Cost of Justice

In this twisted car accident injury case the ICBC claimant asked for $3 million and received only $62,900 for his injury after a Supreme Cour trial.  He was also denied his legal costs. The claimant lost his appeal on the issue of quantum but  the Court of Appeal found that as the successful party he was entitled to his legal costs, which were no doubt substantial( Loft v. Nat,2015 BCCA 418).

Before the beginning of the trial, and while the claimant was involuntarily hospitalized under the Mental Health Act, ICBC made two formal offers to settle pursuant to R. 9-1 of the Supreme Court Civil Rules. The first was for $125,000 and the second was for $150,000. In the covering letter for each offer, the defendants’ counsel wrote:

The defendants confirm that this offer is made with the acknowledgment that the Insurance Corporation of British Columbia (“ICBC”) has been served with a Notice of Attachment and/or Requirement to Pay and is therefore obligated to first pay to Family Maintenance Enforcement Program (“FMEP”) from the Settlement Payment in this matter. The defendants and/or ICBC are required to first meet any obligation to FMEP before paying monies to the plaintiff in relation to the Settlement Payment, pursuant to the Family Maintenance Enforcement Act, R.S.B.C. 1996, c. 127 and amendments and regulations thereto.

The family maintenance enforcement legislation  includes ICBC as a “debtor” to the claimant by operation of the his legal right to receive the settlement funds from ICBC, as well as FMEP’s statutory right to commence an action against ICBC for the payment of those funds if ICBC fails to remit them to FMEP under the Notice of Attachment. In the Court of Appeal’s view, the trial judge erred in principle in finding that the reference in the offer to settle to ICBC’s obligation to remit settlement monies in the amount alleged to be owed by the claimant for arrears of support to FMEP rendered the offer not one that the plaintiff ought reasonably to have accepted.

In British Columbia the reality of motor vehicle litigation is that an insured’s policy of insurance with ICBC provides that ICBC will assume conduct of any litigation commenced against its insured and make the decisions with respect to that litigation. In that regard, the ICBC lawyer in this case  summarized ICBC’s contractual and statutory rights as follows:

The reality of motor vehicle claims is that an insured’s contract with ICBC states that insurer assumes conduct of the litigation in the event that an individual starts an action against an insured. The insured defendant does not determine whether or not they admit or deny liability, or whether an offer to settle is made. ICBC has the contractual and statutory right to assume conduct of the litigation and ultimately determines the appropriate steps to take. Although not named as a party in this action, the reality is that ICBC would ultimately be responsible for paying any damage award. ICBC appoints counsel to assume conduct of the litigation, and the lawyers take instruction from the insurer, not the insured. Stating that an insurer is not a debtor pursuant to the Family Maintenance Enforcement Act ignores the substance of the relationship between the insured and insurer.

In general, insured drivers and owners do not directly receive monies from ICBC to pay a claimant pursuant to a settlement or court order. Typically, although not always, it is the insurer ICBC that pays the monies directly to the the claimant’s lawyer.  The Court of Appeal sent further to state,

[46] As was pointed out by counsel for the intervenor Director, this Court held in British Columbia (Maintenance Enforcement) v. I.W.A. Forest Industry Pension Plan (Trustee) (1991), 61 B.C.L.R. (2d) 264 (C.A.) that the FMEA is a form of “social legislation” for which a purposive construction of its provisions should be given:

[20]      The Family Maintenance Enforcement Act is an example of what is sometimes referred to as “social legislation”. It is designed to address the evil of widespread default in payments required to be made by family maintenance payment orders. In essence it makes available to persons entitled to maintenance payments the power and the resources of the state to enforce payment and thereby alleviate the distress which is the frequent consequence of non-payment. It is the class of enactment to which the court had traditionally given a “purposive” construction.

[47] Furthermore, as mandated by s. 8 of the Interpretation Act, R.S.B.C. 1996, c. 238, the words of an enactment should be given a “fair, large and liberal construction and interpretation as best ensures the attainment of its objects.” That directive applies to the term “indebted” in s. 15(1) of the FMEA. A purposive construction of that term, given the objective of the legislation to alleviate the distress of non-payment of support obligations, would necessarily include ICBC as a “debtor” to the plaintiff by operation of the plaintiff’s legal right to receive the settlement funds from ICBC, as well as FMEP’s statutory right to commence an action against ICBC for the payment of those funds if ICBC fails to remit them to FMEP under the Notice of Attachment. In my view, the judge erred in principle in finding that the reference in the offer to settle to ICBC’s obligation to remit settlement monies in the amount alleged to be owed by the plaintiff for arrears of support to FMEP rendered the offer not one that the plaintiff ought reasonably to have accepted.”

However, because the claimant was involuntarily hospitalized for a mental condition at the time of the ICBC offers to settle, the offers were not offers that ought reasonably to have been accepted. In the result, the claimant was entitled to his full legal costs for the prosecution of his personal injury case, from beginning to end.

Posted by ICBC Claims Lawyer Mr. Renn A. Holness, B.A. LL.B.- “I Work only for the injured, Not ICBC or any other insurance company”

Leave a Reply

Your email address will not be published. Required fields are marked *

Post comment