Ontario court declines to apply 2007 insurance decision retroactively to 2002 case

The Ontario Superior Court has dismissed a motion for summary judgment by Pilot Insurance Company to end a court action against it by the province’s Motor Vehicle Accident Claims Fund (The Fund).

The Fund, administered by the province’s ministry of finance, sought a claim for restitution against Pilot for accident benefits the Fund paid to John Taggart, a 1995 motor vehicle collision victim.

The Fund has paid more than $1.5 million to Taggart since he was injured as a passenger in a car owned and operated by people without auto insurance.

During its investigations, the Fund questioned whether Taggart was a “dependent” of someone who was covered under a Pilot insurance policy. [The nature of Taggart’s “dependent” relationship to this person is the subject of a forthcoming trial.]

Pilot argued the Fund’s court action against it was statutebarred. Pilot noted the Fund had failed to give it written notice of its intention to dispute its obligation to pay benefits within 90 days of Taggart’s application. Notification is a requirement of “insurers” seeking restitution from other insurers under the Insurance Act.

In support of its contention, Pilot observed the courts’ interpretation of the Fund’s legal status as an “insurer” (an unsettledstatusincaselaw)hadchangedin Allstate v. Motor Vehicle Accident Claims Fund, decided in 2007.

Prior to Allstate, a number of court decisions suggested the Fund was not, strictly speaking, an “insurer” and was thus not bound by the procedural rules in the Insurance Act requiring notification.

But in Allstate, a five-judge panel of the Ontario Court of Appeal in 2007 ruled the Fund was in fact bound by the procedural notifications of the Insurance Act regulations.

Pilot asked the Superior Court to apply the Appeal Court’s 2007 decision retroactively to the Fund’s 2002 claim for restitution against Pilot.

But Ontario Superior Court Justice Mary Jo Nolan said the Fund had relied on the law as it was at the time between 1995 to 2007. “It would be unfair to apply the law as it was declared in 2007 to a proceeding that commenced in 2002,” she wrote.