The Ontario government announced last Friday that it was suspending limitation periods while the province was under a state of emergency because of COVID-19. This will have a major impact on loss transfer and priority disputes.
Loss Transfer Limitation Periods
In Markel Insurance Company of Canada v. ING Insurance Company of Canada, the Ontario Court of Appeal held, pursuant to the Limitations Act, 2002, that loss transfer matters are subject to a two-year rolling limitation period. This means that each loss transfer request for indemnification starts a two-year clock to recover the indemnification amount in the request. All clocks stop ticking when the insurer initiates arbitration.
Priority Dispute Limitation Periods
Priority disputes are governed by O. Reg 283/95. The Regulation contains several deadlines/limitation periods (emphasis mine):
3. (1) No insurer may dispute its obligation to pay benefits under section 268 of the Act unless it gives written notice within 90 days of receipt of a completed application for benefits to every insurer who it claims is required to pay under that section.
5. (1) An insured person who receives a notice under section 4 shall advise the insurer paying benefits in writing within 14 days whether he or she objects to the transfer of the claim to the insurers referred to in the notice.
(2) If the insured person does not advise the insurer within 14 days that he or she objects to the transfer of the claim, the insured person is not entitled to object to any subsequent agreement or decision to transfer the claim to the insurers referred to in the notice. O. Reg. 283/95, s. 5 (2).
(3) Subject to subsection 7 (5), an insured person who has given notice of an objection is entitled to participate as a party in any subsequent proceeding to settle the dispute and no agreement between insurers as to which insurer should pay the claim is binding unless the insured person consents to the agreement or 14 days have passed since the insured person was notified in writing of an agreement and the insured person has not initiated an arbitration under the Arbitration Act, 1991.d)
7. (3) The arbitration may be initiated by an insurer or by the insured person no later than one year after the day the insurer paying benefits first gives notice under section 3.
8. (2) The following rules apply with respect to an arbitration of a dispute relating to an accident that occurs on or after September 1, 2010:
1. If an insurer to whom a notice to initiate arbitration is delivered does not respond to the notice within 30 days, the insurer is deemed to have accepted the jurisdiction of the arbitrator proposed in the notice.
2. A pre-arbitration hearing must be scheduled and take place no later than 120 days after the appointment of the arbitrator.
3. Subject to paragraph 4, once a date for the arbitration is scheduled, the arbitration must be conducted on that day.
4. The arbitrator may grant an adjournment on such terms as the arbitrator considers appropriate, but only if there is cogent and compelling evidence of the reasons why the hearing cannot proceed on the scheduled day.
5. Unless consented to by all parties, the hearing of the arbitration must be completed within two years after the commencement of the arbitration. O. Reg. 38/10, s. 9.
Ontario Regulation 73/20 has “stopped the clocks” in Ontario as of March 16, 2020:
Whereas an emergency has been declared pursuant to Order in Council 518/2020 (Ontario Regulation 50/20) on March 17, 2020 at 7:30 a.m. Toronto time pursuant to section 7.0.1 of the Emergency Management and Civil Protection Act (the “Act”);
And Whereas the criteria set out in subsection 7.1 (2) of the Act have been satisfied;
Now Therefore, an Order is made pursuant to subsection 7.1 (2) of the Act, the terms of which Order are the following:
- Any provision of any statute, regulation, rule, by-law or order of the Government of Ontario establishing any limitation period shall be suspended for the duration of the emergency, and the suspension shall be retroactive to Monday, March 16, 2020.
- Any provision of any statute, regulation, rule, by-law or order of the Government of Ontario establishing any period of time within which any step must be taken in any proceeding in Ontario, including any intended proceeding, shall, subject to the. discretion of the court, tribunal or other decision-maker responsible for the proceeding, be suspended for the duration of the emergency, and the suspension shall be retroactive to Monday, March 16, 2020.
The duration of this Order is subject to any renewal required under subsection 7.1 (4) and, if applicable, subsection 7.1 (5) of the Act.
What does this Mean?
Given that this Order was released last week, and given that it is unprecedented, the following discussion is based on my review and impressions as of today. This is not legal advice and I reserve the right to be completely wrong!
Paragraph 1 of the Order applies to limitation periods. Note how the Order suspends the “provision” establishing a limitation period and not the actual limitation period. This likely means that any limitation clock that was ticking before March 16, 2020 stopped ticking on that date. Presumably, when the Order is lifted and all of the affected provisions are no longer suspended, all clocks will start to tick again. But how would this work in practice?
For example, suppose that your clock showed on March 16 that you had 30 days left until your limitation period expired. In practice, I predict that your clock will be frozen at “30 days” until the Order is lifted. Once the Order is lifted, your clock will start ticking again and 30 days will become 29 days, 28 days, etc.
Paragraph 2 applies to “timelines” in any proceedings (including courts and tribunals) in Ontario. These timelines are also suspended – but the suspension is subject to the discretion of the court, tribunal, or decision-maker responsible for the proceeding. The example above likely applies to procedural timelines too (clocks resume ticking when the Order is lifted), although it appears the judge/tribunal could start the procedural clock at their discretion.
The Order does not include any transitional language as to how matters will be handled when the Order is lifted. This might cause some confusion. For instance, if a party had only one day left on their clock as of March 16, it might be unfair to them to be faced with a limitation expiry as soon as the Order is lifted. They might miss the lifting Order altogether. Therefore, I can foresee a future Order with some protocols for the transition back to a world where clocks tick once again.
Pursuant to paragraph 1 of the Order, if you are pursuing loss transfer, it means that the limitation clock has stopped on any loss transfer requests for indemnification that you have sent less than two years ago. For example, if your limitation period would otherwise expire on April 1, 2020, it won’t if the emergency Order is still in effect.
It also means that sending a loss transfer request for indemnification today does not start a two-year clock until the emergency Order is lifted.
As noted above, priority disputes are subject to several limitation periods and procedural timelines. The manner in which these operate during the emergency will be very interesting (in an insurance sort of way).
- If you received a completed application for accident benefits (OCF-1) on or after March 16, 2020, the 90-day notice deadline under section 3 of O. Reg 283/95 is suspended.
I assume this means, in practice, that you would still have 90 days to give a priority dispute notice when the Order is lifted. For example, if you received an OCF-1 on March 23, 2020 and the Order is lifted effective May 1, 2020, your 90 days would start on May 1, 2020.
- If you received a completed OCF-1 before March 16, 2020 and you were still within the 90-day window to give notice, the clock stopped on whatever day you were on within the 90-day window.
I assume this means that if March 16 was your Day 50 of 90, and the Order was lifted, effective May 1, 2020, you would have 40 days from May 1 to give your notice.
- The 14-day window allowing a claimant to object to a file transfer under section 5 is suspended.
This likely means that if a claimant received a Notice to Applicant of Dispute Between Insurers form before March 16, 2020, they will have whatever amount of days were left to object once the Order is lifted. Any claimant that receives a Notice after March 16 will have 14 days to object once the Order is lifted.
- The one-year limitation for initiating arbitration under section 7 is suspended.
This likely means that if a section 3 notice was given before March 16, 2020, the limitation clock stopped as of March 16. For example, if on March 16, 2020 the insurer had 30 days to initiate arbitration, they will likely still have 30 days to do so once the Order is lifted.
Where a section 3 notice is given on or after March 16, 2020, the insurer will likely have a full year to initiate arbitration once the Order is lifted.
- The 30-day window to object to a proposed arbitrator under section 8 is likely suspended
This isn’t a limitation period per se but an insurer that missed the 30-day window to respond to an arbitration notice might have a reasonable argument that the Order applied to suspend the 30-day window. It would make sense considering insurers may not be able to respond as quickly to arbitration notices in this climate.
- Other procedural deadlines under section 8 are suspended, subject to the arbitrator’s discretion
The arbitrator will be able to decide how to deal with the remaining procedural timelines under section 8.
What About Appeals?
Appeals from loss transfer and priority dispute arbitrations are heard at the Ontario Superior Court. Section 47 of the Arbitration Act, 1991 prescribes a 30-day limit for bringing appeals:
47 (1) An appeal of an award or an application to set aside an award shall be commenced within thirty days after the appellant or applicant receives the award, correction, explanation, change or statement of reasons on which the appeal or application is based.
Paragraph 2 of the Order likely applies to this provision. If you received an arbitration decision before March 16, 2020, your 30-day clock to appeal stopped on March 16 and you would likely have your remaining days available when the Order is lifted. If you received a decision on or after March 16, you would likely have 30 days to appeal once the Order is lifted.
However, if your Arbitration Agreement specifies a 30-day deadline to appeal, you might be bound by that agreement, which may not fall under the scope of the Order – I reserve my right to argue otherwise in future.
Just because time is frozen does not mean we should rest on our laurels. I strongly recommend that you take all necessary steps (while social distancing of course) to satisfy your limitation deadlines while the Order is in effect. The only thing better than a frozen clock, is a clock that has ticked its last tock before the suspension Order stops.
It is vitally important to keep track of your limitation period dates in light of the suspension. If you have a pending limitation date, you should highlight the remaining number of days, weeks, months, or years as of March 16, 2020 and revisit those numbers as soon as the Order is lifted. Better yet, treat all matters as though the suspension was not in place and maintain efforts to satisfy your deadlines as in the ordinary course.
Daniel loves coverage. Want to know if the “your work” exclusion applies? Ask Dan. Want to know if a “house” is a “home”? Ask Dan. Want to know the best toppings to cover a pizza? Don’t ask Dan: He can’t eat gluten. But he does digest various insurance policy definitions, wordings, and exclusions without any heartburn.