BC Court of Appeal Finds ICBC Part 7 Benefits Not Repayable in Contractual Subrogated Claim
Interesting reasons were released today by the BC Court of Appeal limiting the scope of a contractual subrogated claim to exclude part 7 benefits a plaintiff recovered in an ICBC claim settlement.
In today’s case (Brugger v. The Trustees of the IWA) the Plaintiff was ordered to repay over $40,000 of a personal injury settlement he obtained to the Defendant’s due to a contractual subrogated claim they enjoyed. The Plaintiff appealed arguing the scope of the subrogated claim could not apply to ICBC part 7 benefits. The BC Court of Appeal agreed and reduced the ordered repayment accordingly. In reaching this decision the Court provided the following reasons:
 The Trustees have a broad discretion to establish and change the terms upon which benefits are paid but are entrusted to pay the benefits described in the Plan.
 Section 9 of the Plan describes the Disabled Employee’s obligation to reimburse the Plan. It is applicable where a Disabled Employee “recovers compensation from a Third Party [a person whose acts have caused or are alleged to have caused the Disability] or receives a Settlement [the conclusion of a Disabled Employee’s claim for monetary compensation against a Third Party]”. A Settlement is deemed to include payment of compensation by ICBC for damages arising out of the use or operation of a motor vehicle by an uninsured or underinsured motorist.
 Gross Compensation is defined by the Plan to be the total of sums paid or payable upon Settlement or contingent upon Settlement.
 The Reimbursement Agreement binds the appellant to make the repayment called for in the Plan, hence, repayment of a portion of any lump sum cash payment made upon or contingent upon resolution of a claim for compensation made against a Third Party.
 In my view, Part 7 benefits should not be included in Gross Compensation or calculation of the reimbursement obligation. Such benefits are not paid by or on behalf of a person whose acts or omissions have caused or are alleged to have caused the disability. They are not paid pursuant to Part 6 of the Regulation, which describes third-party liability insurance coverage; they are paid, rather, by the Disabled Employee’s insurer as first-party benefits. Pursuant to s. 79 of the Regulation, they are paid “to an insured in respect of death or injury caused by an accident that arises out of the use or operation of a vehicle” regardless of fault.
 The Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231, draws a distinction between Part 7 benefits and a tort claim for damages. Subsection 83(2) states:
A person who has a claim for damages and who receives or is entitled to receive benefits respecting the loss on which the claim is based, is deemed to have released the claim to the extent of the benefits.
“Benefits” are defined in the Act as “the prescribed benefits”, including Part 7 benefits.
 The fact that Part 7 benefits are distinct from and form no part of a tort claim, and that disputes with respect to entitlement to Part 7 benefits must be addressed by separate proceedings, was noted by this Court in Baart v. Kumar (1985), 66 B.C.L.R. 1 (C.A.). The Court there observed, at p. 12:
The enactments with which we are concerned have been changed from time to time. The general purpose of them, to shift responsibility from the person at fault to a body that provides insurance regardless of fault, has continued. The shift necessarily takes away the right to claim against a person other than the insuring body. That is a common feature in no-fault plans; the workers’ compensation scheme is a familiar example. This Court recognized that shift in Fisher v. Wabischewich (1978), 5 B.C.L.R. 335, 85 D.L.R. (3d) 106.
 While the Trustees are given authority to set the terms upon which Plan Members are entitled to benefits, and have broad discretion to determine what portion of Gross Compensation represents compensation for wage loss, they have established a Plan and must abide by its terms. Without amending the Plan, they do not have discretion to include in Gross Compensation amounts received by the member that are not paid by or on behalf of a tortfeasor.
 The chambers judge proceeded on the basis that the payment of the no-fault insurance benefits established by the statutory scheme of universal compulsory insurance could properly be considered to be compensation as defined by the Plan. Appellate courts must exercise caution in identifying errors of law in disputes arising from contractual interpretation: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53,  2 S.C.R. 633. However, in my view, the issue of whether Part 7 benefits constitute monetary compensation paid by or on behalf of a person whose acts are alleged to have caused the disability is a question of law requiring consideration of the legal distinction between first-party no-fault insurance benefits and tort damages.