Two-Year Limitation Found Not to Bar Action Against Foreign Insurer For Recovery of No-Fault Benefits

Two-Year Limitation Found Not to Bar Action Against Foreign Insurer

In MOLDOVAN V. ICBC, 2010 BCSC 1778 (“MOLDOVAN”), a judgment released on December 10, 2010, the Court found that a foreign insurer which had purportedly stepped into the shoes of ICBC through a Power of Attorney and Undertaking (“PAU”) could not rely on the two-year limitation period in s. 103 of the INSURANCE (VEHICLE) REGULATION, B.C. Regulation 447/83 to deny an action for no-fault coverage under Part 7 of the regulations. This decision illustrates how it is important not to assume that statutory limitation periods operate to bar claims for no-fault benefits where an out-of-province insurer is named as a defendant.

In MOLDOVAN, the Plaintiff suffered injuries after a U-Haul vehicle he was a passenger in was involved in an accident on June 8, 2005 in Coquitlam, B.C. The rental U-Haul vehicle was insured under a contract entered into in Arizona with a company incorporated in that state under the name Republic Western Insurance Company (“RWIC”). Due to various confusions, the Plaintiff did not apply to RWIC for Part 7 benefits until January 13, 2009, well outside the two-year limitation period in s. 103. RWIC refused to pay the Plaintiff the Part 7 accident benefits he was asking for, and argued that the fact that it had filed a PAU and stepped into the shoes of ICBC entitled it to rely on the two-year limitation period for bringing such an action, despite its contractual agreement to pay out “any kind or class” of benefit established by law in B.C.

The RWIC contract of insurance itself did not mention any limitation period for bringing an action for no-fault benefits.

The Court held at paragraph 23 that the PAU did no more than require RWIC to:

a)    Appear in proceedings;

b)    Not set up defences that are not available under a policy issued in British Columbia; and

c)    Satisfy any judgment, up to the limits of liability in the policy, but to an amount not less than the limits required with respect to a policy issued in British Columbia.

 

While the above obligations impose the negative duty not to raise defences which are not available under B.C. legislation, it is important to note that there is no positive empowerment allowing the foreign insurer to rely on legislative defences which were not present in the foreign contract.

Before proceeding with its analysis, the Court in MOLDOVANconsidered the following comments relating to the insurance implications of PAU agreements from DIOTTE V. ICBC, 2000 BCSC 1779:

[12]      The B.C. legislature has created a scheme whereby in certain actions in B.C., arising out of accidents in B.C., extraprovincial and other foreign insurers may be prevented from relying on contractual limits which are less than those required by the law of B.C. As a result, some extraprovincial and other foreign insurers may be required to pay their insureds higher benefits than are prescribed in a contract of insurance. This situation arises under B.C. legislation because (a)it is a condition of a license issued in B.C. to carry on business in B.C.; (b) there is reciprocity legislation; or (c), the insurer has filed a PAU. The legislation which makes up this scheme includes theINSURANCE ACT, the INSURANCE (MOTOR VEHICLE) ACT, and the FINANCIAL INSTITUTIONS ACT, R.S.B.C. 1996, c. 141.

[18]      The law in this province regarding the legal effect of filing a PAU appears to be well settled. Where a foreign insurer has filed a PAU with the Superintendent, the foreign insurer is bound by the terms of the PAU from setting up a defence to a claim, action or proceeding initiated in this province, which might not be set up if the contract of insurance had been issued in this province. …

[28]      Thus, once the PAU has been filed, the extraprovincial or foreign insurer is precluded by law from setting up any defence on the basis that the contract of insurance does not include a provision for Part 7 benefits. Because all contracts of insurance issued in B.C. contain provisions for the payment of Part 7 benefits, an extraprovincial or foreign insurer who has filed a PAU is obliged to pay Part 7 benefits up to the limits prescribed in this province.

In MOLDOVAN, the Court found that the agreement to pay out “any kind or class” of legislatively mandated benefit could not be avoided by reliance on the limitation period in s. 103 of the INSURANCE (VEHICLE) REGULATION. The Court rejected RWIC’s argument that the filing of a PAU necessarily incorporated all provisions and defences present in B.C.’s statutory insurance scheme, finding instead that “[t]he PAU is an undertaking and not an agreement to incorporate into RWIC’s insurance policy all those terms that theINSURANCE (VEHICLE) ACT and REGULATIONS, including Part 7, of this Province requires a British Columbia or ICBC policy to include” (at para. 35).

While the PAU in this case constituted an undertaking to pay certain benefits, it did not automatically superimpose the entire statutory scheme on a pre-existing contract made outside the province. Indeed, the Court pointed out at paragraph 35 that “in UNIFUND ASSURANCE CO., the Supreme Court of Canada recognized that to give effect to that argument would give British Columbia legislation an impermissible extraterritorial effect”.

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