IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20100201

Docket:
35325

Registry: Vernon

Between:

Douglas Thoreson

Plaintiff

And

Insurance Corporation of British
Columbia

Defendant

Before: The Honourable Mr. Justice Cole

Reasons for Judgment

Facts

[1]            
The plaintiff was injured in an accident that
occurred on September 5, 2002, near Vernon, British Columbia. The plaintiff was
driving a rented Harley Davidson motorcycle and his girlfriend, Debra Schultz,
was riding on the back of the motorcycle when he was forced off the road by an
unidentified driver. Both the plaintiff and Ms. Schultz were injured as a
result of this motor vehicle accident.

[2]            
On March 26, 2007, the Honourable Mr. Justice
Rice assessed liability at 85% against the unidentified motorist and 15%
against the plaintiff.

[3]            
Ms. Schultz obtained judgment against the
unidentified driver and Mr. Thoreson, the driver, and Excellent Adventures
Ltd., who was vicariously liable as owner of the motorcycle. Ms. Schultz
also sued the Insurance Corporation of British Columbia (“ICBC”) pursuant to
s. 24 of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231[Act].
Judgment was obtained in the amount of $935,521.79 including costs.

[4]            
The plaintiff, on March 17, 2008, settled his
action for the sum of $125,000, net of Mr. Thoreson’s 15% liability
assessment.

[5]            
After Ms. Schultz received judgment, she
wrote to ICBC demanding payment and when the payment was not made, a demand
letter was sent on July 26, 2007, demanding that Excellent Adventures Ltd., the
defendant, pay the amount of the judgment within seven days or execution
proceedings would be taken.

[6]            
Ms. Schultz’s solicitor had declined to
hold off collecting their judgment until ICBC could resolve the issues with the
plaintiff Mr. Thoreson and determine the pro-rata distribution under
s. 24 of the Act.

[7]            
ICBC paid out the full amount of Ms. Schultz
judgment but internally ICBC broke down the payment into three sources:  first,
no fault benefits under Part 7 were paid in full; second, $200,000 was paid
under s. 24 of the Act; and third, the balance was paid under the
owner’s certificate for the defendant Excellent Adventures Ltd.

[8]            
The plaintiff says that ICBC cannot unilaterally
make an internal allocation for the purposes of the Schultz settlement because
they say Schultz demanded payment only from Excellent Adventures Ltd. Therefore,
they argue, all of the $200,000 should be available to satisfy the claim of the
plaintiff.

Issue

[9]            
On January 27, 2009, the plaintiff was granted
an order for a legal issue to be determined in the form of a special case for
the opinion of the Court. The special case is stated as follows:

… whether [Mr. Thoreson]
is entitled to recover the entire settlement in the sum of $125,000.00 plus
costs under Section 24 of the Insurance (Vehicle) Act or whether [Mr. Thoreson]
is restricted to [the] pro-rata share of the available limits under Section 24
of the Act, taking into account the pro-rata share of Ms. Schultz…

Legislative Overview

[10]        
Section 24 of the Act provides a remedy
for damages in a hit and run accident. Pursuant to 24(1), if bodily injury to a
person arises out of the use or operation of a motor vehicle on a highway in BC
and the names of the owner and the driver of the vehicle cannot be ascertained
a person who has a cause of action against the unidentified owner and driver
with respect to that bodily injury may bring an action against ICBC as a
nominal defendant, alone or as a defendant along with others who are alleged to
be partly to blame.

[11]        
Pursuant to s. 24(8) of the Act, on
a judgement against ICBC as nominal defendant or on settlement of the claim,
ICBC must pay towards satisfaction of the judgment or settlement, an
amount that it is authorized to pay under the Act and Regulations: Insurance
(Vehicle) Regulation, B.C. Reg. 447/83.

[12]        
Part 8 of the Regulations applies to s. 24.
Pursuant to s. 105 of the Regulations the limits of ICBC’s liability
arising out of the same accident are $200,000, all inclusive. Pursuant to
s. 106(2), no amount shall be paid by ICBC under s. 24 of the Act
in respect of that part of a claim that is paid or payable as an insured claim.
An ‘insured claim’ is any benefit, right or claim to indemnity accruing to a
claimant.

Analysis

Pro-rata Distribution

[13]        
The position of the plaintiff is that Ms. Schultz
sought recovery solely from Excellent Adventures Ltd. and Thoreson, leaving the
entirety of the $200,000 in the s. 24 fund, available to the plaintiff. The
plaintiff asserts that while ICBC made the payment, it was pursuant to the
owner’s certificate of Excellent Adventures Ltd. and not pursuant to s. 24.
Furthermore, the plaintiff argues that ICBC cannot make an internal allocation
as it would allow them to do indirectly, what other tortfeasors cannot do
directly, which is seek contribution and indemnity from ICBC under s. 24: Dodge
v. Canada (Attorney General), 2006 BCSC 1615, 33
C.P.C. (6th) 369 [Dodge].

[14]        
In Dodge the plaintiffs were injured in a
motor vehicle accident. One person was killed. The defendant police officer and
an unidentified motorist were found to be equally at fault and jointly and
severally liable. The Attorney General of British Columbia was held to be
vicariously liable for the fault of the police officer. The Attorney General of
British Columbia sought contribution and indemnity against ICBC under s. 24
of the Act. Madam Justice Holmes stated, at paras. 76-79:

[76]      Section 24 provides the procedural
means by which the injured victim of an unidentified driver may obtain
compensation (within the regulated limits). ICBC’s participation in the
proceedings as nominal defendant essentially enables the position of the
unidentified driver to be litigated. If that position fails, in whole or in
part, judgment may be obtained against ICBC “as nominal defendant” and ICBC is
obliged to satisfy the judgment to the extent that the IMVA and Revised
Regulations authorize (s. 24(8)). There is no indication in s. 24 or
elsewhere in the IMVA that ICBC’s obligations under s. 24 are more
extensive. As Stevenson J.A. concluded in relation to the Administrator, ICBC’s
financial obligations to the injured victim arise from the statutory
requirements to pay (as in s. 24(8)) and not because ICBC is directly
answerable for the judgment.

[77]      It is noteworthy in this regard
that s. 24(8) of the IMVA expressly requires ICBC to satisfy
(within the authorized limits) any judgment against it “as nominal defendant
under [s. 24]”. If ICBC’s role and obligations as nominal defendant under
s. 24 were identical to those of a “real” or “actual” defendant subject to
a judgment, s. 24(8) would be unnecessary.

[78]      As the dictionary meanings of
“nominal” suggest, ICBC is “named” in place of the “real or actual” party (the
unidentified driver) in order that the fault of that person may be litigated. ICBC’s
involvement under the section stands in “entire contrast to something real or
substantial”; it is, simply, to provide an injured victim of an unidentified
driver the means to statutory compensation, in accordance with the Act
and the Revised Regulations.

[79]      The
RCMP defendants seek from ICBC relief outside the scope for which s. 24 of
the IMVA provides. Having commendably paid the entire amount of the
plaintiffs’ damages, they are nonetheless not entitled to contribution and
indemnity from ICBC under s. 4(2)(b) of the Negligence Act.

[15]        
Ms. Schultz was paid her entire judgment
from ICBC, which is not surprising since ICBC was required to pay under the
owner’s certificate and under s. 24 of the Act. This case, however,
turns on a simple question of fact:  who did Ms. Schultz seek recovery
from?  Despite the plaintiff’s submissions that Ms. Schultz only demanded
payment from Excellent Adventures Ltd., I am satisfied Ms. Schultz
made a claim for compensation under the provisions of s. 24 of the Act based
on the following facts:

(1)      She delivered to ICBC the statutory ICBC CL-45 application
for payment under the Insurance (Vehicle) Act, s. 24 Hit and Run.

(2)      Ms. Schultz sued ICBC as defendant under s. 24.

(3)      Ms. Schultz accepted payment by cheque from ICBC.

[16]        
Having found that Ms. Shultz made a claim
under s. 24 of the Act, I am also satisfied that ICBC made a
payment pursuant to that section. ICBC did not blur the distinction between the
coverages. Even if she wrote a demand letter to Excellent Adventures Ltd., what
Ms. Schultz does in terms of trying to collect her money cannot, in my
view, affect the rights and obligations of ICBC. ICBC’s involvement with
respect to the 85% liability of the unidentified driver was statutory; as a
nominal defendant pursuant to the statute, not as a real defendant. Therefore,
their obligations to pay are determined pursuant to the statute. Pursuant to
s. 24(8), ICBC was expressly required to satisfy the judgement within the
authorized limits and ICBC did so.

[17]        
The plaintiff also argues that s. 24 is a
“social welfare” type of section and therefore should only come into play after
Ms. Schultz has exhausted all the other available avenues of compensation.
However, there is nothing in the wording of s. 24 to suggest that payment
under s. 24 is secondary or excessive coverage only.

[18]        
The purpose of s. 24 has been set out in
two cases: Alfonso v. Insurance Corp. of British Columbia (1992), 63
B.C.L.R. (2d) 378, 88 D.L.R. (4th) 689 (C.A.) at 698, where Madam Justice
Rowles commented in respect to s. 23 [now s. 24]:

The purpose of
the statutory scheme created by ss. 23 and 46 of the Insurance (Motor
Vehicle) Act is to provide some measure of compensation to those who have
suffered injury caused by "hit and run" collisions where no common [sic]
law remedy is available…

[19]        
In Fundytus v. Insurance Corporation of
British Columbia (1989), 59 D.L.R. (4th) 131, Mr. Justice Gow states
as follows, at 139:

The intent does
not embrace the monetary succour provided by the "safety net" of
s. 23 of the Insurance (Motor Vehicle) Act. I.C.B.C. the nominal
defendant is not “the party liable" within the meaning of s. 10(2),
(6) and (10) but the agency through which the person who has a cause of action
as defined by s. 23 may as a matter of social welfare policy obtain some
measure of monetary solace…

[20]        
While this is a correct statement of the policy
considerations underlying s. 24, the legislation makes it very clear that
ICBC must pay pursuant to s. 24(8). There is no discretion in my view. The
only deductions available are for an insured claim, pursuant to s. 106 of
the Regulations. This does not include a deduction for payment or amounts that
could be recovered from a liable defendant or insurance payable to a liable
defendant, due to vicarious liability as indemnity accrues to the tortfeasor
not the claimant.

[21]        
Because ICBC was required to pay Ms. Schultz
under s. 24(8) and because those payments were made, the entirety of the
fund does not remain untouched and the plaintiff must share in the distribution
of those funds. Pro-rata distribution is the norm, save for exceptional
circumstances: I.C.B.C. v. Pozzi, 2004 BCCA 440 at para. 22, 244
D.L.R. (4th) 641. Exceptional circumstances have been found to include when an
insurer makes voluntary payments under the policy: Stobbe v. Allwood Estate (1983),
81 B.C.L.R. (2d) 117, 15 C.C.L.I. (2d) 305 (S.C.). However, in the present case
Ms. Shultz had already obtained a judgment at the time of payment. Payment
on a judgment does not qualify as a voluntary payment: Henry v. Zurich
Insurance Co. (1998), 49 B.C.L.R. (3d) 195, 50 C.C.L.I. (2d) 35 (S.C.). This
is not a case for the discretion, to deviate from the normal distribution of
funds, to be exercised.

[22]        
Having found that Ms. Shultz made a claim
under s.24 of the Act and received payment pursuant to that section,
this then limits the plaintiff’s recovery from ICBC pursuant to section 24 of
the Act, to his pro-rata share of the $200,000 fund.

Joint and Several Liability

[23]        
During the course of submissions on June 23,
2009, an issue arose as to whether in the Schultz action, ICBC was jointly and
severally liable with the co-defendants Thoreson and Excellent Adventures Ltd.
under s. 4(2)(a) of the Negligence Act, R.S.B.C. 1996, c. 333,
and if so what effect this would have on the plaintiff’s argument that Ms. Schultz
elected to claim her entire judgment from the defendant Excellent Adventures
Ltd. directly. While I appreciate the further submissions of counsel on this
point, having decided that Ms. Schultz did not claim her entire judgment
from Excellent Adventures Ltd. directly, but rather made a claim and recovered
pursuant to s. 24 of the Act, this issue need not be resolved.

[24]        
The plaintiff Thoreson settled his claim for the
amount of $125,000 net of his 15% liability assessment, and Ms. Schultz obtained
judgement in the amount of $935,521.79 including costs. The following is the
calculus for a pro-rata distribution of the fund:

[25]        
In conclusion, Mr. Thoreson is entitled to
recover $23,573.30 from ICBC pursuant to s. 24 of the Act.

The Honourable Mr. Justice F. W. Cole