As previously discussed, BC’s Financial Institutions Act requires out of Province vehicle insurers to sign a “Power of Attorney Undertaking” in essence promising to provide the minimum insurance coverage available in BC when their insured vehicles are travelling in this Province and further not to raise any defences which are not available to BC insurers. As many North American jurisdictions have insurance limits well below those required in BC this often creates excess exposure for foreign insurers. Reasons for judgement were released recently by the BC Supreme Court, New Westminster Registry, stripping a PAU signatory of a defence they otherwise would be entitled to.
In the recent case (McCord v. Insurance Corporation of British Columbia) the Plaintiff was injured as a pedestrian in a BC collision. He was insured for no-fault benefits both with ICBC and a private insurer from Ontario. He received benefits from ICBC and subsequently sought coverage with the Ontario provider. The Ontario insurer denied payment relying on an Ontario regulation which limited payments “if the person receives benefits under the law of the jurisdiction in which the accident occurred“.
The Plaintiff sued arguing the Ontario insurer could not rely on this section as they signed the PAU. Mr. Justice Saunders agreed and provided the following reasons:  Western Assurance says that there has been no violation on its part of the PAU; it has not set up a defence as to coverage, but has simply taken a position as to the amount of coverage available….  The PAU sets out two provisions. One is an undertaking not to raise defences. The other is an undertaking to pay limits as set out in (a) and (b) of the PAU. A “position” taken by a foreign insurer that only the minimum amount is payable, and not the full amounts otherwise payable under the foreign insurer’s policy, is, in every sense of the word, a defence. The position being taken here by Western Assurance is one of the types of conduct which the PAU is designed to prevent…  In my view, the raising of the provisions of the Regulation by Western Assurance is a defence within the meaning of the PAU, and reliance on those provisions as a defence would constitute a breach of the undertaking under the PAU.  The application is therefore allowed, and s. 57(1.1) of the Regulation will have no application to Mr. McCord’s claim for benefits.
Reasons for judgement were released today by the BC Court of Appeal addressing the ability of foreign insurers to rely on the s.103 limitation defence for no-fault accident benefits.
By way of background, BC’s Financial Institutions Act requires out of Province vehicle insurers to sign a “Power of Attorney Undertaking” in essence promising to provide the minimum insurance coverage available in BC when their insured vehicles are travelling in this Province. As many North American jurisdictions have insurance limits well below those required in BC this often creates excess exposure for foreign insurers.
The Court of Appeal confirmed PAU signatories can take advantage of the limitation contained in s. 103 of BC’s Insurance (Vehicle) Regulation. The Court further discussed the common sense approach BC law imposes in adding a defendant to an existing lawsuit despite the availability of a limitation defence.
In today’s case (Moldovan v . Republic Western Insurance Company) the Plaintiff was injured while travelling as a passenger in a rented U-Haul vehicle. The vehicle was insured by the Republic Western Insurance Company. The Plaintiff sought no fault benefits and sued ICBC. When he realized he sued the wrong insurer the limitation period under s.103 of the Insurance (Vehicle) Regulation had passed.
He sought to add RWIC to the existing lawsuit which the Court of Appeal ultimately permitted. In doing so the Court explained that while a foreign insurer PAU signatory can take advantage of the s. 103 limitation period the Court retains a discretion to add a Defendant to an existing lawsuit even beyond the limitation period due to section 4(1)(d) of BC’s Limitation Act and further due to the former Rule 15(5)(a) which is reproduced as the new Supreme Court Rule 6-2(7). The Court provided the following reasons: As will be seen below, I am of the opinion that while s. 103 would normally be available to RWIC to assert in defence of the plaintiff’s claim, s. 4(1)(d) of the Limitation Act nevertheless does permit the court to join RWIC as an additional defendant. I also conclude that RWIC should be so joined in the circumstances of this case… I conclude that the chambers judge erred in declining to apply s. 103 on the basis that the PAU does not constitute an agreement to incorporate into RWIC’s insurance policy all the terms that are required to be incorporated in a policy issued by ICBC. The fact that s. 103 was not incorporated into U-Haul’s rental contract did not make it somehow inapplicable to Mr. Moldovan, any more than the silence of a British Columbia policy on the question of limitation would make it inapplicable to a claim against ICBC. As a person claiming benefits under Part 7 in a British Columbia action, the plaintiff is subject to the statutory limitation in s. 103. No breach of the principle of extraterritoriality arises…
I set out below the material provisions of s. 4 again for convenience:
4(1) If an action to which this or any other Act applies has been commenced, the lapse of time limited for bringing an action is no bar to
(a) proceedings by counterclaim, including the adding of a new party as a defendant by counterclaim,
(b) third party proceedings,
(c) claims by way of set off, or
(d) adding or substituting a new party as plaintiff or defendant,
under any applicable law, with respect to any claims relating to or connected with the subject matter of the original action…
The circumstances surrounding the plaintiff’s claim, which need not be rehearsed here, were reviewed by the Master. Most important, he found that the plaintiff’s delay “resulted not from any tactical decision designed to gain an advantage for the plaintiff but from solicitor inadvertence or an honest error in judgment.” As against this, RWIC has not alleged any particular prejudice.A helpful summary of the law on the weighing of relative prejudice in this context is found in the analysis of Martinson, J. in Wadsworth v. McLeod, supra:
Regard must be had for the presence or absences of prejudice. There must be a balancing of prejudices: Teal at p. 299. Prejudice can be assumed, or actual.
Prejudice means prejudice associated with the delay itself. The fact that an opposing party is affected negatively by such an amendment does not mean that he is prejudiced. The prejudice must affect the ability to respond to the amended claim: Bel Mar Developments Inc. v. North Shore Credit Union,  B.C.J. No. 512, 2001 BCSC 388 at para. 9.
I agree with the following comments of Master Bolton in Takenaka v. Stanley,  B.C.J. No. 288, 2000 BCSC 242 at paras. 41 and 42:
Putting aside any issues of actual prejudice in addition to the prejudice resulting from the loss of the cause of action or of the limitation defence, I am satisfied that the prejudice to a plaintiff in the former event will usually be greater than the prejudice to a defendant in the latter. In the former case the plaintiff loses the opportunity to ask a court to consider a claim that the defendant has done something the law of the land considers to be actionable. In the latter, the defendant loses a windfall opportunity to avoid the issue altogether. Their respective situations may be precisely balanced in purposely financial terms, but not, I conclude, as a matter of justice. A right to seek justice cannot fairly be equated with a right to cut short the search without an answer.
I believe that his analysis provides a firmer foundation for the conclusion I reached at paragraph 68 of the Mah decision ( B.C.J. No. 44), that if all else is equal the balance of prejudice should be resolved in favour of the plaintiff.” [At paras. 22-4.]
In the circumstances of this case, it seems to me that the balance of prejudice is clearly in the plaintiff’s favour, and that it is just and convenient that RWIC was added as a defendant notwithstanding the time limitation in s. 103 of the Regulation. I would therefore dismiss the appeal and confirm the order of the chambers judge below, although for different reasons than those she expressed.
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When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.
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