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November 12, 2015

Today the Court of Appeal released a decision

Developments in Loss Transfer: Defence of laches is not available to bar delayed claims

Michael Blinick
Michael Blinick,


By Michael Blinick

While a first party insurer 'discovers' its claim for loss transfer on the day after it makes a request for indemnification1, it was unclear whether there are any limitation periods relating to when a first party insurer must deliver an indemnification request to be entitled to seek indemnification under the loss transfer provision of the Insurance Act2. This gap in the legislation has resulted in conflicting decisions by the Superior Court relating to whether a first party insurer is required to start a loss transfer dispute within a specified amount of time.

Decision released in the appeals of Intact Insurance Company of Canada v. Lombard General Insurance Company of Canada...

Today the Court of Appeal released its decision in the appeals of Intact Insurance Company of Canada v. Lombard General Insurance Company of Canada3 and found that the doctrine of laches is not available to second party insurers when defending a claim for loss transfer. The Court found that loss transfer is not an equitable claim and that the Limitations Act, 20024 prohibits second party insurers from raising this defence to defeat a claim for legal relief that is not subject to the unexpired basic limitation period prescribed by the Limitations Act. While the second party insurers argued for the inherent unfairness in allowing a first party insurer to advance a claim where unreasonable delay has occurred, the Court highlighted that any unfairness could be rectified through the enactment of regulations. The Court also stated that this decision does not address the availability of other equitable defences (such as waiver, estoppel and acquiescence) to the extent not founded solely on a first party insurer's delay in initiating its claim.


While we now know that second party insurers are unable to rely on the Doctrine of Laches to defeat a claim for loss transfer, this finding has significant consequences for insurers of heavy commercial vehicles or for the insurers of vehicles that collide with motorcycles or motorized snow vehicles. These insurers must continue to adjust for and acknowledge the possibility of a loss transfer dispute many years in the future even though a request for indemnification has never been provided. This decision suggests that second party insurers ought to conduct thorough investigations into liability even though they have no knowledge of whether a demand for loss transfer will ever be presented.

1 Markel Insurance Co. of Canada v. ING Insurance Co. of Canada, 2012 ONCA 218
2 R.S.O. 1990, c. I.8
3 2015 ONCA 764
4 S.O. 2002, c. 24, Sched. B (“Limitations Act”)


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