D & J Trucking Ltd. - v. -, 2014 SKPC 32

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2014 SKPC 032 Date: February 7, 2014 File: 2012-39 Location: Melfort _____________________________________________________________________________ Between: D & J Trucking Ltd. - and - Saskatchewan Government Insurance A. Malik For the Plaintiff A. Tayco For the Defendant ______________________________________________________________________________ JUDGMENT R. GREEN , J ______________________________________________________________________________ I.

INTRODUCTION [ 1 ] Donald Fehr owns and operates D & J Trucking Ltd., a trucking company from Nipawin involved in excavation, demolition, landscaping and hauling gravel. On October 2, 2010, Mr. Fehr, and two of his co-workers, were driving three vehicles back from a demolition contract in Stony Rapids. Between Stony Rapids and Points North, while unoccupied and parked by the side of the road, one of those vehicles - a 1985 tandem Ford truck owned by and registered to the plaintiff [1] - caught on fire and burned beyond repair.

The truck was insured, under the Certificate of Registration, by the defendant Saskatchewan Government Insurance (SGI), pursuant to s.

38(1) of The Automobile Accident Insurance Act which reads: 38

(1) Subject to this Act , an owner’s certificate shall further insure the person named therein in the amounts hereinafter specified against direct and accidental loss of or damage to the vehicle designated therein, including its equipment, occurring in Canada, ... from any peril. [ 2 ] Mr. Fehr left the burned truck at the side of the road, and returned with the others to Nipawin. The day after returning home, he contacted SGI by telephone and made a claim on his insurance for the truck. On October 6, 2010, at Nipawin, Mr.

Fehr signed a statutory declaration in the presence of Scot Perry, an SGI adjuster, setting out what happened and what his loss was. [ 3 ] SGI denied this claim by letter on April 21, 2011 (Exhibit D-11). Subsequently, the plaintiff commenced this action on October 12, 2012, claiming damages of $15,000.00 as a result of SGI’s failure to pay him for this truck. [ 4 ] Despite the provisions of s. 38(1), SGI, in its Dispute Note, raised in defence that:

(1) This claim was not commenced within two years of Mr. Fehr discovering the damage to his truck, and therefore it is statute barred pursuant to s. 5 of The Limitations Act ;

(2) The damage to this truck was caused by a mechanical fracture or breakdown of a part of the truck and/or by rusting, corrosion, freezing or wear and tear, or by an explosion within the combustion chamber, any of which results in SGI not being liable because of s. 38(3)(a.1) of The Automobile Accident Insurance Act ; and

(3) Mr. Fehr wilfully and knowingly provided information to SGI which was false, and with a view of committing a fraud, contrary to s. 78(1) of The Automobile Accident Insurance Act , so as to void his insurance coverage. II. BACKGROUND [ 5 ] Mr. Fehr purchased this truck in 1995 for $15,000.00 from Hudson Bay Transport. He initially used the truck, which he purchased in the form of a semi-trailer, to haul scrap metal. In 2000, he converted the truck to a so-called tandem truck, to be used for hauling soil, gravel and debris. [ 6 ] Mr.

Fehr described in some detail work that he did to the truck from the date of purchase until the truck was destroyed by fire in 2010. At some point, he had the company Peterbuilt completely rebuild this truck’s engine, a 400 Cummins, for $15,000.00. Between 2008 and 2010, a mechanic at Nipawin named Ron Stevens worked on the truck, including work on the engine’s injector and head. As well, before he took this truck to Stony Rapids, he changed the oil, checked the transmission fluid and did a safety inspection on the brakes, tires and lights. [ 7 ] Mr.

Fehr’s company was contracted to demolish a hospital in Stony Rapids. To get the necessary equipment there, he made two trips up to Stony Rapids: the first driving his semi-trailer, with the tandem truck on the flat deck and, after returning to Nipawin, the second with two employees named Jody Fehr and Kyle Fehr. The three men were in Stony Rapids for three days demolishing the hospital. Mr. Fehr said there were no issues or problems with the tandem truck, which he drove while hauling away debris, on the morning of their departure for home. [ 8 ] Mr.

Fehr and his co-workers left Stony Rapids on October 1, 2010, around noon. He was driving the semi-trailer, Kyle Fehr was driving the tandem truck and Jody Fehr was driving a three-quarter ton. He said the road between Stony Rapids and Points North is a so-called winter road and was in very poor condition that day, with boulders and stones all over it. As a result, it was not possible to drive more than 10 kilometres an hour.

[ 9 ] Kyle Fehr was in front in the tandem truck. At some point, Mr. Fehr came upon Kyle who was stopped, and who told Mr. Fehr that the tandem truck’s engine had stopped. Mr. Fehr opened the hood, checked the oil and otherwise looked at the engine, without noticing any problem. He then started the truck. It ran for thirty seconds and stalled. He tried this again but the same thing happened. Mr. Fehr then decided to pull the tandem truck behind his semi-trailer with a chain, with Kyle steering the tandem truck. [ 10 ] Mr.

Fehr proceeded to pull the tandem truck with the semi-trailer for about twelve hours, until midnight. During that time, the chain broke a couple of times and they as well stopped more than once when Kyle indicated there was a problem. On the first such occasion, Kyle said he could smell smoke in the tandem truck cab. Mr. Fehr could not smell it, and opened the hood and could see no smoke or fire. They stopped for ten or fifteen minutes and then went on for another hour or two. Then Kyle, again, said that he could smell smoke, and Mr.

Fehr thought he could smell some in the cab but could see no sign of smoke or fire under the hood. [ 11 ] Mr. Fehr said Kyle was using the clutch on the tandem truck to slow the vehicle down while it was being towed, and this had the effect of attempting to start the engine. As a result, Mr. Fehr loosened the fuel filter to prevent the possibility of the engine starting. [ 12 ] After another three hours, Kyle again said he could definitely smell smoke. Mr. Fehr stopped and he both smelled smoke and saw smoke in the cab. However, he opened the hood and there was no smoke or fire.

As it was around midnight, the three men stopped to sleep. [ 13 ] Mr. Fehr said he went to sleep in the semi-trailer, with his employees sleeping in the three-quarter ton and with the tandem truck parked by the side of the road. About half an hour after he went to sleep, Jody pounded on his door and said that the tandem truck was on fire. He got out quickly and saw flames inside the cab of the truck. He opened the hood to try to reduce the damage and saw no flames or smoke in the engine area.

He said the truck was too far gone already, and he could not stop the fire, although the men threw gravel onto the fuel tank so it did not catch. He said, later on, the engine caught fire, he thought through the air filter which was close to the firewall of the cab. It took about an hour for the truck to completely burn. Mr. Fehr left the truck by the side of the road and then drove with the others non-stop back to Nipawin. [ 14 ] Jody Fehr worked for the plaintiff in 2010.

He described the return trip from Stony Rapids and how, after about an hour and a half out of Stony Rapids on the return trip, there were problems with the tandem truck he was driving. He said that Mr. Fehr then towed the tandem truck (with Jody steering) behind the semi-trailer. He said they stopped a few times along the way because of a broken chain and other reasons. They stopped a few hours before Points North to sleep. [ 15 ] Jody said he woke up and smelled smoke and saw flames in the tandem truck. He woke up Mr. Fehr and got him out. He said the cab of the truck was in flames, before the firewall.

The flames were spreading to under the hood. At the end the engine was burning. He didn’t see anyone around the truck before it burned and had no idea what caused the fire. III. IS THE CLAIM OUT OF TIME? [ 16 ]

Section 5 and 6 of The Limitations Act provides: 5 Unless otherwise provided in this Act , no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered. 6

(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known: (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of the claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(

a) to (

d) on the day on which the act or omission on which the claim is based took place, unless the contrary is proved. [ 17 ] SGI argues that the claim had to be commenced by October 2, 2012, as that is two years from the date the fire was discovered by Mr. Fehr. For the reasons that follow, I disagree. [ 18 ] In the present case, Mr. Fehr provided a statutory declaration - as required by statutory condition 6(

b) of s. 39 of The Automobile Accident Insurance Act , to be done within 90 days of the loss or damage - on October 6, 2010. That was four days after the loss occurred. By virtue of statutory condition 13 of the same Act , SGI then had 60 days - until December 5, 2010 - to pay Mr. Fehr for the truck. [ 19 ] I am satisfied that there is no binding judicial authority from Saskatchewan on the specific limitations question in this case. I appreciate that this Court, in Williams v.

Saskatchewan Government Insurance [2] , interpreted s. 5 and 6 of The Limitations Act so that the two-year limitation period began on the date Ms. Williams discovered the damage to her vehicle, and hence dismissed the action as it was commenced more than two years after that date. However, on appeal, the Court of Queen’s Bench disagreed with that

interpretation and held that the action was not statute barred. [3] On further appeal, the Court of Appeal set aside the orders made in both lower Courts - without ruling on the proper

interpretation of the limitation period - and directed that the action be remitted for trial to the Provincial Court. [4] [ 20 ] I am satisfied that the British Columbia Court of Appeal decision in Dueck Chevrolet Cadillac Hummer Ltd. v. Insurance Corporation of British Columbia [5] is directly on point. In that case, a vehicle was destroyed by fire on February 5, 2006, the plaintiff filed a proof of loss on May 24, 2006, and on December 15, 2006, ICBC sent a letter to the plaintiff denying coverage. That letter was never received by the plaintiff. The action was not commenced until July 22, 2008.

Despite the fact that the plaintiff did not file a proof of loss within 90 days from the date of loss (the same provision as in Saskatchewan, but not an issue raised by ICBC), the Court of Appeal went on to rule as follows: A cause of action arises when the insured has a right to sue on the contract of insurance; this occurs either when the insurer ( sic ) clearly and unequivocally denies coverage or when the insurer fails to pay within the prescribed time after the filing of the proof of loss. [6] [ 21 ] While, as argued by SGI, s. 6(1)(

a) of The Limitations Act imports the principle of discoverability and while the two year period suggested by SGI (from the date of the loss) is one element mentioned in this section, I am satisfied that s.6 (1)is to be read and considered in its entirety - from subsection 6(1)(

a) to (d) - in determining when a claim should be commenced. In my view, it is significant that s. 6(2) refers to the day of the act or omission on which the claim is based. Here, the plaintiff’s action against SGI (as per s. 6(1)(c)) arose when SGI failed to pay the plaintiff’s claim when mandated statutorily to do so (on December 5, 2010). Clearly, it was on that day, and not earlier, that the plaintiff knew, or should have known, that an action against SGI was an appropriate remedy (as per s. 6(1)(d)).

Simply put, the cause of action in this case arose when SGI failed to pay as required by the statute, and not when the truck burned. [ 22 ] As a result, applying this reasoning - the same as was applied by the Court in Dueck - to the facts of this case, I am satisfied that it was on December 5, 2010 that the plaintiff’s cause of action arose. It was on this date that SGI was obligated to make payment and did not . Because this action was commenced within two years of December 5, 2010, this action is not statute barred. IV.

DOES SECTION 38(3)(a.1) OF THE ACT APPLY? [ 23 ] Section 38(3)(a.1) of the Automobile Accident Insurance Act provides that SGI is not liable for loss or damage “caused by mechanical fracture or breakdown of any part of the vehicle or by rusting, corrosion, freezing or wear and tear, or explosion within the

combustion chamber”. In a case like this, the onus is on SGI to show that the loss falls squarely within this exclusion. [7] For the reasons that follow, I am not satisfied on a balance of probabilities that SGI has proved that the exclusion in this subsection applies in this case. Relevant evidence [ 24 ] Mr. Fehr testified that he did not know what caused the fire to this truck. [ 25 ] Ronald Stevens was qualified at the trial as an expert in truck mechanics. In the summer of 2010, Mr. Fehr brought this truck to him. He removed the centre head and installed a new one and replaced the injector.

He said he examined the top part of the engine, took the valve covers off and the centre head as well. Regarding the condition of this truck, he described it as not new but on a ten point scale being between six or seven. He described it as a truck with wear but dependable for what it was being used as. He said the condition of the engine was good, and looked good to him from the top. He wasn’t aware of any mechanical issues with the truck. [ 26 ] Mr. Stevens said he inspected the remains of the truck three days before the trial.

He said he removed the oil pan and looked at the bottom of the engine and could see no evidence, and did not believe, that the fire started in the combustion chamber of the engine. Nor did he accept that Mr. Fehr could have caused a fire in the engine by loosening the fuel filter. Based on his examination of the truck, he believed that the fire started inside and not outside the cab of the truck. [ 27 ] Mr. Stevens admitted the engine stalling, after running for thirty seconds as described by Mr. Fehr, could mean a cylinder wall problem in the engine.

He as well admitted that the pictures of the truck’s engine bearing (in Exhibit P-12, pictures 28 and 29), showed some friction damage that could be an indication of engine trouble, but said this was friction damage not fire damage. He said the damage to the bearings would reduce the value of the truck. [ 28 ] In total, Mr. Stevens did not know the cause of the fire.

He said there is wiring inside the cab of this truck and, despite not knowing the cause of the fire, he said it was possible this was an electrical fire, caused by wires rubbing or a short in the electrical wires from the rough road. [ 29 ] While in its Dispute Note SGI claimed it was not liable as a result of this subsection, Mr. Perry admitted that SGI does not know what caused the fire.

Analysis [ 30 ] Taken together, while it is possible this was an electrical fire and while the condition of the engine bearing brings into question the value of the truck, neither of the parties know what caused the fire, and I am not satisfied on a balance of probabilities that the exclusion in s. 38(3)(a.1) applies so as to exclude SGI from liability. V.

IS THE PLAINTIFF ’S INSURANCE VOID BECAUSE OF S. 78(1) OF THE ACT ? [ 31 ] Section 78(1) of the Automobile Accident Insurance Act provides that where: ... an insured violates a term or condition of this Act or commits a fraud or makes a wilfully false statement with respect to a claim under this Act ; any claim by or in respect of the applicant or the insured shall be rendered invalid and his right ... to benefits and insurance money shall be forfeited.

[ 32 ] The onus is on SGI to show this subsection applies in this case. In doing so, there is a high standard for proof when fraud is alleged in a civil case. [8] Paragraph 8 of SGI’s Dispute Note, in referring to this subsection, said that Mr. Fehr wilfully and knowingly provided information to SGI which was false, and with a view of committing a fraud. For the reasons that follow, I disagree that this subsection applies in this case. Relevant evidence [ 33 ] Mr. Fehr phoned SGI on the morning of October 3, 2010 and spoke to a woman adjuster.

He said he told his story about how the truck caught fire and burned and the adjuster wanted pictures of it. He claimed he told her how they were towing the vehicle after the truck had trouble. He said the adjuster told him that she was taking a statement as they talked on the phone and that he could come either to Tisdale or Nipawin to sign his statement. He chose Nipawin. The adjuster also told him that he should report this to the RCMP, and he did so that day, and subsequently spoke to the RCMP in La Ronge to give the statement (Exhibit P-9). [ 34 ] The statutory declaration that he gave to Mr.

Perry (Exhibit P-8) on October 6, 2010 at Nipawin, reads: I, Don Fehr, of the Town of Nipawin, in the Province of Saskatchewan, owner of D & J Trucking Ltd., do solemnly declare, that my date of birth is May 12, 1963. On September 24, 2010, we left to go do a demolition job for the Provincial Government north of Points North at Stony Rapids where we went to demolish a health care centre that had been empty for 10 years. We were done the job and were on our way out. We drove about 150 kilometres and parked for the night. We stopped at about midnight to have a sleep on the side of the road.

It is a very long trip because the road is very rough. I was parked first in line with my semi that has the low bed on the trailer and I was sleeping in the sleeper, my gravel truck was second and my half-ton was third. My two workers were sleeping in the half-ton. Then at about 12:30 a.m., one of the workers came to my semi and told me the gravel truck was on fire. By the time I got to the truck with my fire extinguisher, the entire cab was engulfed in flames. There was flames under the hood as well and it looked like the flames were coming out from under the cowl.

We could not get the fire out and had just to watch it burn. There is no phone service where we were so there was no one to call. It happened midnight Friday and then we got home and then when we got home we called SGI. I have not notified the RCMP as I did not realize that they needed to be called. The plate number on the truck is 388 HPH. It is a 1985 Ford LTL 9000 with a 15 foot gravel box. I have had the truck for about 20 years. Within the last year I had the pump rebuilt and replaced the one cylinder head as well as some other maintenance.

There was also an SGI claim on the truck last year where the passenger’s side was done. There are no liens on the truck. The truck is still sitting on the side of the road and I am trying to get a loader or trailer with a winch out there to get it off the road and hauled back. I am trying to get a hold of a person at Points North with a loader that could load it on my trailer so I could bring it back as I could bring it back for $2,500.00.

There is not much left of the truck other than the front axle and tires. [ 35 ] When he was asked by his lawyer whether anything was missing in his statutory declaration to SGI, Mr. Fehr said that the statement didn’t say anything about towing the tandem truck. He said he was not sure why that was missing, but said that the statement was prepared by the SGI adjuster and presented to him. He also said he only skimmed over the statement presented to him, and thought everything was there that he had previously told the adjuster. [ 36 ] Mr.

Fehr said that SGI then requested that he speak to an SGI investigator from Regina. He agreed to do so, and also agreed to allow SGI to take possession of and inspect the remains of the truck. On April 21, 2011, he received a letter from SGI in Tisdale denying his claim. That letter concludes: “Due to the false declaration, Saskatchewan Government Insurance will not pay for loss or damage claimed”. [ 37 ] In cross-examination he was shown a series of thirty-one pictures taken by SGI.

These pictures portray the remains of the truck, together with parts of the engine and an indentation in the middle of the front bumper of the truck. In summation, Mr. Fehr said he had no idea what caused the fire and no idea what problem would have led to this. Nor did he know where the fire started. [ 38 ] Scot Perry is an adjuster for SGI in Tisdale and was qualified at the trial as an expert automobile adjuster including trucks. He took the statutory declaration from Mr. Fehr on October 6, 2010 at an autobody shop in Nipawin.

He said he typed it on his laptop, and may have taken some of the statement from the original report given by Mr. Fehr to the woman adjuster he initially spoke to. He claimed Mr. Fehr left out significant information in his statutory declaration about damage to and the condition of the truck. He said the fact that this information was included in Mr. Fehr’s statement to the RCMP led SGI to believe something was not right with this claim. As a result, an investigator from SGI in Regina was sent up to take a statement from Mr. Fehr, and the adjuster - Rick Torgunrud -

concluded that Mr. Fehr should have disclosed serious problems with the engine on this vehicle when making his claim to SGI (Exhibit D-10). [ 39 ] Mr. Perry also filed notes from the original adjuster, Roxanne McPeak, which made no mention of Mr. Fehr towing the truck (Exhibit D-17). [ 40 ] In cross-examination, Mr. Perry admitted that at the time Mr. Fehr phoned SGI initially, there was no recording made of the telephone call. He said there is now a recording made of such telephone claims. He admitted that it was possible that the original adjuster missed something in typing out Mr.

Fehr’s statement, but he thought it was highly unlikely. When asked about Mr. Fehr’s statutory declaration (Exhibit P-8), he admitted he could find nothing in that document that was false. Analysis [ 41 ] The evidence of Mr. Perry was that nothing in the statutory declaration of loss given by Mr. Fehr was false. He however maintained that Mr. Fehr failed to mention in his statutory declaration that the truck had mechanical problems and that it was being towed. These facts were included in Mr. Fehr’s statement to the RCMP. Taken together, Mr. Perry claimed the actions of Mr. Fehr amounted to a fraud. [ 42 ] Mr.

Fehr, on the other hand, maintained that he told the initial woman adjuster that he spoke to on the telephone that he had told the adjuster that the tandem truck had engine trouble and they towed the truck. [ 43 ] I accept the statutory declaration was typed out by employees of SGI, and not by Mr. Fehr, and contained information he gave to SGI at different times. I, as well, accept the evidence of both Mr. Fehr and Jody Fehr about what occurred on the trip back from Stony Rapids and about their knowledge of how the truck burned. In all the circumstances, I am satisfied that it is equally possible as not that Mr.

Fehr told the adjuster that the truck had mechanical problems and was being towed. Taken together, I am not satisfied on a balance of probabilities, especially considering the required standard of proof for fraud, that Mr. Fehr was attempting to commit a fraud on SGI by filing this claim and by making the representation he did to SGI. VI. WHAT ARE THE DAMAGES? [ 44 ] In his statement to the RCMP on October 11, 2010 (Exhibit P-9), Mr. Fehr said the truck was worth $9,000.00. Mr. Stevens said the value of this truck when it burned was $10,000.00. Further, when shown picture 28 in Exhibit P-12, Mr.

Stevens said this pictured a bearing that had failed and showed friction damage to the engine which would decrease the value of the engine. [ 45 ] In an Autosource Valuation of this truck for SGI (Exhibit D-2) the so-called “total condition adjusted market value” was $18,405.00.

This valuation was done after the truck had been destroyed by fire and without knowing the mileage on this truck when it burned. [ 46 ] In SGI’s Brief of Law [9] , their lawyer argued that, if insurance coverage was available to the plaintiff for the loss of this truck, s. 39 of The Automobile Accident Insurance Act should be followed as it sets out the method of appraisal when there is a disagreement over the amount of insurance payable respecting the loss or damage.

However, I doubt this provision was intended to apply to a case - such as this - where the available evidence has the insurer assessing the value of the truck at a level almost twice as high as the evidence given by the insured. As well, counsel for SGI, at the trial, submitted that, if I found SGI to be liable, that I proceed to determine the value of the truck regardless of s. 39. [ 47 ] In total, I am satisfied, considering that SGI did not know the mileage on this truck and that the truck was assessed after it was destroyed by fire, that the best evidence of the value of the truck when it burned came from Mr.

Stevens, the expert in truck mechanics who worked on this truck not long before the date of loss. That value is $10,000.00, from which the plaintiff’s deductible of $700.00 (set out on the Certificate of Registration) is to be deducted, for a net value of $9,300.00.

VII. CONCLUSION [ 48 ] For the reasons stated above, I am satisfied that the plaintiff is entitled to receive from the defendant payment for the value of this truck. The plaintiff shall have judgment against the defendant in the amount of $9,300.00, together with interest under The Pre- judgment Interest Act from December 5, 2010 (the date the plaintiff was entitled to payment) and the cost of issuing the claim ($100.00). R. Green, J [1] Exhibit P-2 is the Certificate of Registration for the truck. [2] 2008 SKPC 174 . [3] Q.B.G.

No. 20 of 2009, Judicial Centre of Melfort (unreported decision dated June 25, 2009). [4] 2011 SKCA 66 . [5] 2012 BCCA 493 . [6] At para. 42. [7] Robson v. Mennonite Mutual Fire Insurance Co. of Saskatchewan , [1987] S.J. No. 263 (Sask. Q.B.) [8] See Hermez v. Saskatchewan Government Insurance , 2010 SKQB 207 at para. 24 and 25 . [9] At para. 32 and 33.