IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150617

Docket: S11-2854

Registry: Victoria

Between:

SCK Motor Company
and Linda Lee Evans

Plaintiffs

And

Insurance
Corporation of British Columbia and

CDI Direct
Insurance Incorporated

Defendants

– and –

Docket: M137516

Registry: New
Westminster

Between:

Ocean Park Ford
Sales Ltd.

Plaintiff

And

Insurance
Corporation of British Columbia and

CDI Direct Insurance
Incorporated

Defendants

Before: The
Honourable Madam Justice Fisher

Reasons for Judgment

[1]            
The plaintiffs in Action S112854, SCK Motor Company and Linda Lee Evans,
and the plaintiff in Action M137516, Ocean Park Ford Sales Ltd. seek, among
other things, declarations that they are entitled to insurance coverage by the
defendants Insurance Corporation of British Columbia (ICBC) and Canadian Direct
Insurance Incorporated (CDI). In this summary trial in respect of both actions,
the defendants have applied for a declaration that the plaintiffs are not
entitled to insurance coverage and they seek to have the claims dismissed under
Rule 9-7(15) of the Supreme Court Civil Rules.

[2]            
The insurance coverage in issue is in relation to a 2003 Mercedes Benz
that was involved in a motor vehicle accident on December 10, 2008, and whether
any of the plaintiffs are entitled to rely on provisions in the Insurance
(Vehicle) Regulation that apply to insurance coverage for substitute
vehicles.

Factual Background

[3]            
SCK Motor Company (SCK) is in the business of buying and selling new and
pre-owned vehicles. Steve Evans is the President of SCK and his wife, Linda Lee
Evans, is the office manager.

[4]            
SCK and Ocean Park Ford Sales Ltd. (Ocean Park) had a business
arrangement whereby SCK sold vehicles to Ocean Park and then leased them back,
allowing SCK to free up capital and Ocean Park to profit from lease financing.

[5]            
On January 8, 2008, SCK sold a 2007 BMW to Ocean Park and leased it back
for the use of Mrs. Evans. SCK had the BMW licenced and insured under a valid
ICBC insurance policy with Mrs. Evans as the principle operator. A month later,
SCK added collision and excess liability coverage through CDI. All premiums
were paid by SCK.

[6]            
On November 24, 2008, SCK acquired the 2003 Mercedes Benz. Mrs. Evans
wanted to trade in the BMW for the Mercedes. On December 10, 2008, SCK and
Ocean Park agreed to the termination of the BMW lease, the sale of the Mercedes
to Ocean Park, and a new lease back of the Mercedes to SCK. Mr. Evans went to
Ocean Park and signed a bill of sale, a transfer form and a commercial motor
vehicle lease agreement for the Mercedes. No money changed hands at that point,
but Mr. Evans expected to be paid within a few days as was their practice. Mrs.
Evans then took the BMW to Ocean Park, gave up possession to Ocean Park, and had
the licence plates from the BMW removed. She took them back to SCK and Mr.
Evans had the plates attached to the Mercedes.

[7]            
Mr. Evans intended to report and register the transfer and change of
vehicle insurance documents later that day. However, shortly after the licence
plates were attached to the Mercedes, Mrs. Evans drove it into Vancouver and
was involved in a motor vehicle accident. The next day, December 11, 2008, the
transfer was registered and a new owner’s certificate was issued for the
Mercedes.

[8]            
The Mercedes was seriously damaged in the accident and was determined to
be a total loss. A number of actions arising from this accident were
subsequently commenced. CDI paid the total loss for the damage to the vehicle,
which was eventually received by SCK.

The issues

[9]            
The primary issue is whether the Mercedes was acquired by SCK as a
substitute vehicle for the BMW, and whether SCK is entitled to a ten day grace
period to report the change of vehicle and register the transfer documents. If
not, as ICBC contends, the Mercedes was not insured at the time of the accident
on December 10, 2008.

The statutory framework

[10]        
The Motor Vehicle Act, RSBC 1996, c. 318, in s. 3(1), requires
the owner of a motor vehicle to register that vehicle with ICBC and obtain a
licence and an owner’s certificate under in the Insurance (Vehicle) Act,
RSBC 1996, c. 231 before using it or operating it on a highway. “Owner” is
defined in the Motor Vehicle Act as including “a person in possession of
a motor vehicle under a contract by which he or she may become its owner on
full compliance with the contract”. Under s. 17, an owner has a grace period of
10 days from the date title or interest in the vehicle is transferred to notify
ICBC for registration:

17 (1) If the title or interest
of a person in a motor vehicle … registered under section 3 is transferred,
whether by gift, exchange, barter, or sale, the transferor and the transferee
of the title or interest must immediately sign a notice of the transfer in the
form required by the Insurance Corporation of British Columbia, and the
transferee must within 10 days from the day of the transfer deliver the notice
to the corporation for registration by the corporation, accompanied by the
prescribed fee and the insurance premium in respect of the transfer and the
amount of tax owing in respect of the motor vehicle under the Social Service Tax Act,
the Consumption Tax Rebate and
Transition Act, section 212.1 or 218.1 or Division IV.1 of Part
IX of the Excise Tax Act
(Canada) or the Provincial Sales Tax Act.

[11]        
Under the Insurance (Vehicle) Act, an “owner’s certificate” is
defined as “a certificate issued to an owner under the plan”. The “plan” is the
plan of universal compulsory vehicle insurance operated by ICBC. “Owner” is
defined as

the person in whose name a
vehicle is registered and licensed under the Motor Vehicle Act
or the Commercial Transport Act.

[12]        
Part 2 of the Insurance (Vehicle) Regulation, BC Reg. 447/83 (the
Regulation) deals with applications, renewals, and changes to an owner’s
certificate. Under s. 8, applications for leased vehicles must set out the name
of the owner (as lessor), the name of the lessee (as renter) and the address of
either the owner or the renter.

[13]        
Mid-term changes are addressed in s. 9:

9 (2) The insured named on an owner’s certificate
must,

(a) within 10 days after

(i) the insured’s address is
changed from the address set out in the certificate, or

(ii) the insured acquires a
substitute vehicle for the vehicle described in the certificate,

report the change of address, vehicle, use or territory to a
person referred to in section 3, and pay or be refunded the resulting
difference in premium.

[emphasis added]

[14]        
Section 10 deals with the effect of an owner’s certificate. It provides
that an owner’s certificate validated by ICBC evidences that an insured has
coverage under Part 6 (third party liability), Part 7 (accident benefits) and Part
10 (first party coverage). “Insured” as used in s. 10 is defined in ss. 63, 78,
147 and 148 and includes “a person named as an owner in an owner’s
certificate”.

[15]        
Section 53 deals with the effect of an owner’s certificate for leased
vehicles. Similar to s. 10, it provides that an owner’s certificate issued to
an applicant who has complied with s. 8 evidences similar coverage for:

(a) the renter, and the renter’s household,

(b) the driver assigned by the renter to operate the leased
vehicle and that driver’s household, and

(c) every person operating the
vehicle with the renter’s consent.

[16]        
Part 5 of the Regulation deals with conditions of certificate.
Section 52 addresses substitute vehicles:

52 Where an owner of a vehicle described in an owner’s
certificate

(a) acquires, during the term of
the owner’s certificate, another vehicle in substitution for the described vehicle,

(b) transfers title to or interest
in the described vehicle, and

(c) removes the number plates from
the described vehicle, in accordance with section 3.05 of the Motor Vehicle Act
Regulations, B.C. Reg. 26/58, and displays them on the substitute vehicle,

the coverage evidenced by the owner’s certificate applies in
respect of the substitute vehicle for a period of 10 days from the day the
owner acquires the substitute vehicle.

[emphasis added]

Positions of the parties

[17]        
ICBC’s primary position is that s. 52 of the Regulation applies
only to owners of vehicles and not to lessees, submitting that if the
Legislature intended for a lessee to have the benefit of the substitute vehicle
provision it would have referred not only to the “owner of a vehicle” but also
“a renter of a leased vehicle”. Therefore, SCK, as a lessee, is not entitled to
the benefit of coverage for the Mercedes during the 10 day grace period as a
substitute vehicle.

[18]        
ICBC also took the position that title to the Mercedes had not passed to
Ocean Park at the time of the accident because Ocean Park had not yet paid for
it and the transfer and insurance documents had not yet been filed. On that
assumption, ICBC submitted that Ocean Park could not obtain the benefit of s.
52 because it had not acquired the Mercedes at the time of the accident.

[19]        
However, during submissions, ICBC conceded that SCK had transferred its
interest in the Mercedes to Ocean Park on December 10, 2008, such that Ocean
Park became the owner, at least within the meaning of s. 52(b) of the Regulation,
which refers to transfers of title to or interest in the described
vehicle. It maintains, however, that Ocean Park could still not obtain the
benefit of s. 52 because it did not acquire the Mercedes as a substitute
vehicle, since it retained the BMW in its inventory.

[20]        
CDI’s position is that coverage under its excess liability policy is
predicated upon the existence of valid compulsory insurance with ICBC. This is
because the Insurance (Vehicle) Act requires that optional insurance may
only extend coverage in excess of the underlying ICBC policy and such extended coverage
terminates if the underlying coverage provided by ICBC terminates.

[21]        
SCK’s position is that the benefit of s. 52 cannot be limited to owners
of vehicles because s. 8, which sets out what an insured must do when a
substitute vehicle is acquired, is not restricted to owners. It also says that
in practice, substitute vehicles are often acquired under lease and the lessee
functions essentially as the owner, being the one who operates the vehicle and
obtains the insurance for it.

[22]        
Ocean Park’s position is that it was not the owner of the Mercedes at
the time of the accident, and if it was, it adopts the position of SCK.

Ownership of the Mercedes

[23]        
On December 10, 2008, prior to the accident, SCK and Ocean Park executed
documents that evidence their agreement for the sale and purchase of the
Mercedes and a lease back to SCK. Although the bill of sale was not available,
the transfer and lease documents show that the transaction took place on
December 10, 2008.

[24]        
Firoz Jessa, the Fleet and Lease Manager for Ocean Park, confirmed that
these documents were executed on December 10, but deposed that it was his
intention that Ocean Park would become the owner of the Mercedes once the
official insurance documents had been filed and Ocean Park had paid for the
vehicle. He also deposed that no money was ever exchanged due to the accident
that occurred later that day.

[25]        
In my view, the evidence establishes that Ocean Park acquired ownership
of the Mercedes on December 10, 2008. In addition to the documentary evidence,
the actions of the parties are consistent with a transfer of ownership. It was
done in the context of SCK terminating the BMW lease and executing a new lease
for the Mercedes. SCK gave up possession of the BMW to Ocean Park, removed the
licence plates, and attached them to the Mercedes. Although no money changed
hands for the sale of the Mercedes on the day of the transaction, this was
expected to occur within a few days. It did not take place due to the loss of
the vehicle in the accident. In any event, SCK was eventually paid for the
value of the Mercedes from the insurance proceeds paid out by CDI.

[26]        
This case is distinguishable from Hammerton v MGM Ford Lincoln Sales
Ltd. 2007 BCCA 188, cited by ICBC. In Hammerton, one dealer sold a
truck to another dealer under a bill of sale which included a provision that
title to the vehicle did not pass to the purchaser until the entire purchase
price had been paid in full. The truck was in an accident the day after the
contract for purchase and sale was completed, but before the price had been
paid. In those circumstances, it was held that title to the truck had not
transferred to the purchaser at the time of the accident. Here, there is no
bill of sale in evidence, and no properly admissible evidence that the parties
intended title to pass only after the money was paid.

[27]        
Mr. Jessa’s evidence of his intention is inadmissible parole evidence.
As the court held in Hammerton, the evidence that is relevant to
determining the intentions of the parties is the objective evidence of their
conduct and the surrounding circumstances, not evidence of their subjective
intentions.

[28]        
Accordingly, I find that on December 10, 2008, SCK and Ocean Park
terminated the BMW lease, Ocean Park purchased the Mercedes from SCK and became
the owner, and Ocean Park leased the Mercedes back to SCK.

Interpretation of s. 52

[29]        
An issue was raised at the hearing of these applications regarding the
principles of construction that apply to the interpretation of insurance
regulations. It is clear that the contra proferentem rule does not
apply. As held in Squire v. ICBC (1990), 44 BCLR (2d) 65 (CA), this rule
has no application where neither party can choose the language of statutory
provisions that apply to the insurance relationship.

[30]        
This was recognized in Felix v ICBC, 2014 BCSC 166. However, in Felix,
Saunders J. applied the principle that in cases of doubt, statutory provisions
should be interpreted in favour of the insured, following July v. Neal
(1986), 32 DLR (4^th) 463 (ONCA). In July, the majority judgment
expressed support for this at para. 17:

… Insurance policies are statutory contracts and the
wording of the terms as in the instant case normally are not the words of the
insurer but the words of the statute or of the regulation. To such terms the contra
proferentem rule does not apply. However, the insurance industry is
consulted and does have input with regard to legislation affecting the
industry. The individual insured has none. His role is to pay the premium for
the expected indemnity.

It appears to me that if there is
doubt in the legislation establishing and governing the cover, and there are
two possible interpretations of any aspect of the cover, the one more
favourable to the insured should govern.

[31]        
This principle was applied to the interpretation of insurance regulations
on the basis that the insurance industry in Ontario was consulted or involved
in their development. This was also recognized in Somersall v. Friedman,
2002 SCC 59 in both majority and minority judgments. Whether the same is true in
British Columbia was not raised before me, and without some evidence or
acknowledgement that this is the case, I would be reluctant to depart from the
clear direction in Squire.

[32]        
In my view, the usual rules of statutory interpretation apply to
insurance regulations, as stated by Professor Driedger in Construction of
Statutes (Toronto, Butterworths, 1983) at p. 87, as well as the requirement
in s. 8 of the Interpretation Act, RSBC 1996, c 238:

Every enactment must be construed
as being remedial, and must be given such fair, large and liberal construction
and interpretation as best ensures the attainment of its objects.

[33]        
The words of a regulation are to be read in their entire context and in
their grammatical and ordinary sense harmoniously with the scheme and the
object of the Act and the intention of the legislature. In addition, the
presumption against tautology presumes that the legislature avoids superfluous
or meaningless words and every word in a statute has a specific role in advancing
the purpose of the legislation. Courts should avoid interpretations that render
any portion of a statute meaningless or redundant: see Wormell v ICBC,
2011 BCCA 166 at paras. 18-19; Streeper Contracting Ltd. v. ICBC, 2013
BCSC 355 at paras. 15-17; Felix at para. 57.

[34]        
Applying these principles, my view is that the Regulation permits
either an owner or a lessee to acquire a substitute vehicle and s. 52 extends
coverage for a substitute vehicle for a period of 10 days from its acquisition,
provided the conditions in paragraphs (a) to (c) are met.

[35]        
I do not interpret s. 52 to be restricted to owners to the exclusion of
lessees who hold a lesser interest, for these reasons:

a)       The use of the term “owner” in s. 52 is not
unqualified. It refers to “an owner of a vehicle described in an owner’s
certificate”. At the time of the accident on December 10, 2008, the owner’s
certificate for the 2007 BMW described the owner as both Ocean Park as the
lessor and SCK as the lessee. Thus, on the face of it, SCK was an “owner” as
that term is used in s. 52.

b)       Under s. 53, an
owner’s certificate for a leased vehicle evidences coverage for the lessee (or
renter) as long as the application for the owner’s certificate included the
names of the owner as “lessor” and the lessee as “renter”, and the address of
one or the other (as required in s. 8). This is consistent with the description
of the owner in the owner’s certificate for the 2007 BMW. I do not consider the
use of the word “lessee” rather than “renter” in the owner’s certificate for
the BMW to be significant, since it is ICBC that issues the certificate.

c)       Section 52(b)
requires, as a condition of coverage for the substitute vehicle, that the
“owner” (as described above) transfers title to or interest in the
described vehicle. The clear implication from this is that an interest less
than full title can be transferred.

[36]        
Any other interpretation would make little sense. To exclude lessees
from the 10 day grace period under s. 52 would be inconsistent with s. 9, which
requires “the insured named on an owner’s certificate” to report a change in
vehicle when the insured acquires a substitute vehicle. The definition of an “insured”
and an “owner” is the same. In s. 10 (which confirms coverage) “insured” includes
“a person named as an owner in an owner’s certificate”.

[37]        
Moreover, if s. 52 is interpreted as ICBC contends, it would appear to
have limited use to owner/lessors, who routinely acquire vehicles when leases
expire or terminate and keep those vehicles in their inventory for more than 10
days. It is the lessee who acquires possession of the vehicle and insures it,
and it is the lessee who would acquire a substitute vehicle.

[38]        
In this case, SCK complied with all three conditions in s. 52. During
the term of the owner’s certificate for the BMW, it acquired a lease interest
in the Mercedes in substitution for the BMW; it transferred its lease interest
in the BMW to Ocean Park; and it removed the number plates from the BMW and
displayed them on the Mercedes. Therefore, the coverage evidenced by the
owner’s certificate for the BMW applied to the Mercedes as the substitute
vehicle on December 10, 2008 and until a new owner’s certificate for the
Mercedes was issued on December 11, 2008.

[39]        
Given this valid and enforceable ICBC liability coverage, the excess
liability insurance provided by CDI is also valid and enforceable.

Conclusion and order

[40]        
The applications by the defendants for a declaration that the plaintiffs
are not entitled to insurance coverage and for dismissal of the claims against
them are dismissed.

[41]        
Despite the fact that the plaintiffs did not bring competing
applications for judgment, Rule 9-7(15) permits the court, on hearing a summary
trial application, to grant judgment in favour of any party, either on an issue
or generally. In their actions, the plaintiffs seek relief that includes
declarations of insurance coverage under both the ICBC and CDI policies.
Counsel agreed that the court may grant the declarations sought by the
plaintiffs in the event the applications were dismissed.

[42]        
Accordingly, the plaintiffs are entitled to declarations of insurance
coverage under the ICBC liability insurance policy and the CDI excess insurance
policy.

[43]        
The parties have liberty to make submissions on costs.

“Fisher,
J.”