The doctrine of laches is not available to a second party insurer in defence of a loss transfer claim for no fault statutory accident benefits under s.275 of the Insurance Act, R.S.O. 1990, c. I.8.
Insurance law – Automobile insurance – Statutory Accident Benefits – Loss transfer provision – Actions – Equitable defences – Limitation of actions – Laches and acquiescence
Intact Insurance Co. of Canada v. Lombard General Insurance Co. of Canada,  O.J. No. 6954, 2015 ONCA 764, Ontario Court of Appeal, November 12, 2015, Hoy A.C.J.O., van Rensburg and Benotto JJ.A.
Appeal by two insurers from conflicting decisions dealing with the application of the equitable doctrine of laches to loss-transfer claims made under s.275 of the Insurance Act, R.S.O. 1990, c. I.8 (the “Act”). Under s.268 of the Act, first party insurers are required to pay no-fault statutory accident benefits to their insured when the insured is injured in a motor vehicle accident. The legislature introduced s.275 as a means to transfer the high share of costs borne by first party insurers of lighter vehicles to second party insurers of heavy commercial vehicles, recognizing that the driver of the lighter vehicle was more likely to suffer serious injuries when involved in an accident with a heavy commercial vehicle. Disputes between insurers in regards to indemnification are to be resolved by arbitration.
The Court of Appeal had previously held that the first party insurer discovers its claim under the Limitations Act, 2002, S.O. 2002, c.24 (the “Act”), the day after making a request for indemnification under s.275. In the two underlying cases before the court, the first party insurers had requested indemnification 4.5 and 11 years after the accidents occurred. Both second party insurers attempted to rely on the doctrine of laches as a defence to the loss transfer, with conflicting results on appeal of the arbitrator’s decisions.
The court concluded that the doctrine of laches was not available to a second party insurer in defence of a claim under s.275 of the Act. In reaching its conclusion, the court determined that a claim under s.275 was a claim for legal relief, whereas laches had been historically restricted to claims for equitable relief. As well, unlike other limitations statutes, the provision preserving the use of equitable defences had been removed from the Act. Finally, the Act was intended to represent a comprehensive approach to the limitation of actions, and permitting a defendant to invoke the doctrine of laches because a legal claim has an equitable flavour would be inconsistent with the comprehensive approach.
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