



COURT OF APPEAL FOR ONTARIO

CITATION: Intact
    Insurance Company of Canada v. Lombard General Insurance Company of Canada,
    2015 ONCA 764

DATE: 20151112

DOCKET: C58290 and C59127

Hoy A.C.J.O., van Rensburg and Benotto JJ.A.

BETWEEN

Intact Insurance Company of Canada

Applicant
    (Respondent)

and

Lombard General Insurance Company of Canada

Respondent
    (Appellant)

AND BETWEEN

Zurich Insurance Company

Respondent (Respondent)

and

TD General Insurance Company

Applicant (Appellant)

Greg Bailey, for the appellant, Lombard General
    Insurance Company of Canada

Joseph Lin and Matthew Stepura, for the respondent,
    Intact Insurance Company of Canada

William G. Woodward and I. Caley Ross, for the appellant,
    TD General Insurance Company

Eric K. Grossman, for the respondent, Zurich Insurance
    Company

Heard: June 22, 2015

On appeal from the order of Justice Victoria R.
    Chiappetta of the Superior Court of Justice dated September 30, 2013, with
    reasons reported at 2013 ONSC 5878, and on appeal from the order of Justice Sidney
    N. Lederman of the Superior Court of Justice dated May 27, 2014, with reasons
    reported at 2014 ONSC 3191.

Hoy A.C.J.O.:


I

OVERVIEW

[1]

On these appeals, we are asked to determine whether the equitable
    doctrine of laches can defeat loss-transfer claims made under s. 275 of the
Insurance
    Act
, R.S.O. 1990, c. I.8 (the Act), and, if so, whether that doctrine
    should defeat the loss-transfer claims in the two instances before us.

[2]

Under s. 268 of the Act, an insurer  a first party insurer  must pay
    statutory accident benefits to its insured when the insured is injured in a
    motor vehicle accident, regardless of fault. The legislature recognized that
    this scheme would result in first party insurers of lighter vehicles bearing a high
    share of the cost of statutory accident benefits, as their drivers are more
    likely to suffer serious personal injuries than the drivers of heavier
    vehicles.
[1]
Section 275 provides a means to shift those costs from the first party insurer
    to another insurer. It permits a first party insurer of a vehicle other than a
    heavy commercial vehicle to claim indemnification for statutory accident
    benefits from the insurer of a heavy commercial vehicle involved in the
    accident  the "second party insurer.
[2]
Indemnification or loss-transfer with respect to this limited class of accidents
    is to be made based on the respective degree of fault of each insurers insured
    as determined under the
Fault Determination Rules
, R.R.O. 1990, Reg.
    668
.
If the insurers are unable to agree with respect to
    indemnification, the dispute is to be resolved by arbitration.

[3]

This court determined that a first party insurer discovers its claim
    under the
Limitations Act, 2002
, S.O. 2002, c. 24, Sched. B the day
    after the first party insurer makes a request to the second party insurer for
    indemnification under s. 275:
Markel Insurance Co. of Canada v. ING
    Insurance Co. of Canada
,

2012 ONCA 218, 109 O.R. (3d) 652, at paras. 26-27. Thus, the first party
    insurer must initiate arbitration within two years and a day of requesting
    indemnification.
[3]

[4]

The Act imposes strict deadlines on insurers, including a 90-day notice
    period for disputes between insurers as to which insurer is required to respond
    to an accident benefits claim:
Disputes Between Insurers
, O. Reg.
    283/95, s. 3. However, s. 275 does not specify when a first party insurer must
    make its indemnification request. It provides that the first party insurers
    entitlement to indemnification is subject to such terms, conditions,
    provisions, exclusions and limits as may be prescribed, but as of yet no
    condition as to when the first party insurer must make an indemnification
    request has been prescribed. And while the Financial Services Commission of
    Ontario, the licensing and regulating body for insurers in Ontario, issued F.S.C.O.
    Bulletin No. A-11/94, which sets out that the first party insurer should notify
    the second insurer promptly, its bulletin does not create a condition of
    indemnification.

[5]

In the two instances before us, the first party insurers requested
    indemnification  and thereby triggered the running of the two-year limitation
    period  a number of years after the underlying accident occurred. Arbitration
    ensued. As a preliminary issue, each arbitrator determined whether the first
    party insurers delay in making its loss-transfer claim precluded recovery.
    Each losing insurer appealed, and the Superior Court judges hearing the appeals
    arrived at conflicting results. One held that the doctrine of laches can have
    no application to a loss-transfer claim under s. 275 of the
Insurance Act:
    Intact Insurance Co. of Canada v. Lombard General Insurance Co. of Canada
,

2013 ONSC 5878, 26 C.C.L.I. (5th) 158. The other held both that it could,
    and that it defeated the first party insurers claim for loss-transfer:
Zurich
    Insurance Co. v. TD General Insurance Co.
, 2014 ONSC 3191, 120 O.R. (3d)
    278.

[6]

I conclude that the doctrine of laches is not available to a second
    party insurer in defence of a claim under s. 275 of the Act and that, even if
    it were, it would not have defeated the first party insurers claims for
    indemnification in the instances before the court.

[7]

Below, I outline the doctrine of laches, the reasons below and the first
    and second party insurers arguments as to the availability of the doctrine of
    laches as a defence to a loss-transfer claim. I then provide my analysis of
    that question and explain why, even if the doctrine were available, the second
    party insurers could not have successfully relied on it in the two instances
    before the court.


II

THE EQUITABLE DEFENCE OF LACHES

[8]

Historically, statutes of limitations did not apply to equitable claims:
M.(K.) v. M.(H.)
,
[1992] 3 S.C.R. 6, at p. 76. As a result, the
    courts of equity developed their own limitation defences to delayed equitable
    claims, the most important of which was the defence of laches.

[9]

In
M.(K.)
,
the Supreme Court discussed the equitable doctrine
    of laches in defence to a claim in equity. At pp. 77-78, the court stated that
    mere delay is insufficient to trigger laches. To trigger a laches defence, the
    defendant must establish one of two things. The delay of the plaintiff must [constitute]
    acquiescence or [result] in circumstances that make the prosecution of the action
    unreasonable.

[10]

In
Manitoba Metis Federation Inc. v. Canada (Attorney General)
, 2013 SCC 14,
[2013] 1 S.C.R. 623, at
    paras. 145-46, McLachlin C.J.C. and Karakatsanis J., writing for the majority,
    citing
M.(K.)
,
summarized the doctrine as follows:

The equitable doctrine of laches requires a claimant in equity
    to prosecute his claim without undue delay. It does not fix a specific limit,
    but considers the circumstances of each case. In determining whether there has
    been delay amounting to laches, the main considerations are (1) acquiescence on
    the claimants part; and (2) any change of position that has occurred on the
    defendants part that arose from reasonable reliance on the claimants
    acceptance of the
status quo
.

As La Forest J. put it in
M.(K.)
, at pp. 76-77, citing
Lindsay Petroleum Co. v. Hurd
(1874), L.R. 5 P.C. 221, at pp. 239-40:

Two circumstances, always important in such cases, are, the
    length of the delay and the nature of the acts done during the interval, which
    might affect either party and cause a balance of justice or injustice in taking
    the one course or the other, so far as relates to the remedy.

[11]

This court in
Perry, Farley &
    Onyschuk v. Outerbridge Management Ltd.
(2001)
, 54 O.R. (3d) 131 (C.A.)  a decision central to the second
    party insurers arguments on this appeal  described, at para. 36, the second
    branch of
M.(K.)
: A party relying on the defence must show a combination
    of delay and prejudice.

[12]

In
Perry
, the limitations act, to the extent it applied at all, did not
    bar the creditors claim under the
Fraudulent Conveyances Act
, R.S.O.
    1990, c. F.29. The court agreed with the motions judge that the doctrine of
    laches could apply to an action brought by a creditor pursuant to the
Fraudulent
    Conveyances Act

to attack the conveyance of assets as void. The
    doctrine was not unavailable merely because the claim arose under a statute. Sharpe
    J.A., writing for the court, explained at para. 35:

The elements of a claim to set aside a fraudulent conveyance have
    a distinctively equitable flavour and the argument is inconsistent with the
    modern approach to the significance of the intersection between law and equity.


III

THE DECISIONS BELOW

The Lombard Appeal

[13]

In
    the first matter under appeal, Intact Insurance Company of Canada sought
    indemnity from Lombard General Insurance Company of Canada approximately four
    years and seven months after a multi-vehicle accident involving a pickup truck
    insured by Intact and a tractor trailer insured by Lombard.

[14]

When
    the matter proceeded to arbitration, Lombard raised the defence of laches as a
    preliminary matter. The arbitrator, Bruce R. Robinson, concluded, based on
Perry
,
that the doctrine of laches could be applied to loss-transfer claims under s.
    275. He then determined that Intacts failure to make a request for
    indemnification for four years and three months after it was aware of its
    ability to seek loss-transfer from Lombard amounted to acquiescence. Further,
    he concluded that Intacts unexplained delay gave rise to a presumption of
    prejudice; the onus was on Intact to explain that prejudice and it had not done
    so. Therefore, Intact was precluded from proceeding with its loss-transfer
    claim.

[15]

On
    Intacts appeal of Arbitrator Robinsons award to the Superior Court of
    Justice, Chiappetta J. concluded that the laches doctrine does not apply to
    loss-transfer claims under s. 275. She reasoned, at para. 7, that the right to
    loss-transfer indemnity is purely statutory and that, unlike the statutory
    provision considered in

Perry
, it does not have a
    distinctively equitable flavour. She wrote, at para. 10, that [i]t is  not
    appropriate to purposely re-characterize the equitable doctrine of laches in an
    effort to fill a perceived legislative omission, or to augment a statutory
    limitation period.

[16]

She
    further concluded that, even if the doctrine of laches could apply, Arbitrator
    Robinson had erred in concluding that it was made out in this case. At para.
    18, she held that acquiescence requires a plaintiff to fail to react to the
    defendants conduct. Here, there was no evidence that Lombard attempted to deny
    Intact any of its rights: Intact cannot acquiesce to conduct that never
    occurred. And, she wrote at para. 24, a presumption of prejudice arising out
    of delay has no place in the context of a positive laches defence. Lombard was
    required to demonstrate actual prejudice and did not.

[17]

Lombard
    appeals the order of Chiappetta J. setting aside the decision of Arbitrator
    Robinson.

The TD Appeal

[18]

In
    the second matter under appeal, TD General Insurance Company sought indemnity
    from Zurich Insurance Company approximately 11 years after an accident
    involving a heavy commercial vehicle insured by Zurich and an automobile
    insured by TD. Over the decade that followed, TD paid statutory accident
    benefits to its insured. Ten years after the accident, a global mediation was
    held to settle TDs insureds tort claim. TDs insureds accident benefits
    claim settled approximately one week later. TD requested indemnification seven
    months later. TD paid the majority of the amounts for which it sought
    indemnification following the settlement.

[19]

Zurich
    moved before Arbitrator Kenneth J. Bialkowski to have TDs claim dismissed on
    the basis of laches.

[20]

Arbitrator
    Bialkowski declared himself bound by the decision of Chiappetta J. in
Intact
,
    and dismissed Zurichs motion. However, he expressed his disagreement with her
    conclusion that laches should never apply:

I am of the view that there may well be circumstances where laches
    ought [to] apply. If crucial documentation, information or witnesses are no
    longer available by reason of the passage of an inordinate amount of time to
    the prejudice of the second party insurer then laches should be available to
    preclude a loss transfer claim.

[21]

He
    concluded that, even if the doctrine of laches could apply in certain cases, it
    would not apply in this instance. Zurich was required to prove presumed
    prejudice or actual prejudice and it had failed to do so. He wrote that Zurich
    had knowledge of the accident and the personal injury claims resulting from the
    accident. It had defended the tort claim brought by TDs insured and would have
    completed a thorough liability investigation to defend that claim. There was no
    indication that their liability investigation documents were no longer in
    existence or that a crucial witness was no longer available.

[22]

Lederman
    J. allowed Zurichs appeal to the Superior Court. He considered
Perry

and found, at para. 22:

[T]hat Ontarios loss transfer regime possesses an equitable
    flavour because it is designed to address unfairness between participants in
    the provinces insurance industry, and that is a sufficient basis to permit the
    application of the doctrine of laches. Alternatively, I find that the fusion of
    law and equity, which has evolved in order to achieve fairness and justice,
    requires a finding that laches can apply in this case.

[23]

He
    also reasoned that, as the doctrine of laches developed because limitation
    periods did not apply to equitable claims and, as post-
Markel
, there
    is no limitation period governing when a first party insurer must request
    indemnification, applying the doctrine of laches in this situation is
    consistent with the purpose of the doctrine.

[24]

Lederman
    J. held, at para. 28, that Arbitrator Bialkowski had not erred in finding that
    Zurich did not suffer prejudice:

There was evidence that Zurich had knowledge of both the
    accident and the personal injury claims brought by TDs insured; there was no
    suggestion that Zurichs liability documentation was no longer available; nor
    that any crucial witness was no longer available. In the circumstances, his
    conclusion as to prejudice was reasonable and the Court should give deference
    to it.

[25]

However,
    the Arbitrator failed to consider whether there was acquiescence in this case.
    Lederman J. reasoned, at para. 45, that
Manitoba Metis
at least
    implied that in some cases, delay might be interpreted as a clear act by the
    plaintiff amounting to acquiescence. At para. 47, he concluded that, in the
    unique circumstances of this case, TDs delay in requesting loss transfer gave
    rise to an inference that it had abandoned or waived its rights to the claim.

[26]

TD
    appeals Lederman J.s order setting aside Arbitrator Bialkowskis award.


IV

THE POSITIONS OF THE PARTIES: CAN LACHES DEFEAT A CLAIM OF A FIRST PARTY
    INSURER UNDER S. 275?

[27]

The
    second party insurers argue that Ontarios loss-transfer regime has an equitable
    flavour and that, in any event, the fusion of law and equity should permit the
    application of laches to prevent injustice.

[28]

They
    submit that

Perry
and Lederman J.s conclusion find further
    support in
N.A.P.E. v. Memorial University of Newfoundland
(1998), 167
    Nfld. & P.E.I.R. 72 (N.L.C.A.) and
ING Halifax v. Royal &
    SunAlliance Insurance Co. of Canada
(2004),
12 C.C.L.I. (4th) 272 (Ont. S.C.).

[29]

Between
    1986 and 1995, no legislative provision in Newfoundland and Labrador stipulated
    the time within which an application to set aside an arbitration award had to
    be brought. At paras. 84 and 85, the court in
N.A.P.E.
, relying on
Lindsay
    Petroleum
,
concluded that laches could be used to fill the
    limitation gap: 
Lindsay Petroleum
speaks generally of utilizing principles
    substantially equitable to fill a limitation gap.

[30]

In
ING
, a first party insurer paid statutory accident benefits to its
    insured then sought and obtained indemnification from the second party insurer
    under s. 275. The insurers subsequently learned that the accident occurred
    while the insured was in the course of employment and therefore was not
    entitled to statutory accident benefits. The second party insurer sought
    reimbursement from the first party insurer, asserting that the first party
    insurer was similarly entitled to reimbursement. E. MacDonald J. held that the
    second party insurer was entitled to rely on the equitable principle of
    restitution to seek repayment of amounts paid to the first party insurer under
    s. 275. This was a claim in equity as opposed to a claim under s. 275.
    Nevertheless, the second party insurers rely on this case as authority for the
    proposition that equity is not foreign to loss-transfer disputes.

[31]

The
    first party insurers, on the other hand, say laches cannot apply to a claim
    under s. 275 of the Act.

[32]

They
    say a loss-transfer claim is a purely statutory claim and does not have the
    distinctively equitable flavour of the action under the
Fraudulent
    Conveyances Act
considered in
Perry
. Moreover, they argue, laches
    does not apply when  as in these cases  a claim is subject to and made within
    a statutory limitation period:
Paul v. 1433295 Ontario Ltd.
, 2013 ONSC
    7002, 120 O.R. (3d) 339, at para. 43; G. Mew,
The Law of Limitations
, 2nd
    ed. (Markham: LexisNexis, 2004), at p. 38.


V

ANALYSIS: CAN LACHES DEFEAT A CLAIM OF A FIRST PARTY INSURER UNDER S.
    275?

[33]

I
    agree with Chiappetta J. that the defence of laches cannot be invoked in
    response to a loss-transfer claim under s. 275. Such a claim is a claim for
    legal relief. In my view, given the historic restriction of laches to claims
    for equitable relief, the removal of the provision preserving the use of
    equitable defences from the
Limitations Act, 2002
and the
    comprehensive nature of the new Ontario limitations scheme, the defence of
    laches cannot be raised to defeat claims for legal relief that are subject to
    the unexpired basic limitation period under the
Limitations Act, 2002
,
even those with an equitable flavour. Accordingly, even if a second party
    insurers right to indemnity under s. 275 might be argued to have an equitable
    flavour because its objective is to re-allocate the cost of statutory accident
    benefits in a more equitable fashion, a second party insurer cannot invoke the
    doctrine of laches as a defence.

Loss Transfer is Not an Equitable Claim or a Claim for
    Equitable Relief

[34]

The
    remedy of indemnification is a direct right to reimbursement:
Addison
    & Leyen Ltd. v. Fraser Milner Casgrain LLP
, 2014 ABCA 230, 577 A.R. 99,
    at para. 22. A party may have a legal claim for indemnity that arises as a
    result of a contract or statute. In the absence of a legal right to indemnity,
    a party may, in a narrow set of circumstances, be able to seek equitable
    indemnification (also referred to as implied indemnity). In
R. v. Imperial
    Tobacco Canada Ltd.
, 2011 SCC 42, [2011] 3 S.C.R. 45, at para. 147, the
    Supreme Court of Canada recently explained:

Equitable indemnity is a narrow doctrine, confined to situations
    of an express or implied understanding that a principal will indemnify its
    agent for acting on the directions given. As stated in
Parmley v. Parmley
,
    [1945] S.C.R. 635, claims of equitable indemnity proceed upon the notion of a
    request which one person makes under circumstances from which the law implies
    that both parties understand that the person who acts upon the request is to be
    indemnified if he does so. [Citations omitted.]

[35]

A
    loss-transfer claim is clearly a statutorily-provided legal right to indemnity
    and not an equitable claim or a claim for equitable relief: see
Markel
,
    at paras. 20 and 26.

Historic Restriction of Laches to Claims for Equitable
    Relief where Limitations Statute Did not Apply

[36]

Historically,
    the doctrine of laches was restricted to claims for equitable relief that were
    not subject to a statutory limitation period. Several of the authorities relied
    on by the second party insurers in this case were decided when the Ontario limitations
    statute did not apply to the equitable claims at issue. Accordingly, these
    cases do not assist in determining whether laches can defeat a legal claim for
    indemnity that is subject to the basic limitation period prescribed under the
Limitations
    Act, 2002
.

[37]

As
    the Supreme Court explained in
M.(K.)
, the courts of equity developed
    their own limitation defences to delayed equitable claims because historically
    statutes of limitations did not apply to equitable claims. In that case, the
    court concluded that the defendant could raise the defence of laches to defeat
    the plaintiffs claim for breach of fiduciary duty.
[4]
At the time, the old
Limitations Act
, R.S.O. 1990, c. L.15 was in
    effect. This act applied only to specified causes of action and not to civil
    actions in general. No relevant limitation period under that Act would have
    applied to the fiduciary duty claim.
The
    limitation periods prescribed under the
Limitations Act, 2002
,
however, apply to all claims  whether
    legal or equitable, arising under statute or common law  unless they are
    specifically exempted from its application. It is undisputed that the
Limitations
    Act, 2002

and the basic limitation period prescribed thereunder apply
    to a claim for indemnification under s. 275 of the Act.

[38]

In
N.A.P.E.
,
there was
    similarly no applicable statutory limitation period. The Newfoundland Court of
    Appeal held that laches could fill a legislative gap.

ING
, the other case relied on by the second party
    insurers,
involved a claim for restitution  an equitable remedy 
    and simply recognized that such a claim could be advanced. There was no
    question of delay or the application of the equitable defence of laches.

Absence of a Laches-Saving Provision in the Limitations
    Act, 2002

[39]

Unlike
    the
Limitations Act, 2002
, s. 2 of the old
Limitations Act
specifically
    preserved entitlement to equitable relief. It provided that nothing in that act
    interfered with any rule of equity in refusing relief on the ground of
    acquiescence, or otherwise, to any person whose right to bring an action is not
    barred by virtue of this Act. (For convenience only, I refer in the following
    paragraphs to this section as the laches-saving provision.) The court in
M.(K.)
,
    at p. 70, commented with respect to that section:

This section makes clear that the Act does not exhaust the
    defences available to a defendant because of the passage of time. Thus, certain
    actions expressly made subject to the
Limitations Act
may not yet be
    out of time under the terms of that statute, but may be precluded by equitable
    defences that apply notwithstanding the terms of the Act. The section also
    gives rise to the inference that there is a category of equitable claims not
    subject to the Act at all, and that the equitable defences survive in those
    cases.

[40]

While
    s. 2 was contained in Part I of the old
Limitations Act
, which dealt with
    limitation periods in respect of real property claims, the Supreme Court
    interpreted it as applying generally to all claims under that act. See also:
Susin v. Genstar Development Co.

(2001), 14 C.L.R. (3d) 292 (Ont. S.C.), affd
    (2003), 27 C.L.R. (3d) 161 (Ont. C.A.), at paras. 21-23.

[41]

In
Perry
, which is the cornerstone of the second party insurers
    arguments, the old
Limitations Act
 with its broad laches-saving
    provision in s. 2  was applicable. Nolan J. noted in
Paul
, at para.
    44, that the decision not to include the saving provision from the old
Limitations
    Act
in the
Limitations Act, 2002
could be interpreted as an
    implication by the legislature that, where limitations legislation is
    applicable to claims in equity, equitable remedies are not to be used.

[42]

While
    I refrain from commenting on the availability of equitable remedies generally,
    I agree with the view that the absence of a laches-saving provision from the
Limitations
    Act, 2002
suggests that the equitable defence of laches is not available to
    bar a claim that is brought within the basic limitation period prescribed under
    the
Limitations Act, 2002
. While the mere fact that the laches-saving
    provision was left out of the new Act may not necessarily give rise to a
    presumption that the legislature intended to change the law, the removal takes
    on additional significance when viewed in context. A number of factors support
    the conclusion that the removal of the laches-saving provision in this case was
    intentional.

(a) Consideration of the
    Impact of a New Limitations Scheme on Laches

[43]

The
    need to consider the impact of any legislative changes on the doctrine of laches
    was highlighted in the review of limitations law that preceded the enactment of
    the
Limitations Act, 2002
. However, the laches-saving provision from
    the 1990
Limitations Act

was not included in the
Limitations
    Act, 2002
in the face of decades of consideration.

[44]

In its seminal 1969 report entitled Report on Limitation of Actions
    (the 1969 Report), the Ontario Law Reform Commission recommended the adoption
    of a catch-all provision that would make all claims subject to the new Ontario
    limitations scheme. The Commission cautioned, at p. 22, that when reform of
    limitation laws is being undertaken, careful consideration should be given to
    the role that  laches should play and the consequences that changes would have
    on [this] equitable [defence].

[45]

The
    Commission distinguished between the defence of acquiescence (which it
    described as conduct by which a person has shown himself indifferent to the
    violation of his rights and as something which may arise without delay) and
    laches, which may exist even without any element of acquiescence being present.
    The Commission noted that it seems that acquiescence will always be a defence
    and it makes no difference whether the Act expressly governs the matter or
    not. Laches, on the other hand, could operate as a limitation period by
    analogy, when no statutory limitation period applies. The Commission contemplated
    that the scope of laches would be narrowed once the new act governed all claims
    and would not be applicable to equitable claims generally. It wrote, at pp. 22-23:

Where the Act expressly applies to an equitable claim, delay
    short of the full period is clearly irrelevant.



Once all actions are expressly governed, there will be no need
    for the operation of the doctrine of laches except insofar as the granting of
    certain equitable remedies in aid of legal rights is concerned. Claims for specific
    performance or rescission of a contract, for example, should remain subject to
    the defence of laches. Acquiescence, on the other hand, should continue to be a
    valid defence to the full extent that it now is.

[46]

In
    a 1977 discussion paper, the Ministry of the Attorney General proposed draft
    legislation reflecting this recommendation: it contained a catch-all provision,
    capturing any residual claims not covered by a specified limitation period, and
    preserved the doctrine of laches only in the case of equitable relief claimed
    in aid of a legal right: Ministry of the Attorney General,
Discussion Paper
    on Proposed Limitations Act
(Toronto: Ministry of the Attorney General,
    1977), at pp. 6 and 8.

[47]

In
    1983, the Ontario legislature introduced Bill 160,
An Act to revise the
    Limitations Act
, 3rd Sess, 32nd Leg, Ontario, which would apply generally
    to all claims. Subsection 2(1) of the Bill contained a broader laches-saving
    provision than that recommended by the 1969 Report and 1977 discussion paper,
    explicitly preserving the use of equitable defences to defeat a claim on the
    grounds of acquiescence or undue delay.

[48]

In
    December 1989, the Ministry of the Attorney General established a Limitations
    Act Consultation Group to conduct a comprehensive review of the Ontario
    limitations regime and make recommendations for reform. While it did not
    specifically mention equitable doctrines or the role they should play in the
    new limitations scheme in its subsequent report (the March 1991 Report), the Consultation
    Group referred to the 1969 Report, the 1977 draft legislation and Bill 160 in
    discussing the ongoing attempts to modernize Ontarios limitations scheme and
    endorsed many of the recommendations contained therein: Limitations Act
    Consultation Group,
Recommendations for a New Limitations Act
(Toronto: Ministry of the Attorney General, 1991), at p. 1. The 1969 Report, the
    1977 draft legislation and Bill 160 continued to remain at the forefront as new
    legislation was considered. Despite over three decades of considering the role
    of laches in Ontarios limitations regime, the legislature ultimately did not
    include a laches-saving provision in the
Limitations Act, 2002
.

(b) Laches-Saving
    Provision in the Real Property Limitations Act

[49]

While
    the legislature did not include a laches-saving provision in the
Limitations
    Act, 2002
, it preserved s. 2 of the old
Limitations Act
in the
Real
    Property Limitations Act
, R.S.O. 1990, c. L.15.

[50]

In
    its March 1991 Report, the Consultation Group had recommended further review of
    Part I of the old
Limitations Act
 the provisions in respect of
    actions affecting real property (primarily to recover land or rent or relating
    to charges on land). It also expressed concern that such further review not
    delay the implementation of the balance of the proposed reforms. The
    legislature acted on that recommendation. In 2002, it repealed Parts II and III
    of the old
Limitations Act
,
leaving only the definitions and
    Part I. To reflect this narrowed scope, the old
Limitations Act
was
    renamed the
Real Property Limitations Act
and the
Limitations Act,
    2002
,
which came into effect on January 1, 2004, was enacted to
    deal with limitation periods other than those affecting real property. The fact
    that the legislature extricated Part I of the old
Limitations Act

    including the laches-saving provision in s. 2  and enacted it as
the
Real Property Limitations Act
without
    adding a general laches-saving provision to the
Limitations Act, 2002
might
    suggest that it had always intended that the laches-saving provision apply only
    to real property claims.

(c) Other Common Law
    Provinces Retained a Laches-Saving Provision

[51]

Ontario
    was one of the last provinces to adopt a limitations statute that applies to
    civil actions generally. At the time the
Limitations Act, 2002

was
    enacted, every other common law province where the limitations legislation
    governed all civil actions contained a laches-saving provision, expressly
    preserving the application of equitable doctrines, notwithstanding that the
    applicable limitation period had not expired.
[5]
The drafters of the
Limitations Act, 2002

would have been
    familiar with this legislation and the widespread retention of a laches-saving
    provision in the context of generally applicable limitations statutes. A number
    of these provinces have recently amended their limitations legislation to adopt
    a uniform limitation period applying to all claims, similar to the
Limitations
    Act, 2002
. With the exception of Nova Scotia, these amended acts continue
    to retain a laches-saving provision.
[6]
The absence of such a provision in Ontario is therefore noteworthy.

[52]

The
    legislatures removal of the laches-saving provision overrules any suggestion
    in
Perry
that laches might bar the commencement of a proceeding to
    pursue an unexpired legal claim to which the basic limitation period prescribed
    by the
Limitations Act, 2002
applies. Indeed, even in the presence of
    such a provision, this court has held that [s]o long as the action was
    instituted within the limitation period, the question of laches does not arise:
F.(L.) v. F.(J.R.)
(2001),
144 O.A.C. 372 (C.A.), at para. 6.

Comprehensive Nature of the Limitations Act, 2002

[53]

The
    deletion of the laches-saving provision from the
Limitations Act, 2002

coincided with a major reform of the existing limitations law in Ontario
    and a shift toward a more comprehensive scheme that aims to provide certainty
    and clarity to litigants.

[54]

As
    I note above, the old
Limitations Act
applied only to a closed list of
    enumerated causes of action and not to civil actions in general. Equitable
    causes of action, with few exceptions, were outside of its scope. The
Limitations
    Act, 2002
represents a revised, comprehensive approach to the limitation
    of actions:
Joseph v. Paramount Canadas Wonderland
, 2008 ONCA 469
, 90 O.R. (3d) 401, at para.
    8. In
Joseph
, this court concluded that the common law doctrine of
    special circumstances had no application under the new, comprehensive
Limitations
    Act, 2002
. That doctrine had allowed a court to add or substitute a party
    or to add a cause of action after the expiry of a limitation period where
    special circumstances existed, unless the change would cause prejudice that
    could not be compensated for with either costs or an adjournment. Permitting a
    defendant to invoke the equitable doctrine of laches because a legal claim has
    an equitable flavour would be inconsistent with the comprehensive approach to
    the limitation of actions represented by the
Limitations Act, 2002
.

[55]

Permitting
    a defendant to rely on the defence of laches where the claim is a legal claim
    and subject to and within the basic limitation period prescribed under the
Limitations
    Act, 2002
would also be counter to the purpose of that Act of promoting
    certainty and clarity in the law of limitation periods:
msi Spergel Inc. v.
    I.F. Propco Holdings (Ontario) 36 Ltd.
,
2013 ONCA 550, 117 O.R.
    (3d) 81, at para. 61.

[56]

Given
    the comprehensive approach of, and absence of a laches-saving provision in, the
Limitations Act, 2002
, together with the historic restriction of
    laches to claims for equitable relief, I am satisfied that a second party
    insurer cannot invoke the doctrine of laches as a defence to a first party
    insurers legal claim for indemnity.

Scope of Decision and Impact on Equitable Defences

Generally

[57]

I
    wish to make clear that this decision does not address the availability of
    equitable defences (such as waiver, estoppel and acquiescence) to the extent not
    founded solely on a plaintiffs delay in initiating its claim. Nor do I suggest
    that delay in seeking equitable relief such as an injunction could not be a
    relevant factor in deciding whether such equitable relief should be granted.
    This decision considers whether a defendant seeking legal relief within the
    basic limitation period prescribed under the
Limitations Act, 2002
can
    rely on the delay-based defence of laches.

[58]

In
    coming to my conclusion, I am mindful of the fact that the arbitrators in the
    loss-transfer disputes (
Federation Insurance Co. of Canada v. Kingsway
    General Insurance Co.
,
2010
    CarswellOnt 17903 (Ins. Arb.) (S. Densem), at p. 16, and
ING Insurance Co.
    of Canada v. Markel Insurance Co. of Canada
(4 April 2011), Toronto (Ins. Arb.)
    (L. Samis), at p. 10) that led to this courts decision in
Markel
,
    either assumed or contemplated that the doctrine of laches could be available
    to a second party insurer where the first party insurer had been exceptionally
    dilatory in seeking indemnification.

[59]

However,
    I am not persuaded that the inability to invoke the doctrine of laches is as
    significant an issue for second party insurers as they argue. First, it is in a
    first party insurers best interests to request indemnification under s. 275
    promptly. It will only obtain payment from the second party insurer if it
    requests payment. Presumably, therefore, any instances of exceptional delay
    would be the result of inadvertence and would not be commonplace. Second, the
    Act and the regulations under the Act are the subject of frequent amendment. What
    the second party insurers characterize as a legislative gap could seemingly
    be filled by the enactment of regulations. Finally, given the requirements of
    the doctrine of laches, the situations in which a second party insurer could
    have successfully invoked the doctrine would have been very limited. As I
    discuss below, neither Lombard nor Zurich would have been able to rely on
    laches in the cases under consideration.


VI

COULD THE SECOND PARTY INSURERS HAVE RELIED ON LACHES IN THESE CASES?

[60]

To
    rely on the doctrine of laches a defendant must establish that in all the
    circumstances the delay was unreasonable and either that:

(1)

the
    delay by the claimant constituted acquiescence of the defendants conduct; or

(2)

the claimants
    delay resulted in
actual
prejudice to the defendant that would make the
    action unreasonable or unjust.

Manitoba Metis
, at paras.
    145-46;
M.(K.)
, at pp. 76-78;
Perry
, at para. 36;
Lindsay
    Petroleum
, at pp. 239-240,
N.A.P.E. v. Memorial University of
    Newfoundland

(1995), 132 Nfld. & P.E.I.R. 205 (N.L. T.D.),
    affd (1998), 167 Nfld. & P.E.I.R. 72 (N.L. C.A.), at paras. 42, 44, 49-50,
    52-55.

[61]

At
    p. 78 of
M.(K.)
, the Supreme Court explained what acquiescence means
    in the context of laches: after the deprivation of her rights and in the full
    knowledge of their existence, the plaintiff delays. This leads to an inference
    that her rights have been waived.

[62]

Contrary
    to the second party insurers submissions, the notion of a presumption of
    prejudice arising from the passage of time which surfaces in other contexts
    has no place in this equitable doctrine. This is clear from
Perry
and
Manitoba
    Metis
. In
Perry
,
the court indicated that the defendant must show  prejudice and set aside
    the summary judgment below because the motion judge had not specified the
    nature of the prejudice suffered by the defendants that would justify barring
    the claim.
Manitoba Metis
directed, at para. 145, that under the
    second branch of the test in
M.(K.)
the court must consider whether
    there was any change of position that has occurred on the defendants part
    that arose from reasonable reliance on the claimants acceptance of the
status
    quo
.

[63]

The
    party seeking to rely on the defence of laches must show actual prejudice.

[64]

Accordingly,
    in the context of a claim under s. 275 of the Act, a second party insurer
    seeking to rely on the second branch of the test would have to establish that
    the first party insurers delay resulted in
actual
prejudice to the
    second party insurer that would make a determination of the loss-transfer,
    based on the Fault Determination Rules, unreasonable or unjust.

[65]

Neither Lombard nor Zurich could have successfully invoked
    the doctrine of laches in these cases.

The Lombard Appeal

[66]

I
    agree with Chiappetta J. that the defence of laches, if applicable, was not
    made out.

[67]

Lombard
    did not establish acquiescence. As Chiappetta J. wrote, at para. 18, there was
    no evidence that Lombard attempted to deprive Intact of any of its rights.
    Indeed, it is difficult to envisage a situation where a second party insurer
    could successfully invoke laches in response to a first party insurers claim
    for indemnification under s. 275 based on acquiescence.

[68]

And,
    as Chiappetta J. wrote, at para. 25, Lombard was required to demonstrate actual
    prejudice and did not.

The TD Appeal

[69]

I disagree with Lederman J. that acquiescence was made out simply
    because of TDs delay. While delay

after a plaintiff has been deprived
    of her rights

can give rise to an inference that her rights have been
    waived, Zurich had not deprived TD of any rights. TDs delay in making a loss-transfer
    claim therefore could not constitute acquiescence in the context of laches.

[70]

Manitoba
    Metis
was central to Lederman J.s reasoning. With respect,
Manitoba
    Metis
does not permit a finding of acquiescence where  as here  the
    claimant has not been denied any rights.

[71]

In
Manitoba Metis
, the majority concluded that the doctrine of laches did
    not bar a claim by Métis claimants that the Crown failed to implement its
    land-grant obligations to the Métis people enshrined in the
Manitoba Act,
    1870
,
S.C. 1870, c. 3, in a manner consistent with the honour of
    the Crown.

[72]

In
    addressing the issue of acquiescence, the majority focussed on, among other
    things, the imbalance in power between the Métis people and Crown. At para.
    147, the majority concluded that, in the context of that case, the delay of
    more than 100 years could not by itself be interpreted as some clear act by
    the claimants which amounts to acquiescence or waiver.

[73]

Lederman J. interpreted this passage as implying that, in some cases,
    delay alone might be interpreted as giving rise to an inference that a claimant
    had abandoned its rights and that the claimant need not have been deprived of
    any rights. However, the majority found that the Métis people had been deprived
    of rights: the federal Crown had failed to implement the land grant provisions
    set out in the
Manitoba Act
in accordance with the honour of the
    Crown. The statement on which Lederman J. relied was made in that context and
    must in my view be interpreted in that light.

[74]

As
    to prejudice, Arbitrator Bialkowski determined that Zurich had failed to prove
    prejudice, and Lederman J. held that the Arbitrators conclusion was
    reasonable. I agree with Lederman J.s analysis and conclusion on this issue.

VII

DISPOSITION

[75]

I
    would dismiss the Lombard appeal and allow the TD appeal. In accordance with
    the agreement of the parties, I make no order as to costs of these appeals.

Released: AH  NOV 12 2015

Alexandra Hoy
    A.C.J.O.

I agree K. van
    Rensburg J.A.

I agree M.L. Benotto
    J.A.





[1]

Jevco Insurance Co. v. Wawanesa Insurance Co.
(1998), 42 O.R. (3d) 276 (Gen. Div.), at p. 286
.
    See also
Royal Insurance Co. v. Wawanesa Mutual Insurance Co.
, [2004]
    O.J. No. 2924 (S.C.), at para. 3, affd, (2005), 25 C.C.L.I. (4th) 120 (Ont.
    C.A.).



[2]
Loss transfer also benefits insurers of motorcycles and motorized snow
    vehicles. An insurer of a motorcycle or motorized snow vehicle may claim
    indemnification for statutory accident benefits from the insurer of another
    vehicle involved in the accident, as long as that other vehicle is not a
    motorcycle, motorized snow vehicle or off-road vehicle.



[3]
The provisions of the
Limitations Act, 2002
apply to an arbitration as
    if the arbitration were an action and a claim made in the arbitration were a
    cause of action:
Arbitration Act
,
1991
, S.O. 1991, c. 17, s.
    52(1).



[4]
It concluded, however, that the defence was not made out in the circumstances.



[5]

Limitations Act
, R.S.A. 2000, c. L-12, ss. 3 and 10;
Limitation
    Act
, R.S.B.C. 1996, c. 266, ss. 3(5) and 2, as repealed by S.B.C. 2012, c.
    13, s. 31;
The Limitation of Actions Act
, C.C.S.M. c. L150, ss.
    2(1)(n) and 59;
Limitation of Actions Act
, R.S.N.B. 1973, c. L-8, ss.
    9 and 65, as repealed by 2009, c. L-8.5, ss. 34(3) and 34(17);
Limitations
    Act
, S.N.L. 1995, c. L-16.1, ss. 9 and 3;
Limitation of Actions Act
,
    R.S.N.W.T. 1988, c. L-8, ss. 2(1)(j) and 49;
Limitation of Actions Act
,
    R.S.N.W.T. 1988, c. L-8, ss. 2(1)(j) and 49, as amended by S.Nu. 2013, c.20, s.
    23;
Statute of Limitations
, R.S.P.E.I. 1988, c. S-7, ss. 2(1)(g) and
    51;
The Limitation of Actions Act
, R.S.S. 1978, c. L-15, ss. 3(1)(j)
    and 51, as repealed by
The Limitations Act,
S.S. 2004, c. L-16.1, s. 28;
Limitation of Actions Act
, R.S.Y. 2002, c. 139, ss. 2(1)(j) and 50.



[6]

Limitation Act,
S.B.C. 2012, c. 13, s. 5;
Limitation of Actions Act
,

S.N.B. 2009, c. L-8.5;
The Limitations Act
, S.S. 2004, c. L-16.1.


