Recently, the BC Supreme Court considered the ability of a motor vehicle insurer to bring one claim in its name when subrogating for a large group of insureds against the same alleged tortfeasor(s), pursuant to s.84 of the Insurance (Vehicle) Act, RSBC 1996, c.231 (“IVA’).
This summary trial application is cited as Insurance Corporation of British Columbia v. Teck Metals Ltd. 2020 BCSC 259. However, the application hearing determined the issue for three actions: Insurance Corporation of British Columbia v. Teck Metals et al, Economical Mutual Company v. Teck Metals Ltd. et al, and Intact Insurance Company v. Teck Metals Ltd.
The underlying actions arose out of two sulphuric acid spills on a highway near Trail, BC, resulting in damage to vehicles that allegedly drove along the affected stretch of road on the dates in question. Nine actions arose from the spills, and more were expected before the limitation expiry date, with the Insurance Corporation of British Columbia (“ICBC”), Economical Mutual Insurance Company (“Economical”), and Intact Insurance Company (“Intact”) receiving the most claims, respectively. ICBC received thousands of vehicle damage claims, and determined 520 vehicles to be “write-offs”. Economical determined 208 vehicles of the 607 inspected to be beyond repair, and Intact did the same with 118 vehicles of the “numerous claims” it opened.
The Defendants in these claims are Teck Metals Ltd. (“Teck”), who produced the sulphuric acid, International Raw Materials Ltd. to whom the sulphuric acid was sold, and Westcan Bulk Transport Ltd. who was transporting the acid from Teck Metals’ site to a railway junction. Several governmental actors were also named as defendants for alleged failures in prevention and spill response.
The Plaintiffs, ICBC, Economical and Intact (the “Plaintiff Insurers”), filed claims in their own names pursuant to section 84(1) of the IVA, representing hundreds of individual insureds whose vehicles were damaged by sulphuric acid on the subject dates, and whose claims they accepted. The Defendants pleaded a number of subrogation defences, arguing that the Plaintiffs were improperly relying on the statutory subrogation provision to bring what was in effect a class action lawsuit when the vehicles were damaged at different locations and times under different circumstances.
The Plaintiff Insurers brought a summary trial application seeking a ruling that each of them satisfied the substantive requirements of s.84(1) of the IVA, and were entitled to commence a single action in their respective names, in place of all insured owners whose vehicles were damaged in the sulphuric acid spills. Some of the Defendants opposed this relief arguing that it would effectively erase their subrogation defences pleaded in their responses to civil claim. They also argued that the issue was not severable from other issues in the litigation, and not appropriate to be decided summarily. Finally, they argued that the Plaintiff Insurers’ evidence on application was not sufficient to satisfy s.84(1)’s substantive requirements.
The issue before the BC Supreme Court were:
- Is the s.84(1) analysis severable from other issues, and suitable for summary determination in these matters?
- If so, are s.84(1) requirements met here in each of the three Plaintiff Insurers’ actions?
Applicable principles of subrogation
Justice Riley began his analysis by emphasizing certain principles of subrogation that factored into his analysis. Most notably, he affirmed that the alleged tortfeasor cannot, “plumb the depths of the insurer’s liability under its contract with the insured,” citing the decision of the Privy Council in King v. Victoria Insurance Company,  A.C. 250 (PC). In other words, defendants are limited in their ability to interrogate the insurance contract. This was an important factor counteracting many of the Defendants’ arguments for why the substantive requirements of s.84(1) were not met.
Indemnification under s.84(1) of the IVA
84(1) On paying or providing benefits or insurance money or assuming liability for paying or providing benefits or insurance money, an insurer:
(a) is subrogated to and deemed to be the assignee of all rights of recovery against any other person liable in respect of the loss, damage, bodily injury or death of a person to whom, on whose behalf or in respect of whom the payment or provision of insurance benefits or insurance money is made or to be made, and
(b) may bring action in the name of the insured or in its own name to enforce the rights referred to in paragraph (a).
To utilise this provision, insurers must prove on a balance of probabilities:
- there was a valid contract of insurance in British Columbia between the insurer and the insured in force at the time of the loss;
- the insurer paid “benefits” or “insurance money” or assumed liability to the insured; and
- the insurer did so with the intention of covering the insured owner’s loss under the insurance contract.
The court reviewed this provision as well as the definitions and other statutory provisions relevant to its interpretation. Of note, Justice Riley confirmed that “insurer” includes ICBC as well as any other person who provides insurance under an “optional insurance contract” (in contrast to its predecessor provision, which was defined only as ICBC). It was also highlighted that s.84(1) only provided rights of subrogation to insurance contracts “obtained or renewed in British Columbia.”
The Defendants recognized that the IVA allowed the Plaintiff Insurers to bring actions in their own names yet said the Plaintiff Insurers’ evidence did not satisfy the substantive requirements of s.84(1). Many of them also disputed that the substantive subrogation issue was not severable from other issues in the litigation, and it was not appropriate to decide the matter summarily.
Severability and suitability for summary trial determination
With respect to severability under Rule 9-7(2) of the Supreme Court Civil Rules, Justice Riley had no difficulty determining that the subrogation issue was a discrete one. He stated in paragraph 23: “there is no logical or evidentiary relationship between the right of the plaintiffs to bring subrogated claims and the other live issues.” Moreover, he found that determining the issue would save considerable time and expense at trial. Justice Riley accepted the Plaintiff Insurers’ argument that if the matter was not determined before the expiry of the limitation period, they would be forced to bring claims on behalf of each individual insured which would ultimately be determined unnecessary at trial once the subrogation issue was determined.
As to the suitability of the matter for summary disposition, the Defendants argued that it was too early in the litigation to determine if the substantive elements of s.84(1) of the IVA were met. The Defendants argued that the court could not make the necessary findings of fact based on the affidavit evidence before it. They argued that they required document discovery and examinations for discovery to be completed for them to properly explore whether the requirements under s.84(1) were met. Justice Riley rejected these arguments and emphasized again that the Defendants had limited scope for arguing that payment to an insured is not covered under the terms of the applicable insurance contract.
Satisfaction of section 84(1) IVA requirements
The crux of the analysis was focused on whether the substantive requirements of s.84(1) were met based on the evidence proffered by the Plaintiff Insurers. Each of the Plaintiff Insurers tendered two affidavits from a manager overseeing the assessment and payment of the vehicle owners’ claims for which they were asserting a subrogation right. Attached thereto were charts with each insured’s name, and payment amounts for each insured. The second affidavits included evidence about the standard terms of these insurance contracts, each attaching a copy of the policy wordings.
This evidence was uncontroverted, and Justice Riley relied heavily on that, and the fact that the Defendants had not raised credibility issues, in accepting the evidence. As pertaining to each particular requirement:
(1) Proof of a Valid BC Insurance Contract Between the Plaintiff Insurers and Each Insured Owner
On this element, the court accepted each affiants’ general assertions that there existed a “valid and existing” optional insurance contract that was in force at the time of the date of loss with each insured, notwithstanding that the affiants did not testify to each contract more specifically. Moreover, the court found that these were BC contracts – in ICBC’s case because it was a BC-based insurer – and as it applies to Economical, Intact as well as ICBC, because the loss vehicles were BC-registered motor vehicles, and their insurance contracts reflected BC law and standard terms. Related to this point, Intact sought leave to add two Alberta-registered vehicle owner insureds as plaintiffs accepting that they did not fulfill this requirement to be part of the subrogated claim in Intact’s name.
As pertaining to Intact’s affidavits, its materials also included each proof of loss attached as exhibits. Some of the Defendants raised issues with the proofs of loss, such as discrepancies between them, or inexplicable expiry dates. The court determined that such issues were minor, and did not prevent it from determining that these were valid insurance contracts in force at the date of loss.
(2) Proof that the Plaintiff Insurers Paid Amounts or Assumed Liability in Respect of Each Insured
The Plaintiff Insurers did not tender documentary proof of payments such as cheques or bank records. Certain Defendants argued that this meant they had not provided actual proof that they paid out “insurance moneys” or “benefits.” They also argued that the Plaintiff Insurers could have possibly paid these claims out for other reasons than what was covered under the insurance contracts, such as for policy or public relations reasons.
The court relied on the affiants’ word that such payments were made. Additionally, the court noted the two different bases in the provision: “paid or assumed liability for payment,” and stated that if it was not proven that the Plaintiff Insurers paid these amounts, they had at least proven that they assumed liability for said payments.
Another defence argument was that the Plaintiff Insurers’ evidence on this element was opinion evidence and inadmissible as such, or conclusory and thus devoid of meaning. Perhaps the evidence most susceptible to this argument was found in the second affidavit that ICBC tendered as evidence, where the affiant mirrored the statutory language exactly as she deposed that the payments ICBC made were “benefits and insurance monies.” Justice Riley did not accept the Defendants’ characterisation of the evidence, stating that it was offered as a “particularization of the payments,” not as opinion; when read with the rest of the evidence, it was clear the affiant was describing ICBC’s classification of these payments.
Economical and Intact’s affiants did not parrot the wording in the IVA, and the court found that their descriptions of these payments easily fell within the definition of “insurance money” in section 2 of the IVA.
(3) Proof of the Plaintiff Insurers’ Intention to Cover Each Insured Owner’s Loss Under the Insurance Contract
Finally, the Plaintiff Insurers had to show that, for each insured owner for whom a subrogated claim was asserted, that they made those payments or assumed the liability with the intention of covering the insured’s loss under the insurance contract. The court found no direct evidence on this point, but stated there was compelling evidence upon which that intention could be inferred. Namely, the Plaintiff Insurers tendered evidence of the claims they received, the assessments they made, the payments made thereafter, and the binding insurance contracts in place for each insured owner. Justice Riley was also persuaded by Economical’s supporting affidavit in which the affiant testified to the process whereby how Economical “ultimately accepted” 208 of the spill damage claims as “covered” under the relevant insurance policies, and indemnified each of its corresponding policyholders in accordance with its obligations under the relevant policies.
Mr. Justice Riley granted the declarations each of the Plaintiff Insurers were seeking: that they could bring an action in their respective names on behalf or in place of all insured owners whose vehicles were allegedly damaged in one of the two acid spills, and that they each had met the statutory requirements under s.84(1) for each of the 709 insured vehicle owners for whom they assert a right of subrogation. Finally, the court also granted an order dismissing each of the subrogation defences in the Defendants’ responses to civil claim.
This summary trial decision confirmed the following:
(a) Insurers can utilise s. 84(1) of the IVA to bring an action in its own name, and if challenged, can ask the court for a summary determination of that issue prior to trial; it is inherently a discrete issue that is easy to hive off, as it is likely quite separate from the other issues in the litigation.
(b) There are three substantive elements that a plaintiff insurer must prove to be able to utilize s.84(1): that there was a valid BC insurance contract in place between the insurer and insured at the time of the loss, that the insurer paid amounts, or assumed liability in respect of each insured, and that the intention behind payment was to cover each insured owner’s loss under the insurance contract.
(c) Affidavit evidence providing general assertions about the claims process can suffice to prove the three statutory elements if there is no contrary evidence. Mere speculation will not suffice to counteract this evidence.
(d) On subrogated claims, the courts will not allow defendants to insert themselves into the contractual relationship between insurer and insured to critically assess the niceties of the insurance contract.
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