ABDALLAH AL-ASADI Plaintiff (Defendant by Counterclaim) - v. -, 2003 ABQB 289

Al-Asadi v. Alberta Motor Association Insurance Company, 2003 ABQB 289 Date: 20030 331 Action No. 0201-01756 IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL DISTRICT OF CALGARY BETWEEN: ABDALLAH AL-ASADI Plaintiff (Defendant by Counterclaim) - and - ALBERTA MOTOR ASSOCIATION INSURANCE COMPANY Defendant (Plaintiff by Counterclaim) _______________________________________________________ REASONS FOR JUDGMENT of the HONOURABLE MR. JUSTICE JOHN D. ROOKE _______________________________________________________ APPEARANCES: Peter G. Nieswandt, Chadi & Company for the Plaintiff

Robert J. Katzell, Alberta Motor Association for the Defendant I. INTRODUCTION [ 1 ] The factual issue in this case is whether the Plaintiff has been the victim of auto theft and vandalism, or whether he has perpetrated a fraudulent insurance claim. [ 2 ] The legal issues relate to the onus of proof on a plaintiff and defendant in a claim under an insurance policy, specifically an alleged theft and vandalism, and the onus, if any, on a defendant where the theft is denied, and/or fraud is alleged. II.

BASIC FACTS AND POSITIONS OF THE PARTIES [ 3 ] The Plaintiff, Abdallah Al-Asadi (“Al-Asadi”), alleged that on December 12, 2001, his motor vehicle, a 1999 Mercury Cougar, was stolen and vandalised. His action against the Defendant insurance company, Alberta Motor Association Insurance Company (“AMA”), is based upon his allegation (not denied by AMA) that he had an insurance policy in good standing which, if his vehicle was “written off”, would entitle him to a replacement value of $28,282.15. Al-Asadi claimed this amount.

He also claimed aggravated and punitive damages of $125,000 based upon an alleged breach by AMA of the insurance policy, a breach of the Insurance Act , R.S.A. 2000 c. I-3 (the “ Act ”) and the allegation that the AMA acted in a “high handed, wilful and malicious” manner which resulted in a “detrimental loss” to Al-Asadi, including a loss of use of his vehicle, unwarranted stress and mental anguish.

Furthermore, Al-Asadi claimed costs “on a solicitor and his own client basis”. [ 4 ] In its Statement of Defence and in arguments at trial, AMA admitted that the subject insurance policy was in place and in good standing, and that a Proof of Loss was filed within the terms of the policy, but denied that the vehicle was stolen and put Al-Asadi to strict proof thereof. AMA did not expressly plead fraud, but pled and relied upon section 613(1) (

b) and (

c) of the Act which states: 613(1) If ... (

b) the insured contravenes a term of the contract or commits a fraud, or (

c) the insured wilfully makes a false statement in respect of a claim under the contract, a claim by the insured is invalid and the right of the insured to recover indemnity is forfeited. AMA asserted that Al-Asadi had “a duty to deal with the AMA fairly, honestly and in the utmost good faith ... [and] had a duty to be honest with respect to any claims submitted to AMA”.

Finally, AMA denied that it breached the terms of the policy or the Act , that it acted in a high handed, wilful or malicious manner, or that the Plaintiff was entitled to aggravated or punitive damages, or solicitor and his own client costs. [ 5 ] By way of counterclaim, AMA claimed that any loss or damage to the motor vehicle owned by Al-Asadi was caused “directly and intentionally by Al-Asadi or, alternatively, at his specific request or direction”. Therefore, “as a result of this false and fraudulent conduct on the part of Al-Asadi”, AMA claimed damages, which, as proven at trial, amounted to $2,004.30.

Moreover, AMA claimed that the conduct of Al-Asadi was “wilful, malicious and calculated to mislead AMA into paying for a loss not covered by the policy of insurance. In so doing, Al-Asadi’s conduct was in manifest bad faith and contrary to the duties and obligations imposed under a contract of insurance” and, therefore, punitive damages in the sum of $10,000 were claimed, plus interest and costs “assessed on a solicitor and his own client basis”. III. JUDGMENT

[ 6 ] Following the trial of this matter, on December 20, 2002, I issued an oral judgment (a copy of the pertinent aspects of the transcript of which is attached as Appendix “A”) with these Reasons to follow.

In that oral judgment I dismissed Al-Asadi’s claim, allowed AMA’s claim for $2,004.30, plus interest, punitive damages in the sum of $5,000, and solicitor/client costs. [ 7 ] Additionally, I found that, in the process of examining the vehicle in question, AMA had, not contrary to law, but contrary to Al-Asadi’s interest, tampered with the vehicle in its possession by removing the steering column for trial purposes and, therefore, in accordance with the policy, I directed that AMA pay into court the salvage value of the vehicle, the sum of $6,000, to be paid out to those parties having a claim in accordance with their priorities, whether it be AMA (as the set off for its judgment), Al-Asadi or a third party. [ 8 ] After the oral judgment was delivered, AMA claimed that a pre-trial settlement offer to Al-Asadi more favourable to him than the judgment had been refused by him, and accordingly AMA sought double costs.

In response to an invitation by the Court, Counsel for AMA submitted (counsel for Al-Asadi declined) authorities with respect to whether or not double costs were available in such circumstances – when full indemnity solicitor/client costs had been ordered. [ 9 ] These Reasons are to set out the reasons for my oral judgment and to deal with the issue of double costs. IV. BURDEN OF PROOF A.

INTRODUCTION [ 10 ] The parties agreed on the various authorities that set out the burden of proof in an insurance case under the laws of Ontario and British Columbia, further agreed that those two principles of law conflict, and agreed that there is no clear authority on the issue in Alberta. In simple terms, they agreed that the law of Ontario is that, in a claim of theft and vandalism (or the equivalent), the onus is on the plaintiff to establish liability by the insurance company, notwithstanding an allegation equivalent to fraud by the insurance company against the claimant.

They further agreed that the law in British Columbia, however, is that once the claimant establishes a prima facie case that an insured item has been stolen, if the defendant insurance company raises the allegation of fraud or the equivalent, the onus shifts to the defendant to prove such fraud. [ 11 ] The issue is really that stated in leading British Columbia case of Bevacqua v. Insurance Corp. of British Columbia , 1999 BCCA 553 (CanLII) , [1999] B.C.J. No. 2178 , 68 B.C.L.R. (3d) 262 (CA) , leave to appeal to S.C.C. refused, [1999] S.C.C.A.

No. 556, at para. 1 as follows: This [case] raises the issue of whether an insured claiming indemnity for loss by theft and damage by vandalism under the comprehensive coverage of the standard [automobile insurance policy] has the onus of proving that he did not cause, nor know who caused, the loss and damage [the Ontario law]; or whether the insured, by showing a prima facie case of loss within the ambit of the comprehensive coverage, can shift the onus to the insurer to prove the insured’s participation in causing the loss, or knowledge of those who did, in order to avoid liability [the B.C. law]. [ 12 ] After referencing numerous B.C. and Ontario cases, the Court in Bevacqua also noted at para. 34 : As can be seen, it is not possible to draw any consistent principles from these cases, and indeed, so far as vandalism is concerned, the decisions of the B.C. and Ontario trial courts as to onus of proof cannot be reconciled.

B. GENERAL AND BRITISH AUTHORITY [ 13 ] Dealing with the basic principles of claims under insurance, Nicholas Legh-Jones, MacGillivray on Insurance Law , 9 th ed.

(London: Sweet and Maxwell, 1997) states at 453 (footnotes omitted) that the burden of proof is generally on the insured. Specifically, the text states at para. 19-6: The burden of proving that the loss was caused by a peril insured against is on the assured. It is not necessary for him to prove precisely how the casualty occurred, but he must show that the proximate cause falls within the perils insured against. Further, at para. 19-7 under the heading “Exceptions”, the authors state: Once the assured has proved that the loss was caused by the general peril insured against, it is for the insurer to bring himself within any exception in the policy on which he relies. [ 14 ] In the same

section of MacGillivray , reference is made to Munro Brice & Co. v. War Risks Association , [1918] 2 K.B. 78 , wherein the authors say that the principles set down there by Bailhache J. “are applicable to all classes of insurance”. Those principles, relevant for our purposes, are the following: 1. The assured must prove that the loss or damage was caused by the operation of the general risk insured against; [and] 2.

If the general risk is qualified by the exception of specific risks ... the burden is on the insurer to prove facts which bring the case within the exception relied on; ... [ 15 ] In Munro , elaborating on the aforementioned second principle, Bailhache J. stated, at 88: ... it is sufficient for the plaintiff to bring himself prima facie within the terms of the promise, leaving it to the defendant to prove that, although prima facie within its terms, the plaintiff’s case is in fact within the excluded exceptional class. [ 16 ] In paragraph 19-8 of MacGillvray , under the heading “Wilful act of the assured”, the authors also state: Since the burden of proving that the loss was caused by a peril insured against is always on the assured, it may sometimes be the case that, if the insurers raise the possibility that the insured himself wilfully caused the loss, the assured will have to prove that he did not so cause the loss ....

If the insurer chooses to plead positively that the assured deliberately destroyed the property insured he will assume the burden of proving the assertion; but even if he fails to discharge that burden, the assured may nevertheless be unable to recover if he in his turn cannot prove that the property was lost by a peril insured against. If, however, there is no doubt that the peril insured against has operated to cause the loss, the burden of proof will be different.

Thus if the assured sets fire to his own property insured under a fire policy, the assured can easily establish that there has been a loss by fire and the onus will then shift to the insurer to plead and prove that the fire was caused by the wilful act of the assured. [ 17 ] Regina Fur Company, Ltd. v. Bossom, [1958] 2 Lloyd’s Rep. 425 (CA) , dealt with a claim of loss of furs by the plaintiff, who claimed that they had been stolen following a break and entry. The defendant denied liability, denied that a burglary had taken place and alleged that the onus was on the plaintiffs to prove the loss.

The plaintiffs argued that the defendant, by resisting the claim, was alleging fraud and that the onus should shift to him. The Court held the onus was on the plaintiffs throughout. Lord Justice Sellers said this at 434: In order to succeed, the plaintiffs have to prove a loss of goods covered by the policy due to a risk insured against, and this obligation remains none the less where the evidence advanced to prove the loss, if rejected, and/or evidence called by the defendant underwriter,

might establish or tend seriously to show that a crime had been committed by the claimants. If the evidence of all the witnesses and the effect of all the documents leaves the Court in doubt on the question whether or not there was a fortuitous loss - that is, by breaking and entering and stealing - the plaintiffs would not be entitled to judgment as they would not have established the material fact that the loss of the goods was due to a risk insured by the policy. C. ONTARIO AUTHORITY [ 18 ] A series of Ontario cases have seemingly adopted the rule set out in Regina Fur , noted above. [ 19 ] In Shakur v.

Pilot Insurance Co., 1990 CanLII 6671 (ON CA) , [1990] O.J. No. 1613 , 74 O.R. (2d) 673 (C.A.) [ Shakur cited to O.R.], the plaintiff alleged that she had been robbed of her jewellery. The defendant’s defence was that she had not proved that a robbery had occurred. The trial judge held that the allegation of the defendant was that of fraud and stated that a higher degree of proof was required of the defendant.

The appeal was allowed and a new trial ordered along with the Court holding that the issue was not whether the defendant had proved a fraud but whether the plaintiff had established a theft within the meaning of the policy. Griffiths J.A., at 681, stated: It is fundamental insurance law that the burden of proof rests on the insured to establish a right to recover under the terms of the policy. In this case, the burden rested on the [plaintiff] and remained on the [plaintiff] to prove on the balance of probabilities that a theft of her jewellery had occurred.

That the [defendant], in denying the allegation of theft, impliedly alleged that the [plaintiff] was fraudulent in putting forward the claim in no way shifted the basic burden of proof resting on the [plaintiff]. Later on, also at 681, he stated: The issue was not whether the [defendant] had proven a fraud on the part of the [plaintiff]. The simple issue was whether the [plaintiff] had established a theft within the meaning of the policy. [ 20 ] In El-Ash v. Traders General Insurance Co. , [2001] O.J.

No. 3335 (S.C.J. - Hambly J.), a case of similar facts to that at Bar, the plaintiff claimed that his vehicle had been stolen and was found abandoned and damaged. The defendant took the position that the plaintiff staged the theft of his own vehicle and was responsible for the damage.

The defendant’s allegation against the plaintiff was found by the trial judge (para. 1) to be “equivalent to an allegation that [the plaintiff] attempted to commit a fraud against [the defendant insurance company]. [The defendant] counter-claimed for the cost of its investigation....” [ 21 ] The Court held (para. 2) that the plaintiff must prove, on a balance of probabilities, that the vehicle was stolen and damaged by “someone other than himself”.

As to the counterclaim, the Court held (para. 3) that, in that the insurance company alleged fraud, being a criminal offence, that it must prove its claim “on a balance of probabilities but to a degree higher than required to prove a claim of civil negligence”. The Court further held (para. 4) that: To prove that [the plaintiff] attempted to commit a fraud against [the defendant], it is sufficient for [the defendant] to prove that he was responsible for the damage done to the vehicle.

It is not necessary for [the defendant] to prove that he personally moved the vehicle to where it was abandoned and damaged it himself. R. v. Thatcher (1987), 1987 CanLII 53 (SCC) , 32 C.C.C. (3d) 481 . [ 22 ] The Court specifically rejected the B.C. law as set out in Bevacqua , referenced above and discussed below. In the end result, the Court in the El-Ash case found that the plaintiff had failed to establish liability on the insurance company and the insurance company, with the higher standard, had failed to prove fraud.

Therefore, both the claim and the counterclaim were dismissed. [ 23 ] To the same effect see: Zhaloba v. Lumbermens Mutual Casualty Co. , [2002] O.J. No. 1845 (S.C.J. - Stinson J.). D. B.C. AUTHORITY

[ 24 ] As noted above, the Bevacqua case is the leading case in B.C. on the subject, followed by numerous others. It established the principle as set out at paras. 24-25 of the judgment as follows: The general rule is that the party who makes a positive assertion bears the burden of proving it to the appropriate standard. In insurance claims the insured has the onus of showing that the loss alleged falls within the perils insured against under the terms of the policy coverage.

Once that burden has been met, the onus is on the insurer to prove any affirmative defences, including fraud: see Roland Roy Fourrures Inc. c. Maryland Casualty Co. (1973), 1973 CanLII 141 (SCC) , [1974] S.C.R. 52 (S.C.C.) ; and Continental Insurance Co. v. Dalton Cartage Ltd. , 1982 CanLII 13 (SCC) , [1982] 1 S.C.R. 164 (S.C.C.) . In cases where the peril insured against does not require any human intervention there is usually no difficulty in applying those general rules. However, some losses cannot occur without human action.

Theft, by definition, requires the taking of property by a person, and vandalism, by definition, requires the intentional infliction of damage to property. [ 25 ] Later in the case, and relying upon a number of other cases, the Court stated (paras 31-32): In cases of loss by fire, Canadian courts have been consistent in holding that the insurer bears the onus of proving fraud ... The insurer has similarly been found to have the onus of proving fraud in some cases of automobile theft: see Tri-Wonder Marketing Inc. v. Canada West Insurance Co. (1998), 1988 CanLII 3803 (AB KB) , 84 A.R. 385 (Alta.

Q.B.) . [All other citations omitted.] [ 26 ] I note that Finch J.A. stated in relation to the British authorities discussed previously, that (para. 39): It is unfortunate that neither the decision in Munro Brice supra , nor the

summary of principles set out above in MacGillivray is referred to in the judgments of Regina Fur Co. v. Bossom or Shakur v. Pilot Insurance supra . [ 27 ] See also: DCH Motors Ltd. v. Lok , [1997] B.C.J. No. 1214 , 44 C.C.L.I. (2d) 32 (B.C.S.C. - Loo J.); Wilburn v. Insurance Corp. of British Columbia , [2001] B.C.J. No. 890 , 28 C.C.L.I. (3d) 80 (B.C.S.C. - Loo J.); Leon v. Insurance Corp. of British Columbia , [2002] B.C.J. No. 1322 , 40 C.C.L.I. (3d) 63 (B.C.S.C. - Powers J.); Wong v. Insurance Corp. of British Columbia, 2002 BCPC 234 (CanLII) , [2001] B.C.J. No. 1593 (B.C.P.C. - Romilly P.C.J.); Palmieri v.

Insurance Corp. of British Columbia, [2002] B.C.J. No. 2376 (B.C.P.C. - Spence P.C.J.); and Bassra v. Insurance Corp. of British Columbia , [2001] B.C.J. No. 477 , 27 C.C.L.I. (3d) 278 (B.C.P.C. - Warren P.C.J.). E. ALBERTA AUTHORITY [ 28 ] One of the two Alberta cases that seem close to the B.C. position is the Tri-Wonder case.

In that case, where the plaintiff’s vehicle was never found, Andreksen J. held that the burden of proof in the first instance was upon the plaintiff to show that the vehicle was stolen within the terms of the policy, but that the defence must prove that the plaintiff permitted the vehicle to be taken and if it did so it would have permitted it to be “stolen”. In the end result, the Court found that the plaintiff had established a prima facie case of theft and the defendant had not established the defence that the plaintiff permitted the vehicle to be stolen. [ 29 ] In the other case, Jakubik v.

Liberty Mutual Insurance Co., [2001] A.J. No. 1301 , ABQB 836 , Moreau J. held (at para. 39), in relying upon B.C. cases, that: ... the insured has the initial burden of proving that a loss covered by an insurance policy resulted from theft. If that hurdle is overcome, then the onus shifts to the Defendant to establish that the Plaintiff is not entitled to indemnity.

Furthermore, at para 37, relying upon Continental Insurance Co. v. Dalton Cartage Co. Ltd. (supra), she held that the insurer, relying upon an exclusion from otherwise “unlimited liability”, must show that the exclusion applies. [ 30 ] I find that I need not decide whether the B.C. or the Ontario position represent the correct state of the law in Alberta, as I find, on the evidence in this case (as discussed below), that under either formulation of the onus, Al-Asadi’s vehicle was not stolen and vandalized (that is, taken by and damaged by someone without knowledge or authority of the owner), as alleged by him.

I note that in MacGillivray on Insurance Law , supra , it is stated at para. 19-17: It cannot, however, be too strongly emphasized that the prime duty of a court is to make up its mind how the loss occurred; the rules about burden of proof need only be resorted to when the evidence is insufficient for the court to make a decision. V. EVIDENCE IN THIS CASE [ 31 ] There is no doubt that Al-Asadi’s vehicle was found by the police some distance from his residence with all of its windows smashed (curiously, except the driver’s window), and with other blunt force damage to the body and the steering column.

The question is whether the vehicle was stolen and then vandalized by some third party thief and vandal (in which case the policy of insurance comes into place and effect), or whether it was in fact smashed by Al-Asadi, or someone with his knowledge and with his involvement, in which case there is no liability on AMA. [ 32 ] The evidence of Al-Asadi [1] was to the effect that, on December 12, 2001 [2] : he picked up his girlfriend from school; they went and had lunch at and spent some time at a local shopping mall; they returned home to his apartment at approximately 6:30 to 7:00 p.m.; within ½ hour thereafter four of his friends, Jessica Smith arriving last, came to visit and they all had dinner; Jessica Smith, the last guest to depart, left at around 12:00 midnight; 15 minutes later (the first time since he had arrived home) he and his girlfriend left his apartment, with his vehicle key, to drive his girlfriend home; and when they got to his parking stall, where he had parked his vehicle when they had returned from the mall, they found the vehicle missing.

Al-Asadi looked elsewhere in the parking lot for the vehicle and could not find it. He thereupon phoned the last departing guest, Ms. Smith, and after talking to her, she (living only a couple of blocks from him) returned to assist him (due to alleged language difficulties) in phoning the police. She did so telephone the police early on the 13th, confirmed by a report made to the police on December 16, 2001 (Exhibit 12), and orally reported to AMA later that day. On December 17, 2001, Ms.

Smith assisted him in making a statement and claim with AMA. [ 33 ] Al-Asadi also testified that there were two computer micro chip keys for the vehicle, which permitted it to be started, but that one key had been altered by an “after market” supplier to remove the computer chip, which was used to activate an automatic remote controlled vehicle starter. He testified, in effect, that he assumed that key would, therefore, no longer work, leaving him with one workable key.

His evidence was that he never lent his vehicle or his keys to anyone and, in effect, that neither key was ever out of his control that night or at anytime to his knowledge. [ 34 ] There was cross by Counsel for AMA of Al-Asadi that went to motivation to make a fraudulent insurance claim.

That evidence demonstrated that he was then unemployed (although he had the unconfirmed prospect of a job) and had earned less than $800 for the period from the end of September to the end of November 2001, but had large debt and payment obligations, although all were in good standing. [ 35 ] Different from Al-Asadi’s testimony, his statement to AMA on December 17, 2001 (Exhibit 25), written by Ms. Smith, was that: his vehicle “was taken between 9:00 p.m. and 12:00 a.m..

The last time I saw my car was when I got home at about 9:00 p.m.”, and in paras. 47 and 48 that the vehicle was last seen and last driven at 9:00 p.m. (in cross he claimed he did not know anything about 9:00); prior to parking his vehicle he “went to pick up my girlfriend at her house”; he was not “in possession of all keys at present”; and he last drove and saw the vehicle at about 9:00 p.m.. [ 36 ] Also different from his evidence, the police report appeared to indicate (Exhibit 12, as discussed in the evidence) that the time between when the vehicle was last seen and was observed to be missing was 9:00 p.m. to 11:45 p.m., but, in cross, he claimed that was wrong. [ 37 ] In his statement to AMA, Al-Asadi indicated that at about 11:30 a.m. on December 13, 2001, the police advised that they had

found his vehicle in another quadrant of the city, damaged as noted above. [ 38 ] The vehicle was “written off” by AMA as not being economically worthy of repair, but having a salvage value of $6,000 (Exhibit 26). [ 39 ] In addition to Al-Asadi, his girlfriend, a male friend who was at the dinner and Ms. Smith testified on behalf of the Plaintiff. [ 40 ] Al-Asadi’s girlfriend, Ms. Cardenas-Florez, testified, generally confirming Al-Asadi’s evidence, except that she thought Ms. Smith left about 9:00 p.m., although she was not sure. [ 41 ] Mr.

Abdul Jawad Al-Aquail testified that he was a very good friend of Al-Asadi and had been at his home for dinner on the date in question. He too generally confirmed Al-Asadi’s evidence, testifying that he was there between 7:00 and 10:00 p.m. and Al-Asadi never left the residence. [ 42 ] Ms.

Jessica Smith testified (in some material respects different than Al-Asadi) that: she arrived at 6:00 p.m.; she left at about midnight and drove 4 - 5 blocks to her home in 3 minutes; when she got home there was a message on her answering machine from Al- Asadi that his vehicle had been stolen; she phoned him back and as a result she went back to assist him in phoning police; and she wrote out the statement to AMA for Al-Asadi (Exhibit 25) based on what he told her to write down, and particularly references to 9:00 p.m. because he told her that was the last time he had seen the vehicle, but that she had him write in the word “yes” to the last question which was “ARE ALL THE ANSWERS TO THE ABOVE QUESTIONS TRUE?”.

She said that while she assisted Al-Asadi due to his lack of ability in English, she did not speak his native tongue, but had no difficulty understanding him. [ 43 ] The Defendant called five witnesses. [ 44 ] Ms. Beckerman testified as to the nature of the AMA investigation and confirmed that, based thereon, AMA had denied the claim (Exhibits 22, 2 and 24) because there was no evidence it had been stolen in that the investigation confirmed that the vehicle could not have been started without Al-Asadi’s micro chip equipped key, and that the damage to the steering column did not affect the key operation.

After the denial, new information came to light from examination of the steering column that a chip out of one of the keys for the vehicle had been glued to the steering colunm to override the security system (apparently to accommodate the remote starter), but that a key (even without a chip) made for the lock in that vehicle was still needed to (mechanically) start it.

She testified that a polygraph test was offered to Al-Asadi to give him an opportunity to verify that, to his knowledge, the vehicle had been stolen (this was consistent with her discovery testimony read-in by Counsel for Al-Asadi) and, as such, that the polygraph was requested as an investigative tool to confirm veracity. [ 45 ] Mr. McKay, a technician with Woodridge Lincoln in Calgary, testified regarding the coding of vehicle keys for this vehicle.

He indicated (in cross) that, in effect, keys for this type of vehicle have two functions relative to starting the vehicle: (1) mechanical - to turn the lock mechanism in the ignition; and (2) electronic – a code (chip) to permit the mechanism to be turned. In chief he testified that, at the request of AMA, he hooked the vehicle up to an electronic scanner to test and determine how many keys, available only from a Ford dealership, had been programmed to start the subject vehicle and, in simple terms, found that only two keys had been so programmed.

He further testified that by gluing the chip of the “Master key” to the steering column, it provided the electronic frequence to enable the vehicle to be started with any mechanical key that fit the lock, even without a chip in it - that is, the electronics in the vehicle recognized the frequency of the chip glued to the steering wheel, and did not need to have a chip enhanced key in the ignition. I note that there is no evidence that Al-Asadi knew this, because he said that the key with the chip taken out of it wouldn’t work, whereas Mr. McKay’s evidence was that it would. I conclude that Mr.

McKay is correct, but that Al-Asadi merely presumed it wouldn’t work without a chip. [ 46 ] Mr. Hayner testified regarding the AMA investigation and about asking Al-Asadi if he would take the polygraph. He testified that the plastic shrouding around the steering wheel of the Al–Asadi vehicle was broken (Exhibit 13) and that while, on first blush, it appeared that the lock mechanism was compromised, it was later found that it was operational.

He testified that, in his experience, an ignition lock mechanism was often compromised as a means of stealing a vehicle by starting it without a key - moreover, he testified that a key was necessary to unlock the steering and transmission mechanisms, and thus, a key was necessary for the three S’s - to start, shift and steer. He noted, however, that there was no such damage visible to the locking mechanism in this case. This resulted in him

concluding, in effect, that (I presume absent towing which was not put to any witness) the vehicle could have only been moved from the location at Al-Asadi’s residence to where it was found, by using a key that fit the locking mechanism. He said (in cross) that he could see no evidence to support the claim that the vehicle had been stolen. [ 47 ] Mr. Hayner further testified that he interviewed Al-Asadi in English and they had no difficulty in understanding each other. He said that Al-Asadi also told him, as in the Al-Asadi statement, that he had last seen the vehicle at 9:00 p.m. on December 12 th .

He said that as a result of his investigation he had concerns about the bona fides of the claim and asked Al-Asadi if he was willing to take a polygraph to verify his claim that it had been stolen and Al-Asadi agreed. [ 48 ] Mr. Lachuk testified that he was a polygraph operator for the Insurance Bureau of Canada and testified as to the circumstances surrounding the administration of a polygraph test to Al-Asadi and the statements made to him by Al-Asadi.

This testimony is consistent with the law that the results of a polygraph test are not admissible, but statements and comments made during the course of the test may be admissible: Kerkowich v. Wawanesa Mutual Insurance Co. , [2001] M.J. No. 68 (Q.B. - Jewers J.).

He testified that his procedure took 2½ - 3 hours in which he: met Al-Asadi; explained his rights to him; explained how the polygraph worked; asked some preliminary questions to determine if a polygraph test was suitable for administration, and determined it was; did a demonstration test; discussed the questions he would be asking; and administered the test three times.

He said that, as background to the test, he had a discussion with Al-Asadi about the events and that Al-Asadi also told him (I find, contrary to Al-Asadi’s evidence at trial) that the last time he had driven the vehicle was around 9:00 p.m. on December 12 th . Specifically, he told him that he and his girlfriend had been at his place in the afternoon and then went out at 5:00 - 6:00 p.m. when he had driven “downtown to Second Cup” and then purchased dinner from a chicken take-out outlet close to his residence and returned to his residence again. He also told Mr.

Lachuk that he had the keys and had never lost a key. [ 49 ] Mr. Crosier was qualified as an expert in the field of locksmithing - specifically, touching on the issues of the mechanical functioning of locks, including automobile ignition locks and related security features, as well as investigation and detection of theft related damage to locks.

He spoke to his expert report (Exhibit 37) wherein he opined that the vehicle’s steering column damage was minor and consistent with attempted theft, or “attempts to re-create theft related damage” (which I equated as attempting to “create the allusion of theft”, as he so stated in chief). He also opined that the damage was not sufficient to disable the vehicle’s operation and that the ignition, steering wheel lock and transmission shift lever lock were still operable and functional.

He further opined that the vehicle could be damaged such as to operate it without a key (“hot wired” in the vernacular), but that had not been done. Finally, he opined that the vehicle could only be operated with a key and that “this vehicle was last operated with its correct key”. Additionally, he described the operation of what has been referenced as a “chip” as a small radio transponder that sends out a coded frequency. VI. ANALYSIS IN THIS CASE A.

LIABILITY [ 50 ] On the basis of the authorities (both B.C. and Ontario), it is necessary for Al-Asadi to prove on a balance of probabilities that the peril insured against (theft and vandalism) occurred. [ 51 ] In other words, a plaintiff’s claim will fail (in B.C. or Ontario), even without the allegation of fraud, if the plaintiff does not meet the onus on him to show that the loss is one that is covered. If the plaintiff meets this threshold of proof, then the onus shifts to the defendant to prove fraud or some other exclusion.

In this case I find that Al-Asadi did not meet the onus upon him on the evidence that was before the Court, presented as part of his case, in face of the AMA evidence. Even if Al-Asadi can be said to have established a prima facie case of theft and vandalism of his vehicle, I find that the AMA has proven that it was Al-Asadi, or someone acting with Al- Asadi’s knowledge and/or consent, who moved and damaged his vehicle.

However, I note that, on the counterclaim, AMA had the specific onus to prove fraud which they therein specifically allege, as I will discuss below. [ 52 ] The plaintiff and defence evidence which I accept causes me to conclude that this vehicle was never stolen, but rather was driven by Al-Asadi, or by someone with his consent and/or knowledge, to the location where it was later found by the police in a vandalized condition. There are several facts that I find from the evidence that lead me to this conclusion. Al-Asadi testified that he always had the two keys for the vehicle (the only two ever made says Mr.

McKay) within his control and never lent them or his vehicle to anyone at anytime, and certainly not on the day in question. This evidence, which I accept, means that no one else could have had any mechanical key (without the chip) cut - even though his evidence (having regard to his statement that the other key would not work) would suggest that he did not know that a mere mechanical key could start the vehicle. He did not accidentally leave the keys in his

vehicle and, even if someone else had made a key, they would not have needed to damage the steering colunm - they could have just used the key, which supports the conclusion that such damage was an unsuccessful ruse to create the appearance of a theft [3] by making it look as if someone had operated the vehicle without a key (when other evidence that I accept as fact indicated this was not so) - and there was, under that scenario, no motivation for the vandalism that followed. [ 53 ] Additionally, there were numerous conflicts and issues that challenged the credibility of Al-Asadi and/or his witnesses, both from his own mouth, and from other witnesses who testified on his behalf.

Although other Plaintiff witnesses were generally supportive of his claim that they came over for dinner, there were many discrepancies. The discrepancies relevant in the evidence in relation to Al- Asadi’s stories are several. [ 54 ] First:

(1) Al-Asadi testified that he last saw his vehicle at about 6:30 - 7:00 p.m., when he got home;

(2) Ms. Smith said he instructed her to write in the statement that he last saw his vehicle at 9:00 p.m.(which Counsel for AMA argued damaged her credibility, because, on her evidence of what happened that evening, she would have known that this information was false, as the Court raised with her, but she was unable to provide a credible explanation and Counsel for AMA also argued that her requiring Al-Asadi to write the word “yes” to the question (page 8 of Exhibit 25) as to whether the information was correct was support for this); (3) the police report (Exhibit 12) made by Ms.

Smith on Al-Asadi’s behalf says that the vehicle was last seen at 9:00 p.m.; (4) the Proof of Loss (Exhibit 3) is a Statutory Declaration executed by Al-Asadi which states that the loss took place after 9:00 p.m.; and (5) both Mr. Haynes and Mr. Lachuk said that Al-Asadi told them that he last drove the vehicle at 9:00 p.m., and Mr. Lachuk said Al-Asadi told him that this was after leaving his home at around 5:30 - 6:00 p.m. and returning around 9:00 p.m.. [ 55 ] Second:

(1) Al-Asadi testified that after he got home at 6:30 - 7:00 p.m., two other friends arrived 20 minutes later and Ms. Smith was the last of 4 friends to arrive; but

(2) Ms. Smith says she was the first to arrive at 6:00, and Al-Asadi was already there. [ 56 ] Third:

(1) Al-Asadi and Ms. Smith testified that she was the last to leave around midnight, and that it only took her 3 minutes to drive 4 - 5 blocks home;

(2) Al-Asadi testified that he went down to get his vehicle at 12:15 - 12:20 and then after that called Ms. Smith and talked to someone who passed the phone over to her;

(3) Ms. Smith said that by the time she got home, there was already a message on her answering machine from Al-Asadi - raising the issue as Counsel for AMA stated as to how Al-Asadi could phone Ms. Smith to report his vehicle stolen before he knew that it had been stolen; and (4) the police report (Exhibit 12), containing information she passed on, on his behalf, states that the vehicle was found missing at 11:45 - even before Ms.

Smith says she left the Al-Asadi residence, and even before he testified he left the residence. [ 57 ] There are also discrepancies between what Al-Asadi testified to in Court, and what Mr. Lachuk (and Mr. Hayner) said that Al-Asadi told him (them), about leaving his residence and returning at 9:00 p.m. as noted above. Not only was there no rebuttal called, there was no cross-examination, to challenge Mr. Lachuk’s evidence on this point. Indeed, there was no rebuttal called to “clarify” any of these discrepancies.

This caused Counsel for AMA to argue that the evidence of Al-Asadi and his witnesses was not a matter of fading memories after a year (between the incident and the trial), but rather was false and fraudulent evidence as a “poorly orchestrated attempt to bolster an alibi” for his evidence at trial. He argued that, at best, this and other discrepancies showed that Al-Asadi’s evidence was not credible and supported the conclusion that he had made a false declaration on his Proof of Loss. [ 58 ] There was evidence that supported a motivation for Al-Asadi to make a false claim.

While he had a good credit rating, he had expenses that exceeded his income, without evidence of another source of funds. He was not employed at the time of the alleged loss, and he had only a prospect of employment. As Counsel for AMA argued, he was at the “end of his financial rope” and “teetering on the edge of financial difficulties”.

Additionally, his entitlement, on his insurance S.E.F. 43R endorsement, to damages equal to the net purchase price of his vehicle, was to expire in about 3 weeks from the date of his alleged loss. [ 59 ] I find these unexplained discrepancies - as noted, there was no attempt to call rebuttal evidence by Al-Asadi to explain them - and the motivations for a false claim, are merely further doubts I have, which, when added to the very significant negative evidence of theft associated with the key, have caused me to find that Al-Asadi’s vehicle was not taken and damaged by someone other than himself, or was taken and damaged with his consent and/or knowledge. [ 60 ] Indeed, this evidence should be put in proper perspective.

Counsel for Al-Asadi relied upon the statement in para. 6 of Palmieri that: “While it is clear that there are some inconsistencies in the evidence and questions arising from their testimony, these are not such as would lead this Court to conclude on balance that the vehicle was not stolen”. That alone in this case might have led me to a similar conclusion.

Along with the evidence with respect to the key, however, it not only leads me to conclude that the evidence does not establish that the vehicle was stolen, it also causes me to find that Al-Asadi was fraudulent in reporting it stolen, as the only conclusion to which all the evidence leads is that it was moved from its location by him, or by someone else with his consent and/or knowledge.

Moreover, having regard to his sworn testimony before the Court that he last saw the vehicle at 7:00 p.m., whereas his statements to others, and both his sworn Statutory Declaration for the Proof of Loss (Exhibit 3), and the “Stolen/Vandalized ... Report (Exhibit 25) signed by him, contain a statement by him that the vehicle was last seen at 9:00 p.m. (all uncontradicted by Al-Asadi), constitute a false statement to the Court and/or in the Statutory Declaration, or both.

Either dis-entitles him to recovery of his claim. [ 61 ] My findings as to the lack of proof by Al-Asadi of recoverable loss in this case are substantially on “all fours” with the findings in the El-Ash case, in particular the conclusions at paras. 76 - 77, and 79. [ 62 ] With respect to the counterclaim, there is a specific allegation of fraud and, therefore, the onus is clearly upon AMA (Plaintiff by counterclaim) to prove that fraud. To be clear, the burden is on the insurer and the standard is one requiring cogent evidence: inter alia, Leon, supra , at para. 29, relying on Petersen v.

Bannon et al , 1993 CanLII 4719 (BC CA) , [1993] B.C.J. No. 2357 (C.A.) , leave to appeal to the S.C.C. refused, [1994] S.C.C.A. No. 39 and Brooks v. Insurance Corp. of British Columbia , [1994] B.C.J. No. 136 (S.C.) . I find that, in all of the circumstances, and on the evidence, there is no other conclusion to arrive at than that Al-Asadi must have used the key himself to start the vehicle and move it to the place in which it was damaged, with the implication that he, or someone on his behalf, did the damage or, alternatively, that he allowed someone else to do both.

Accordingly, in doing so, and then making a claim on false information and evidence, he is fraudulent and liable for the damages caused thereby. AMA need not prove whether he did it or whether someone else did it on his behalf (see El-Ash at para. 4). I say “on the evidence” because the evidence was not that he (or someone else with his consent and/or knowledge) left it in the place found (for good reason) and that it was vandalized there (which, if true, would undoubtedly have resulted in his claim being upheld). [ 63 ] After analysing all the evidence, I find, as was found in Swan Hills Emporium & Lumber Co.

Ltd. v. Royal General Insurance Company of Canada (1977), 1977 ALTASCAD 13 (CanLII) , 2 Alta.

L.R. (2d) 1 (C.A.) , referenced at para. 40 of Jakubik , where the issue (see para. 2) was whether the proof of loss and related reports “contained false information and whether the loss ... reported was fabricated”, that, the necessary changes being made, “the conclusion [is] “inescapable” that the insured [has] made a wilfully false statement in the proof of loss and that he was fraudulent”. [ 64 ] I find that AMA has proved the following damages resulting from the fraudulent conduct of Al-Asadi, namely, Exhibit 10 - $834.60, Exhibit 8 - $144.45 and $160.50, Exhibits 8 and 11 - $153.33, and Exhibit 16 - $711.42, for a total of $2,004.30.

VII. PUNITIVE DAMAGES [ 65 ] The law of punitive damages was recently restated by the Supreme Court of Canada in Whiten v. Pilot Insurance Co. , 2002 SCC 18 , 209 D.L.R. (4 th ) 257 , where, in simple form, the headnote states the following principles: ...

(1) Punitive charges are very much the exception rather than the rule, (2) imposed only if there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour, (3) where they are awarded, punitive damages should be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the [claimant] and any advantage or profit gained by the [perpetrator], (4) having regard to any other fines or penalties suffered by the [perpetrator] for the misconduct in question, (5) punitive damages are generally given only where the misconduct would otherwise be unpunished or where other penalties are or are likely to be inadequate to achieve the objectives of retribution, deterrence and denunciation, (6) their purpose is not to compensate the [claimant], but (7) to give a [perpetrator] his or her just desert (retribution), to deter the [perpetrator] and others from similar misconduct in the future (deterrence), and to mark the community's collective condemnation (denunciation) of what has happened, (8) punitive damages are awarded only where compensatory damages, which to some extent are punitive, are insufficient to accomplish these objectives, and (9) they are given in an amount that is no greater than necessary to rationally accomplish their purpose. (10) ... the [claimant] will keep punitive damages as a "windfall" in addition to compensatory damages,

(11) Judges and juries in our system have usually found that moderate awards of punishment, which inevitably carry a stigma in the broader community, are generally sufficient. See also Milbury v. Imperial Life Assurance Co. of Canada ( supra ), at paras. 10 and 11. [ 66 ] Al-Asadi’s claim for punitive damages was based primarily on the fact that AMA asked him to take a polygraph test to prove the veracity of his claim, and he acknowledged that he agreed to take one, after an opportunity to consult legal counsel. The results of the

test were not sought to be admissible, as they are not in law, as noted above, but there was evidence from both Al-Asadi and Mr. Lachuk, the polygraph operator, regarding the test (not the results) and the discussion after the test. Al-Asadi acknowledged, in response to a question in cross as to whether everyone associated with AMA had treated him courteously and in a professional manner, that he was “treated all right”, and that Mr. Lachuk dealt with him politely, but that the comments of Mr. Lachuk about the results (raised only by Al-Asadi, not Mr.

Lachuk) upset him. [ 67 ] I find that all aspects of the investigation of the claim of Al-Asadi by AMA constituted a reasonable and proper investigation, and that the grounds for denying the claim were that Al-Asadi failed to demonstrate that the vehicle had been stolen. As in Zhaloba (at paras. 79 and 80), I find that, based on its investigation, AMA acted in good faith in denying the Al-Asadi claim. [ 68 ] As to the polygraph, I find that it was offered in good faith (not compulsory) to allow Al-Asadi to provide evidence to try to allay the suspicions of AMA.

In this regard, I note the comment by Binnie J. in Whiten v. Pilot , at para. 24 that “This was ... accepted ... as a good faith offer made to allay [the insurer’s] suspicions”. I have come to a similar conclusion. While the Court is no advocate of polygraph tests, I do not find the offering of one to be reprehensible, and therefore note, with disagreement, the suggestion at para. 80 of Zhaloba that the investigator’s “only impropriety (if it can be classified as such) was in asking the Zhalobas if they would be willing to submit to a polygraph test. ... that approach is not commendable”.

Nevertheless, even there the Court found that the conduct “falls short of establishing bad faith on the part of the insurer”. Moreover, I find that neither the offering of the polygraph test, nor the comments of Mr. Lachuk to Al-Asadi during it, were of a nature as to justify any claim for punitive damages. Specifically, to use the language of Whiten , I find that none of the AMA officials were guilty of “high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour” in their interaction with Al-Asadi. [ 69 ] In Andrusiw v.

Aetna Life Insurance Co. of Canada , 2001 CanLII 61004 (AB KB) , [2001] A.J. No. 789 , 289 A.R. 1 (Q.B.) , Murray J. described the obligation between an insurer and an insured (at para. 82): The contract of insurance between an insurer and an insured is one of utmost good faith. Implicit is a term of the contract that the insurer has an obligation to deal with the claims advanced by an insured in good faith and an insured has an obligation to the insurer to put forward his claims honestly and in good faith.

As such, breach of that obligation on the part of either party constitutes a separate and independent wrong for which compensation is paid. Thus, if either party acts in bad faith toward the other, that is an independent actionable wrong as contemplated by McIntyre, J. in Vorvis [ Vorvis. v. Insurance Corp. of British Columbia , 1989 CanLII 93 (SCC) , [1989] 1 S.C.R. 1085 ].

I agree with Laskin, J.A. in the case of Whiten v.Pilot Insurance Co. (1999), 1999 CanLII 3051 (ON CA) , 42 O.R. (3d) 641 , ... that though a good case can be made out that an insured or insurer has a duty in tort of good faith toward the other because the relationship is sufficiently proximate to give rise to a concurring duty in tort alongside the implied contractual obligation, one need not go this far. The breach by one party or the other to a contract of insurance of the implied term of good faith meets the Vorvis requirement of an independent actionable wrong.

He found that the plaintiff was deceitful and awarded $20,000 in punitive damages, stating the following in the process (paras. 84 - 85): This leaves the question of whether or not the plaintiff’s conduct was so reprehensible and high-handed that he should be punished for his behaviour. Counsel for the defendant makes the point that the plaintiff embarked on a deliberate course of conduct to misrepresent facts to the defendant in order to [advance his claim].

If the only consequence of this behaviour is forfeiture of his claim then in effect he is no worse off than if he had been truthful in the first place and deterrence which is one of the objects of granting punitive damages is given no effect. A great deal has been made in the case law, to which this court was referred, of the fact that insurers vis a vis their insureds are in a superior bargaining position and one which places the insureds in positions of dependency and vulnerability. Equally, insurers must not be looked upon as fair game.

It is a two-way street founded upon the principle of utmost good faith arising from the very nature of the contract. Thus, it is appropriate that punitive damages be awarded and I do so in the sum of $20,000.00. [ 70 ] The problem of insurance fraud has been raised in the electronic media and publications. Numerous legal articles reference it - for example, see: Owen Lippert, “Time to take insurance fraud seriously”, Canadian Lawyer , January 2003, at 54; Neo J. Tuytel, “Fraudulent Property Insurance Claims: Identification, Investigation, Denial and Defence at Trial (Part 1)” (1995), 13 Can. J. Ins.

L. 9; Ross E MeLarty & Neo J. Tuytel, “Fraudulent Claims Under Insurance Policies: Recent Developments in Non-Disclosure, Arson and False Proofs of Loss” 11 Can. J. Ins. L. 19; Christopher Clark, “Legal Update: Insurance Law”, Canadian Lawyer , September 1995 at 35; The Insurance Bureau of Canada, “Insurers wage war on fraud” (1996), 4 Assurances at 659; and Louis Caron & Georges Dionne,

“Insurance Fraud Estimation: More Evidence From the Quebec Automobile Insurance Industry” (1997), 64 Assurances 567. In the 1995 Canadian Lawyer “Insurance Law” article, noted above, the author states, under the heading “Insurance Fraud also a Growth Area” at 41: Insurance fraud – defined as everything from a totally bogus claim to a padded claim – is estimated by the insurance industry to cost about $1.3 billion a year. That translates into 10-15 percent more in insurance premiums. An

article in a recent Insurance Bureau of Canada newsletter summed up the problem: “A great number of Canadians don’t consider insurance fraud a serious breach of the law or they pass it off as something everyone is doing, so it’s okay. Attitude is especially relevant to what we call opportunistic fraud, like inflating a claim a little to cover the deductible or a lot to recoup the premium too.” [ 71 ] The Courts must play their

part in penalizing those insured who engage in insurance fraud in appropriate cases, as equally as they must punish insurers who fail to deal with the claims advanced by an insured in good faith. This is one of those appropriate cases. [ 72 ] I find that Al-Asadi, by his intentional fraud, breached his duty of good faith to AMA. I further find that a mere denial of his claim, and compensation for the damages he caused, is not sufficient to show the Court’s view that such conduct is reprehensible and repugnant.

Aside from the fact that it would support a charge of criminal perjury, in a civil context there must be a further deterrent - general, as to others who might stoop to become fraudulent claimants, and specific, as to Al-Asadi never to engage in such conduct again - that deserves and requires an additional punishment in punitive damages. [ 73 ] Having regard to these principles, and noting that Al-Asadi was seeking $28,282.15 in general damages, and AMA was seeking $10,000 in punitive damages, I awarded $5,000 in punitive damages to AMA against Al-Asadi.

I find the amount of $5,000.00 is reasonably proportionate to the amount of the claim and the need for punishment. VIII. COSTS [ 74 ] In announcing my oral decision I granted costs to AMA on a solicitor/client basis relevant to the proof of the allegation of insurance fraud, as fraud can be a basis for solicitor-client costs: inter alia , Jackson v. Trimac Industries Ltd. (1993), 1993 CanLII 7031 (AB KB) , 8 Alta. L.R. (3d) 403 (Q.B. – Hutchinson J.) at 417. Counsel for AMA then made reference to an unaccepted offer by AMA to Al-Asadi prior to trial, and, based on Rule 174(1.1), claimed double costs.

I challenged Counsel for AMA to provide authority to establish the entitlement to double costs based on an unaccepted offer when solicitor/costs have been awarded which, in effect, provide full indemnity. Filing dates were provided and he did so, but Counsel for Al-Asadi declined to respond, leaving the “evidence” as to the offer and the submissions unchallenged. [ 75 ] A “Formal Offer of Judgment” of taxable party-party costs and disbursements was made by AMA to Al-Asadi on September 30, 2002, and withdrawn November 22, 2002. [ 76 ] In argument, Counsel for AMA made reference to Rules 169(1), 174(1)(

b) and 174(1.1), noting that the offer of compromise must be genuine (for which there is no argument made to the contrary, or apparent), and by virtue of the words “unless for special reason”, the awarding of double costs is mandatory: Budget Rent-A-Car of Edmonton Ltd. v. Security National Insurance Co. , 2001 ABCA 71 (CanLII) , [2001] A.J. No. 321 , 277 A.R. 305 (C.A.) at para. 7 . See also: Forster v. MacDonald , 1995 ABCA 431 (CanLII) , [1995] A.J. No. 1063 , 35 Alta. L.R. (3d) 319 (C.A.) at para. 5 .

Counsel for AMA described the issue in these words: The real issue is whether there is any “special reason” to deny an award of double costs for all steps taken after service of the Offer. A number of cases have considered the issue of whether or not over-indemnification is a “special reason” to deny double costs as the result of the Formal Offer.... [ 77 ] In Edmonton (City) v. Lovat Tunnel Equipment Inc. , [2002] A.J. No. 1440 (Q.B.) , Lee J., citing Mitran v.

Guarantee RV Centre Inc. (1999), 1999 ABQB 276 (CanLII) , 251 A.R. 77 (Q.B. - Johnstone J.), and others, concluded at para. 186 that over- indemnification is not a special reason to refuse an award of double costs. In Mitran , Johnstone J., herself relying on other authorities, stated, at para. 10 that “[t]he special reason must be something relevant and truly exceptional” and “the conduct of the parties constitutes

a special reason”. In this case, there is no conduct of AMA that would dis-entitle it to double costs. The awarding of solicitor-client costs is, however, in my view, both relevant and truly exceptional. [ 78 ] On the issue of over-indemnification, Lee J. referenced: Foothills Decorating Ltd. v. Amigo Construction Ltd. (2000), 2000 ABQB 993 (CanLII) , 285 A.R. 28 (Q.B. - Hutchinson J.); Greep v. Josephson (2001), 2001 ABQB 1137 (CanLII) , 285 A.R. 326 (Q.B. - Romaine J.); Shillingford v. Dalbridge Group Inc. (2000), 2000 ABQB 28 (CanLII) , 268 A.R. 324 (Q.B. - Perras J.); and Jama v.

Bobolo , 2002 ABQB 216 , [2002] 7 W.W.R. 523 (Clarke - Q.B.) .

None of these cases dealt with solicitor-client costs. [ 79 ] In Foothills , Hutchinson J. stated that there was no evidence on the issue of whether a double costs award would exceed the plaintiff’s actual solicitor and client costs and held that the defendant’s had failed to meet their burden to provide evidence on that issue. [ 80 ] In Greep , Romaine J., for special reasons, limited the doubling of costs to a maximum amount “equal to solicitor and his own client costs and disbursements”. [ 81 ] In Shillingford , Perras J. (restricting his comments to party-party costs - para. 27) reasoned (Clark J. to the same effect in Jama ), quite correctly, in my view, that even if over indemnification might result, that the purpose of Rule 174 is to promote settlements and punish those who refuse reasonable offers.

As Lee J. noted in Lovat , with respect to the decision in Shillingford , that principle (at least as to party and party costs) applies “irrespective of the actual cost of the lawyer, or the fact that a party is represented through legal aid or self-represented” (para. 184). [ 82 ] In Lovat itself, there was evidence that double costs would result in over-indemnification by about 14%, and Lee J. held that was “not a special reason to refuse an award of double costs”. [ 83 ] Here, absent one consideration I will reference below, it is not a question that over indemnification might result , but twice the actual full indemnity cost will mean double indemnification will result .

The one consideration I reference is that here there may be an issue on the quantification of solicitor-client costs, because, as I understand it, Counsel for AMA is in-house counsel. That should not be a reason to deny double costs in a party-party cost award, as Perras J’s judgment in Shillingford would support.

Neither should it be a reason to deny full indemnification on a solicitor-client basis - it is merely a matter of Counsel for AMA quantifying such amount, if necessary, before the Taxing Officer. [ 84 ] While the aforementioned cases related only to party-party cost awards, Marshall J. in Hillside Investments Ltd. v. Boychuk , 2002 ABQB 26 (CanLII) , [2002] A.J. No. 33 (Q.B.) ostensibly upheld the principle of double solicitor-client costs in an oppression case. He did not, however, directly discuss the issue, but merely made reference to Shillingford and Forster v.

MacDonald , both party- party cases, and stated that “in keeping” with those decisions “the Rules respecting offers prevail over considerations of over- indemnification” (para. 14). In application, however, he calculated a surrogate therefor that resulted in the award of approximately 1 ½ times the solicitor-client costs.

In that he did not expressly address the propriety of double solicitor-client costs, I do not find this decision is conclusive in the context of a specific engagement of this issue. [ 85 ] The end result is that, in my view, the Court should not necessarily be concerned about the possibility of, or actual, over- indemnification in a party-party cost award, having regard to the need for a reward/punishment element to promote reasonable offers being accepted.

However, in the context of an award of solicitor-client costs, although the Rules do not speak to what type of costs are being awarded, I am of the view that, if the aspect of reward/punishment (or other special reason) exists or is built into the case, it does not follow that there must be double solicitor-client costs. However, if there is no other reward/punishment element in existence, then something should be done to create one - as Marshall J. did Hillside . [ 86 ] In this case, a special reason exists for limiting the costs awarded to solicitor-client costs.

The punishment aspect, albeit not for refusing the offer, but for fraud, is accomplished by the punitive damages I have awarded. In all of the circumstances, I find that full cost indemnification and the punishment of punitive damages are sufficient to constitute a reward and punishment such as to meet the intent of the rule and to constitute a “special reason”. To hold otherwise would result in AMA receiving a windfall that would be excessive of what is required for reward and punishment, and amounts to “overkill”.

If I were to be in error in this regard, however, I would find no other reason why there should not be double solicitor-client costs to AMA in this case.

IX. OTHER ISSUES [ 87 ] As noted in my oral reasons, I directed that, having regard to the fact that AMA had taken steps relative to dismantling the salvage, that they be entitled to it - indeed, had taken control over it, and were accordingly required to pay its value into court, for claim by any party having an interest in it. X. CONCLUSION [ 88 ] I dismissed Al-Asadi’s action against AMA. I found that Al-Asadi had failed to prove that his car was stolen and vandalized by someone other than himself or without his knowledge and consent.

Even if I had found that Al-Asadi had made out a prima facie case that his vehicle was stolen and vandalized, AMA has clearly proved fraud by Al-Asadi. As a result of AMA proving fraud, AMA’s action for $2,004.30 was allowed together with punitive damages in the sum of $5,000.00. [ 89 ] AMA shall have its costs on a solicitor-client basis in such amount as may be agreed to, or, failing agreement, as may be taxed by the Taxing Officer.

Despite the fact that there was a Formal Offer of Judgment served by the Defendant on September 30, 2002, and withdrawn on November 22, 2002, AMA will not receive double costs pursuant to Rule 174(1.1). I find that there is a special reason for this result, in that AMA will receive indemnity costs and punitive damages, such that the purpose of promoting settlement and punishing those who refuse reasonable offers to settle is fulfilled. HEARD on the 16 th - 18 th , and 20th days of December, 2002. DATED at Calgary, Alberta this 31st day of March, 2003. __________________________ J.C.Q.B.A.

APPENDIX “A” No. 0201-01756 IN THE COURT OF QUEEN'S BENCH OF ALBERTA JUDICIAL DISTRICT OF CALGARY BETWEEN: ABDALLAH AL-ASADI Plaintiff - and -

ALBERTA MOTOR ASSOCIATION INSURANCE COMPANY Defendant ------------------------------------------------------------ REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE ROOKE ------------------------------------------------------------ THE COURT: The matters before the Court in this case relate primarily to findings of fact. Controversies of law between the standards of proof in Ontario, as opposed to BC, with no apparent clear decisions in Alberta on the issue, are of relevance as a matter of law.

I reserve the right to comment on that standard as it should apply to Alberta in my view, although in this case under, either standard, the findings might well have been the same. My decision in this case, for which written reasons will follow, is that the action of the Plaintiff is dismissed in that he has failed to meet the onus on him to prove his claim, and I find, as a fact, that the Defendant has proved fraud by him. As to whether it was pled in the pleadings or not I will address in my written reasons, there being arguments on that issue.

The action of the Defendant for $2,004.30 for expenses related to the investigation, plus interest thereon as may be agreed to by counsel or determined by the Court in the absence of agreement, based on the allegation of fraud proven, is allowed, together with punitive damages in the sum of $5,000.

As AMA has taken control of the vehicle and tampered with it -- and I pause to say I am not suggesting that either was contrary to law, but nevertheless they have altered the vehicle from their unilateral decision as I understand it, although apparently with notice to the Plaintiff -- and even beyond that, because they are "in the business", they shall take ownership of the vehicle, but will be liable for salvage in the sum of $6,000, as set out in Exhibit 26.

They are directed to pay that sum into court on notice to the Plaintiff and all other parties having a claim including themselves, as it relates to the judgment interests and costs herein, which sum will then be paid out in whole or part as any member of this court may determine on a motion by any of the interested parties for payment out. Exhibit 38 tells me that there may be security holders with an interest in these funds.

The Plaintiff clearly has an interest in these funds, and if it were merely the Plaintiff and the Defendant, I would merely offset that salvage against the judgment that I have granted and costs that I will grant the Defendant, Plaintiff by Counterclaim, AMA. But because there may be third parties involved, it seems to me the most appropriate way is to go formally through an interpleader and then have the Defendant, Plaintiff by Counterclaim, stand in line for the appropriate priority to those funds.

Unless there are any submissions on offers that are relevant to the case, there being fraud alleged and proven, the standard requires solicitor-client costs and those will be paid by the Plaintiff to the Defendant in such amount as may be agreed to or, failing agreement, as may be taxed by the Taxing Officer....

[1] Through an interpreter, notwithstanding he acknowledged in cross that he had a good understanding of English other than that bigger English words were difficult for him, and notwithstanding other witnesses had no difficulty in communicating with him in English. [2] There was some testimony and other evidence (Exhibit 3) that the alleged theft took place on December 17, 2001, but it appears that was merely a mistaken recollection. [3] Note that in the El-Ash case at para. 76 the Court similarly concluded that “ There was no reason for the [damage to] the steering column other than a clumsy attempt to make it appear that the vehicle was stolen ” .