SFL Security Financial Leasing Inc. v. ICBC Date:, 2012 BCPC 322

Citation: SFL Security Financial Leasing Inc. v. ICBC Date: 20120907 2012 BCPC 0322 File No: 1136601 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: SFL SECURITY FINANCIAL LEASING INC. CLAIMANT AND: INSURANCE CORPORATION OF BRITISH COLUMBIA DEFENDANT RULING ON APPLICATION OF THE HONOURABLE JUDGE N.N. PHILLIPS Counsel for the Claimant: J. Zaitsoff Counsel for the Defendant: L. Karr Place of Hearing: Vancouver , B.C. Date of Hearing: August 20, 2012 Date of Judgment: September 7, 2012

Overview [ 1 ] The Defendant Insurance Corporation of British Columbia (hereinafter ICBC) seeks an order that the action commenced by SFL Security Financial Leasing Inc. (hereinafter SFL) be stayed pending compliance with certain provisions of the Insurance (Vehicle) Regulations . This is the decision of the Court on that application heard on August 20, 2012. Factual Background [ 2 ] For the purpose of this Application, no real issue was taken regarding the factual under-pinning to the dispute. As set out in the Notice of Claim filed July 28, 2011, SFL leased a 2003 Cadillac Escalade to Aaron Iverson, the lessee.

On August 13, 2009, Iverson reported the vehicle stolen. At the time of the theft, both SFL and Iverson had insurance on the vehicle from ICBC; SFL as the registered owner and Iverson as the principal operator. The policy did not contain coverage for fire, theft or conversion caused by a lessee. SFL filed an insurance claim and later an Automobile Proof of Loss with ICBC. [ 3 ] On September 23, 2010, ICBC wrote to SFL advising that no payment would be made on the claim due to Iverson’s failure to attend an Examination Under Oath (EUO).

The Notice of Claim filed in this dispute seeks payment from ICBC on the insurance policy in the amount of $22,432.87. In the Proof of Loss filed by Iverson, he claimed $29,000 as the amount of loss. [ 4 ] When he first reported the theft of the vehicle to ICBC, Iverson said he had left it parked on a Vancouver street and spent the night with a friend, returning in the morning to find the SUV gone.

Two days later Iverson contacted ICBC to disclose that the vehicle had been vandalized a couple of weeks earlier in Kelowna and that the SUV had not been insured at that time and those repairs had not been made. [ 5 ] In March 2010, the woman Iverson claimed to have been with the night the SUV was stolen wrote ICBC and said she was not with Iverson at the time of the alleged theft. Consequently, ICBC advised Iverson that he would be required to attend an Examination Under Oath on May 10, 2010. Iverson called an hour before the appointed time for the EUO and said he would not be attending.

He has yet to comply with the demand to attend. [ 6 ] SFL last had contact with the lessee in November 2009 and attempts by the company to contact since him have not succeeded. On September 23, 2010, ICBC advised SFL that it was not going to make an offer of settlement on the claim. The insurer advised SFL that due to Iverson’s failure to attend the Examination, ICBC was not able to determine the cause of the loss. SFL maintains that they have not been told by ICBC that they take issue with their valuation of the loss nor proposed an alternative valuation to that set out in SFL’s Proof of Loss form.

Neither party has taken steps to deal with the question of valuation through arbitration. The Reply filed by ICBC does not raise the issue of valuation of the loss or the need to proceed through arbitration. Applicable Legislation [ 7 ]

Schedule 10 of the Insurance (Vehicle) Regulations B.C. Reg. 447/83 (hereinafter the “Regulation”) sets out Prescribed Conditions (s. 169). 1

(1) In these conditions: "insured" means a person who, whether named or not, is insured by this optional insurance contract; … 6

(1) If required by the insurer, the insured must, on the occurrence of loss or damage for which coverage is provided by this contract, deliver to the insurer within 90 days after the occurrence of the loss or damage a statutory declaration stating, to the best of the insured's knowledge and belief, the place, time, cause and amount of the loss or damage, the interest of the insured and of all others in the vehicle, the encumbrances on the vehicle, all other insurance, whether valid or not, covering the vehicle and that the loss or damage did not occur through any wilful act or neglect, procurement, means or connivance of the insured.

(2) An insured who has filed a statutory declaration must (

a) on request of the insurer, submit to examination under oath, … 8

(1) The insurer must pay the insurance money for which it is liable under this contract within 60 days after the proof of loss or statutory declaration has been received by it or, if an arbitration is conducted under

section 177 of the Insurance (Vehicle) Regulation, within 15 days after the award is rendered.

(2) The insured must not bring an action to recover the amount of a claim under this contract unless the requirements of conditions 4, 5 and 6 are complied with and until the amount of the loss has been ascertained by an arbitrator under

section 177, by a judgment after trial of the issue or by written agreement between the insurer and the insured.

(3) Every action or proceeding against the insurer in respect of loss or damage for which coverage is provided under this contract must

be commenced within 2 years from the occurrence of the loss or damage. [ 8 ] The same language is found in the Autoplan Optional Policy in Division 8, Part 6(1) and (2) and Division 8, Part 8(2). Division 2 of the Policy states that the

definitions in the Policy are the same as those found in the Act and Regulations. Division 8,

Section 8 requires compliance with sections 4, 5, and 6: 8(2) the insured must not bring an action to recover the amount of a claim under this contract unless the requirements of conditions 4, 5 and 6 are complied with. [ 9 ]

Section 176 and 177 of the Regulations state: 176

(1) In this

section and in

section 177, "coverage dispute" means, in relation to insurance against loss of or damage to a vehicle or the loss of use of a vehicle, a dispute between the owner and the insurer as to (

a) the nature and extent of required repairs or replacement, or (

b) the amount payable in respect of direct loss of or damage to the vehicle.

(2) Subject to subsection (3), a coverage dispute, unless resolved voluntarily by the parties to it, must be resolved by arbitration under

section 177.

(3) A coverage dispute must not be submitted for arbitration more than 2 years after the occurrence of the loss or damage. 177

(1) If a coverage dispute is, under section 176 (2), required to be submitted to arbitration, the owner or the insurer may refer the matters in dispute to arbitration in accordance with the Commercial Arbitration Act ... [ 10 ] Section 15(1) of the Commercial Arbitration Act states: If a party to an arbitration agreement commences legal proceedings in a court against another party to the agreement in respect of a matter agreed to be submitted to arbitration, a party to the legal proceedings may apply, before filing a response to civil claim or a response to family claim or taking any other step in the proceedings, to that court to stay the legal proceedings. [ 11 ]

Section 8 of the

Interpretation Act [RSBC] ch. 238 provides: Every enactment must be construed as being remedial, and must be given such fair, large and liberal construction and

interpretation as best ensures the attainment of its objects. Case Law Principles of

Interpretation [ 12 ] Counsel were unable to find any case law considering the effect of the language in Division 8,

part 6 of the Optional Policy or

Part 10 of the Regulations when there is more than one insured. Accordingly, the Court must analyze the applicable provisions and apply them to the facts before the Court at this application. [ 13 ] The leading authority on statutory

interpretation is Re Rizzo & Rizzo Shoes Ltd. [1988] 1 SCR 27 . Speaking for the Supreme Court, Iacobucci, J. stated (@ paragraph 21): Although much has been written about the

interpretation of legislation (see, e.g., Ruth Sullivan, Statutory

Interpretation (1997); Ruth Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994) (hereinafter "Construction of Statutes"); Pierre-André Côté, The

Interpretation of Legislation in Canada (2nd ed. 1991)), Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. He recognizes that statutory

interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states: Today there is only one principle or approach, namely, the words of

an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. [ 14 ] At paragraph 27 the Supreme Court of Canada observed: In my opinion, the consequences or effects which result from the Court of Appeal's

interpretation of ss. 40 and 40a of the ESA are incompatible with both the object of the Act and with the object of the termination and severance pay provisions themselves. It is a well

established principle of statutory

interpretation that the legislature does not intend to produce absurd consequences. According to Côté,supra, an

interpretation can be considered absurd if it leads to ridiculous or frivolous consequences, if it is extremely unreasonable orinequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment (atpp. 378-80). Sullivan echoes these comments noting that a label of absurdity can be attached to

interpretations which defeat the purposeof a statute or render some aspect of it pointless or futile (Sullivan, Construction of Statutes, supra, at p. 88). [15] In Cort v. ICBC [2011] BCSC 586, Master Keighley considered an application to stay proceedings pending attendance at anexamination under oath. The Court stated (@ paragraph 32): …The purpose of an EUO, on the other hand is investigative. The insured is contractually bound to co-operate with his insurer bysubmitting to an examination which may assist the insurer in determining its response to the claim.

The insured may not, as a matter ofcontract, seek to attach conditions to his attendance. [16] In Transportaction Lease Systems Inc. v. Guarantee Co. of North American (ON CA), [2005] O.J. No. 5036(C.A.), the Court considered whether a lessor and a lessee had separate insurable interests. The lessee in that case had deleted mostcoverage upon placing the vehicle in winter storage and then damaged the vehicle driving it. The appellate court held that one co-insured cannot unilaterally cancel or delete coverage of another co-insured.

The Court observed that the rights and obligations of co-insured are several rather than joint in the absence of clear and precise statutory language to the contrary. The Court also noted there wasnothing on the face of the contract to indicate that the rights of one insured were qualified by the conduct of the other named insured.

Atparagraph 22 of the decision, LaForme, J.A. stated: Importantly, the plain language of the insurance agreement does not alter the starting position taken from the case law - that the co-insured's rights and obligations are separate in the absence of clear language in the policy to the contrary. The insured is referred tothroughout the automobile policy as "you" and "your".

Section 1.7 of the policy provides that "you may cancel your insurance any timeby advising us". "You" and "your" can be taken as referring to one insured or both.

There is nothing on the face of the contract thatwould indicate to an insured that its rights were in any way qualified by the conduct of the other named insured. [17] At paragraphs 43 and 47, Borins, J.A. held (in separate but concurring reasons): As LaForme J.A. concluded, the contract of automobile insurance is several, rather than joint, and, as such, effectively creates twoinsurance contracts, one insuring the interests of Transportaction as the owner and lessor of the vehicle, and the other insuring theinterests of Beals as the lessee of the vehicle.

Because the several nature of the contract provides for separate coverage of the insurableinterests of each co-insured, one co-insured could not delete the coverage affecting the insurable interests of the other co-insured withoutthe consent of the latter... I prefer to base my decision on the narrow ground that, because Transportaction and Beals were separately insured, Beal's deletion of allof the coverage except for fire and theft affected only his coverage, and not that of Transportaction, which had an insurable interest in thecar.

Put simply, because the contract of insurance between the insurer and Transportaction was a separate and distinct contract insuringits ownership interest in the leased car, its coverage was not deleted when Beals, who also had a separate and distinct contract, instructedthe insurer to delete coverage that applied to him. Accordingly, under its contract of automobile insurance with Transportaction, theinsurer was required to indemnify it for the value of the car. [18] In Forbes Chevrolet Oldsmobile Ltd. v. Home Insurance Co. (NS SC), [1990] N.S.J.

No. 426 (S.C. – T.D.)the Court examined the claim of a co-insured where the other insured deliberately collided a vehicle with another car in an attemptedsuicide. The lessor was held to be entitled to claim under the insurance policy. The Court was called upon to interpret the applicablepolicy of insurance and made reference to the Supreme Court of Canada’s guidelines for doing so as set out in Consolidated-BathurstExport Ltd. v.

Mutual Boiler and Machinery Insurance Co., (SCC), [1980] 1 S.C.R. 888 @ 901: Even apart from the doctrine of contra proferentem as it may be applied in the construction of contracts, the normal rules of constructionlead a court to search for an

interpretation which, from the whole of the contract, would appear to promote or advance the true intent ofthe parties at the time of entry into the contract. Consequently, literal meaning should not be applied where to do so would bring about anunrealistic result or a result which would not be contemplated in the commercial atmosphere in which the insurance was contracted.Where words may bear two constructions, the more reasonable one, that which produces a fair result, must certainly be taken as theinterpretation which would promote the intention of the parties. Similarly, an

interpretation which defeats the intentions of the partiesand their objective in entering into the commercial transaction in the first place should be discarded in favour of an

interpretation of thepolicy which promotes a sensible commercial result. It is trite to observe that an

interpretation of an ambiguous contractual provisionwhich would render the endeavour on the part of the insured to obtain insurance protection nugatory, should be avoided.

Said anotherway, the courts should be loath to support a construction which would either enable the insurer to pocket the premium without risk or theinsured to achieve a recovery which could neither be sensibly sought nor anticipated at the time of the contract. [19] The Nova Scotia court found that lessor and lessee interests were separate and not joint and several and that default by oneinsured would not necessarily vitiate the claim of the other. The Court added the following (@ page 5): These cases received the approval of the Ontario Court of Appeal in Rankin v.

North Waterloo Farmers Mutual Insurance Co. (1979), (ON CA), 100 D.L.R. (3d) 564 wherein the court stated:

Applying the principles above stated, it is my opinion that the word "Insured" in the exception clause means, where as here more than one person is insured, the person who is making a claim under the policy. In the present case, the son was separately insured for his own personal effects, but had no interest in the house or the contents owned by the appellants for which loss was proved. The appellants are not affected, in respect of their interests, by the wrongful act of their son. Cases Involving More than one Insured [ 20 ] In Gill v. Insurance Corp. Of BC [1988] B.C.J.

No. 376 (S.C.) Southin, J. (as she then was) was required to consider the effect of a breach of a condition by one co-insured relating to the criminal offence of dangerous driving, on an innocent co-insured. The Court found in favour of the co-insured to the extent of his insurable interest in the vehicle. Southin, J. Stated (@ page 5): Counsel were unable to point to any

section of the Act or Regulations imputing a breach of condition by one insured to the other insured nor indeed did they point to anything in the Act or Regulations which makes even a passing reference to multiple insureds under one policy... Counsel have not found, nor in the time available to me, have I found any authority either on the old conditions or on the provision now in issue as to the effect of a breach of condition by one named insured upon other named insureds in the policy. [ 21 ] In Hobenshield v.

Insurance Corp. of BC [2000] BCCA 172, the Court of Appeal considered a claim made by a woman whose husband was found to have knowingly misstated his co-insured wife’s age in an insurance application. The Court found the wife had not voided her insurance and that she was entitled to be compensated to the extent of her “insurable interest” in the vehicle. Valuation [ 22 ] In Robinson v. Insurance Corporation of B.C. [1999] B.C.J.

No. 18 S.C., Robinson’s claim for indemnity was denied by the insurer on the basis that his vehicle had not been stolen as claimed and that the insured had made a false statement to that effect. There was no agreement as to the amount payable to Robinson. The Court considered the provisions of s. 62 of the Regulations, similar to s. 177, prohibiting an evaluation after the expiry of two years from the occurrence of the loss.

Section 142 of the former legislation stated: Subject to s. 117(3), any dispute between an insured and the corporation under this Division as to (

a) the nature and extent of the repairs or replacement required, or... (

c) the amount payable in respect of loss or damage shall be submitted to evaluation under

section 62. [ 23 ] The Court did not accede to ICBC’s position that the insured had no forum for quantifying his loss. At paragraphs 23 and 24 the Court held: In my view, it is also apparent from the review of the Regulations in their entirety that s. 142 and s. 62 are not applicable in circumstances such as the present. The dispute, which must relate to own damage coverage, is required to be submitted to evaluation within two years of the loss.

Section 144 provides that where an award is made under s. 62, it must be paid within 15 days after the award is made. It seems clear that s. 62 is intended to provide a simple method for the resolution of disputes as to the nature and extent of repairs or the amount payable in respect of the loss. One or two appraisers are to be appointed, with costs to be shared as between insured and insurer.

The effect of the argument of the defendant would be that in circumstances such as the present, the parties would have to follow the procedure mandated by s. 62 prior to the trial of the issue of the liability of the insurer to its insured. A plaintiff such as Mr. Robinson would thus have to incur the expense of an evaluation before trial, a potentially academic exercise. For the above reasons, I do not accede to the defence argument that s. 142 of the Regulations precludes the court from adjudicating damages. [ 24 ] In Nye v.

Insurance Corp. of BC [2012] BCSC 1053 the Court found the Claimant entitled to coverage due to ICBC not proving he had operated his vehicle in breach of the Regulations or his insurance policy. The Court then considered whether it was appropriate to assess damages. The Court noted that the legislation had been amended since the decision in Robinson (supra) and that disputes as to the value of the loss are to be referred to arbitration.

The two year limitation period was not in issue in Nye. [ 25 ] In considering whether the loss was excluded from coverage under the terms of the insurance policy, the Court in Nye noted (@ paragraph 23): In Progressive Homes , the court held at para. 51 that the defendant must show that an exclusion "clearly and unambiguously" applies to exclude coverage. At paras. 22 through 24, the court set out the principles to be applied when interpreting a policy of insurance:

The primary interpretive principle is that when the language of the policy is unambiguous, the court should give effect to clear language,reading the contract as a whole (Scalera, 2000 SCC 24 , [2000] 1 S.C.R. 551, at para. 71). Where the language of the insurance policy is ambiguous, the courts rely on general rules of contract construction (Consolidated-Bathurst, (SCC), [1980] 1 S.C.R. 888, at pp. 900-902). For example, courts should prefer

interpretations that areconsistent with the reasonable expectations of the parties (Gibbens, 2009 SCC 59 , [2009] 3 S.C.R. 605, at para. 26; Scalera, atpara. 71; Consolidated-Bathurst, at p. 901), so long as such an

interpretation can be supported by the text of the policy. Courts shouldavoid

interpretations that would give rise to an unrealistic result or that would not have been in the contemplation of the parties at thetime the policy was concluded (Scalera, at para. 71; Consolidated-Bathurst, at p. 901). Courts should also strive to ensure that similarinsurance policies are construed consistently (Gibbens, at para. 27). These rules of construction are applied to resolve ambiguity. They donot operate to create ambiguity where there is none in the first place.

When these rules of construction fail to resolve the ambiguity, courts will construe the policy contra proferentem - against the insurer(Gibbens, at para. 25; Scalera, at para. 70; Consolidated-Bathurst, at pp. 899-901). One corollary of the contra proferentem rule is thatcoverage provisions are interpreted broadly, and exclusion clauses narrowly (Jesuit Fathers, 2006 SCC 21 , [2006] 1 S.C.R.744, at para. 28). Attornment [26] The question of attornment was considered in Farough v.

Financial Control Industries Inc. [2007] BCPC 351 where JudgeSenniw stated (@ paragraph 17): Attornment is discussed in Castel & Walker's Canadian Conflict of Laws (6th ed., Vol. 1) at p. 11.2: Third, defendants who appear to defend the action on the merits implicitly consent to the jurisdiction of the court to determine thecontroversy.

This is sometimes called "attornment". ... courts will generally determine jurisdiction at the outset of the proceedings --before a defence on the merits is entered -- and entering an appearance solely to contest jurisdiction will not be regarded as attornment.[8] Once a party takes steps to contest the merits of the claim, even if those steps are taken in error [9], or with express notice of theintention to challenge jurisdiction [10], the party will be precluded from challenging the jurisdiction of the court, whether in respect ofthe whole of the claim or of a part of it. [11] This will be so even if that challenge is based on a forum selection clause [12] or on aninternational convention.

Submissions of Counsel Counsel for the Applicant, ICBC [27] ICBC submitted that SFL cannot bring this action for recovery under the contract of insurance unless the requirements ofDivision 8,

section 6 of the Optional Policy have been complied with (as set out in Division 8, section 8(2)). Iverson failed to submit toan Examination pursuant to

Schedule 10 of the Insurance (Vehicle) Act and Division 8, section 6(1) and (2) of the Autoplan OptionalInsurance Policy. Pursuant to Division 5,

Part 2,

section 5.9(b)(

i) of the ICBC Optional Policy, ICBC says it is not liable to indemnifythe owner of a vehicle for a theft committed by the lessee. [28] ICBC submits that the clear purpose of the legislative and policy provisions relating to EUOs is to permit them to investigateclaims against their policies (see Cort, supra). ICBC argues that on a plain reading of the Optional Policy, SFL cannot continue its claimbecause Iverson has not complied with the EUO requirement.

ICBC submits that the fact there are two insured parties in this caseshould not make a difference if the Optional Policy provisions are given a plain reading to determine their intent. In the absence of caselaw on point, ICBC invites the Court to determine the matter based on principles of statutory

interpretation. [29] ICBC argues that an ordinary reading of Division 8,

Section 8 of the Optional Policy cannot support a conclusion thatcompliance with the requirements applies to each insured separately. The Policy states that a claim cannot be brought “unless therequirements are complied with”. ICBC says it is irrelevant that the insured bringing the claim is not the party who is not in complianceand that neither insured has an independent entitlement to indemnity. While conceding that the lessor may be entitled to its claim, ICBCsubmits that question will have to be resolved at some later date given the non-compliant status of the Iverson at this time.

ICBC onlyseeks an order staying the proceeding at this point. [30] Counsel for ICBC noted the Regulations state that coverage will not be provided unless certain requirements are met and thatthe need to comply is not limited to a named insured. ICBC submitted that neither SFL nor Iverson has an independent claim and that aliteral

interpretation of the applicable provisions that would enable SFL to succeed in a claim when Iverson could not, would not makesense. [31] In addition to arguing that a stay is appropriate due to the lessee’s non-compliance with the EUO, ICBC submitted that a stayshould be imposed because the amount of the loss has not been ascertained by an arbitrator under s. 177 of the Regulation and thus s.8(2) of

Schedule 10 has not been complied with. ICBC also submitted that the Section 6(2) prohibits the bringing of a claim unless thevalue of the vehicle has been determined by an arbitrator, by a court action, or by agreement. ICBC states that the value of the vehicle

has never been set and that SFK and Iverson have suggested different values for the SUV. ICBC had not determined value prior to closing their file. Counsel for SFL [ 32 ] SFL submitted that ICBC cannot rely upon the breach of conditions by Iverson to deny SFL’s claim when the company itself is in compliance. To that end, counsel provided the Court with case authority to support the proposition that breach of a condition by one co-insured does not prevent the innocent co-insured from claiming under the policy.

Counsel argued that SFL and Iverson have separate insurable interests and given that SFL was not in breach of any policy conditions, it is entitled to bring this claim under the policy. SFL submitted that the matter should proceed to trial where ICBC would have to try to prove Iverson was responsible for the theft, but that a stay should not be granted. [ 33 ] Regarding the valuation of the loss, SFL noted the lessor had submitted a proof of loss form which included a valuation and that ICBC never advised SFL that issue was taken with their valuation nor proposed an alternative value.

More than three years has elapsed since the loss occurred and in that time ICBC did not raise the matter of arbitration except in the context of this application. Counsel submitted it would not make sense to require SFL to go through arbitration before a decision on coverage was made.

Moreover, counsel submitted that regardless of whether it is the Court or an arbitrator who assesses damages, the case law does not support a stay of proceedings being entered pending that determination. [ 34 ] Finally, counsel for SFL submitted that ICBC attorned to the jurisdiction of the Court by filing a Reply which does not raise issues of jurisdiction nor refers to the arbitration process. By delivering a list of documents and attending a mediation session, ICBC has continued to engage in the process of the Court.

The bringing of the application for a stay shows continued involvement by ICBC in the Court process. Counsel submitted ICBC’s participation should be taken as falling within the language of s. 176(2) of the Regulations: “...a coverage dispute, unless resolved voluntarily by the parties to it, must be resolved by arbitration...” By attorning to the jurisdiction of the Court, the parties should be taken to have resolved the matter voluntarily.

Analysis [ 35 ] I begin by considering whether the requirement to submit to an examination under oath in accordance with the Prescribed Conditions and Optional Policy provisions operates to effectively bind Iverson, SFL, or both of them. [ 36 ] Under the R egulations an insured is defined to mean “a person who, whether named or not, is insured by this optional insurance contract...” The provisions state that if required by the insurer, the insured must provide a statutory declaration relating to the loss. On request of the insurer, the insured must also submit to an examination under oath.

The legislation provides that an insured must not bring an action to recover the amount of a claim under the contract of insurance unless these requirements are met. [ 37 ] In the case at bar, ICBC required SFL to provide a statutory declaration relating to the loss and SFL did so. ICBC has not requested SFL to submit to an examination under oath; they only made that request of Iverson. [ 38 ] ICBC’s position is that they must have the power to request information from insured parties by way of statutory declarations and examinations under oath in order to conduct an investigation into a loss claim.

ICBC says where an insured, such as the lessor in this case, has no real knowledge of the events leading to the claim, the insurer would be thwarted from gathering information if the investigatory requirements could not be enforced against other insured parties. [ 39 ] However, ICBC is doing nothing to investigate Iverson’s claim at this time and has closed its file.

While the requirement for the examination under oath is intended to provide the insurer an opportunity investigate a claim, once an insurer has closed its file having exhausted any available investigatory avenues, in my view it would take the clearest of language to stay liability claims brought by ‘innocent’ insured parties. No such language exists herein. [ 40 ] There is no suggestion that ICBC has done or has been able to do any investigation in relation to this claim for about two years. Refusing to resolve SFL’s claim has done nothing to assist ICBC in determining the cause of the loss.

It seems unreasonable for another insured to have to hold a claim in abeyance if the insurer is doing nothing to investigate and the file is closed. While ICBC has a right to investigate a claim, I find it would be absurd for that right to last in perpetuity leaving another insured without even the remedy of having the dispute dealt with in court.

To interpret the legislation in that fashion, in my opinion, would lead to an extremely inequitable or unreasonable consequence (see Transportaction, supra ). [ 41 ] In other words, I do not think that the term “insured” should be interpreted as being in the plural form so to include all insured persons relating to a claim. A plain reading of the wording simply does not support that

interpretation. Had the legislature intended for insurance coverage to be unavailable unless and until all insured person were in compliance, it could have easily stated that. Reference to rules of construction or

interpretation are applied to resolve ambiguity, but where there is no ambiguity they need not operate. I do not find the applicable language ambiguous. [ 42 ] Consideration must also be given to the issue of whether the interests of SFL and Iverson are joint or several. Where two persons are jointly insured and their interests are so intertwined that a loss necessarily affects both, misconduct by one may negate insurance coverage to the other. However, the case law provided by counsel establishes that the rights of co-insured are several in the absence of statutory or contractual language to the contrary.

ICBC was not able to point to any language in the Regulations or the policy provisions describing the rights of SFL and Iverson to be joint. [ 43 ] Case law also establishes that where rules of

interpretation do not resolve the matter, a court can apply the principle of contra proferentem against the insurer. This approach to resolving a matter sees exclusion clauses in insurance contracts narrowly construed

and coverage provisions broadly interpreted (see Nye, supra ) . [ 44 ] In the materials before the Court, it appears that the lessor and the lessee here had separate insurable interests. As such it would not be appropriate to hold SFL’s claim in abeyance without any prospect of action being taken by ICBC to resolve the situation with Iverson. [ 45 ] Regarding the matter of valuation, I find that a stay of proceedings should not be granted despite the decision in Nye (supra) as the facts in that case are distinguishable .

At no time until the Court case was underway did ICBC advise SFL that any issue was taken with the valuation. In other words, it appears that ICBC did not make its position on valuation known to SFL until after the two year limitation had expired. It would be inappropriate to permit ICBC to use the limitation when it did not place valuation in issue until the time for SFL to move to arbitration had expired. It would not make sense to expect that SFL should have anticipated the valuation defence and gone to arbitration in case the insurer later decided to raise it as a defence.

The legislation provides for the issue to be resolved by a court at a trial as well as by arbitration. Staying the case on this basis would be inappropriate. Result [ 46 ] I think it is open to a trial judge in this case to find that the insured interests of SFL and Iverson were several and not joint. It is also possible that a trial judge will find there is no ambiguity in the legislation or policy. It will be up to the trial judge to determine whether SFL is entitled to succeed or whether the defences put forward by ICBC are accepted.

For the reasons set out above, the question of valuation should not prevent SFL from being able to seek a decision on the claim at trial. [ 47 ] The application for a stay is thus dismissed. The matter will proceed to trial where SFL will have to prove entitlement to insurance coverage and ICBC will be able to advance the positions taken at this application in support of their denial of SFL’s claim. _______________________ N. N. Phillips Provincial Court Judge