IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20110224

Docket:  M064259

Registry:
Vancouver

Between:

Roy H. Hicks

Plaintiff

And

The Public
Guardian and Trustee of British Columbia as Litigation representative for the
Estate of Darrin James Bieberbach and
the Insurance Corporation of British Columbia

Defendants

Before:
The Honourable Madam Justice Adair

Reasons for Judgment

Introduction

[1]            
The plaintiff, Roy Hicks, claims against the estate of Darrin Bieberbach
for injuries Mr. Hicks alleges he suffered in a motor vehicle accident on April
21, 2005.  Mr. Bieberbach, who was killed in the accident, was driving a stolen
vehicle and as a result was uninsured.  At the time of the accident, Mr. Hicks
was an employee acting in the course of his employment, and he elected to claim
compensation from the Workers’ Compensation Board (the “WCB”).

[2]            
By way of a special case under Rule 9-3 of the Rules of Court,
the parties pose the following question for the court:

Does the Insurance Corporation of British Columbia have the
legal authority to deduct Workers’ Compensation Board benefits paid to the
Plaintiff from any amount to be paid to the Plaintiff for damages, as a result
of settlement or judgment in this matter, taking into account Section 20 of the
Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 and regulation 106 of the
Insurance (Vehicle) Act Regulations, or the predecessor to these
sections which were repealed on June 1, 2007?

[3]            
For the reasons that follow I answer the question:  no.

Legislation governing Claims against uninsured Motorists – Old and New

[4]            
The special case concerns provisions in the Insurance (Motor
Vehicle) Act, R.S.B.C. 1996, c. 231, and Regulation, and
in the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231, and Regulation. 
Effective June 1, 2007, the Insurance (Motor Vehicle) Act (the “Old
Act”) was repealed and replaced by the Insurance (Vehicle) Act
(the “New Act”). The specific provisions in issue concern claims
by persons injured by uninsured motorists.  These are found in s. 20 of
both the Old Act and the New Act and Part 8 of the Regulation.

[5]            
The relevant provisions of s. 20 of both the Old Act and
the New Act read as follows (underlining added):

20  (1) In this section:

"claimant" means a
person who alleges that he or she has a right of action against an uninsured
motorist for damages arising from bodily injury to or the death of a person, or
loss of or damage to property, caused by or arising out of the use or operation
of a motor vehicle, but does not include a person who is entitled to bring an
action against the corporation under section 24;

. . .

"uninsured motor
vehicle" means a motor vehicle used or operated or owned by an uninsured
motorist;

"uninsured motorist"
means a person who uses or operates a motor vehicle on a highway in British
Columbia when he or she is not insured under third party liability insurance
coverage . . .

(2) A claimant may apply
to the corporation, in the prescribed form, for payment of the damages
to which he or she claims to be entitled.

(3) The corporation must, on
receiving an application under subsection (2), send by registered mail a notice
of the application, in the prescribed form, to the uninsured motorist and, if
he or she is not the same person, to the owner of the uninsured motor vehicle,
at the last addresses for them according to the records of the corporation.

. . .

(5) If a notice is sent under
subsection (3), the corporation may

(a) settle with or consent to judgment in favour of the
claimant on behalf of and in the name of a person to whom the notice was sent,
but if that person replies to the corporation within the time limited by the
notice, denying liability, the corporation is not entitled to recover from that
person an amount paid by it until it has recovered a judgment against that
person as provided in subsection (11), or

(b) require the claimant to bring or continue an action
against all persons who may be liable to the claimant for the damages claimed.

(6) If, in an action brought by a
claimant, an uninsured motorist

(a) fails to file a response to civil claim or to appear in
person or by counsel at the trial or assessment of damages,

(b) consents to the entry of judgment against him or her, or

(c) does or fails to do anything that entitles the claimant
to take default proceedings,

the corporation must not make a
payment to the claimant under this section unless notice of the failure,
consent or act of default has been given to the corporation in time to enable
the corporation to rectify it and the corporation fails to intervene in the
action within 30 days after receiving notice of the failure, consent or act of
default.

(7) If the corporation receives
notice under subsection (6), it may intervene in the action and, on behalf of
and in the name of the uninsured motorist, whether or not he or she is an
infant, take any steps that he or she might have taken in the action . . ..

. . .

(9) If the corporation enters
into a settlement with a claimant or a claimant obtains a judgment against
an uninsured motorist in accordance with this section and the claimant has
otherwise complied with this section and the regulations, the corporation may,
subject to the regulations, pay all or part of the settlement or judgment.

. . .

(16) The corporation, on
application by a person who would otherwise be a claimant but whose right
of action has been extinguished because he or she has, without the consent of
the corporation, entered into a settlement with the uninsured motorist or the
owner of the uninsured motor vehicle or both, may pay to the person that
part, if any, of the amount owing and unpaid under the settlement that the
corporation considers appropriate in the circumstances.

(17) The corporation must not consider an application by a
claimant under this section if any other motorist who is liable for all or part
of the claimant’s damages is insured against liability in respect of those
damages, but the corporation, if it considers it appropriate in the
circumstances, may waive the requirements of this subsection in respect of
any one or more of the persons against whom the claimant has a cause of action.

[6]            
Also effective June 1, 2007, the Insurance (Motor Vehicle) Act
Regulation, B.C. Reg. 447/83 (the “Old Regulation”) was
replaced by the Insurance (Vehicle) Regulation, B.C. Reg. 447/83
(the “New Regulation”).  Part 8 of the Regulation
(ss. 105 to 108) is entitled “Third Party Rights Occasioned by Uninsured or
Unidentified Motorists,” and applies to claims under s. 20 of the Act.

[7]            
Section 106 of the Old Regulation provided:

106  (1)  In this section
"insured claim" means any benefit, right to indemnity or claim to
indemnity accruing to a claimant and includes a benefit or right or claim

(a) under the Workers Compensation Act or a similar
law or plan of another jurisdiction,

. . .

(2)  No amount shall be paid by the corporation under section
20 or 24 of the Act in respect of that part of a claim that is paid or payable
as an insured claim.

[8]            
Section 106 of the Old Regulation had the potential to be
very unfair to certain injured persons.  In Buxton v. Tang, 2007
BCSC 1101, Madam Justice Bennett explained the problem, at para. 4:

Under Regulation 106 of the old Act,
ICBC did not have to make any payment for loss which had already been
compensated for by the WCB.  The result was that the injured worker could, to
use an example provided by counsel, end up with nothing.  If WCB paid the
injured worker $7,000 for income and medical benefits and a court awarded $12,000
as damages, comprised of $7,000 for income and medical expenses and $5,000
general damages, ICBC would not be obliged to pay $7,000 and the WCB could take
the $5,000 as a payment towards the $7,000 it paid out to the injured worker. 
. . .

[9]            
Section 106 of the New Regulation addressed this problem. 
The definition of “insured claim” has been changed, to exclude from that
definition WCB benefits in respect of which the WCB pursues its right of
subrogation.  The section now requires ICBC to pay the entire amount of the
claim and not deduct the WCB benefits:

106 (1)  In this section, “insured
claim” means any benefit, compensation similar to benefits, right to indemnity
or claim to indemnity accruing to a person entitled to benefits, compensation
or indemnity or to the personal representative or guardian of the person, and
includes a benefit, compensation, right or claim

(a) under the Workers Compensation Act or a similar
law or plan of another jurisdiction, unless

(i)  the insured elects not to claim compensation under
section 10 (2) of the Workers Compensation Act and the insured is not
entitled to compensation under section 10 (5) of that Act, or

(ii)  the Workers Compensation Board pursues its right of
subrogation under section 10 (6) of the Workers Compensation Act,

. . .

(2)  No amount shall be paid by the corporation under section
20 or 24 of the Act in respect of that part of a claim that is paid or payable
as an insured claim.

[10]        
Form CL-42, the form prescribed by s. 108 of both the Old
Regulation and the New Regulation for making a claim
under s. 20, is a statutory declaration to be completed by the applicant.  The
form under the New Regulation remained substantially the same as
under the Old Regulation.

Facts for the Special Case

[11]        
I take the facts from the “Special Case Brief.”  In these facts,
“plaintiff’s counsel” is a lawyer with the Legal Services Department of the WCB.

[12]        
Mr. Hicks was involved in a motor vehicle accident on April 21, 2005
when his vehicle collided with a stolen motor vehicle operated by Mr.
Bieberbach.  Mr. Bieberbach died in the accident.  He was 17 years old at the
time of his death.

[13]        
On April 29, 2005, Mr. Ed Hicks, Roy Hicks’ brother, filed a statutory
declaration in Form CL-42 in relation to the property damage arising out of the
accident.

[14]        
On May 6, 2005, Roy Hicks elected to claim Workers Compensation benefits
for his injuries.  The WCB then became subrogated to Mr. Hicks’ cause of action
pursuant to s. 10(6) of the Workers Compensation Act, R.S.B.C.
1996, c. 492.

[15]        
On June 27, 2005, Ed Hicks signed a release and assignment in the
prescribed form in settlement of his property claim.  On June 30, 2005, ICBC
concluded the material damage portion of the accident claim.

[16]        
On August 10, 2005, the ICBC collections department determined not to
seek any recovery against Mr. Bieberbach’s estate.

[17]        
On August 10, 2005, a lawyer employed by the Legal Services Department
of the WCB wrote to ICBC advising that a claim was being advanced on behalf of
Roy Hicks, and requesting particulars of documents in the possession of ICBC,
including statements and police reports.

[18]        
On August 17, 2005, ICBC wrote to the Legal Services Department of the
WCB confirming that the truck Mr. Bieberbach had been driving had been stolen. 
ICBC’s letter went on to say:

Stolen vehicles are deemed to be uninsured with respect to
third party liability claims.  As such, any third party claim would have to be
brought under the terms of Section 20 of the Insurance (Motor Vehicle) Act. 
As per Part 8 of the Regulation pursuant to that Act, any claims paid by the
Board would be deemed to be an “insured claim” and thus excluded from
any consideration for payment by ICBC under Section 20 of the Act.

[19]        
On September 7, 2005, WCB counsel wrote to ICBC referencing ICBC’s
August 17, 2005 letter, wherein ICBC had confirmed the truck was stolen and
that ICBC was relying on Part 8 of the Insurance (Motor Vehicle) Act
Regulation.  On October 17, 2005, ICBC replied to the WCB’s
September 7, 2005 letter.

[20]        
On or before February 10, 2006, ICBC granted relief from forfeiture
against Mr. Bieberbach’s estate, and paid the death benefits claim under Part 7
of the Old Act.

[21]        
The endorsed writ of summons in this action was filed on October 23,
2006, and alleged that Mr. Bieberbach was driving a stolen vehicle.  Both Mr.
Bieberbach and ICBC were named as defendants.  On November 21, 2006, ICBC
acknowledged service of the writ.  An appearance was entered on November 22,
2006 on behalf of ICBC only.

[22]        
On February 7, 2007, counsel retained by ICBC wrote to plaintiff’s
counsel.  ICBC’s counsel requested that the writ be served on the appropriate
person(s) representing Mr. Bieberbach’s estate.  He advised that he had been
appointed to defend the claim on behalf of the deceased uninsured defendant if
required, and requested that he be advised if there was a default (once the
writ was served), so that appropriate steps could be taken to defend the
claim.  ICBC’s counsel also pointed out that ICBC had not been properly named
as a defendant, and requested that the action be discontinued as against it.

[23]        
Prior to June 1, 2007, both parties engaged in settlement negotiations
on this matter.  Both parties made proposals and/or demands, orally and in
writing.  Both parties proceeded in those negotiations prior to June 1, 2007 on
the understanding that the law required that the WCB’s benefits be deducted
from any damages to be paid by ICBC under s. 20 of the Old Act
and made proposals and/or demands with those deductions applied.

[24]        
On June 1, 2007, the Old Act was replaced by the New
Act.

[25]        
On June 28, 2007, Buxton v. Tang, was decided by Madam
Justice Bennett.

[26]        
On September 18, 2007, plaintiff’s counsel swore an affidavit in support
of an application to amend the pleadings, to allow the action to proceed in the
absence of a person representing Mr. Bieberbach’s estate and without service of
the writ on any person representing Mr. Bieberbach’s estate.  On September 27,
2007, a notice of discontinuance was filed, discontinuing the action as against
ICBC, as had been requested in February 2007.

[27]        
On December 7, 2007, plaintiff’s counsel wrote to ICBC asking whether a
declaration in Form CL-42 had been filed by Roy Hicks.  ICBC had not requested
that Mr. Hicks complete a CL-42.

[28]        
On January 24, 2008, Roy Hicks signed a CL-42 statutory declaration
form.

[29]        
On February 22, 2008, counsel for the WCB sent the CL-42 that had been
completed by Roy Hicks to ICBC.

Discussion

[30]        
Based on the facts set out in the special case, Mr. Brun, counsel for
the defendant, submits that the Old Act and the Old
Regulation apply to Mr. Hicks’ claim, and that the question for the
court on the special case should be answered “yes.”

[31]        
In Buxton v. Tang, Madam Justice Bennett addressed the
same question as has been posed by the special case:  where, prior to June 1,
2007, a person is injured by an uninsured motorist, and the injured person
elects to claim benefits from the WCB, does s. 106 of the Old Regulation
apply, or does s. 106 of the New Regulation apply?  On the
facts before her, the accident occurred in July 2003, and the plaintiff applied
for compensation under s. 20 of the Act in 2005.  Madam Justice
Bennett concluded that the Old Act and (more importantly) the Old
Regulation applied.

[32]        
Before turning to analyse the cases, Madam Justice Bennett commented on
the nature of the claim under s. 20 against the uninsured motorist, and
contrasted it with a claim under s. 24 against an unidentified motorist, at
paras. 7-8 (underlining in original):

[7]        . . . A claim under
this section, that is, the uninsured vehicle section, is not based on an
insurance contract because the defendant has no contract.  The language in s.
20 is that ICBC may pay.  It is a creation of statute to assist those
who are injured by persons who are so irresponsible as to not carry insurance. 
. . .

[8]        Section 24, which is similarly worded to s. 20,
relates to the situation where the party is injured as a result of a hit and
run driver, and this section imposes a statutory obligation on ICBC to
compensate the injured party if a settlement is reached or a judgment is
granted.  The terms there are mandatory; “shall pay”. The difference is that
there is no defendant who can be sued and the only possibility for compensation
for the injured party is from ICBC.

[33]        
After reviewing the cases, Madam Justice Bennett concluded, at para. 14
[underlining added]:

[14]      The bulk of the authority tends towards a
prospective application when rights accrue prior to an amendment.  In this
case, the plaintiff could have made his claim the day after the accident and he
could have simply claimed against ICBC without making a claim for Workers’
Compensation benefits.  Regardless of which route he took for compensation, his
rights arose on the date of the accident. The rights of the insurance
company, which included deductions for payments made by ICBC, were
engaged, in my view, when the plaintiff filed the statutory declaration.  It
was at that point that ICBC was in a situation where it at least “may” pay. 
Indeed, there is no obligation on ICBC to pay anything in the context of that
legislation.  Thus, the rights of both parties were engaged before the
amendment of June 1, 2007.

Since, on the facts, the rights of both parties were
engaged before the June 1, 2007 amendments, ICBC was permitted to deduct the
payments made by WCB before payment out to the plaintiff Buxton.

[34]        
Buxton v. Tang was considered in Ayres v. Doe,
2009 BCCA 552, affirming 2008 BCSC 48.  However, the issue in Ayres
was whether the old or new legislation applied to a claim under s. 24 in
respect of an unidentified motorist, rather than a claim under s. 20 in respect
of an uninsured motorist.

[35]        
Here, the accident occurred before the legislation was changed. 
However, unlike Buxton v. Tang, Roy Hicks’ CL-42 claim form,
formally applying for payment of damages under s. 20, was not signed until
January 2008 and not submitted until February 2008.

[36]        
Mr. Brun argues that Mr. Hicks’ right to make a claim in respect of his
injuries arose at the time of the accident.  There is no dispute on this point.
With respect to ICBC, Mr. Brun submits that, although the CL-42 was not submitted
until February 2008, ICBC’s rights were in fact engaged before June 1, 2007, by
the pattern of dealing between the parties.

[37]        
Mr. Brun notes that, when it was advised by the WCB on August 10, 2005
of the claim by Roy Hicks, ICBC in response specifically referred to s. 20 of
the Act and Part 8 of the Regulation, and indicated
that any WCB benefits would be deductible.  The writ of summons was issued
before the legislation was changed, and Mr. Brun says that ICBC likely was
named as a defendant (although improperly) because Roy Hicks intended to
advance some form of statutory claim against ICBC arising out of an accident
involving a stolen vehicle.  Mr. Brun notes that ICBC gave up rights against
Mr. Bieberbach’s estate, and paid benefits to the estate.

[38]        
Mr. Brun notes further that, prior to June 1, 2007, ICBC engaged in
settlement negotiations to settle Roy Hicks’ claim.  During negotiations, both
parties proceeded on the understanding that the law required WCB benefits to be
deducted from any damages to be paid under s. 20, and they made proposals or
demands with those deductions applied.  In Mr. Brun’s submission, these ongoing
negotiations demonstrate that the parties believed they had reached a point
where ICBC was in a position to pay a claim under s. 20, and that plaintiff’s
counsel was agreeable to proceeding to settle on the basis that deductions
would be made.  Mr. Brun argues there is nothing in s. 20 that requires
completion and submission of an application in Form CL-42 before ICBC “may” settle
with someone injured by an uninsured motorist, and the only consequence of
doing so without a formal application is that ICBC cannot proceed against the
uninsured motorist.  Since, on the facts here, ICBC was not going to proceed
against Mr. Bieberbach’s estate in any event, an application in Form CL-42 from
Roy Hicks was unnecessary.

[39]        
In short, Mr. Brun says that ICBC’s rights to deduct payments from any
settlement are engaged, at the latest, when a claimant applies under s.
20.  However, he submits that, consistent with the legislation, there is
nothing preventing those rights from being engaged earlier, and without any
formal application.  Mr. Brun says that is what has happened on the facts here,
with the result that the date and the making of the formal application are
irrelevant.  In his submission, in view of the pattern of the parties’
dealings, the Old Regulation must apply.

[40]        
However, I do not think that s. 20 can be read in this way.

[41]        
Section 20 does not obligate ICBC to pay anything to a person injured in
an accident involving an uninsured driver.  The word used is “may,” in contrast
to s. 24, where the word used is “must.”

[42]        
However, the circumstances in which ICBC “may” pay are described in s. 20(9):

If the corporation enters into a settlement with a
claimant or a claimant obtains a judgment against an uninsured motorist in
accordance with this section and the claimant has otherwise complied with
this section and the regulations, the corporation may, subject to the
regulations, pay all or part of the settlement or judgment.

I do not see anything in this language to suggest that
an application under s. 20(2) in the prescribed form could be dispensed
with altogether, as ICBC might see fit.  On the contrary, on its face, s. 20(9)
requires a claimant to comply with s. 20 and the regulations.

[43]        
In s. 20(17), there is specific language whereby ICBC “may waive
the requirements of this subsection.”  However, I do not find anything of the
sort in relation to s. 20(2).  I do not think the words “may waive the
requirements” can be implied, in relation to how a claim is made, in view of
the express language in subsections (2) and (9) of s. 20.

[44]        
A claimant who is injured by an insured driver and who wishes to make an
application to ICBC for damages must do so in the prescribed form: 
s. 20(2).  The form prescribed is a statutory declaration, where an
applicant must verify facts as if under oath or on affirmation.  I do not see
anything in s. 20 to suggest that ICBC “may pay” without having fundamental facts
relevant to the claimant’s claim verified by solemn declaration,  as prescribed
by the legislation.  On the contrary, the clear implication of s. 20(9) is that
it is necessary for a claimant to submit a declaration in Form CL-42 before
ICBC “may” pay.  The significance of the word “may pay” (rather than “must pay”)
is that, even when a claimant has complied with s. 20 and the regulations,
ICBC is not obligated to pay:  see Buxton v. Tang, at
para. 7.

[45]        
In my view, ICBC’s correspondence dated February 7, 2007, indicates that
ICBC requires plaintiff’s counsel to comply with the service and default
requirements of s. 20 (see in particular ss. 20(5)(b), (6) and (7)), and, more
generally, indicates that ICBC expected Roy Hicks to comply with the section
and the regulations before any amount would be paid to him.  This is entirely
consistent with s. 20(9).  One of the requirements was that Mr. Hicks
complete and submit a CL-42.  Unlike s. 24 of the Act, which
requires a claimant to give ICBC notice of a claim within 6 months after the
accident but does not specify any form in which the notice must be given, s. 20
specifies the form of notice of a claim, but does not fix a deadline.

[46]        
I turn then to consider the parties’ settlement negotiations.

[47]        
On the facts, the parties engaged in settlement negotiations and
exchanged proposals prior to June 1, 2007.  Not surprisingly, the settlement
negotiations were conducted in the context of s. 106 of the Old
Regulation.

[48]        
However, as of June 1, 2007, no settlement had been concluded.  Although
the parties were negotiating with one another, ICBC had not committed itself to
pay anything, and Roy Hicks (in fact, WCB on behalf of Mr. Hicks) had not
committed himself to accept anything, by way of a settlement.

[49]        
Mr. Brun argues the inference to be drawn from the facts concerning the
settlement negotiations is that the parties believed they had reached a point where
ICBC was already in a position to pay a claim under s. 20, even though no
CL-42 declaration had been submitted.  However, and especially where no
settlement had been concluded, that is not the only reasonable inference.  In
view of the specific provisions of s. 20, and in the absence of any concluded
settlement, it is reasonable to infer that the parties were proceeding with
settlement negotiations on the basis that, if the negotiations were successful,
ICBC would be in a position to pay once Roy Hicks had complied with the
requirements of s. 20 and the regulations.  That is that the legislation
required Mr. Hicks to do.

[50]        
In that light, the facts concerning the parties’ settlement negotiations
are neutral, in my opinion.  They do not support the position being advanced by
Mr. Brun, that ICBC’s rights had been engaged before June 1, 2007 and therefore
the Old Regulation must apply.

[51]        
Finally, in my view, Mr. Brun’s position is inconsistent with Madam
Justice Bennett’s interpretation of s. 20 in Buxton v. Tang.  She
concluded (at para. 14) that ICBC’s rights were engaged when a claimant filed
the statutory declaration in form CL-42.  Madam Justice Bennett said that it
was “at that point that ICBC was in a situation where it at least ‘may’ pay.”

[52]        
In my opinion, in this case and reading s. 20 as a whole, ICBC was not
in a position where it at least “may” pay, until Roy Hicks submitted his CL-42
statutory declaration.  That was the final step Mr. Hicks needed to complete
(since service of the writ and defence of the claim by ICBC had been addressed
in the fall of 2007) as claimant.  Since the CL-42 statutory declaration was
submitted in February 2008, s. 106 of the New Regulation
applies.

[53]        
Mr. Brun advances an estoppel argument in the alternative, although he
did not press the point in oral argument.  In my view, even if the other
elements of an estoppel against Mr. Hicks could be made out, the estoppel
argument must fail on the point of detrimental reliance.

Summary

[54]        
In summary, the question posed on the special case is:

Does the Insurance Corporation of British Columbia have the
legal authority to deduct Workers’ Compensation Board benefits paid to the
Plaintiff from any amount to be paid to the Plaintiff for damages, as a result
of settlement or judgment in this matter, taking into account Section 20 of the
Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 and regulation 106 of the
Insurance (Vehicle) Act Regulations, or the predecessor to these
sections which were repealed on June 1, 2007?

My answer is no.  Section
106 of the New Regulation applies in respect of the plaintiff’s
claim.

“The
Honourable Madam Justice Adair”