[1] Endorsement of LEDERER J.: — This is an appeal from the order of an arbitrator. She found that the applicant, the Economical Mutual Insurance Company ("Economical"), was not barred as a result of the operation of any limitation period from pursuing a claim for a "loss transfer" from the respondent, Zurich Insurance Company ("Zurich"). Zurich has appealed. It says the claim is out of time.

[2] Joan Hall was insured by Economical. On July 18, 2005, she was involved in a motor vehicle accident. Economical responded to her accident benefit claim. It made payments to her. The car being driven by Joan Hall had been struck by a "dump truck"¹ insured by Zurich. Economical, as the "first-party insurer" purports to have made a loss transfer claim from Zurich, as the "second-party insurer".

[3] Notice of loss transfer was provided by Economical to Zurich on November 8, 2005.

[4] On January 30, 2006, Economical forwarded a "request for indemnification" to Zurich claiming $27,516.12 less the $2,000 statutory deductible. On February 21, 2008, Economical served a second updated request for indemnification listing all payments to that date, totalling $119,898.14. A third request for indemnification was sent by Economical on April 17, 2008 in the amount of $127,172.22.

[5] A notice to participate and demand for arbitration, dated November 25, 2009, was served by Economical, on Zurich, on November 29, 2009.

[6] Between the notice of loss transfer (November 8, 2005) and the service of the notice to participate and demand for arbitration (November 27, 2009), there was considerable correspondence [page668] between the two insurance companies. For its part, Zurich sought to obtain the accident benefit file indicating that, on receipt, an audit would be conducted and a response provided. As it is, the parties agree that, at no time during the course of this communication did Zurich indicate that it would be accepting the loss transfer claim or agree to indemnify Economical.

[7] On December 8, 2011, the underlying accident benefit claim was settled as between Joan Hall and Economical. The settlement disclosure notice indicates the total settlement was in the amount of $127,220. A further request for indemnification, dated January 24, 2012, was sent from Economical to Zurich reflecting the amount of the settlement less costs, disbursements and HST. The amount requested for indemnification was $95,857.

[8] No payment has been made by Zurich to Economical. Zurich has accepted that its insured is liable for the accident and that this is an applicable case for loss transfer. In this case, Zurich relies on the expiration of the limitation period and, on that basis, denies it bears any continuing responsibility under the loss transfer regime.²

[9] The position taken by Zurich is founded on the understanding that the applicable limitation period (two years)³ commenced on January 30, 2006, the date of the first request for indemnification, and that the arbitration was not commenced (the claim was not made) until November 27, 2009, when the notice to participate and demand for arbitration was served. This was well after the end of the limitation period. As Zurich sees it, if no arbitration was begun within two years, the first-party insurer (Economical) has no right to make a claim, even though payments which could not have been contemplated within the two-year time period were paid after it had expired.

[10] The arbitrator did not agree. She found that each request of indemnification invoked an independent or separate limitation period. This was referred to as a "rolling limitation period". [page669]

[11] Her decision relied on Federation Insurance Co. of Canada v. Kingsway General Insurance Co.⁴ In that case, it was determined that the limitation period with respect to a loss transfer claim begins to run at the time the request for indemnification is made.⁵ This was confirmed by the Court of Appeal:

[12] What this leads to is that each time there is a request for indemnification, followed by the failure of the second-party insurer to satisfy its legal obligations, that is failing or omitting to pay the loss transfer, a new limitation period commences.⁷ This is the "rolling limitation period".

[13] Zurich argued that the decision of the Court of Appeal did not deal with and cannot be relied on as determining that each new request for indemnification has its own separate limitation period. The arbitrator was at some pains to point out that the decision of the Court of Appeal leads logically to that result:

[14] It was also submitted on behalf of Zurich that, to commence the limitation period with the refusal or omission of the second-party insurer to pay, which is to say, immediately after the delivery of the request for indemnification if payment is not made, is to give control of the limitation period to the first-party insurer. This may be so but, as the arbitrator pointed out, this is not as a result of her decision, but is an outgrowth of the decision of the Court of Appeal.⁹ She goes on to point out that there is an expectation that insurers will want to have their indemnifications completed.¹⁰ Presumably, they want the money. The arbitrator also noted that there has been a demonstration of some measure of control remaining with the second-party insurer. In Intact Insurance Co. of Canada v. Lombard General Insurance Co. of Canada,¹¹ the first-party insurer was denied its claim for loss transfer. It had waited too long to make the claim. The doctrine of laches was applied.

[15] There is a broader concern for the approach proposed by Zurich. To my mind, Zurich seeks to treat this matter as if the action was based on the underlying tort, the negligence that was the cause of the motor vehicle accident. In a tort case, the commencement of the running of the limitation period is associated with the accident. [page671]

[16] The applicable limitation period is set by the Limitations Act, 2002,¹² s. 4:

[17] The limitation period begins when the claim is discovered. The factors that explain discovery are provided in Limitations Act, 2002, s. 5:

[18] It is not difficult to see that where the harm arises from a car accident, it is that event which will generally give rise to the fulfillment of these requirements: the "discovery" of the claim and the commencement of the running of the limitation period. It follows that it will often be the case that there will not be a full understanding of the damages at the time the two-year limitation period expires. In such circumstances, there is no new cause of action associated with any increased understanding of the damages. It is understood that the action will have to be started within two years of the accident and that its process will have to respond to what is unknown, either by waiting for some time to pass or projecting what will happen in the future. In this case, Zurich is arguing for the same approach. However, the action in a loss transfer claim is not the same. It is not a claim in negligence. It is a claim that finds its basis in the legislation. [page672]

[19] The legislative foundation for a claim for loss transfer is in the Insurance Act,¹³ s. 275(1):

[20] This section makes clear that the first-party insurer is to be indemnified for the payments that it is required to make on account of statutory accident benefits. The indemnification is to be fault based.¹⁴ Where there is a dispute, the legislation calls for arbitration as the method to be employed in resolving the difference:

[21] The Court of Appeal has confirmed that, given that s. 275(1) of the Insurance Act creates a statutory cause of action, there is no reason to apply the principles of limitation that have been developed in the common law of torts to claims made under this provision.¹⁶

[22] The better analogy is to claims in contract, say for the payment of rent under a lease or for some product purchased over time. If a tenant or purchaser stops paying monthly rent or installments and no action is commenced for more than two years after the first payment is missed, it would not be the case that the landlord or the seller would lose out on its ability to sue for every and all future failures to pay. Rather, the entitlement to sue would remain for all payments not made within the preceding two years. This is consistent with the approach taken by Economical in this case and the policy behind the loss transfer system which "was created to establish a streamlined [page673] mechanism to readjust the responsibility for the payment of various Statutory Accident Benefits between two insurance companies and to reduce litigation with respect to that loss transfer".¹⁷ I join the arbitrator in her expressed confidence that sophisticated insurance companies will work reasonably to have these indemnifications completed¹⁸ and not make a habit of holding them up or attempting to avoid the responsibilities the legislation dictates by the reliance on the sort of technical objections referred to by Zurich.

[23] It is in this vein that I should refer to State Farm Insurance Co. v. Manitoba Public Insurance Co.¹⁹ It could be said that the problem there is the reverse of the issue raised here. In that case, over a time frame of years, a series of requests for indemnification were made. Before some but after others, a notice to participate and demand for arbitration was made. There was no dispute that the arbitration would reach back and cover the requests for indemnification made over the two years prior to the serving of the demand for arbitration. The question was whether it also covered the requests for indemnification that came after the demand for arbitration was served or whether, as fresh causes of action, they required their own demands for arbitration. Since none had been made and more than two years had passed, it was argued that it was too late and that no claim for these further requests for indemnification could be made. The arbitrator was clear in his view that this position was not supportable:

[24] Interestingly, the arbitrator justified his conclusion, in part, by analogizing this claim to an action in tort. He pointed out that, where a claim is made for a bodily injury requiring a claim for additional damages incurred after the action was commenced, it would not be necessary to start a separate lawsuit for those expenses. The claim would be dealt with in the context of the existing lawsuit perhaps, but not necessarily requiring an amendment to the pleadings.²¹ In this context, this may seem to be a useful comparison. I repeat that, to my mind, it is problematic and inconsistent with the finding made by the Court of Appeal. The limitation period should not be applied as it would be in common law torts. The proposition that no new action or claim would have to be commenced is equally true in the analogy to contract claims to which I referred earlier. If a claim is made for a failure to pay rent or to make periodic payments in the furtherance of the purchase of some product, it is unlikely that a new claim would be required for each failure that occurs after an action has begun. The necessary adjustments could be made through an amendment to the pleadings.

[25] Ultimately, the processes we use to resolve our differences have to work and not be tied up in unnecessary and unhelpful overly technical positions.

[26] For the reasons reviewed herein, the appeal is dismissed.

[27] I confirm, as did the arbitrator, that the first request for loss transfer, dated January 30, 2006, is excluded by operation of the Limitations Act, 2002, as the arbitration was not initiated until November 27, 2009. This request for loss transfer was in the amount of $27,516.12 before the $2,000 deductible was applied. All subsequent requests for indemnification (February 21, 2008; April 17, 2008; March 8, 2011; and January 24, 2012) are not barred as a result of any limitation period.

[28] As agreed to by the parties, costs are awarded to Economical to be paid by Zurich in the amount of $11,000.