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Tag: section 19 insurance (vehicle) Act

Producing False Witness To Collision Leads to $200,000 in Financial Consequences

In an illustration of BC’s motor vehicle insurance system having real teeth to punish fraudulent acts, reasons for judgement were released this week by the BC Supreme Court, Vancouver Registry, ordering substantial damages against a couple who produced a false witness to ICBC following a motor vehicle collision.
In this week’s case (ICBC v. Panag) the Defendant was involved in a 2006 collision.  The parties had competing versions of how the collision occurred.  The Defendant produced a witness in support of her claim.  After investigation ICBC determined this individual in fact did not witness the collision and was known to the Defendant.
ICBC paid out over $188,000 in claims following the crash.  ICBC held the Defendant in breach of insurance and sued to recover this money on the basis that the Defendant attempted to commit insurance fraud.  Mr. Justice Grauer agreed and ordered repayment of these damages along with punitive damages.  In reaching this decision the Court provided the following reasons:
64]         In these circumstances I am satisfied that the Panags and Harinder Grewal were in fact involved in a conspiracy to put forward Mr. Grewal to ICBC as a witness to the collision knowing that he had not in fact witnessed it, and with the intention that he provide ICBC with evidence that he did not have and which they knew to be untrue.  The facts, in my view, cannot fairly admit of any other inference.  Speculation is not required…
[67]         It follows that both Mr. and Mrs. Panag participated in a conspiracy to deceive ICBC about both how the accident happened and the status of Mr. Grewal as a witness to the accident.  They clearly intended ICBC to rely upon their representations, and ICBC as a result was left scrambling for a considerable period of time as it embarked upon an extensive investigation in an attempt to straighten out what would otherwise have been and should have been a straightforward matter.  This amounts to fraud.  See, for instance, ICBC v. Nisbet, 2009 BCSC 1570, at para. 85.
[68]         In the result, the Panags have forfeited their right to coverage under s. 19(1)(d) of the IMVA as well as s. 19(1)(e), and ICBC is entitled to recover against both of them.  Whether directly as a consequence of the Panags’ conspiracy to commit fraud or as a result of the application of the principles of unjust enrichment, this would include the moneys paid out to Mr. Panag for his material damage claim and to Mrs. Panag for her Part VII claim.  The total amount awarded to ICBC in this regard is $188,722.86, which I am satisfied accurately represents what ICBC paid out, to which I add pre-judgment interest of $8,460.21.  I have deducted $305.06 from the interest claimed because of the absence of evidence concerning the date when expenses related to surveillance were incurred…
[70]         In providing ICBC with willfully false statements and in conspiring to commit fraud, the Panags undoubtedly engaged in conduct that was reprehensible.  In the particular circumstances of this case, however, I note that the consequences of their actions have exposed them to statutory liability far beyond the actual financial consequences of their actions.  Had they succeeded in their deception, they would have saved a mere $801 plus whatever might have been gained through a potential personal injury claim.  Now they must pay over $188,000 plus interest…

More on ICBC Injury Claims and Breach of Insurance

I’ve written many times about the potentially steep financial consequences of being in breach of an ICBC Policy when an injury claim is made.
A frequent type of breach relates to misrepresenting who the principal operator of a vehicle is.   Reasons for judgement were released today demonstrating some of the consequences that occur when this type of a misrepresentation is knowingly made.
In today’s case (Deters v. Totovic) the Plaintiff was involved in a 2003 BC Car Crash.  She sued the owner and driver of the other vehicle involved (a mother and daughter respectively).  ICBC refused to provide coverage to the defendants claiming that they misrepresented who the principle operator of the vehicle was when they purchased their policy of insurance.  A Motion was brought before the BC Supreme Court asking the judge to decide if there was a misrepresentation at the time and therefore a breach of insurance.
Mr. Justice Smith decided that the Defendants did knowingly misrepresent who the principal operator of the vehicle was when purchasing insurance from ICBC.  A a result he held that the Defendants lost their right to indemnity from ICBC.
Mr. Justice Smith succinctly summarized the law relating to breach of insurance for principal operation misrepresentation as follows:

[5] Section 19(1)(b) and (e) of the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231 [Act], as it was in force in 2003, said:

19 (1) If…

(b) an applicant for an owner’s certificate or driver’s certificate knowingly misrepresents or fails to disclose in the application a fact required to be stated in it,…

(e) an insured makes a willfully false statement with respect to a claim under a plan,

all claims by or in respect of the applicant or the insured are rendered invalid, and his or her right and the right of a person claiming through or on behalf of or as a dependant of the applicant or the insured to benefits and insurance money is forfeited.

[6] The regulations to the Act (now called the Insurance (Vehicle) Act) define the principal operator as “the person who will operate the vehicle described in an application for a certificate for the majority of the time the vehicle is operated during the term of the certificate.”

[7] The burden of proving that the insured knowingly misrepresented a material fact is on the insurer. The standard of proof is the civil standard of balance of probabilities. The question of whether or not there has been a knowing misrepresentation is to be determined on the basis of the circumstances that existed at the time the policy of insurance was issued:  Booth v. ICBC, 2009 BCSC 1346 at paras. 7-9.

Mr. Justice Smith pointed out that if the vehicle was insured with the daughter as the principal operator “the insurance would have cost approximately four times what was actually paid”.

The Court went on to make the following finding:

[28] In short, all of the evidence supports the inference, on the balance of probabilities, that (the Daughter) was, in fact, the principal operator of the vehicle during the period covered by the insurance certificate and was using it extensively for work purposes. That finding in itself does not necessarily mean that there was a breach of the insurance coverage because the question is whether or not there was a knowing misrepresentation at the time the policy of insurance was issued.

[29] At the time the policy of insurance was issued on June 25, 2003, (The Daughter) had been working in the T&F Sales job for approximately two months. The circumstances around the time the insurance policy was issued indicate that (the Mother) had to have known that (the Daughter) would be the principal operator of the Mazda—she needed it on a daily basis for her job. Therefore, I find that on the balance of probabilities, Smilja made a misrepresentation when she declared herself to be the principal operator in June 2003…

[31] I therefore find that there was a misrepresentation within the meaning of the Act and therefore the defendants’ right to indemnity for the plaintiff’s claim is forfeited pursuant to s. 19 of the Act. ICBC is also entitled to costs of this action.

What this ruling means, in practical terms, is that if the Plaintiff is successful in her lawsuit, ICBC would pay the judgement to the Plaintiff and then come after the Defendants personally for the damages they had to pay.  Depending on the severity of the claim the consequences could be anywhere from thousands to millions of dollars.  This case shows yet again that the short term financial advantages that can come with principal operator misrepresentation are far outweighed by the financial consequences of being in breach of a policy of insurance.