BERNADETTE MARTIN, Plaintiff, – v. –, 2023 NBKB 32

IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK JUDICIAL DISTRICT OF MONCTON TRIAL DIVISION Martin et al v. Estate of Pierrette Landry MC-456-2015 and Pembridge Ins. Co. 2023 NBKB 032 2023/03/06 BETWEEN: BERNADETTE MARTIN, Plaintiff, – and – THE ESTATE OF PIERRETTE LANDRY, Defendant. – and – PEMBRIDGE INSURANCE COMPANY, Third Party. – and – MC-455-2015 BETWEEN: JACQUELINE BLANCHARD, Plaintiff, – and – THE ESTATE OF PIERRETTE LANDRY Defendant.

– and – PEMBRIDGE INSURANCE COMPANY, Third Party. – and – : MC-793-2016 BETWEEN DONALD ROSS ROSE, Plaintiff, – and – THE ESTATE OF PIERRETTE LANDRY, Defendant. – and – PEMBRIDGE INSURANCE COMPANY, Third Party. DECISION BEFORE: Chief Justice Tracey DeWare AT: Moncton, New Brunswick DATE OF HEARING: January 20, 2023 DATE OF DECISION: March 6, 2023 APPEARANCES: Robert R. Goguen, K.C., on behalf of the Plaintiff, Bernadette Martin

J. William Collette, K.C., and Natacha Bujold, on behalf of the Plaintiff, Jacqueline Blanchard Justin Robichaud, K.C., on behalf of the Plaintiff, Donald Ross Rose Hélène L. Beaulieu, K.C., on behalf of the Defendant Julie A. Young on behalf of the Third Party INTRODUCTION [ 1 ] The moving party, Pembridge Insurance Company, (herein after “Pembridge”) brings the present motion seeking an Order allowing it to pay into court the sum of $200,000.00 in full and final satisfaction of their obligations under a policy of insurance.

Pembridge also seeks an Order permitting their solicitor, Hélène Beaulieu, K.C., to be removed as solicitor on record . The Plaintiffs in the three actions involved oppose Pembridge’s requests. FACTS [ 2 ] On December 1, 2014, the Plaintiffs in the various actions were involved in a motor vehicle accident. At that time a vehicle driven by the defendant, Pierrette Landry, crossed the centreline and struck a second vehicle allegedly injuring the plaintiffs, Donald Rose, Jacqueline Bouchard and Bernadette Martin.

Pembridge investigated the accident and determined that its insured driver, Pierrette Landry, had intentionally crossed the centreline in an attempt to commit suicide. Ms. Landry pled guilty to criminal charges as a result of her actions on December 1, 2014. Following the motor vehicle accident Ms. Landry passed away and these actions have now been continued against her estate. [ 3 ] At the time of the December 1, 2014, motor vehicle accident, Ms. Landry’s vehicle was insured under a Standard Automobile Policy issued by Pembridge. Pembridge provided a defence to Ms.

Landry and appointed counsel, Hélène Beaulieu, K.C. Pembridge maintained the position that since the accident was the result of a deliberate act taken by Ms. Landry their obligations to the injured Plaintiffs were limited to $200,000.00 as set out in

section 243 of the Insurance Act . [ 4 ] On October 29, 2021, Justice Denise LeBlanc, as she then was, issued a written decision confirming that in the circumstances Pembridge’s obligation was limited to $200,000.00 following her

interpretation of sections 243 and 250 of the Insurance Act . In particular, Justice LeBlanc wrote at paragraph 49 of her decision as follows: 49 . Pembridge does not seek to be relieved of all liability to the Applicant on the basis of the public policy rule. In my view, the circumstances particular to this case make it such that the operation of

section 2 and subsections 250(1), (4), and (11) limits Pembridge’s liability to the Applicant Martin is limited to the amount of two hundred thousand dollars exclusive of interest and costs, as set out in

section 243 of the Act. Justice LeBlanc’s decision was appealed and upheld by the New Brunswick Court of Appeal.

[ 5 ] Justice LeBlond writing for the Court of Appeal discussed the nature of the standard Automobile Policy at paragraphs 18-24 in Cooperators General Insurance Company et al v. Martin et al , 2022 NBCA 15 : [18] The Standard Auto Policy is a contract of indemnity between the insurer and its insured. With the limited exception mentioned below, its primary purpose is not to “protect” third party claimants.

Section A of the policy provides coverage to the insured for any liability imposed by law on the insured for loss or damage caused to third parties arising from the insured’s ownership, use or operation of the insured vehicle, up to the limit of coverage stated in the policy.

Section 243 of the Act mandates that this limit must be a minimum of $200,000, and s. 17.1(1) of the Motor Vehicle Act , R.S.N.B. 1973, c M-17 , requires every motor vehicle registered in New Brunswick to carry, at a minimum, $200,000 of coverage. While that provision arguably benefits third-party claimants, the fact remains the policy is strictly one of indemnity for the protection of the insured. [19] However, the NBEF 44 is clearly designed to provide “protection” coverage to a claimant who sustains loss or damage caused by an individual with insufficient

Section A coverage to cover the claim. To the extent such a claimant’s own

Section A limit exceeds the at- fault party’s

Section A coverage, that claimant can recover the difference from his/her own insurer under the NBEF 44 endorsement up to its limit. [20] A third-party claimant’s entitlement to recover from the insurer of the at-fault party is governed by s. 250 of the Act . However, that

section imposes certain limits to the right of recovery. [21] First, s. 250(1) states a claimant can recover from the insurer only up to the

Section A limit of indemnity set out in the at-fault party’s policy. In this case, as noted, the Landry policy has a

Section A limit of $1,000,000. However, because of the facts of this case, the analysis does not end here. [22] It is not disputed, and the application judge accepted, that Ms. Landry breached the Motor Vehicle Act and the Criminal Code in operating her motor vehicle as she did at the material time. Her actions can only be viewed as having intended to cause loss or damage. As a result, and as against her as its insured, Pembridge denied her right to claim indemnity on the ground she had breached the public policy rule codified by s. 2 of the Act as she had acted illegally.

However, pursuant to s. 250(4), these facts do not deprive the third parties of their right to recover against Pembridge under s. 250(1) and, absent s. 250(11), none of these facts would be available to Pembridge as a defence to claims by those parties under s. 250(1).

But for s. 250(11), the analysis would end here. [23] The appellants argue the statutory scheme established by s. 250 renders insurers liable to third parties for all injuries arising from the ownership, use or operation of a motor vehicle, including those arising from an insured’s intentional acts, to the full extent of the insured’s policy limits because the Standard Auto Policy does not provide for any exclusion of coverage for intentional acts. That argument ignores the purpose of s. 250(11). [24] Section 250(11) (along with ss. 250(9) and (10)) sets out a limit to the s. 250(1) recovery right.

Notwithstanding s. 250(4), s. 250(11) entitles an insurer to deny payment to a claimant of any amount exceeding the s. 243 minimum limit of $200,000 if the insurer elects to avail itself, as against the claimant, of any defence it is entitled to set up against its insured. As against the claimant, those defences are not limited to the ones set out in s. 250(4) but encompass any defence . This includes the defence established by s. 2, which, once again, is not disputed by the appellants as being available to Pembridge against its insured, Ms.

Landry. [Emphasis mine.] [ 6 ] It is anticipated that the total amount of the claims arising out of the motor vehicle accident will well exceed the $200,000.00 statutory minimum now available under the Pembridge policy. The various plaintiffs have filed actions against their own insurers under the N.B.E.F No#44 endorsement (The Family Protection Endorsement) seeking payment of any damages not covered by the $200,000.00. ISSUES

[ 7 ] The issues for the court to resolve in this matter are as follows: (

a) Is Pembridge liable to pay costs and interest in addition to the $200,000.00 available to the Plaintiffs under its policy? (

b) Can Solicitor Beaulieu now be removed as solicitor for record for Pembridge following payment of the $200,000.00 into court? POSITION OF THE PARTIES [ 8 ] Pembridge suggests that as it does not hold a contract of indemnity on behalf of its insured following the determination that the accident was the result of an intentional act, there is no obligation to pay costs or interest to the Plaintiffs. Pembridge maintains that upon payment of $200,000.00 into court they will have satisfied all potential obligations owing to the various Plaintiffs.

Pembridge asks this Court to confirm upon payment of the $200,000.00 they will have fully satisfied all obligations in relation to this policy of insurance and their solicitor, Hélène Beaulieu, K.C., can be removed from the file. Pembridge argues that the duties of an insurer to pay costs and interests are limited to those cases where there is an enforceable claim for indemnity.

In this case Pembridge points out there is no duty to indemnify as the accident occurred due to the deliberate act of their insured, thus limiting their total obligation to the $200,000.00 statutory minimum. [ 9 ] The Plaintiffs all advance the same argument in response to Pembridge’s motion. The Plaintiffs suggest that the wording of both the Standard Automobile Policy of Insurance and the Insurance Act , R.S.N.B. 1973, c.I-12 , result in a conclusion that Pembridge is responsible for costs and interests to the plaintiffs, in addition to the $200,000.00 statutory minimum.

The Plaintiffs suggest that Pembridge cannot be released or found to have fully satisfied all of its obligations under the policy until the outstanding costs, disbursements, and interest have been appropriately calculated and added to the $200,000.00 statutory minimum.

LAW AND ANALYSIS Is there a requirement to pay interest and costs in excess of $200,000.00? [ 10 ] T he various sections of the Insurance Act referenced by the parties in their written and oral submissions include the following: 237 Every contract evidenced by a motor vehicle liability policy shall provide that, where a person insured by the contract is involved in an accident resulting from the ownership, use or operation of an automobile in respect of which insurance is provided under the contract and resulting in loss or damage to persons or property, the insurer shall, (

a) upon receipt of notice of loss or damage caused to persons or property, make such investigations, con - duct such negotiations with the claimant and effect such settlement of any resulting claims as are deemed expedient by the insurer; (

b) defend in the name and on behalf of the insured and at the cost of the insurer any civil action that is at any time brought against the insured on account of loss or damage to persons or property; (

c) pay all costs taxed against the insured in any civil action defended by the insurer and any interest accruing after entry of judgment upon that part of the judgment that is within the limits of the insurer’s liability; and (…) 243(1) Every contract evidenced by a motor vehicle liability policy insures, in respect of any one accident, to the limit of at least two hundred thousand dollars exclusive of interest and costs , against liability resulting from bodily injury to or the death of one or more

persons and loss of or damage to property. 243(2) The contract shall be interpreted to mean that where, by reason of any one accident, liability results from bodily injury or death and from loss or damage to property (

a) claims against the insured arising out of bodily injury or death have priority to the extent of one hundred and eighty thousand dollars over claims arising out of loss of or damage to property; and (

b) claims against the insured arising out of loss of or damage to property have priority to the extent of twenty thousand dollars over claims arising out of bodily injury or death. 243(3) The insurer may, instead of specifying a limit in the policy for an inclusive amount, specify a limit of liability of at least two hundred thousand dollars, exclusive of interest and costs, against liability resulting from bodily injury to or the death of one or more persons and a limit of liability of at least two hundred thousand dollars exclusive of interest and costs, against liability for loss of or damage to property. 250(1) Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy , notwithstanding that such person is not a party to the contract, may, upon recovering a judgment therefor in any province or territory of Canada against the insured, have the insurance money payable under the contract applied in or towards satisfaction of his judgment and of any other judgments or claims against the insured covered by the contract and may, on behalf of himself and all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied. 250(11) Where one or more contracts provide for coverage in excess of the limits mentioned in

section 243, the insurer may, (

a) with respect to the coverage in excess of those limits, and (

b) as against a claimant, avail itself of any defence that it is entitled to set up against the insured, notwithstanding subsection (4). [Emphasis mine] [ 11 ] There are also sections of the Standard Automobile Policy that are pertinent to the present analysis. In Particular Pembridge directs the Court to the following passage: Where indemnity is provided by this

section , the insurer shall (…)

(3) Pay all costs taxed against any person insured by this policy in any civil action defended by the insurer and any interest accruing after entry of the judgment upon that part of the judgment which is within the limits of the insurer’s liability.

[12] According to Pembridge, as there is no indemnity provided under their Policy, the duties on the insurer as set out in s. 237 and243 of the Insurance Act are not applicable. In particular, Pembridge suggests that it has no duty to defend and no obligation to paycosts nor interest. Pembridge is only required to pay the statutory minimum of $200,000.00 following the Court’s determination thatthere is no contract of indemnity in place as a result of the intentional act of Ms. Landry. [13] The questions that were before the Alberta Court of Queen’s Bench in Ly v.

Nguyen, 1999 ABQB 1032, are the exact issues nowbefore this Court. In Ly, an insurer, Western Union Insurance Company, sought to be released from any further liability to severalplaintiffs in various actions upon payment of the $200,000.00 into court. In Ly, the Court determined Western was only required to paythe $200,000.00 statutory minimum because Nguyen had violated clause 8(

c) of the Standard Automobile Policy by carrying passengersfor hire. [14] In Ly, Justice Moore determined that neither interest nor costs were payable in addition to the $200,000.00 statutory minimum.As Justice Moore’s analysis is directly on point to the Court’s considerations in this matter, I will quote it in its entirety: [8] There are two lines of authority on pre-judgment interest. The first states that pre-judgment interest is already included in the$200,000 statutory minimum. For example, see Kalkinis v. Allstate Insurance Company of Canada (1996), (ON SC),28 O.R. (3d) 237 (Gen.

Div.), appeal allowed (ON CA), [1998] O.J. No. 4466 (C.A.); Pagliarella v. Di BiaseBrothers Inc. (1989), (ON CA), 58 D.L.R. (4th) 691 (Ont. C.A.); and Corbett and Nash v. Co-operative Fire andCasualty Company (1984), (AB KB), 56 A.R. 60 (Q.B.).

The second line of authority is represented by Stamper v.Finnigan (1986), (NB KB), 33 D.L.R. (4th) 71 (N.B.Q.B.), reversed on other grounds (1987), (NB CA), 40 D.L.R. (4th) 175 (N.B.C.A.), which found that pre-judgment interest was payable in addition to the statutory minimum. [9] In Pagliarella, the Court of Appeal stated that pre-judgment interest is merely compensation for the time value of money - “damagesdue to delay” (at p.700). Consequently, it is part of the damages arising from the use of the automobile and falls within the statutoryminimum.

Pagliarella (at p.702) explicitly disagreed with the reasoning in Stamper. Corbett also denied pre-judgment interest. However,that was a slightly different situation (an action in Alberta to recover on a judgment from British Columbia). That is the only Alberta caseto which the parties referred. [10] In Kalkinis, the General Division declined to include pre-judgment interest in the Ontario

section comparable to our s.312(1). TheCourt of Appeal awarded pre-judgment interest, because this was a damages award made at trial, rather than a payment made under theterms of the policy. The Court of Appeal agreed (at para. 17) that the reasoning in Pagliarella would have applied had the payment beenmade under the policy. [11] In Stamper, the plaintiff submitted that a

section equivalent to our s.306(

c) meant that pre-judgment interest should be included. Theargument is that there is an inconsistency because one

section (equivalent to our s.312(1)) refers to “interest” and one (equivalent to ours.306(c)) refers only to “interest accruing after entry of judgment”. Stamper held that this inconsistency should be resolved in favour ofthe plaintiff, not the insurer. [12] I do not agree that there is an inconsistency. Each

section has a specific function.

Section 306(

c) relates to the insurer’s liabilitywhen defending a civil action. It is inapplicable in the present case, as discussed below. Section 312(1) relates to the limit of eachinsurance contract in specific circumstances, such as those here. I prefer the reasoning in Pagliarella, as recently confirmed by theOntario Court of Appeal in Kalkinis, that pre-judgment interest is part of the damages arising out of the accident. [Emphasis mine.] [15] The Plaintiffs view the

interpretation of the Insurance Act quite differently and refer the Court to Chief Justice G. Richard’s, ashe then was, comments in Di Domenicantonio v. Finnigan, 1986 75 NBR (2d) 301, where he stated as follows: [22] I believe that when the legislators enacted s. 243(1) they meant exactly what they said, namely, that insurers were obligatedto insure to a stated limit exclusive of interest and costs. I doubt that they were ever made aware of the ambiguity created by s. 237but in the circumstances it matters not. Looking at the case from all its aspects, i.e., the ambiguity, the principles of

interpretation, thetemptation for insurers to delay payment as long as they can, the profit made by them in delaying, the loss suffered by litigants as aresult, the universal knowledge that money earns interest and that, when it does not, it depreciates in real value, the equitable

considerations of fairness and equity, the principle of unjust enrichment, the matter of delays in court, the incentive to act promptly, are all serious reasons to interpret in favour of the insured. On the other hand, I do not find a single logic, legal or equitable reason to interpret in favour of the insurer. [Emphasis mine.] [ 16 ] In the Di Dominicantonio v. Finnigan matter, Chief Justice G. Richard considered the question of payment of pre-judgment interest and costs in addition to the limits of the policy.

In Finnigan , there was a valid policy of insurance and a duty on the part of the insurer, Wawanesa, to indemnify its insured. However, the claims advanced were in excess of the limits of the policy of insurance. This is quite different from the present situation where there is no duty to indemnify Pembridge’s insured or provide a defense but only to pay the minimum statutory limit of $200,000.00 as required under the Insurance Act . [ 17 ] The distinguishable nature of the analysis undertaken by Chief Justice G.

Richard from the issues currently before this Court are clear when considering his comments at paragraphs [14] and [15] as follows: [14] All seem to agree with the decision in Blanchard , supra , but I am struck by the fact that the one and only stated reason for the result in that case was an “appearance that it was the intention of the insurer and of the parties to the insurance contract that the liability of the insurer is limited to the amount shown plus interest on the judgment”.

Added to this in the Hillier case is the reasoning that “the insurer is required to pay no more than he has contracted with the defendant to pay or as obliged by the Insurance Act ” (emphasis is mine). I agree with this last statement but I question whether, given both the wording of ss. 237 and 243(1) of the Insurance Act , the contract between the insurer and the insured is as clear and unambiguous as we are led to believe in the cases cited above. If one looks at s. 243(1) alone, it is clear that the insurer was obligated to insure for a limit of at least $100,000 exclusive of interest .

In the ordinary course of business, insured persons do not generally analyze the wording of their insurance policies, nor do they look at the Insurance Act , but the trained insurers do. Furthermore, insurers write their own policies without any input from the insured. [15] The fact that s. 237(

c) of the Insurance Act provides somewhat differently from s. 243(1) is in itself confusing and ambiguous. It raises questions of

interpretation which in turn offers the possibility of at least two different and plausible results, namely, that insurers are obligated by statute to pay prejudgment and postjudgment interest or to pay postjudgment only. The reported cases are proof of this ambiguity, not to mention the probability of many other non-reported cases that might have been resolved on the strength of the reported cases. Counsel for Stamper even submits another possible

interpretation which adds further to the ambiguity. He submits that “the post- judgment interest mentioned in

section 237(

c) is not upon that part of the judgment that is within the policy limit but upon that part of the judgment within the limits of the insurer’s liability ”. The submission being that the meaning of judgment in that

section is “the total judgment against Finnigan and that the judgment that is within the limits of the insurer’s liability under s. 237(1) is the limit of at least one hundred thousand dollars exclusive of interest and costs ” provided for in s. 243(1). Counsel for Stamper further submits that “in order to determine what, if any, interest is within the limits of the insurer’s liability, we must first ascertain what, if any, interest is included in the judgment and then verify if any part of this interest is within the limits of the insurer’s liability”.

The argument goes on that “ s. 45 of the Judicature Act provides that the court may order that there shall be included in the sum for which judgment is given interest on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of judgment ”.

While I make no comment on this last submission, it nevertheless indicates the breadth of the ambiguity that has been created by the wording of ss. 237 and 243(1) of the Insurance Act and of the policy. [Emphasis mine.] [ 18 ] This is not a case where the Court is considering potential ambiguities either in the wording of the Standard Automobile Policy or the Insurance Act in order to determine an insurer’s obligations vis-à-vis its insured.

In this case, the policy of insurance and its resulting obligations imposed on the insurer, Pembridge, have been vitiated as a result of the intentional conduct of its insured, Ms. Landry. The question in this matter is whether the statutory obligation of an insurer to make available to injured persons a minimum amount of $200,000.00 in cases where the insurer has been relieved of its obligations to indemnify their insured, as a result of the insured’s conduct and the public policy provision, includes an obligation to pay costs and interest in excess of the statutory minimum.

This question is, in my respectful view, very different to the one considered by Chief Justice G. Richard in Finnigan and far more analogous to the question considered by Justice Moore in Ly . [ 19 ] Returning to the wording of both the Standard Automobile Policy and the Insurance Act , the salient provisions speak to “where

indemnity is provided (…)”, “in respect of which insurance is provided under the contract”, “a claim against an insured for which indemnity is provided (…)”. The analysis presupposes that there is a valid contract of insurance in place and a duty to indemnify as between an insurer and an insured. This fundamental component does not exist in the present matter. As noted by Justice LeBlond, “ The Standard Auto Policy is a contract of indemnity between the insurer and its insured ”.

In this particular matter, as determined by Justice LeBlanc, Pembridge has been relieved of its duty to indemnify under the policy as a result of the conduct of its insured. Therefore, the provisions which consider an insurer’s obligations in contexts where there is a duty to indemnify are not applicable in this case. [ 20 ] I adopt the reasoning of the Court in Ly and find that Pembridge is relieved of its obligations to these Plaintiffs upon payment of the $200,000.00 statutory minimum into court.

Interest and Costs [ 21 ] On the issue of interest, Pembridge suggests that any amount of interest that Pembridge could potentially be required to pay could not be determined prior to a determination of damages at trial. Pembridge refers the court to subsection 45(1) of the Judicature Act , R.S.N.B. 1973, c.

J-2 which states as follows: 45(1) In any proceedings for the recovery of any debt or damages, the Court may order that there shall be included in the sum for which judgment is given interest on the whole or any part of the debt or damages for the whole or any part of the period between the date the debt was due or the amount subsequently awarded as damages ought reasonably to have been paid and the date of judgment. [ 22 ] In the present matter, my conclusion that Pembridge is only required to pay the $200,000.00 negates the need to determine the potential entitlement to interest and costs as well as the appropriate means to calculate these items.

In the circumstances, I will refrain from further discussion on that issue. Removal of Solicitor of Record [ 23 ] There is no further role required of Solicitor Beaulieu once the $200,000.00 has been paid into Court. Pembridge has no duty to indemnify nor defend its insured in these circumstances. Pembridge’s request to have Solicitor Hélène Beaulieu, K.C., removed as solicitor of record is likewise accorded once the statutory minimum amount has been paid into Court. CONCLUSION AND DISPOSITION [ 24 ] For all the aforementioned reasons, the Court concludes as follows: (

a) Pembridge is not required to pay costs and interest in addition to the $200,000.00 available to the Plaintiffs pursuant to sections 2, 243(1) and 250(11) of the Insurance Act ; (

b) Upon payment of the $200,000.00 statutory minimum as set out in section 243(1) of the Insurance Act into Court, Hélène Beaulieu, K.C., may be removed as Solicitor of Record on behalf of Pembridge; and (

c) Pembridge has been successful on its motion and is entitled to costs which are fixed at $1,500.00 and may be deducted from the $200,000.00 payable into Court. DATED at Moncton, N.B., this 6 th day of March 2023.

___________________________________________________ Tracey DeWare Chief Justice of the Court of King’s Bench of New Brunswick