



COURT OF APPEAL FOR ONTARIO

CITATION: Rooplal v. Fodor, 2021 ONCA 357

DATE: 20210528

DOCKET: C68481

Rouleau, Benotto and Thorburn JJ.A.

BETWEEN

Bibi Saffora Rooplal

Plaintiff (Respondent)

and

Leslie
Patrick Fodor
,
Toronto Transit Commission
, John Doe

Driver, John Doe Owner and
Novex Insurance Company

Defendants (
Appellants
/
Respondent
)

J. Thomas Curry, Adam H. Kanji, and Chad Townsend, for
the appellants, Leslie Patrick Fodor, Toronto Transit Commission, and Toronto
Transit Commission Insurance

Robert R. Patterson and Naresh C. Misir, for the
respondent, Bibi Saffora Rooplal

Maseeh M. Sidky, for the respondent, Novex Insurance
Company

Heard: February 3, 2021 by video conference

On appeal from the order of the Divisional Court (Justices
Harriet E. Sachs, Todd Ducharme, and William M. LeMay), dated December 11,
2019, with reasons reported at 2019 ONSC 7211, 59 M.V.R. (7th) 40, affirming
the order of Justice Victoria R. Chiappetta of the Superior Court of Justice, dated
August 20, 2018, with reasons reported at 2018 ONSC 4985, 143 O.R. (3d) 149.



Thorburn J.A.:



OVERVIEW

[1]

The respondent, Bibi Saffora Rooplal, was injured while riding a Toronto
Transit Commission (TTC) bus. She was told by the bus driver that the
accident was caused by an unidentified motorist.

[2]

Ms. Rooplal brought a claim against the unidentified motorist, the TTC,
and the bus driver, Leslie Fodor, for damages resulting from the accident. In
the same action she brought a claim against her insurer, Novex Insurance
Company (Novex), for declaratory relief and to indemnify her for damages
caused by the unidentified motorist.

[3]

She later sought to add the appellant Toronto Transit Commission
Insurance (TTC Insurance) as a party defendant, seeking declaratory relief
and indemnification for damages caused by the unidentified motorist pursuant to
s. 265 of the
Insurance Act
, R.S.O. 1990, c. I.8 and
Uninsured
Automobile Coverage
, R.R.O. 1990, Reg. 676 (Regulation 676). TTC
Insurance took the position that this should not be permitted as the claim against
TTC Insurance was statute-barred by s. 4 of the
Limitations Act, 2002
,
S.O. 2002, c. 24, Sch. B (the
Limitations Act
).

[4]

The motion judge permitted the claim against TTC Insurance to proceed on
the basis that the two-year limitation period for commencing a claim set out in
s. 4 of the
Limitations Act
had not expired as, under the criteria set
out in s. 5, Ms. Rooplal had not yet discovered her claim against the
insurer.

[5]

The motion judge held that the limitation period for the indemnification
claim against TTC Insurance does not begin to run until the day after [Ms.
Rooplal] made an indemnification claim which [TTC Insurance] failed to satisfy.
Since [Ms. Rooplal] made her motion to add [TTC Insurance] as a defendant
before making a claim that [TTC Insurance] failed to satisfy, the limitation
period has not expired. That decision was upheld by the Divisional Court, adopting
the reasons of the motion judge.

[6]

Leslie Fodor, the TTC, and TTC Insurance appeal the decision of the
Divisional Court.

[7]

The issue on this appeal is when the limitation period begins to run on
the claim for indemnification against TTC Insurance.

[8]

TTC Insurance submits that the limitation period begins to run when Ms. Rooplal
knew or ought to have known the unidentified motorist was at fault. TTC says
this was when she received the police report.

[9]

Ms. Rooplal claims the two-year limitation period does not begin to run
until the insurer denies her claim for indemnification under the contract of
insurance. In the alternative, she claims that even if the limitation period
began to run when she knew or ought to have known there was a tort claim
against the unidentified motorist, she did not have evidence of how the
accident happened until the TTC bus driver was examined for discovery. Ms.
Rooplal served her motion to add TTC Insurance less than two years thereafter. Novex
makes no submissions on the appeal.

[10]

For
the reasons that follow, I find that the limitation period for bringing a claim
against TTC Insurance for declaratory relief and indemnification for damages
caused by the unidentified motorist has not expired.

[11]

Before
conducting the legal analysis, I will briefly outline the underlying accident,
the pleadings, the terms of insurance, and the relevant provisions of the
Limitations
Act
.

BACKGROUND

(1)

The Accident

[12]

On
May 4, 2012, Ms. Rooplal was a passenger in a TTC bus driven by Leslie Fodor.
The bus braked sharply, causing Ms. Rooplal to be propelled forward and strike
her head on an interior bar pole. She was told by the TTC that the bus stopped
suddenly as another car cut it off.

[13]

On
February 24, 2014, Ms. Rooplals counsel received the accident report from the
Toronto Police Service. The report cites the information provided by the TTC
driver and provides that the accident occurred when an unidentified vehicle
caused the TTC bus to brake suddenly to avoid a collision.

[14]

At
the time of the accident, Ms. Rooplal had a valid motor vehicle insurance
policy with Novex, which included a family protection coverage endorsement
under Ontario Policy Change Form 44R (OPCF-44R). TTC was self-insured by TTC
Insurance.

(2)

The Pleadings

[15]

On
March 26, 2014, Ms. Rooplal filed her Statement of Claim against the unidentified
motorist, the unidentified owner, the TTC, and the TTC bus driver for damages
caused by the accident. She also sought a declaration and indemnification from
her insurer, Novex,

up to the full policy limits, including but not
limited to OPCF-44R family protection coverage, for any and all

damages,
injuries and losses resulting from the motor vehicle accident
.
Ms. Rooplal claims she suffered permanent
and serious injuries as a result of the accident and seeks damages in the
amount of $800,000.

[16]

Ms.
Rooplal claimed that her Family Protection Coverage endorsement with Novex,
under the OPCF-44R, provides coverage to persons insured under the contract
for loss and injuries sustained as a result of the actions of an unknown
operator of an unidentified motor vehicle pursuant to section 265(1) of the
Insurance
Act
, R.S.O. 1990, c. 1.8. She also pleads that the incident was caused
or contributed to by the negligence of the owner and/or operator of the
[unidentified] Doe Vehicle.

[17]

On
September 11, 2014, Novex served its Statement of Defence and Crossclaim against
the TTC and its driver denying Ms. Rooplals claim for unidentified motorist
insurance. At para. 5 of the Statement of Defence (para. 7, in the amended
pleading) Novex pleads that Ms. Rooplal has no cause of action as against it,
until she obtains judgment as against any of the co-defendants, a determination
is made that any of the co-defendants are uninsured and the plaintiff is unable
to satisfy the said judgment as against the assets of any of the other co‑defendants.

[18]

On
May 7, 2015, examinations for discovery were completed. On December 10, 2015,
counsel for Novex wrote to Ms. Rooplals counsel, copying TTCs counsel, and
stated that it was my understanding that plaintiffs counsel would be amending
his clients claim to include the TTC insurer to the action. Can you please
confirm that this is the case?

[19]

On
March 16, 2017, Novex amended its Statement of Defence and Crossclaim to plead
that:

5. This defendant specifically denies that it is the insurer
for the purposes of coverage for incidents or accidents caused by or
contributed to by the negligence of the owner and/or operator of an
unidentified and/or uninsured motor vehicle.

6. Further, this defendant states that the plaintiff was a
passenger/occupant in the co-defendant TTC vehicle and any claims pursuant to
unidentified and uninsured provisions and/or section 265 of the
Insurance
Act
, R.S.O. 1990, c. I.8 ought to be against the co-defendant TTC
vehicle's policy and not this defendant. [Emphasis omitted.]

[20]

Shortly
thereafter, Ms. Rooplal brought a motion to amend her Statement of Claim to add
TTC Insurance as a party defendant. TTC Insurance opposed the motion on the
grounds that the limitation period had expired.

[21]

The
proposed claim against TTC Insurance is for a declaration that, at the time of
the accident, Ms. Rooplal was an occupant of a vehicle insured by TTC Insurance
and an insured pursuant to that policy, and that TTC Insurance must indemnify
her for all damages caused by the unidentified motorist up to the policy
limits.

(3)

The Terms of Insurance

[22]

Where
an unidentified motorist is at fault, there may be no means of securing
compensation for an injury from the unidentified motorist, as the motorist and
the motorists insurer may never be identified. In Ontario, there are two means
of addressing this gap in coverage: (i) mandatory uninsured/unidentified motorist
coverage, under s. 265 of the
Insurance Act
; and (ii) optional OPCF-44R
family protection coverage.

Section 265 unidentified
automobile insurance

[23]

The
Insurance Act
requires that all automobile insurance policies provide
coverage for accidents involving an unidentified motorist. Section 265(1) of
the
Insurance Act
provides that:

Every contract evidenced by a motor vehicle liability policy
shall provide for
payment of all sums that
,

(a)
a person insured under the contract
is legally entitled to recover
from the owner or driver of an uninsured
automobile or
unidentified automobile as damages for bodily injuries
resulting from an accident involving an automobile;

subject to the terms, conditions, provisions, exclusions and
limits as are prescribed by the regulations
. [Emphasis added.]

[24]

Section
265(2) of the
Insurance Act
defines person insured under the
contract for the purpose of a claim for bodily injuries as, among other
things, any person while an occupant of the insured automobile.

Regulation 676 of the
Insurance Act

[25]

Regulation
676 sets out additional obligations on insureds seeking to pursue a claim for
indemnification pursuant to s. 265
Insurance Act
in the attached Schedule
Uninsured Automobile Coverage (the Schedule): R.R.O. 1990, Reg. 676.

[26]

Section
1 of Regulation 676 provides that:

The terms, conditions, provisions, exclusions and limits set
out in the following Schedule apply to payments under a motor vehicle liability
policy under subsection 265 (1) of the Act and shall be attached to or included
in every motor vehicle liability policy, as a Schedule in or to the policy.

[27]

The
Schedule referred to in s. 1 of Regulation 676 provides, at s. 8 (Limitations),
that [n]o person is entitled to bring an action to recover an amount provided
for under the contract, as required by subsection 265 (1) of the Act, unless
the requirements of this Schedule with respect to the claim have been complied
with. The requirements include the following:

·

Section 2(1)(c): The s. 265 insurer is not liable to pay the
claim if the insured is entitled to recover money under the third-party
liability section of a motor vehicle liability policy. This is known as the
1% rule as, if another insured is found to be even 1% liable for the accident,
the s. 265 insurer is exempt from liability. In other words, the s. 265 insurer
is only liable in the last resort.

·

Section 3: The person injured in an unidentified motorist
accident must report the accident to police in a timely manner and notify the
s. 265 issuer within 30 days of the accident or as soon as is practicable and
provide certain details to the s. 265 insurer.

·

Section 4(1)(c): The determination of whether the insured is
entitled to damages and, if so, the amount, may be determined by the courts.
Unless a liability determination has already been made by another court, the
insurer may defend both liability and damages.

·

Section 5(1): Where an insured commences a tort action for
damages against a person involved in the accident,
a copy of the writ of summons or other proceeding shall be
delivered or sent by registered mail immediately to the insurer
.

·

Section 5(2): If the claimant obtains a judgment against the other
person but is unable to recover or fully recover the amount of that judgment, subject
to the 1% rule discussed above, the s. 265 insurer must make the claimant
whole. This section also permits the s. 265 insurer to require the assignment
of the judgment prior to paying the claimant.

·

Section 6: A person making a claim shall do so by (i) giving
written notice to the insurer within 30 days of the accident or as soon as is
practicable after that date; (ii) giving the insurer proof of the accident, the
resulting loss, and the claim within 90 days of the accident or as soon as is
practicable; (iii) providing the insurer with a certificate stating the cause
of injury or death and the nature of the injury, and the expected duration of
any disability; and (iv) providing the details of any other insurance policy,
other than life insurance, to which the claimant may have recourse.

[28]

Any
claim brought pursuant to s. 265 of the
Insurance Act
must comply with
the notification requirements set out in the Schedule contained in Regulation
676.

OPCF-44R Family Protection
Coverage

[29]

In addition to the mandatory statutory unidentified motorist
insurance, an insured may elect to purchase OPCF-44R insurance coverage, which
may be purchased as an endorsement to the standard Ontario motor vehicle
insurance Owners Policy.

[30]

The OPCF-44R endorsement provides additional coverage for the
named insured and their family, including for unidentified motorist claims. As
the occupant of any other vehicle in an accident caused by an unidentified
motorist, an insured may seek indemnification under an OPCF-44R policy for the
injuries sustained in an accident caused by an unidentified motorist.

[31]

However, and importantly for the purpose of the underlying action,
s. 7 of the OPCF-44R provides that coverage under this policy is excess to any
amount received elsewhere and to other amounts available from uninsured
automobile coverage under any other valid motor vehicle policy.

(4)

The
Limitations Act

[32]

Section
4 of the
Limitations Act, 2002
provides that a proceeding shall not
be commenced in respect of a claim after the second anniversary of the day on
which the claim was discovered, unless the Act provides otherwise.

[33]

Section
5(1) of the Act provides that:

A claim is discovered on the earlier of

(a) The day on which the person with the claim first knew,

(i) that the injury, loss or damage
had occurred,

(ii) that the injury, loss or damage
was caused by or contributed to by an act or omission,

(iii) that the act or omission was
that of the person against whom the claim is made, and

(iv) that, having regard to the
nature of the injury, loss or damage, a proceeding would be an appropriate
remedy to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and
in the circumstances of the person with the claim first ought to have known of
the matters referred to in clause (a).

[34]

The
requirements under s. 5(1)(a) are conjunctive, and all must be met for a claim
to be discovered:
Longo v. MacLaren Art Centre Inc.
, 2014 ONCA 526, 323
O.A.C. 246, at para. 41;
Apotex Inc. v. Nordion (Canada) Inc.
, 2019
ONCA 23, 431 D.L.R. (4th) 262, at para. 78.

THE ISSUE

[35]

The
issue for this court is a narrow one: Is Ms. Rooplals claim against TTC
Insurance for unidentified motorist coverage, statute-barred by ss. 4 and 5 of
the
Limitations Act
? Resolving this question requires this court to
determine when Ms. Rooplal discovered, or ought to have discovered, her
claim against the purported s. 265 insurer, TTC Insurance. In other words, what
is the act or omission of TTC Insurance that caused the plaintiffs loss?

THE DECISION BELOW

[36]

The
motion judge considered this courts pre-
Limitations Act
jurisprudence
and then outlined the changes occasioned by the
Limitations Act
.

[37]

The
motion judge referred to
July v. Neal
(1986), 32 D.L.R. (4th) 463 (Ont.
C.A.), a case heard before the changes to the
Limitations Act
. July
was a passenger in a three-party collision including an unidentified motorist. MacKinnon
A.C.J.O, for the majority, held that the limitation period began when the cause
of action against the insurer arose meaning when the material facts on which
the claim is based have been discovered or ought to have been discovered by the
plaintiff by the exercise of reasonable diligence: p. 469.

[38]

The
motion judge in this case noted that the test changed with the 2002 enactment
of the
Limitations Act
.

[39]

She
referred to
Markel Insurance Company of Canada v. ING Insurance Company of
Canada
, 2012 ONCA 218, 109 O.R. (3d) 652, the leading case interpreting
the limitation period under s. 4 of the
Limitations Act
in the context
of the
Insurance Act
.
Markel
was a loss-transfer claim
between two insurers, for indemnification for statutory accident benefits paid
to an insured. In that case, the limitation period did not begin until the
first insurers request for indemnification was received by the second insurer.

[40]

She
also referred to the decision of this court in
Schmitz v. Lombard General
Insurance Company of Canada
,
2014 ONCA 88
,
118 O.R. (3d) 694
,
leave to appeal refused, [2014] S.C.C.A. No. 143, a case involving an insureds
claim against their own insurer under the OPCF-44R endorsement. The court in
Schmitz
held that the reasoning in
Markel
was dispositive of the limitations
issue s
uch that claim for indemnity
under the OPCF-44R did not start to run until there is a demand for indemnity
and default of the obligation to indemnify the insured.

[41]

After
reviewing the changes in the law, the motion judge observed, at para. 29, that:

The
Limitations Act
discoverability provisions are
based upon the common law principles of discoverability. However, the statute
provides a discoverability definition that is much more nuanced and complex.
The detailed discoverability definition was not before the Court of Appeal nor
contemplated by it in
July
. While the general discoverability doctrine
set out in
July
remains unchanged by the
Limitations Act
pronouncement,
the discoverability definition in the test enunciated by MacKinnon
J. must now be interpreted in accordance with the
Limitations Act
's
definition of "discovered"
. In this regard, the Court of Appeal's
analysis in
Markel
and
Schmitz
cannot be ignored. It is binding
on this court. [Emphasis added.]

[42]

The
motion judge held that, although this is not a loss-transfer case or a claim
against the OPCF-44R insurer, the analysis in
Markel
and
Schmitz
applies. In her view, Ms. Rooplal could not be said to know that there is a
loss caused by an omission of the unidentified motorist insurer, i.e. TTC Insurance,
until she asserted a claim for indemnification against TCC Insurance: see
Limitations
Act
, ss. 5(1)(a)(i)-(iii). The motion judge concluded that the limitation
period begins to run  on the first day of default after the demand for
indemnification is made. Accordingly, Ms. Rooplals claim against TTC
Insurance was not statute-barred.

[43]

The
appeal to the Divisional Court was dismissed for the reasons of the motion
judge.

ANALYSIS

(1)

The Standard of Review

[44]

Whether
Ms. Rooplals claim against TTC Insurance is statute-barred requires this court
to interpret both the
Limitations Act
and the
Insurance Act
s
unidentified motorist provisions. All parties agree that this is a question of
law, subject to correctness review:
Housen v. Nikolaisen,
2002 SCC 33,
[2002] 2 S.C.R. 235, at paras. 8-9.

(2)

The Parties Positions

[45]

The
appellant TTC Insurances position is that the motion judge and the Divisional
Court erred in finding that this courts pre-
Limitations Act
jurisprudence no longer governs a claim brought against a s. 265 insurer for
unidentified motorist coverage. TTC Insurance submits that the framework
developed in
Markel
and
Schmitz
was not meant to apply to such
claims and both cases are readily distinguishable. Moreover, in TTC Insurances
view, [t]o hold that the limitation period does not commence until the
Plaintiff has made an indemnification demand to the TTC Insurance would produce
an absurd result, namely that the plaintiff could potentially lie in wait
indefinitely before bringing a claim against the s. 265 insurer.

[46]

Several
other lower court decisions applied the same reasoning as the motion judge and
TTC submits these decisions are wrongly decided: see e.g.
Chahine and
Al-Dahak v. Grybas
, 2014 ONSC 4698, 38 C.C.L.I. (5th) 282;
Platero v.
Pollock
, 2015 ONSC 2922, 49 C.C.L.I. (5th) 212;
Sukhu v. Bascombe
,
2018 ONSC 2878.

[47]

The
respondent, Ms. Rooplal, submits that the analysis in
Markel
and
Schmitz
applies

and no absurdity arises from the motion judges decision.
First, this is not a stale claim as TTC Insurance and the TCC are effectively
indistinguishable, sharing the same premises and counsel. Furthermore, s. 6 of
the Schedule contained in Regulation 676 sets out notice requirements for any
claim brought against a s. 265 insurer.

(3)

The pre-
Limitations Act
Jurisprudence

[48]

Before
the
Limitations Act
, the courts applied a limitation period contained
in the then-current regulations to the
Insurance Act
. Section 8(2) of
the relevant schedule held that the limitation period for claims for damages
caused by an unidentified motorist was two years from the date on which the
cause of action against the insurer arose.
[1]
This court found that the plaintiff discovered that the cause of action arose
when the material facts on which an action is based were discovered or ought to
have been discovered by the plaintiffs exercise of reasonable diligence: see
July;
Johnson v. Wunderlich
(1986), 34 D.L.R. (4th) 120 (Ont. C.A.);
Hier v.
Allstate Insurance Co. of Canada
(1988), 51 D.L.R. (4th) 1 (Ont. C.A.);
and
Chambo v. Musseau
(1993), 106 D.L.R. (4th) 757 (Ont. C.A.).

[49]

In
July v. Neal
, the plaintiff

was a passenger in a vehicle
owned and operated by a family member named Neal. Neals vehicle was in an
accident involving two other vehicles. The driver of one of those other
vehicles was unidentified. The accident report stated that an unidentified
vehicle was involved in the accident. After the examinations for discovery, counsel
for the plaintiff wrote the plaintiffs insurer to advise that the plaintiff
would be looking to it for the loss that may be found to be caused by the hit
and run driver.

[50]

The
plaintiff brought a claim against Neal within two years of the accident but
waited more than two years to bring a claim for unidentified motorist coverage
against the insurer. MacKinnon, A.C.J.O. observed at pp. 466-7 that in cases
where both an unidentified driver and a third-party identified driver may be at
fault:

I have had great difficulty in interpreting the intended effect
of the relevant legislation and regulation. It seems to me that the drafters of
the legislation were considering the usual case of an insured motorist involved
in an accident with a hit-and-run driver. There is no difficulty in such cases
in requiring the motorist to commence his action within the two-year-time-limit
from the date of the accident. The complicating factor in the instant case  is
the existence of an identified motorist, Neal, who was involved in the accident
and who is a defendant.

[51]

He
concluded that the limitation period begins to run, when the material facts on
which the claim is based have been discovered or ought to have been discovered
and held that it would be up to the trial judge, after hearing the evidence, to
determine when the material facts, including the potential liability of an
unidentified motorist or its insurer, ought to have been discovered. Under the
1% rule, if
any

liability rested with another defendant, the s.
265 insurer would not be required to indemnify the plaintiff.

[52]

Later
that year, in
Johnson v. Wunderlich
(1986), this court applied a
similar analysis to an uninsured motorist accident. The plaintiffs, Lionel and
David Johnson, were involved in an accident with a vehicle owned by Linda
Wunderlich and operated by Michael Wunderlich. Both Johnsons and Mr. Wunderlich
were killed in the accident and no appearance was entered by the defendants.
The defendants motor vehicle was uninsured. The plaintiffs moved to add their
insurer as a party more than two years after the accident. The insurer sought a
declaration that the claim was time-barred.

[53]

Morden
J.A. (as he then was) rejected the plaintiffs argument that the plaintiffs
were simply enforcing the judgment against the tortfeasor in seeking indemnity
from the insurer, such that the limitation period did not begin to run until
all of the conditions precedent for a claim against the insurer had been
satisfied, namely: submission of the notice and proof of claim; determination
of legal liability and the amount of damages; a finding that the plaintiffs
were entitled to damages from the owner or driver of the uninsured automobile; the
judgment remained unsatisfied; and a request for payment from the insurer had
been made and refused. Instead, at pp. 128-129, he held that this was a direct
action against the insurer, and that:

[T]he elements of this cause of action are (1) a person insured
(2) who is legally entitled to recover damages from the owner or driver of (3)
an uninsured or unidentified automobile. (Implicit in this is that the damages
have resulted from an accident involving the automobile.) The cause of action
accrues when the plaintiff (the person insured) has discovered these material
facts or ought to have discovered them by the exercise of reasonable diligence.
See
July v. Neal
(1986), 57 O.R. (2d) 218, 44 M.V.R. 1, 19 C.C.L.I. 230,
12 C.P.C. (2d) 303, (Ont. C.A.).



[T]he appellants did not
submit that the cause of action does not arise until the insurer has denied
liability on the contract. Notwithstanding that the form of the insurers
obligation is contractual (legislatively imposed) I do not read the relevant
provisions as making a denial of liability a constituent element of the direct
claim. In other words, an action commenced before denial of liability would not
be premature from a cause-of-action perspective.

[54]

Morden
J.A. concluded, however, that it cannot be determined that an action for
recovery is barred by the terms of s. 8(2) of the Schedule, because it was
unclear whether the plaintiffs action was for declaratory relief or for
recovery against the insurer, and actions for declaratory relief were not
subject to the two-year limitation period in s. 8(2) of the Schedule at that
time. Accordingly, he dismissed the insurers argument on the limitation
period.

[55]

Finlayson
J.A. agreed in the result but would have found that the limitation period had
not expired. At p. 137, he explained:

While the matter is not free from doubt, it is my opinion that an
action against the insurer is an action for breach of contract and the cause of
action arises from the date of the breach. This breach occurs when the insurer
denies liability or the insured knows or ought to know that his claim will not
be honoured.

[56]

The
case of
Hier

v. Allstate Insurance Co. of Canada
(1988), involved
a two‑party hit-and-run accident. There was no question that the insured
knew on the day of the accident that his vehicle was hit and was entitled to
damages from the unidentified motorist. Goodman J.A. held, at p. 12, that:

In the case at bar the respondent (plaintiff) was insured by
Allstate's policy, he was according to the trial judge, legally entitled to
recover damages from the unidentified automobile, and he was aware on the date
of the accident that the other motor vehicle involved, its owner and operator
were all unidentified.
On those facts, it is my opinion, that the limitation
period commenced to run from the date of the accident and the respondents
action was barred under s. 8(2)
. [Emphasis added.]

All of the necessary elements to establish a cause of
action were established and as such, the action against the insurer, brought
more than two years after the accident, was time-barred.

[57]

Finally,
in
Chambo v. Musseau
(1993), the plaintiff was injured in an accident
she claimed was caused by another driver who was uninsured. Her claim against
the insurer was brought more than two years after the accident. In that case, Osborne
J.A. allowed the plaintiffs appeal and order that the action proceed to trial.
In so doing, he distinguished an action against the uninsured motorist from an
action for coverage brought against the insurer. At p. 765, he explained:

[I]t makes no difference whether the insurer and the tortfeasor
are sued in the same action, or whether the insurer alone is named as a
defendant (as happened here). Nor does it matter if, as occurred in
Johnson
v. Wunderlich
, the insurer is added as a defendant after the commencement
of the action against the tortfeasor.
If the uninsured owner/driver and the
insurer are both sued, the cause of action asserted against the tortfeasor is
different from the cause of action asserted against the insurer. The former is
in negligence; the latter is for payment under a contract, albeit one imposed
by statute. Different limitation periods apply
.  The s. 8(2) limitation
period [for a claim against the insurer] is
two years from the
date on which the insured person knew, or with the exercise of reasonable
diligence could have established, that the tortfeasors motor vehicle was
uninsured.

[Emphasis added; see also p. 766.]

[58]

In
sum, prior to the
Limitations Act, 2002,
the two-year limitation
period for a claim for indemnification was triggered when the person knew or
ought to have known the material facts giving rise to the cause of action,
namely: (1) the plaintiff was injured and (2) was legally entitled to recover
damages from the owner or driver of (3) an uninsured or unidentified
automobile. It was recognized that determining when the cause of action arose on
a claim for indemnification was more difficult where there were multiple
possible tortfeasors one of whom was unidentified or uninsured. The claim
against the insurer is a claim founded in the insurance contract imposed by
statute, not a tort action, and dependant on the plaintiff knowing or with
reasonable diligence being able to establish that no other tortfeasor is even
1% liable. As such, (except in
Hier
, where the insured knew on the day
of the accident that he was entitled to damages only from the unidentified
motorist and therefore a claim could be brought against the insurer), the appellate
cases from this court found that the commencement of the limitation period was a
factual matter to be resolved by the trial judge.

(4)

The
Limitations Act
and Related Jurisprudence

[59]

The
Limitations Act, 2002
supersedes the limitation period set out in s.
8(2) of the Schedule contained in Regulation 676: see
Limitations Act
,
s. 19(1). The two-year limitation period set out in s. 4 of the
Limitations
Act
does not refer to when the cause of action arises. Rather, the
wording is when the claim [is] discovered.

[60]

Section
5 of
Act
determines when a claim is discovered. It provides that a
claim is discovered when the plaintiff knows or ought to have known (i) that
they have suffered injury or loss (ii) by an act or omission that is (iii)
that of the person against whom the claim is made and (iv) it is appropriate
to commence a legal proceeding.

[61]

Of
particular note is the requirement of s. 5(1)(a)(iii): the claim discovered only
when a plaintiff learns that their injury was caused by the acts or omissions
of
the person against whom the claim is made
. In other contexts, this court
has held it is an error to overlook this particular requirement imposed by s.
5(a)(iii): see
Morrison v. Barzo
, 2018 ONCA 979, 144 O.R. (3d) 600, at
paras. 35, 47.

[62]

The
consequences of this requirement are illustrated by
Markel Insurance
Company of Canada v. ING Insurance Company of Canada
(2012) and
Schmitz
v. Lombard General Insurance Company of Canada
(2014).
Those cases stand for the proposition that
the plaintiff suffers a loss when the insurer fails to satisfy its legal
obligation under the policy.

[63]

Markel
concerned two collisions, both of which involved an automobile and a
tractor-trailer. In both cases, the insureds right to insurance benefits was
not in issue. The dispute was which insurer was responsible for payment of the
benefits to the insured under s. 275 of the
Insurance Act
.
[2]
The plaintiff drivers insurers asked the tractor-trailers insurers to
indemnify them for some of the payments made to the insured. The tractor-trailer
insurers did not make the payments requested. Both tractor-trailer insurers
claimed that the limitation period for the loss-transfer claims had passed.

[64]

Sharpe
J.A. reviewed the discoverability requirements of the
Limitations Act
.
He noted that the new limitations regime required him to focus his analysis on
the four elements of s. 5(1)(a). At para. 24, he observed:

Items (ii) and (iii) require that the second party insurer must
have done or omitted to do something that can be said to have caused a loss.
The second party insurer cannot be said to have omitted to indemnify if there
was no request for indemnification. It follows that items (ii) and (iii) cannot
be satisfied until the first party insurer has asserted the loss transfer claim
against the second party insurer to trigger a legally enforceable claim or
obligation.

[65]

With
this in mind, he reasoned that, once the request for indemnification has been
sent, [a]ll the facts are present to trigger the legal obligation of the part
of the second party insurer to indemnify the first party insurer for the loss.
The situation has crystallized into a complete and valid legal claim that is
immediately enforceable against the second party insurer. According, he held,
at para. 27, that the first-party insurer discovers the loss caused by the
second-party insurer the moment the second party insurer can be said to have
failed to satisfy its legal obligation to satisfy the loss transfer claim  [which
is] the day after the Request for Indemnification is made.

[66]

In
other words, the party demanding indemnification did not know it had a loss
resulting from the second insurers wrongdoing and that it was appropriate to
commence a proceeding until a demand for indemnification was made that was not
satisfied by the insurer. Until then, the claim was not discovered within the
meaning of the
Limitations Act
.

[67]

Schmitz
involved a claim for indemnity for underinsured motorist coverage pursuant to
an optional OPCF-44R endorsement. The plaintiff brought a claim against the
underinsured tortfeasor in a timely manner but did not bring a claim against
the OPCF-44R insurer for excess damages until nearly four years after the
accident. On appeal, the OPCF-44R insurer argued that two-year limitation
period under s. 4 of the
Limitations Act
began to run at the time the
plaintiff knew or ought to know that their claim against the uninsured
tortfeasor exceeded the limitations of the tortfeasors coverage.

[68]

The
court rejected the insurers argument, holding that this courts recent
decision in
Markel
is dispositive of the issue of when the s. 5
limitation period begins to run in respect of a claim under the OPCF 44R. The
court did not accept that this would result in prejudice to the insurer,
observing that [t]here are a number of ways in which underinsurers can protect
their interests including  a provision requiring the insured to provide timely
notice to the insurer when he knew or ought to have known he was underinsured.

(5)

Analysis and Application of the Law

[69]

TTC
Insurance asks this court to distinguish
Markel
and
Schmitz.
Notwithstanding
the language in s. 5 of the
Limitations Act
, they argue that Ms. Rooplal
discovered her claim against TTC Insurance when she learned of the involvement
of an unidentified driver who was potentially liable for her injuries.

[70]

TCC
Insurance urges that
Markel
and
Schmitz
are appropriate for
their own unique contextual circumstances but inapt for claims against s. 265
insurers. TTC Insurance points out that this case is different from
Markel
as there the only issue to be determined was which of two insurers was
responsible for the payment. Similarly,
Schmitz
concerned a
contractual dispute between insured and insurer, not the statutory provisions
in s. 265, so the contract-based framework articulated in
Markel
was
arguably more appropriately adopted there than in this case.

[71]

In
July
and this case, by contrast, tort liability had not been
determined among the defendants and the s. 265 insurers liability depended on
a finding that no other party was even 1% liable. In
July
, this court
held that discovery of the cause of action could only be decided by the trial
judge after hearing evidence.

[72]

Section
5 of the
Limitations Act, 2002
was enacted to bring greater clarity
and certainty to the determination of when a limitation period commences, as
described in the recommendations of
Limitations
Act Consultation Group
: see
Recommendations for a New Limitations
Act
(Toronto: Ministry of the Attorney General of Ontario, 1991). Unless
the
Limitations Act
provides otherwise, a
proceeding must be commenced within two years of when a
claim is discovered, that is,
when the plaintiff knows, or ought to
have known they have suffered loss, injury or damage caused by or contributed
to by the acts or omissions of the person
against whom the claim is made

(emphasis added) and that it is appropriate to commence a proceeding: ss. 4 and
5(1).

[73]

The
importance of isolating the wrongful act of each particular defendant has been
emphasized by this court. It is not enough that the plaintiff has suffered some
loss from some act or omission. As Strathy C.J.O. explained in
Apotex
,
at para. 86, discovery requires that the person with the claim know that the injury,
loss or damage had
occurred
 (s. 5(1)(a)(i)), that it was
caused or
contributed
to by the act or omission (the breach of contract) (s.
5(i)(a)(ii)), and that the act or omission was
that of the defendant
(s.
5(1)(a)(iii)) (emphasis in original).

Has Ms. Rooplal discovered her claim under s. 5 of the
Limitations Act?

[74]

Ms.
Rooplals proposed Amended Statement of Claim asserts a claim in negligence
against the unidentified motorist, the TTC, and the TTC driver; and a claim for
declaratory relief and indemnity in contract against TTC Insurance for damages
resulting from the actions of the unidentified motorist up to the s. 265 policy
limit.

[75]

There
is a distinction to be drawn between knowledge of the act or omission of the
unidentified motorist, for which (but for practical impediments) damages in
tort may be sought, and the act or omission of the insurer for which
indemnification pursuant to the insurance policy is sought. TTC Insurance
suggests that this court should ignore this distinction as, in effect, the
insurer stands in the shoes of the uninsured or unidentified tortfeasor in a
claim brought under s. 265 of the
Insurance Act
: quoting
Kosanovic
v. Wawanesa Mutual Insurance Co.
(2004), 237 D.L.R. (4th) 441 (Ont. C.A.),
at para. 7. TTC Insurance also directs this courts attention to several other post-
Limitations
Act, 2002
decisions from the lower courts, which have applied the
July
discovery rules to unidentified motorist cases: see
Galego v. Pereira
(2005), 207 O.A.C. 384 (Div. Ct.);
Bhatt v. Doe
, 2018 ONSC 950;
Wilkinson
v. Braithwaite
, 2011 ONSC 2356.

[76]

I
disagree.

[77]

Section
5(1)(a)(iii) of the
Limitations Act
makes clear that Ms. Rooplal only discovers
her claim against TTC Insurance when she knows or ought to know that
TTC
Insurance
did or omitted to do something that caused her loss or damage. Only
then is her claim discovered such that the two-year limitation period under
s. 4 of the
Limitations Act
begins to run. The requirements of s.
5(1)(a) are conjunctive:
Longo
at para. 41. In this case, there is no
evidence Ms. Rooplal has made any demand for indemnification.

[78]

I
note that
Kosanovic
does not assist TTC Insurance as that case did not
concern limitation periods and the quoted language was only a shorthand summary
of the s. 265 scheme. Nor does
Galego
address the
Limitations Act
.
Bhatt
and
Wilkinson
do not address the s. 5 criteria for
discovery of a claim.

Does public policy warrant the maintenance of the
July
framework?

[79]

In
resisting this conclusion, TTC Insurance invites this court to depart from the wording
of the
Limitations Act
and suggests that [p]ublic policy surrounding
the use of limitation period favours using the tortfeasors act or omission 
as the relevant benchmark for the discover of a claim under s. 265.

[80]

I
do not accept this submission.

[81]

The
modern principle of statutory interpretation provides that the words of an Act
are to be read in their entire context and in their grammatical and ordinary
sense harmoniously with the scheme of the Act, the object of the Act, and the
intention of Parliament:
Rizzo & Rizzo Shoes Ltd. (Re)
, [1998] 1
S.C.R. 27, at para. 21, quoting Elmer A. Driedger,
Construction of Statutes
,
2nd ed. (Toronto: Butterworths, 1983), at p. 87.

[82]

The
ordinary sense of s. 5(1) of the
Limitations Act
is clear. A claim is
discovered when plaintiff knows, or ought to have known, that the act or
omission causing the plaintiffs loss was that of the person
against whom
the claim is made
 (emphasis added). Ms. Rooplals claim is not against the
unidentified tortfeasor, it is against TTC Insurance.

[83]

The
Limitations Act
was intended to provide a comprehensive limitations
scheme that applies to all court proceedings [u]nless this Act provides
otherwise: s. 4. There is no evidence that the legislature intended to permit
exceptions to the s. 5 discovery rules other than those identified by the Act. Indeed,
some provisions in the
Insurance Act
are specifically excluded from
the
Limitations Act
s ambit: see
Limitations Act
, s. 19(1)
and schedule. There is no such exclusion for claims under the contractual
provisions mandated by s. 265.

[84]

This
court is not free to depart from the
Limitations Act
simply because it
may reflect poor policy. There is however a presumption against absurdity.

[85]

TTC
Insurance claims the requirements of s. 5 of the
Limitations Act
may,
at first glance, appear to create a seemingly undesirable outcome: The
plaintiff could control the limitation period by delaying her demand to
indemnify. Further, as noted above, the insurer need only indemnify the
plaintiff if no other party is even 1% liable. TTC Insurance asserts that, if
the limitation period on the plaintiffs claim against the s. 265 insurer does
not begin to run until the plaintiff demands indemnification, the plaintiff can
delay bringing the claim against the insurer until after the tort action
against other potentially liable parties has been determined. This could result
in a multiplicity of proceedings, as TTC Insurance is permitted to defend
liability on the request for indemnification under Regulation 676: Schedule, s.
4(1)(c).

[86]

However,
the consequences of the limitation analysis must be considered harmoniously
with the scheme of the
Insurance Act
as a whole. In this case, the requirements
set out in s. 8(1) of the Schedule contained in Regulation 676 provide that:

No person is entitled to bring an action to recover an amount
provided for under the contract, as required by subsection 265 (1) of the [
Insurance
Act
] unless the requirements of this Schedule with respect to the claim
have been complied with.

[87]

Whether
or not a party chooses to commence a claim against the insurer, insurers must
be provided with knowledge of the underlying accident, as Regulation 676 and
the Schedule are terms and conditions of the contract of insurance. Among other
things, the Schedule requires a potential claimant for unidentified motorist
coverage to provide the purported s. 265 insurer with: (a) a statement setting
out the details of the accident including whether it was caused by an
unidentified motorist and what damages were suffered within 30 days or as soon
as practicable (s. 3); (b) written notice of the claim against the insurer and
the circumstances thereof within 30 days or as soon as practicable (s. 6).

[88]

Read
as a whole, therefore, the statutory scheme provides some safeguards against
the threats identified by TTC Insurance. As Hoegg J.A. for the Newfoundland and
Labrador Court of Appeal observed in
Tucker v. Unknown Person
, 2015
NLCA 21, 365 Nfld. & P.E.I.R. 307, leave to appeal refused, [2015] S.C.C.A.
No. 250, at paras. 22-23, an insurer faced with a potential unidentified
motorist claim may begin the limitation period by refusing to indemnify a s.
265 claimant after receipt of timely notice, as required by the regulation. In
this manner, the insurer retains control of the limitation period.

[89]

Ms.
Rooplal served her motion to add TTC Insurance as a defendant to the action on
May 4, 2017, five years after the accident and three years after she commenced
her claim against the TTC, the TTC driver, and her own insurer.

[90]

Although
the two-year limitation period for her claim against TTC Insurance has not
expired, it is not clear from the record whether Ms. Rooplal fulfilled the
notice obligations set out in the Schedule contained in Regulation 676 and Ms. Rooplals
compliance with those requirements is not before this court.

SUMMARY AND DISPOSITION

[91]

Ms.
Rooplal pleads that she is an insured under the TTC Insurance policy for
unidentified motorist coverage pursuant to s. 265 of the
Insurance Act
.

[92]

Section
5 of the
Limitations Act
determines when a claim is discovered. It
provides that a claim is discovered when the plaintiff knows or ought to know:

(a)

she has suffered a loss or injury,

(b)

by an act or omission that is,

(c)

that of the person against
whom the claim is made, and

(d)

it is appropriate to commence a
legal proceeding.

[93]

In
her tort claim against the unidentified motorist John Doe, the unidentified
owner John Doe, the TTC, and the TTC driver, Ms. Rooplal pleaded that the
incident was caused or contributed to by the negligence of the owner and/or operator
of the [unidentified] Doe vehicle.

[94]

If
either the TTC or the TTC bus driver is in any way contributorily negligent for
even 1% of her losses, Ms. Rooplal has no right to declaratory relief or
indemnification from TTC Insurance.

[95]

Ms.
Rooplal discovers her claim against TTC Insurance when she knows or ought to
know that
TTC Insurance
did or omitted to do something that caused her
loss or damage. The act or omission is the failure to indemnify her for the
damage caused by the unidentified driver as required by the policy of insurance.

[96]

The
public policy concerns expressed by TTC Insurance are addressed in the Schedule
contained in Regulation 676 which requires an insured who commences a legal
action for damages against any person owning or operating an automobile
involved in the accident provide a copy of the writ of summons to the insurer
and written notice of the claim within thirty days after the accident or as
soon as is practicable after that date: Regulation 676, Schedule, ss. 5 and 6. The
insurer is therefore apprised of the claim against unidentified motorist and
can take appropriate steps to protect its interests in the proceeding.

[97]

For
the above reasons, the limitation period has not expired and, as a result, I
would dismiss the appeal.

[98]

In
accordance with the agreement between the parties to this appeal, costs to the
respondent Ms. Rooplal in the amount of $15,000 for the appeal on the merits in
addition to $800 for the leave to appeal.

Released: May 28, 2021 P.R.



J.A. Thorburn J.A.

I agree. Paul Rouleau
J.A.

I agree. M.L. Benotto
J.A.





CORRECTED DECISION

Corrections made June 4, 2021: The title of
proceedings was amended to include Novex Insurance Company as a respondent.
Paragraph 9 was amended to indicate that Novex made no submissions on the
appeal and para. 98 was amended to clarify that costs are payable only to the
respondent Bibi Saffora Rooplal.

Correction made July 5, 2021: Paragraph 98 was
corrected to award costs of $800 to the respondent Ms. Rooplal for the leave to
appeal, in accordance with the agreement between the parties.

Correction made October 28, 2021: Paragraph 56 was
amended to move the following sentence from the quotation to the paragraph: All
of the necessary elements to establish a cause of action were established and
as such, the action against the insurer, brought more than two years after the
accident, was time-barred.







[1]
Prior to the enactment of Regulation 676 in 1990, the relevant regulation was R.R.O.
1980, Reg. 535.



[2]
Section 275 and the regulations permit the payor insurer to recover from the
insurer of the other vehicle involved in the collision where that other vehicle
is a heavy commercial vehicle at fault.



