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Tag: Section 82.1 Insurance (Vehicle) Act

Joint TortFeasor Payments Fully Deductible From Lessor's Vicarious Liability Obligations

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BC’s Motor Vehicle Act and Insurance (Vehicle) Act limit the vicarious liability of vehicle lessor’s to $1 million.  Reasons for judgement were released this week by the BC Court of Appeal clarifying this obligation when a personal injury claim is worth over $1 million and other responsible tort feasors have paid the first $1 million in damages.  In short, the BC Court of Appeal held that once payments from other tortfeasor’s are made up to $1 million lessor liability is fully extinguished.
In this week’s case (Stroszyn v. Mistui Sumitomo Insurance Company Limited) the Plaintiff was involved in a serious motor vehicle collision and settled his injury claim for $1.6 million.  ICBC, who insured the responsible driver, paid the first $1 million being the full extent of the Third Party insurance available.  The Plaintiff sought to collect the balance from the lessor, Honda Finance Inc., who was the registered owner of the Defendant’s vehicle and vicariously liable for the tort.
The BC Court of Appeal held that ICBC’s payment fully satisfied any exposure Honda had.  In reaching this conclusion and clarifying the protections given to vehicel lessor’s in BC the Court provided the following reasons:

[24]         I see no basis in law for considering only a portion of the ICBC payment to have been made on behalf of Honda. In my view, each of the insureds in this case can regard the whole of the payment made by ICBC to have been made on his, her or its behalf and to have reduced its liability to the petitioner to the full extent of the payment. In the absence of a statutory provision limiting the lessor’s liability, all three would remain jointly and severally liable for the balance of the petitioner’s damages. However, the I(V)A having limited the lessor’s liability to $1 million, it is my view that the payment of $1 million to the petitioner on behalf of all insureds, including the lessor, completely discharges the lessor’s liability and leaves the other defendants jointly and severally liable for the balance of the damages.

[25]         This must certainly be the case where the liability of Ms. Chen and Honda is entirely vicarious. Vicarious liability is discharged to the extent of any payment made in satisfaction of a plaintiff’s claim for damages. This is not a case where liability can be apportioned by degrees of blameworthiness, or severed.

Vehicle Lessor Liability Limit Over and Above That of Motorist

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UPDATE – November 7, 2014 – the below decision was overturned in reasons released this week by the BC Court of Appeal
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Important reasons for judgement were released last week by the BC Supreme Court, Vancouver Registry, addressing the limit of exposure for vehicle lessor’s when their vehicles are involved in an at-fault collision.
Provisions of the BC Motor Vehicle Act and Insurance (Vehicle) Act expose lessor’s to $1,000,000 of liability when their vehicles are involved in a collision.  The BC Supreme Court was asked to interpret these provisions in the case of a $1.6 million dollar claim.
In this week’s case (Stroszyn v. Mitsui Sumitomo Insurance Company Limited) the Plaintiff sued an at fault motorist and the vehicle lessor for damages following a collision.  The quantum was agreed to at $1.6 million dollars.  The ICBC insured defendant paid out the policy limits of $1 million.    The vehicle lessor argued that they did not need to pay the balance as they were shielded by section 82.1 of the Insurance (Vehicle) Act from any payment after a Plaintiff collects $1 million.  Mr. Justice Bowden disagreed finding a lessor’s exposure, while capped at $1 million, is over and above damages collected from other liable parties. In reaching this conclusion the Court provided the following reasons:
[34]         As a lessor, under s. 86(1.2), Honda Canada is vicariously liable as a joint tortfeasor. Without the limitation in s. 82.1, it would be liable, together with the lessee, for all or part of the damages of $1,600,000. However, section s. 82.1 places a $1,000,000 limit on that liability such that Honda Canada’s portion cannot be greater than $1,000,000.
[35]         In my view, the payment of $1,000,000 on behalf of the lessee does not reduce the liability of Honda Canada to zero. It is simply a payment by one joint tortfeasor towards the total liability of the jointly liable parties. By virtue of s. 86(1.2) of the MVA, both the driver, Mr. Chen, and Honda Canada are jointly liable for the damages of $1,600,000. Pursuant to s. 82.1, Honda Canada’s portion of that liability cannot exceed $1,000,000. Of the total liability, $1,000,000 has been discharged by ICBC on behalf of the lessee, but Honda Canada remains liable as a joint tortfeasor, for $600,000.
[36]         This result is consistent with the plain meaning of s. 82.1 of the I(V)A which limits the liability of Honda Canada to $1,000,000. Its portion of the joint liability will not exceed $1,000,000. In my view, the combined effect of s. 86(1.2) of the MVA and s. 82.1 of the I(V)A is to expose a lessor, like Honda Canada, to liability as a jointfeasor, of $1,000,000, but no more. Thus, in this case, if the driver/lessee had no insurance coverage, the lessor would be liable for the amount of $1,000,000. On the other hand, if the insurance coverage of the driver/lessee resulted in a payment of $1,600,000, then no amount would be payable by the lessor, Honda Canada.