim because it was not aware of the error. In those circumstances, the Statement of Defence could not constitute a refusal to pay an amount claimed or benefit claimed within the meaning of s. 72(1) of the SABS.

The Court of Appeal also found that the trial judge erred by failing to award post-judgment interest in accordance with s. 68 of the SABS. It stated that the section is worded in a non-discretionary manner and there is no basis not to apply it to post-judgment interest as well as pre-judgment interest.

This case was originally summarized by Natasha D. Morley and edited by David W. Pilley.

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