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.

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.

The insured owned a pick-up truck insured by the insurer. His son was an 'excluded driver' under the policy. His son used the truck, accompanied by another driver, and was involved in a motor-vehicle accident. Both the insured and his son were sued by the occupants of the other vehicle.

The insurer brought an application for a declaration that it had no duty to defend or indemnify either the insured or his son. The insurer argued that there was no coverage on three grounds: (1) The son was an 'excluded driver'; (2) The son drove the truck on public roads without the insured's consent; and (3) The insured allowed the son to drive while in breach of the conditions on his G-1 driver's license.

On the first ground, the court agreed that the insurer had no duty to defend or indemnify the son, as he was clearly listed as an 'excluded driver'. However, the insured argued that he understood this to mean that his son had no coverage, not that he was not himself protected from third party liability. The court questioned whether the insurer had taken adequate steps to bring the coverage implications to the insured's attention. The form that was originally sent to the insured, clearly explaining the implications of having an excluded driver on the policy, only listed another vehicle owned by the insured, not the truck in question. Although the insurer sent a revised form, listing the truck, the insured had left the country and claimed he did not receive it prior to the accident. Since the evidence was unclear, the court was not prepared to make a finding on the evidence that the insurer had taken all the appropriate steps to ensure the insured fully understood the coverage implications of having his son listed as an 'excluded driver'. The court directed the trial of an issue on the 'excluded driver' endorsement.

On the second ground, the court found that although both the insured and his son had sworn affidavits that the son did not have express consent to drive the vehicle, he did have implied consent. Email evidence suggested that when the insured found out that his son was using the truck on some public roads, he simply told his son to "be careful."  The court found that, at the very least, the insured had acqueised and had impliedly consented to his son using the truck on public roads.

On the third ground, the court found that the insured did not allow his son to drive while unauthorized to do so. The son had his G-1 license, which required him to have another driver in the vehicle with more than four years driving experience. At the time of the indicent there was another driver with the son, but he had less than the requisite experience. The court found that it could not be stated that the insured allowed his son to drive his truck in breach of the liscensing requirements since he could not have known that his son's passenger lacked the requisite experience.

The court directed a trial of an issue under Rule 38.10(1)(b) with regard to the coverage implications of the 'excluded driver' endorsement in relation to the insured. It also declared that the son was not covered and that the insurer had no duty to defend or indemnify him in the upcoming actions.

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

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

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

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

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

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

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

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

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

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

MedCentra Inc. (“MedCentra”) was a third party service provider which provided MRI examinations to persons who were involved in motor vehicle accidents and who were insured persons under standard automobile policies of insurance Economical Mutual Insurance Company (“Economical”). MedCentra directly billed Economical for the MRI services provided to persons insured through Economical pursuant to the direct billing provisions set out in section 44 of the Statutory Accident Benefits Schedule (SABS). Economical paid for some but not all of the services performed by MedCentra. MedCentra sought to compel payment from Economical directly for the MRI examination services that it rendered to individuals insured by Economical. The issue for determination on this motion for summary judgment was whether MedCentra was entitled to bring an action directly against Economical to compel payment of any amounts that might be owing to MedCentra for MRI services rendered to persons insured by Economical.

To be entitled to recover payment directly from Economical for services rendered to insured persons, MedCentra would have to establish that it met the test of the principled exception to the doctrine of privity of contract. The “critical and cumulative” factors necessary to satisfy the test were set out by the Supreme Court of Canada in Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd, [1999] 3 S.C.R. 108:

(a) Did the parties to the contract intend to extend the benefit in question to the third party seeking to rely on the contractual provision? and,

(b) Are the activities performed by the third party the very activities contemplated as coming within the scope of the contract in general, or the provision in particular, again as determined by reference to the intentions of the parties?

The Court found no evidence that Economical or any of the insured persons to whom MedCentra provided services intended to confer any benefit on MedCentra, let alone the benefit of direct billing. The Court further found that any attempt by an insured person to confer the benefit of direct billing on MedCentra would be invalid because of the prohibition contained in section 65 of the SABS against an insured person making any assignment of benefits under the SABS. The option of allowing a service provider to bill an insurer directly was within the insurer’s discretion alone. The Court agreed with Economical’s submission that MedCentra could not be in a better position than an insured person under the SABS and thus could not be in a position to compel Economical to extend the benefit of direct billing to it.

The Court also found that to allow MedCentra to compel payment directly from Economical would undermine the statutory benefit regime provided under the Insurance Act and would be contrary to the explicit statutory provisions that kept the claims dispute process between insurers and insured persons. The provision allowing for direct billing at the option of the insurer did not change the basic nature of the claims process, namely, that claims are made by the insured person and any resulting dispute is between the insured person and the insurer, and not between the service provider and the insurer.

In the result, MedCentra had no right to bring an action directly against Economical for payment for the examinations provided to insured persons. There was no contractual relationship between Economical and MedCentra and no basis on which to relax the doctrine of privity of contract.

This case was originally summarized by Emily M. Williamson 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 plaintiff was injured when the seat he was sitting in broke, causing him to fall backward.  At the time of the incident, the plaintiff was riding on a moving bus operated by the defendant, Greater Toronto Transit Authority.  The defendant brought a motion seeking a declaration that the plaintiff’s injuries arose directly or indirectly from the use of an automobile as defined by s. 1 of the Insurance Act, R.S.O. 1990, c. I.8.  The defendant also sought a declaration that it was a “protected defendant” pursuant to s. 267.3 of the Insurance Act, which would entitle it to the benefit of the threshold under s. 267.5(5), and the $30,000.00 deductible under s. 5.1. of the Court Proceedings for Automobile Accidents that Occur on or After November 1, 1996, O. Reg. 461/96.

The Superior Court of Justice ruled that the plaintiff’s injuries were sustained during the use of an automobile, and that the defendant was a “protected defendant” entitled to the benefit of the threshold and the deductible.  In so ruling, the Superior Court referred to the Supreme Court of Canada’s decision in Amos v. Insurance Corporation of British Columbia, [1995] 3 S.C.R. 405.  In Amos, the Supreme Court held that the determination as to whether injuries are suffered through the use of a motor vehicle depends on whether the accident resulted from the ordinary use of an automobile, and whether there is some causal relationship between the injuries and the ownership, use, or operation of the vehicle.  In applying this test to the case at bar, the Superior Court ruled that it would be “torturous reasoning” to conclude that the plaintiff, who was injured while he was a passenger on a moving bus, did not suffer his injuries from the use or operation of a motor vehicle.

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

In April 2003, the Mawjis were involved in a 68 car pile-up on Highway 401 in Toronto.  Their lawyer received a Motor Vehicle Accident Report stating the Mawjis were involved in a single car collision with a vehicle driven by Mr. Christiaans. The Mawjis commenced an action against Mr. Christiaans in April 2005, and served it in May 2005.

A Statement of Defence and Counterclaim were delivered in December 2005, that stated Mr. Christiaans had been struck by a driver and or operator of vehicles unknown or unnamed in this lawsuit. Enclosed with the pleading was a Statement of Claim by the estate of Mr. Amayo naming Mr. Christiaans, Mawji, a number of orther defendants including John and Jane Doe from the same multi car pile-up.

Mr. Christiaans' lawyer suggested to Mawji's lawyer that he should consider adding other defendants. Mawji's lawyer responded by saying no other vehicle was involved, and that he would consider adding other defendants when he was given some evidence suggesting Mr. Christiaans was not at least 1% liable.

In January 2006, Mr. Christiaans' lawyer sent Mawji an Ontario Provincial Police Technical Report showing other vehicles were involved in the collision, including Mr. Amayo in his maroon Mazda. In March 2006, Mawji commenced an action against Mr. Amayo.

In January 2007, Mr. Chriastiaans stated in his examination for discovery that he had been struck by an unidentified beige car. Mawji's lawyer then wrote to Axa in May 2007 giving notice there was a potiential claim under the unidentified vehicle coverage of the policy.

In April 2008, the Mawjis commenced an action against Axa under the unidentified vehicle coverage of their policy, five years after the collision.

The issues for the court were; a) when was the claim against Axa discoverable, b) if the claim was outside the limitation period, were there special circumstances to allow it, c) would Axa suffer prejudice, and, d) was there a genuine issue for trial as to whether the action was statute barred.

The court held that the Mawjis must possess sufficient knowledge before bringing the action or it could be dismissed as having no reasonable prospect of success. There was a genuine issue for trial with respect to when the Mawjis knew or ought to have known the necessary facts to add Axa to the proceedings. Axa did not suffer actual prejudice as it had been aware of the claim as of at least May 2007.

The judge dismissed the motion as the question as to when the Mawjis would have had sufficient information to maintain a successful action against Axa was a question of fact and beyond the role of a motions judge.

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