British Columbia Insurance Blog : Canada Insurance Lawyer & Attorney : Michael Thomas of Harper Grey Law Firm : British Columbia, Vancouver

The Plaintiff stated that ICBC had initially paid some chiropractic and physiotherapy expenses under Part 7 of the Act, but then discontinued benefits on the basis that the accident did not cause the injuries. The Plaintiff argued that the application was therefore an abuse of process and the Defendant should be stopped from seeking the deduction.The Plaintiff was injured in a motor vehicle accident and received a tort award from the Defendant. The Defendant sought a deduction from the cost of future care award pursuant to s. 83(5) of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 (the “Act”). The Defendant argued that the costs of future care covered by Part 7 of the Act are to be deducted from an award of damages regardless of whether the Plaintiff has claimed for or received benefits under Part 7. The Defendant took the position that all of the items enumerated in the cost of future care award, except for $5000 which was awarded for upkeep of the family cabin, were expenses which fell under s. 88 of the Act. Section 88 of the Act outlines which benefits ICBC will pay for the event that an insured is injured. An adjuster for ICBC deposed that the Plaintiff had received $7,859.00 as a reimbursement for physiotherapy and an advance of $20,000.00.

The Plaintiff stated that ICBC had initially paid some chiropractic and physiotherapy expenses under Part 7 of the Act, but then discontinued benefits on the basis that the accident did not cause the injuries. The Plaintiff argued that the application was therefore an abuse of process and the Defendant should be stopped from seeking the deduction.

After reviewing a number of authorities, the Court held that Plaintiff’s entitlement to s. 7 benefits had to be estimated and that amount deducted from the tort award. Certain contingencies must be taken into account in doing so. Section 88(1) of the Act states that ICBC is only obliged to pay for “all reasonable expenses incurred by the insured.” The fact that ICBC has the ability to deem certain expenses as unreasonable despite the Court’s award for such items as part of a tort award must be considered. According to the legislation and payment schedules, the amounts permitted for treatments and the frequency of visits for treatments was significantly less than the amounts awarded to the Plaintiff for these items. It was not known whether ICBC would in fact make payments to the Plaintiff beyond the amounts and frequency specified in the legislation and payment schedules. Taking these things into account, the Court held that $25,000.00 was deducted from the award as well as $20,000.00 for the advance.

This case was originally summarized by Kim Yee and originally edited by David W. Pilley.

A MVA occurred at an intersection under construction by Peters Bros. Construction Ltd. (the "Contractor"), an independent contractor hired by the City to undertake repairs to certain roadways in the city. The Contractor was required to purchase a policy of liability insurance naming the City as an additional insured. AXA was the insurer for the policy in issue. The pleadings in the MVA Claims alleged that the MVA occurred as a result of the Contractor's negligence in removing a stop sign at the intersection and replacing it in the wrong location. Ultimately, the MVA Claims were settled and the City was not required to contribute to the settlement. However, the City sought a declaration that AXA was liable to pay the defence costs incurred by the City.

The Court noted that AXA would only have the duty to defend the City if the Statements of Claim in the underlying actions alleged a state of facts that, properly construed, would support an action that could potentially fall within coverage: Non-Marine Underwriters, Lloyds of London v. Scalera, 2000 SCC 24. The policy issued by AXA provided coverage to the City as an additional insured "but only with respect to liability which arises out of the operations of the Insured". The Court noted that each and every claim in the underlying actions flowed back to the movement of the stop sign and the conduct of the Contractor in removing and improperly relocating the sign and therefore was attributable to matters that "arise out of the operation of the insured". The Court concluded that had the Contractor not been working on the construction contract at the particular intersection in issue and had it not removed and relocated the stop sign, there would not have been any claims. Thus, the liability at issue in each of the MVA claims arose "out of the operations of the Contractor". As a result, the Court concluded that all of the claims alleged a state of facts which, if proven, arose out of the operations of the Contractor and, therefore, fell within the coverage afforded by AXA's policy.

The Court rejected AXA's argument that defence costs should be apportioned between covered and non-covered claims. The Court cited from RioCan Real Estate Investment Trust v. Lombard Insurance Co., [2008] O.J. No. 1449 (S.C.J.), where the Court concluded that where there is a duty on an Insurer to defend some, or only one, of the claims against an insured and that claim embodies the true nature of the claim, a duty to defend the entire claim arises. The Court further noted that where the covered and non-covered claims are so intertwined that there is no rational or practical basis for distinguishing costs related to the covered and arguably non-covered claims, an Insurer is obliged to fund the defence of the whole claim relying on the decision in SREIT (Park West Centre) Ltd. v. ING Insurance Co. of Canada, 2008 NSSC 183.

In the result, Penticton was successful in obtaining an Order that AXA indemnify it for all defence costs incurred in defending the MVA Claims.

This case was originally summarized by Jonathan D. Meadows and originally edited by David W. Pilley.

The Plaintiff claimed for a declaration of entitlement to insurance benefits and for general and special damages following a refusal by ICBC to pay insurance benefits for the total loss of his leased vehicle due to a fire. ICBC denied coverage on the basis of the exclusion set out in s. 132(1)(b) of the Insurance (Vehicle) Regulation, B.C. Reg. 447/83, which excludes coverage for loss or damage caused by a “mechanical fracture, failure or breakdown”.

Based on the opinion of an expert witness, the Court found that the plaintiff spun the tires of his vehicle excessively, causing both a build up of heat in the rear fender wells and the snapping of the left rear axle “U” joint. The damage to the rear axle immobilized the plaintiff’s vehicle, causing the heat to build up in the fender wells to the point where rubber tire residue, plastic and fibreglass materials in both wheel wells ignited, causing the fire. The Court acknowledged the expert’s evidence that if the plaintiff’s vehicle had remained drivable, and the plaintiff had brought it to a stop within 30 seconds after he had ceased spinning the rear tires, a fire would likely still have occurred. However, it was the mechanical damage to the rear axle that immobilized the plaintiff’s vehicle and created the condition which caused the heat to build up in the rear fender wells to the point where ignition occurred. But for the broken left rear axle “U” joint, the fire would not have occurred, bringing the loss within the exclusion clause.

The Plaintiff nevertheless contended that the loss fell within the exception to the exclusion clause which provided that the exclusion clause did not apply if “the loss or damage is coincidental with other loss or damage for which indemnity is provided under comprehensive or collision coverage or is caused by fire, theft or malicious mischief.” He argued that no matter the cause of the fire, the exclusion clause had no application, or in the alternative, that any loss caused by mechanical failure was coincidental to the fire loss therefore the exception applied. The Court held that the exception to the exclusion only applied if the loss or damage neither consisted of, nor was caused by mechanical fracture, failure, or breakdown of the vehicle.  Because the fire damage was caused by mechanical failure or breakdown of part of the vehicle, the exception did not apply and ICBC was not liable to indemnify the Plaintiff.

This case was originally summarized by Emily M. Williamson and originally edited by David W. Pilley.

The plaintiff, a dentist, was diagnosed with cataracts in both eyes, a condition which substantially undermined his ability to carry on with his practice.  In July of 1998, the plaintiff’s claim for disability benefits from the defendant, Sun Life, was approved. The defendant subsequently informed the plaintiff that his policy required him to undergo corrective eye surgery.  The plaintiff petitioned the Supreme Court for a declaration to the contrary.  On June 29, 2001, while the Supreme Court judgment was under reserve, the defendant wrote to the plaintiff reaffirming that he was required to have corrective surgery, indicating that it intended to cease benefits if he did not, and setting out a date for final payment. The Supreme Court and the Court of Appeal held for the defendant.  The Court of Appeal issued its ruling on January 29, 2003, and the plaintiff commenced corrective surgery shortly thereafter. Despite the surgeries, the plaintiff was unable to practice dentistry, and commenced an action against the defendant for disability benefits.  The defendant brought an application under Rule 18A claiming the action was statute barred as it was commenced outside the limitation period set out in s. 22 of the Insurance Act, R.S.B.C. 1996, c. 266.  The plaintiff argued that correspondence and discussions passing between the parties during the litigation meant that “clear and unequivocal notice” of the defendant’s intention to deny benefits was never given.  This submission was premised mainly on the fact that the defendant had indicated that it would not consider the plaintiff in fundamental breach of his policy if he postponed surgery during the litigation.  No formal standstill agreement was reached.

The plaintiff’s action was dismissed.  The Supreme Court ruled that the June 29, 2001 letter constituted “clear and unequivocal notice”.  In determining what constitutes “clear and unequivocal notice”, the Supreme Court referred to the Court of Appeal’s decision in Balzer v. Sun Life Assurance Company of Canada, 2003 BCCA 306, and the line of cases emerging from that judgment.  The Court interpreted Balzer to mean that when an insurer expresses its intention to cut off benefits and close its file, the s. 22 limitation period is triggered.  The correspondence and discussions passing between the parties did not undermine the notice contained in the June 29, 2001 letter as the communication was related to the appeal, and to the consideration of additional information concerning the plaintiff’s medical status.

This case was originally summarized by Kim Yee and edited by David W. Pilley of Harper Grey.

The homeowner, Quiding, hired Aspen to build a home on his lot. The home was replete with defects and problems, including leaking windows and walls, fans venting into the attic, entranceways that gathered water, and stucco placed so close to concrete that it wicked water into the walls.

Quiding refused to pay Aspen for the work, and Aspen sued for the balance due on the contract. Quiding's counterclaim against Aspen was framed in both contract and tort. The breach of contract claim was based on the implied warranty that the work would be suitable and fit for purpose, and the tort claim was that Aspen owed a duty to exercise all reasonable care, skill, and competence as a general contractor in constructing the new home. The judge found that Aspen breached both the implied contractual warranty and the duty of care owed to Quiding, and awarded $44,000 for items left unfinished.

Under the Home Warranty Program, the limit of liability under the warranty was the lesser of (a) the total provincial contract price for the dwelling unit or (b) $200,000. This number included cost of repairs, investigation, engineering and design, and the supervision of the repair.

An additional term of the warranty stipulated that Aspen was to perform the repair, but Quiding rejected that. Three years after an adjuster was assigned to the claim, the Insurer wrote a letter to Quiding declining coverage on the basis that Quiding refused to let Aspen do the repairs. The Insurer also said that it would cover the defects and apply the warranty coverage if Quiding would let Aspen do the repair work.

The repair work was by December 2007 but Aspen did not correct the defects. In January of 2008, the Insurer commenced legal proceedings to sort out its obligations to Quiding. Part of the counterclaim by Quiding included punitive damages for bad faith.

While the judge felt that starting an action to resolve the issue was not the ideal way to address the matter, it did not amount to reprenhensible conduct in all of the circumstances. The judge rejected the punitive damages claim, but awarded damages of $180,000 against the Insurer. The judge further ordered that the Insurer was able to recover that $180,000 from Aspen.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

The Defendant Insurer applied for a dismissal of the Plaintiff Insured's claim.  The Insured was employed by the Royal Bank of Canada as a customer service representative.  The Insurer provided insurance coverage, including long term disability coverage for the bank's employees, including the Insured.

The Insured developed laryngitis and, as a result, was told to rest her voice.  She attempted to return to work but was unable to do so.  On the advice of her employer, she accepted short-term disability benefits for eight weeks.  After the Insured's short-term disability benefits were exhausted, she applied to the Insurer for long-term benefits based on her doctor's then diagnosis of "muscular tension dysphonia".  The Insurer approved her application for long-term disability benefits.  The Insured was advised that if her medical condition prevented her from performing the duties of her own occupation, she would, in approximately 18 months, be eligible for disability payments only if she was unable to work at any occupation for which she was qualified, or might reasonably become qualified by training, education or experience.

The Insured was eventually advised that her claim would be closed at the expiration of the 18 month period as she was no longer entitled to disability benefits.  Approximately six months after the Insured's benefits were cut off, she received a new diagnosis of conversion disorder and advised the Insurer. The Insurer rejected the Insured's claim for benefits based on the new diagnosis and the Insurer issued a Writ of Summons.

The Insurer brought this application to have the Insured's claim dismissed on the basis that section 22(1) of the Insurance Act of British Columbia requires that "every action on a contract must be commenced within one year after the furnishing of reasonably sufficient proof of a loss or claim under the contract and not after".

In this case, the policy provisions that applied to the Insured's claim, on a literal rating, permitted the Insured to commence legal action two years after the last day on which a proof of claim would be accepted under the terms of the policy.  Thus, the issue before the Court was which limitation period applied.  If section 22(1) of the Insurance Act applied, the Insured had not brought her claim within time whereas, if the limitation period in the policy applied, the Insured had brought her claim within time.

The Court found that while section 3 of the Insurance Act prevents an Insurer from contracting for a limitation period shorter than that provided for in the Insurance Act, there is nothing in section 3 that prevents an insurer from contracting for a period greater than that in the Act.  The Court also granted the Insured relief from forfeiture as she had failed to formally file a proof of loss, which the Court viewed as imperfect compliance given the circumstances of the case.  In the result, the Insurer's application was dismissed.

This case was digested by Cameron B. Elder and edited by David W. Pilley.

Wingtat was in the business of slaughtering poultry and processing, packaging and selling poultry and meat. Wingtat had cold-storage facilities in its own premises but also used off-site cold-storage facilities owned by third parties. A fire at an off-site storage location destroyed Wingtat's stock valued at $800,000. Aviva took the position that coverage for this loss was limited to $25,000 as a result of the wording of paragraph 10 of a Multi Peril Extension Endorsement regarding temporary locations. Aviva pursued summary judgment with respect to its position.  The Chambers Judge dismissed Aviva's application and Aviva appealed from that decision.

The Court of Appeal found that coverage was provided for stock at a temporary location under Clause 2.B of the insuring agreement. Clause 2.B did not require that the address of the temporary location be specified on the Declarations Page as a precondition to coverage.  The Court noted that a requirement to specify the address of the temporary location on the Declarations Page could not be implied in Clause 2.B because such a requirement would make the clause superfluous with respect to the category of Temporary Locations. The Court rejected Aviva's argument that the Endorsement providing $25,000 in additional coverage for temporary locations limited such coverage noting that the Endorsement clearly stated that the extensions of coverage were in addition to the limits provided elsewhere in the policy. If the coverage in paragraph 10 of the endorsement was in addition to the limits provided elsewhere in the policy, then the wording in that paragraph could not possibly be construed to be a reduction or cap of those limits. The $25,000 limit in paragraph 10 of the Endorsement for temporary locations was simply a limit of the additional insurance provided by the Endorsement.

In the result, Aviva's appeal was dismissed.

This case was originally summarized by Jonathan D. Meadows and orginally edited by David W. Pilley.

Manulife owns Metrotown Centre in Burnaby, B.C. and the Defendant Maxime's Bakery was a tenant there. Maxime's insurance policy through Sovereign named Manulife as an additional insured under the policy.

One of Maxime's employees was delivering goods in a cart, and struck the Plaintiff Liu, causing a number of injuries. The Plaintiff commenced an action against the employee, Maxime's and Manulife. The issue  in this application was whether the claims as alleged in the pleadings fell within the scope of Manulife's coverage outlined in the policy. Did the event arise from legal operations performed by or on behalf of the named Insured, requiring Sovereign to defend Manulife, or did the event occur due to the statutory breaches of Manulife as an occupier under the Act?

Liu alleged that the Defendants did not take all reasonable steps to ensure the premises were reasonably safe for the operation of the cart. The delivery of goods undertaken by the employee fell within the scope of the policy. That act comprised part of the legal operations of Maxime's and any claims arising from these actions permit Manulife to rely on the additional Insured clause in the policy. The Plaintiff's injuries arose out of the delivery of goods, and not through an independant obligation of Manulife as an occupier. The collision was clearly connected to the operation that Sovereign agreed to insure.

In the result, the Court determined that Sovereign owed Manulife a duty to defend the action.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

Concord, a development company, purchased a large parcel of land on the old Expo 86 fairgrounds in Vancouver. Concord's intention was to build and develop residential and commercial space throughout the following 20 years. In 1992, Concord appointed Willis as its insurance broker, and in 1993 Willis approached Encon seeking insurance for Concord construction projects. Encon is a national insurance manager which administers insurance projects for insurance copanies.

Temple issued a Builders Risk Construction Policy to Concord which included an endorsement insuring against delayed opening losses. These losses would include such things as interests Concord would be required to pay during delays in completing sales of units, and rent which Concord lost because units were not available for rent during the period of delay. A formula was calculated for covering such losses, and a letter was sent stating the insurers' intent that no claim for delay would be paid with respect to loss resulting from non-completion of the insured project prior to a "scheduled date of completion" which corresponds to the contracted date for completion according to the construction contract, and which should correspond to the expiry date of the policy or project certificate.

Since Concord managed its own construction through an associated company, it did not have a contracted date for completion or a substantial completion date for any other projects. The insurance Concord obtained however did have an expiry date for the Builders Risk Policy or for the particular project certificate.

On November 17, 1999 Concord provided Willis with a document estimating the construction period for the project would be 24 months ending November 15, 2001. On November 19, Concord completed a form entitled Builders Risk Information Form and wrote that the construction period would be from November 15, 1999 to April 15, 2002, a 29 month period. Concord provided the Builders Risk Information Form to Willis for the purpose of obtaining coverage for the project.

There were two water incursion incidents at the site during excavation, one on April 18, and one on June 7, 2000. The combined effect of the two water incidents would potentially delay the project by about three months resulting in a 27 month construction period. When Willis learned of the incursion, it contacted Concord asking whether they needed to extend the Builders Risk coverage beyond April 15, 2002. Concord replied that it was not necessary since they expected to finish before that time.  All parties agreed that the project was complete and tenantable on January 12, 2002.

Concord's position was that the November 15, 2001 date should be the scheduled date of completion as this was the date referred to originally as the 24 month construction period. It is seeking to collect on the delayed opening coverage, and block Temple's application for rectification of the contract. Temple argued that Concord would not be prejudiced by rectification since it always knew April 15, 2002 was the scheduled completion date, and that rectification would simply permit the policy to reflect the terms and conditions agreeable to both parties.

Section 12 of the Insurance Act provides:

12(1)  A term or condition of the contract which is not set out in full in the policy or in the document in writing attached to it, when issued, is not valid or admissable in evidence to the prejudice of the insured or a beneficiary.

12(2) This section does not apply to an alteration of the contract agreed on in writing betweem the Insurer and the Insured after the issue of the policy.

Concord argued that Section 12(2) does not apply and Temple argues that Section 12(1) does not apply, but that in the alternative Section 12(2) could apply as the amended project certificate was agreed on in writing between the parties and issued October 2000.

The Judge held that Temple was not attempting to introduce a term or condition into the policy that would impose additional obligations on the Insured. The scheduled completion date was an essential term of the contract and the omission of that date in the contract was through an inadvertence. Rectification would enable the policy to reflect the party's bargain at the time the policy was negotiated, and that Section 12 of the Insurance Act did not bar Temple's claim to rectification to include an essential term. The judge dismissed Concord's claim for the delayed opening losses, and entitled Temple to an order rectifying the project certificate to show the scheduled date of completion being April 15, 2002.

This case was originally summarized by Neil J. MacDonald and originally edited by David W. Pilley.

The Court of Appeal was asked to consider whether the trial judge had estimated the deduction for Part 7 benefits appropriately under the regulations to British Columbia’s Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231. Part 7 benefits apply in respect of injury or death caused by an accident arising out of the use or operation of a vehicle regardless of who is at fault in the accident. The benefits cover medical and rehabilitation costs, disability benefits, and death benefits. Part 7 benefits are deducted from any tort award.

At trial the judge had allowed a deduction for future benefits based upon trial counsel’s statement in written submissions that the Insurance Company of British Columbia (“ICBC”) would pay the full amount of the proposed deduction to the plaintiff. In allowing the appeal, the Court of Appeal held that it was impermissible for the trial judge to take into consideration counsel’s opinion of what position ICBC would take as to future claims under Part 7. The Court was clear that this was not to be taken as “suggesting evidence as to ICBC policy is not acceptable on a [Part 7 benefits] application.” Rather, it is unacceptable for the court to consider ICBC counsel’s representation as to what ICBC would cover.

This case was digested by W. Jay Havelaar and edited by David W. Pilley of Harper Grey LLP.