MacMillan v. Insurance Corporation of British Columbia, 2021 BCPC 184

Citation: MacMillan v. Insurance Corporation of British Columbia 2021 BCPC 184 Date: 20210803 File No: 2067083 Registry: Robson Square IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CALEB MacMILLAN CLAIMANT AND: INSURANCE CORPORATION OF BRITISH COLUMBIA DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE GOUGE Counsel for the Claimant: S. Arrandale Counsel for the Defendant: J. Rusinek Place of Hearing: Vancouver , B.C. Date of Hearing: July 29, 2021

Date of Judgment: August 3, 2021 The Issue [ 1 ] The Defendant (“ICBC”) insured a vehicle leased by Mr. MacMillan. The vehicle was destroyed by a fire on April 29, 2018. Mr. MacMillan alleges that it was stolen, and seeks to recover the value of his leasehold interest. ICBC denies liability, and has filed a counterclaim, seeking to recover from Mr. MacMillan the amount paid by ICBC to the lessor of the vehicle. On this application, ICBC seeks a stay of Mr. MacMillan’s action until he submits to an oral examination under oath, as required by

section 6 of

Schedule 10 of the Insurance (Vehicle) Regulations , BC Reg. 447/83 (“the Regulation ”). The Statutes [ 2 ] Many of the terms of automobile insurance contracts in British Columbia are mandated by the Regulation . The term in issue in this case requires an insured who has filed a claim for vehicle damage to submit, upon ICBC’s request, to an oral examination under oath by an ICBC investigator. [ 3 ]

Section 75 of the Insurance (Vehicle) Act SBC 1996, c 231provides: All claims by or in respect of the applicant or insured are invalid and the right of an applicant, an insured, or a person claiming through or on behalf of an applicant or insured or of a person claiming as a dependant of the applicant or the insured, to insurance money under the plan or an optional insurance contract, is forfeited if: * * * (

c) the insured makes a wilfully false statement with respect to the claim. The Facts [ 4 ] Mr. MacMillan submitted his proof of loss on May 1, 2018. He was interviewed by an ICBC investigator on June 19, 2018 and subsequently provided copies of certain documents requested by the investigator. [ 5 ] ICBC requested that Mr. MacMillan attend for examination under oath on December 18, 2018, August 1, 2019, October 8, 2019, December 10, 2019 and February 11, 2020. Mr. MacMillan did not attend on any of those dates. On each occasion, he proffered an excuse.

He has tendered no evidence to support any of the excuses. [ 6 ] On February 25, 2020, the ICBC investigator sent an e-mail to Mr. MacMillan’s counsel. The pertinent extracts from the e-mail are: ICBC takes the position that Mr. MacMillan has adjourned the Examination Under Oath too many times and there is insufficient time to conduct an Examination and our follow up investigation prior to the passing of the limitation date. ICBC also takes the position that Mr. MacMillan’s contractual obligation to submit to an Examination Under Oath remains if he commences litigation.

With respect to his alleged theft claim, ICBC takes the position that Mr. MacMillan has made material false statements triggering a forfeiture of coverage pursuant to

section 75(

c) of the Insurance (Vehicle) Act. Therefore his claim is denied. Legal Principles [ 7 ] ICBC relies upon Cort. v. Insurance Corporation of British Columbia , 2011 BCSC 586 in support of the proposition that this action should be stayed until Mr. MacMillan has fulfilled his statutory and contractual obligation to submit to an examination under oath. In Cort , ICBC had not refused to pay Mr. Cort’s claim and had advised him that the claim continued to be under investigation. In this case, ICBC has denied Mr.

MacMillan’s claim and asserts that he “… has made material false statements triggering a forfeiture of coverage …” (underlining added). No such assertion was made in Cort . [ 8 ] The classic statement of the governing principle was given in Heyman v Darwins Limited [1942] AC 356 @ page 361: If one party so acts or so expresses himself, as to show that he does not mean to accept and discharge the obligations of a contract any further, the other party has an option as to the attitude he may take up.

He may, notwithstanding the so-called repudiation, insist on holding his co-contractor to the bargain, and continue to tender due performance on his part. In that event, the co-contractor has the opportunity of withdrawing from his false position, and even if he does not, may escape ultimate liability because of some supervening event not due to his own fault which excuses or puts an end to further performance ….

Alternatively, the other party may rescind the contract, or (as it is sometimes expressed) "accept the repudiation", by so acting as to make plain that in view of the wrongful action of the party who has repudiated, he claims to treat the contract as at an end, in which case he can sue at once for damages.

In this case, ICBC chose the second option. [ 9 ] In Moschi v Lep Air Services Ltd. [1973] AC 331 , Lord Diplock said @ page 350 (underlining added): Generally speaking, the rescission of the contract puts an end to the primary obligations of the party not in default to perform any of his contractual promises which he has not already performed by the time of the rescission. It deprives him of any right as against the other party to continue to perform them. It does not give rise to any secondary obligation in substitution for a primary obligation which has come to an end.

The primary obligations of the party in default to perform any of the promises made by him and remaining unperformed likewise come to an end as does his right to continue to perform them. But for his primary obligations there is substituted by operation of law a secondary obligation to pay to the other party a sum of money to compensate him for the loss he has sustained as a result of the failure to perform the primary obligations ….

In this case, the obligation to submit to an interview under oath was one of Mr. MacMillan’s “primary obligations” under the policy.Assuming, without deciding, that ICBC was entitled to forfeit Mr. MacMillan’s coverage as and when it did, Mr.

MacMillan’scontractual obligations (including his obligation to attend an interview under oath) came to an end. [10] In Keneric Tractor Sales Ltd. v Langille (SCC), [1987] 2 SCR 440, Justice Wilson said @ paragraph 28(underlining added): The modern view is that when one party repudiates the contract and the other party accepts the repudiation the contract is at this pointterminated or brought to an end. The contract is not, however, rescinded in the true legal sense, i.e., in the sense of being voided ab initioby some vitiating element.

The parties are discharged of their prospective obligations under the contract as from the date of terminationbut the prospective obligations embodied in the contract are relevant to the assessment of damages. [11] In this case, ICBC asserts that Mr. MacMillan has breached his contract by making material false statements. On the strength ofthat assertion, ICBC says that his insurance coverage is forfeit. Those assertions amount to: (

i) an allegation that Mr. MacMillan hascommitted a fundamental or repudiatory breach of contract; and (ii) an election by ICBC to “… accept the repudiation …” and treat thecontract as at an end. If ICBC is correct in those assertions, the contractual obligations of the parties. Including Mr. MacMillan’sobligation to submit to an examination under oath, ended on February 25, 2020. [12] I do not say that every wrongful refusal by an insurer to pay a claim is a fundamental or repudiatory breach of contract: 01170776 Ontario Ltd. v Co-operators General Insurance Co. [1999] OJ No. 3206 @ paragraph 10. The question is whether, consideredobjectively, the insurer’s denial of coverage: (

i) deprives the insured of substantially the whole of the benefit which it was intended thatthe insured would receive from the contract of insurance; or (ii) considered objectively, evinces an intention on the part of the insurer tobe no longer bound by the contract: Spirent Communications of Ottawa Ltd. v Quake Technologies (Canada) Inc. 2008 ONCA 92; [2008] OJ No. 444; 291 DLR (4th) 163 @ paragraphs 36 – 37 (leave to appeal refused @ [2008] SCCA 151). [13] Ms. Arrandale characterizes this proceeding as an action for specific performance of the contract of insurance.

Thatcharacterization gives rise to an issue of some difficulty. Specific performance is an equitable remedy, devised and awarded by theCourt of Chancery prior to the Judicature Acts. Sections 1 and 3 of the Law & Equity Act RSBC 1996, c 253 purport to confer on thiscourt jurisdiction to award such remedies.

However, they are subject to a constitutional constraint - a provincial statute may not conferon a statutory court a jurisdiction which was exercised solely by the superior courts at the time of Confederation: Reference reResidential Tenancy Act, 1979 (SCC), [1981] 1 SCR 714; Reference re Code of Civil Procedure (Quebec) 2021 SCC27. It may be that, because of the constitutional constraint, this court cannot order specific performance. That is obviously a complexquestion, and I do not intend to decide it on this application. Mr. MacMillan might be well-advised to recast his claim as one for acontract debt.

Application of the Principles to this Application [14] Ironically: a. If ICBC’s assertion that Mr. MacMillan made wilfully false statements to ICBC is correct, Mr. MacMillan is not, today, obliged tosubmit to an oral examination under oath. That is because ICBC elected to treat the false statements as a fundamental or repudiatorybreach of contract, and to terminate the contract as a result. b. If ICBC’s assertion that Mr. MacMillan made wilfully false statements is incorrect, Mr. MacMillan is, today obliged to submit to anoral examination under oath.

That is because, on the premise stated, ICBC committed a repudiatory breach of contract, but Mr.MacMillan did not accept the repudiation. Rather, he has elected to sue for specific performance of the contract. As a consequence, hecontinues to be bound to perform his obligations under the contract. So, If ICBC is ultimately destined to succeed at trial, this application should be dismissed. By contrast, if Mr. MacMillan is ultimatelydestined to succeed at trial, this application should be allowed. [15] I am not the trial judge. I have been given no particulars or evidence of the alleged false statements.

I am in no position todetermine whether ICBC’s position is justified. However, if ICBC’s position is justified, Mr. MacMillan is under no obligation tosubmit to an examination under oath. As a consequence, ICBC can succeed on this application only if its position on the substantiveissue is unjustified. In such circumstances, a stay of proceedings would be manifestly unfair. Disposition ICBC’s application for a stay of proceedings is dismissed. August 3, 2021 ________________________ T. Gouge, PCJ