Accident Benefit Article

CROSSING THE THRESHOLD: WHEN DOES THE LIMITATION PERIOD CLOCK START TO TICK?

June 8, 2015

Generally, civil litigants have 2 years from the date that their claim is “discovered” to commence a civil proceeding. Typically, the discovery date will coincide with the date the act or omission, on which the claim is based, occurred.

The Ontario Limitations Act states that a claim is presumed to have been discovered on the day the act or omission, on which the claim is based, took place, unless the contrary is proven.

In third party claims arising from motor vehicle accidents, the question of when the limitation period begins to run is complicated by the so-called “Threshold”, which is set out under s.267.5(5) of the Insurance Act.

The Threshold requires that an injured person sustain either:

a) Permanent serious disfigurement; or,

b) Permanent serious impairment of an important physical, mental or psychological function,

to advance claims against an at-fault driver for pain and suffering damages and/or medical expenses arising from in accident. The Threshold applies only to motor vehicle accident claims and serves to restrict a litigant’s ability to commence litigation. However, the Threshold requirement to commence motor vehicle accident litigation may also have the unintended consequence of extending discoverability dates for accident victims who, in many cases, will not know whether their claim surpasses the Threshold (which requires permanent injury), for months or years following an accident. A Plaintiff does not discover an action if there is only a mere chance of succeeding. The Court of Appeal has stated that discovery does not occur until a Plaintiff has a substantial chance of success in recovering a Judgment for damages. In the motor vehicle context, this will frequently require a medical opinion that the Plaintiff’s injuries surpass the Threshold.

There are several recently reported Summary Judgment decisions in motor vehicle actions, where Plaintiffs have been permitted to continue claims commenced beyond the 2-year anniversary of the accident. These Plaintiffs have successfully contested Summary Judgment motions, on the basis that their claim could not be discovered until there was medical evidence to support a substantial chance of surpassing the Threshold. In chronic pain type cases, it may be months or years following a motor vehicle accident, before medical evidence supporting a permanent injury exists.

Ontario Superior Court Justice Perell has recently accepted the argument that there may be a period of delay after a motor vehicle accident, before discovering a Threshold claim, in the cases of Farhat v. Monteanu (where the Plaintiff commenced a claim 2 years and 32 days after the date of the accident) and Naipaul v. State Farm Mutual Insurance Company (where the Plaintiff commenced a claim approximately 2 years and 4 months after the accident). In the Farhat decision, Justice Perell stated that:

“Much to the dismay of insurance companies of defendants, almost invariably, it will take several months to determine whether ongoing pain, suffered as a result of an accident is a permanent serious impairment. It will typically, almost invariably, be the case that a plaintiff with only a chronic pain claim will not know that the claim surpasses the Insurance Act threshold, until sometime after the date of the accident.”

Justice Perell went on to highlight the dichotomy that exists with respect to limitation periods in motor vehicle actions and other personal injury cases:

“A simple comparison between Mr. Farhat’s automobile accident claim and a slip and fall case demonstrates why the operation of s.267.5 to limitation periods rankles the insurance defence bar. Visualize, if Mr. Farhat had gotten out of his parked van and slipped and fell on a sidewalk in disrepair, there would be no waiting for a medical report, and the limitation period for this occupier’s liability claim would immediately have commenced to run.”

From a Plaintiffs’ perspective, this dichotomy is one created entirely at the behest of insurance companies to prevent motor vehicle accident litigants from suing. It must be emphasized that many motor vehicle accident victims are entirely precluded from pursuing tort litigation because of the Threshold. These litigants are only entitled to compensation through the highly regulated (and often arduous) accident benefits system. The hreshold remains overwhelmingly in favour of insurers, by preventing most motor vehicle accident litigants from filing a claim. In these circumstances, insurers should not be complaining about the small subset of litigants that are unable to discover their underlying permanent injuries within 2 years of the motor vehicle accident.

In both Farhat and Naipaul, Justice Perell found that there was insufficient evidence, prior to issuing the claim, for the Plaintiff to establish a reasonable chance of meeting the Threshold. In both cases, Justice Perell dismissed the Defendants’ Summary Judgment Motions and declared that the Plaintiffs’ actions were not statute barred. Notably, Justice Perell also found that arguments regarding solicitor’s negligence, or inadvertence in failing to advance a claim within 2 years of the accident, were not relevant considerations in the discoverability analysis.

These decisions may provide helpful relief to Plaintiffs who commence motor vehicle accident litigation more than 2 years after the date of the accident. In cases involving chronic and developing conditions, it will now be extremely difficult for Defendants to succeed on limitations defences in most motor vehicle accident claims. However, as the Plaintiff bares the onus of persuading the Court that the claim could not have been discovered, with reasonable diligence, within 2 years of the accident, it will rarely be worth the risk to wait more than 2 years to commence a motor vehicle accident claim. That said, health practitioners who are confronted with a situation where a potential Plaintiff has a permanent and serious injury, but has not sued within 2 years of the accident, should not foreclose the possibility of a civil claim and should recommend that their client obtain a legal opinion on the merits of a lawsuit.

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