Where one insurer is liable to indemnify another for statutory accident benefits, the statutory scheme creates a new and actionable statutory cause of action each time a proper request for indemnification is made and goes unsatisfied. The insurer was liable to satisfy requests made within two years of the notice to arbitrate and any requests made after.

[2014] O.J. No. 4166

2014 ONSC 4763

Ontario Superior Court of Justice

T.R. Lederer J.

September 2, 2014

Economical’s insured was involved in a motor vehicle accident with Zurich’s insured. Zurich’s insured was at fault for the accident, and Economical sought indemnification from Zurich. Economical made three requests for indemnification between January 30, 2006 and April 17, 2008. No monies were received from Zurich, and Economical served a notice to arbitrate on November 29, 2009. Economical settled its insured’s claim on December 8, 2011, and sent a final request to Zurich on January 24, 2012.

At the arbitration, Zurich argued that Economical’s request for indemnification was barred by the expiry of the limitation period, having been served more than two years from the first request. The Arbitrator disagreed and, relying on the logical path of reasoning stemming from a decision of the Ontario Court of Appeal, stated that a complete and legally valid claim is enforceable each time a request for indemnification is made and not satisfied. According to the arbitrator, this meant that each request for indemnification invoked an independent or separate limitation period, something the arbitrator referred to as a rolling limitation period for the purposes of commencing arbitration. Zurich appealed.

The court upheld the arbitrator’s decision. While the first request was out of time, this did not preclude Economical from seeking indemnity for those requests made within two years of the notice to arbitrate and any after. Unlike a claim in negligence, the statutory scheme was such that each time a proper request was made and not satisfied, a new and actionable statutory cause of action arose. The court analogized the situation to a claim in contract for the failure to pay rent. Finally, the court was critical of Zurich for taking what it called an unnecessary and unhelpful overly-technical position.