Limitations Act Does Not Apply to Priority Disputes

May 2, 2011 | Anna-Marie Musson

Markel and Co-operators (March 31, 2011 – Samis)

Markel had not commenced arbitration within one year.  It argued that the Limitations Act applies and not Ontario Regulation 283/95.

Section 7 of Ontario Regulation 283/95 requires the insurer to initiate arbitration within one year from the notice.

The Limitations Act, 2002 has a two year default limitation.

Arbitrator Samis concluded that the Limitations Act only applied to “claims”.  “Claims” was defined under section 5 as a remedy to injury, loss or damage that occurred as a result of an act or omission.

How can the Respondent (Co-operators) be said to have committed an act or omission that caused injury, loss or damage to the Applicant (Markel)?  The Applicant has paid benefits which ought to have been paid by the Respondent.  This is an “injury, loss or damage” but there was no act or omissions which caused these losses.

This dispute was not a “court proceeding” and therefore was not within the scope of the Limitations Act.  Ontario Regulation 283/95 is mandatory for this type of proceeding.  Insurers do not have the option to conduct themselves in accordance with the regulation. 

Arbitrator Samis was then asked to determine whether Markel had “commenced” arbitration proceedings.  He noted that Ontario Regulation 283/95 does not say what constitutes commencement of an arbitration.

Section 23 of the Arbitrations Act provides that an arbitration is commenced by serving a Notice to Appoint or to Participate in the Appointment of an Arbitrator or a Notice Demanding Arbitration.

The notice must set in wheels the motion for the arbitration process.  There should be no uncertainty in the mind of the Respondent that the process is being invoked.

In the current case, Markel delivered a letter to Co-operators indicating that “if you don’t respond then we will arbitrate”. Arbitrator Samis found that this did not constitute commencement of arbitration.

Markel was precluded from proceeding with the Arbitration.

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