An insured may be entitled to punitive damages if her insured unsuccessfully attempts to breach her for impaired driving

A plaintiff was successful in seeking a declaration that she was entitled to coverage on the basis that her motor vehicle insurer had not established she was impaired at the time of the accident and she was awarded punitive damages for the insurer’s bad faith conduct with respect to the claim.

McDonald v. Insurance Corp. of British Columbia, [2012] B.C.J. No. 372, February 24, 2012, British Columbia Supreme Court, S.K. Ballance J.

 This was an action by the plaintiff seeking a declaration that she was entitled to indemnification by her insurer, the Insurance Corporation of British Columbia (“ICBC”), for all claims arising from a motor vehicle accident and for damages for bad faith for refusing to indemnify her and settling the civil action arising from the accident without involving the plaintiff.

On the night of the accident, the plaintiff had approximately two glasses of wine between 11:30 p.m. and 1:00 a.m. and then went out with a friend to get late night sushi. The plaintiff drove her mother’s vehicle and they went to pick up another friend. The plaintiff was stopped at a random road check at 4:12 a.m. and the officer noticed no signs of impairment. The accident occurred around 5:00 a.m. when the plaintiff took the wrong off-ramp from the highway and mistakenly turned left into the flow of traffic and collided head-on with another vehicle.

The plaintiff had difficulty providing a breath sample at the scene though she was given 5-7 chances to blow. She was arrested at the scene for refusal to provide a breath sample and for impaired driving. She was also issued a ticket for driving without reasonable consideration for others using the highway and received a 24-hour suspension and notice of driving prohibition. Subsequently, additional criminal charges of dangerous driving were laid against her. The charges for refusal to provide a breath sample and impaired driving were stayed five weeks before the criminal trial proceeded. Ultimately, the plaintiff pleaded guilty to the charge of driving without reasonable consideration which carried a penalty of a fine of $500.

ICBC conducted little investigation of its own until after the criminal trial was concluded. ICBC then took steps to interview and obtain statements from the two passengers in the plaintiff’s vehicle, speak to the two officers who attended the scene, and seek additional information from the plaintiff. However, the only substantive outcome of these efforts was communication with one of the officers involved. Only weak attempts were made to contact the other individuals and to obtain information from the road check where the plaintiff had been stopped earlier in the evening and no attempts were made to get further information from the plaintiff herself. During this time, ICBC retained counsel to defend the civil action on behalf of the plaintiff’s mother and the lessor of the vehicle but no counsel was retained to act for the plaintiff. ICBC settled the action on behalf of all three defendants but did not notify the plaintiff.

After the civil action was settled, ICBC decided to deny the plaintiff coverage on the basis of an “alcohol incapability breach”. The factors in ICBC’s decision that the plaintiff was incapacitated at the time of the accident were (1) the late hour of the accident, (2) the plaintiff’s failure to provide a breath sample at the scene, (3) the fact the plaintiff was driving the wrong way in a familiar area, (4) the plaintiff’s admission she had consumed alcohol, (5) the information obtained from one officer, and (6) the contents of the report of the other officer at the scene.

At trial it was found that there were several material difficulties with the first officer’s assessment of the plaintiff’s sobriety at the scene and the accuracy of his account to ICBC and also difficulties with the impressions formed by the second officer as recorded in her report. The judge concluded that it was due to inattentiveness that the plaintiff missed the road signs and the accident resulted when the plaintiff seriously misjudged her entitlement to turn left. The plaintiff’s substandard driving at the material time was unconnected to her prior alcohol consumption. In the result, it was held that ICBC had failed to meet its burden of proof that the plaintiff was incapacitated at the time of the accident. The plaintiff was entitled to indemnification for all claims arising from the accident.

The trial judge further found that ICBC had effectively made its coverage decision based on the information obtained from the first officer and had failed to thoroughly review the police file in full and pursue other aspects of the investigation. ICBC also acted unfairly in failing to advise the plaintiff of the settlement of the civil action when it was “essentially on the brink of deciding the plaintiff was in breach” and would not be indemnifying her. In the result, it was found that ICBC’s multiple failings in the investigation, assessment, and breach decision, and its misconduct in relation to the civil action contravened the duty of fair dealing and good faith owed to the plaintiff. The plaintiff was awarded $75,000 in punitive damages.

This case was digested by Emily M. Williamson and edited by David W. Pilley of Harper Grey LLP.

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