Motor Vehicle Accident Claims in British Columbia:

Transcription

1 Motor Vehicle Accident Claims in British Columbia: A Manual for Out-Of-Province Claims Examiners by The Insurance Practice Group at Clark Wilson LLP West Georgia Street Vancouver, BC V6C 3H1 Canada Tel Fax

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3 Motor Vehicle Accident Claims in British Columbia: A Manual For Out-Of-Province Claims Examiners TABLE OF CONTENTS: PART 1: MVA Claims in British Columbia: A Manual for Out-Of-Province Claims Examiners Foreword Motor Vehicle Insurance Legislation in British Columbia The Court System in British Columbia Substantive Law Differences Procedural Differences No Fault Benefits Breach of Policy Considerations Subrogated Claims PART 2: Insurance (Motor Vehicle) Act, RSBC 1996, c.231 PART 3: Insurance (Vehicle) Act, RSBC 1996, c.231, Part 7 PART 4: Insurance (Vehicle) Regulation, B.C. Reg. 132/2007 PART 5: Negligence Act, RSBC 1996, c.333 PART 6: Limitation Act, RSBC 1996, c.266 PART 7: Workers Compensation Act, RSBC 1996, c.492, ss.10 and 257 PART 8: Restrictions on Tort Claims Under the Workers Compensation Act Introduction The Act Restrictions on Tort Claims Permitted Actions Section 257 Certificates Conclusion PART 9: Family Compensation Act, RSBC 1996, c.126

4 PART 10: Infants Act, RSBC 1996, c.223, s.40 PART 11: Sample Power of Attorney and Undertaking PART 12: Interrogatories PART 13: Court Order Interest Act, RSBC 1996, c.29 PART 14: Registrar s Interest Rates 1991-present PART 15: What Out-of-Province Automobile Insurers Need to Know About First Party Coverage in British Columbia Introduction Out-of-Province Insurers and Policy Reformation Accident Benefits in British Columbia: Part 7 Underinsured Motorist Protection Conclusion Post Script: Can Reformation Be Avoided? PART 16: Insurance Act, RSBC 1996, c.226, Part 6 PART 17: Non-Waiver Agreements, Reservation of Rights Letters and the Defence of Claims in Questionable Coverage Situations Introduction The Doctrines of Waiver and Estoppel The Relevant Insurance Act Provisions Conduct Amounting to Waiver or Estoppel Non-Waiver Agreements and Reservation of Rights Letters Other Enforceability Considerations Procedural Options If the Insured Refuses to Cooperate Questionable Coverage Situations and the Duty to Defend Conflicts of Interest and Mechanics of Defence The Role of Defence Counsel The Role of Coverage Counsel Conclusion Appendices PART 18: Health Care Costs Recovery Act PART 19: Health Care Costs Recovery Act Comes into Force BC Begins a New Era of Subrogation for Medical Costs

5 PART 1: Motor Vehicle Accident Claims in British Columbia: A Manual For Out-Of-Province Claims Examiners A publication of the Insurance Practice Group at Clark Wilson LLP Originally drafted: Summer 1992 Most recent revision: March 2009 FOREWORD As more people throughout North America choose British Columbia as a place to vacation, conduct business and take up residence, accidents involving motor vehicles insured outside the province become ever more common. Likewise, accidents involving British Columbia residents and motor vehicles insured in British Columbia are a daily occurrence in other jurisdictions. All of these accidents, of course, give rise to claims in British Columbia that must be adjusted or examined by claims departments outside the Province. This Manual is intended to provide guidance to out-of-province claims examiners who find themselves confronted with a motor vehicle accident ("MVA") claim in British Columbia. The Manual is by no means a definitive text on such claims; rather, it attempts to highlight some of the considerations that are unique to British Columbia and with which out-of-province claims examiners may not be familiar. It is assumed that the reader has a basic general knowledge of the litigation process in his or her particular jurisdiction. The original author of this Manual, Nigel Kent, is head of the Insurance Litigation Group at Clark Wilson. Before moving to British Columbia, Mr. Kent practised insurance law in Alberta for 11 years and during that time he defended hundreds of motor vehicle claims. The author of the most recent revisions to this Manual, Jonathan Hodes, is a partner and member of the Insurance Litigation Group at Clark Wilson and is also a member of both the Bars of Alberta and of British Columbia. He has also handled many MVA claims in both jurisdictions. Thus, Mr. Hodes and Mr. Kent are uniquely positioned to counsel out-of-province insurers with respect to MVA claims in British Columbia. 1. MOTOR VEHICLE INSURANCE LEGISLATION IN BRITISH COLUMBIA Prior to June 1, 2007, there were three pieces of legislation governing motor vehicle insurance in British Columbia: the Insurance (Motor Vehicle) Act; the Insurance Act; and the Motor Vehicle Act. On June 1, 2007, Part 6 of the Insurance Act, which governed private auto insurers in British Columbia, was repealed. The Insurance (Motor Vehicle) Act was renamed the Insurance (Vehicle) Act, and amended to cover private insurers.

6 p. 2 Claims examiners will have to be familiar with all of the above legislation, as the new statutes apply only to policies which take effect on or after June 1, In other words, any policy issued up to May 31, 2007 will be governed by the old Acts, even though it may not expire until a long time thereafter. 1.1 The Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231 Since March 1974, the Province of British Columbia has operated a universal compulsory automobile insurance scheme known as "Autoplan". Until June 1, 2007, the Insurance Corporation of British Columbia ("ICBC") administered Autoplan pursuant to the Insurance (Motor Vehicle) Act. As part of the regular vehicle licensing procedure in British Columbia, every owner of a licensed motor vehicle is required to purchase basic Autoplan insurance from ICBC. The Insurance (Motor Vehicle) Act sets out the framework for Autoplan. The coverage and administrative details are set out in the Regulations made pursuant thereto. The Regulations replace the typical insurance contract that was used in the insurance industry before the creation of ICBC. Out-of-province claims examiners should have a basic understanding of the Regulations, which consist of 12 parts, together with various Schedules, as follows: Part 1 Interpretation (sets out key definitions) Part 2 Owner's Certificate (terms and conditions, renewals, policy changes, etc.) Part 3 Premiums (premiums, claim rated scales and discounts) Part 4 Driver's Certificate (terms and conditions of issuance) Part 5 General (breaches, exclusions, waivers, arbitration) Part 6 Third Party Legal Liability (terms and conditions of third party liability coverage) Part 7 Accident Benefits (terms and conditions of no-fault benefits) Part 8 Third Party Rights (coverage for accidents with uninsured and hit-and-run motorists) Part 9 Extension Insurance (coverage respecting underinsured third parties, extended comprehensive first party coverage) Part 10 First Party Coverage (inverse liability and uninsured or hit-and-run accidents outside British Columbia) Part 11 Special Policies and Coverages (special coverages, permits, other miscellaneous matters) Part 12 Fleetplan (deals with fleet plans)

7 p. 3 Schedules 1 to 10 include a Rate Class Table, Vicinity Codes, Rate Groups, Territories, Premiums by Territories, Driver's Certificate Premium and the Claim Rated Scale. Part 2 of this Manual includes a complete copy of the Insurance (Motor Vehicle) Act. 1.2 The Insurance Act, R.S.B.C. 1996, c. 226 The British Columbia government originally intended to prohibit all private insurers from writing auto insurance in British Columbia. However, since 1976 private insurers have been able to compete with ICBC to provide coverage beyond the basic coverage afforded by Autoplan for vehicle damage and third party legal liability. The Insurance Act applies to the private auto insurers who issued policies effective prior to June 1, (The Insurance Act has no application to ICBC, except in very restricted circumstances.) Out-of-province insurers are also governed by the Insurance Act. Part 6 of the Insurance Act deals exclusively with automobile insurance. The Insurance Act is similar to the Insurance Acts found in most other Canadian provinces. Like the Alberta Act, for example, the Insurance Act requires the use of standard forms approved by the Superintendent of Insurance for applications, policies and endorsements. It also imposes Statutory Conditions, provides for the effects of misrepresentation or fraud, regulates the duty to defend, subrogation and pro-rating, allows judgment creditors to sue the auto insurer directly, provides for Third Party proceedings in cases of coverage denial, and so on. As noted above, Part 6 of the Insurance Act was repealed on June 1, 2007, though its provisions remain applicable to all auto insurance policies issued by private insurers before that date. 1.3 The Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 On June 1, 2007, the Insurance (Motor Vehicle) Act was renamed the Insurance (Vehicle) Act, and was amended so that it now governs all auto policies issued in BC. The new Act continues to set out the framework for Autoplan, and the mandatory coverage, while some of the section numbers are different, remains largely the same. Part 4 the Insurance (Vehicle) Act contains 18 sections governing "Optional Insurance Contracts" which previously were governed by Part 6 of the Insurance Act, and Part 5 of the new statute contains "General Provisions" which apply to all automobile insurers. The coverage and administrative details are now contained in the Insurance (Vehicle) Regulation, which replaced the Revised Regulation enacted pursuant to the Insurance (Motor Vehicle) Act. The new Insurance (Vehicle) Regulation is similar to the Revised Regulation to the Insurance (Motor Vehicle) Act, except that the entirety of Part 9 (Extension Insurance), as well as other optional coverages (such as excess underinsured motorist protection, excess income replacement and drivers policies) have been repealed. These coverages still exist, but are now governed by Part 5 of the Insurance (Vehicle) Act, and a new Part 13 of the Insurance (Vehicle) Regulation.

8 p. 4 Under its transitional provisions, the Insurance (Vehicle) Act will govern only insurance contracts which take effect on or after June 1, Therefore, any claims ongoing on June 1, 2007 will be governed by the old regime, as will any claims arising after June 1, 2007 which are made under policies issued prior to that date. As British Columbia is subject to a two year limitation period for MVA claims, and a court action need not be served for one year after filing, it is possible that new claims will arise as late as May 31, 2011 which are governed by the old legislation (e.g. one year policy issued May 31, 2007, accident occurs May 31, 2008, lawsuit commenced May 31, 2010, lawsuit served May 31, 2011). It will therefore be necessary for out-of-province claims examiners to be familiar with both the old and new regimes for the next several years. Part 3 of this Manual includes a complete copy of the Insurance (Vehicle) Act, and Part 4 contains a complete copy of Part 7 of the Insurance (Vehicle) Regulation (governing no-fault benefits), which is identical in substance to Part 7 of the Revised Regulation in force prior to June 1, It should be noted that the Regulations are periodically revised and these amendments may materially affect issues such as the availability and quantum of no-fault benefits and so on. Claims examiners should therefore ensure that they consult the version of the Regulations in force at the time of the accident. 1.4 The Motor Vehicle Act, R.S.B.C. 1996, c. 318 The other piece of legislation with which out-of-province insurers should be familiar is the Motor Vehicle Act, which deals with the registration and licensing of motor vehicles, the licensing of drivers and traffic control. Section 86 of the Motor Vehicle Act provides for vicarious liability on the part of an owner for the negligent driving of his or her family members or persons driving with his or her consent: 86 (1) In the case of a motor vehicle that is in the possession of its owner, in an action to recover for loss or damage to persons or property arising out of the use or operation of the motor vehicle on a highway, a person driving or operating the motor vehicle who (a) is living with, and as a member of the family of, the owner, or (b) acquired possession of the motor vehicle with the consent, express or implied, of the owner, is deemed to be the agent or servant of, and employed as such by, that owner and to be driving or operating the motor vehicle in the course of his or her employment with that owner. Since November 2007, s.86(1.2) of the Motor Vehicle Act has made lessors vicariously liable for the negligence of their lessees and those driving with the lessees' consent. The liability of a lessor

9 p. 5 under s.86(1.2) is limited to $1 million by s.82.1 of the Insurance (Vehicle) Act, but the limitation is restricted to vicarious liability. There is no limit to the lessor's liability for its own negligence, and thus, creative plaintiffs' counsel can be expected to include allegations of independent negligence against the lessor in every case. In light of the two provisions mentioned above, one of the first questions examiners must ask is whether the vehicle is leased. Where an insurer is defending both a lessor and a lessee, the question of allocation of insurance money will become relevant prior to settlement, as leasing companies will, in most cases, have more money than individual insureds. In order to avoid allegations of bad faith, insurers will have to consider on whose behalf the funds are being paid when a claim is settled. Fortunately, this consideration will only arise in large loss cases involving leased vehicles, and therefore will only be significant in a small percentage of claims. Further, since the limitation of a lessor's liability appears in the Insurance (Vehicle) Act, which applies only to policies issued after June 1, 2007, it is debatable whether the liability of lessors is limited at all in cases involving policies issued before that date and governed by the Insurance (Motor Vehicle) Act. As of the date of this manual, this issue has not been considered by the British Columbia courts, and should be kept in mind in cases involving leased vehicles.

10 p THE COURT SYSTEM IN BRITISH COLUMBIA Out-of-province claims examiners will likely find themselves handling claims in either the Small Claims Division of the Provincial Court (the "Small Claims Court") or the Supreme Court of British Columbia (the "Supreme Court"). The following diagram sets out the hierarchy of the Courts in the Province of British Columbia: Supreme Court of Canada British Columbia Court of Appeal Supreme Court of British Columbia Small Claims Court

11 p. 7 For administration purposes, the Province of British Columbia is divided into judicial districts with Courts located as follows:

12 p The Small Claims Court As of September 1, 2005, the Small Claims Court has jurisdiction to hear claims involving $25,000 or less (exclusive of interest and costs). This includes both property damage and personal injury claims arising out of motor vehicle accidents. Claimants whose claims exceed $25,000 may abandon the excess and restrict their claim to $25,000 if they wish the matter to proceed in the Small Claims Court. The Small Claims Rules prescribe the rules and forms regulating practice and procedure in the Small Claims Court. Both the forms and the procedure are deliberately uncomplicated. There is no oral discovery process in the Small Claims Court, but document discovery is normally ordered. All parties must proceed to a formal Settlement Conference in front of a Judge and if the matter is not resolved at that stage, then the claim ultimately proceeds to Trial. The ordinary rules of evidence do not apply and the Trial Judge can admit any evidence that he or she considers to be relevant to the issues at hand. Appeals from Small Claims Court judgments may be made to the Supreme Court of British Columbia. The appeal period is 40 days from the date of the Order being appealed. The appellant must deposit $200 with the Registry as security for costs together with any amount the appellant is required to pay under the Order being appealed. Certain Small Claims registries have implemented a mandatory mediation process for certain claims up to $10,000. This process, if triggered, takes place prior to the formal Settlement Conference, without a judge being present. In addition, the recent amendment to the Small Claims Rules includes a new optional mediation process for claims between $10,000 and $25,000 which is very similar to the mediation process which exists in the Supreme Court. 2.2 The Supreme Court of British Columbia The Supreme Court is the Court before which all major civil cases are tried in British Columbia. The practices and procedures before the Court are much the same as in other provinces. However, some notable differences are briefly discussed in part 4 below (Procedural Differences). It should be noted that pursuant to Rule 57(10) of the Supreme Court Rules, a Plaintiff in a Supreme Court action who recovers judgment for less than $25,000 (being the financial limit of the Small Claims Court) is not entitled to recover any costs except for disbursements. This Rule is obviously designed to discourage the institution of small claims in the Supreme Court, but there may well exist compelling reasons for bringing the proceeding in the Supreme Court in appropriate cases (for example, where discovery is required to "make the case"). Most civil trials before the Supreme Court are conducted without a jury. However, almost every motor vehicle accident claim can be tried before a jury and, indeed, jury trials in such cases are often used in British Columbia. Traditionally the Plaintiff's bar has been quite aggressive in

13 p. 9 seeking jury trials, although in recent years ICBC has used juries with great success when defending minor injury claims. 3. SUBSTANTIVE LAW DIFFERENCES When a motor vehicle accident occurs in British Columbia, the British Columbia Courts will have jurisdiction to entertain the resulting lawsuit. In such cases, non-resident Defendants will be served with the Writ and Statement of Claim. No Court Order is required to serve the Writ and Statement of Claim outside the Province, but the Writ and Statement of Claim must state the ground upon which service outside British Columbia is permitted (this will usually be a tort committed in British Columbia). Different considerations can apply if the accident occurred outside British Columbia. In such situations, the jurisdiction of the British Columbia Courts may be tenuous and, in appropriate cases, defence counsel may be able to obtain an Order "staying" (halting) the proceedings in British Columbia. Such Orders are discretionary and many different factors are considered by the Court, including the nature and extent of the British Columbia connection, convenience and expense, limitation periods, location of witnesses, available juridical advantages and so on. When a lawsuit is started in British Columbia respecting a motor vehicle accident that occurred inside the province, then British Columbia law, both substantive law and procedural law, applies. If an action is commenced in another province for a motor vehicle accident that occurred in British Columbia, then British Columbia substantive law will apply. (See Tolofson v. Jensen (1994), 100 B.C.L.R (2d) 1 (S.C.C.).) Consequently, it is important for out-of-province claims examiners to be familiar with the unique aspects of British Columbia law that may be applicable to a case. 3.1 Contributory Negligence and Joint Tortfeasors In British Columbia, as in all common law provinces, an innocent Plaintiff is entitled to recover all of the judgment from any one of multiple Defendants whose negligence jointly caused the Plaintiff's loss (joint and several liability). In other words, if one of two Defendants was held 10% responsible for the accident and the other Defendant was held 90% responsible, the Plaintiff could nevertheless recover 100% of the judgment from the first Defendant. The joint and several liability provisions are found in section 4 of the Negligence Act, R.S.B.C. 1996, c In such instances, the hapless Defendant who pays the judgment is left to pursue "contribution" from the remaining Defendant. Needless to say, such contribution is a hollow remedy if that other Defendant is uninsured or otherwise penniless. In other jurisdictions (for example, Alberta), a joint tortfeasor is liable to pay the full judgment to the Plaintiff even if the Plaintiff is guilty of contributory negligence. This is not the case in British Columbia. Pursuant to section 2 of British Columbia's Negligence Act, a contributorily negligent Plaintiff can only recover from a joint tortfeasor that percentage of the judgment attributable to that tortfeasor's fault. The following example illustrates this result. Assume: the Plaintiff is held 25% responsible (contributorily negligent) for the accident;

14 p. 10 Defendant #1 is held 15% responsible for the accident; Defendant #2 is held 60% responsible for the accident; and the Plaintiff's damages are $100,000 which, because of his contributory negligence, results in an award of $75,000. In Alberta, the above Plaintiff would be able to recover $75,000 from Defendant #1 even though that particular Defendant was only 15% responsible for the accident. In British Columbia, however, the Plaintiff will only be able to recover $15,000 from that particular Defendant! The lesson, then, for out-of-province claims examiners is that the issues of a Plaintiff's contributory negligence and each Defendant's separate degrees of fault must be rigorously examined in every case. If it turns out that the co-defendant is uninsured, this does not necessarily mean that the out-of-province insurer must fund all of the Plaintiff's claim. In serious cases where significant dollars are at stake and the Plaintiff was contributorily negligent, a trial on the liability issues may be warranted even though the co-defendant is uninsured. A copy of British Columbia's Negligence Act is included in Part 5 of this Manual. 3.2 Limitation Periods It is essential that all claims personnel become familiar with some of the more common limitation periods respecting the institution of legal proceedings in British Columbia. This affects not only the defence of liability claims but also has particular relevance for files where subrogation possibilities exist. The most important piece of legislation is British Columbia's Limitation Act, R.S.B.C. 1996, c A complete copy of this Act is included in Part 6 of these materials. Section 3 of the Limitation Act sets out limitation periods of two years, six years, 10 years or no limitation period at all for different types of actions. Most actions arising out of a motor vehicle accident will be subject to a two year limitation period, but there are a number of variables which may extend that limitation for a considerable period of time. Some examples of common limitations include the following: TYPE OF ACTION APPLICABLE LIMITATION action for damages against a Municipality written notice to clerk of Municipality within 2 months of date damage sustained action to be commenced within 6 months RELEVANT STATUTE/ AUTHORITY Local Government Act, s. 286 Vancouver Charter, s. 294(2) Local Government Act, s. 285 Vancouver Charter, s. 294(1)

15 p. 11 TYPE OF ACTION APPLICABLE LIMITATION action for damages in respect to injury to person or property including economic loss (whether based on contract, tort or statutory duty) fatal accident action brought by personal representative of deceased under Family Compensation Act fatal accident action brought directly by beneficiaries (as opposed to personal representative of deceased) under Family Compensation Act action for damages for conversion or detention of goods actions not specifically provided for in the Limitation Act* action in negligence against hospital, hospital employee or medical practitioner actions by persons under disability (i.e. minors, mental incompetence, etc.) 2 years after cause of action arises* RELEVANT STATUTE/ AUTHORITY Limitation Act, s. 3(2)(a) 2 years from date of death Limitation Act, s. 3(2)(g) 2½ years from date of death Kitto v. Hanson (1991), 58 B.C.L.R. (2d) 265 (C.A.) 6 years Limitation Act, s. 3(6)(c) 6 years after cause of action arose ultimate limitation 6 years after cause of action arose running of limitation period postponed to date of cessation of disability Limitation Act, s. 3(5) Limitation Act, s. 8 Limitation Act, s. 7 * N.B. occasionally the physical injury or property damage may not be immediately obvious and may not have been caused by some readily identifiable external event. In such circumstances, the case law in British Columbia provides that the two year limitation period referred to in section 3(2)(a) of the Limitation Act is not applicable. Instead, the six year limitation period contemplated by section 3(4) governs: see W.C.B. (B.C.) v. Genstar Corp. (1988), 24 B.C.L.R. (2d) 157 (C.A.); Zurbrugg v. Bowie (1992), 68 B.C.L.R. (2d) 322 (C.A.); The Owners, Strata Plan NW 3341 et al. v. Delta (Corporation), 2002 BCCA 526. Extension of Limitation Period by Waiver or Confirmation Potential Defendants are entitled to waive any available defence based on limitation periods. Where, through negotiation or otherwise, the waiver of the defence is express, few complications arise. Sometimes, however, such waivers may be implied in appropriate circumstances, usually where there has been an admission of liability or conduct amounting to a promise not to rely upon the limitation defence. Quite apart from questions of waiver (which are common to all provinces), the British Columbia limitation legislation specifically provides for the postponement of a limitation period where the

16 p. 12 proposed Defendant "confirms" the potential Plaintiff's cause of action (Limitation Act, section 5). Such "confirmation" arises where the Defendant either: 1) acknowledges a cause of action, right or title of the potential Plaintiff; or 2) makes a payment in respect of the cause of action, right or title of the potential Plaintiff. (Limitation Act, section 5(2)). The British Columbia Courts have found a "confirmation" of the Plaintiff's cause of action (and hence extended the limitation period) where insurers have made advance payments towards a potential Plaintiff's claim or even where they have reimbursed the potential Plaintiff's lawyer for medical reports. Where such payments or other similar "confirmatory" action is contemplated, insurers must accompany the same with an appropriately worded disclaimer. The disclaimer should make it perfectly clear that the action in question is being made "without prejudice" to the respective rights of the parties, for the purpose of negotiating settlement, and is not in any way to be construed as an admission of liability, a waiver or extension of any applicable limitation period or an acknowledgement or confirmation of any cause of action on the part of the Plaintiff. 3.3 Workers' Compensation Considerations The statutory scheme in British Columbia respecting Workers' Compensation matters is pretty much the same as in other provinces. Under British Columbia's Workers Compensation Act, a worker and his or her dependents forfeit any rights they may have against any "employer" or "worker" (as defined in the Act) for damages for personal injury, disability or death sustained "on the job". A copy of sections 10 and 257 of the Act is included in Part 7 of this Manual. The provision taking away the right of action against other workers and employers is found in section 10. It should be noted, however, that section 10 does not bar the Plaintiff's right of action in all situations and tort claims may still be brought where: 1) the potential Plaintiff was not a "worker" (as defined) at the time of the accident; 2) the potential Plaintiff was not acting within the scope of his or her employment at the time of the accident; 3) the potential Defendant was not an "employer" or "worker" (as defined) at the time of the accident; or 4) the potential Defendant is the registered owner of a motor vehicle involved in the accident and is neither a "worker" nor an "employer" (even though the driver may have been a "worker" in the course of employment). Where the injury suffered by the Plaintiff is caused partly by the negligence of a worker/employer and partly by the negligence of a non-worker/employer, the Plaintiff can only

17 p. 13 recover that percentage of damages attributable to the non-worker's/employer's negligence (section 10(7) of the Act). The legislation contemplates the injured worker making an election either to claim compensation under the Act or to bring a Court action against the persons responsible for his injuries (so long as they are not "protected" by the Act). If the worker elects to claim compensation, this election must be made within three months of the injury although extensions of this time period are routinely granted. Where compensation is provided, the Workers' Compensation Board will pursue a subrogated claim against all responsible parties who do not enjoy immunity under the Act. In such cases the Board and not the injured worker decides on the terms of settlement, if any. In these Workers' Compensation Board subrogated actions, the excess of any settlement monies or judgment proceeds will be paid to the claimant (the injured worker). First, however, the Workers' Compensation Board will deduct their entitlement to the monies as follows: 1) any wage loss benefits paid to the claimant; 2) any medical aid or special damages paid (i.e. medical, chiropractic, hospital and similar costs); 3) administration costs; and 4) all legal disbursements incurred. Included in Part 8 of this Manual is a paper which discusses the Workers' Compensation scheme in greater detail. 3.4 Family Compensation Claims (Fatal Accidents) British Columbia's Family Compensation Act, R.S.B.C. 1996, c. 126 authorizes claims to be brought in fatal accident cases for the benefit of a surviving spouse, parent, grandparent or child of the deceased (section 3(1) of the Act). This legislation is very similar to the fatal accident legislation in other jurisdictions, for example, Alberta's Fatal Accidents Act. It should be noted, however, that unlike Alberta (for example), the definition of "spouse" in British Columbia includes a common-law spouse who lived with the deceased for at least two years before the fatal accident (section 1 of the Act). A complete copy of British Columbia's Family Compensation Act is found in Part 9 of this Manual. It will be noted that an action under the Act should be brought by and in the name of the personal representative of the deceased on behalf of claimants under the Act. A two year limitation period applies to such action. However, if there is no personal representative or if the action has not been commenced within six months of the death, the claimants may themselves commence the action in their own names (section 3(4) of the Act) in which event the British Columbia Court of Appeal has ruled that the two year limitation period does not start to run until after six months have passed from the date of death: Kitto v. Hanson (1991), 58 B.C.L.R. (2d) 265 (C.A.).

18 p. 14 A family compensation action includes claims for loss of financial support, loss of household assistance, loss of guidance and companionship, loss or acceleration of inheritance and so on. The future pecuniary loss claims are calculated on an "actuarial" basis which involves the determination of the present value of a lump sum which, if invested, would provide payments of the appropriate size over a given number of years in the future, extinguishing the fund in the process. It involves assessment of net income that would have been enjoyed by the deceased, a deduction for personal consumption, a deduction for other contingencies, a "gross-up" for income tax purposes and so on. Expert evidence is usually required with respect to such assessments. While the assessment of damages in fatal accident claims in British Columbia is very similar to the process used in other provinces there are some variations. For example, the British Columbia legislation does not contemplate "damages for bereavement" as is the case under the Alberta Fatal Accidents Act. As well, the British Columbia Courts adopt a different approach to "pooling" where both a deceased and the surviving spouse were employed before the death. It is therefore strongly recommended that out-of-province examiners consult with counsel when assessing quantum in fatal accident cases. 3.5 Infant Claims As is the case across the country, if an infant (in British Columbia, a person under the age of 19 years) suffers injuries in a motor vehicle accident, any lawsuit to recover personal injury damages must be brought by a guardian for litigation purposes (guardian ad litem). The appointment of such a guardian is governed by the Supreme Court Rules which essentially permit any person ordinarily resident in the province to act as a guardian ad litem. Where there is a conflict of interest between the guardian and the infant and there is no other person willing or able to act as a guardian ad litem, British Columbia's Public Trustee will assume the role. There are two aspects of infant claims with which out-of-province examiners must be familiar, namely limitation periods applicable to actions by infants and the provisions of British Columbia's Infant's Act relating to settlement of personal injury claims. Limitation Period Considerations As indicated in section 3.2 of this Manual, most actions for personal injury damages must be brought within two years following the motor vehicle accident, failing which the claim will be barred. This is not the case with respect to claims by infants for which British Columbia's Limitation Act makes special provision (see Part 6 of this Manual). In British Columbia, section 7 of the Limitation Act effectively provides that the two year limitation period does not start to run until the infant reaches the age of 19. In other words, the limitation period for an action by an infant arising from a motor vehicle accident might not expire for many years. This has obvious handling implications for out-of-province examiners. There is a procedure whereby the limitation period against an infant can be triggered. Sections 7(6) and (7) of the Limitation Act provide for a Notice to Proceed to be served upon the infant's

19 p. 15 guardian and the Public Trustee in which case the two year limitation period starts to run from the date of service. The Notice must: 1) be in writing; 2) be addressed to the guardian and to the Public Trustee; 3) specify the name of the infant; 4) specify the circumstances giving rise to the potential claim (i.e. the motor vehicle accident) with sufficient particularity to enable the guardian to investigate whether the infant has a cause of action; 5) give warning that the infant's cause of action is liable to be barred by the Limitation Act; 6) specify the name of the person on whose behalf the Notice is delivered; and 7) be signed by the person delivering the Notice or his solicitor. In appropriate cases, out-of-province examiners should consider using a Notice to Proceed of the sort described above so that the two year limitation period can be triggered. Settlement of Infant Claims A Settlement Agreement is, of course, a contract. Section 19 of British Columbia's Infants Act provides that, subject to certain exceptions, a contract made by an infant is unenforceable. However, section 40 of the Infants Act specifically provides for settlement of an infant's claim for damages. A copy of that section is found under Part 10 of this Manual. Different procedures apply depending upon whether an action has been started and whether the settlement is under $10,000 (inclusive of interest and costs). Where an action has been started, the only method of "settlement" contemplated by the legislation is a Court Order awarding damages in favour of the infant. All proposed settlements (by way of a Court Order or otherwise) must be presented to the Public Trustee for review. If the settlement is under $10,000 and the Public Trustee consents to the same, then no Court approval is required. In such cases where no action has been started, a formal Settlement Agreement can be finalized with either the guardian or the Public Trustee. If, however, the Public Trustee refuses to give his consent, then an application can be made to the Court for approval of the arrangement on 10 days written notice to the Public Trustee. The Public Trustee will provide written comments outlining the reasons for refusal and the final decision will, of course, rest with the Court. If the proposed settlement amount inclusive of interest and costs, exceeds $10,000, a Court Order approving the settlement is required. Again, the Public Trustee must provide written comments recommending either approval or rejection of the proposal and setting out his reasons. If no action has been started and the Court approves the settlement proposal, either the guardian or the

20 p. 16 Public Trustee can enter a formal Settlement Agreement. If an action has been commenced, then the settlement will proceed by way of a Consent Order awarding damages in favour of the infant. 3.6 Rental Vehicles Most auto insurance policies contain a "Temporary Vehicle" or similar provision which will govern in situations where the insured is the driver of a rental car. In such cases, where an accident occurs, the first issue for any claims examiner will be to determine whether the insured's own policy or that of the rental company will provide primary coverage. In British Columbia, the standard owner's policy covers not only the owner, but also persons driving the insured vehicle with the owner's consent. The policy contains a waiver of subrogation as against the person driving with consent, and where the driver is covered by more than one policy, the owner's policy is usually primary. Therefore, if a non-resident insured, for example, travels to British Columbia on vacation, borrows a friend's car and is involved in an accident, the friend's insurance would be primary, and the insured's policy would be secondary. In the case of a vehicle rented in British Columbia, the same general rules would apply, and the rental company's insurance would, based on the coverage alone, be primary. However, the analysis does not end with the insurance coverage. In the rental scenario, the rental contract may contain a provision requiring the insured to reimburse the rental company, in which case the insured's policy may be forced to respond, assuming that such a clause is enforceable. The enforceability of this clause is an issue that should be considered in each case, based on the terms of the rental contract at issue. In the case of a vehicle rented outside British Columbia, the law of the jurisdiction of the rental contract will likely apply. Alternatively, the vehicle may be rented in a jurisdiction in which the rental company is selfinsured, in which case, the vehicle is not "insured" for the purpose of the overlapping coverage analysis. Such a situation would result in the insured's own policy being primary. Finally, a vehicle rented outside British Columbia may be insured by a policy containing "superexcess" or "super-escape" language, in which case, the insured's policy would again provide primary coverage. See N.H. Indem. Co. v. Budget Rent-a-Car Sys., 64 P.3d 1239 (WA). Therefore, when presented with a claim involving a rental vehicle, it is essential to review the rental contract as well as both the insured's and the rental company's insurance coverage in order to determine which insurer will be primary, and thus obligated to defend the claim in the first instance. 4. PROCEDURAL DIFFERENCES As indicated at the beginning of this Manual, it is assumed that the out-of-province examiner using this material has a general working knowledge of the litigation process. It is not the purpose of this material to review the British Columbia litigation process in detail. However, there are some matters that are unique to British Columbia and which will be of interest to outof-province examiners in respect of claims involving litigation in this province.

21 p Writs and Appearances Unlike Alberta, for example, British Columbia retains the Writ system. In Alberta, the Plaintiff simply files a Statement of Claim and the Defendant files a Statement of Defence. In British Columbia, the Plaintiff initiates proceedings by way of a Writ of Summons. The Writ notifies the Defendant that a lawsuit has been started against him and advises the Defendant that, if he intends to defend the claim, he must file an Appearance within the time specified. The Plaintiff's Statement of Claim is a completely separate document. It is similar in form to the Statements of Claim used in other provinces. It is not necessary for the Statement of Claim to accompany the Writ of Summons and it may not be filed until well after the Writ of Summons has been issued in certain cases. In most motor vehicle accident lawsuits, however, the Statement of Claim will accompany the Writ of Summons and both will be served upon the insured at the same time. As indicated, a Defendant served with a Writ of Summons who intends to defend the action must file a document entitled "Appearance". The document is signed by the Defendant directly (if he is representing himself) or by his solicitor and it sets out the Defendant's address for delivery of all subsequent documentation in the lawsuit. 4.2 Service and Filing Requirements As in most (if not all) jurisdictions, the Supreme Court Rules provide for the method of serving documentation upon proposed Defendants. Essentially, personal service of the originating documentation is required. However, substitutional service is available in appropriate circumstances. Service of a Writ or Statement of Claim on a person outside British Columbia can be effected without Order of the Court in most circumstances, particularly if the lawsuit arises from a motor vehicle accident that occurred inside British Columbia. In some cases it may be necessary to obtain a Court Order granting leave for the originating process to be served outside the province. The time available for filing an Appearance depends on where the Defendant was served: Place and residence of person served In British Columbia Elsewhere within Canada In U.S.A. Elsewhere in the world Number of days to file Appearance 7 days 21 days 28 days 42 days If an Appearance is not filed within the time required, the Plaintiff will be able to avail himself of the appropriate default process. It can sometimes be difficult to set aside the default process and it will invariably involve legal costs that could easily have been avoided. As is the case for claims inside their own provinces, out-of-province claims examiners should ensure that:

22 p. 18 1) insureds are advised to immediately report any Writs or Statements of Claim served upon them; and 2) upon receipt of the Writ or Statement of Claim, the matter is either referred immediately to legal counsel or a waiver of the requirement for filing an Appearance is obtained (preferably in writing) from the solicitor for the Plaintiff. Although few Plaintiffs' counsel seem to be aware of it, many auto insurers both inside Canada and outside Canada have filed with the BC Superintendent of Financial Institutions (formerly the Superintendent of Insurance) a "Power of Attorney and Undertaking" of the sort contemplated by section 134(9) of British Columbia's Insurance Act. An example can be found Part 11 of this Manual. Pursuant to the Power of Attorney and Undertaking: 1) the insurer appoints the Superintendent to accept service of any legal proceedings against either the insurer or its insured arising out of a motor vehicle accident in the province; 2) the insurer undertakes to appear in any such legal proceeding against its insured; and 3) the insurer undertakes that, upon receipt from the Superintendent of a copy of the Writ, it will "forthwith" cause the same to be personally served upon the insured. Out-of-province examiners should bear these undertakings in mind when dealing with Plaintiff's counsel on questions of service (usually involving requests to accept service on behalf of the insured). 4.3 Interrogatories One very useful mechanism available in British Columbia to extract detailed information from the Plaintiff respecting the nature and extent of the injuries and damages sustained as a result of the motor vehicle accident is the use of Interrogatories. Interrogatories are formal questions reduced to writing and served upon the Plaintiff. The Supreme Court Rules require the Plaintiff to answer the Interrogatories by way of an Affidavit responding to the questions within 21 days. The Interrogatories can be served on a Plaintiff along with the Defendant's Statement of Defence. If properly used and if answered within the time required by the Rules, Interrogatories will provide an out-of-province examiner with detailed information on damages and losses arising from the accident such that the examiner can make an informed assessment of the quantum issues involved in the case. In Part 12 of this Manual is a copy of the standard form Interrogatories often used by Clark Wilson's Insurance Litigation Group in the course of defending motor vehicle accident claims in British Columbia. In addition to obtaining detailed medical information, the answers to the Interrogatories also provide defence counsel with information respecting the whereabouts of

23 p. 19 potentially relevant documentation, i.e. medical records at doctors' offices, hospital records, employment records and so on. 4.4 Trial Dates and Summary Trials In British Columbia the parties can secure a trial date as soon as the pleadings have "closed" (generally speaking, once the Statement of Defence has been filed). The trial will likely not be heard until one to two years later but this process certainly permits matters to be set down for trial much more quickly than in many other jurisdictions. In situations where a trial can be completed within two days, the Rules in British Columbia have, since 1998, provided for a form of fast track litigation. Either party can elect to proceed under the fast track rules by way of an endorsement added to Statement of Claim or Defence. Under this rule, Examinations for Discovery are limited to two hours and interrogatories are not permitted. A trial date, which must be by judge alone, can be obtained within four to eight months of election to proceed under the rule, and the costs to which a successful party is entitled are fixed. This process provides an effective mechanism for disposing of simple claims in under one year. For those seeking to litigate matters without proceeding through a full blown trial, generally speaking, the procedural rules across Canada and in the United States provide for "summary judgment" applications. These are applications by a Plaintiff or Defendant for summary judgment based on Affidavit evidence. Summary judgment will only be granted if there is no "triable issue" between the parties. In motor vehicle accident litigation there is almost invariably a triable issue between the parties (usually both quantum and liability) and summary judgment is therefore rarely available. However, in addition to the usual summary judgment procedure, the Rules in British Columbia also provide for a "summary trial". This is an application, also based on Affidavit evidence, where the Court is asked to grant judgment either in the lawsuit in its entirety or upon one or more of the issues in dispute between the parties. It differs from a summary judgment application because it is in fact a trial, i.e. the Judge will weigh all of the Affidavit evidence in front of him or her and make findings of fact for the purposes of disposing of the proceedings. The Court may refuse to grant judgment if, on the whole of the evidence before it, it is unable to make the factual findings necessary to decide the issues of fact or law in the case or if the Court is simply of the opinion that it would be "unjust" to decide the issues in a summary trial. In such a case, of course, the lawsuit will proceed to a full trial in the usual manner. However, the summary trial proceeding can be a very useful mechanism to limit the issues in dispute between the parties and to shorten what might otherwise be a lengthy trial. 4.5 Formal Settlement Procedures All of the usual settlement mechanisms are available in British Columbia, i.e. mediation, arbitration, negotiations between counsel, and so on. Additionally, however, the British Columbia Rules permit the parties to have a Judge facilitate settlement either through a formal

24 p. 20 Settlement Conference or by way of a mini-trial. The Settlement Conference is essentially a mediation with a Judge acting as a mediator (although the Judge is not formally trained as a mediator, and a Settlement Conference does not involve the same costs as commercial mediation). The mini-trial is different inasmuch as the Judge will listen to the presentation of both sides, will review the relevant documents or other evidence and will then issue a nonbinding opinion on the issues of quantum and liability (of course, the parties are at liberty to have agreed beforehand that the opinion will be binding and will dispose of the lawsuit). Both the formal Settlement Conference and the mini-trial are proving to be quite popular. They are only available with the consent of both sides of the lawsuit, but they are particularly well suited to motor vehicle accident litigation. It is strongly recommended that out-of-province examiners consider the availability of a formal Settlement Conference or a mini-trial on all files involving claims that seem to be headed to trial. In addition to these more formal processes, the British Columbia government introduced a mandatory mediation regime for motor vehicle accident claims in 1998, under the Regulations enacted pursuant to the Insurance (Motor Vehicle) Act. By 2001, this process had proven so successful that a general regulation was enacted pursuant to the Law and Equity Act, R.S.B.C. 1996, c.253, such that currently, all civil litigation proceeding in the British Columbia Supreme Court, with the exception of family law, administrative and sexual abuse matters, are subject to the new regime. Unlike Settlement Conferences and mini-trials, the mandatory mediation process can be imposed on the opposing party. As a result, the majority of personal injury claims of any complexity now proceed to mediation, and of those, the majority are settled by this process. 4.6 Offers to Settle Prior to July 2008, Rules 37 and 37A of the British Columbia Rules of Court allowed both Plaintiffs and Defendants to deliver formal Offers to Settle. These offers could be brought to the attention of the Court after trial, and where a Plaintiff's offer was lower than the judgment awarded at trial, or a Defendant's offer was higher than the judgment against them, the court had the ability to penalize the party who did not accept the offer. The penalties included awarding double costs to a successful party in the former case or, alternatively, depriving a successful party of costs in the latter. On July 1, 2008, the formal offer provisions of Rules 37 and 37A were repealed, and replaced by Rule 37B, which serves a similar purpose. Since that time, an Offer to Settle can be made under Rule 37B, and must meet the following requirements: (i) it must be made in writing by a party to a proceeding, (ii) it must be delivered to all parties of record, and (iii)it must contain the following sentence: "The.[name of party making the offer]. reserves the right to bring this offer to the attention of the court for consideration in relation to costs after