In Ontario if the limitation period for initiating an arbitration to resolve a coverage issue has expired, a civil action may be commenced to resolve the issue

The Defendant Insurer appealed from a decision that it, rather than the Plaintiff Motor Vehicle Accident Claims Fund, was responsible for paying accident benefits.  The Insurer argued that the Fund was obligated to proceed by way of arbitration.  The Court of Appeal dismissed the appeal.

Ontario (Minister of Finance) v. Progressive Casualty Insurance Co. of Canada, [2009] O.J. No. 1216, Ontario Court of Appeal, March 25, 2009, D.R. O’Connor A.C.J.O., D.H. Doherty and M. Rosenberg JJ.A.

The Defendant Insurer appealed from a finding that it, rather than the Plaintiff Motor Vehicle Accident Claims Fund, was responsible for paying accident benefits to its Insured.  Its Insured was the only survivor of a car accident that took the life of the other three occupants.  Progressive was the insurer for the driver of the vehicle.  At the time of the accident, Progressive had cancelled the policy due to an error by the driver’s bank in forwarding payment.  The Motor Vehicle Accident Claims Fund agreed to pay accident benefits to the Insured on a without prejudice basis, pending determination of ultimate responsibility.

The Trial Judge found that the Insurer did not have a valid reason for terminating the driver’s policy and therefore, that the policy remained in force.  The Insurer appealed on the basis that the Fund was obliged to proceed by way of arbitration under the provisions of the Disputes Between Insurers Regulation rather than via court action for restitution.  The Insurer further submitted that even if the action was validly brought, the Fund had failed to comply with the notice provisions of the Regulation.

The Ontario Court of Appeal dismissed the appeal.  It found that the Superior Court had jurisdiction over the Fund’s claim.  The Court found that a common law action for restitution was the only means by which the merits of the Parties’ dispute could be settled.  The Court found that neither party instituted the arbitration process to resolve the dispute.  Once the deadline for arbitration had passed, a lawsuit for restitution was the only means by which the dispute could be determined.

This case was originally summarized by Cameron B. Elder and originally edited by David Pilley.

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