New Insurance Act section cannot amend exclusion to existing policy: Ontario Court of Appeal

No clear language in new provision indicates retroactivity

New Insurance Act section cannot amend exclusion to existing policy: Ontario Court of Appeal
An insurance claim is an event, not a status, that arises from the date of loss

A newly enacted section of the Insurance Act, RSO 1990, c I.8 does not cover claims for losses that happened prior to it being in force but have yet to be paid by the insurer the Ontario Court of Appeal has ruled.

In Lin v. Weng, 2022 ONCA 367, Jian Lin purchased a house in 2014 with a mortgage to CIBC. It was insured with RBC General Insurance Company, later succeeded by Aviva General Insurance Company.

In 2015, Qi An Weng and Xiuqin Weng rented Lin’s master bedroom. However, Lin asked them to move out in 2016 because the Wengs defaulted on their rent. On the day they were scheduled to move out, the Wengs caused an explosion when they attempted to extract resin from marijuana and burned the house down. The Wengs pleaded guilty and charges against Lin were withdrawn.

Aviva denied coverage because of two exclusion clauses in the policy. Lin then sued both RBC and Aviva. A month later, the newly enacted s. 129.1 of the Insurance Act came into force. Lin amended his statement of claim to include this new provision. Aviva and RBC did not amend their statement of defence.

The motion judge awarded summary judgment to Aviva. He found that the provision “does not apply retrospectively to insurance policies before the date of its enactment.”

On appeal, Lin contested the motion judge’s finding on retrospectivity, asserting that an outstanding “claim” under the amended provision includes one that “is ongoing until the insurer pays it or successfully contests its obligation to pay.”

The appellate court disagreed.

“A retroactive law is one that applies a new law to an event that happened in the past and to which the old law applied before the new law was enacted … in contrast, a retrospective law is one that has an effect for the future set of facts that occurred in the past,” said the court.

There is also a strong presumption against retroactivity, said the court.

The act does not have a definition of the word “claim” but, in the context of s. 129.1, the appellate court ruled that a claim is an event, not a status, and that the “relevant point in time … is the date when the insured became entitled to indemnity from the insurer or had a claim for loss – that is, the date of the loss.”

Further, there is no clear language in the provision to support Lin’s interpretation that claims cover losses already incurred but unpaid, and therefore the presumption against retroactivity has not been rebutted, said the court.

Thus, the appeal was dismissed.

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