Ontario Court of Appeal upholds decision for insurer to repay Motor Vehicle Accident Claims Fund

The Ontario Court of Appeal has denied an insurer’s appeal that the Motor Vehicle Accident Claims Fund is liable for the benefits paid to a passenger seriously injured in a motor vehicle accident.

Cuong Ngo was seriously injured in a motor vehicle accident, when the car he was a passenger in left the road and struck a tree on Aug. 11, 1997.

Progressive Casualty Insurance Company of Canada had issued an automobile liability policy to the driver effective Apr. 22, 1997, but purported to have cancelled the policy on Jun 18, 1997 for non-payment, according to Ontario (Finance) v. Progressive Casualty Insurance Company of Canada.

The Fund, aware that Progressive was taking the position that the policy had been cancelled, agreed to pay benefits to Ngo on a without prejudice basis while making further inquiries as to its ultimate responsibility for paying those benefits.

In the statement of claim, the Fund contended that Progressive’s purported cancellation of the policy was ineffective and that the benefits paid on behalf of Ngo should be paid by Progressive, the Court notes.
Progressive argued that under the Dispute Regulation, the Fund was obliged to pay Ngo’s benefits pending resolution of the dispute. The insurer further alleged that the Fund had failed to comply with the notice provisions in the Dispute Regulation and failed to commence arbitration proceedings as required and was therefore estopped from advancing the restitution claim, according to the Court.

The Fund, until a 2007 decision confirmed it was an insurer, had always taken the position it was not an insurer for the purpose of the Dispute Regulation. This meant that the Fund sometimes proceeded by way of arbitration and sometimes made a restitution claim in the Superior Court, the Court pointed out.

“Once the trial judge decided, correctly in my view, that this was an appropriate case in which to allow the Fund to proceed by way of a restitution claim, the procedural provisions in the Dispute Regulation, including the notice requirements, became irrelevant,” Justice Doherty writes. “The Fund’s action was subject to the procedures and time limits applicable to claims for restitution brought by way of statement of claim in the Superior Court.  There is no suggestion that the Fund failed to comply with any of those requirements.”