Priority Disputes: When “We’ll Get to It Later” Costs You the Case

Aviva v. MVACF, (February 25, 2025), Arbitrator Novick.

The claimant was injured as an occupant in a single vehicle collision in May 2018. The identity of the driver was unknown. The claimant’s grandmother was a named insured of Aviva Insurance Company of Canada. The claimant submitted an accident benefits claim to Aviva on the basis that she was principally financially dependent on her grandmother.

Aviva disagreed that the claimant was principally financially dependent on its insured. It served the Motor Vehicle Accident Claims Fund with notice of a priority dispute. Subsequently, an arbitration was commenced.

The parties filed an agreed statement of facts which established two missed deadlines. Firstly, the arbitration hearing was not completed within two years of commencing arbitration. Secondly, a pre-hearing was not completed within 120 days of the appointment of the arbitrator. The Fund took the position that Aviva was responsible for the missed deadlines and, as such, their claim to shift priority should be dismissed. Aviva took the position that the Arbitrator should exercise her discretion to allow the claim despite the missed timelines.

Priority Deadlines

Insurers are well aware of the 90-day deadline required to put a higher priority insurer on notice. However, there are other timelines within the priority dispute scheme which were introduced in 2010. Section 8(2) of O. Reg: 283/95 provides the relevant provisions for this dispute:

8(2) The following rules apply with respect to an arbitration of a dispute relating to an accident that occurs on or after September 1, 2010:

1. If an insurer to whom a notice to initiate arbitration is delivered does not respond to the notice within 30 days, the insurer is deemed to have accepted the jurisdiction of the arbitrator proposed in the notice.
2. A pre-arbitration hearing must be scheduled and take place no later than 120 days after the appointment of the arbitrator.
3. Subject to paragraph 4, once a date for the arbitration is scheduled, the arbitration must be conducted on that day.
4. The arbitrator may grant an adjournment on such terms as the arbitrator considers appropriate, but only if there is cogent and compelling evidence of the reasons why the hearing cannot proceed on the scheduled day.
5. Unless consented to by all parties, the hearing of the arbitration must be completed within two years after the commencement of the arbitration.    

Case law indicates that these deadlines are meant to be “permissive and directive”, rather than mandatory. In MVACF v Jevco (June 16, 2017), the Arbitrator articulated various factors to be considered when deciding whether an insurer is precluded from proceeding with a priority claim despite non-compliance with the deadlines. These factors included:

1. Did the Respondent respond to the Notice to Arbitrate and complete its investigation in a timely fashion?
2. Was it practical to complete all necessary steps (production exchange, completion of Examinations Under Oath, obtain satisfaction of undertakings provided, obtain co-operation and production of documents from non-parties, etc.) to be in a position to complete the hearing within two years of the commencement of the arbitration?
3. Did the complexity of the dispute (number of issues, number of parties, involvement of 3rd tier insurers, etc.) make it practical to be in a position to complete the hearing within two years of the commencement of the arbitration?
4. Has the Respondent been prejudiced by the delay?
5. Did the Respondent advise that it required the hearing to be completed within two years or did it acquiesce to the pace of the proceeding?
6. Did the conduct of the Respondent meaningfully contribute to the hearing not being completed in two years?
7. Did the Applicant provide the Respondent with relevant documentation and priority investigation information reasonably requested in a timely fashion?

The Arbitration Decision

Adjudicator Novick agreed that strict enforcement of the deadlines was discretionary. However, this did not change the fact that these timelines were specifically intended by the legislature to assist the parties to resolve priority disputes quickly. The short turnaround time is necessary to allow a higher priority insurer to assume priority and to take over the adjusting of a claim.

In review of the established facts and timeline, Arbitrator Novick concluded that Aviva was responsible for the delays in the proceedings. Aviva initially complied with the Regulation in serving the priority arbitration notice. However, when the Fund promptly responded and requested evidence to establish priority, no response or records were forwarded by Aviva. After Arbitrator Novick was appointed, a pre-hearing was scheduled; however, counsel from Aviva did not appear on the scheduled date. Aviva later retained new counsel, but the pre-hearing and the arbitration were ultimately completed outside of the requisite timeframes.

Arbitrator Novick concluded that the factors from Jevco did not assist Aviva in this case. The Fund had responded to the notice in a timely matter. An EUO was completed earlier in the claim and there was no evidence of other necessary steps which delayed the proceedings. There was no evidence to establish that this claim was so complex as to reasonably expect a delay in the priority proceedings. There was also no evidence that the Fund acquiesced to the delays as it had advised Aviva that it would not consent to waive the prescribed timelines. Finally, the Arbitrator agreed that the Fund would be prejudiced by the delay as it would now have to adjust the accident benefits claim seven or eight years after the date of loss.

Based on these considerations, Arbitrator Novick dismissed Aviva’s claim.

Take Home

This decision stands as an important reminder of the less often discussed but still important timelines prescribed in the priority dispute scheme. While case law has established that these deadlines are not necessarily mandatory, insurers are reminded that arbitrators will not exercise their discretion to excuse or extend a missed deadline absent clear and compelling circumstances. Insurers are viewed as sophisticated parties and are expected to comply with the Regulation and its strict deadlines. Arbitrators who follow established case law may not accede to equitable arguments outside of the Jevco factors.

Important takeaways for insurers:

1. Diarize deadlines – Once an insurer decides to initiate a priority investigation, it must ensure that the various deadlines prescribed within the Regulation are accounted for. As the dispute proceeds, new deadlines including the date of first pre-hearing (120 days from appointment of arbitrator) and arbitration completion (2 years from commencement of arbitration) must be added / updated in the calendar. Insurers are advised to utilize “tickler” systems / applications for regularly reminders and to liaise with their counsel to ensure that deadlines are not missed.
2. Retain counsel early – Insurers are recommended to retain counsel at the earliest opportunity once a decision to investigate priority is made. Experienced counsel will initiate important investigative steps, such as an EUO, and provide advice on moving the matter forward in a timely matter.
3. Move the matter forward – an Insurer should ensure that its first pre-hearing is schedule within the 120 days of appointing an arbitrator, and actively work towards gathering the necessary evidence, and having an arbitration conducted, within 2 years of commencing arbitration.
4. Request an extension if required – if an Insurer knows that it won’t be able to have the arbitration completed within 2 years of commencing arbitration, and has justification for the delay (whether circumstances beyond its control, or because the delay was at the hands of a responding Insurer), it should proactively seek an extension of the two-year timeline from the arbitrator, before the matter goes to a hearing.
5. Respond promptly – Insurers are reminded of the importance of timely correspondence in priority disputes. Arbitrators may be called upon to address whether steps were taken by the parties in accordance with the Regulation. In the context of a missed deadline, Arbitrators will look to the evidence to determine which party bore responsibility for the delay. Insurers need to promptly respond to all demands for arbitration / requests for productions within the context of the priority claim. Insurers must clearly communicate their positions / demands and provide reasonably requested documents / information promptly.