IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20150717

Docket: L150153

Registry: Vancouver

Between:

Cinda Joyce
Middleton

Plaintiff

And:

Siegfried Heerlein
and Enterprise Rent-A-Car Canada
Limited / Enterprise Location D’Autos Canada Limitee

Defendants

Docket: M153425

Registry: Vancouver

Between:

William Leroy
Middleton

Plaintiff

And:

Siegfried Heerlein
and Enterprise Rent-A-Car Canada
Limited / Enterprise Location D’Autos Canada Limitee

Defendants

Before:
The Honourable Mr. Justice Johnston

Reasons for Judgment

(In
Chambers)

[1]            
In two applications argued on behalf of two
insureds, Progressive Max Insurance Company (“Progressive”), an insurer
carrying on business in the United States, seeks to revisit a subrogation issue
it litigated unsuccessfully in Matilda v. MacLeod, 2000 BCCA 1.

[2]            
Progressive insured Mr. and Mrs. Middleton, who
are the plaintiffs in two separate personal injury actions in British Columbia.
Mr. and Mrs. Middleton are husband and wife and ordinarily resident in
Washington State at any time relevant to these actions. The Middletons were
riding a motorcycle in British Columbia on July 24, 2010, when they
collided with a vehicle owned by the defendant Enterprise Rent-A-Car Canada and
operated by the defendant Mr. Heerlein.

[3]            
The Middletons’ insurance policy provided that
Progressive would pay “reasonable expenses incurred for necessary medical
services" received by the plaintiffs as insureds “within three years of
the date of a motor vehicle accident.”

[4]            
The accident caused injuries that required
“necessary medical services” to each of Mr. and Mrs. Middleton: Progressive paid
$11,275.16 for Mr. Middleton, and $110,092.28 for Mrs. Middleton (all amounts
expressed in United States dollars).

[5]            
In addition, Progressive paid Mrs. Middleton
$5,371.25 for wage loss benefits and $2,370.00 for homemaker benefits. These
payments were not required by Progressive’s policy of insurance, but instead
were required by the terms of a power of attorney and undertaking it had filed
pursuant to s. 106 of the Motor Vehicle Act, R.S.B.C. 1996, c. 318. By
that undertaking, Progressive was obliged to provide to those it insured, who
might be injured in a vehicle accident in British Columbia, at least “the kind
or class of coverage or coverages required by law” for those insured within
British Columbia. The undertaking obliges Progressive to provide to its
insureds, who may be injured in a vehicle accident in British Columbia, the
same benefits as a British Columbia insured would receive under Part 7 of the Insurance
(Vehicle) Regulation, B.C. Reg. 447/83, commonly called no-fault benefits.

[6]            
Mr. and Mrs. Middleton have sued for damages in
separate actions, and in each action have brought applications for summary
judgment pursuant to Rule 9-6 for their medical, wage loss, and homemaker
benefits, paid to them by Progressive. The applications proceeded on the basis
of admissions in which, for the purposes of this summary judgment application,
all parties admit that there was an accident as described, the authenticity of
documents that include the Progressive policy of insurance, the power of
attorney and undertaking filed by Progressive in British Columbia, a summary of
payments made by Progressive to or on behalf of each of its insured plaintiffs,
and written notices of subrogation sent by Progressive to each plaintiff.

[7]            
The issue here is whether Progressive can
recover what it paid to the Middletons, in claims brought in their names,
through the exercise of its right of subrogation, or, as the defendants argue, whether
those claims are released by s. 83(2) of the Insurance (Vehicle) Act,
R.S.B.C. 1996, c. 231, which provides:

83.       (2)        A
person who has a claim for damages and who receives or is entitled to receive
benefits respecting the loss on which the claim is based, is deemed to have
released the claim to the extent of the benefits.

[8]            
Purely for the sake of convenience, I will refer
to the applicant in each of these subrogated applications as Progressive, in
recognition that the applications represent Progressive’s pursuit of its
subrogated interests.

[9]            
Progressive raises similar claims in these
applications to those it raised by special cases under former Rule 33 in Matilda,
in which it sought declarations that it had enforceable rights at common law,
or under its contracts of insurance, to recover payments it had made to its
insured plaintiffs in two separate actions. At that time, the governing statute
was the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231. Matilda
was concerned with the interpretation and application of s. 25 of the
former Act, although s. 26 was also argued. The Insurance (Motor Vehicle)
Act was re-enacted as the Insurance (Vehicle) Act, R.S.B.C. 1996,
c. 231, effective June 1, 2007. In the process, ss. 25 and 26 of the Insurance
(Motor Vehicle) Act were repealed, and replaced by ss. 83 and 84 of the Insurance
(Vehicle) Act.

[10]        
The Court of Appeal in Matilda stated
that the issue turned on the application of s. 25(1) and (2) of the Insurance
(Motor Vehicle) Act. Progressive had argued that its policy of insurance
provided it a right of subrogation, and that British Columbia had no jurisdiction
to modify by statute a contract of insurance written outside British Columbia.

[11]        
When Matilda was decided, the relevant
portions of s. 25 of the Insurance (Motor Vehicle) Act provided as
follows:

25.       (1)        In
this section and in section 26, "benefits" means a payment that is or
may be made in respect of bodily injury or death under a plan established under
this Act, other than a payment pursuant to a contract of third party liability
insurance or an obligation under a plan of third party liability insurance, and
includes accident insurance benefits similar to those described in Part 6 of
the Insurance Act that are provided under a contract or plan of
automobile insurance wherever issued or in effect.

 (2)        A
person who has a claim for damages and who receives or is entitled to receive
benefits respecting the claim, is deemed to have released the claim to the
extent of the benefits.

[12]        
The court noted at para. 7:

As the chambers
judge noted, in the absence of any express statutory right of subrogation the
insurer’s right of subrogation is a derivative right only, which must be
advanced in the name of the insured. The insurer is placed in no better
position than that of the insured. The revised form of question 1 could be
answered “no” simply on the ground that Progressive has no status as a
subrogated insurer to advance any claim against the defendants in its own name.

The revised
question, to which the above answer was given, was stated in this way at
para. 2:

Does Progressive (the third party) have an
enforceable right under the contract or the common-law to recover from the
defendants all or part of the funds, being $17,800.00 U.S. paid by Progressive
to the plaintiff?

[13]        
It would seem, therefore, that unless the plaintiffs
can point to an express statutory right of subrogation, the answer in these
cases must be governed by the result in Matilda set out above.

[14]        
In spite of the finding in para. 7, the court in
Matilda went on to deal with what it said was a broader issue argued by
the parties – provincial legislative competence over extra-provincial insurance
contracts, which it framed in this way at para. 8:

The issue is
whether the provisions of the Insurance (Motor Vehicle) Act purport to
modify the terms of extra-provincial policies and thereby exceed the reach of
provincial jurisdiction. In my view, they do not. The focus of s. 25(1)
and (2) is on the tort action by Progressive’s insureds against ICBC’s
insureds. The torts are the motor vehicle accidents that occurred within
British Columbia and clearly are within provincial jurisdiction. The
subsections simply provide that accident benefits cannot be claimed in the B.C.
tort actions irrespective of where the policy paying the benefits was made.
That does not purport to modify the terms of the extra-provincial policies. It
merely limits the damages recoverable in tort whether by the insured
beneficially or Progressive as subrogated claiming in the name of its insureds.
In my opinion, the subsections address an incident of provincial jurisdiction
over torts within the province and do not attempt to legislate terms of
extra-provincial contracts. [Underlining added.]

[15]        
Although there is no argument in these
applications that the current version of the statute purports to modify
extra-provincial contracts, the underlined portions above would appear to offer
no comfort to Progressive, as there is no material difference in wording
between the section before the court in Matilda and s. 83(1) and (2)
invoked by the defendants in these cases.

[16]        
The court in Matilda then dealt with an
argument, also made in these cases, that the purpose of s. 25(2) was to avoid a
double recovery, where the insured could claim damages from a tortfeasor for a
loss for which he or she had already been compensated as an accident benefit.
Progressive argued there, as here, that s. 25(2) was intended to prevent
the insured from being paid twice for the same loss, but was not intended to
prevent an insurer, that had made its insured whole through payment of benefits,
from recovering those payments from the tortfeasor.

[17]        
After canvassing authorities, some of which are
also cited on these applications, the court concluded that “the application of
s. 25(2) is not limited to cases of double recovery” (para. 10).

[18]        
So far, the decision of the Court of Appeal in Matilda
would appear to be a complete answer to Progressive’s claims in these
applications, but Progressive argues that Matilda is no longer good law
as a result of a change made when the Insurance (Motor Vehicle) Act was
re-enacted as the Insurance (Vehicle) Act, and s. 26 was repealed
and replaced by s. 84.

[19]        
The change to which the plaintiffs point is in
the language of s. 84 of the current Insurance (Vehicle) Act, which they
contrast with the wording of s. 26 of the former Insurance (Motor Vehicle)
Act. The relevant portions of the two sections from each statute read:

26.       (1)        On
making or assuming liability for payment of benefits or insurance money, the
corporation

 (a)        is subrogated to and is deemed to
be the assignee of all rights of recovery against any other person liable in
respect of the loss, damage, injury or death of a person to whom, on whose
behalf or in respect of whom the benefits or insurance money are paid or to be
paid, and

 (b)        may bring action in the name of
the insured or in its own name to enforce the rights referred to in
paragraph (a).

 (2)        If
money is recovered under subsection (1) and the burden of the loss is shared by
the insurer and insured, the net amount, after deduction of the costs of
recovery, must be divided between them in the same proportions as they bear the
loss.

84.       (1)        On
making a payment of benefits or insurance money or assuming liability for
payment of benefits or insurance money, an insurer

 (a)        is subrogated to and is deemed to
be the assignee of all rights of recovery against any other person liable in
respect of the loss, damage, bodily injury or death of a person to whom, on
whose behalf or in respect of whom the payment of benefits or insurance money
is made or to be made, and

 (b)        may bring action in the name of
the insured or in its own name to enforce the rights referred to in
paragraph (a).

 (2)        If
money is recovered under subsection (1) and the burden of the loss is shared by
the insurer and insured, the net amount, after deduction of the costs of
recovery, must be divided between them in the same proportions as they bear the
loss.

 [Underlining
added to both.]

[20]        
Nothing turns on the difference between the two
statutes in the language defining “benefits”. The underlined words, “the
corporation” in the former statute, and “an insurer” in the current statute,
constitute the difference that Progressive says makes Matilda no longer
an obstacle to their current claims. Progressive argues that the effect of this
change is to now afford it the same unique status as was given to ICBC under
the previous wording, referred to at para. 11 of Matilda:

The appellants
contended that the position of ICBC under s. 26 of the Insurance (Motor
Vehicle) Act with respect to the recovery of benefits paid on behalf
of an insured is inconsistent with the “matching principle” interpretation of
s. 25. ICBC has a statutory right of subrogation under s. 26 but s. 26 only
applies to ICBC. I do not think that ICBC’s unique status under s. 26 affects
the position of other insurers under s. 25.

This argument overlooks the definition of
“insurer” in s. 1 of the current statute:

"insurer" means

(a)        the corporation, or

(b)        the person who
undertakes, agrees or offers to provide insurance under an optional insurance
contract;

Progressive meets neither branch of the
definition.

[21]        
I conclude that Matilda governs the
interpretation of s. 83, is not affected by the change in wording from s. 26 to
s. 84, and is a full answer to these applications.

[22]        
Both applications are dismissed with costs to
the defendants.

              “R.T.C.
Johnston, J.”             

The
Honourable Mr. Justice Johnston