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

ICBC sought an order enjoining itself from paying $200,000 in settlement funds to the Insured in accordance with a settlement agreement reached on January 15, 2007. This settlement was in respect of a motor vehicle accident that had occurred in August 1986. ICBC claimed that the Insured had committed fraud with respect to a subsequent single-car accident that occurred on January 5, 2005 and brought an action against the Insured in this regard.

 In the fraud action ICBC alleged that the Insured and his uncle had made false statements concerning who was driving the vehicle at the time of the 2005 accident. A little more than a year after that accident, it became clear that the Insured had lied when he stated that his uncle had been driving the vehicle. Prior to learning of the Insured’s alleged "fraud", ICBC had paid out approximately $55,800.00 and therefore sought indemnity from the Insured for this amount, and punitive damages of up to $100,000.

The issue before the Court was whether a Mareva injunction should be issued to prevent the Insured from receiving all or part of the settlement funds in respect of the earlier accident. The primary questions were whether the nature of the alleged fraud was sufficiently serious to place it within the fraud exception to the general rule prohibiting pre-judgment execution and whether the evidence supported an inference that the Insured would likely dissipate the funds. The Court considered its general jurisdiction to grant an injunction under s. 39(1) of the Law in Equity Act and noted that in order to obtain a Mareva injunction the plaintiff must demonstrate that it has a strong prima facie case [of fraud], and also that there is a real risk of assets being dissipated before judgment is obtained.

While the Court noted that the alleged fraud by the Insured was serious and could not be countenanced, it was distinguishable from the fraudulent conveyances cases on which ICBC relied as it did not involve the complex taking of property. The Court found that the Insured’s lies and misleading statements only suggested that the Insured was a dishonest person who could not be trusted. This was not sufficient to support an inference of a real risk that the asset would be dissipated such that ICBC’s attempts to realise on any judgment it might obtain would be frustrated.

The Court ultimately concluded that there was no factual basis for it to grant a Mareva injunction in the nature of pre-judgment execution and, further, that it would not be just and equitable in the circumstances to do so.

A representative Plaintiff, CE Design Ltd. (CE Design), brought an action against Health Craft Products Inc. ("Health Craft") in Illinois. Health Craft had a commercial general liability policy issued by ING Insurance Co. of Canada ("ING"). Health Craft and CE Design entered into a Settlement Agreement, which was approved by an Illinois Court. The Settlement Agreement provided that Health Craft consented to judgment against it in the amount of $543,000 USD and would assign to the Illinois Plaintiffs any rights it had under the ING policy. ING was not a party to the Settlement Agreement.

 ING brought an Application in Ontario for a declaration that that it was not required to defend nor indemnify Health Craft. The Court found that because the insurance contract was issued in Ontario and both ING and Health Craft carried on business in Ontario, the proper law of the contract was Ontario and there was a real and substantial connection to Ontario. The Court found that Ontario was also the forum conveniens on the basis that if Health Craft had brought a claim for coverage, the proper forum would clearly have been Ontario, and it was fair and equitable that the forum would continue to be Ontario since the assignee, CE Design, stood in the shoes of Health Craft.

Here is an article that Kim Jakeman and I wrote on this issue in the spring of 2006:

insuranceblog.harpergrey.com/Interjurisdictional article.pdf

I have included the text of the article below.  Please note that this version of the article is unformatted.  If you would like a formatted version of the article please use the link.

More than you bargained for -

The effect of British Columbia’s Universal Automobile Insurance on American, and other out-of-Province, Insurance Policies

INTRODUCTION
When motorists venture into the Province of British Columbia they may have more insurance than they or their insurer ever imagined. Non resident motorists travelling in British Columbia could be entitled to British Columbia’s $200,000 third party liability minimum regardless of the coverage provided in their automobile insurance policy.

In addition, if the motorist is injured in a motor vehicle accident while in the Province their insurer could be required to pay British Columbia’s statutory first party benefits which consist of unlimited first party wage replacement benefits, $1,000,000 underinsured benefits and $150,000 medical and rehabilitation benefits.

Finally, insurers are unable to subrogate for any proceeds paid through a policy of automobile insurance in British Columbia.

NATURE OF AUTOMOBILE INSURANCE MANDATED IN
BRITISH COLUMBIA
Since 1974 automobile insurance in British Columbia has been governed by the Insurance (Motor Vehicle) Act and the Regulations enacted under the Act. This legislation introduced a universal compulsory automobile insurance scheme to British Columbia (the "BC’s Autoplan"). The Insurance Corporation of British Columbia ("ICBC") was created to operate the scheme. Insurance was made compulsory by requiring every owner of a licensed motor vehicle to purchase basic automobile insurance from ICBC. Basic automobile insurance includes minimum third party liability limits of $200,000; and first party benefits including: total disability benefits that could extend for an insured’s full working life expectancy, death benefits, underinsured, uninsured motorist protection of $1,000,000, and hit and run motorist protection, and $150,000 for medical and rehabilitation expenses ("Basic Autoplan Insurance").

Benefits paid pursuant to automobile insurance in British Columbia cannot be subrogated. Section 25 of the Insurance (Motor Vehicle) Act stipulates that benefits payable to a plaintiff injured in a motor vehicle accident are deductible from any damages awarded to the plaintiff. The effect of this provision is that insurance benefits paid to an insured cannot be recovered in the underlying tort action. Therefore benefits paid to an insured under their automobile insurance policy cannot be subrogated because the insured cannot recover from the tortfeasor.

Although ICBC operates the BC’s Autoplan and provides Basic Autoplan Insurance, other insurance companies are able to supplement Basic Autoplan Insurance with private insurance. This consists mainly of vehicular damage and supplemental third party legal liability benefits. Before ICBC was created automobile insurance in British Columbia was governed by Part 7 of the Insurance Act.

Although the Insurance Act has essentially no application to ICBC, it applies to every other insurance company who provide automobile insurance to British Columbia drivers or is licensed to sell automobile insurance in British Columbia. Section 228(9) of Part 7 of the Insurance Act stipulates that an insurer that issues motor vehicle liability insurance outside of British Columbia shall file with the Superintendent of Insurance a Power of Attorney and Undertaking ("PAU").

POWER OF ATTORNEY UNDERTAKINGS
The initial wording of the PAU was determined by the Superintendent of Insurance in 1964. Insurers file the PAU with the Superintendent of Financial Institutions. The 1964 PAU reads as follows:

To appear in any action or proceeding against it or its insured in any province or Territory in which such action has been instituted and of which it has knowledge;
That upon receipt from any of the officials aforesaid of such notice or process in respect of its insured, or in respect of its insured and another or others, it will forthwith cause the notice or process to be personally served upon the insured;
Not to set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up if the contract had been entered into in, and in accordance with the law relating to motor-vehicle liability insurance contracts of the Province or Territory of Canada in which such action or proceeding may be instituted, and to satisfy any final judgment rendered against it or its insured by a Court in such Province or Territory, in the claim, action, or proceeding, up to
(1) the limit or limits of liability provided in the contract; but

(2) In any event an amount not less than the limit or limits fixed as the minimum for which a contract of motor-vehicle liability insurance may be entered into in such Province or Territory of Canada, exclusive of interest and costs and subject to any priorities as to bodily injury or property damage with respect to such minimum limit or limits as may be fixed by the Province or Territory.

The impact of the 1964 PAU on first party benefits contained in Basic Autoplan Insurance was considered by the British Columbia Court of Appeal in Shea v. Shea (1995) 66 B.C.L.R. 92 (BCCA). Mr. Shea lived in the Province of Manitoba and had insured his motor vehicle in Manitoba. He drove his vehicle into British Columbia and was involved in a motor vehicle accident in which his son was seriously injured. The son was entitled to benefits under his father’s automobile insurance policy.

In addition, the son commenced a tort action against his father for compensation for injuries suffered in the accident. He received a substantial judgment. The benefits that the son received from his father’s automobile insurance were deducted from the tort award pursuant to section 25 of the Insurance (Motor Vehicle) Act. The court then had to determine whether the son was entitled to the benefits stipulated in the policy of automobile insurance purchased in Manitoba, or the benefits required under British Columbia’s Basic Autoplan Insurance.

Although Mr. Shea’s automobile was insured by an out-of-province insurer who did not normally operate in British Columbia, the insurance company had filed the 1964 PAU with the Superintendent of Insurance in British Columbia. The British Columbia Court of Appeal ruled that the 1964 PAU did not impose a requirement on the out-of-province insurer to provide no-fault benefits required by BC’s Autoplan, and that Basic Autoplan Insurance would not be read into an automobile policy issued in another jurisdiction. Therefore the son was only entitled to benefits as stipulated by the Manitoba insurance policy. Since these benefits were deducted from the tort award, no right for subrogation existed for the Manitoba insurance company.

This issue was considered in other provinces in Canada, and reconsidered by the British Columbia Supreme Court and the British Columbia Court of Appeal. These subsequent decisions led to uncertainty with respect to the scope of the 1964 PAU. It was generally felt that Shea had been effectively overturned and that the 1964 PAU would be interpreted by British Columbia’s courts as requiring out-of-province insurers to provide Basic Autoplan Insurance to people insured by their policies in British Columbia.

Although there was uncertainty as to whether the 1964 PAU applied to first party benefits, the law is clear that the 1964 PAU applied to third party liability limits. Therefore, out-of-province automobile insurers who are signatories to the 1964 PAU will have the Basic Autoplan Insurance third party liability limit of $200,000 read into their insurance policies for accidents that occur in British Columbia regardless of what the limits are in the contract of insurance.

Uncertainty over the scope of the 1964 PAUs was recently resolved by the British Columbia Court of Appeal in Batchelder v. Filewich [2004] B.C.J. No. 149 (BCCA). Batchelder directly addressed the decisions which had raised uncertainty over Shea and concluded that an out-of-province insurer, who was a signatory to the 1964 PAU, was not responsible for providing Basic Autoplan Insurance as required by BC’s Autoplan.

THE NEW POWER OF ATTORNEY UNDERTAKINGS
The Government of British Columbia redrafted the 1964 PAU in 1988, largely in an attempt to circumvent the court’s interpretation of Shea and impose British Columbia’s Basic Autoplan Insurance onto out-of-province automobile insurance policies. The 1988 PAU reads as follows:

Not to set up any defence to any claim, action, or proceeding, under a motor-vehicle liability insurance contract entered into by it, which might not be set up if the contract had been entered into in, and in accordance with the laws relating to motor vehicle liability insurance contracts or plan of automobile insurance of the Province or Territory of Canada in which such action or proceeding may be instituted, and to satisfy any final judgement rendered against it or its insured by a Court in such province or Territory, in the claim, action, or proceeding, in respect of any kind of class of coverage provided under the contract or plan and in respect of any kind or class of coverage required by law to be provided under a plan or contracts of automobile insurance entered into in such Province or Territory of Canada up to the greater of
the amounts and limits for that kind or class of coverage or coverages provided in the contract or plan, or
the minimum for that kind or class of coverage or coverages required by law to be provided under the plan or contracts of automobile insurance entered into in such province or Territory of Canada, exclusive of interest and costs and subject to any priorities as to bodily injury or property damage with respect to such minimum amounts and limits as may be required by the laws of the Province or Territory.
[emphasis added]

The 1988 PAU was interpreted by the British Columbia Supreme Court in Diotte (Gaurdain ad litem of) v. ICBC [2000] B.C.J. No. 2476 (BCSC). The court noted that once the out-of-province insurer files the 1988 PAU, any automobile insurance issued by the insurer will be considered to be a contract of insurance issued in British Columbia when the vehicle is in British Columbia. All automobile insurance policies issued in British Columbia are required to provide Basic Autoplan Insurance as stipulated by BC’s Autoplan regardless of the wording of the policy.

Therefore, when an insurance company files the 1988 PAU with the Superintendent of Financial Institutions, the insurer has made an election to opt into BC’s Autoplan and, as such, creates enforceable rights and obligations. The out-of-province insurer is then required to pay Basic Autoplan Insurance benefits required by BC’s Autoplan to their insureds, despite the fact that the benefits were not included in the issued contract of insurance. This interpretation is consistent with how the 1988 PAU has been interpreted in Ontario, another Canadian Province, and by the Supreme Court of Canada in Unifund Assurance Co. v. ICBC 2003 SCC 40.

Although the 1988 PAU has been in force for over 16 years, the Financial Institutions Commission of British Columbia has not required signatories of the 1964 PAU to execute and file the 1988 PAU. The process of updating the 1964 PAU to the 1988 PAU has been instituted by requiring all new signatories to file and execute the 1988 PAU. Therefore, it is imperative that counsel determine which version of the PAU, if any, has been filed in British Columbia in order to assess whether Basic Autoplan Insurance applies to the out-of-province policy of insurance. The short answer is that both the 1964 and the 1988 PAU create third party liability insurance limits of $200,000; but only the 1988 PAU create an obligation to provide Basic Autoplan Insurance benefits.

One additional consideration that must be made is to determine whether the insurance company has obtained an authorization to carry on insurance business in British Columbia. Although most American insurance companies do not sell automobile insurance in British Columbia; the companies that are authorized to sell automobile insurance in British Columbia are subject to the Financial Institutions Act; and, more specifically, the Motor Vehicle Liability Insurance Regulation. The Motor Vehicle Liability Insurance Regulation has arguably the same effect that the 1988 PAU, and Basic Autoplan Insurance would likely be read into the out-of-province automobile policy. It is important to note that this would occur even if the insurer has not filed a PAU with the Superintendent of Financial Institutions.

CHOICE OF JURISDICTION
Noteworthy is the fact that both the 1964 PAU and the 1988 PAU only apply if the lawsuit is brought in British Columbia. The effect of this provision was noted by the British Columbia Court of Appeal in Marchand v. A.M.A. (1994) 89 B.C.L.R. (2d) 253 (BCCA). Marchand involved a person who was insured by an out-of-province automobile insurance policy who was injured in British Columbia, and commenced a claim to recover benefits under his policy of insurance in British Columbia. The insurer brought a motion to have the action stayed and tried in its jurisdiction on the basis that the plaintiff was simply forum shopping and commenced his action in British Columbia because so that he could obtain British Columbia’s Basic Autoplan Insurance, which contained benefits that were substantially more than the benefits in the insurance policy that he purchased from A.M.A.

The British Columbia Court of Appeal noted that if the insured had commenced his action for benefits under his policy of insurance in his own jurisdiction he would have been entitled to $5,000 in first party benefits contained in the policy. However, by commencing the action in British Columbia he was entitled to Basic Autoplan Insurance, worth approximately $150,000. With respect to the forum shopping argument, the Court of Appeal noted that a strong degree of deference should be provided to the exercise of judicial discretion in this type of application. Since there was some factual basis supporting the chambers judge’s decision that British Columbia had the "natural" or "real and substantial" connection with the action, it would be inappropriate to overturn the decision. The action was allowed to continue in British Columbia, and the insured was granted the Basic Autoplan Insurance benefits.

The basic rule is that an insured whose automobile insurance policy provides less than British Columbia’s Basic Autoplan Insurance benefits will be able to obtain additional coverage by commencing an action for payment of their first party benefits in British Columbia. The determination of whether British Columbia is an appropriate forum for a lawsuit involving a non-resident injured in British Columbia but insured by an out-of-province insurer falls largely within the discretion of the chambers judge.

The lesson for out of province automobile insurers is that it is to their benefit to obtain a judicial determination of their insured’s entitlement to benefits in their own jurisdiction. Where an insured is injured in British Columbia an out-of-province automobile insurer may want to consider a pre-emptive application in their jurisdiction to determine their insured’s entitlement to benefits.

CONCLUSION
The determination of whether an out-of-province automobile insurer will be subject to British Columbia’s compulsory automobile insurance scheme depends largely on whether the insurer is a signatory to the 1964 PAU or the 1988 PAU. If the insurer is a signatory to the 1988 PAU it is likely that the automobile insurance policy would be interpreted as including Basic Autoplan Insurance required by BC’s Autoplan in British Columbia.

If an insurer is a signatory to a PAU filed in British Columbia one should carefully consider the jurisdiction in which the determination of entitlement to benefits under their policy of insurance is decided, and if this determination should be made before an insured receives judgment for damages suffered in a motor vehicle accident. For example, if an insured is injured in an automobile accident in British Columbia, it might be prudent to seek a declaration from a court outside of British Columbia to determine the insured’s entitlement to benefits before a tort award is made in British Columbia. This might help insulate an insurer from becoming liable for payment of first party benefits contained in Basic Autoplan Insurance required by BC’s Autoplan in the tort action.

The Insured was an employee of the City of Toronto, which had a contract with the Insurer to provide health and disability benefits to City employees for injuries sustained in the course of their employment. The Insured, a truck driver and loader for the City, was injured in a motor vehicle accident that occurred during the course of his employment. He made a claim for long-term disability benefits from the Insurer, who denied the claim on the ground that the Insured had elected to proceed with a civil action against the other driver, rather than pursue his application for Workplace Safety and Insurance benefits ("WSIB").

The Insured had brought an action against the Insurer for payment of benefits under the policy, but before trial the Insurer sought a preliminary determination of the Insured’s entitlement to such benefits and the appropriate deductions assuming that entitlement was established. The motions judge held that the Insured was not entitled to receive LTD benefits from the Insurer because of his election to proceed with a civil action.

The Court of Appeal considered the relevant portions of the Insurer’s LTD plan and specifically Article 4, which provided for monthly benefits payable to an employee who was insured under the policy. Article 4 stated that the amount of monthly benefits payable to an employee would be reduced by any payment to which the disabled employee was entitled to under any Workers’ Compensation Act or under the disability benefit provisions of the Canada or Quebec Pension Plan. Article 4 further provided that in order to receive benefits under the Plan, the employee must make an application for any disability benefits for which he or she might be eligible under any Workers’ Compensation Act or comparative legislation or insurance provision, or under the Canada or Quebec Pension Plan. The Insured had made an application for WSIB benefits, but had then elected to proceed with a civil action against the third party driver, leaving his application for benefits outstanding.

The Court of Appeal considered the effect of s. 30 of the Ontario Workers’ Compensation Act, which provided that, depending on the amount of damages obtained by the Insured in the civil action, his application for WSIB benefits might still result in payment of some benefits to him. Accordingly, the Court concluded that the Insured was entitled to receive LTD benefits under the policy having met the condition precedent of making the application for benefits that he might be entitled to.

The Court of Appeal further concluded that the Insurer was entitled to reduce the monthly benefit payable to the Insured under the policy by the amount of any WSIB benefits to which he would have been entitled had he not elected to proceed with the civil action.

In September and October 2000, the Insured, Agresso Corporation ("Agresso"), entered into a series of agreements with the Sault College of Applied Arts and Technology ("Sault College") to provide software.

On January 14, 2002, Agresso applied for Information Technology Errors and Omissions insurance from Temple Insurance Company ("Temple"). A policy was issued from February 28, 2002 to February 28, 2003. The policy insured Agresso for "wrongful acts" that occurred within the policy.

There were problems with the software, and by January 20, 2003, Agresso was aware that Sault College was not satisfied with its progress on solving a major problem. On February 21, 2003, Agresso applied for a second policy. Temple issued a new policy on the same terms as the first one from March 28, 2003 to March 28, 2004, and a retroactive date of February 28, 2002. The Insured did not disclose to the Insurer that there was a potential claim from Sault College.

The Court found that on the basis of the pleadings, the Statement of Claim alleged a statement of facts that properly construed, would support an action that could potentially fall within coverage. However, the Court found that there was no duty to defend because Agresso had failed to disclose information material to the contract. The application form for the policy required the Insurer to answer a number of questions regarding knowledge of prior errors or claims. Agresso’s own evidence confirmed that it first became aware of a potential claim on January 20, 2003, a month before the application for the second policy was completed. The Court found that the true question was whether a reasonable person would have concluded that the circumstances constituted a dispute, allegations of non-performance, or facts, circumstances, or situations which may reasonably give rise to a claim. The Court found that Agresso was aware of Sault College’s view that a key problem could not be solved, that the College abandoned the entire system only a few months later, and that it notified Agresso of its intention to start legal proceedings a few months after that. The Court was satisfied that a reasonable person in Agresso’s position would have been of the opinion that the circumstances indicated that there was a reasonable likelihood a claim would be made against it. The Court was also satisfied that if the Defendants had been informed of the situation, they would have acted differently by refusing to accept the risk or imposing special conditions. The insurance contract was therefore void pursuant to section 13 of the Insurance Act.

The Insured was involved in a single motor vehicle accident in the state of Vermont. He was employed as a truck driver and driving a tractor trailer that was not owned by him, was licensed and registered in Ontario, and was insured by Royal & Sunalliance Insurance Co. ("Royal") under a motor vehicle insurance policy issued in Ontario. The Insured also owned a private passenger vehicle which was licensed and registered in Ontario and was insured by Wawanesa Mutual Insurance Co. ("Wawanesa") under a motor vehicle policy issued in Ontario. The Insured claimed statutory accident benefits under the Statutory Accident Benefits Schedule of theOntario Insurance Act, R.S.O. 1990, c. I.8 and by virtue of section 268(2) of the Act, his recourse was against Wawanesa as the owner of his own passenger vehicle. Wawanesa paid the statutory accident benefits to the Insured, and then claimed indemnification from Royal under section 275 of the Act. Section 275 provides that an Insurer responsible under subsection 268(2) for the payment of statutory accident benefits is entitled to indemnification from the Insurers of the automobiles involved in the incident which gave rise to the responsibility. Royal argued that it was not obligated to indemnify Wawanesa on the grounds that the law of Vermont applied, and there were no loss transfer provisions in that jurisdiction.

The arbitrator applied the ruling in Tolofson v. Jensen, [1994] 3 S.C.R. 1022 and found that section 275 applied because "to have the insurer be forced to pay accident benefits pursuant to Ontario law and an Ontario contract for an accident in Vermont, and then forbid it from recovering the costs of those benefits which it would be allowed to do under Ontario law (loss transfer), has all the hallmarks of injustice". The Court agreed with the arbitrator’s finding, but disagreed with the arbitrator’s reasoning. The Court found that Tolofson v. Jensen was inapplicable to the situation, as that case dealt with the law in relation to a tort claim occurring in another jurisdiction. Relying on Unifund Assurance Co. Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63, the Court found that the issue between Wawanesa and Royal was not a tort claim; rather, Wawanesa’s claim was a statutory claim under 275 of the Act, and constituted a separate and distinct claim from any underlying tort claim. The statutory claim was governed by the provisions of the Ontario Insurance Act.

In this case, the Plaintiff was run down in the parking lot of a local mall as he was pursuing a shoplifter. The van that struck him, driven by one of the Defendants, was being used as the get-away vehicle. The issue for the Court to decide was whether damages in the amount of approximately $163,000 were to be paid by Allstate, the liability insurer of the registered owner of the vehicle at the time of the incident, or by ING, the Plaintiff’s Section D (Uninsured Motorist) Insurer.

Based largely on findings of credibility, the Court found that the owner of the van failed to rebut the statutory presumption that it was being operated by the Defendant, Charles Burke, with the owner’s consent when the Plaintiff was injured. It therefore followed from s. 144(1) of the Insurance Act and s. 248(3) of the Motor Vehicle Act that Allstate was liable to pay the Plaintiff’s damages as the issuer of the owner’s liability policy. The action against ING, the Plaintiff’s uninsured motorist Insurer was dismissed.

This was an appeal from the Motion Judge’s decision allowing an appeal of an Arbitrator’s decision finding that the Insured was not principally dependent on his mother for care when he was involved in a motor vehicle accident that left him quadriplegic. The Motions Judge had found that because the Insured was living with his mother, who had acted as his bail surety at the time of the accident, he was principally dependent on her for care.

The issue on appeal was which Insurer would be liable to the Insured for statutory accident benefits; his mother’s Insurer, the Applicant, or the Insurer of the vehicle that the Insured occupied at the time of the accident. The Ontario Insurance Act provided that the Insured’s first recourse was against his mother’s Insurer if he was dependent on her for financial support.

The Court of Appeal confirmed the Arbitrator’s finding that while the mother had some control over the Insured, he was not under her care. The mere fact of control over an individual’s conduct did not in all circumstances result in a relationship of dependent care.

In addition, the Court of Appeal held that the Arbitrator’s decision primarily involved a question of fact and ought to be given deference, unless it was clearly unreasonable.

The Insurer settled the claim without notice to, or the consent of, the Insured. Judgment in favour of the injured party was obtained against the Insurer, but not against the Insured. The Court held that the plain language of s. 258(1) of the Insurance Act, R.S.O. 1990, c. I.8 provided for the application of insurance money in or towards satisfaction of a judgment recovered against the Insured. The section read:

Any person who has a claim against an Insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, even if such person is not a party to the contract, may, upon recovering a judgment therefor in any province or territory of Canada against the Insured, have the insurance money payable under the contract applied in or towards satisfaction of the person’s judgment and of any other judgments or claims against the Insured covered by the contract and may, on the person’s own behalf and on behalf of all persons having such judgments or claims, maintain an action against the Insurer to have the insurance money so applied."

The Court held that absent an agreement between the Insurer and the Insured, the recovery of a judgment was a prerequisite to any entitlement under s. 258(1) to access available insurance monies. The Court held that the scheme envisioned by s. 258 contemplated the balancing of an insurer’s right to minimize its exposure to a tort claimant with an insured’s right to be protected against unreasonable settlements by its insurer. The Court then set aside the summary judgment of the motions judge.

At trial, a police officer and an unidentified driver of another vehicle were found to be equally responsible for an accident that killed an auxiliary police officer and injured the Plaintiffs. The police officer and the Attorney General of Canada (the "RCMP Defendants") and ICBC were each held to be 50% jointly and severally liable. ICBC had been named as a nominal defendant in the tort action by virtue of s. 24 of the Insurance (Motor Vehicle) Act, which applies to hit and run situations when a driver or vehicle is unidentified.

In this proceeding, the RCMP Defendants brought an application for contribution and indemnity from ICBC based on s. 4(2)(b) of Negligence Act, after they had paid the entire amount of the Plaintiffs’ damages. ICBC took the position that, as a matter of social welfare policy, s. 24 provides limited and specific statutory relief to injured victims of hit and run drivers. ICBC submitted that participating in the action as a nominal defendant and the subsequent finding that it was jointly and severally responsible for the Plaintiffs’ damages, did not render ICBC "at fault" within the meaning of s. 4(2)(b) of the Negligence Act.

The Court concluded that the phrase "nominal" defendant meant that ICBC was named in place of the real or actual party in order for the fault of that person to be determined. Further, ICBC’s involvement under this section was said to stand in "entire contrast to something real or substantial" and was simply to provide an injured victim of an unidentified driver the means to statutory compensation. As such, the RCMP Defendants were not entitled to contribution and indemnity from ICBC under the Negligence Act.

Mr. Sylvester (the "Insured") had a life insurance contract that provided a $100,000 death benefit payable to his beneficiaries. The Insured was a member of the Outlaws Motorcycle Gang in Manitoba. He disappeared on May 29, 1998. He was never found. Pursuant to a consent order made seven years after his disappearance, the Insured was declared presumed dead as of May 29, 1998. Following the declaration, the insurance company paid out the insurance proceeds of $100,000 and returned the premiums paid from the date of the disappearance to the date of the presumption of death. The beneficiaries commenced this action in an attempt to recover the interest on the $100,000 death benefit for those seven years.

The policy of insurance was silent as to whether interest should be paid during this period. In reviewing the matter, Kennedy J. noted that the Insured was clearly associated with an outlaw gang and that he was associated with persons and activities that led him to criminal activity. His disappearance was mysterious. When his close acquaintance was shot to death by bullets to the head, it is possible that an inference could be raised that the Insured probably suffered a similar fate. There was no evidence that the Insured intended to disappear-- he had made plans for his children, started a business, which was deserted, and his financial and other possessions were left unattended. In addition, police information indicated that they believed that the Insured had been killed.

The Estate argued that well before the passage of seven years, the insurance company ought to have acted on the available evidence and paid out the insurance proceeds. Since the insurer did not do so, the insurer should now pay interest on the death benefits. Kennedy J. noted that counsel for the Estate had advised their client of the cost of applying for a death certificate and the uncertainty that may arise with that application before the expiration of seven years. The Estate, based on the advice of their lawyer, elected to wait until the expiration of seven years.

Kennedy J. could not conclude that the insurance company’s actions warranted the entitlement to interest, as the option to proceed earlier was available to the Estate and they chose to delay the application until the expiration of seven years. However, the evidence demonstrated that the insurance company did not take a particularly helpful approach to the beneficiaries. While the Estate made the decision not to proceed before the expiration of seven years, the insurance company had informal evidence, which in Kennedy J.’s view, could have supported a successful interim application for presumption of death. In the result, the application was dismissed without costs.

Aviva Canada Inc. ("Aviva") issued a comprehensive owner’s policy (the "Policy") to the Dewhirsts (the "Insureds"). On March 1, 2003, the Insureds’ daughter held a party on the Insureds’ deck. Unfortunately the deck collapsed. Approximately 45 people were on the deck. As a result of the collapse, seven parties have commenced actions against the Insureds. Many of the people injured in the collapse were minors at the time and consequently, the limitation dates for commencing actions may not commence until they reach the age of majority. Aviva wished to enter into settlement negotiations with the existing claimants. However, Aviva wished to be credited for funds paid under the policy such that it would not be liable for future claims in excess of its policy limits.

Aviva took a variety of steps to locate additional potential claimants, including obtaining a list of the individuals at the social event, phoning each individual on the list and leaving messages for them, writing letters to the individuals, placing ads in newspapers, and asking individuals who had been contacted to pass on Aviva’s adjuster’s name and number on to people whom they knew or suspected having had been at the social event. Despite these efforts, a number of people who attended at the social event have not been contacted.

Aviva sought a declaration that it is entitled to pay settlements and judgments on behalf of the Insureds in chronological order in which defendants’ costs, settlements and judgments incur, that the amounts paid will reduce the limits of liability specified in the policy, and that no additional relief for the incident will be available once the policy limits have been exhausted.

Wong J. noted that Aviva sought a declaration that British Columbia courts adopt the "first past the post" approach in regards to the allocation of insurance policy limits in the non-automobile context. The "first past the post" approach means that insurers pay insurance proceeds to judgment creditors in the order in which the creditors obtain judgment. It also applies to settlements negotiated on behalf of the insured. As such, insurers are free to pay judgment creditors as soon as judgment is obtained and to settle with claimants with the knowledge that the insurer’s aggregate policy limits will be reduced accordingly. Once the policy limit has been realised, the insurer’s liability would be extinguished.

In British Columbia, the Courts have interpreted the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231 and Part 6 of the Insurance Act, R.S.B.C. 1996, c. 226 to mean that insurance proceeds, in the automobile context, are to be distributed to successful third party claimants on a pro rata basis. Wong J. noted that Bartkow and Walker v. Merit Insurance Co., [1962] I.L.R. 336 (B.C.C.A.), Henry v. Zurich Insurance Co. (1998), 50 C.C.L.I. (2d) 35 (B.C.S.C.) and Regency Plymouth Chrysler Inc. v. ICBC (1999), 11 C.C.L.I. (3d) 94 (B.C.S.C.) support this proposition. However, Wong J. stated that in contrast to the automobile context, third party claims in the non-automobile context are governed solely by s. 24 of the Insurance Act. Wong J. determined that s. 24 of the Insurance Act does not use the same limiting language present in s. 21 of the Insurance (Motor Vehicle) Act and s. 159 of the Insurance Act.

Wong J. noted that in Ontario, the Ontario Superior Court of Justice in Solway v. Lloyd’s Underwriters (2005), 22 C.C.L.I. (4th) 138 (Ont. S.C.J.) and the Alberta Queen’s Bench in Commerce & Industry Insurance Co. of Canada Inc. v. Singleton Associated Engineering Ltd., 2005 ABQB 500, have applied the "first past the post" approach in the property insurance context. Applying a pro rata obligation in this context would require claimants who have diligently brought their claims forward to wait until all potential claimants have come forward and had their cases heard. In addition, Aviva took steps to ensure that all potential claimants were identified and provided with an opportunity to initiate their claims.

Wong J. determined that public policy suggest that British Columbia should adopt the "first past the post" approach, as it encourages early settlement that lessens the burden on the Courts, rewards claimants who diligently move their claims forward, and affords judgment creditors the opportunity to realise the fruits of their judgments as soon as possible.

The Defendants argued that the Ministry knowingly participated in a trial fraught with risk and was a full participant in the litigation. The Court noted that the Ministry did no more than forward a few pieces of correspondence and did not attend or participate in the trial in any way. Accordingly, the Trial Judge could not have found that the Ministry was an equal partner in the litigation and to assess costs against the Ministry in the manner requested by the Defendants would be unfair and unreasonable. The Court of Appeal therefore dismissed the appeal.

This was an appeal by the Defendant, Wawanesa Mutual Insurance Co. ("Wawanesa") from a cost award after a jury dismissed the Plaintiff’s claim. The Plaintiff had claimed against its insurer, Wawanesa, for negligent, unfair and deceptive acts and practices in the adjustment of their insurance claim following a fire that destroyed their home. The Ministry of Health and Long-term Care (the "Ministry") had brought a subrogated claim against the Defendants for the cost of insured services received by the Plaintiffs following the fire; however, the claim was withdrawn half-way through the trial. The trial judge fixed Wawanesa’s costs at $565,000 and those of the remaining Defendants at $490,000. While the Defendants had sought to have costs awarded jointly and severally against the Plaintiffs and the Ministry, the trial judge held that only the adult Plaintiffs were liable for the Defendants’ costs.

The issue was whether the Ministry should pay the costs of the successful Defendants. The Ministry had joined the action to pursue their subrogated interest for $8,057 that represented health benefits received by the Plaintiffs following the fire. The Ministry did not attend at trial nor did it participate in any way.

On October 21, 2003, the Court granted summary judgment in favour of UWO and various individual Defendants against Guardian. The Court had declared that Guardian owed a duty to defend UWO in respect of the action and that Guardian had failed to honor that duty. The Court had ordered that UWO was entitled to be compensated for the expenses incurred by it in defending the main action prior to trial, at trial, and up to the time of the commencement of the appeal from the trial judgment. In the course of judgment, the Court had indicated that Guardian would be entitled to a credit with respect to portions of UWO’s claim for defence costs which UWO had received in a settlement with the other Third Party Insurers. Guardian brought an application for a determination of whether it could claim credit for these costs.

On the application, UWO argued that Guardian was not entitled to receive the credit as the funds received from the other Third Party Insurers were attributable to the legal defence costs incurred by UWO in defending the action, not in prosecuting the Third Party action which was the subject of these proceedings. UWO further submitted that the money obtained by UWO from the Third Party Insurers only indemnified UWO for costs incurred over a certain time period and that such costs had not been claimed against Guardian. The Court was satisfied that UWO had not been over-indemnified by the Court award against Guardian. As a result, there was no reason in equity for the Court to intervene as requested by Guardian to deduct the credit from the award that UWO obtained against Guardian. In the result, Guardian’s application for credit was dismissed.

In the result, the Plaintiff’s claim was dismissed.

The Respondent Insured was injured in a car accident on April 7, 1999 and was eligible to receive statutory accident benefits from the Appellant Insurer under the Insurance Act, R.S.O. 1990, c. I.8 (the "Act") and the Statutory Accident Benefits Schedule - Accidents On Or After November 1, 1996 O. Reg. 403/96 (the "SABS"). In accordance with the SABS, he was assessed for catastrophic impairment at a Designated Assessment Centre ("CAT DAC") where it was determined that he had suffered a catastrophic impairment in the accident and was therefore entitled to a higher level of certain benefits. In order to dispute this finding, the Appellant Insurer first initiated mediation in accordance with the Act. After the mediation failed, the Insurer commenced an action for a declaration that the Insured had not suffered a catastrophic impairment. The Insured then brought a motion under Rule 21 to strike the Insurer’s claim on the basis that the Act did not allow an Insurer to bring such an action.

The Court found that the Act and the provisions formed a complete Code for dispute resolution which could work effectively and fairly for all parties. The Court found that Insurers were not entitled to apply to the Court for a Declaration regarding catastrophic injury. Rather, the legislation provided a remedy for Insurers who disagreed with the outcome following a CAT DAC.

This action was the result of a motor vehicle accident. The Insured was driving and owned the car; her husband and two sons were passengers. All were seriously injured. The driver of the other vehicle involved in the accident was intoxicated, uninsured, and entirely at fault. However, one of the passengers, Travis Gostick, was not wearing his seatbelt and the driver was negligent in not ensuring he was properly secured. She was therefore jointly liable with the driver of the oncoming car for his injuries.

The Insured’s vehicle was insured under a standard automobile insurance policy issued by Royal & Sun Alliance Insurance Company of Canada. The policy had a third party limit of $1,000,000. The driver had paid an additional premium to obtain the OPCF 44R Family Protection Coverage endorsement with a limit of $1,000,000. The policy also contained a provision that said the maximum liability was the amount by which the limit of family protection coverage exceeded the total of all limits of motor vehicle insurance of the inadequately insured motorist and any other person jointly liable with that motorist.

The Insurer submitted that because the driver was jointly liable for Travis Gostick’s damages, and the third party liability limits were being paid to him, no payment was available under the Family Protection Coverage. It argued that if payment were available, that would result in a total recovery for family members of $2,000,000 in spite of the family having chosen to purchase only $1,000,000 of coverage.

The Court applied the ruling in Craig v. Allstate Insurance Co. of Canada, [2002] O.J. No. 2124, and held that the Family Protection Coverage attached because: (1) the Plaintiffs could have no resort to Ms. Morrison’s third party liability coverage; (2) the Plaintiffs were in the category of those to whom the endorsement was designed to give relief, that is, those injured by default exclusively of an inadequately insured driver; and (3) the words of the endorsement did not require or invite interpretation contrary to the intention of the endorsement.

This was an action brought by the Plaintiff, Mr. Henwood, who had been provided with a rental truck by his employer. The truck was rented from the Defendant, Ontario Car and Truck Rentals Ltd. ("Ontario Car"). The employer asked the Plaintiff to take the Defendant, Mr. Coburn on a sales trip. Mr. Coburn did not have a driver’s license and the employer advised the Plaintiff that Mr. Coburn was not allowed to drive. An altercation ensued in the course of the trip and Mr. Coburn jumped into the driver’s seat and started the vehicle. The Plaintiff jumped into the passenger seat in an attempt to talk Mr. Coburn out of taking the truck. During the course of the ensuing journey, the Plaintiff tried to convince Mr. Coburn to stop the truck. When the truck was involved in a motor vehicle accident, the Plaintiff was injured and sought damages for his injuries. There was no dispute that Mr. Coburn was at fault.

The Plaintiff’s claim against Ontario Car was that, as owner of the vehicle, it was responsible for Mr. Coburn’s negligence. Ontario Car argued that at the time of the accident, its motor vehicle was in the possession of Mr. Coburn without its consent and therefore, it should not be liable. The Court acknowledged authorities that where the permitted driver remains an occupant in the vehicle and either specifically allows the non-permitted driver to drive the car or acquiesces to the driver using the car, the permitted driver continues to remain "in possession" of the vehicle and the owner will remain liable.

The Court found that by deciding to occupy the vehicle and taking the action that he did, the Plaintiff continued to assert his possession of the vehicle. Accordingly, the Plaintiff was in possession of the rented vehicle at the time of the accident within the meaning of s. 192 of the Highway Traffic Act and Ontario Car was therefore liable for damages as a result of the negligent driving of Mr. Coburn.

This was an appeal by the Defendant, CAA Insurance, from a decision in chambers that Royal & Sun Alliance Insurance ("Royal") was not required under s. 258(1) of the Insurance Act, R.S.O. 1990, C. I-8, (the "Act") to compensate the Plaintiff. The Plaintiff had been involved in a motor vehicle accident with the Defendant, who at the time of the accident, was driving a cube van owned by his employer with a weight of more than 4500 kg. Prior to the accident, Royal issued a policy of auto insurance to the Defendant that restricted coverage for vehicles driven by the insured to those weighing less than 4500 kgs.

Section 258(1) of the Act provides that an injured third party may enforce a motor vehicle insurance contract directly against the insurer of the person who caused the motor vehicle accident.

In chambers, the Judge found that Royal was not obliged under s. 258(1) of the Act to compensate the Plaintiff because on a plain reading of s. 258(1), it is triggered only when a person has a claim against an insured for which indemnity is provided by a motor vehicle policy. In this case, the policy did not provide coverage for the claim that was advanced, there was no possibility of indemnity and therefore s. 258(1) did not apply.

The Court of Appeal dismissed the appeal holding that the motions Judge was correct in ruling that there could be no recovery by a third party beneficiary under s. 258(1), unless the insured could have been entitled to recover under a motor vehicle liability policy. Because, in this case, the policy did not provide coverage for the claim that was advanced, there was no possibility of indemnity and s. 258(1) did not apply.

In March 1992, a turbine manufactured by Whirlpool Canada’s predecessor exploded, causing extensive damage to Manitoba Hydro. At the time of the explosion, Commercial Union Assurance Co. of Canada ("Commercial") provided primary liability insurance coverage for Whirlpool with a policy limit of $2,000,000. National Union Fire Insurance Co. of Pittsburgh ("National") provided umbrella liability coverage with a policy limit of $25,000,000. In November 1998, Manitoba Hydro filed a claim in the Manitoba Court of Queen’s Bench seeking damages against Whirlpool in the amount of approximately $31,000,000.

Both the Commercial and the National policy contained clauses whereby the Insurer agreed to defend any claim against the Insured where the damages sought in the claim were for a loss insured under the policies. Both National and Commercial denied a duty to defend the Manitoba Hydro action.

The Application before the Court considered which law was to be applied to the National policy.

The Court noted that in Canada "proper law" issues were resolved by considering the contract as a whole in light of all the circumstances and applying the law with which the contract had the closest and most substantial connection. The Court found that the contract had the closest and most real connection with the United States rather than any Canadian province. The Court noted that the domicile and residence of the contracting parties was in the United States, the contract was made in the United States, the premium would be paid in the United States, any losses would presumably be paid from National’s Head Office in the United States, and other aspects of the policy would be performed in the United States, including the giving of notice of occurrence audits, maintenance of underlying insurance, etc.

The Court then considered whether the proper law was the law of New York or the law of Michigan. While there were numerous factors in favour of either state, the Court found that the circumstance which tipped the scales in favour of New York was that the decision to underwrite the risk was taken there. The Court concluded that the proper law of the contract was New York.

Ms. Arnold was injured in a motor vehicle accident. She commenced an action against Ms. Davidson and Ms. Davidson’s insurer, Enterprise Rent A Car Canada Ltd. ("Enterprise"). In addition, Ms. Arnold commenced an action against Wawanesa Mutual Insurance Co. ("Wawanesa") under an SEF 44 family protection endorsement, which would provide Ms. Arnold with insurance benefits to the extent that the damages in the action that she commenced against Ms. Davidson were not covered by Ms. Davidson’s insurer, Enterprise.

Wawanesa brought an application to compel Enterprise to produce a copy of its Certificate of Insurance [ with Ms. Davidson ] in the action that Ms. Arnold had commenced against Wawanesa. The Court noted that Enterprise was not a party in that action and as such, the determination of disclosure of the Certificate of Insurance was governed by the Court being satisfied that the production of the document was necessary for disposing fairly of the proceedings or of saving costs, and was not injurious to the public interest. Enterprise opposed production of its Certificate of Insurance relying upon Peters and Fireman’s Fund Co. of Canada (1984) 45 O.R. (2d) 149 (O.N.H.C.) and Lamie v. Royal Insurance Co. of Canada [1994], N.S.J. No. 433.

Wawanesa argued that although many provinces have legislated disclosure of policy limits, in this case, Enterprise had already orally disclosed its policy limits to Wawanesa. Wawanesa was not satisfied with this disclosure and requested the actual Certificate of Insurance.

Dymond D. J noted that it was not until liability had been proven against Enterprise that Wawanesa could have any potential liability to Ms. Arnold in the action that she has commenced against them. In addition, unless Enterprise was held liable for a claim greater than its policy limits on behalf of Ms. Davidson, it would never be called upon to disclose to Wawanesa its policy coverage. Dymond J concluded that there would not appear to be a nexus that connects the application for production of Enterprise’s Certificate of Insurance to Wawanesa at this time. Dymond J determined that the present application was premature and that the Enterprise’s Certificate of Insurance was not producible to Wawanesa.

Mr. Gogna was insured in a motor vehicle accident on January 9, 2004. He received first party accident benefits from his insurer, State Farm Mutual Automobile Insurance Co. ("State Farm"). At the request of State Farm, Mr. Gogna attended a multi-disciplinary insured’s medical assessment, a neurological assessment, a functional abilities evaluation, and a physiatry assessment. The neurological assessment was conducted by Dr. Myer, who recommended that Mr. Gogna undergo a psychological evaluation. Mr. Gogna attended the psychological examination with Dr. Nemeth on March 21, 2005. On March 30, 2005, Dr. Nemeth provided a detailed report of her assessment and noted that Mr. Gogna had abruptly left the assessment after one hour. State Farm terminated Mr. Gogna’s benefits until Mr. Gogna made himself fully compliant and cooperated with the psychological examination. Mr. Gogna volunteered to attend a psychological examination that was conducted by a different physician. Mr. Gogna asserted that Dr. Nemeth’s manner was impatient, harsh and unaccommodating and that he did not feel comfortable being assessed by her.

Mr. Gogna commenced an application before an arbitrator pursuant to subsection 50(1)(b) of Ontario Regulation 403/96 to have his insurance benefits reinstated. At the hearing, both Mr. Gogna and Dr. Nemeth were cross-examined on what occurred during the independent medical examination. Miller, J, the Arbitrator, based on Dr. Nemeth’s testimony and documentary evidence, determined that Dr. Nemeth created an insensitive, critical, impatient and intense atmosphere for the assessment. He determined it was more likely than not that Dr. Gogna felt Dr. Nemeth’s impatience and critical attitude toward him and for this reason was provoked into leaving the assessment. Therefore, the psychological assessment with Dr. Nemeth was not a reasonable examination to which Mr. Gogna should be required to continue to submit. Mr. Gogna’s insurance benefits should be reinstated. Noteworthy is the fact that Mr. Gogna agreed that a psychological assessment was a reasonable request and agreed to undergo a psychological assessment from a different physician.

This was the trial of a dispute between motor vehicle insurers that arose after a settlement by one insurer with the Plaintiff, Patricia Trainor. The Defendant, Aaron Barker, was a minor who lived with his parents and was employed at Burger King. Aaron’s father, the Defendant, Gary Barker, allowed his son to drive the family car to work and, during the course of his employment, Aaron Barker negligently collided with the vehicle driven by the Plaintiff. The Barker’s Insurer, Coseco Insurance Company ("Coseco") settled with the Plaintiff by paying her $312,000 and received, by assignment, her claim against QSC Inc., the Defendant company that owned the Burger King franchise ("QSC"). Coseco sought reimubursement from QSC’s insurer, the Halifax Insurance Company ("Halifax").

Liability was imposed by the Court on the Barkers and on QSC. The Court found that Coseco insured the Barkers under a valid "owner’s policy" and that QSC was insured under a valid "non-owner’s policy" by Halifax.

The issue for the Court to decide was whether s. 277(1) of the Insurance Act applied to establish priority between an "owner’s policy" and a "non-owner’s policy". Section 277(1) of the Insurance Act essentially provides that insurance determined to be an "owner’s policy" is a "first loss" insurance in respect of liability arising from or occurring in connection with, the ownership or use or operation of an automobile owned by the insured and that insurance attaching under any other valid motor vehicle liability policy is excess insurance only.

The Court found that s. 277(1) of the Insurance Act applied to establish priority. The language of s. 277(1) clearly provides that in this circumstance, the primary policy is the Coseco policy and the Halifax is excess insurance only. The limits of the Coseco policy were sufficient to cover the loss and there was therefore no need to call on the Halifax policy for indemnification.