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

This matter concerns two appeals which we heard together challenging the province’s addition of s. 113B of the Insurance Act, R.S.N.S., c. 231 (the “Act”) and the corresponding regulations. The legislative changes capped non-monetary damages for “minor injuries” at $2,500.00.

The appellants in the first appeal appealed a dismissal of their challenge of the minor injury legislation on the following bases:  (1) the definition of a minor injury discriminates against individuals with certain types of pain and discomfort, and is therefore contrary to s. 15(1) of the Canadian Charter of Rights and Freedoms (the “Charter”); (2) s. 113B(1)(a) of the Act discriminates on the basis of gender by disproportionately affecting women with minor injuries as a result of an automobile accident; (3) the Limitation Regulations discriminate against individuals suffering from certain forms of chronic pain, as compared to individuals who are not deemed to have minor injuries; and (4) the regulations expand beyond what the legislation intended.

The government’s position was that the legislation is constitutionally valid and reflects public policy designed to contain sky-rocketing insurance premiums.

The Court dismissed the first appeal and held that the legislation is valid and is not discriminatory as contemplated by the Charter. The regulations do not run afoul with the Act. The Court found that the Appellants were treated differently from other automobile accident victims who avoid the cap on the enumerated ground of a physical disability. The Appellants are disadvantaged by the minor injury cap because of the monetary limit and because they will be denied an independent judicial assessment and the right to seek full recovery for their injuries from a wrongdoer. However, the disadvantages do not trigger s. 15 of the Charter. The evidence fell short of establishing that the legislation perpetuates or is a result of prejudice or stereotyping sufficient to trigger s. 15 of the Charter. The legislation is sufficiently attentive to the appellants’ needs, capacity, and circumstances. The Appellants’ ability to seek recovery for wage loss, costs of future care, legal costs and/or aggravated and punitive damages remains intact.

With respect to discrimination on the basis of gender, the Court held that any disadvantages in that regard are due to pay equity issues unrelated to minor injury cap. The legislation does not trigger s. 15 of the Charter in this respect.

The regulations' expansive definition of the scope of a minor injury was consistent with the Insurance Act and the clear legislative intent to reduce rapidly rising premiums.

In the second appeal, the Appellant asserted that individuals who have purely mental injuries, such as post-traumatic stress disorder, would be discriminated against because of the wording of the legislation which could be read to mean that mental injuries would automatically be deemed to be a “minor injury”. The Court of Appeal denied her leave to appeal on the basis that her appeal was moot. The Chambers judge in the court below had found that her post-traumatic stress disorder was a physical rather than a mental injury.

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

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.

The plaintiff insured Janey McQueen (“McQueen”) was injured in a rollover motor vehicle accident in January 2004. At the time of the accident, McQueen was not employed and had been receiving disability benefits for 10 years, primarily due to manic depression. She was 35 years old and resided with her husband and 14 year old daughter. Following the accident, the defendant insurer, Echelon General (“Echelon”), paid some benefits but eventually terminated housekeeping benefits, refused to pay transportation benefits, and refused to fund a psychological assessment. McQueen experienced 21 denials of 16 separate benefits over a period of three years and after two failed mediations, brought a suit seeking certain statutory benefits pursuant to the Statutory Accident Benefits Schedule and alleging that Echelon had breached its obligation to act in good faith in handling her claims.

McQueen’s evidence was that prior to the accident, she did the cooking, cleaning, shopping, etc. but that after the accident, she was bedridden for two months and her husband was obliged to leave his job to take care of her and take on the household responsibilities. McQueen obtained a certificate from her family doctor and an occupational therapy assessment which both supported her entitlement to housekeeping benefits. Echelon paid housekeeping benefits until the end of July 2004 and then ceased payments based on a medical report completed by Dr. Kwok, following a half-hour examination of McQueen and without the benefit of seeing the occupational therapy assessment. Echelon also denied McQueen funding for an in-home assessment for housekeeping benefits that was recommended by the occupational therapist, saying it was not “reasonable and necessary.”

The Court found that the onus was on Echelon to provide reasons for the assessment being unreasonable and unnecessary, which it did not do. It further found that McQueen had a substantial inability to carry out housekeeping activities without assistance during the relevant time and that she had established her entitlement to housekeeping benefits on a balance of probabilities. She was awarded benefits of $100 per week for the relevant period.

With regard to McQueen’s claim for transportation benefits, the Court found that these benefits had been denied in spite of the occupational assessment indicating that she required taxi transportation. Dr. Kwok’s report stated that McQueen was not disabled from operating a motor vehicle and Echelon incorrectly assumed that McQueen had a vehicle, though hers had been destroyed in the motor vehicle accident, and denied the benefit. The Court awarded McQueen a transportation allowance of $7,500.

The Court also awarded McQueen the cost of a number of psychological, neurological and occupational therapy assessments that had been recommended but not carried out.

The Court reviewed the law regarding awarding damages for mental distress, citing the BC Court of Appeal and the Supreme Court of Canada decisions in Fidler v. Sun Life Assurance, 2004 Carswell BC 1086 and [2006] 2 SCR 3. The Court held that for an award of damages for mental distress to be appropriate, it must be satisfied that:

a) An object of the contract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties; and,

b) The degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation.

The Court found that Echelon’s file notes were evidence of an adversarial approach to McQueen ab initio and that in behaving in that manner, Echelon had breached its contract of insurance with McQueen. Echelon adopted this adversarial approach early on, in spite of file notes indicating that McQueen had serious injuries that required treatment and notwithstanding the duty of good faith it owed to McQueen throughout. The Court held that the object of the contract of insurance was to secure psychological benefits to McQueen in the form of peace of mind and that the nature of the contract was such that its breach would bring about mental distress and that this was within reasonable contemplation of the parties. McQueen had endured mental suffering as a result of the breach, which was of a sufficient character to warrant compensation. McQueen was accordingly awarded $25,000 in damages for mental distress.

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

The appellant leased a single unit in a commercial mall owned by the respondent.  A fire occurred in the appellant’s unit, causing damage to the building and its contents, and interrupting the appellant’s business.  The parties brought a motion seeking a determination regarding whether the respondent or its insurer was entitled to claim damages against the appellant.  This question was itself dependant on whether the terms of the Offer to Lease had passed risk of loss caused by the fire on to the appellant or the respondent.  For the purposes of the motion, it was assumed that the appellant’s negligence occasioned the loss.  The Superior Court ruled that the appellant had assumed the risk of loss, and that the respondent was therefore entitled to pursue its claim.

The Court of Appeal disagreed, holding that the respondent had assumed risk of loss.  In so ruling, the Court of Appeal turned to the terms of the Offer to Lease and the Supreme Court of Canada’s decision in Ross Southward Tire Ltd. v. Pyrotech Products Ltd., [1976] 2 S.C.R. 35.  In Ross, the lease contained a condition requiring the tenant to pay for insurance, but did not contain a covenant requiring the landlord to obtain such insurance. The lease did not specifically mention insurance for losses occasioned by fire.  The Supreme Court of Canada ruled that given the terms of the lease, the risk of losses caused by fire passed to the landlord and precluded a subrogated claim against the tenant for damages.  The Court of Appeal found that the Offer to Lease in the case at bar was in substance identical to the lease in Ross, insofar as it required the appellant to contribute to the cost of insurance, but imposed no reciprocal obligation on the respondent.  The Court of Appeal held that if a tenant is required to pay for insurance, it is entitled to the benefit of that insurance.  As a result, in order for the appellant to be deprived of such a benefit, the Offer to Lease must contain a specific term to that effect.

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

The insured was a self-employed businessman injured in a car-accident and was thus entitled, under the SABS, to a weekly income replacement benefit (“IRB”) as well as to loss of income earning capacity benefits (“LECB”)after 104 weeks. The insurer paid the IRBs but would not pay the LECB. The insured commenced an action in 2001 for a declaration that he was entitled to a LECB amount. The insurer counterclaimed for a refund in respect of an overpayment of the IRB. The insured hired an accountant who discovered that the insurer had made an error in the calculation and payment of the IRBs. He therefore sought to amend his claim in 2006. The trial judge found that the IRB claim was statute barred. She found that the delivery of the Statement of Defence and Counterclaim constituted a refusal to pay any further benefits to the insured and thus triggered the two year limitation period under s. 72(1) of the SABS and s. 281 of the Insurance Act. Lastly, she awarded pre-judgment interest in accordance with s. 68 of the SABS but post-judgment interest in accordance with s. 129 of the Courts of Justice Act, at a lower rate.

The Court of Appeal found that the trial judge erred in her finding the insured’s claim was statute barred. It found that, until the accountant became involved, the insurer was not aware of the error in calculation. Therefore, the insurer did not intend its Statement of Defence to constitute a refusal to pay the minimum IRB component of the IRB claim because it was not aware of the error. In those circumstances, the Statement of Defence could not constitute a refusal to pay an amount claimed or benefit claimed within the meaning of s. 72(1) of the SABS.

The Court of Appeal also found that the trial judge erred by failing to award post-judgment interest in accordance with s. 68 of the SABS. It stated that the section is worded in a non-discretionary manner and there is no basis not to apply it to post-judgment interest as well as pre-judgment interest.

This case was originally summarized by Natasha D. Morley and edited by David W. Pilley.

The Insureds were Ontario residents who were injured in a motor vehicle accident in Florida. They sued the at-fault driver in Florida and recovered damages at his policy limit, $100,000 USD each. After legal expenses the net amount recovered by the Insureds was approximately $120,000 USD total. The Insureds then pursued damages from their own insurer under the underinsured motorist endorsement of their own automobile insurance policy. The matter went to trial and a jury assessed the Insureds damages at $177,500 and $682,000 respectively. The policy clearly indicated that the Insurer was entitled to deduct from the jury award the amount received by the Insureds from the American insurer. At issue was whether the amount “received” by the Insureds was the gross amount of the award or the net amount after legal expenses.

The judge held that there was no ambiguity in the insurance contract and that a plain reading showed that the Insurer was entitled to deduct all funds already obtained by the Insureds in compensation for their injuries with no allowance made for any costs incurred by them in pursuing recovery. The Insureds’ attorneys in the Florida litigation received the full $200,000 USD in trust as agents for the Insureds and these funds were presumably disbursed in accordance with the Insureds’ instructions. The Insurer had no control over the disbursement of the funds and no method for determining what expenses were reasonably incurred in recovering the funds. Given the unambiguous terms of the insurance contract there could be no reason to read in a term that limited the Insurer to deducting the net amount when this would leave the Insurer in the uncertain position of not knowing what expenses might properly be deducted from the gross receipts to arrive at a net sum. When making their claim against the Insurer under the underinsured motorist endorsement, it was open to the Insureds to claim special damages for the costs incurred to recover the funds already received.

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

The Insureds were Ontario residents who were injured in a motor vehicle accident in Florida. They sued the at-fault driver in Florida and recovered damages at his policy limit. They then sought to recover damages from their own insurer pursuant to an underinsured motorist endorsement included in their own automobile insurance policy. The Insurer sought to limit their claim on the basis of either the no-fault threshold provisions contained in the Ontario Insurance Act or a verbal threshold provided for by Florida law.

The judge held that case law clearly established that the object of the Ontario no-fault scheme is to preclude tort claims by injured motorist by limiting liability for pecuniary and non-pecuniary damages. Since the no-fault provisions address substantive issues (liability) rather than procedural issues, the principles of private international law dictate that the law of the forum, i.e. Florida law, should apply. Florida case law clearly established that an at-fault driver was only entitled to the benefit of the no-fault scheme if he had purchased a PIP endorsement and that an injured motorist may sue an at-fault driver without a PIP endorsement without regard to the threshold provisions of the Florida no-fault scheme. The driver that caused the accident in this case did not have PIP coverage so the Florida threshold provisions did not apply. Therefore, the Insureds were entitled to claim pecuniary and non-pecuniary damages under the underinsured motorist endorsement of their policy.

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

A motor vehicle accident occurred when the Defendant's motor vehicle slid on an unexpected patch of ice on a bridge. The Court found that the Defendant driver had breached a statutory and common law duty to allow the Plaintiff half of the road free and clear. This gave rise to a prima facie case of negligence casting upon the Defendant driver the "onus of explanation". In reviewing the circumstances, the Court noted that the weather on the day of the accident was clear with good visibility. The Defendant was driving a mechanically sound vehicle equipped with all terrain radial tires that had good tread. The Defendant was driving 15 - 20 km/hr below the posted speed limit and had no forewarning of the slippery condition. The Court concluded that the Defendant was driving with the degree of care and caution that a reasonably competent driver would exercise under similar circumstance and had, therefore, met the standard of care required of him. The Court held that the collision was an unfortunate accident for which no one was legally liable.

The Court went on to assess damages on a provisional basis. The Court found that the Plaintiff suffered the following injuries as a result of the accident:

(a) an injury to his right chest area that went on to heal uneventfully;

(b) an injury to his lower back which continued to cause pain/discomfort;

(c) a small chip fracture to his left hand that went on to heal uneventfully;

(d) a contusion to his right ankle that went on to heal uneventfully; and

(e) a fracture to his right wrist which resulted in an obvious deformity of that wrist and which continued to cause pain/discomfort.

Based upon the threshold requirements set out in Section 113B of the Insurance Act, RSNS 1989, c.231, the Court concluded that the Plaintiff had not suffered a permanent "serious" disfigurement. The Court also concluded that while the Plaintiff had suffered a permanent impairment of important bodily functions caused by continuing injuries that were physical in nature, such impairments were not "serious" as defined by the legislation. On this basis, general damages would have been limited to $2,500.

This case was originally summarized by Jonathan D. Meadows and originally 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.

This action arose as result of a car accident which occurred in front of the Park Hyatt Hotel in Toronto. The Plaintiff was injured when his vehicle was struck from the rear by the Defendant, Abdenuce Mohammed. The Plaintiff alleged that he sustained a number of injuries and subsequently began to obtain long-term disability benefits through his employer. At the time, Mr. Mohammed was employed as a parking valet with the Park Hyatt Hotel.    The vehicle that he was operating was insured by the Coachman Insurance Company, and had excess coverage with Gerling Canada Insurance Company. The Court, on a previous occasion, ordered that the Coachman and Gerling policies were to be the first loss insurance and the Hyatt’s policy was to be excess insurance only.

The issue before the Court in this instance was whether the Hyatt was entitled to the benefit of the deduction, trust, and assignment provisions set out in the Ontario Insurance Act (“the Act”), even though it was only an excess insurer. Section 267.8(1) of the Act provides that damages for pecuniary loss, such as loss of income and loss of earning incapacity, are to be reduced by any payments that the Plaintiff has received or that he was entitled to receive prior to trial. Sections 267.8(9), (10) and (12) of the Act provide that if the Plaintiff recovers damages for future loss of income or earning capacity he shall hold any and all of those benefits in trust to the credit of the Defendants. The Act does not speak to whether the sections applicable to excess insurers.

The Court held that the Hyatt was entitled to a deduction under s.267.8(1) and was also entitled to benefit of the trust and assignment benefits contained in ss.267.8(9), (10) and (12).

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