Court Agrees that Limitation Period for Pre-2004 Loss Transfer Claim is Six Years

In Lloyd’s Underwriters v. The Dominion of Canada General Insurance Company, Mr. Justice George Strathy upheld a ruling by arbitrator Bruce Robinson, who had determined that the limitation period for a “loss transfer” claim under s. 275 of the Insurance Act was six years. (Normally, insurers cannot seek reimbursement for no-fault benefits. But section 275 allows such claims in certain types of cases: those in which the vehicles that they insure are disproportionately likely to cause injury (heavy commercial vehicles) or those whose occupants are especially vulnerable to injury (motorcycles).)

This case arose prior to the enactment of the Limitations Act, 2002, which took effect on January 1, 2004. That statute established a two-year limitation period that applies to most types of cases. At the time of the events giving rise to the loss transfer claim in the present case though, there was a two-year limitation period under s. 206(1) of the Highway Traffic Act, where the claim was one “for the recovery of damages occasioned by a motor vehicle”.

The other limitation period that might have applied was the six-year period provided for by s. 45(1)(g) of the former Limitations Act for an “action upon the case”.

The issue was of considerable importance in this case. As Justice Strathy noted, the limitation period for loss transfer claims is a “rolling” one, such that a new limitation period arises with each payment made by the first party insurer. If the two-year limitaiton period were found to apply, the first party insurer could only pursue a claim for benefits totalling $9,795.22. However, if the limitation period were determined to be six years, the claim would total $194,203.61.

In this case, arbitrator Bruce Robinson had held that the longer limitation period applied. On appeal to Justice Strathy, His Honour reviewed other arbitral decisions and concluded that a loss transfer claim is not one “for the recovery of damages occasioned by a motor vehicle”, as required by the HTA limitation period. Rather, it is a claim for indemnity, which, he said, is not the same thing. Accordingly, he agreed with Mr. Robinson, that the six-year limitation period governed.

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