Consolidating two actions can’t lead to consolidated arbitration being statute-barred: Ontario court

Consolidating a court case concerning income replacement benefits (IRB) with a related arbitration matter on catastrophic injury determination, each of which was filed within their respective limitation periods, cannot result in the consolidated arbitration being statute-barred, the Ontario Superior Court has ruled.
The claimant, Julia Gordyukova, was injured in a motor vehicle accident on Nov. 9, 2001. She filed an action in the Ontario Superior Court on Sept. 16, 2002, which the insurer agreed included a claim for continuation of her IRB benefits.
Gordyukova’s med-rehab benefits ran out on Oct. 28, 2005, at which time she made an application for a catastrophic impairment determination. The insurer rejected this application, and Gordyukova filed for arbitration on the catastrophic impairment determination issue on Nov. 28, 2008.
Certas Direct Insurance Company was named the priority insurer in December 2009. Certas argued on Mar. 29, 2010 that the scheduled arbitration on catastrophic impairment determination should be added to the court action for IRB benefits instead. The insurer wanted to make sure the findings were consistent in the IRB court action and in the arbitration on cat determination.
The claimant said the arbitration and the IRB actions should be allowed to proceed separately and concurrently.
An Ontario arbitrator ruled that the causation issues raised by Certas required that issues of entitlement to specific accident benefits (IRB) and cat impairment should be heard in arbitration, on condition that the claimant gave notice to discontinue the court action, which she did.
But on the eve of the arbitration, Certas said Gordyukova’s claim for IRB benefits, now combined with the cat determination issue, was statute-barred from being arbitrated. The insurer noted IRB benefits were the focus of the 1992 claim, which was filed more than two years prior to the cat determination arbitration for which the claimant filed in 2008.
An Ontario Director’s Delegate agreed with the insurer’s position on appeal, but the court overturned this decision in favour of the claimant.
“It is clear and not disputed by Certas that each of the court action and the arbitration was commenced within the limitation period required,” the Superior Court ruled. “If the court action and the arbitration proceeded independently, no issue of limitation would arise.
“By seeking to consolidate all of the claims in one proceeding, Certas has itself created the limitation issue.”
The court rejected the notion that the IRB claim (in the court process) could not be added to cat determination claim (in the arbitration process) unless the cat arbitration commenced within two years of when the IRB action arose. “That interpretation does not, in my opinion, comply with the letter and the spirit of [s. 281.1 of the Ontario Insurance Act.],” Ontario Superior Court Justice John Jennings ruled.