An insurer may be liable to pay insurance proceeds for a tort even though a claim under the insurance policy is statute barred by a limitation period.
The limitation period for automobile insurance benefits is two years in British Columbia. The insured commenced an action, alledging bad faith, for failing to advise the insured of his potential entitlement to benefits and of the limitation period. A preliminary motion to quash the action was dismissed on the basis that the limitation period did not apply to a non-contractual claim against the insurer. The decision was upheld by the Court of Appeal on the basis that a trial would be required to determine if a valid action existed.
McIlvenna (Litigation guardian of) v. Insurance Corp. of British Columbia
[2008] B.C.J. No. 1267 British Columbia Court of Appeal C.M. Huddart, P.A. Kirkpatrick and D.A. Tysoe JJ.A July 7, 2008
Here is a link to a summary prepared by the Canadian Underwriter.
The Respondent, who was the plaintiff in the underlying action, was a minor when he was injured in a collision involving a motor vehicle and the bicycle he was riding. Several years after the accident, the appellant, ICBC, denied funding for recommended treatments for the Respondent’s head injury on the basis that the Respondent had become disentitled to statutory ICBC benefits because the Respondent had not commenced a legal action in a timely way.
ICBC applied to strike the Respondent’s action on a pre-trial motion. The chambers judge dismissed ICBC’s motion and ICBC appealed that ruling. ICBC had raised two issues in its motion. The first was whether the Respondent’s claims were statute barred by section 103 of the Revised Regulation (1984) under the Insurance (Motor Vehicle) Act, which imposed an absolute two-year limitation period for commencing an action in respect of statutory benefits. The Respondent had argued that the Limitation Act, which provides for the postponement of the running of time while a prospective plaintiff is a minor, should prevail. The Court of Appeal affirmed the decision of the chambers judge, holding that while section 103 was a contractual provision limiting the right of the insured to sue the insurer, it was only applicable in contract actions. Justice Tysoe, writing for the unanimous court, held at para. 27: “[i]t is my view that section 103 does not apply to a non-contractual claim against ICBC as long as the claim is not an indirect attempt to enforce the contractual right to benefits”. As the Respondent’s claim was framed in negligence, and not in contract, that portion of ICBC’s appeal was dismissed and the Respondent was allowed to rely on the Limitation Act provision postponing the running of time while the Respondent was a minor.
The second issue was whether the Respondent’s action should be dismissed because it was bound to fail. The Respondent had pleaded against ICBC in negligence alleging that an ICBC adjuster’s failure to advise the Respondent about the availability of statutory benefits constituted a breach of a duty of care ICBC owed to the Respondent. ICBC had alleged in its motion that it was plain and obvious that ICBC did not owe the Respondent a duty of care in the circumstances. The Court of Appeal affirmed the chambers judge’s decision that the Respondent’s action was not certain to fail, and thus should not be dismissed summarily.
This case was originally summarized by jhavelaar@harpergrey.com and originall edited by dpilley@harpergrey.com
