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 Respondent had unprotected sex with three women and contracted genital herpes and a rare complication of that condition called transverse myelitis which resulted in total paralysis from his mid abdomen down. The Respondent was not aware that any of the women that he had intercourse with had herpes. However, he did know that contracting a sexually transmitted disease was a potential risk of having intercourse. He claimed for compensation under a group insurance policy on the basis that the paralysis resulted “directly and independently of all other causes from bodily injuries occasioned solely through external, violent, and accidental means, without negligence” on his part. The policy did not contain a definition of the word “accident”.

The trial judge found in the Insured’s favor and held that the paralysis was accidental as the Insured did not expect to become a paraplegic as a result of engaging in unprotected sexual intercourse. The Court of Appeal upheld the trial judge’s decision and found that the Respondent’s condition did not arise “naturally”, but rather it was a result of an external factor or “unlooked-for mishap”.

The Supreme Court of Canada allowed the appeal and held that the loss was not covered by the policy. The Court considered the meaning of the term “accident” and held that it should be given its ordinary meaning as it would have been understood by the average person applying for insurance. In ordinary speech the term “accident” does not include ailments which flow from natural causes. The causal chain which led to the injury was the sexual transmission of herpes which led to the development of transverse myelitis. Transverse myelitis is a rare complication, but is a normal incident of herpes. To conclude that the acquisition of herpes was an “accident” despite the absence of any mishap or trauma would be contrary to the intent of the policy which was not intended to be a comprehensive health insurance policy for infectious diseases.

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 Applicants sought a Declaration of Coverage, as mortgagees, under the Standard Mortgage Clause in a fire insurance policy. The policy was issued by the Respondent Insurer to an Insured who was not a party to the proceedings. The Insurer had denied coverage on the basis of a Tenant Exclusion Endorsement which provided that loss and damage caused directly or indirectly by vandalism or criminal or malicious acts was excluded. The fire had been deliberately set by the property's tenant. The Applicants argued that the Standard Mortgage Clause was all encompassing and should prevail over the Tenant Exclusion Endorsement. The Court agreed finding that while the Tenants Exclusion Endorsement expressly excluded coverage for loss or damage resulting from malicious or criminal acts, it was inconsistent with the Standard Mortgage Clause which protected the Applicants from any act of the occupants and expressly stated that it superseded any policy provisions in conflict with it. The Tenant Exclusion Endorsement was therefore unenforceable.

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

This appeal raised the question of whether the subrogation right of an insurer under the Standard Mortgage Clause in a home insurance policy may be exercised simply on the insurer paying the loss award to the mortgagee without the insurer establishing that it has no liability to the insured.

The Respondent Insurer had insured the home of the Appellant Insureds. The Insureds had a mortgage with the Bank of Montreal. The Insureds submitted a claim to the Insurer seeking indemnity for repairs to the house, damage to its contents, and additional living expenses following a fire. The Insurer denied their claim on two grounds:

1)         the Insureds had voided the policy by failing to notify the Insurer of a material change in the risk, namely, a change in the heating system of the premises; and

2)         the Insureds had made wilfully false statements with respect to their contents claim and their claim for alternative living expenses, thus vitiating their right to recover.

The Bank of Montreal submitted a Proof of Loss seeking payment of the mortgage under the Standard Mortgage Clause and the Insurer paid that claim. The Insurer then, relying on its right of subrogation under the Standard Mortgage Clause, claimed the sum it had paid to the Bank of Montreal from the Insureds. The motions judge granted summary judgment against the Insureds in the amount paid by the Insurer to the Bank of Montreal. The Insureds appealed seeking an Order dismissing the Insurer's Motion for Summary Judgment directing that the two Actions be tried together (the Insureds had commenced a separate proceeding against the Insurer seeking a Declaration that the policy was valid and enforceable).

The Court of Appeal held that there are two preconditions to the Insurers' entitlement to subrogation under the Standard Mortgage Clause. First, the Insurer must make payment of the loss award, or part of it, to the mortgagee. Second, the Insurer must establish a claim that it has no liability to the mortgagor insured. The Court found that this conclusion flows from the construction of the Standard Mortgage Clause and is not dependent on the specific facts of the case.

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

The Plaintiff Insured appealed the dismissal of his action against the Defendant Insurer. The Insured held a long term disability policy with the Insurer. The Insured subsequently became disabled as a result of meningitis. He applied for long term disability benefits but his application was rejected by the Insurer who took the position that the Insured had materially misrepresented his medical history on the initial questionnaire.

The trial judge found that the policy was void ab initio because the Insured had not disclosed material facts. In particular, the Insured had not disclosed the identity of his attending physician or his consultation with that physician four or five months prior to the date of the insurance application regarding lumbar pain. The trial judge found that had the Insured not misrepresented his medical history, the coverage offered would have been subject to full exclusions for back and hip related ailments. The Insured's appeal, which was on the basis that the trial judge had committed errors of facts, was dismissed.

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

Feaver was struck by a car driven by Briggs after leaving a party held at the third party's restaurant. The Defendant, Unifund Assurance Company, joined the restaurant alleging they were liable to the deceased in that they allowed him to consume alcohol, and become intoxicated to the extent that he was unable to ensure his own safety.

The Feavers attended a staff party at the restaurant where, in her affidavit, Mrs. Feaver said her husband consumed approximately six beers during the evening, and was feeling good but was not drunk. Blood samples taken from Mr. Feaver suggested he had consumed closer to 18 to 20 bottles of beer during the evening.

The restaurant owner's affidavit also stated that Mr. Feaver appeared fine and did not display any visible signs of intoxication when he left. Mr. Feaver left in the company of his wife and another couple, who were responsible for him. The restaurant owners knew the group were going to walk to a nearby restaurant along a sidewalk, and that they were going to be driven home by a group called Operation Red Nose after leaving the second restaurant.

The judge held that Unifund could argue the third party restaurant owners should have known Mr. Feaver had consumed up to 18 beers despite the assertion of Feaver's wife that he had four to five and lacked signs of intoxication. However, even if Feaver was visibly intoxicated, the third party owners knew he was in the hands of three other people, including his wife, that he was going to be walking along a sidewalk adjacent to their establishment, and that he was to be driven home at the end of the evening. On the strength of that evidence the judge felt that there was no foreseeable risk to Mr. Feaver when the third party owners allowed the group to walk to the other restaurant, and as a result the claim against the third party would be dismissed at trial. The judge granted the summary judgment against the Defendant Unifund Insurance under Rule 22.

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

The Plaintiff's boat was insured by the Defendant insurance company. As a result of a collision, the boat was destroyed. The Plaintiff claimed $38,439 plus pre-judgment interest pursuant to the policy. The Defendant Insurer denied coverage on the grounds the driver of the boat was impaired, and in the alternative that the accident was caused by an illegal or an intentional act of the driver.

This motion was brought as a result of the Plaintiff wishing the Defendant to produce a knowledgeable person pursuant to the Manitoba Rules of Court. While the Plaintiff did not designate a specific person for the Defendant to produce, he suggested that the insurance adjuster retained by the Defendant to investigate the claim could be the local knowledgeable representative . The Defendant Insurer argued that there was no suitable local representative and that it wished to bring a knowledgeable representative from Coast Underwriters Limited in Vancouver.

The Defendant maintained that it had no offices in Manitoba and it conducted no business in Manitoba. The Defendant's managing general agent was Coast Underwriters Limited in Vancouver, who issued the policy in question from its Vancouver office. It also submitted that the policy was brought to Coast Underwriters by the Winnipeg office of Marsh Canada, an insurance broker.

The Insurer was licensed under the Manitoba Insurance Act, and section 22(2) outlines who will be deemed an insurer carrying on business within the province. The Court held that the Defendant met several of the criteria for carrying on business in the province contained within s. 22 of the Insurance Act. The judge went on to say that it would be inconsistent with the intent of the Insurance Act to allow the Defendant to sell insurance in Manitoba and then to behave as a disconnected stranger when an insured seeks indemnity.

The judge held that the term "residence" was a flexible term to be interpreted in the context of a case, and that in conjunction with the Manitoba Insurance Act he was persuaded that the Defendant resided in the province of Manitoba for the purposes of the Rules of Court. Accordingly, no conduct money needed to be paid.

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

The insureds purchased a policy of insurance for their trailer through their insurance broker, AA Munro Insurance, . In the spring of 2009 the river where their trailer was parked flooded and destroyed their trailer. When they attempted to claim against their policy for the full replacement value of the trailer, they discovered that their policy only entitled them to the depreciated value of the trailer.

The insureds claimed that when they spoke to AA Munro Insurance they were clear in their desire for replacement value insurance. The court found that there was more than one way for the broker to insure the trailer. The more expensive option would have been through a so-called trailer policy, which would have provided for full replacement value. The less expensive option was to use a standard automobile policy which provides for a depreciated amount only, in the event of theft or damage. The broker insured the trailer under the latter.

Before agreeing to the coverage the insureds received a fax from the broker quoting the premium on the policy. The fax read, in part, "$30,000 value Replacement Cost." The insureds concluded from this that they had replacement value insurance. The broker claimed that it needed to know the replacement cost to know how much insurance to arrange, but that this did not mean that the coverage would be for replacement value.

The court found that most people reading those words would conclude that they had replacement value insurance, It held, citing the Supreme Court of Canada's decisions in Fine's Flowers Ltd. v. General Accident Assurance Co, (1977), 17 O.R. (2d) 529, and Fletcher v. Manitoba Public Insurance Co, [1990] 3. S.C.R. 191, that it is the duty of an insurance broker to explain the coverage being offered, and in particular match it up with the customer's needs. In this case the broker did not fully explain to the insureds the limitations of the policy they would be getting. In doing so, the broker was in breach of its duty of care.

The insureds were awarded the difference between the replacement value of their trailer ($33,900.00) and the amount their insurance company actually paid them for the trailer ($28,465.00), amounting to $5,435.00.

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

On October 5, 2003, Clements was driving a truck owned by the Baltzers when he collided with a vehicle driven by the Clarks. The Clarks brought an action against the Baltzers, Clements and Royal & Sun Alliance, the Section "D" insurer of the Clark vehicle.

By consent, the parties sought a preliminary determination of the issue of whether Clements was operating the vehicle in question with the consent, express or implied, of the Baltzers. Clements was a friend of the Baltzers and also a mechanic. Over the years he had done maintenance on their truck. He did not have a vehicle of his own and on several previous occasions, with the Baltzers' consent, he had used the truck. Several weeks after the accident the Baltzers produced a document, dated October 4, 2003, which purported to set limits on Clements' use and operation of the truck. The document was signed by Mr. Baltzer and Clements.

The trial judge found as a fact that Clements had used the truck with the consent of the Baltzers. She did not accept that the document was executed prior to the accident on October 5, 2003. She then went on to consider s. 248(3) of the Motor Vehicle Act, R.S.N.S. 1989 and found that the principle of the Baltzers' vicarious liability was rebutted, as Clements was not driving in the course of employment with the Baltzers or acting under their instructions. She therefore concluded that the uninsured motorist provisions in the Clarks policy was engaged and Royal & Sun Alliance was responsible for responding to the claims by Clark and his passengers.

On appeal Royal & Sun Alliance argued that the trial judge had erred by failing to consider s. 144 of the Insurance Act to determine that the Baltzers' insurer was responsible to pay any damages occasionsed by Clements's use of the vehicle. The Court of Appeal agreed. It noted that the judge had correctly found that Clements was driving the vehicle with the consent of the Baltzers. According to s. 114 of the Insurance Act, and the jurisprudence, it would therefore be the Baltzers' insurance which would be called upon to respond to any claims. The judge incorrectly applied s. 248 of the Motor Vehicle Act, which deals with tortuous liability for accidents, not insurance coverage. The appeal was allowed and the order requiring Royal & Sun Alliance to respond to the claim was reversed.

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