Court of Appeal Upholds Relief from Forfeiture in the Case of Imperfect Compliance

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Dams v TD Home and Auto Insurance Company 2016 ONCA 4

This case concerned the appeal and cross-appeal of a Superior Court of Justice decision from November 2014.

On June 26, 2009, the appellant, Wolfgang Dams, stopped his motorcycle for a red light at an intersection. Mr. Dams slowly turned to make a legal right turn on the red light. Before he fully merged, he checked his left and he saw a dark vehicle speeding towards him. He hit his brakes to avoid hitting the vehicle but in doing so, he fell and his bike landed on top of him, causing an ankle injury.

Mr. Dams failed to report the incident to his insurer within the company’s required reporting time. As such, when Mr. Dams finally reported the incident six months later, the insurer refused his claim. Mr. Dams brought a claim against the insurer in the Superior Court.

The Superior Court granted relief to Mr. Dams under section 129 of the Insurance Act and section 98 of the Courts of Justice Act. The Superior Court judge then attributed 60% liability to the insured and 40% liability to the unidentified driver of the dark vehicle.

The insurance company appealed the relief granted to Mr. Dams as well as the attribution of liability. Mr. Dams cross-appealed the 60% liability attributed to him.

The Court of Appeal focused on the purpose of Section 129 of the Insurance Act which allows the court to grant relief from forfeiture where there has been imperfect compliance with a statutory condition. Section 98 of the Courts of Justice Act allows a court to grant relief against forfeitures on just terms.In interpreting these two provisions, the Court of Appeal turned to the Supreme Court of Canada’s decision in Falk Bros Industries Ltd v Elance Steel Fabricating Co, [1989] 2 SCR 778, which concerned legislation from Saskatchewan which had identical language to the current Ontario legislation. In that decision, the SCC found that sections like section 129 are remedial in nature and should be given an appropriately broad interpretation. Case law since the Falk decision has affirmed that this type of remedy is only available in relation to policy conditions that refer to proof of loss. The Court of Appeal stated that Falk was on all fours with the case before them and thus upheld the trial judge’s decision to grant relief from forfeiture. Regarding the issue of apportionment of liability, the Court of Appeal found nothing unreasonable about the trial judge’s apportionment of liability and thus dismissed the appeal and cross-appeal on that basis.

The Court of Appeal dismissed both issues on appeal and the cross-appeal.

What the Insurer Should Know

The courts have the ability to grant relief from forfeiture when the violation of the policy relates to the proof of the claim. Courts will interpret the laws related to relief from forfeiture in a very broad manner to be able to extend the relief to as many situations as can fit within the wording of the legislation.

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Mitch Kitagawa Jennifer Cox, Articling Student