IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Protrux Systems v. ICBC,

 

2004 BCSC 1194

Date: 20040921
Docket: C992252
Registry: Vancouver

Between:

Protrux Systems Inc.

Plaintiff

And

Insurance Corporation of British Columbia

Defendant

 

 

 

Before: The Honourable Mr. Justice Halfyard

Reasons for Judgment

Counsel for Plaintiff

M. Tweedy

Counsel for Defendant

R. Weddigen, Q.C.

S. Munro

 

Date and Place of Hearing:

February 26 and July 8, 2004

 

Vancouver, B.C.

[1]            The plaintiff Protrux Systems Inc. ("Protrux") has applied under Rule 18A for summary trial and judgment against the defendant Insurance Corporation of British Columbia ("ICBC") for damages for breach of a contract of insurance. 

[2]            The plaintiff seeks to recover $17,565.66, which was the amount paid to Aggressive Auto Towing for removing two trailer loads of chipboard from the Similkameen River alongside Highway No. 3, about 30 kilometres east of Hope, B.C. 

[3]            Most of the facts giving rise to this litigation are not in dispute, and I find them to be as follows.  On February 8, 1999, Tibor Himer, an employee of Protrux, was driving a tractor and trailer unit that was under lease to Protrux.  He had taken on a load of chipboard from "Hardwoods" in Langley that morning, and was intending to haul this cargo to Kelowna.  The chipboard consisted of sheets of wood that each measured about 4 feet x 8 feet x ¾ inch thick.  This product was known as melanine, a plastic-coated chipboard.  The cargo weighed an unknown number of tons, and was stacked on two flatdeck trailers and protected by tarps. 

[4]            Mr. Himer was driving the tractor trailer unit in an easterly direction on Highway 3, near Sumallo Lodge in Manning Park, when he lost control of the vehicle due to slippery road conditions.  The tractor and trailers went off the roadway, down an embankment of about 15 feet, and came to rest in the Similkameen River lying on their sides, in three or four feet of water.  The driver was shaken up but not otherwise injured. 

[5]            The tractor was insured against physical damage and third party liability claims, by ICBC.  The trailers were also insured by ICBC, but had no collision coverage. 

[6]            The cargo was owned by Hardwoods of Langley, B.C., and was insured by AXA Pacific Insurance Company ("AXA") under a policy of insurance with Protrux. 

[7]            The accident occurred at or shortly after 1:00 p.m. on February 8, 1999.  The driver Mr. Himer was taken to Sumallo Lodge, and he (or someone on his behalf) contacted Protrux and told them about the accident.  Protrux notified Alan Cole, a claims adjuster employed by Brouwer Claims Canada & Co. Ltd., the representative of AXA. 

[8]            The R.C.M.P. and Aggressive Auto Towing Ltd. ("Aggressive") attended at the accident scene.  Mr. Cole promptly contacted Hardwoods, and was told that the chipboard cargo was of no value, having been exposed to water.  Mr. Cole notified Aggressive that the cargo insurer was not interested in recovering the cargo, as it had no salvage value. 

[9]            On February 10, 1999, Aggressive pulled the tractor and trailers out of the river.  Before doing so, they cut the straps holding the chipboard cargo on the trailers, and as a result, the chipboard was left lying in the river.  Aggressive towed the tractor to its yard in Abbotsford, on February 10th.   The evidence does not disclose what was done with the trailers after recovery. 

[10]        Aggressive removed the chipboard from the river, and hauled it away to a place of storage.  The evidence does not reveal who it was that instructed Aggressive to remove the chipboard from the river. 

[11]        A claims adjuster for ICBC at Langley was notified of the accident on February 9th, and on February 12th referred the claim of Protrux to the heavy equipment claims section of ICBC.  On or about February 18, 1999, Aggressive towed Protrux' tractor to Inland Kenworth in Langley, for the repair work to be done.  Mr. German, a heavy equipment appraiser for ICBC, estimated the damage to the plaintiff's tractor on or about February 19, 1999.  (Repairs were eventually completed at a cost of over $36,000, which was paid by ICBC.) 

[12]        Aggressive billed ICBC for $1,085.70, which included recovery of the tractor from the river, towing the tractor to Aggressive's yard in Abbotsford, towing the tractor from its yard to Inland Kenworth, a portion of the costs for flagpersons, and eight days storage fees. 

[13]        Aggressive billed the plaintiff $17,565.66 plus GST, for removing the chipboard from the river and disposing of it.  AXA refused to pay it, and told the plaintiff that ICBC was liable. 

[14]        Aggressive was not paid promptly, and on or about February 23, 1999, it seized Protrux' tractor from the repair shop, and demanded payment from Protrux as a condition of releasing the tractor. 

[15]        An agreement was made between AXA and Protrux whereby AXA agreed to provide Protrux with the money to pay Aggressive's account, so as to recover possession of its tractor.  In advancing this money to Protrux, AXA maintained its denial of liability to pay for the removal of the cargo from the river.  As a condition of receiving this money, Protrux agreed to lend its name to bring an action against ICBC and to cooperate in seeking recovery of the amount paid to Aggressive.  It was agreed that, if the action failed, Protrux would not be required to repay the money to AXA, and AXA would pay all costs associated with the litigation. 

[16]        By letter dated March 11, 1999, Mr. Cole made a demand to ICBC on behalf of AXA, requesting reimbursement from ICBC for the amount paid by AXA to cover Aggressive's invoice under its agreement with Protrux.  Mr. Cole took the position that s. 64 of the Regulations made pursuant to the Insurance (Motor Vehicle) Act required ICBC to cover the cost of removing the cargo.  Mr. Cole's letter included the following paragraphs: 

"With regard to liability imposed by law, we understand from Aggressive Towing that recovery of the debris in the river was ordered by the police and/or Ministry of Transport. 

With regard to the property damage, this does not only mean some type of physical injury is required.  It also includes injury to an intangible, such as an infringement of some right of way or pollution of a river." 

[17]        By letter dated March 23, 1999, Calvin Boyce, a heavy equipment examiner with ICBC, replied to Mr. Cole's letter of March 11th.  The text of Mr. Boyce's letter reads as follows: 

"ICBC respectfully declines to contribute to the cargo debris recovery on this loss.  Liability imposed by law is only effective when a toxic substance is released into the environment and a court order is obtained by the Ministry of Environment." 

[18]        AXA paid for the loss of the chipboard cargo, which was valued at almost $30,000. 

[19]        This action was commenced on May 3, 1999, more than five years ago. 

[20]        Protrux alleges that ICBC is liable to indemnify it for the cost of removing the chipboard from the river and disposing of it, under s. 64 of the Regulations, which reads as follows: 

"64 Subject to section 67, the corporation shall indemnify an insured for liability imposed on the insured by law for injury or death of another or loss or damage to property of another that

 (a)  arises out of the use or operation by the insured of a vehicle described in an owner's certificate, and

 (b)  occurs in Canada or the United States of America or on a vessel travelling between Canada and the United States of America." 

[21]        It is admitted that the chipboard ended up in the river as a result of "the use or operation ... of a vehicle", and that the accident occurred in Canada.  Protrux argues that it was liable under the Waste Management Act to remove the chipboard from the river, and that the presence of the chipboard caused damage to the river, by obstruction or pollution. 

[22]        ICBC submits that the evidence fails to establish any liability imposed on Protrux by law to remove the chipboard, nor does it show any damage to property of another.  Counsel points out that no request or order was issued by any governmental authority to require removal of the chipboard from the river, and submits there is no evidence to prove that the chipboard constituted an obstruction of the river or was polluting the river. 

[23]        In the alternative, ICBC asserts three additional independent grounds for dismissal of this action, as follows: 

(a)            The plaintiff vitiated its coverage by failing to comply with s. 73 of the Regulations. 

(b)            The plaintiff has failed to establish that the loss incurred was a necessary expense, in that the evidence fails to show that it was necessary for Aggressive to cut the straps and release the chipboard into the river, as a pre-condition to pulling the tractor and trailers out of the river. 

(c)            AXA made a voluntary payment to cover Aggressive's invoice, while denying liability under the cargo insurance policy, and therefore it is precluded from seeking recovery of the amount paid.  Nor can Protrux recover that amount, since it has not incurred any loss. 

[24]        The evidence is unsatisfactory in several respects.  Each party denies authorizing Aggressive to recover the chipboard cargo from the river, and Mr. Cole's evidence that the R.C.M.P. or the Ministry of Highways gave the instructions, is inadmissible hearsay.  There is no evidence from any employee or agent of Aggressive.  Consequently its authority for removing the chipboard remains a mystery.  It is possible (there may even be a reasonable probability) that it was necessary to cut the cargo straps and release the cargo, in order to remove the tractor and trailer vehicles.  But that has not been proved on the balance of probabilities.  And no explanation whatever has been given by either party as to why no evidence has been obtained from Aggressive. 

[25]        There is a further aspect in which the evidence is unsatisfactory.  In his examination for discovery, Calvin Boyce testified that Aggressive only billed ICBC for recovery and towing costs related to Protrux' tractor truck, and not for the two trailers.  Again, no explanation was provided as to who paid for the cost of recovering the trailers.  And without evidence from Aggressive, it is unknown whether the trailers were removed from the river separately, or together with, the tractor truck. 

[26]        In the most recent affidavit (sworn November 24, 2003, by Seeley Munro), it is established that the cargo insurance policy between Protrux and AXA included coverage for: 

"Expenses necessarily incurred by the insured, in the removal of the debris of the property occasioned by loss or damage not otherwise excluded hereunder." 

[27]        In her affidavit sworn July 8, 2003, Ms. Munro established that Protrux filed a proof of loss with AXA on February 22, 1999, but made no claim for payment of Aggressive's invoice.  These aspects of the evidence raise a suspicion that Protrux may not have been aware of the "debris removal" clause in its policy at an early date.  But again, no evidence has been given on the point. 

[28]        I would describe the two primary issues in this way: 

(a)            Was liability imposed on Protrux by law, to remove the chipboard cargo from the river? 

(b)If so, did the presence of the chipboard in the river cause damage to the river (i.e., the property of the provincial Crown)? 

[29]        Counsel has informed me that these issues are not new as between cargo insurers and third party liability insurers, but it appears to be the first dispute of its kind requiring determination by this court.  In many accidents of this nature, the spilled cargo has salvage value, so that the cargo insurer recovers the cargo and cleans up the cargo debris, in the course of salvaging the cargo.  In other cases, it appears that ICBC, as the third party liability insurer, has covered the cost of clean up, where the spilled cargo consists of a toxic or otherwise dangerous substance. 

[30]        It appears that the officers who administer the Waste Management Act were not aware of the occurrence of this accident.  There is no evidence that the chipboard was causing or would cause pollution of the river, which requires "... the presence in the environment of substances or contaminants that substantially alter or impair the usefulness of the environment" (see the definition in s. 1 of the statute).  Absent some evidence of pollution, a manager could not order removal of the chipboard under s. 31 of the Act. 

[31]        However, if the chipboard had not been removed from the river by Aggressive, and had been abandoned by Protrux, I think the chipboard would then have constituted "refuse" under the Act, i.e., "discarded or abandoned materials, substances or objects".  The definition of "waste" includes refuse, and in my opinion, the deposit of waste in the river could trigger the application of s. 3(2) of the Act, which reads in relevant part as follows: 

"... a person must not, in the course of conducting an industry, trade or business, introduce or cause or allow waste to be introduced into the environment." 

[32]        The definition of "environment" is broad, and would clearly include the river in question.  Moreover, s. 1(2) of the Act states, in part: 

"For the purposes of this Act, introduction of a waste into the environment means depositing the waste on or in, ... any land or water...." 

[33]        It is arguable that, on or about February 9 or 10, 1999, Protrux (through its agents AXA and Brouwer Claims) abandoned the chipboard cargo.  If so, then the chipboard became "waste" under the statute.  In my view, the continued presence of the chipboard in the river could then have constituted a "spill" within s. 12.1(1) of the Act, i.e., "the introduction of a substance into the environment, whether intentional or unintentional, otherwise than as authorized by this Act." 

[34]        Section 12(5) requires that: "If ... waste is introduced into the environment" without authority, the incident must be promptly reported to the governmental authority pursuant to the regulations. 

[35]        The law may have required Protrux to report the accident to the waste management branch.  If that had been done (or if the accident had been brought to the attention of an officer by any other means), I think s. 12.1 of the Act would have given an officer the power to decide whether the chipboard "may pose a hazard to health or the environment", and whether action would be necessary to address the hazard or threat.  If an officer decided those two issues in the affirmative, the Act would authorize the government to "carry out actions to ... remove, clean up ... or otherwise address the perceived hazard or threat."  Section 12.1 goes on to empower the government to recover the costs of such actions from the persons who had possession, charge or control of the substance that was spilled. 

[36]        But there is no evidence to support the inference that an officer would have made the decisions required by s. 12.1(2), so as to empower the government to demand removal of the chipboard from the river (or to remove it, if its order was not obeyed).

[37]        In my opinion, it is also arguable that Protrux, while in the course of conducting a business, caused waste to be "introduced" into the environment, and would have been subject to charge under s. 3(2) of the Act, had it abandoned the chipboard cargo.  I do not think the Crown would be required to prove that the depositing of the waste was intentional or that the presence of the waste was causing damage to the environment.  If Protrux had had been charged and prosecuted to conviction under s. 3(2) of the Act, it would have been subject to the penalties prescribed in s. 54(3), (17) and (19) of the Act.  A sentencing judge under s. 56.1 of the Act, would have had power to direct Protrux to take action to remedy any harm to the environment, and could direct Protrux to pay the government for the cost of any remedial action taken by the government as a result of the commission of the offence. 

[38]        In my view, it is not necessary that a demand or order must have been made against Protrux under the Waste Management Act, before it can be said that there was "liability imposed ... by law", to remove the chipboard from the river.  I do not think that the judgment of the English Court of Appeal in Smit Tak v. Youell [1992] 1. L.L.R. 154 is in any way inconsistent with that proposition.  In that case, a foreign government demanded that the appellant (the insured) raise its sunken ship, but the demand was not enforceable by law.  The court held (at pp. 158-159) that the appellant was not "legally liable", and so there was no liability imposed on the insured, to raise the ship.  Thus, the insurer had no obligation to indemnify the appellant for the cost of raising the ship. 

[39]        In this case, the evidence fails to persuade me that legal liability could have, or would have, been imposed on Protrux under the Waste Management Act, for the removal of the chipboard from the river.  It is possible that Protrux abandoned the chipboard cargo.  It is possible that an officer would have made a demand on Protrux to remove the chipboard.  If such a demand had been made, it would certainly be enforceable by process of law.  But on the evidence presented, I am unable to make the findings necessary to establish "liability imposed on the insured by law". 

[40]        In case I am wrong, I will consider the second issue, which is whether the chipboard caused damage to the river. 

[41]        There is no evidence of pollution.  It also seems clear that there was no physical damage caused to the riverbed or to the water in the river.  However, in my opinion, it should be inferred that two large trailer loads of chipboard would constitute an obstruction in the river, regardless of whether it interfered with navigation or fishing.  It also seems obvious to me that it would cost considerable money to pay for the men and equipment required to remove the cargo from the river and dispose of it, so as to return the river to its original condition.  In this sense, I think there was damage to property owned by the provincial Crown. 

[42]        My reasoning may be illustrated by the following example.  Assume for the moment that the truck and trailers had gone off the highway and rolled over into someone's backyard, adjacent to the highway.  Assume further that the trailers ended up lying on their sides in a large pond situated in the backyard of the property, and that the chipboard cargo was ruined as a result.  Finally, assume that the tractor and trailers could not be removed, without first cutting loose the chipboard from the trailers.  Again, there would be no physical damage to the pond bed or the pond water.  But surely the property owners have the right to possess a pond (and a yard) that is free from such an obstruction.  Accordingly, they would have the right to sue the vehicle driver and owner for the cost of removing the chipboard, to restore their property to its original state. In this case, the provincial Crown is in a position similar to that hypothetical property owner, in my view.  I find support for this reasoning in Attorney General for Ontario v. Fatehi (1984) 15 D.L.R. 4d 132 (S.C.C.). 

[43]        I will comment on the issue of whether the plaintiff's claim for indemnity should fail by reason of non-compliance with s. 73 of the Regulations.  The relevant part of s. 73 reads as follows: 

"73(1) An insured shall

(a)   promptly give the corporation written notice, with all available particulars, of

(i)   any accident involving death, injury, damage or loss in which he or a vehicle owned or operated by him has been involved,

(ii)  any claim made in respect of the accident, and

(iii) any other insurance held by him providing coverage for the accident

...

(d)   except at his own cost, assume no liability and settle no claim ...

(2)   The corporation is not liable to an insured who, to the prejudice of the corporation, fails to comply with this section." 

[44]        ICBC received notice of the accident on the day following the accident.  The evidence does not disclose who gave this notice, or what particulars were given.  There is no suggestion that Protrux made any claim for indemnification by ICBC for costs of cargo removal, before Aggressive removed the chipboard from the river.  ICBC further submits that Protrux assumed liability for the cargo removal and paid Aggressive's invoice, on its own, thereby breaching s. 73, and denying ICBC of the opportunity to investigate the circumstances surrounding the loss, and the opportunity to settle Aggressive's claim for cargo removal costs. 

[45]        It is argued that prejudice to ICBC can and should be inferred, even in the absence of specific evidence of prejudice.  As authority for this proposition, counsel cited Busby v. ICBC [1993] B.C.J. No. 1821 (Davies, J.) particularly at paras. 5 and 6. 

[46]        I think this point is well taken.  On the evidence presented, ICBC was denied the opportunity to decide who would remove the chipboard from the river, how it would be removed, and whether the charges for the cost of removal were reasonable.  In the circumstances of this case, I conclude that there was prejudice caused to ICBC by the plaintiff's failure to comply with s. 73(1) of the Regulations.  I would not have drawn this inference, if the evidence had established that ICBC knew, before Aggressive commenced operations for the recovery of the chipboard, that:

(a)            Aggressive intended to cut the straps holding the chipboard cargo to the trailers; 

(b)            Aggressive would be removing the chipboard from the river and disposing of it, by methods of their own choosing, and without independent supervision;

(c)            Aggressive would be billing Protrux for all costs incurred in recovering the chipboard from the river and disposing of it; and 

(d)            Protrux would be looking to ICBC to pay the cost of recovering the chipboard from the river. 

[47]        I find it unnecessary and inappropriate to decide the other two defences raised by ICBC.  However, from a preliminary point of view, it appeared to me that the point concerning Protrux' failure to establish the necessity of cutting the cargo straps, was weak; and that the point concerning the absence of any loss to Protrux, was sound.  I do not agree with the plaintiff's submission that the money Protrux received from AXA should be treated as being analogous to a bank loan. 

[48]        I did not think it would be useful for me to review all of the case authorities cited by counsel in support of their respective submissions.  The facts and issues in the other cases referred to, were not of sufficient similarity to be of direct assistance. 

[49]        The meaning and applicability of the debris removal clause in the cargo insurance policy between Protrux and AXA is not directly in issue in this proceeding.  But it will be apparent from what I have said that I think it was necessary for Protrux to incur expenses to remove the chipboard from the river.  The expenses charged by Aggressive seem high, but the evidence does not permit an assessment of the reasonableness of these charges. 

[50]        In the result, the action is dismissed.  It seems to me that the defendant should recover costs at scale 3, unless counsel wish to make submissions on costs.

“D.A. Halfyard, J.”
The Honourable Mr. Justice D.A. Halfyard