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Insurance - Relief from Forfeiture - Statutory Requirements

Dams v. TD Home and Auto Insurance Company (Ont CA, 2016)

In this case the Court of Appeal discussed the application of the s.129 Insurance Act relief from forfeiture provisions, which can operate to relieve an insured from the consequences of non-compliance with statutory requirements for making a claim:
[15] The starting point for the analysis is the decision of the Supreme Court of Canada in Falk Bros. Industries Ltd. v. Elance Steel Fabricating Co., 1989 CanLII 38 (SCC), [1989] 2 S.C.R. 778. In that case, Elance Steel Fabricating Co. claimed against a surety company under a bond on account of a debt due from Falk Bros. Elance gave notice of its claim 28 days after the expiry of the notice period specified in the bond. The case required the Supreme Court to interpret a section in The Saskatchewan Insurance Act, R.S.S. 1978, c. S-26, identical in language to s. 129 of the Ontario Insurance Act.

[16] The Supreme Court observed, at p. 782, that sections like s. 129 are remedial in nature and “as such should be given an appropriately broad interpretation”. The purpose of allowing relief from forfeiture in insurance cases “is to prevent hardship to beneficiaries where there has been a failure to comply with a condition for receipt of insurance proceeds and where leniency in respect of strict compliance with the condition will not result in prejudice to the insurer”: at p. 783. However, the court’s power under provisions like s. 129 only extends to cases “of such statutory conditions as to proof of loss or other matters or things that are required to be done or omitted with respect to the loss”: at p. 786.

[17] The court then addressed the question of whether the failure to give notice of a claim under an insurance policy amounted to “imperfect compliance with a statutory condition as to the proof of loss”, in which case relief under the statutory provision would be available, or whether it was non-compliance or breach of a condition precedent, in which case there could be no relief. It concluded, at pp. 785-786, that the failure to give notice of a claim in a timely fashion constitutes “imperfect compliance with a statutory condition as to the proof of loss” and falls within the terms of the relief provision. By contrast, the failure to institute an action within the prescribed time period would be a more serious breach, akin to non-compliance. Because Elance’s failure to give notice of its claim within the prescribed time constituted imperfect compliance rather than non-compliance, Elance was eligible to claim relief from forfeiture.

[18] In the years following Falk Bros., this court has re-affirmed on several occasions that the discretion possessed by a court under s. 129 of the Insurance Act is limited only to those policy conditions – statutory or contractual – that relate to proof of loss: Williams v. York Fire & Casualty Insurance Co., 2007 ONCA 479 (CanLII), 86 O.R. (3d) 241, at para. 33; Kozel v. The Personal Insurance Company, 2014 ONCA 130 (CanLII), 119 O.R. (3d) 55, at para. 35. The court’s power under s. 129 concerns things or matters required to be done in relation to the loss – i.e. to instances of imperfect compliance with the terms of a policy after a loss has occurred: Williams, at para. 33; Kozel, at para. 58.

[19] TD Home argues that the reporting requirements contained in s. 3 of the Regulation are akin to conditions precedent in the nature of limitation periods, because s. 8(1) of the Regulation provides that no person can bring an action to recover an amount under the contract of insurance “unless the requirements of this Schedule with respect to the claim have been complied with.”

[20] I am not persuaded by this argument, for two reasons. First, the decision of the Supreme Court in Falk Bros. stands squarely against it. The reporting requirements contained in s. 3 of the Schedule are functionally similar to the notice of claim requirement at issue in Falk Bros. Both operate with the view of providing the insurer with timely information about the loss so that it can investigate the matter, if it so choses. The nature of Mr. Dams’s failure to comply in the present case clearly falls within the class of cases covered by the statutory language in s. 129 – i.e. a statutory condition as to the proof of loss to be given to the insured or other matter or thing required to be done omitted by the insured with respect to the loss.[1]

[21] Second, to assess the effect of s. 8(1) of the Schedule on the availability of relief under s. 129 of the Insurance Act, the Schedule must be read in its entirety. Section 8(1) applies to all the requirements of the Schedule concerning uninsured automobile coverage. In addition to the reporting requirements imposed by s. 3, the Schedule also requires a person entitled to make a claim to give notice of the claim and to provide a proof of claim: s. 6. To accept the interpretation of s. 8(1) advanced by TD Home would result in that section of the Schedule precluding relief from forfeiture for imperfect compliance with the obligation to provide a proof of loss, a matter for which s. 129 specifically affords relief from forfeiture. Such an interpretation of the Schedule would run counter to the very purpose of the statutory provision. In my view, such an untenable interpretation signals that s. 8(1) of the Schedule does not transform all the requirements imposed on a claimant by the Schedule into conditions precedent to a claim for which relief from forfeiture is not available. Instead, s. 8(1) must be read in the light of s. 129 of the Insurance Act and the principles set down by the Supreme Court in the Falk Bros. case. When so read, relief from forfeiture under s. 129 of the Insurance Act is available where a claimant has failed to meet the time periods for the reporting requirements set out in s. 3 of the Schedule.

[22] Consequently, the trial judge did not err in holding that Mr. Dams was entitled to claim relief from forfeiture under s. 129 of the Insurance Act in respect of his failure to make a report to the police and to provide an accident statement to TD Home within the times stipulated by s. 3 of the Schedule. Since TD Home limited its argument to the jurisdiction of the trial judge to grant relief from forfeiture and did not contend that the trial judge had failed to look at all relevant factors when considering whether to grant relief from forfeiture, the conclusion that the trial judge could grant relief from forfeiture under s. 129 disposes of this part of the appeal.

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