2008 BCSC 777 4766605 B.C. Ltd. v. Insurance Corporation of British Columbia

Before: Master B.M. Young

Reasons for Judgment

Appearing for the Plaintiff:	S. Meade
Counsel for the Defendant:	K.D. Watts
Dates and Place of Hearing:	December 4, 2007 and March 25, 2008
	Vernon, B.C.
Written Submissions:	April 25, 2008

[1] The plaintiff, 476605 B.C. Ltd., leased a 1995 International 9200 Pro Sleeper truck from Sovereign Leasing. As a result of a single-vehicle accident, that truck was significantly damaged on or about May 20, 2004. ICBC chose to write off the vehicle and pay its value to the plaintiff. The plaintiff says that it did not receive fair value for the truck, and brings this action to claim recovery of fair replacement cost of the vehicle and accessories. ICBC paid the plaintiff $18,000, saying that this represented the fair value of the truck.

[2] The plaintiff says that the vehicle was insured for $40,000 and that it had a new engine installed, and that it had two extra-large gas tanks installed, prior to the accident. The plaintiff says that these additions to the vehicle should have been taken into account when ICBC assessed the value of the vehicle.

[3] Mr. Stuart Meade, for the plaintiff, submits that s. 117 of the Revised Regulation (1984) under the Insurance (Motor Vehicle) Act requires ICBC to pay fair value or the actual cash value of the vehicle and its equipment.

[4] ICBC says that any dispute regarding the value of the vehicle has to be dealt with under s. 142 of the Revised Regulation (1984) under the Insurance (Motor Vehicle) Act which sets up mandatory arbitration.

[5] The plaintiff says that s. 142 excludes disputes under s. 117 and that he is not required to go to arbitration but has access to the court to enforce the provision of s. 117. In particular, he says s. 117 requires ICBC to pay the cost of repairing or replacing the vehicle: “...and its equipment or any part of it with material of similar kind or quality,...[or pay] the declared...or...actual cash value of the vehicle and its equipment, whichever is least...”.

[6] The plaintiff says ICBC failed to do this. ICBC valued the vehicle based on its age and mileage and disregarded the extra equipment in the truck.

[7] On first reading of the sections of the Act it appears that s. 142 does exclude s. 117 disputes, and one can understand why the plaintiff thought he was entitled to bring this dispute to the court. However, s. 117 does not deal with the actual assessment of the quantum of the loss; it deals with the liability to reimburse for the loss. Section 117 is the liability section. Section 142 is the coverage or quantum section. I have to agree with the plaintiff that it is not all that clear.

[8] To complicate matters somewhat more for me, the legislation was repealed in 2007. I requested further submissions as to the impact of the repealing and amending of the legislation. Written submissions were filed in March of 2008. The Regulation was replaced with a regulation that was virtually identical. Section 142 was repealed by s. 70 of Regulation 166/2006 on June 1, 2007. The date of loss was May 20, 2004. The transition clause for the new Regulation says that the Act and Regulations, as they read before coming into force of the new Act, applied to claims under insurance that pre-dated the amendment.

[9] In any event, even if the transition clause had not been there, the new sections 176 and 177 are virtually identical but interestingly do delete the confusing words: “but without limiting this, does not include a dispute between the owner and the corporation as to the rights or liability of the corporation under, or any decision made by the corporation under, section 117 (1) (a), (2), (3) or (4)”.

[10] Those were the words that led the plaintiff to believe that he is not required to go to arbitration and could bring this action to the courts.

[11] I do accept Mr. Watts’ submission that the change of legislation has no affect on this case. The original Act applies.

[12] The plaintiff argues that the doctrine of contra proferentem should apply and be used against the defendant; however, contra proferentem does not apply to ambiguous legislation. It only applies to contracts drafted by one party who cannot then rely on the ambiguity in a claim against the other party.

[13] I find that the courts do not have jurisdiction to deal with coverage disputes, given that there is mandatory arbitration set up by s. 142. In Ajvazi v. Insurance Corp. of British Columbia, 2006 BCPC 87, Her Honour Judge Rae, at para. 10, said:

...I appreciate that the Claimant believes he ought to have the right to pursue the matter in this Court, but the statute imposes a mandatory forum for resolution of these disputes, and this Court is excluded from that process. There are a number of cases which have reached the same conclusion; namely Goldie v. Grewal, [1988] B.C.J. No. 1035; Sidhu v. Insurance Corporation of British Columbia, [1993] B.C.J. No. 1998; Suttie v. Insurance Corporation of British Columbia, [2001] B.C.J. No. 1587.

She goes on to caution that the claimant, if he wishes to pursue arbitration, must move quickly because he is statute barred two years after the date of loss.

[14] This plaintiff is four years post-date of loss. Rather than pursue arbitration he started this action, and then this action remained dormant. He came to court in December 2007 to defend a motion for dismissal for want of prosecution of this action.

[15] Now I find that he indeed should have gone to mandatory arbitration and that I have no jurisdiction to deal with the coverage dispute.

[16] A second hearing was convened at my invitation to make further submissions on the effect of further legislation. At that hearing, Mr. Meade expanded his submissions to address the fact that s. 117 deals with liability. He submitted that ICBC said it had a policy that it never dealt with new engines in vehicles and therefore he submitted his case was a liability issue and not a quantum issue. He went to court to enforce the conditions of his insurance contract and the statute which says that ICBC is liable to cover the loss of vehicle and equipment. He says ICBC is denying that liability.

[17] These submissions went beyond what I had invited the parties to address, so I permitted Mr. Watts an opportunity to respond. He requested that he be permitted to do so in writing, in 30 days, and I granted that leave.

[18] A claims examiner swore an affidavit denying that he ever spoke of a policy that ICBC did not deal with engines, and he went further to say no such policy existed. If a policy did exist, it would have contravened the Act. He deposed that he offered to pay out the actual cash value of the vehicle as it was, including its current state of repair and equipment. The CL30 form that appraisers fill in has a space for the appraiser to include details on improvements made to the vehicle. The claims examiner attached a CL30 form completed in this case. I have reviewed it and it does not have any information included in it. What he has attached is a blank CL30 form and not the actual CL30 form completed in this file. He has also attached all of the correspondence he exchanged with the plaintiff. The examiner invited the plaintiff to participate in the arbitration set up by s. 142 as early as September of 2004. There is no reference to the additional equipment on this truck in the correspondence. There is some reference to the plaintiff viewing the comparables and reporting back to the examiner that the comparables were inferior vehicles to the one that he lost.

[19] In the second hearing, I informed both parties that I was considering whether I could grant Mr. Meade relief from forfeiture if I found that I had no jurisdiction to deal with the vehicle value issue. Mr. Watts addressed the relief from forfeiture argument in his further submissions. His first submission was that it was premature to determine whether the plaintiff would be left without a remedy because he had not yet commenced the evaluation process. He is beyond the time limit to use the arbitration process. Section 142(3) used mandatory language: “A coverage dispute must not be submitted for evaluation or arbitration more than two years after the occurrence or loss or damage.” (emphasis added)

[20] If the defendant will not commit to allow a s. 142 arbitration that this stage, then my assumption is that it will not consent to an extension of the time limit and the plaintiff will indeed be left without a remedy.

[21] Section 24 of the Law and Equity Act gives the court jurisdiction to relieve against all penalties and forfeitures, and in granting the relief impose any terms as to costs, expenses, damages, compensations and all other matters that the court thinks fit.

[22] Counsel for ICBC submits that s. 24 of the Law and Equity Act only grants the court the right to relieve from contractual penalties and forfeitures and not against statutory penalties and forfeitures.

[23] Counsel for ICBC quotes from Saress v. Insurance Corp. of British Columbia, 2006 BCPC 353, which quotes the British Columbia Court of Appeal decision of Martin Mine Ltd. v. British Columbia (1985), 62 B.C.L.R. 107 and the Privy Council case of The Canadian National Railways v. His Majesty the King and the Provincial Treasurer of Alberta (1922), 64 S.C.R. 264. The Privy Council agreed that judges do not have the right to relieve from statutory forfeiture because that would, in effect, give an authority to the courts to repeal statutes. The Privy Council decision was unanimously confirmed in the Supreme Court of Canada. Idinglton J. says in his judgment that the power of the court to relieve from penalties seemed to him to be applicable only to such contractual penalties and forfeitures.

[24] Most recently the Supreme Court of British Columbia said in Griffiths v. New Westminster (City), 2001 BCSC 1516 that the court cannot relieve against penalties or forfeiture which are statutory in origin.

[25] I, therefore, have no choice but to conclude that I do not have jurisdiction to deal with a coverage claim. The plaintiff was required to proceed under s. 142 of the Revised Regulation (1984) under the Insurance (Motor Vehicle) Act and to use the arbitration mechanism set up in the Act.

[26] There is a two-year limitation period and he is now statute barred.

[27] I do not have jurisdiction to extend that deadline, but I wish I did. If I had authority to grant relief from forfeiture, I would have exercised it.

[28] The position taken by the plaintiff is not an unreasonable one. I too found the inclusion of the following words in s. 142 to be confusing: “but without limiting this, does not include a dispute between the owner and the corporation as to the rights or liability of the corporation under, or any decision made by the corporation under, section 117 (1) (a), (2), (3) or (4)”.

[29] Those words in the statute led the plaintiff to believe, erroneously, that it was excluded from the requirement of arbitrating.

[30] When the Act was amended, those words were removed, which leads me to presume that the plaintiff and I are not the only ones who found the legislation unclear.

[31] ICBC alerted the plaintiff to the fact that there was a two-year limitation period to commence arbitration, but the plaintiff believed that the court had power to remedy this situation.

[32] On the merits of his case, I see nothing in any of the material filed by ICBC to indicate that it gave any consideration to the fact that the vehicle had a new engine.

[33] It is not referred to in the letters making the $18,000 offer. It does not show up in the forms which were attached to the claims examiner’s affidavit. The CL30 form which was attached to the examiner’s affidavit is a blank form and does not relate specifically to this case.

[34] There is no reference to the examiner or estimator considering the age of the engine.

[35] I am not convinced that any consideration was given to the engine. This matter should go to arbitration so that the plaintiff can assert this claim. If ICBC did consider the value of the new engine it should prove that to the plaintiff.

[36] My hands are tied. I can say what I would do if I had the authority to do it, but I do not have the authority. The plaintiff’s claim in this court is dismissed with no costs to either party because of the unfortunate lack of resolution of the central issue.

“B.M. Young”
Master B.M. Young

Citation:	*476605 B.C. Ltd. v. Insurance Corp. of British Columbia,*
	2008 BCSC 777