IN THE SUPREME COURT OF BRITISH
COLUMBIA
Citation: | McDonald v. Insurance Corporation of British Columbia, |
| 2012 BCSC 283 |
Date:
20120224
Docket: S101804
Registry:
Vancouver
Between:
Eleanor Linda
McDonald
Plaintiff
And
Insurance
Corporation of British Columbia
Defendant
Before: The Honourable Madam
Justice Ballance
Reasons for Judgment
Counsel for Plaintiff: | S.T. Cope and P. |
Counsel for Defendant: | D.D. McWhinnie |
Place and Date of Trial: | Vancouver, B.C. June 7-10, 15 |
Place and Date of Judgment: | Vancouver, B.C. February 24, 2012 |
TABLE OF CONTENTS
· Use of the McDonald Family Vehicles
· Family Policy Against Drinking and Driving
· Consumption of Alcohol before the Accident
· Travel to Surrey and Vancouver
· Encounter with Constable Butterman
· Interaction with Police at the Scene
· The Mt. Lehman Interchange Project
· Mrs. McDonalds Interview and
Statement
· Ms. Baadsviks First Discussion with
Constable Wood
· Other Events before the Criminal Trial
· Further Communications with Constable Wood
· Ms. Baadsviks Review of the Police
File
· ICBCs Formal Decision August 18,
2009
· Events after the Formal Decision
· Notification to the Plaintiff of ICBCs
Decision
· Incapacity to Properly Control a Vehicle
· Legal Framework Incapacity
· Was the plaintiff Incapacitated at the time
of the Accident?
· Has ICBC Acted in Bad Faith?
INTRODUCTION
[1]
It was dark and raining steadily in the early morning of October 10,
2007 as the plaintiff, Eleanor McDonald, took the second exit off
Highway 1 at the Mt. Lehman interchange and turned the wrong way and into
an oncoming van driven by Thi Hoa To.
[2]
The plaintiff was arrested at the scene for refusal to provide a breath
sample and for impaired driving. She was also issued a ticket for driving
without reasonable consideration for others using the highway, and received a
24-hour suspension and notice of driving prohibition. Subsequently, the additional
criminal charge of dangerous driving was laid against her.
[3]
Ms. To launched a civil action (the To Action) against the
plaintiff, the plaintiffs mother as the lessee of the vehicle, and the leasing
company claiming damages for personal injuries arising from the collision. ICBC
appointed counsel to act on behalf of the mother and the corporate lessor. No
counsel was appointed to represent the plaintiffs interests, and nor did ICBC
issue a statutory third party notice to defend the claim pursuant to s. 77(3)
of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 (the I(V)A).
[4]
The proceedings in respect of the two alcohol-related charges were
eventually stayed prior to the commencement of the criminal trial. The trial
proceeded solely on the charge of dangerous driving. Partway through, the
plaintiff pled guilty to driving without reasonable consideration for other
persons using the highway pursuant to s. 144(1)(b) of the Motor Vehicle
Act, R.S.B.C. 1996, c. 318 (the MVA ), for which she
received a $500 fine.
[5]
Following the disposition of the criminal trial, statements of defence
in the To Action were filed on behalf of the defendants other than the
plaintiff. Unbeknownst to her, the To Action was subsequently settled out
of court by payment to Ms. To of the sum of $182,085.36. Some weeks after
that, ICBC concluded that at the time of the accident the plaintiff was
intoxicated from alcohol rendering her incapable of exercising proper control
of the vehicle. As a result, the plaintiff was deemed to be in breach of the
insurance contract pursuant to s. 55(8)(a) of the Insurance (Vehicle)
Regulation, B.C. Reg. 447/83 (the I(V)R). On that footing, ICBC
sought reimbursement from the plaintiff of the monies paid in respect of the
To Action.
[6]
In this proceeding, the plaintiff seeks a declaration that she is
entitled to indemnity from ICBC for all claims arising from the accident,
including the To Action, together with damages for breach of contract.
Asserting bad faith on the part of ICBC, she also seeks punitive damages.
BACKGROUND
·
Use of the McDonald Family Vehicles
[7]
The plaintiff is the fourth of the six children of Don and Rita
McDonald. At the time of the accident, she was in her mid-twenties and still
resided at her parents sprawling 9-bedroom house in Abbotsford. Her father has
been the fleet and leasing manager of the local Ford dealership for the better
part of four decades. Until 2000, the plaintiffs mother was a full-time
homemaker and occasionally assisted her husband with his business. Since 2000,
Mrs. McDonald has run her own vehicle leasing company.
[8]
The McDonalds are a close-knit family. Theirs was a busy, dynamic
household where the McDonald children would routinely gather and socialize with
their friends. The children were always on the move, attending school, playing
sports and holding down part-time jobs.
[9]
The evidence establishes that, at any given time, there were typically
numerous, meaning four to five vehicles, leased and/or owned by the McDonald
parents. The keys were hung on a wall hook in the kitchen. The plaintiff
testified that her parents never required any of the children to obtain their explicit
permission to drive the family vehicles. She explained that it was common
knowledge that she and her siblings were allowed to use whichever of those vehicles
happened to be parked in the driveway.
[10]
The plaintiff followed the pattern of using her parents vehicles from
the time she obtained her drivers licence at age 16. She and her
siblings would drive to school, to recreational activities, and to other
commitments, choosing a vehicle by its availability and, to a lesser extent, by
the particular needs of the day (for example, the plaintiff would use the minivan
to transport herself and her soccer teammates). The plaintiff says that even after
she leased her own vehicle, she would occasionally drive one of her parents
vehicles when convenient. Even a child who moved out of home would
periodically use one of their parents vehicles. The plaintiffs testimony
pertaining to the standing household arrangement around the use of the parents
stable of vehicles was verified by the evidence of her parents and siblings. When
corroborating the generous availability of vehicles her sister, Dolores Yonan, summed
up the practice this way: I would determine what vehicle to drive by looking
out the front door.
[11]
An exception to the first come, first served policy was when
Mrs. McDonald would assert priority over the use of a particular vehicle.
As well, because all of the sisters preferred to take the Mustang, they would
occasionally negotiate amongst themselves their entitlement to drive it.
[12]
Colleen McDonald (who, coincidentally, shares the plaintiffs surname)
is a long-time friend of the plaintiff. She was a regular guest at the
McDonald home and attended a number of their family events over the space of
many years. She persuasively testified that she had never known the plaintiff
to have to seek permission from either parent to use any of the vehicles. She
added that the plaintiff typically drove an assortment of the family vehicles
and that she would never know which vehicle the plaintiff might pull up in to
collect her.
[13]
The plaintiff, her siblings and Mr. and Mrs. McDonald each
displayed a genuinely forthright and no nonsense demeanour in giving their
testimony. To a person, they impressed me as being credible witnesses. Their
combined testimony on the availability of vehicles establishes that the
vehicles owned and/or leased by the McDonald parents were available to be
driven by those of the McDonald children who had a drivers license, as they
chose. In addition, the evidence overwhelmingly establishes that there was no
expectation, much less any requirement, that the McDonald children would obtain
the explicit permission of a parent to drive one or another of the vehicles. That
settled household practice was ongoing and in effect at the time of the
accident.
· Family Policy Against Drinking and Driving
[14]
It was well understood by all members of the McDonald clan that drinking
and driving would not be tolerated, and that driving while intoxicated was
forbidden. The plaintiff testified that she and all of her siblings complied with
the household prohibition. In keeping with it, she imposed upon herself a
two-drink restriction, over which she would not get behind the wheel of a
vehicle.
[15]
The plaintiff elaborated that her parents had never been put in the
difficult position of having to prohibit any of their offspring from driving due
to intoxication because the kids knew better than to violate that house rule. Mrs. McDonald
was known to pick up and bring home her children if they had been imbibing.
[16]
Visitors to the McDonald home were not exempt from drinking
responsibly. In order to consume alcohol at the McDonald residence, an
individual had to be of legal drinking age. The plaintiffs sister, Louise Hinton,
testified that the drinking and driving rule was enforced by the McDonald parents
and children alike, and if there was even a remote possibility of a guest being
intoxicated, that individual would not be permitted to drive away from the
property. Ms. Hinton stated that an individual did not have to be
staggering drunk in order to trigger the intervention of a family member. Ms. Yonan
recalled that her older brother would take the car keys away from intoxicated
guests. Those who had had too much to drink would leave in a taxi or Mrs. McDonald
would drive them to their destination.
[17]
Colleen McDonalds understanding of the McDonald house policy was that
so long as she consumed only one or at most two alcoholic beverages, she could
drive at her discretion. On occasions where she had overindulged, she would
often spend the night at the McDonald residence, explaining that there was no
problem with her doing so from the familys standpoint.
[18]
I have already commented favourably on the credibility of the plaintiff,
her siblings and her parents in relation to the issue of the implied consent
the McDonald children had to drive their parents various vehicles as they
liked. Those positive remarks apply equally to their testimony about the
familys strict approach to drinking and driving. Collectively, the evidence
on that point was harmonious, plausible and uncontroverted. I accept it.
·
Consumption of Alcohol before the Accident
[19]
Most of the McDonald children worked part-time at the local McDonalds restaurant
chain throughout high school and often into their post-secondary years. The
plaintiff was no exception. She was hired by McDonalds at age 16. At
the time of the accident, she held the position of manager.
[20]
On October 9, 2007, the plaintiff planned to meet her friend and
workmate, Shawna McLure, at the McDonald residence after her night shift. She
arrived home sometime between 11:30 and 11:45 p.m., and Ms. McLure showed
up soon thereafter. The plaintiff took a shower while Ms. McLure used the
computer.
[21]
It is common ground that the two friends drank some white wine while at
the McDonald residence. It is the amount of wine that the plaintiff consumed
before she got behind the wheel that is controversial.
[22]
The plaintiff testified that there was a bottle of wine in the kitchen
fridge which she described as a normal-sized bottle. She could not recall
whether it had already been opened or whether she and Ms. McLure had
uncorked it. Ms. McLure testified that we without specifying which of
the two of them had opened the bottle of wine. I find that is likely.
[23]
As they sipped their wine, the two women chatted, checked Facebook, and
snacked on pretzels. The plaintiff was not certain whether she and Ms. McLure
had finished the bottle. In cross-examination she allowed for the possibility
that they had each consumed half of the bottle over the course of just over an
hour. At the same time, however, she repeatedly insisted that she had two
glasses of wine at most, explaining that the half bottle she conceded she had
possibly consumed would have amounted to two glasses. Despite opposing counsels
attempt to show that the plaintiffs testimony on this crucial point was
inconsistent with her evidence at her examination for discovery, there was no
discrepancy of consequence.
[24]
Ms. McLure testified that she drank two or three glasses of wine
from the bottle. She could not recall whether they had finished the entire
bottle but agreed that it was possible that they had. She initially testified
that the plaintiff had two glasses of wine, but later agreed it was possible she
may have had up to three glasses.
[25]
The two friends talked about going out to eat and decided on sushi.
Since no sushi restaurant was open in Abbotsford at that late hour, they agreed
to drive into Vancouvers West End to a late-night sushi restaurant known to
the plaintiff. Ms. McLure suggested that en route they should swing
through Surrey to collect her new friend, Elwin Cipriano, whom the plaintiff
had never met.
[26]
Ms. McLure testified that neither she nor the plaintiff brought
alcohol along with them for the ride, and that no alcohol was consumed in the
vehicle. The plaintiff was not questioned on this point. I accept Ms. McLures
uncontradicted evidence and conclude that no alcohol was consumed by the
plaintiff or either of her passengers while they were in the vehicle.
[27]
The plaintiff flatly denies that she was intoxicated when she and
Ms. McLure departed the McDonald residence bound for Mr. Ciprianos
home in Surrey. Ms. McLure rejected the suggestions that after drinking
the wine, the plaintiffs face became flushed or that her balance appeared to
be affected. To the contrary, she testified that she noticed no difference in
the plaintiff after they finished the wine and had no concerns about driving to
Vancouver with her at the wheel.
[28]
The plaintiff was careful in her responses in cross-examination about
her consumption of alcohol, but they did not appear to be scripted or
rehearsed. Nor, in my assessment, did she attempt to understate or
misrepresent the quantity of wine that she consumed during the night of October
9 and into the early part of the following morning. Throughout her testimony, the
plaintiff persuasively maintained that in accordance with her familys policy
and her own self-imposed rule, she would not have driven that morning had she
consumed more than two drinks of alcohol. I believe her. The probabilities
flowing from the evidence persuade me that the plaintiff drank two glasses of
wine, and not more, before she and Ms. McLure headed out in Mrs. McDonalds
car.
·
Travel to Surrey and Vancouver
[29]
The plaintiff testified that the keys to her mothers relatively new Ford
Fusion were hanging on the communal hook. She stated that she elected to take
her mothers car rather than her own because it was newer and fancier and was
equipped with superior features like a touch-screen navigation system. Ms. McLure
testified along the same lines. She also recalled that the plaintiff chose the
Fusion because it was most conveniently situated in the driveway.
[30]
It is useful to momentarily stray from the chronology to note that after
the accident it was discovered that the plaintiffs insurance coverage on her
vehicle had expired about six weeks earlier and had not been renewed. The
plaintiff did not agree with the suggestion raised in cross-examination that
she had chosen her mothers car because the coverage on her own car had
lapsed. She credibly testified that she had always left it to her parents to
renew her insurance and that she was unaware that her coverage had expired.
Her parents gave corroborative testimony. I am satisfied that the lapse of
insurance coverage on the plaintiffs vehicle was due to an inadvertent
oversight on the part of Mrs. McDonald of which both she and her daughter
were unaware and which played no role in the plaintiffs decision to take her
mothers vehicle on October 10, 2007.
[31]
I find that it was legitimately understood by the plaintiff that her
mothers vehicle was available for her use at the material time, and conclude that
she had her mothers implied consent to drive it.
[32]
The uncontradicted evidence of the plaintiff and Ms. McLure, which
I accept, indicates that they started out to Mr. Ciprianos residence
between approximately 12:45 and 1:00 a.m. on October 10, 2007.
[33]
Neither woman had been to Mr. Ciprianos home before. They did not
have his exact address or much familiarity with the neighbourhoods of Surrey. Ms. McLure
intended to text and/or telephone Mr. Cipriano for better directions as
they approached Surrey. I accept her evidence that, despite their best efforts
to follow Mr. Ciprianos instructions, they got lost a number of times and
ended up driving for close to two hours before they finally arrived at Mr. Ciprianos
doorstep. The evidence establishes that they picked him up at about 3:00 a.m.
on October 10.
[34]
Mr. Cipriano sat in the back seat. He testified that he did not
notice the smell of alcohol when he got into the vehicle, or at any other time,
including when the women spoke.
·
Encounter with Constable Butterman
[35]
With Mr. Cipriano now navigating, the trio proceeded to Vancouver.
They lost their bearings and ended up in the vicinity of Commercial Drive and Broadway
on the east side of the city. Constable Butterman of the Vancouver Police
Department was on patrol in that area conducting random vehicle stops, checking
for driver sobriety and valid drivers licences and insurance.
[36]
Constable Butterman randomly stopped the plaintiff. It was now just
after 4:00 a.m. She answered the Constables questions through the open
window of her drivers side door. The plaintiff recalled that he asked where
she and Ms. McLure worked, which in turn prompted further questions which
they answered. The evidence establishes that at some point, Constable
Butterman leaned in slightly through the plaintiffs window and posed questions
directly to Mr. Cipriano. He also asked to see everyones identification.
As instructed, the plaintiff gave him her drivers licence and vehicle
registration. When Constable Butterman returned her drivers licence, the
plaintiff handed it to Ms. McLure to hold.
[37]
I accept the testimony of the plaintiff and her passengers that
Constable Butterman also asked them what they were doing in that neighbourhood
at such a late hour, and warned them that they were in a bad part of Vancouver
and should head home. The entire encounter occupied between five and ten
minutes in total.
[38]
Constable Butterman had no specific recollection of the incident. The
evidence is clear that he ran a query about Mrs. McDonalds licence plate
number through the Canadian Police Information Centre database at
4:12 a.m. on October 10. Constable Butterman testified that it is
not his practice to take notes of every vehicle stop because often nothing
comes of it that is, the driver is sober and the proper documentation is
produced and in order. He went on to clarify that where he forms a reasonable
suspicion that a driver might be impaired, his practice is to record notes of
the vehicle stop. In that event, he might also administer a roadside breath
test. On this particular occasion, he made no notes of his stop and did not
administer any kind of roadside sobriety test to the plaintiff. It is
reasonable to infer that Constable Butterman did not do so because he did not detect
any indicia of alcohol impairment on the part of the plaintiff.
·
The Accident
[39]
Heeding Constable Buttermans direction, they abandoned their search for
sushi and headed back to Abbotsford along Highway 1. As they travelled
non-stop, Mr. Cipriano fell asleep in the back seat, and Ms. McLure
dozed off sometime later. While the plaintiff admits to exceeding the posted
speed limit, I find that this was unconnected to her earlier consumption of
alcohol, and played no part in the accident.
[40]
Considerable evidence was elicited about the construction of the new
off-ramps that comprise the Mt. Lehman interchange in Abbotsford where the
accident took place. I will review that evidence later in my reasons.
[41]
The plaintiff testified that upon reaching the interchange, she mistakenly
exited Highway 1 on the second, rather than the third, off-ramp. She had
meant to take the third ramp and follow it a short distance to where it intersects
with the Fraser Highway, and at that point turn left to proceed home. She had
taken that route many times before. According to the plaintiff, once she
reached the top of the second off-ramp she realized that she was on the wrong ramp.
She claims, however, that she believed that the traffic flow along the Fraser
Highway at that junction was in her favour, just as it was at the top of the
third off-ramp. As she manoeuvred left, however, she realized too late that
she had turned against the flow of traffic. Before she could rectify her
mistake, she collided head-on with Ms. Tos vehicle which was coming from
the opposite direction.
[42]
The accident occurred one or two minutes before 5:00 a.m. on October 10,
2007. Upon impact, both front seat airbags in Mrs. McDonalds vehicle
deployed. The plaintiff testified that her chest hurt a lot from the initial
harsh impact of the airbag. Ms. McLure testified that the airbag struck
her with such force that she found it difficult to breathe. After the accident,
Ms. McLure missed four days of work due to her chest and neck pain.
[43]
I accept the plaintiffs evidence that after the collision she felt in
shock and disbelief that she had so seriously misapprehended her entitlement to
turn left. She immediately checked on the welfare of her passengers and found that,
although Ms. McLure had some pain, both she and Mr. Cipriano were okay.
The plaintiff next walked over to Ms. Tos vehicle. Her airbag had also
released. She was crying a bit and speaking in Vietnamese which the plaintiff
was able to understand. The plaintiff saw no blood or anything that led her to
believe that Ms. To was seriously injured. She then returned to her
vehicle and, leaving the drivers door ajar, telephoned her father.
·
Interaction with Police at the Scene
[44]
Four police officers were dispatched to the scene and arrived at
approximately 5:15 a.m., when it was already bustling with ambulance personnel
and firefighters. Only the evidence of Constables Brah and Wood was relevant.
[45]
Constable Brah was the lead investigating officer. At that time in her
career, she had carried out only one impaired investigation. Constable Brahs attention
was divided between Ms. To and the plaintiff, spending greater time and
focus on Ms. To. She found the plaintiff forthright in identifying
herself as the driver and fully cooperative. The plaintiff was not able to
produce her drivers licence to Constable Brah, having forgotten that she had
handed it to Ms. McLure after Constable Butterman had stopped them in
Vancouver. She cried intermittently and appeared to be confused. Constable
Brah asked her whether she was okay, to which she responded that she was
fine.
[46]
The plaintiff told Constable Brah that they had been returning from
Vancouver and she had accidentally turned the wrong way. That prompted
Constable Brah to ask whether they had been in a bar or nightclub while in
Vancouver. The plaintiff answered no, and explained that they had ventured
into the city for sushi.
[47]
Based on her initial interactions with the plaintiff, Constable Brah did
not think that she was impaired. However, as they continued to converse she noticed
that the plaintiff seemed to lean toward and away from her, and speak in a
whispering tone. Those behaviours struck Constable Brah as a little awkward.
When the plaintiff leaned her way, Constable Brah detected the odour of liquor
on the plaintiffs breath, which she classified as faint and very mild. Constable
Brah noticed that the plaintiffs face was pale and her pupils were dilated.
These observations caused Constable Brah to shift the focus of her
investigation.
[48]
At first, Constable Wood found the plaintiff coherent, steady on her
feet, and displaying no gross symptoms of impairment. However, quite soon
after arriving on scene, he says that he formulated a suspicion that alcohol might
have played a role in the collision. In chief, he explained that his suspicion
arose from the totality of the circumstances, which he particularized as
follows:
(1) the time of the
collision being late at night;
(2) the orientation of the
plaintiffs vehicle facing against the flow of traffic;
(3) the dynamics of the
collision for some reason, he assumed that the accident was caused by the
plaintiff having pulled a u-turn along the Fraser Highway to head back over the
overpass against traffic;
(4) verbal declarations made
by the occupants that they were coming from the bar district of Vancouver; and
(5) mild
symptoms of impairment he did not expand on the nature of those symptoms.
[49]
Constable Wood decided to administer the approved roadside screening
device (ASD) to the plaintiff. He stated that the device had been
functioning properly when he had used it in respect of an incident earlier that
evening.
[50]
The evidence concerning the number of times the plaintiff attempted to
blow and the manner in which Constable Wood administered the ASD was in dispute.
[51]
Constable Wood testified that he read the standard demand to the
plaintiff and explained in non-legal language that she had to provide a breath
sample. He stated that he inserted a fresh mouthpiece into the instrument and
demonstrated to the plaintiff how to blow into it. He also verbally instructed
her on its use.
[52]
Based on Constable Woods testimony, the plaintiffs blow on her first
try registered as no go on the ASD screen, indicating that the air flow had
not been adequate for the device to analyze the sample. He stated that he ordinarily
allows individuals three attempts to blow before arresting them for refusing to
provide a sample. Following his usual pattern, he reiterated his instructions
to the plaintiff and permitted her a second attempt which also showed as no go.
Constable Wood testified that he gave the plaintiff several chances thereafter,
greatly exceeding his usual three attempts limit, and even permitted her an
opportunity to hold the ASD herself while blowing. He claims to have granted
the plaintiff this special dispensation in an attempt to give her every
benefit of every doubt possible because of her age, lack of criminality and
clean driving record.
[53]
Constable Wood stated that all of the plaintiffs attempts registered as
no go on the ASD. His observation was that she was not sealing her lips
properly on the instrument, with the result that most of her breath was bypassing
the mouthpiece when she exhaled. He concluded that the plaintiff was refusing
to blow. She was handcuffed and placed in the rear of Constable Brahs
vehicle. Soon thereafter, her father arrived at the scene and persuaded
Constable Wood to allow his daughter another attempt to provide a breath
sample. To that end, the plaintiff was escorted to an area near the front of
Constable Brahs vehicle. Still handcuffed, she made another attempt which,
once again, registered as no go. Constable Wood removed the plaintiffs
handcuffs and permitted her a final try. It also displayed no go. I find
that he granted her this further attempt because he could plainly see that
having her hands cuffed behind her was impeding the plaintiffs ability to
blow.
[54]
Constable Wood performed no other sobriety test on the plaintiff and
neither did any of the other officers present.
[55]
The plaintiff remembered the events differently. She claimed that when
Constable Wood made the first breath demand, he did not explain or demonstrate
how she ought to do so. She testified that it was only after her first attempt
failed that Constable Wood showed her the proper procedure. She has no
recollection of him allowing her to hold the device for any of her attempts. The
plaintiff claimed that when she attempted to blow in her fathers presence, Constable
Wood removed the ASD from her mouth at a point when she was not sure that she
had finished blowing. She says that the plastic mouthpiece was dislodged by
his action and it fell out of her mouth and onto the ground. Her impression
was that Constable Wood was upset with her and/or annoyed that the device was
not showing a reading. At that point, he uttered thats it, and walked the
plaintiff back to Constable Brahs patrol car.
[56]
Sharing the plaintiffs recollection, Mr. McDonald testified that
Constable Wood appeared to flick the device sideways before his daughter
could finish providing her breath sample, leaving the unattached mouth piece in
her mouth before it fell to the ground. He said that he complained to Constable
Wood that he had not been holding the instrument steady and asked whether he
might be allowed to hold it while his daughter breathed. Constable Wood said
that was not possible, and that he had concluded that she was refusing to blow.
[57]
In addition to her own direct dealings with the plaintiff, Constable
Brah watched some, though not all, of the interactions between her and
Constable Wood. From the front seat of her vehicle, she was able to see
Constable Wood re-administer the ASD after Mr. McDonald showed up. She
noticed that the plaintiff was bopping up and down and crying, and appeared
to be pulling away from the instrument. I conclude that Constable Brah had only
witnessed the plaintiffs first attempt at the front of her patrol car when the
plaintiffs hands were still cuffed, making it appear to Constable Brah that
she was bopping up and down. Constable Brah could not recall whether she had
seen the mouthpiece dislodge from the apparatus during the plaintiffs
attempt. I find that this indeed occurred when the plaintiff made her final
attempt to blow, which Constable Brah did not observe. Constable Brah
confirmed that there was a breathalyser machine at the detachment. She did not
know why the plaintiff was not taken there to have it administered.
[58]
Constable Brah testified that she came to form a view that alcohol was
involved in the accident, that it had affected the plaintiffs ability to
drive, and that the plaintiff was impaired.
[59]
Jack Veliqi was driving behind Ms. Tos van that morning. The
accident occurred 20 to 30 feet in front of him. Mr. Veliqi called 9‑1‑1
and then checked on the welfare of those involved, prepared to use his first
aid training, if required. He spoke to the plaintiff and her two passengers to
ensure that they were alright. In chief, Mr. Veliqi was asked an
open-ended question as to whether he noted anything remarkable about the
plaintiffs appearance or demeanour at the accident. He responded that he did
not, and then added that he had noticed that the plaintiff expressed
frustration over having driven the wrong way. Mr. Veliqi made no
mention of the plaintiff displaying any symptoms consistent with alcohol
impairment. He did not see the interactions between the plaintiff and the officers.
[60]
At the scene, the plaintiff was charged with two criminal offences
impaired driving and refusal to provide a breath sample. She was also given a
24-hour driving suspension and was issued a traffic violation ticket for
driving without reasonable consideration for others using the highway, pursuant
to s. 144(1)(b) of the MVA. Neither of the officers could recall
who wrote out that ticket, and there was no copy of it in evidence. It was not
clear whether it had been issued at the time of the accident or subsequently.
[61]
The police did not take a statement from Ms. McLure or
Mr. Cipriano. Ms. McLure was never subsequently contacted by the
police or Crown counsel, and knew nothing of the criminal case against her
friend.
[62]
The plaintiff was released at the scene at 6:15 a.m.
[63]
Both officers prepared paperwork in respect of the incident. Constable
Wood made notes of the investigation but evidently was not able to locate
them. He also completed a standard single-page accident report, known
colloquially as an MV 60‑20.
·
The Mt. Lehman Interchange Project
[64]
At trial, there was considerable time devoted to the existence and form
of signage along the off-ramp taken by the plaintiff. She was questioned at
length about whether a no left turn sign was affixed to a post located near
the top of the second off-ramp where it connects with the Fraser Highway. For
most of her testimony, the plaintiff was adamant that there was no sign
prohibiting a left turn; however, in cross-examination, she appeared to concede
that it was at least possible that such a sign may have been there. There was
also evidence of the existence of a sign displaying an arrow curving to the
right, directing traffic on the second off-ramp to keep to the right as it
merged with the Fraser Highway. Once again, the plaintiff was initially
steadfast that there was no such marking at the time of the accident, but in
cross-examination came to agree to the possibility of its existence. She testified
that, in any case, she saw neither sign before the accident. She likewise
testified that she did not see signs informing her to prepare to yield or to
yield at the top of the second on-ramp. Neither the police nor ICBC
investigated the placement of relevant signage at or around the accident scene.
[65]
Arthur Kastelein, the manager of transportation and drainage for the
City of Abbotsford, testified that the Mt. Lehman exit off Highway 1
had been a longstanding source of traffic congestion with ongoing safety
issues. In participation with other entities, the City of Abbotsford decided
to implement improvements starting in 2003. Mr. Kastelein was designated
as the point person for the Mt. Lehman interchange project. He oversaw its
design, engineering and construction, which spanned a number of years and cost
more than $26 million.
[66]
Mr. Kastelein explained that the project transformed what had been
a simple exit into a complex interchange and brought about a fundamental
overhaul to the transportation infrastructure of Abbotsford. He testified that
the project was substantially complete, by which he meant pretty much complete
and ready for the safe use by the public, sometime in 2006. A subcontractor
was retained to install over 80 single post traffic signs. He was 90%
certain that the requisite traffic signs and markings had been put into place
by September 2006.
[67]
According to Mr. Kastelein, final completion of the project was
achieved in about April 2007. He was confident that the road markings and
signs shown on the project plan, including signs along the second off-ramp
informing drivers not to turn left, would have been in place before that final
completion date. Yet, he went on to agree that after the completion date, at
least two changes were made to the signage with respect to Fraser Highway. He
also conceded that it was possible that additional signage changes may have
been carried out after final completion of the project. In that regard, he
noted that roughly at the end of 2007, the Ministry of Transportation took
ownership of the majority of the infrastructure and, therefore, he was not able
to speak to any changes that may have been made after that time.
[68]
Mr. Kastelein further revealed that Abbotsford had received lots
of complaints about the location of the east and west routing of the Fraser
Highway. He attributed the publics confusion and/or dissatisfaction to the
wholesale post-project reconfiguration of the Fraser Highway and its new
connection to McClure Road.
[69]
The plaintiff and some members of her family also testified to the
confusing nature of the roadway connections in place during construction of the
interchange and following its completion.
·
Initial Dealings with ICBC
[70]
In his long career as a fleet and leasing manager, Mr. McDonald regularly
dealt with insurers and, since its inception, had frequent business dealings
with representatives of ICBC. He described the interactions with ICBC as usually
cordial, but occasionally confrontational.
[71]
The day after the accident, Mr. McDonald used the 1-800 dial-a-claim
number to report his daughters accident to ICBC. Among other things, he
informed the claim center that his daughter had been driving and was sore and
that he was not sure when she would be available to attend an appointment. This
information was recorded in the claim file folder maintained by ICBC.
Contained in the notes made to that file on October 12 is the remark:
This is Don McDonald, lease manager of Isfeld Ford.
[72]
Peggy Baadsvik was assigned as the liability adjuster. She is a veteran
ICBC adjuster with more than 20 years experience. She described herself as
a busy and detail-oriented adjuster.
[73]
The plaintiff immediately retained Jack Harris, who Ms. Baadsvik
knew to be a local lawyer specializing in criminal law. Mr. Harris
assisted the plaintiff in the preparation of the compulsory two-page written
statement for ICBC.
[74]
The plaintiffs statement, signed on October 18, 2007, together
with a copy of the MV 60‑20, was received by ICBC on or about October 22.
The MV 60‑20 informed ICBC of the criminal charges against the
plaintiff and of her driving prohibition. The evidence suggests that the version
of the MV 60‑20 form sent to ICBC differed from the one retained by
the police in that it did not indicate the name and contact information of the
witness, Mr. Veliqi.
[75]
The salient contents of the plaintiffs statement relayed the following
information to ICBC:
·
the plaintiff had been stopped for approximately ten minutes by a
member of the Vancouver Police Department prior to the accident, and had
produced her drivers licence and vehicle registration to that officer;
·
the plaintiff was fairly familiar with the roadway where the
accident took place;
·
due perhaps to momentary inattentiveness, the plaintiff took the
second off-ramp from Highway 1 and, believing she was on the third
off-ramp, intended to turn left when she reached the top. Immediately upon
turning left, the plaintiff realized that she was in the path of oncoming
traffic;
·
the plaintiff saw no signage prohibiting a left turn on to the
Fraser Highway from the second on-ramp;
·
the plaintiff suffered some minor chest injuries as a result of
the airbag deployment and the sudden stop, but was not in need of medical
attention;
·
the plaintiff attempted to provide a breath sample in the
roadside screening device numerous times but was told by the officer that she
had not provided sufficient air. On each attempt, she genuinely tried to
provide a breath sample, but because of the way the officer held the device,
and as a consequence of being handcuffed, it was impossible for her to provide
any better sample; and
·
the plaintiff had earlier consumed alcohol, but her ability to
drive was neither affected nor impaired by alcohol.
[76]
Apart from assisting the plaintiff with her statement, Mr. Harris
was retained to deal exclusively with the criminal charges against her.
[77]
The plaintiffs disclosure in her statement that she had sustained minor
chest injuries in the accident was substantiated by the testimony of Colleen
McDonald, who is a practicing physiotherapist. I accept that within a day or
so of the accident the plaintiff asked her to examine her chest and rib area. I
further accept Colleen McDonalds testimony that she observed extensive
bruising along the plaintiffs anterior chest wall and over her right shoulder,
and that she showed her exercises that would help with the pain.
[78]
Upon receipt of the plaintiffs statement and the MV 60‑20 form
from Mr. Harris, Ms. Baadsvik sent an ICBC CL27 form letter dated October 23,
2007 to the plaintiff care of Mr. Harris. It stated in relevant part:
We are still investigating this accident. However, there is
some indication that you did not meet a condition of your insurance. This
means ICBC may not pay for your claims, and you may have to repay ICBC for any
payments it makes to others for losses that are your responsibility.
When we have completed our investigation, we will let you
know if your Autoplan insurance will cover you for losses from this accident.
This letter does not affect any
of ICBCs legal rights regarding your insurance coverage, or any time limits
related to this accident.
[79]
The plaintiff read and understood the contents of the letter. From it,
she knew that there was a possibility that she would not be insured for the
consequences of the accident.
[80]
Meanwhile, a search of ICBCs database revealed that the insurance
coverage on the plaintiffs own vehicle had expired on August 30, 2007.
Noting this fact along with the vehicle rating of Mrs. McDonalds Fusion, Ms. Baadsvik
became interested in investigating who the principal operator of Mrs. McDonalds
car might be. For that purpose, she wished to interview Mrs. McDonald.
[81]
On October 23, 2007 Ms. Baadsvik telephoned the McDonald
residence to speak to Mrs. McDonald. Mr. McDonald answered the
telephone and said that his wife was not home. He repeatedly asked why ICBC wanted
to talk to her. A discussion ensued and ended with Mr. McDonald hanging
up abruptly after demanding to speak to Ms. Baadsviks supervisor. It was
not explained to Mr. McDonald that the adjusters objective in arranging
an interview with his wife was to explore the prospect of a principal operator breach.
Based on that single exchange, Ms. Baadsvik decided that Mr. McDonald
was blocking her attempts to speak with Mrs. McDonald, and sought input
from her supervisors
[82]
Later that same day, Mr. McDonald telephoned Ms. Baadsviks
supervisor and asked why ICBC was calling his wife. The supervisors file note
described Mr. McDonald as shouting shouted very impaired on some
substance, slurring words, and shouting. The supervisor informed Mr. McDonald
that it was his understanding that Mrs. McDonald was failing to cooperate
with ICBC. He was also told that the adjuster had been instructed to send out failure
to cooperate breach notices that morning, but would try again to arrange an
appointment with Mrs. McDonald. Mr. McDonald assured the supervisor
that they were prepared to cooperate. Ms. Baadsvik was then instructed
by her supervisor to refrain from sending the breach notices (failure to
cooperate and principal operator violation) if she was able to set an interview
with Mrs. McDonald, but to proceed with their issuance if they give you
the runaround on making an appointment.
[83]
Ms. Baadsvik testified that Mr. McDonald had a reputation at
ICBC of being very difficult to deal with. Whether his reputation was
deserved or not, I find that ICBCs negative perception of Mr. McDonald
played a role in Ms. Baadsviks strident response to their unfortunate
telephone discussion, and coloured somewhat ICBCs approach to the entire
claim.
[84]
In the end, Ms. Baadsvik was able to reach Mrs. McDonald and told
her that she wanted her to provide a statement about the use of her vehicle. Mrs. McDonald
testified that she did not understand why she had to do so because her daughter
had already given a statement. I find that, like her husband, Mrs. McDonald
was in the dark about the expiration of the plaintiffs insurance coverage that
had triggered ICBCs interest about the potential of a principal operator
breach in relation to the use of Mrs. McDonalds Fusion. Ms. Baadsvik
simply responded that if she and her husband did not cooperate, ICBC would hold
them in breach. An interview was scheduled.
[85]
Ms. Baadsvik discussed the file with her manager. They agreed that
they did not want Mr. McDonald present during his wifes interview because
of his history of being overbearing with ICBC.
[86]
On October 30, 2007, Ms. Baadsvik sent the plaintiff a second
letter, again care of Mr. Harris. It informed her that ICBCs
investigation indicated that she was 100% responsible for the accident, and continued:
You have also been charged with one or more offences under
the Criminal Code of Canada for operating your vehicle while under the
influence of alcohol or drugs. If you are convicted on any of these charges,
you will be in breach of your Insurance contract.
Even if you were not convicted, you will be in breach if it
is shown that you were incapable of proper control of your vehicle at the time
of the accident due to the influence of alcohol or drugs.
Your insurance is a contract between you and ICBC. If you
break any terms of that contract, you are in breach of that contract. This
means that:
·
ICBC may not pay for any claims you have;
·
you will be required to repay ICBC for all claims made against
you; and
·
ICBC will not provide a lawyer for you if legal action is started
against you.
To date, no claim payments have been made but there are
claims outstanding. Also, people have up to two years to start a legal action,
so ICBC may not yet have been advised of all claims from this accident. We
will let you know the total amount you owe when the claim is fully paid.
Please call me if you have any
questions.
[87]
From that letter, the plaintiff understood that the coverage risk was
not limited to circumstances where she was ultimately convicted of the criminal
charges. She appreciated that even if she were not convicted, she was exposed
to the potential of having to repay ICBC for a claim against her if it were shown
that, at the time of the accident, she was incapable of the proper control of
her mothers vehicle due to alcohol. I accept that the plaintiff was under the
impression that to be shown to be incapable of driving, entailed some kind of
formal process and something more than an opinion of the ICBC adjuster based on
an in-house investigation.
·
Mrs. McDonalds Interview and Statement
[88]
Mrs. McDonald, accompanied by her husband, met with Ms. Baadsvik
on October 30, 2007. The McDonalds were surprised to learn from Ms. Baadsvik
that the plaintiffs insurance coverage on her vehicle had expired on August 30.
As mentioned, the evidence establishes that Mrs. McDonald was usually in
charge of overseeing insurance matters, and that the renewal of her daughters
coverage had inadvertently slipped through the cracks.
[89]
The body of Mrs. McDonalds statement is contained on a single page.
The controversial part of it reads:
My daughter [the plaintiff]
wanted to try out my new vehicle instead of driving her vehicle. She didnt
have my permission to drive my vehicle, she lives in our basement suite. She
does driving for me sometimes, but if she had asked to borrow the car, at that
time of night, I would not have said yes. The ground rule is they have to ask
before they borrow our vehicles. We have a hook where we hang our keys, and I
think thats where she took them from. We are not charging her with theft or
anything.
[90]
Mrs. McDonald claims that her statement does not reflect what she
told Ms. Baadsvik about her daughters authority to drive her vehicle. More
specifically, she denies telling Ms. Baadsvik that the plaintiff required
explicit permission in advance in order to drive her car that night or at any
time. According to Mrs. McDonald, Ms. Baadsvik did not ask her point
blank whether she had given her daughter permission to take her car. If she
had done so, Mrs. McDonald said she would have clarified that the
plaintiff had always had on-going permission. In this regard,
Mrs. McDonald noted that she had insured her vehicle for herself as well
as part time drivers to enable her children, including the plaintiff, to drive
it as and when they liked.
[91]
Mrs. McDonald insisted that she did not tell Ms. Baadsvik that
the plaintiff did not have permission to use her vehicle in the sense that she
had taken it without her consent. While she agreed that she told Ms. Baadsvik
that her daughter did not ask permission to use her vehicle, she was adamant that
she had explained to her that the plaintiff did not need to ask permission
because it was understood that she had it. Mrs. McDonald also denied
saying that there was some kind of house rule to the effect that the children
had to obtain consent before they borrowed a vehicle. She testified that the
so-called house rule was to the opposite effect.
[92]
Mr. McDonald was present during this part of his wifes interview
and his recollection of his wifes answers supported her testimony. He disagreed
that his wife told Ms. Baadsvik that the plaintiff required explicit
permission to use her car on October 10 or that, had the plaintiff asked
to drive it then, the answer would have been no. Mr. McDonald testified
that they both explained to Ms. Baadsvik that the plaintiff did not seek
permission to drive the Fusion the day of the accident because she did not need
to obtain it. He firmly maintained that since obtaining her drivers licence
at age 16, his daughter has had standing consent to drive their vehicles
at any time.
[93]
The evidence of Mr. and Mrs. McDonald is that at some point
close to the end of the interview, Ms. Baadsvik asked that Mr. McDonald
leave the room, stating that she wished to finalize Mrs. McDonalds
statement. Mr. McDonald testified that he was somewhat surprised by the
request because in his many dealings with ICBC adjusters over the years, he had
never known of anyone being excluded from an interview. Even so, he said he had
no qualms about leaving his wife alone with Ms. Baadsvik and readily
complied with the request.
[94]
Ms. Baadsvik denies that she asked Mr. McDonald to leave. She
testified that both he and his wife left together at the end of the interview.
Her recollection on this point is difficult to reconcile with the evidence that
both she and her manager had already decided that Mr. McDonald was to be
excluded while Mrs. McDonald gave her statement. It is also at odds with Ms. Baadsviks
testimony that she did not want Mrs. McDonald to have the benefit of [Mr. McDonalds]
comments during the interview. The probabilities of the evidence persuade me
that Ms. Baadsvik was mistaken in her account of this matter. I find that
she did ask Mr. McDonald to leave the interview.
[95]
Ms. Baadsvik described Mrs. McDonalds statement as a pure
version of the interview. By that she meant that she composed it verbatim
based on what Mrs. McDonald told her and in Mrs. McDonalds own
words. That was not entirely accurate. It was evident on the face of the
statement, and Ms. Baadsvik agreed, that certain contents in the first few
lines had been inserted by Ms. Baadsvik from the ICBC database, and were
not statements made by Mrs. McDonald.
[96]
The closing sentence of Mrs. McDonalds statement contained a
typical acknowledgement to the effect that she had read it and that it was true
and correct to the best of her knowledge. Mrs. McDonald testified that
while she appreciated that she should have read the statement carefully and in
its entirety, she did neither. Based on Ms. Baadsviks comments that day,
Mrs. McDonald had gained the impression that the adjuster was very busy
and did not have much time to take her statement. Mrs. McDonald was not
worried about providing her statement and simply trusted that Ms. Baadsvik
had accurately captured their discussion. She recalls asking Ms. Baadsvik
whether she could take the statement home to review, and being told it was not
permitted. Mrs. McDonald was not given a copy of her statement.
[97]
From the time that each of the McDonald children had obtained their
drivers licence, they had their parents standing consent to drive any
available family vehicle and, consequently, they were not required to ask
permission to use any particular vehicle. It is, therefore, difficult to
conceive and I do not find it plausible that Mrs. McDonald would have
relayed to Ms. Baadsvik the contrary account contained her statement.
[98]
I find that Mrs. McDonald told Ms. Baadsvik that the plaintiff
did not ask permission to drive her vehicle. It appears that Ms. Baadsvik
construed not asking as equivalent to not having permission to drive her
mothers vehicle, which was neither accurate nor reflective of Mrs. McDonalds
meaning. Although it is somewhat perplexing as to how Ms. Baadsvik got it
so wrong, in my assessment the disputed portion of Mrs. McDonalds
statement is the product of Ms. Baadsviks error and misunderstanding, and
is not accurate. Perhaps had Mrs. McDonald explained herself more fully or
had Ms. Baadsvik listened more attentively, it would have been clear to Ms. Baadsvik
that the plaintiff had not asked her mother for permission to drive the Fusion
because she had implied consent to do so, and thus did not need to ask. I find
it likely that Ms. Baadsvik misconstrued Mrs. McDonalds answers on
the subject at the outset and that her misapprehension skewed the balance of
their exchange. Building on that core misunderstanding, Ms. Baadsvik asked
Mrs. McDonald whether she would be charging her daughter with theft, to
which Mrs. McDonald answered no. In Ms. Baadsviks mind, Mrs. McDonald
had elected not to pursue that course, whereas in Mrs. McDonalds mind,
there was no basis on which to take such action against her daughter.
[99]
I find that Mrs. McDonald did not read her statement carefully, and
therefore was not alerted to Ms. Baadsviks mistakes until this lawsuit
was well underway.
[100] To the foregoing,
I would add that Mrs. McDonalds statement of defence subsequently filed
by her counsel in the To Action expressly states that the plaintiff had Mrs. McDonalds
consent to drive her vehicle at the time of the accident. It is difficult to
reconcile that admission with ICBCs posture relative to the consent issue in
this action. Leaving that matter to the side entirely, I conclude that Ms. Baadsvik
did not accurately transcribe Mrs. McDonalds statement as it pertained to
the issue of consent.
·
Ms. Baadsviks First Discussion with Constable Wood
[101] Ms. Baadsvik
appreciates that insureds place great reliance on their insurance coverage and
that a determination that an insured is in breach of the policy could trigger
profoundly adverse and life altering consequences to that individual. She is
aware that carrying out a coverage assessment with limited information could
lead to a flawed decision by the insurer.
[102] Ms. Baadsvik
testified that it fell to her to determine whether the plaintiff had breached
the insurance policy by driving while intoxicated to such an extent that she
was incapable of the proper control of the vehicle. Accordingly, she was in
charge of investigating the plaintiffs sobriety and ultimately deciding
whether, at the time of the accident, she was incapable of the proper control
of her mothers car and, thus, deemed to be in breach of her insurance contract.
As part of the decision-making process, Ms. Baadsvik would periodically
discuss the matter with management. She was trained that in assessing this
issue of an insureds incapacity, the standard of proof was on a balance of
probabilities, which she understood to mean more likely than not likely.
[103] Ms. Baadsvik
testified about her standard practice when investigating an accident where
alcohol may have played a role. She confirmed that a thorough investigation
had to be carried out. To that end, she would gather information from several
sources, such as police reports, medical reports and any available engineering
reports regarding the mechanics of the accident. She would also typically interview
the police officers involved, if possible, as well as the passengers and
witnesses. Ms. Baadsvik regarded the impressions of the attending
officers as especially important for her purposes. In appropriate
circumstances, she would hire a special investigator to assist her in the
investigatory process.
[104] On October 31,
2007, Ms. Baadsvik and Constable Wood discussed by telephone the
circumstances surrounding the plaintiffs arrest. She recorded their
conversation in the ICBC claim folder in these terms:
[Constable Wood] said that,
unfortunately, not enough here to prove impaired, however, said that the
plaintiffs eyes were watery and bloodshot, and she was unsteady on her feet.
He said that an argument could be made that this was as a result of her airbag
having gone off. Said that he detected an odour of alcohol and the plaintiff
did admit to drinking earlier in Vancouver. She was driving the wrong way down
a one way street. She tried to blame this on the interchange, but Constable
Wood said she lives very close to the interchange and travels it every day. He
said that he normally gives a person 3-4 tries to blow into the breathalyser;
he gave the plaintiff 15-16 chances. At this point, she was not cuffed. After
so many attempts, he cuffed her for refusal to blow. He put her in the back of
the police car. Her father showed up and pleaded to give her another chance to
blow. He gave her another 8 chances, and she was still goofing around.
He said that had she been successful in providing a breath sample, it probably
would not have registered as impaired. His sergeant was there at the time and
watched the whole thing.
[105] The
information conveyed to Ms. Baadsvik from her conversation with Constable Wood
can be distilled into these essential elements:
·
there was not enough evidence to prove that the plaintiff was impaired;
·
Constable Wood had detected an odour of alcohol on the plaintiff;
·
He observed other indicia of alcohol consumption on the part of
the plaintiff such as blood shot, watery eyes, unsteadiness on her feet, but
also noted that those symptoms could have been caused by the deployment of her airbag;
·
the plaintiff had admitted to drinking earlier in Vancouver;
·
the plaintiff had been driving the wrong way down a one-way
street from an interchange that she travelled daily;
·
the plaintiff had been given as many as 23 attempts to blow
but was goofing around and had failed to provide a breath sample. Had the
plaintiff provided a proper breath sample, it probably would not have
registered as impaired.
[106] Ms. Baadsvik
knew that more than one officer had attended the accident scene. She
understood that the bulk of the investigation had been conducted by Constable
Wood and, therefore, considered it unnecessary to speak with any other
attending officer.
[107] Ms. Baadsvik
explained that ICBCs normal practice was to await the outcome of the criminal
proceeding before deciding whether there had been a breach of coverage. In
cross-examination, she admitted that by the end of October 2008, she was
essentially treating the file as an alcohol breach case. (I find that when she
made this concession, she misstated the year and intended to say 2007.) A
reasonable assessment of the evidence supports the inference that from the
moment Ms. Baadsvik finished speaking with Constable Wood on
October 31, 2007, she formulated a confident expectation that the
plaintiff would be convicted of the criminal charge of failing to provide a
breath sample. Believing in the probability that a coverage breach would be
established through that conviction, Ms. Baadsvik refrained from pursuing
any substantive steps in her investigation in the ensuing 17 months pending
that outcome.
[108] In the next
section, I have summarized the few additional investigatory steps taken by
Ms. Baadsvik, and outlined other notable events that occurred prior to the
criminal trial.
·
Other Events before the Criminal Trial
[109] Ms. Baadsvik
had the names of the plaintiffs passengers from the MV 60‑20 form.
In her file, she made note of the questions she intended to ask them, including
when and why they had been stopped by Vancouver police, where they had been in
Vancouver, and how much alcohol the plaintiff had consumed.
[110] Over the
space of a week, Ms. Baadsvik left two messages on Ms. McLures
answering machine asking that she call; her messages were not returned. She
attempted to obtain the contact information for Mr. Cipriano through an
ICBC database and the telephone book, even trying different spellings of his
surname, but nothing came up. What Ms. Baadsvik did not know was that
his surname had been misspelled as Cirriano in the MV 60‑20 form.
That error was rectified early on in the internal police records; however, ICBC
was not apprised of the name correction at that time.
[111] Ms. Baadsvik
learned from the office of Crown Counsel that the criminal trial was scheduled for
September 15, 2008. She also spoke to a representative of Canadian Direct
Insurance (CDI), the insurer for the excess coverage on Mrs. McDonalds
vehicle and was told that there was $1,000,000 in excess coverage.
[112] On July 8,
2008, Ms. Baadsvik notified the collections department of ICBC of the
plaintiffs potential contract breach and her personal financial exposure.
[113] Around the
end of July 2008, the plaintiff received a copy of the writ of summons
filed by Ms. To on July 14, 2008 commencing the To Action. The
endorsement to the writ seeks damages from the defendants for personal injuries
alleged to have been sustained by Ms. To in the accident.
[114] On the
advice of her father, and acting on the reasonably held belief that ICBC was in
charge of such things, the plaintiff delivered the writ to the receptionist at
the Abbotsford ICBC office on July 30, 2008 through ICBCs interoffice mail.
Copies were forwarded to Ms. Baadsvik and to the separate ICBC adjuster
assigned to deal with the To Action.
[115] Ms. Baadsvik
did not communicate with the plaintiff about the writ specifically or the To Action
in general. There is no evidence that the third party adjuster, or any other
ICBC representative communicated with the plaintiff about the writ or the To Action
either until after that lawsuit was settled.
[116] In mid-September 2008,
Ms. Baadsvik discovered that the criminal trial had been adjourned to March 3,
2009. She maintained a tools-down approach awaiting the outcome.
·
The Criminal Proceedings
[117] As noted
earlier, the charges against the plaintiff of impaired driving and failing to
provide a breath sample were stayed approximately five weeks before the
criminal trial was scheduled to begin.
[118] On March 3,
2009, the trial went forward solely on the count of dangerous driving. The plaintiff
was represented by Mr. Harris. At the close of the Crowns case, the
plaintiff pleaded guilty to driving without reasonable consideration for other
persons using the highway contrary to s. 144(1)(b) of the MVA, and
was fined $500.
·
Reviving the Investigation
[119] Ms. Baadsvik
was apprised of the disposition of the criminal proceedings on about March 20,
2009. That news spurred her into a flurry of activity.
[120] The first
thing Ms. Baadsvik did was speak to her manager about the course to chart in
light of the trial outcome. It was decided that ICBC would not abandon the
breach simply because there was a stay of proceedings of the criminal charges.
In a file note to Ms. Baadsvik, her manager acknowledged that considerable
time had passed since the accident, but maintained that the investigation
needed to be continued, and directed that the following basic tasks be
performed:
·
obtain statements from and interview the passengers regarding any
drinking pre-accident;
· obtain
statements from and interview the attending police officer and the Sergeant who
attended the scene (later confirmed to be Constable Brah) regarding their
impressions of [the plaintiff] post MVA.
·
send a letter to the plaintiff seeking additional information
such as details about what she drank, at what time and in what amount. In this
connection, the manager warned: If we are not provided with this information,
we may pursue another breach. Ms. Baadsvik understood her manager to be
referring to the prospect of ICBC asserting a non-cooperation breach on the plaintiffs
part.
[121]
The manager also described himself as puzzled by Constable Woods
comments to Ms. Baadsvik made October 31, 2007, stating:
I have read the notes of your
conversation with Constable Wood and am puzzled by his explanation in essence
arguing his own findings however, he may have criminal burden of proof in
mind versus that of civil balance of probability. It stands to reason that if
he tried 15-16 times to obtain a breath sample, then he must have had a good
reason why.
[122] I find
that within roughly this same timeframe, a letter from a CDI agent addressed to
the ICBC adjuster handling the To Action came to Ms. Baadsviks
attention. Several features of Ms. Baadsviks testimony and the contents
of the ICBC claim file suggest that she and her managers believed that the
Crown had pursued the charges of impaired driving and failure to blow through
to trial, at which time they were stayed. However, the letter from CDI advised
that those charges had been stayed on February 3, 2009, as did the
enclosed copies of the Provincial Court record. Noting that the damages
exposure was significant, the CDI letter also stated that if ICBC intended to
pursue a breach against the plaintiff, further evidence regarding her sobriety
would be required. CDI suggested that statements from Constable Wood and the
passengers be obtained and that the plaintiffs whereabouts prior to the
accident be investigated. Those suggested steps were consistent with the
actions that the ICBC manager had instructed be undertaken.
·
Further Communications with Constable Wood
[123] By email
dated March 31, 2009, Ms. Baadsvik asked Constable Wood to clarify
how it was that he administered the breathalyser 15-16 times, plus 8 more
times after Mr. McDonald showed up, and yet maintained that her breath
sample would probably not have registered as impaired. Parroting her managers
logic, she continued, were thinking that if you tried so many times to get a
breath sample, you probably had a good reason why. The prospect that the stay
of the charge for failure to blow might have been the result of problems with
the charge itself does not appear to have been considered by Ms. Baadsvik
or her manager. In any case, and more importantly, in her email Ms. Baadsvik
acknowledged that in light of the outcome of the criminal trial, ICBC had
insufficient information to pursue a claim of breach against the plaintiff. Continuing
in this vein, her closing remarks noted that had the plaintiff pled guilty to
the criminal charge of dangerous driving, ICBC could have pursued a breach, but
as things stand, we cannot and would like to get some additional information
from you.
[124] In his
same-day email response to Ms. Baadsvik, Constable Wood indicated his
extreme displeasure that the charge of refusing to blow had been stayed, and
with what he perceived to be the failings of the court system at large. In his
words:
The fact the charges of refusal were dropped are an issue to
be taken up with Crown council [sic]. I have already had meetings with them
regarding this issue, and they have realized that the refusal charge should not
have been dropped. With respect to your questions: I do believe that [the
plaintiffs] ability to operate a motor vehicle was impaired by alcohol,
however given the refusal we cannot quantify to what extent. Despite by [sic]
observations at the time, I do not believe that [the plaintiff] would have been
over the legal limit, but rather at or close to the statutory limit. She would
have, in my opinion, been at about 60-80 BAC. Although this does not
constitute the statutory limit, it is sufficient, given her driving evidence,
that she was impaired.
The court system however in this
incident does not appear to have been functional in recognizing the substantive
charges. It is a shame that [the plaintiff] will not receive a criminal charge
out of this. Im not sure what more you need of me, but feel free to call me
…
[125] I find
that Ms. Baadsvik understood Constable Woods reference in his email to
the plaintiffs driving evidence to pertain to the fact that she had been driving
the wrong way in an area with which she was familiar at 5:00 in the
morning.
[126] Still not
entirely clear about Constable Woods impression of the plaintiffs state of
sobriety at the time of the accident, Ms. Baadsvik telephoned him on
April 1 for clarification. She understood the upshot of their
discussion to be that in Constable Woods opinion, the plaintiffs ability to
properly control her vehicle was impaired by alcohol. During that conversation,
he reiterated to Ms. Baadsvik that he was not able to comment on the level
of such impairment because a breath sample had not been obtained.
Ms. Baadsvik and Constable Wood had no further communication.
[127] Constable
Wood testified that his recollection of his interaction with the plaintiff at
the scene, which by then was more than one and a half years in the past, was
relatively clear in his mind when he communicated with Ms. Baadsvik as a
result of his preparations for giving testimony at the criminal trial.
[128] Ms. Baadsvik
was given authority to hire an independent adjuster to obtain the desired
statements from Constable Wood and his superior, which Ms. Baadsvik
later learned was Constable Brah, and to follow up with Ms. McLure. In
mid-April 2009, ICBC retained Kal Sidhu to assist in the investigation.
[129] Neither
Constable Wood nor Constable Brah would return Mr. Sidhus telephone
messages. They eventually declined to provide a statement or grant an
interview and suggested that ICBC seek disclosure of the police materials available
pursuant to a Freedom of Information request. Constable Brah advised Mr. Sidhu
that after ICBC reviewed the police file, she might be able to answer further
questions.
[130] Mr. Sidhu
also attempted to interview Ms. McLure. She returned two or three of his
telephone messages, but was reluctant to involve herself in the investigation.
After some prodding by Mr. Sidhu, Ms. McLure agreed that she would
meet with him after her baby was born. She suggested that they try to connect
at the end of July 2009. That is all ICBC knew about Mr. Sidhus progress
in arranging an interview of Ms. McLure at the time it decided that the
plaintiff was incapable of driving due to alcohol intoxication.
·
Defence of the To Action
[131] There was almost
no evidence about the conduct of the To Action.
[132] At some
point before the end of April 2009, ICBC appointed counsel to act on
behalf of Mrs. McDonald and the corporate lessor. No counsel was
appointed to represent the plaintiffs interests, nor did ICBC issue a
statutory third party notice to defend the claim from that position pursuant to
s. 77(3) of the I(V)A.
[133] On April 29,
2009, approximately five and a half weeks after Ms. Baadsvik learned of
the disposition of the criminal charges, the plaintiffs co-defendants in the
To Action filed a joint statement of defence. In their pleading, those
defendants admitted that the accident occurred because of the plaintiffs
negligence and denied any acts of negligence on their own part. As I have
remarked already, they also admitted that the plaintiff had acquired possession
of Mrs. McDonalds vehicle with her consent. An amended statement of
defence was filed about one week later for Mrs. McDonald exclusively, but
there were no amendments to the foregoing admissions.
·
Settlement of the To Action
[134] The
To Action was settled in the amount of $182,085.36 on behalf of the three defendants,
including the plaintiff, sometime before July 27, 2009.
·
Ms. Baadsviks Review of the Police File
[135] On August 10,
2009, Ms. Baadsvik received a copy of some of the contents of the
Abbotsford Police Departments file on the accident. The names of the
passengers were redacted from the general occurrence police report. However,
it contained the name and telephone number of the witness, Mr. Veliqi,
which ICBC had not been supplied with previously. That information was
prominently displayed in upper case letters, and was readily ascertainable on
the face of the report. Ms. Baadsvik missed it.
[136] Also
included was Constable Brahs separate occurrence report not previously seen by
Ms. Baadsvik. Her report makes the following observations about the
plaintiff at the accident scene:
(1) told
Constable Brah that she got confused and came the wrong way?!!;
(2) said
that she and her passengers were coming from Vancouver where they went for
sushi;
(3) did
not have her drivers licence and said she had misplaced it somewhere;
(4) was
able to correctly provide her birth date, address and telephone number, and a
key word of some kind so as to confirm her identity to Constable Brah;
(5) admitted
that she had consumed liquor, stating that her last drink was earlier in the
day, but was not able to recall an approximate time of consumption;
(6) when
questioned about how much and what she had drank, appeared very agitated and confused,
and answered that she did not know;
(7) would
frequently lean close towards Constable Brah and start whispering about how she
was in Vancouver for sushi, and was on her way back home and drove the wrong
way;
(8) a
very faint odour of alcohol emanated from plaintiff;
(9) her
face was pale and her pupils were dilated;
(10) despite
numerous attempts, was moving in an up and down direction and not sealing her
lips around the ASD device and failed to provide an adequate breath sample;
(11) denied
having any liquor in her vehicle; and
(12) said
that she had never got into trouble, and that this was the first time she had
done something wrong.
[137] Constable
Brahs report also directs the reader to Constable Woods statement in relation
to the ASD demand. Constable Woods separate report was not included in the
package of materials sent to ICBC by the Abbotsford Police Department. The
evidence indicates that Ms. Baadsvik did not have a copy of his report and
did not ask to be provided with one.
·
ICBCs Formal Decision August 18, 2009
[138] On August 18,
2009, Ms. Baadsvik, in conjunction with her manager, decided that ICBC
would pursue the plaintiff for an alcohol incapability breach pursuant to s.
55(8)(a) of the I(V)R. Ms. Baadsvik was aware that Ms. Tos
accident-induced injuries were severe and that the plaintiffs exposure to
damages was significant. That was the reason she involved her manager in the
coverage discussion at that time.
[139] The file
notations recording the managers reasoning that the plaintiff was in breach of
the policy states:
… [the plaintiffs] refusal to
provide a breath sample has also prejudiced our investigation of the claim, and
with the confirmation we have of polices impression of the insured being
intoxicated, the incapability of the insured stands to reason. [Ms. Baadsvik]
will be sending a demand letter to the [plaintiff].
[140] Fundamental
to ICBCs decision was the notion that the plaintiff had refused to blow (despite
the fact that the charge had been stayed) and her failure was indicative of
incapacity, and the belief that ICBC had confirmation of sufficient intoxication
from the police. Both of those underpinnings were flawed.
·
Events after the Formal Decision
[141] Ms. Baadsvik
testified that after she made the decision that the plaintiff was in breach,
she realized she had overlooked following up with the Vancouver Police
Department. She explained that although ICBC had already determined that the
plaintiff was in breach, it absolutely could change its decision if new
information came to light.
[142] On August 24,
2009, Ms. Baadsvik left a detailed telephone message with someone at the
records department of the Vancouver Police Department asking whether a police
report had been prepared regarding the subject matter of a police inquiry
regarding [the plaintiffs] vehicle and why she had been stopped. The next
day, Ms. Baadsvik received a telephone call from a records department clerk
advising that they did not have any report for this driver having been stopped
in Vancouver.
[143] Also
following ICBCs decision to breach the plaintiff, Mr. Sidhu continued his
attempts to contact Ms. McLure but with no luck and then learned from
her mother that Ms. McLure was living in Prince George. Ms. Baadsvik
became aware of his further attempts and instructed Mr. Sidhu to stop
trying to interview her. The investigation was over.
·
Notification to the Plaintiff of ICBCs Decision
[144] By letter
dated August 31, 2009, ICBC notified the plaintiff that it considered her
to be in breach of contract as follows:
Even though you were not
convicted on any of the Criminal Code of Canada charges, you are in
breach of your insurance contract as it has been shown that you were incapable
of proper control of your vehicle at the time of the accident due to the
influence of alcohol or drugs.
[145] The letter
further informed the plaintiff that ICBC had paid damages to property in the
amount of $6,333.57 and damages for personal injury in the amount of
$175,751.79. She was advised to call Ms. Baadsvik before the matter was
referred to the ICBC collections department.
[146] The letter
provided no reasons for ICBCs decision.
[147] The
following month, the collections department of ICBC sent an invoice to the
plaintiff demanding payment within 30 days. In the ensuing months, and
continuing into April 2010, ICBC sent her several subsequent demand
letters containing threats of legal action and other consequences, such as adverse
implications for her credit rating and refusal to issue her insurance and
drivers licence.
[148] The
plaintiff was shocked and horrified when she read the August 31 letter and
subsequent string of demands. She testified that when she received the initial
letter, she felt that her life was over because she knew she would never be
able to repay that kind of money from her job as a restaurant manager. Ms. Baadsvik
testified that she felt sick about sending the plaintiff this letter because
she could not imagine opening a letter like it in the mail.
DISCUSSION
·
Incapacity to Properly Control a Vehicle
[149] The
central issue in dispute is whether, at the time of the accident, the plaintiff
was under the influence of alcohol to such an extent that she was incapable of
the proper control of her mothers car and thereby deemed to be in breach of
her insurance contract, pursuant to s. 55(8)(a) of the I(V)R. For
convenience, I will sometimes refer to the alcohol-induced state of incapacity
contemplated under that statutory provision as Incapacitated.
·
Legal Framework Incapacity
[150]
The applicable law is well-established. The onus rests with ICBC to
prove, on a balance of probabilities, that the plaintiff was Incapacitated. The
concept of the state of incapacity was discussed in Kim v. Insurance Corp.
of British Columbia (1980), 21 B.C.L.R. 18 (S.C.). At p. 20, McKenzie J.
adopts the following passage from Ritchie J. in Union Insurance Society of
Canton Limited v. Andre Arsenault (1961), S.C.R. 766:
The phrase describing a driver as having … his ability to
drive a motor vehicle … impaired by alcohol connotes to me a condition in
which the driver is a potential danger to the other users of the highway
because he is most likely to drive his motor vehicle improperly than he would
if he had not consumed so much alcohol.
In my view there is a wide difference between being likely to
drive improperly and being incapable of driving properly. Every driver
who is under the influence of liquor to the point of being incapable of
proper control is certainly impaired, but in my opinion it does not follow that
every impaired driver is necessarily incapable of proper control. The
danger to the public which is involved in driving an automobile while the
ability to drive is impaired is recognized by the language of s. 223 of
the Criminal Code [R.S.C. 1970, c. C‑34], but the terms of Condition
no. 5 do not serve to relieve an insurer from liability unless and until
it has been proved by a preponderance of evidence that the insured was under
the influence of intoxicating liquor to the point of being incapable of the proper
control of the automobile.
[Emphasis in original.]
[151] McKenzie
J. then continued:
In terms of the clear distinction
drawn by those words it would be necessary for the defendant to prove that the
plaintiffs state went beyond impairment to a point where he was incapable of
driving properly. It necessarily follows that the state of incapacity cannot
be established by the mere proof that the breathalyser reading exceeded .08.
Since there is equivocation in my mind as to whether or not he reached the
state of impairment it follows that he had not exceeded that state.
[152]
The governing principles were neatly summarized in MacGregor v.
Insurance Corp. of British Columbia (1993), 14 C.C.L.I. (2d) 195 (B.C.S.C.)
at para. 4:
The authorities make it clear that the insurer must prove the
incapacity on a balance of probabilities: see Kulbaba v. Insurance Corp. of British
Columbia. (1981), 32 B.C.L.R. 189 (S.C.). Proof of impairment or of an
illegal level of alcohol in the blood is not, by itself, sufficient. Nor is
proof of drinking and negligence enough. The insurer must establish that in
all the circumstances of the particular case there was an incapacity to
exercise proper control. In Caissie v. Insurance Corp. of British Columbia,
[1989] B.C.J. No. 1020, Van. Registry No. CA008908, dated May 24,
1989, the B.C. Court of Appeal approved the test as stated by McKenzie J.
in Schedeger v. Insurance Corp. of British Columbia, [1982]
I.L.R. 1-1562 (B.C.S.C.) as follows:
Negligence on his part might be of such a nature and degree
that, in conjunction with independent evidence of impairment, it might provide
proof on a balance of probabilities that incapacity to exercise proper control
in fact existed. The question here is whether the evidence demonstrates, on a
balance of probabilities, that the negligent acts were of such a nature and
degree as to be explainable only by compelling the inference that the influence
of alcohol caused the negligent acts and that the effect of the alcohol was to
render him incapable of proper control. This can be tested by asking whether
the collision would have been avoided if the plaintiff had been sober.
[153] The
requisite level of incapacity can be and often is established by circumstantial
evidence: Patterson v. Insurance Corp. of British Columbia (1996), 22
B.C.L.R. (3d) 342 [Patterson]. Evidence that the driver consumed
alcohol before the accident in combination with evidence of careless driving
will not necessarily be sufficient to discharge the burden of proof. Even an
illegal level of alcohol in the drivers blood or a conviction for impaired
driving or for failing to provide a breath sample, will not be conclusive: Patterson;
Dhiman v. Insurance Corp. of British Columbia, 2007 BCSC 260 [Dhiman].
On the other hand, where the driver exhibits considerable symptoms of
intoxication, and the circumstantial evidence as a whole inescapably leads to
the conclusion of impairment, the fact that there may be alternate explanations
for some of the drivers symptoms, will not displace the inference of
incapacity: Dhiman. The appropriate test is whether the accident would
have been avoided if the insured had been sober: Smissen v. Insurance Corp.
of British Columbia, 2004 BCSC 742.
·
Was the plaintiff Incapacitated at the time of the Accident?
[154] ICBC
contends that the surrounding circumstances support the conclusion that, in all
probability, the plaintiff was incapable of the proper control of her mothers
vehicle due to alcohol intoxication.
[155] The
specific circumstances identified by ICBC in support of its contention are:
· the
plaintiffs admission that she had consumed alcohol prior to the accident;
· how
the accident took place, including the plaintiffs admission that she went the
wrong way;
· the
plaintiffs alleged failure to blow into the ASD;
· the
independent observations and conclusions of Constables Brah and Wood; and
·
the criminal charges against the plaintiff and the outcome of
those charges.
[156] ICBC acknowledges
that none of the circumstances it points to are conclusive of the plaintiff
being Incapacitated. It argues that it is the cumulative effect of those
circumstances that compels that inference. In my opinion, when critically
evaluated in the context of the evidence as a whole, the circumstantial
evidence relied upon by ICBC falls significantly short of establishing the
likelihood that the plaintiff was Incapacitated at the material time. I would
go even further and say that the preponderance of the evidence is overwhelmingly
the other way.
[157] Before the
accident, the plaintiff consumed, at most, two glasses of wine which may have
represented close to half of the bottle. She drank them over a span of between
60 and 70 minutes ending, at the latest, at 1:00 a.m. on October 10. It
can be reasonably inferred that the plaintiffs pace of consumption was
consistent from beginning to end, such that she drank the two glasses in
relatively even measure throughout the applicable period, as opposed to gulping
down a large portion closer to 1:00 a.m.
[158] A minimum
of four hours elapsed between the plaintiffs last sip of alcohol and the
accident. In the intervening period, she drove without incident for roughly
four hours (other than losing her way in unfamiliar territory, which I find to
be of no moment to the key issue). Neither passenger noticed any driving
difficulties or impairment on her part, or had any reservation about driving with
her for a considerable time, over a considerable distance.
[159] The
purpose of Constable Buttermans patrol was to randomly stop drivers in order
to check their sobriety. It was in pursuance of that objective that he pulled
over the plaintiff. He leaned in through the plaintiffs window and engaged her
and the passengers in conversation. Constable Buttermans interaction with the
plaintiff occurred just over three hours from when she had last consumed
alcohol. It is reasonable to expect that she would have displayed more overt
indicia of alcohol consumption and/or impairment at that time, than she would
45 to 50 minutes later when the accident occurred. However, Constable
Butterman did not suspect that the plaintiff was impaired. Although his
interaction with her was relatively brief, it was not too short a period to
enable him to form a suspicion of alcohol impairment. Indeed, it was about the
same amount of time, or not appreciably shorter, that Constable Wood spent with
the plaintiff before he decided to administer the ASD.
[160] ICBC
relied heavily on Constable Woods observations and remarks concerning the
plaintiffs level of sobriety in arriving at its determination that she was
Incapacitated. During the course of the trial several material difficulties
were exposed with respect to Constable Woods assessment of the plaintiffs
state at the accident scene, and in relation to the accuracy of his account of
things to Ms. Baadsvik. They are summarized below:
(1) According
to Ms. Baadsviks file notes, Constable Wood stated that the plaintiff had
admitted to drinking in Vancouver. In chief, Constable Wood testified that, at
the scene, the vehicle occupants had declared that they had been returning from
the bar district in Vancouver. However, in cross-examination he admitted that
he formed the opinion that they were possibly returning from that area or from
partying of his own accord, conceding further that the words partying and
bar district had originated with him. There had been no admission of
drinking while in Vancouver.
(2) In
his telephone discussion with Ms. Baadsvik, Constable Wood described the plaintiffs
eyes as watery and bloodshot, and said that she was unsteady on her feet,
allowing that those symptoms were also consistent with the release of the
airbag. That was not consistent with his direct evidence at trial, where he
testified that the plaintiff had been steady on her feet and coherent.
(3) At
trial, Constable Wood claimed that he noticed that the plaintiff exhibited mild
symptoms of impairment at the scene, but did not elaborate on what those were.
In cross-examination, he was reminded that at the criminal proceeding he had
been asked whether the plaintiff displayed any physical indicia of impairment and
that he had answered minor, if if any. Constable Wood adopted his previous
testimony as true.
(4) Constable
Wood told Ms. Baadsvik that he detected an odour of alcohol on the
plaintiff at the scene. In cross-examination, he agreed that he had no
recollection of smelling alcohol on her at any time during their interaction.
(5) At
trial, Constable Wood maintained that based on his fairly extensive experience
dealing with impaired persons, he did not believe that the plaintiff would have
exceeded the legal limit had an analysis of her breath been performed. He
testified that, even so, based on the totality of the circumstances at the scene,
he concluded that the plaintiffs ability to operate a motor vehicle was
impaired. That was consistent with his March 31, 2009 email to Ms. Baadsvik.
Near the end of his evidence in chief, Constable Wood provided a startling clarification
about what he believed was the nature of the plaintiffs impairment. He
elaborated that her impairment was not necessarily due merely to alcohol, but
rather could be due to a combination of alcohol, fatigue and other contributing
factors, which he did not specify. Constable Wood was not asked to and did not
speculate on the proportionate contribution of those combined factors to the plaintiffs
impairment.
(6) At
trial, Constable Wood appeared to emphasize that he had only formed a reasonable
suspicion that the plaintiff was impaired, as distinct from reasonable grounds
that she was. In that regard, he said that had he formed reasonable grounds,
being a more demanding threshold than a mere suspicion, he would have taken the
plaintiff to the detachment and administered a breathalyser test.
[161] ICBC
contends that the plaintiffs repeated failure to provide a breath sample is a
particularly strong indicator of her high level of impairment. However,
Constable Woods evidence on this matter was also problematic. At trial, he
did not recall telling Ms. Baadsvik that he had given the plaintiff as many as
22 or 23 tries, or ascribing any number at all to her attempts. He was
uncertain as to the precise number and suggested that it would have been 9, 10
or possibly 11. Constable Brah had knowledge of the plaintiff being given only
3 or, at most, 4 separate chances in total. Her knowledge was limited by the
fact that her attention at the scene was also drawn to Ms. To and, therefore,
she was not present for all of the plaintiffs attempts to blow.
[162] Constable
Wood initially testified that he did not recall the plaintiff or her father
finding fault with the way that he was holding or administering the ASD. He
subsequently qualified his evidence and agreed that it was possible that his
conversation with the plaintiff might have touched on the idea that he may
not have been holding the device correctly, or about why her mouth did not
appear to be making a proper seal around the mouthpiece. In his direct
evidence, Constable Wood said that the plaintiff did not mention an injury or
any other reason why she was not able to provide the requisite airflow into the
ASD. His evidence on cross-examination was decidedly less definite. While he
maintained that he was not able to recall the plaintiff offering an excuse as
to why her breath sample was not being captured by the ASD, he agreed that it
was possible that she had complained to him of having difficulty due to chest
pain. As well, Ms. McLure credibly testified that she had overhead the
police tell the plaintiff to blow harder or breathe harder, and that the
plaintiff had answered that she was not able to. I also accept that Mr. Cipriano
heard the plaintiff complain of chest pain to Ms. McLure at the scene.
[163] I think it
probable that the plaintiff did experience difficulty providing a proper sample
of her breath because the force of the airbag had affected her ability to exhale
fully. I find too that at some stage she complained to Constable Wood of chest
discomfort, and that was one of the reasons that he decided to allow her more
than three attempts to blow. He did not relay any of that to Ms. Baadsvik. I
also conclude that the two additional opportunities given to the plaintiff
after her father arrived were administered deficiently. In the first place,
because the plaintiff was in handcuffs, and in the second instance, because the
device was inadvertently dislodged from her mouth by Constable Wood.
[164] The weight
of the evidence indicates that Constable Wood seriously overstated to
Ms. Baadsvik the number of chances he permitted the plaintiff to provide a
breath sample. I find that she was allowed between 5 and
7 opportunities. On the whole of the evidence, I am not persuaded that
the plaintiff deliberately attempted to by-pass the ASD.
[165] The
relevance of ICBCs assertion that the plaintiff willfully failed to provide a
breath sample is that it serves to support the inference that she was fearful
of failing the test had she taken it, because she was impaired at that time.
The thesis of that submission is only marginally tenable in the face of
Constable Woods view that, had the plaintiff blown properly, her blood alcohol
concentration would probably not have exceeded the legal limit. It is
important that this larger picture not be overlooked.
[166] Constable
Brah had observed only minimal symptoms suggestive of alcohol consumption. In
her report to the Superintendent for an Administrative Driving Prohibition she had
ticked boxes for just three out of the nine possible categories of enumerated
physical indicia of impairment. She noted the odour of alcohol was faint, the
plaintiffs pupils were dilated and her speech was confused. It is not without
significance that Constable Brah did not tick the boxes on the form to indicate
that the plaintiff had watery or bloodshot eyes, that her face was flushed or
pale, or that her balance was uncertain, swaying, wobbling or staggering.
[167] At the
accident scene, the plaintiff told Constable Brah that it was her first time
doing anything wrong and that she should not get into trouble for it. The
plaintiff testified that she meant that she had never before been in a car
accident that was her fault, and that she knew she was at fault because she had
driven the wrong way. I accept that this is what the plaintiff intended to
convey to Constable Brah. Constable Brah, however, misconstrued the
plaintiffs reference to doing something wrong as meaning that she had been
driving while under the influence of alcohol.
[168] It will be
recalled that in her report, Constable Brah described the plaintiff as very
agitated. It was repeatedly put to the plaintiff in cross-examination that she
became agitated and upset as a result of Constable Brahs probing into her
pre-accident drinking because she was worried about how much alcohol she had
consumed. In forcefully denying that suggestion, the plaintiff testified that
it was the accident itself, the recognition that she had caused it, and the
consequent violent deployment of the airbag, which sent her into a state of
shock and made her very upset and agitated. Her explanation is highly
plausible and accords with other evidence. I accept it.
[169] At trial, Constable
Brah stated that she came to form the view that the plaintiff was impaired and
that it affected her ability to drive. But in her report, Constable Brah did
not comment on the plaintiffs sobriety or express the view that she was
impaired. Constable Woods report was likewise silent about those matters.
[170] A key
factor influencing the formation of Constable Brahs view was that the
plaintiff had leaned in and away, and whispered when speaking to her. The
plaintiff testified that she has a habit of whispering and leaning into and
away from individuals when speaking to them, especially when nervous. She
insisted that her doing so when conversing with Constable Brah was simply a
display of her idiosyncratic proclivity, and had nothing to do with any feature
of impairment such as difficulty with balance and/or speech. I believe her. The
can be no doubt that another factor weighing heavily on Constable Brahs mind
was her perception that the plaintiff was wilfully bypassing the ASD. As I
have found that was not the case, Constable Brahs reliance on this factor further
undercuts the legitimacy of the impression she formed about the plaintiffs impairment.
[171] Based on
the foregoing, I conclude that the officers views that the plaintiff was
impaired were based, in part, on flawed premises, and that the quality of their
evidence on the impairment issue at large was very poor. I consider it unsafe
to place much weight on their views in determining whether the plaintiff was
Incapacitated at the material time.
[172] ICBC
contends that the plaintiffs plea to driving without reasonable consideration
for others pursuant to s. 144(1)(b) of the MVA is evidence of an
admission to the facts underlying the offence, and, as such, amounts to a
robust circumstance supporting the finding that she was Incapacitated. I admit
difficulty in following the logic of this line of argument.
[173] The
alcohol-related criminal charges had been stayed before trial and by virtue of
the plaintiffs plea, she was not guilty of the charge of dangerous driving. There
is no cogent evidence as to the basis on which the ticket had been issued to
the plaintiff. Constable Brah testified about the wide range of substandard
driving conduct, for example going the wrong way, which is potentially captured
under s. 144(1)(b). According to the plaintiff, when she pled guilty to
the offence she was not admitting that she had been impaired at the time of the
accident. Rather, she understood that she was merely acknowledging and taking
responsibility for the mistake she had made of driving against traffic. There
was no evidence to the contrary.
[174] In my
view, the plaintiffs guilty plea to the MVA offence is a neutral factor.
[175] The
Mt. Lehman interchange project brought about a radical change to the
routes and roadways in Abbotsford. Aspects of its implementation proved to be
confusing to drivers and prompted complaints by members of the public even
after the completion date. The plaintiff and members of her family credibly testified
about finding the new road system confusing, causing some of them to avoid the
interchange altogether. Mr. Veliqi recalled that there had been some kind
of construction in the vicinity as recently as two to three weeks before the
accident.
[176] On
balance, I consider it likely that, when the accident happened, there was a
sign near the top of the second off-ramp prohibiting drivers from turning left,
and probably one posted along that off-ramp directing traffic to flow to the
right. The plaintiffs familiarity with the interchange was mostly with respect
to the route she usually took home using the third off-ramp, not the second. In
any case, her use of and familiarity with the interchange generally would not
preclude her from exiting the highway on the wrong off-ramp or immunize her
from missing the traffic signs and being genuinely confused about her entitlement
to turn left at the top of the second off-ramp. Those mistakes leading up to
the accident are as consistent with sober driving blunders as they are with alcohol
incapacity. When considered in light of the evidence as a whole, they are far more
harmonious with the former.
[177] I conclude
that due to inattentiveness the plaintiff missed the road signs which were
there to be seen and then seriously misjudged her entitlement to turn left
where the second off-ramp intersects with the Fraser Highway. The weight of
the evidence indicates that her substandard driving at the material time was
unconnected to her prior alcohol consumption. The evidence does not establish
that the plaintiff was in an impaired state, much less that she was incapable
of controlling her mothers car due to alcohol intoxication when the accident
happened.
[178] ICBC has
failed to meet its burden of proof.
[179] Given this
finding, it is not necessary to address the plaintiffs assertion that ICBC is
estopped from seeking recovery against her.
·
Bad Faith Claim
[180] There are
two main streams to the plaintiffs bad faith claim.
[181] In the
first place, she contends that from the outset the conduct of Ms. Baadsvik
and her managers was unreasonable, misguided and aimed at advancing ICBCs
interests to the detriment of her welfare. She submits that ICBCs
investigation into and its assessment of the crucial issue of whether she was Incapacitated
at the time of the accident was manifestly deficient. The plaintiffs companion
assertion is that instead of diligently gathering relevant information about
her sobriety and assessing it in an objective and timely way, once ICBC had in
hand some information that might support the possibility of an alcohol breach,
it effectively closed its mind to any countervailing explanation for the
accident.
[182] Secondly,
the plaintiff impugns ICBCs purported discharge of its duty to defend her
against the To Action. In that branch of her argument, she contends that
by failing to retain counsel to represent her defence interests and keeping her
in the dark about the settlement negotiations, she was deprived of any
meaningful participation in the process and of the opportunity to potentially
mitigate the amount that ICBC says is her loss.
[183] The
plaintiff maintains that across the board, ICBCs course of conduct was unfair,
unreasonable and self-interested, and constitutes bad faith behaviour. She
also submits that ICBCs cumulative bad faith conduct was so highhanded, reprehensible
and offensive to any decent-minded person, that it cries out for a significant
award of punitive damages.
[184] ICBC
denies that it acted unfairly or in any way violated the duty of fair-dealing
and good faith owed to the plaintiff. It defends its investigation and
assessment relative to the alcohol-related breach matter as being balanced,
thorough and fair. With respect to the To Action, ICBC makes the point
that pursuant to s. 74.1 of the I(V)R, it had exclusive conduct of
the defence on behalf of all the defendants to that proceeding and was
authorized to appoint and instruct counsel, admit liability and compromise or
settle that lawsuit. Building on that, ICBC says it was perfectly within its
right to comport itself as it did with respect to the defence and settlement of
the To Action on the collective behalf of the plaintiff and her co‑defendants.
[185] As will be
seen, inherent in ICBCs submissions is a misapprehension as to the proper
course to adopt in order to discharge its duty to act fairly and in good faith
in the circumstances of this case.
·
Legal Framework Bad Faith
[186] Contemporary
insurance law recognizes that an insurance policy is a special species of
contract and has embraced the proposition that parties to an insurance contract
owe the other an implied contractual obligation of good faith and fair dealing:
Fredrikson v. Insurance Corp. of British Columbia (1990), 44 B.C.L.R.
(2nd) 303 (S.C.) [Fredrikson]; Whiten v. Pilot Insurance Co., 2002
SCC 18, [2002] 1 S.C.R. 595 [Whiten]; Insurance Corp. of British
Columbia v. Hosseini, 2006 BCCA 4 [Hosseini]. In the case at
bar, the plaintiff grounds her bad faith claim in her cause of action for
breach of contract against ICBC.
[187] An
insurers duty to act fairly and in good faith is engaged upon its receipt of
the claim: Labelle v. Guardian Insurance Co. of Canada (1989), 38
C.C.L.I. 274 at 292. The existence of an obligation of good faith is fundamental
to a bad faith claim. An approach often taken as a means of assessing a bad
faith claim is to ask whether the insurer has run afoul of its duty of good
faith. While often helpful, this approach is susceptible to yielding an
analysis that becomes circuitous in its logic, i.e. that the concept of bad
faith is defined by the absence of good faith.
[188] Bad faith
is a term of convenience and does not carry a precise legal definition. Like
many other judicial constructs, such as fairness and reasonableness, the notion
of what will constitute bad faith is highly dependent on the factual context
within which it is said to have arisen. It is therefore axiomatic that a bad
faith claim must be evaluated in light of the surrounding circumstances on a
case-by-case basis: a closed category of defining attributes is neither possible
nor desirable. That said, judicial treatment of insurer bad faith has resulted
in the development of useful principles that have served to shape the contours
of its meaning.
[189] Stated in
overview, a typical insurer bad faith claim encompasses a constellation of acts
undertaken by an insurer that offend or run counter to the broad duty of good
faith and fair dealing inherent in the insurance contract. The misconduct is
often aimed at or has the effect of obtaining an advantage or gain for the
insurer, at the expense of the interests of the insured. Evidence of conduct
that amounts to fraud or corrupt motive might be present, but it need not be.
[190] Insurer
bad faith may arise in relation either to first party coverage or third party
coverage. The importance of maintaining the distinction when addressing
allegations of bad faith appears to be an unresolved issue. (See generally,
Gordon G. Hilliker, Insurance Bad Faith, 2d ed. (Toronto: LexisNexis
Canada Inc., 2009.)
[191] Punitive
damages are often sought, but do not invariably follow, from a finding that an
insurer did not act in good faith. Punitive damages are directed at the
insurers misconduct; their objective is to punish and deter especially
deplorable conduct, and not to compensate an insured for any loss. They are
exceptional. The standard for establishing a bad faith claim is not the same
as the test for punitive damages. The threshold for punitive damages is more
demanding.
[192] Apart from
the patently egregious cases, the assessment of whether the cumulative effect
of particular conduct or a course of conduct in particular circumstances ought
to be catalogued as bad faith, can be difficult and nuanced.
[193] Fredrikson
remains a leading authority with respect to an insurers obligation of good
faith in defending a third party claim. There, the bad faith claim stemmed
from ICBCs refusal to settle a claim despite having received competent advice
to do so, with the result that the insureds liability ended up exceeding the
policy limits. The court explored the parameters of the insurers contractual
obligation to investigate and defend the insured in the tort action. It
rejected the proposition that an insurer stood as a fiduciary vis-a-vis
an insured. However, while acknowledging that an insurer is not subject to the
stringent standards imposed upon a true fiduciary, the court affirmed that its
good faith obligation nonetheless entails the requirement that it exercise
reasonable care and skill in investigating the claim.
[194] At 334-335
Esson C.J.S.C. (as he then was) enumerated an array of factors to be
considered in measuring whether an insurer has acted in bad faith in the
currency of the litigation:
(1) failure
to adequately investigate the grounds for the claim against its insured;
(2) failure to advise the insured of settlement decisions that could
adversely affect his interests; (3) failure to regard the advice of
counsel or other agents; (4) failure to settle when the probability of
success at trial is low and the risk of personal liability to the insured is
high; and (5) failure to institute or participate in settlement
negotiations.
[195] Continuing
at 337, the Chief Justice pondered the nature of the insurers duty of good
faith and, in so doing, outlined instructive guidelines as to the types of acts
that might violate it:
But
what is the nature of that duty? This is not the appropriate case in which to
seek to answer that question because, whatever the scope of the duty, it was
met in this case by I.C.B.C. It acted in a fair and open manner, it approached
the question of settlement as if only its own resources were at risk, and it
followed the course which its insured wished it to take. I.C.B.C., which does
not suggest that it was under no duty to Fredrikson, submits that the essence
of the duty upon it was one of honesty. I think that may well be right…
[196] In Shea
v. Manitoba Public Insurance Corp. (1991), 55 B.C.L.R. (2d) 15,
1 C.C.L.I. (2d) 61 (S.C.) [Shea], Finch J. (as he then was)
undertook a comprehensive survey of the authorities and expounded on the
insurers duty when defending third party claims against its insured. As was
the case in Fredrikson, the insurer in Shea had rejected offers
to settle the claim within policy limits. At para. 191, his Lordship
summarized the insurers duty of good faith within the litigation context:
1.
The relationship between insurer and insured is a commercial one, in which the
parties have their own rights and obligations;
2.
Within the commercial relationship, special duties may arise over and above the
universal duty of honesty, which do not reach the fiduciary standard of
selflessness and loyalty;
3.
The exclusive discretionary power to settle liability claims given by statute
to the insurer in this case, places the insured at the mercy of the insurer;
4.
The insureds position of vulnerability imposes on the insurer the duties:
a)
of good faith and fair dealing;
b)
to give at least as much consideration to the insureds interests as it does to
its own interests; and
c)
to disclose with reasonable promptitude to the insured all material information
touching upon the insureds position in the litigation, and in the settlement
negotiations.
5.
The fact that the insured is at the mercy of the insurer for the purposes of
settlement negotiations gives rise to a justified expectation in the insured
that the insurer will not act contrary to the interests of the insured, or will,
at least, fully advise the insured of its intention to do so;
6.
While the commercial nature of the relationship permits an insurer to assert or
defend interests which are opposed to, or are inconsistent with, the interests
of its insured, the duty to deal fairly and in good faith requires the insurer
to advise the insured that conflicting interests exist, and of the nature and
extent of the conflict;
7.
The insurers statutory obligation to defend its insured imposes on the
insurer, where conflicting interests arise, a duty to instruct counsel to treat
the interests of the insured equally with its own; and where one counsel cannot
adequately represent both conflicting interests, an obligation to instruct
separate counsel to act solely for the insureds, at the insurers own cost;
8.
The insurers duty to defend includes the obligation to defend on the issue of
damages, and to attempt to minimize by all lawful means the amount of any
judgment awarded against the insured. In this case that would include arguing
that court order interest and no fault benefits are payable in addition to the
policy limits, where such an argument is available in law; and
9.
Defence preparations and settlement negotiations must take place in a timely
way, and, where last minute negotiations are required, advance planning must be
made to ensure that the insureds interests are given equal protection with
those of the insurer.
[197] There is
no suggestion that Finch J. intended that these considerations were
exhaustive.
[198] In the
end, the court in Shea fixed the insurer with liability for the portion
of the damages that exceeded the policy limit.
[199] A fulsome
discussion of the duty good faith in the first party coverage scenario was
undertaken in Bullock v. Trafalgar Insurance Co. of Canada, [1996] O.J.
No. 2566 (C.J. Gen. Div.) [Bullock]. The insurer, acting on a
suspicion of arson on the part of insured, initially denied a vehicle fire loss
claim. It subsequently reversed its position and offered to settle the claim,
but refused to withdraw its allegation that Mr. Bullock had committed
arson. In the ensuing action brought by the insured, the court found that the
insurers denial had not been unreasonable in the early days of the claim.
However, it reasoned that once the insurer had been provided with the insureds
expert report and assorted witness statements indicating that an innocent
explanation for the fire was more probable, maintaining the denial of coverage
could no longer be said to be reasonable.
[200] In his
analysis, Cumming J. applied essentially the same analysis to the
questions of good faith and fair dealing in the context of first party coverage
as Finch J. had in Shea within the framework of third party
coverage. He concluded that the insurers failure to withdraw the derogatory
allegation of arson when it no longer rested on any viable evidentiary or
factual foundation in circumstances where the insured had reasonably placed very
high importance on its retraction, amounted to a breach of the insurers
ongoing duty to act fairly and in good faith (at p. 127).
[201] The
following guidelines of good faith emerge from the courts instructive analysis
in Bullock: (1) an insurer must perform a balanced and reasonable
investigation and assessment of the first party claim; (2) it must be
prompt in handling and assessing the loss; (3) the insurer must assess the
merits of the claim in a balanced and reasonable manner; (4) it must give
as much consideration to the interests of the insured as it does to its own
interests and is not to do anything to injure the insureds rights to benefits
under the policy; and (5) a want of reasonable care in settling a claim
suggests an absence of good faith.
[202]
Cumming J. also acknowledged the entitlement of an insurer to satisfy
itself that a claim is bona fide before it covers the insured loss. He
cautioned, however, that this entitlement does not authorize the insurer to
adopt a partisan approach in its treatment of the claim. At para. 101, he
writes:
… Scrutiny and challenge of doubtful claims is consistent
with the insurers contractual commitment to pay claims relating to covered,
and not excluded, risks. However, the insurer may not treat the insured as an
adversary whose interests may be disregarded. This encompasses a duty to
settle claims without litigation in appropriate cases: This implies a reasonable
and competent investigation to determine whether a claim will be honoured.
[case citations omitted]
[203] An
important appellate analysis of bad faith is found in 702535 Ontario Inc. v.
Non-Marine Underwriters, Lloyds London, England, (1999), 130 O.A.C. 373,
184 D.L.R. (4th) 687 [702535 Ontario]. The allegation
of bad faith sprang from an insurers delay in paying a claim for two fire
losses suffered by the insureds hotel. The delay of nearly two years was
mostly due to the insurers ultimately unsuccessful insistence that other
insurance should have responded. The court concluded that the insurers delay
was equivalent to a failure to pay within a reasonable time and thereby
constituted a breach of the insurers duty to handle the claim in good faith. The
court affirmed that the denial of an insureds claim, standing alone, will not
constitute an act of bad faith. That is the case even where it later reverses
its decision or the denial is judicially determined to have been incorrect. The
court also endorsed the thread of judicial thinking reflected in Bullock,
and by implication, in Shea, as well as other authorities, stating at
paras. 28-30:
[28]
The first part of this duty speaks to the timeliness in which a claim is
processed by the insurer. Although an insurer may be responsible to pay
interest on a claim paid after delay, delay in payment may nevertheless operate
to the disadvantage of an insured. The insured, having suffered a loss, will
frequently be under financial pressure to settle the claim as soon as possible
in order to redress the situation that underlies the claim. The duty of good
faith obliges the insurer to act with reasonable promptness during each step of
the claims process. Included in this duty is the obligation to pay a claim in
a timely manner when there is no reasonable basis to contest coverage or to
withhold payment [case citations omitted].
[29]
The duty of good faith also requires an insurer to deal with its insureds
claim fairly. The duty to act fairly applies both to the manner in which the
insurer investigates and assesses the claim and to the decision whether or not
to pay the claim. In making a decision whether to refuse payment of a claim
from its insured, an insurer must assess the merits of the claim in a balanced
and reasonable manner. It must not deny coverage or delay payment in order to
take advantage of the insureds economic vulnerability or to gain bargaining
leverage in negotiating a settlement. A decision by an insurer to refuse
payment should be based on a reasonable interpretation of its obligations under
the policy. This duty of fairness, however, does not require that an insurer
necessarily be correct in making a decision to dispute its obligation to pay a
claim. Mere denial of a claim that ultimately succeeds is not, in itself, an
act of bad faith [case citation omitted].
[30]
What constitutes bad faith will depend on the circumstances in each case. A
court considering whether the duty has been breached will look at the conduct
of the insurer throughout the claims process to determine whether in light of
the circumstances, as they then existed, the insurer acted fairly and promptly
in responding to the claim.
[204] In 702535
Ontario, the court concluded that the insurers bad faith conduct was not
sufficiently outrageous as to attract punitive damages.
[205] The
hallmarks of good faith conduct cultivated in the above authorities, and
others, were reaffirmed in Kogan v. Chubb Ins. Co. of Canada (2001), 27
C.C.L.I. (3d) 16 (Ont. S.C.J.) [Kogan]. The insurer, relying on
the report of its expert, suspected arson and denied the insureds claim under
a fire insurance policy on her house. The insurer did not promptly inform the insured
of its decision to deny coverage, preferring instead to advise her that the
matter was under investigation. That the decision to deny had actually been
reached was not revealed until after the insured had commenced an action for
indemnification. That non-disclosure, in conjunction with an inadequate
investigation, failing to help the insured prepare the claim, and making
unfounded allegations that the insured had grossly exaggerated her loss,
sustained a finding of bad faith. Aspects of the insurers deficient
investigation included the fact that it did not examine the damaged contents or
prepare an inventory of them and, in the courts assessment, generally
overlooked vital evidence tending to verify the insureds claim. At para. 61,
Forget J. sums up the insurers overall misguided handling of the claim:
Where
the insurer and/or adjuster acts unreasonably by effectively presupposing arson
as the cause of the fire and taking steps to fortify this conclusion rather than
objectively assessing the evidence in order to draw a reasonable conclusion
therefrom, the label of bad faith will be justified and punitive damages should
be awarded.
[206] The
requirement that an insurer assess all of the information pertinent to the
claim – both supporting and challenging it – through a lens of reasonableness
has emerged as a recurrent feature of contemporary judicial analysis. It is,
therefore, not surprising that the court in Kogan concluded that
prejudging the merits or presupposing contractual breach by the insured
constituted a breach of the insurers duty to act fairly and in good faith, and
justified the significant award of $100,000 in punitive damages. Of additional
note is the controversial finding in Kogan that the adjuster was jointly
and severally liable with the insurer for violating the duty of good faith and
fair dealing.
[207] A
discussion of bad faith and punitive damages is not complete without reference
to two landmark decisions of the Supreme Court of Canada, first in Whiten
and subsequently in Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC
30, [2006] S.C.J. No. 30 [Fidler].
[208] In Whiten,
the insurer persisted in all manner of notorious conduct adverse to the
interests of its insured as a means of denying the fire loss claim of the
insureds home on the basis of arson. In addition to seeking coverage pursuant
to the insurance policy, the insured alleged that Pilot had breached its duty to
act fairly and in good faith. At the Supreme Court of Canada, it was
essentially conceded by Pilot that those duties were implied terms of the
insurance contract. That position was favourable to Pilots primary contention
that breach of such a contractual duty, as distinct from a breach of duty
actionable in tort, could not sustain an award of punitive damages. With
little discussion of the point, the majority affirmed the contractual analysis
relative to the duty of good faith. Significantly, however, the Court went on
to hold that the insurers good faith obligation exists independently of its
contractual obligation under the policy to compensate for loss. Put another
way, it held that conduct that falls short of good faith amounts to something
more than simply a breach of contract it is a separate actionable wrong.
Accepting the classification of insurance policies as peace of mind contracts,
the majority reasoned that a breach of good faith amounted to an independent
actionable wrong within the meaning of Vorvis v. Insurance Corp. of British
Columbia, [1989] 1 S.C.R. 1085, and that, consequently, punitive damages
were available.
[209] In the
context of evaluating the adequacy of the trial judges charge to the jury,
Binnie J., for the majority, provided a comprehensive template for
consideration with respect to the imposition and quantification of punitive
damages:
[94]
To this end, not only should the pleadings of punitive damages be more rigorous
in the future than in the past (see para. 87 above), but it would be
helpful if the trial judges charge to the jury included words to convey an
understanding of the following points, even at the risk of some repetition for
emphasis. (1) Punitive damages are very much the exception rather than the
rule, (2) imposed only if there has been high-handed, malicious,
arbitrary or highly reprehensible misconduct that departs to a marked degree
from ordinary standards of decent behaviour. (3) Where they are awarded,
punitive damages should be assessed in an amount reasonably proportionate to
such factors as the harm caused, the degree of the misconduct, the relative
vulnerability of the plaintiff and any advantage or profit gained by the
defendant, (4) having regard to any other fines or penalties suffered by the
defendant for the misconduct in question. (5) Punitive damages are generally
given only where the misconduct would otherwise be unpunished or where other
penalties are or are likely to be inadequate to achieve the objectives of
retribution, deterrence and denunciation. (6) Their purpose is not to compensate
the plaintiff, but (7) to give a defendant his or her just desert
(retribution), to deter the defendant and others from similar misconduct in the
future (deterrence), and to mark the communitys collective condemnation
(denunciation) of what has happened. (8) Punitive damages are awarded only
where compensatory damages, which to some extent are punitive, are insufficient
to accomplish these objectives, and (9) they are given in an amount that is no
greater than necessary to rationally accomplish their purpose. (10) While
normally the state would be the recipient of any fine or penalty for
misconduct, the plaintiff will keep punitive damages as a windfall in
addition to compensatory damages. (11) Judges and juries in our system have
usually found that moderate awards of punitive damages, which inevitably carry
a stigma in the broader community, are generally sufficient.
[95]
These particular expressions are not, of course, obligatory. What is essential
in a particular case will be a function of its particular circumstances, the
need to emphasize the nature, scope and exceptional nature of the remedy, and
fairness to both sides.
[96] The trial judge should keep in mind that the standard
of appellate review applicable to punitive damages ultimately awarded, is that
a reasonable jury, properly instructed, could have concluded that an award in
that amount, and no less, was rationally required to punish the
defendants misconduct, as discussed below.
[Emphasis
in original]
[210] Throughout
his reasons, Binnie J. emphasized the need for proportionality in several
dimensions of the assessment process.
[211] The
Supreme Court of Canada ultimately restored the jurys verdict of $1,000,000 in
punitive damages, which had been reduced to $100,000 on appeal.
[212] Turning
next to Fidler, in that case, the insured had been receiving long-term
disability benefits for many years. The insurer had taken video surveillance
which, in its view, showed Ms. Fidler perform physical movements
inconsistent with her claimed inability to perform light or sedentary work.
Based on its interpretation of the surveillance information and a medical
opinion of a physician who had never examined her, Sun Life decided that Ms. Fidler
no longer qualified as disabled under the policy. Thereafter, a period of
nearly two years passed, during which the insurer had ongoing communications
with medical professionals and with Ms. Fidler, before finally informing
her of its decision to terminate her benefits. Prior to trial, Sun Life
reinstated the benefits with interest. Despite that, Ms. Fidler pursued
her claim for aggravated and punitive damages.
[213] The trial
judge concluded that although Sun Lifes decision to cut-off benefits was
incorrect and high-handed, it was nonetheless made following a good faith
assessment of the claim. Consequently, Ms. Fidlers claim for punitive
damages was dismissed. Mindful that disability policies are peace of mind
contracts, the trial judge reasoned that despite Sun Lifes good faith, Ms. Fidler
was entitled to aggravated damages in the amount of $20,000 to compensate her
for the infliction of mental distress she suffered in consequence of the wrongful
termination of her benefits.
[214] The Court
of Appeal took a different view (reasons indexed at 2004 BCCA 273). It
concluded that Sun Lifes conduct fell short of its good faith duty by a very
wide margin (at para. 71). The majority cited several factors in support
of its determination that the insurer had acted in bad faith, including the
absence of supportive medical evidence justifying the termination, the insurers
misrepresentation to Ms. Fidler about the contents of the video
surveillance, the refusal to disclose that surveillance to Ms. Fidler, the
failure to itemize the activities captured on the video that the insurer said
were not consistent with her disability, the judicial finding that the
videotaped actions of Ms. Fidler were not incompatible with her disability,
declining to follow the recommendations of its own independent doctor to send Ms. Fidler
to a rehabilitative program, and adopting an adversarial perspective in order
to defend its wrongful cessation of benefits. It also concluded that Sun Lifes
course of conduct was sufficiently reprehensible to deserve punishment by way
of punitive damages. It upheld the quantum of aggravated damages set by the
trial judge, and added $100,000 in punitive damages.
[215] The Supreme
Court of Canada affirmed that a disability insurance contract is a peace of
mind contract, the object of which is to secure a psychological benefit to the
insured. Acknowledging that the good faith duty was contractual and accepting
the proposition that a wrongful denial of insurance benefits payable under a
contract of that kind may cause foreseeable mental distress to the insured and
falls within the reasonable contemplation of the parties, the Court held that
damages for the consequential mental suffering were compensable. Applying
basic tenets of contract law, the Court reasoned that damages of that kind –
distinct from true aggravated damages – are available as straightforward breach
of contract of damages pursuant to the principles established by Hadley v.
Baxendale (1854), 9 Ex. 341, 156 E.R. 145. The Court refined the law by
holding that aggravated damages may be warranted even where there is no bad
faith by the insurer and no financial loss to the insured.
[216] While the Court
found it troubling that Sun Life had denied Ms. Fidler her benefits without
supportive medical evidence, it parted company from the Court of Appeal on the
finding of bad faith. It reasoned that Sun Lifes denial was not the result of
overwhelmingly inadequate treatment of the claim or had resulted from the
application of improper factors. Accordingly, the award of punitive damages
was set aside.
[217] In Asselstine
v. Manufacturers Life Insurance Co., 2003 BCSC 1119, the insurer denied an
application for long-term benefits on the basis that the insured was not
totally disabled at the material time. Morrison J. criticized the
processing of the insureds claim. She found that the insurer had disregarded
pertinent information and placed undue emphasis on unreliable, incomplete, and
otherwise deficient evidence, choosing only to accept certain medical evidence
in the face of compelling, conflicting evidence (at para. 198).
Concluding that the insurer had relied on the wrong information and an
incorrect test for total disability, Morrison J. held that it had clearly
breached its duty of good faith to Ms. Asselstine. Aggravated damages of
$35,000 were awarded to compensate Ms. Asselstine for her anxiety and the
emotional, mental and financial stress caused by the insurer. To that,
Morrison J. added punitive damages in the amount of $150,000, explaining
the underpinnings of her decision at para. 213:
…
The defendants, and insurance companies generally, cannot expect to be able to
disregard compelling medical and other information while placing undue emphasis
on evidence aligned only with their interests; and rely on a report based on
flawed premises generated and selectively disclosed by them, meanwhile
steadfastly maintaining an unsupportable position, and be seen as balancing
fairly the interests of both the insured and the insurer. I award
punitive damages here as a reminder that it is not in the economic interest of
the insurer to engage in similar conduct in future similar situations.
[218] On appeal
(reasons indexed at 2005 BCCA 292), the majority was satisfied that the insurers
inferior adjudication of the claim was sufficiently reprehensible to justify
punitive damages. The court observed that the amount of those damages were on
the high side proportionate to the blameworthiness of Manufacturers Life, but
concluded they did not cross over the line and declined to reduce them.
[219] In Khazzaka
(c.o.b. ESM Autobody) v. Commercial Union Assurance Co. of Canada (2002),
162 O.A.C. 293, 66 O.R. (3d) 390, the Court of Appeal upheld the jurys verdict
of $200,000 in punitive damages made in condemnation of an insurers conduct in
denying a fire loss claim. The court described how the insurers conduct had evolved
from reasonable to unreasonable, and reminded that the duty of good faith is
ongoing and continues right through trial.
[220] ICBCs
duty of good faith arising in the context of a policy governed by the Insurance
(Motor Vehicle) Act, R.S.B.C. 1996, c. 231, was examined by our Court
of Appeal in Hosseini.
[221] On August 23,
1992, Mr. Hosseini had crashed a stolen motorcycle into a
barrier, severely insuring his passenger. In August 1994, the passenger
commenced an action against Mr. Hosseini. It was evident early on that damages
could be in the range of one million dollars. ICBC took the position that Mr. Hosseini
was uninsured. In mid-January 1996, ICBC added itself as a third party
pursuant to the applicable statutory provision. On that same date, ICBC also
filed a statement of defence. The passenger had signed a declaration that
Mr. Hosseini was uninsured. Six years passed before ICBC gave notice to Mr. Hosseini
that it was proceeding under the uninsured provisions of the legislation. The
claim by the passenger was eventually settled without Mr. Hosseinis
consent. Mr. Hosseini argued that the delay in notifying him of ICBCs
position was excessive and prejudicial and estopped ICBC from recovery.
[222] On appeal,
Thackray J.A. framed the central issue as whether ICBC had breached its
duty of good faith to Mr. Hosseini. His Lordship found that ICBC had, in
effect, treated Mr. Hosseini as an insured, and therefore should be
considered as such for the purposes of the good faith analysis.
[223] Thackray J.A.
approvingly reviewed principles that had developed from cases involving a
variety of different types of insurance policies, including the summation in Shea
of the nature and scope of the duties owed by an insurer to an insured. At paras. 70-71,
His Lordship made these observations:
[70]
Allan D. Windt in Insurance Claims and Disputes (New York: McGraw-Hill
Inc., 1982) described the obligations of an insurer as follows at s. 2.01:
Once
an insurer is put on notice of a claim, it should take certain actions
vis-à-vis the insured. As a general matter, it should:
1.
Promptly respond to the notice of claim
2.
Notify the insured of its preliminary coverage position if the policy contains
a duty to defend
3.
Promptly pay an undisputed claim
4.
Properly notify the insured if it decides to deny coverage
5.
Promptly rescind the policy if there are grounds for doing so
Four
of the five required actions are based on promptly carrying out the
obligation. As noted earlier in these reasons, in Shea Mr. Justice
Finch said that an insureds vulnerability imposes on an insurer the duty to
disclose with reasonable promptitude to the insured all material information
touching upon the insureds position in the litigation [para. 191].
[71] The duty of an insurer to act both promptly and fairly
when investigating, assessing and attempting to resolve claims made by its
insureds applies equally to the investigating, assessing and resolving of
claims made against its insureds. In my opinion, I.C.B.C. did not act promptly
or with promptitude and breached its duty of good faith to Mr. Hosseini.
[Emphasis in original]
[224] Mr. Justice
Thackray criticized ICBC for focussing its efforts on finding the best way to
put [Mr. Hosseini] in the most disadvantageous position with respect to
insurance coverage (para. 79). He also admonished ICBC for neglecting to
tell Mr. Hosseini in a timely way that, incorporated into the substantial
judgment against him, was an amount that he was not responsible to pay. His
Lordship ultimately determined that ICBCs bad faith conduct had prejudiced Mr. Hosseini
and that it was estopped from pursuing its claim for recovery against him.
[225] In separate
concurring reasons, Smith J.A. found that ICBC had failed to bring itself
strictly within the provisions of the statutory scheme. Concluding that
certain requirements imposed by the legislation were conditions precedent to
ICBCs right to recover against Mr. Hosseini, Smith J.A. held that
its failure to satisfy those preconditions precluded ICBC from recovery.
Newbury J.A. concurred.
·
Has ICBC Acted in Bad Faith?
[226] The
alcohol-related criminal charges looming over the plaintiff triggered a legitimate
question about her insurance coverage. ICBC quite properly alerted the
plaintiff to that issue and the serious risks that it could entail.
[227] At the
same time, however, ICBC displayed an unfortunate readiness to assert a policy
breach on the flimsiest of grounds. For example, after Ms. Baadsviks one
unsuccessful attempt to contact Mrs. McDonald, ICBC was prepared to adopt
the stance that she was failing to cooperate. Its inclination to make such a
serious and yet groundless assertion of breach was all the more troubling given
that the perceived breach stemmed from a tense exchange between an adjuster and
Mrs. McDonalds husband; conduct unrelated to Mrs. McDonald and about
which she may have known nothing at the time.
[228] ICBC was similarly
disposed to claim a principal operator breach which it had not investigated on
even a superficial basis. ICBCs unfortunate willingness to assert breach
recurred in the aftermath of the criminal trial. When formulating their plan
to write to the plaintiff for information about the events leading up to the
accident, Ms. Baadsvik and her manager contemporaneously averted to the
prospect of pursuing a failure to cooperate breach against her. ICBC had not
once contacted the plaintiff or otherwise sought particulars from her or
Mr. Harris. Given that she had provided the compulsory statement to ICBC
and had promptly informed it of the To Action, her conduct had been
nothing but compliant. ICBC had no indication that she would be anything other
than cooperative.
[229] I would
not expect this mindset to be emblematic of ICBCs standard approach in
handling a claim. I infer that ICBCs disagreeable perception of the very difficult
Mr. McDonald, who had rankled Ms. Baadsvik and her manager from the
outset, was a factor that simmered below the surface and tainted, ever
slightly, ICBCs treatment of the claim involving his wife and daughter.
[230] Confident
that the plaintiff would be convicted of the charge of failing to provide a
breath sample and content to rely on the Crown to establish the breach of
contract, Ms. Baadsvik carried out what can only be described as a
perfunctory and partial investigation as she awaited the outcome of the
criminal trial. Except for the failure to make diligent efforts to locate and
interview the passengers and any witnesses while their recollections were still
fresh, ICBCs wait and see course was probably not unreasonable in the
circumstances. But the landscape shifted significantly with the unexpected
pre-trial stays of the alcohol-related charges and the disposition of the criminal
trial.
[231] ICBC knew
that a coverage breach position could not be sustained as the matter then stood.
It appreciated that several essential investigatory steps had to be performed
in order to carry out a credible investigation and thereby be properly poised
to determine whether the plaintiff was Incapacitated.
[232] The
managers note of August 18, 2009 on the ICBC claim file represents the sum
total of ICBCs recorded rationale for arriving at the decision that the
plaintiff was Incapacitated and, thus, in breach of the insurance contract. At
trial, Ms. Baadsvik expanded upon what she claimed were the major factors
that had influenced her determination. Largely echoing the underpinnings of
Constable Woods reasoning, she identified the relevant factors as:
(1) the late hour of the accident;
(2) the plaintiffs numerous failed opportunities to
provide a breath sample;
(3) the fact that the plaintiff had driven the wrong
way in a familiar area;
(4) the plaintiffs admission that she had consumed
alcohol;
(5) information obtained from Constable Wood;
(6) the
contents of Constable Brahs occurrence report.
[233] Despite Ms. Baadsviks
delineation of these factors, the preponderance of the evidence points to the
fact that, in reality, it was Constable Woods initial comments to her, as
supplemented by his reflections communicated March 31 and April 1, that
grounded ICBCs decision. During the course of testifying, Ms. Baadsvik
came to agree that the paramount factor behind her determination was her
conversation with Constable Wood on March 31. It was clear that she
meant his email of March 31 and her conversation with him the next day.
[234] It is useful
to compare the influencing factors that were already known to Ms. Baadsvik
on March 31 when she acknowledged to Constable Wood that ICBC had
inadequate information to support a breach, with those factors that she learned
after that point in time. At the stage before her further communications with
Constable Wood, Ms. Baadsvik was aware of the circumstances set out in
items (1) through (4) above and had some of the information comprising item (5).
She and her manager correctly appreciated that the aggregate of that
information was not sufficient to sustain a coverage denial based on breach of
contract. It follows that Ms. Baadsvik must have regarded the information
she subsequently received as tipping the balance on the question of the
plaintiffs incapacity. Fitting into the classification of the factors she
identified, that additional information consisted of Constable Woods comments made
March 31 and April 1 (more of item (5)) and Constable Brahs report (item (6)).
[235] What then
did Ms. Baadsvik learn from Constable Wood on March 31 and
April 1? In those communications, Constable Wood reiterated some of what
he had already conveyed to Ms. Baadsvik namely, that had the plaintiff provided
a breath sample it probably would not have registered as over the legal limit.
The essence of the information she received via Constable Woods March 31 and
April 1 communications that she did not have before, was two-fold. First, he
expressed his belief that the plaintiff would have been at or close to the
legal limit of impairment (although not over it). Second, he offered his
opinions that (i) although her blood alcohol concentration would not have
exceeded the legal limit, having regard to the plaintiffs driving evidence, it
was sufficient to show she was impaired, and (ii) the plaintiffs ability to
control her vehicle was impaired. In this context, Constable Wood once again
stressed that he could not comment on the level of her impairment.
[236] The
plaintiffs driving evidence was integral to Constable Woods impression that
she was impaired. That driving evidence referred to the mechanics of the
accident (i.e. driving the wrong way, in a familiar area, at 5:00 a.m.).
Constable Wood had clearly taken a wider of view of impairment than simply a
state induced by alcohol. Moreover, Ms. Baadsvik had already taken the
components of the driving evidence into account as stand-alone considerations
in arriving at her decision that the plaintiff was Incapacitated. She
considered them to be weighty factors in determining the plaintiffs capacity
to drive, as did Constable Wood.
[237] Ms. Baadsvik
also found the observations recorded by Constable Brah in her report to be
relevant to the assessment. Yet, Constable Brah noted very few physical
indicia suggestive of alcohol consumption. Some of her observations consistent
with impairment did not match what Constable Wood had relayed to
Ms. Baadsvik. As well, Constable Wood had informed Ms. Baadsvik that some
of the symptoms the plaintiff exhibited could have been caused by the trauma of
the airbag deployment. Additionally, while Constable Wood reported to
Ms. Baadsvik that he detected an odour of alcohol emanating from the
plaintiff, he did not classify the strength of it. In her report, Constable
Brah described it as very faint.
[238] In my view,
Constable Brahs report ought to have been more significant to Ms. Baadsvik for
what it did not say. Nowhere, did it contain the view or opinion that the
plaintiff was impaired or intoxicated at the time of the accident, or express
any view on her capacity to drive or control a vehicle. This ought to have
alerted Ms. Baadsvik to the need for additional investigation and
clarification. However, she did not follow up Constable Brahs offer to have a
discussion after review of the police file. She did not bother because she
believed that the information she had obtained from Constable Wood was ample
for her purposes. The contents of Constable Brahs report played a minor role
only in her decision.
[239] In
assessing whether the plaintiff was Incapacitated, Ms. Baadsvik was undoubtedly
entitled and, frankly was required, to give serious consideration to the relevant
observations made and impressions formed by the attending police officers. Although
worthy of consideration, that information was by no means conclusive and was to
be assessed along with the whole of the relevant information and mindful of the
governing legal test.
[240]
It is difficult to see how the contents of Constable Brahs report in
combination with Constable Woods qualified conclusory statements to the effect
that the plaintiffs capacity to drive was impaired, could have been reasonably
interpreted as converting the acknowledged inadequate evidentiary foundation,
into a sound one. Ms. Baadsvik placed undue emphasis on Constable Woods
inconclusive views that aligned with ICBCs interests.
[241]
ICBC is not shielded against a bad faith claim simply because it has
relied primarily on a constables impressions and observations.
[242]
In McLean v. Insurance Corp. of British Columbia, 2007 BCSC 91 [McLean],
Rogers J. considered the baseline of information that ICBC must have against an
insured before it can put the insured on notice that it considers the insured to
have been Incapacitated. At para. 40, Rogers J. held that ICBC need only have
sufficient information on which it could rationally conclude that the
evidence, if believed, could result in a finding the insured was Incapacitated.
[243] Counsel
for ICBC contends that the rationally conclude test applied with respect to
Ms. Baadsviks decision and that it was satisfied. Interestingly, that was not
the standard of assessment that Ms. Baadsvik said that she had applied; she said
that she had determined that the plaintiff was Incapacitated on a balance of
probabilities. McLean may well be factually distinguishable and
confined to establishing the threshold for ICBC to issue a statutory third
party notice. Even if that were the applicable standard, in my opinion, it was
not observed. I have no confidence that Ms. Baadsvik or the manager who was
involved in reaching the decision on August 18, appreciated, much less applied,
the demanding standard imposed by s. 55(8)(a) of the I(V)R, or the
distinction between being impaired and being Incapacitated.
[244] Ms.
Baadsvik believed that Constable Woods supplementary remarks had effectively
cleared the path for ICBC to pursue the breach. That was a defining moment in
the life of the claim. Although she proceeded to retain Mr. Sidhu and carried
out a few more steps, Ms. Baadsvik had lost interest in performing a thorough
investigation. She did not review Constable Brahs report with an appropriate
degree of critical scrutiny. She elected not to follow-up with Constable Brah,
as she had done with Constable Wood, to obtain clarification about whether she considered
the plaintiff to be Incapacitated. Ms. Baadsvik did not review the general
police report with care, failing to notice the name and contact information of
the witness, Mr. Veliqi. Nor did it occur to Ms. Baadsvik to determine whether
the passengers, the police officers involved or others had testified at the
criminal trial and, if so, the content of their evidence. Had she done so, she
would have discovered that Mr. Cipriano had testified and could have attempted
to locate him for an interview.
[245] In
addition, Ms. Baadsvik reached the determination that the plaintiff was
Incapacitated without investigating the plaintiffs claim that she had been
pulled over by a member of the Vancouver Police force prior to the accident.
When Ms. Baadsvik realized her oversight after the decision had already been
made, her mode of enquiry with the police was too casual and the content of it
was deficient. Knowing that the plaintiff had been driving her mothers
Fusion, she simply left a voicemail with an unidentified clerk in the records
department asking whether the plaintiff was the subject of a police inquiry
regarding the plaintiffs vehicle. It is, therefore, not surprising
that Ms. Baadsviks inquiry did not elicit information verifying Constable
Buttermans stop of the plaintiff. When, in the course of this lawsuit, a
search was carried out using the appropriate parameters of Mrs. McDonalds
licence plate number and the date that the plaintiff had been pulled over by
Constable Butterman, it produced documented evidence of the stop.
[246] Perhaps
most revealing of Ms. Baadsviks indifference in obtaining a full picture was
that after she communicated with Constable Wood, she decided it was no longer
necessary to hear from the plaintiff. The ICBC claim file does not record a
reason for abandoning that avenue of inquiry and it was not explained at trial.
[247] Ms. Baadsvik
acknowledged that the duty to act in good faith was an ongoing obligation, and
that a determination of breach could be reconsidered and reversed upon receipt
of fresh information. That duty does not come to an end when litigation concerning
an insureds coverage is commenced. After this action was launched and before
trial, ICBCs counsel obtained a more complete report from the Abbotsford
detachment. The police report explicitly queried the correct spelling of Mr. Ciprianos
name. In uppercase type, it contained two possible spellings of his surname,
one of which was correct, with a phone number and two local addresses.
Mr. Cipriano testified that he was never contacted by ICBC. Mr. Veliqis
name and telephone number once again appeared on the face of the report, but
ICBC did not contact him either. The police report also enclosed Constable
Brahs Report to the Superintendant where she had noted only three minor
indicia of alcohol consumption.
[248] I commented
earlier on the significant problems with Constable Woods evidence and the
inconsistencies on vital points between his testimony and his original account
to Ms. Baadsvik. It could not have been lost on ICBC that the foundation
upon which it had primarily fastened its decision had been significantly
compromised at trial.
[249] An insurer
does not have to have an iron-clad case in order to deny coverage. It is not
expected to investigate a claim with the skill and forensic proficiency of a
detective. Nor is it required to assess the collected information using the
rigorous standards employed by a judge. The duty of good faith does not impose
a standard of absolute liability in respect of an insurers wrong decision. The
duty simply dictates that an insurer bring reasonable diligence, fairness, an
appropriate level of skill, thoroughness and objectivity to the investigation, and
the assessment of the collected information with respect to the coverage
decision. My criticisms of the calibre of Ms. Baadsviks investigation and the
shortcomings of her ultimate assessment should not be interpreted as suggesting
that each individual omission or failing is, of itself, necessarily a violation
of good faith and fair dealing. It is their cumulative effect that constitutes
a breach of its duty of good faith.
[250] It is not
possible to perform a fair and proper evaluation in the absence of a reasonably
thorough underlying investigation. The latter precludes achievement of the
former. And so it was, in the case at hand. Here, that deficiency was
compounded by the other failings of Ms. Baadsviks evaluation of whether the
plaintiff had been Incapacitated.
[251] I turn
next to the plaintiffs complaints of ICBCs mishandling of her defence in the
To Action.
[252] Counsel
for ICBC acknowledged that because ICBC had not determined whether the
plaintiff was in breach of the insurance contract until after the settlement of
the To Action, the plaintiff qualified as an insured person throughout the
currency of that lawsuit. Accordingly, ICBC agrees it had a duty to defend her
against the To Action. ICBC relies on the fact that pursuant to s.74.1 of
the I(V)R, it had exclusive control of that defence, including settlement,
on behalf of the plaintiff and her co-defendants. It follows, contends ICBC,
that in exercising that control, it had no obligation to involve the plaintiff
in the conduct of the To Action or to report to her on settlement developments
as they arose.
[253] That
position may be a complete answer in most cases. In the ordinary course, the defence
interests of the insurer and the insured dovetail so that the insurers control
of the defence poses no problem. The main reason that an insurer, like ICBC,
is authorized to manage the defence on behalf of an insured is because in the
vast majority of cases, it is the insurer who is obligated to indemnify for
that third party loss. In those circumstances, the insureds entitlement to be
defended and the insurers right to control the defence coexist satisfactorily.
The situation is more delicate where an issue arises about the insureds
entitlement to coverage. In that scenario, the interests of the insured and
the insurer no longer coincide and it will not be fitting for an insurer to run
the defence on a business as usual platform. The degree to which their
interests diverge will influence the appropriate conduct to be taken by the
insurer. In some cases, it may call for the insurer to relinquish control of
the defence altogether and empower the insured to select and instruct their own
counsel. Other situations will demand less dramatic refinement to the status
quo.
[254] Ms. Baadsviks
understanding of ICBCs usual protocol is to forward a writ filed against its
insured to its internal legal department or to outside counsel for handling.
It is telling to compare the actions taken by ICBC in defending the plaintiffs
co-defendants in the To Action, with the inaction on the plaintiffs behalf.
ICBC appointed counsel to represent those co-defendants in respect of whom no
coverage issue had arisen. The precise timing of that appointment is not
known, other than it was before the filing of their statement of defence on
April 29, 2009, being within six weeks of the disposition of the criminal
trial. At no time did ICBC appoint counsel internal or external to
represent the plaintiffs defence interests. In their pleadings, those
defendants admitted that the accident occurred because of the plaintiffs
negligence. Still, no counsel was appointed for the plaintiff.
[255] It is
settled principle that an insurer is subject to the duty to act fairly and in
good faith in the conduct of its insureds defence. Shea established
that certain requirements are incidental to that good faith duty, such as
acting with reasonable care, skill and diligence. Breaking it down further,
the duty entails that the insurer inform the insured about settlement matters
that could adversely affect the insureds interests, and that it do so with
reasonable promptitude. The rationale underscoring that obligation is an
obvious one: insureds can only take steps to protect their personal interests
and minimize their financial risk if they are informed of material information
in a fulsome and timely way. Notifying an insured, who the insurer regards as
being in a precarious coverage position, of the settlement only after it has
been concluded is the equivalent of no notice at all, and certainly does not
amount to the disclosure with reasonable promptitude contemplated in Shea.
As a side note, I would add that had ICBC followed its initial investigation
plan and communicated by letter with the plaintiff after the criminal trial,
she would have been alerted to the state of affairs and had an opportunity to
take the steps she considered appropriate. I accept the plaintiffs evidence
that, had she known, she would have independently retained her own counsel.
[256] The way
Ms. Baadsvik saw it, her form letter to the plaintiff of October 30, 2007 had
already provided adequate notification that ICBC would not be retaining legal
counsel on the plaintiffs behalf. She explained that was why ICBC did not
retain defence counsel for the plaintiff in the To Action. The messages
conveyed by the October 30 letter are rather at odds. The letter encloses Ms.
Baadsviks earlier correspondence where she advised the plaintiff there was some
indication of a breach of her insurance policy and promised to let [the
plaintiff] know if her insurance would not cover her. It next outlines the
three events that could trigger that breach of contract. The letter goes on to
advise that one of the consequences of these potential breaches is that ICBC
will not provide a lawyer for you if legal action is started against you. An
element of ambiguity is introduced by the second to last sentence in that it
presumes that the plaintiff is or will be found to be in breach, stating, we
will let you know the total amount you owe when the claim is fully paid.
[257] It is not
reasonable to construe this poorly drawn letter in the manner suggested by Ms.
Baadsvik. The fact of the matter is ICBC did not provide a lawyer to represent
the plaintiff at any time before the To Action was settled, even though throughout
that period she was an insured person who had not been determined to be in
breach.
[258] There was
no evidence touching on the length, intensity or details of any sort in the
settlement negotiations in the To Action. However, the plaintiff does not
allege that ICBC took improper considerations into account in reaching the
settlement or that the settlement amount was improvident or make similar
accusations. Her chief complaint is that by keeping her in the dark about the
existence and nature of the settlement negotiations in the face of active
pursuance of a breach against her, she was deprived of an opportunity to
meaningfully participate in those negotiations with a view to protecting her
personal financial interests.
[259] ICBC engaged
in settlement negotiations and concluded a settlement binding the plaintiff without
appointing legal counsel on her behalf, all the while investigating her potential
breach of contract. The plaintiff was never informed of the settlement
discussions despite the fact that ICBC knew that the damages in the To Action were
likely to be significant and that the plaintiff would potentially have to bear
them personally. Indeed, after Ms. Baadsviks final discussion with Constable
Wood on April 1, she was essentially on the brink of deciding that the
plaintiff was in breach and that ICBC would not be indemnifying her. The nature
and sequence of these events, all fully within ICBCs control, was manifestly
unfair.
[260] Ms. Baadsvik
was asked whether, in making the decision that the plaintiff was in breach, any
consideration was paid to the settlement of the To Action. She gave the
unsatisfactory answer that she understood she had to wait until that settlement
was concluded before she could advise the plaintiff about the breach and tell
her how much money was involved.
[261] In my
opinion, ICBCs multiple failings in the investigation, assessment and breach decision
that I have outlined, and its misconduct in relation to the To Action,
respectively, contravened the duty of fair dealing and good faith owed to the
plaintiff.
·
Damages
[262] Although
the plaintiffs pleading seeks damages for breach of contract, it was evident
from her counsels closing argument that she is not asking for Fidler
type aggravated damages in addition to punitive damages.
[263] This is an
exceptional case. The nature of ICBCs bad faith behaviour took different
shapes throughout the time line. The overall handling and evaluation of the
claim was overwhelmingly inadequate. ICBC also allowed its objectivity to be
tainted by the fact that the claim indirectly involved the very difficult Mr.
McDonald. While I recognize that the tainting of impartiality was only slight,
it was nonetheless real and improper.
[264] In my
opinion, ICBCs conduct was harsh, high-handed and oppressive as those concepts
have been developed in the jurisprudence, and marked a significant departure
from the Courts sense of decency and fair play. Some of the acts of bad faith
were inadvertent and others were not and they persisted over a considerable
period. The plaintiff was in a vulnerable position and suffered harm in
consequence of ICBCs misconduct, not all of which is tidily rectified by this
Court confirming her right to be indemnified. ICBC would not be accountable
for its bad faith in the absence of an award of punitive damages, which it can
well afford. Such an award is justified to deter other insurers from engaging
in similar types of misconduct, and to punish ICBC and condemn its breaches of
duty.
[265] The
plaintiff asserts that the calculation of damages should start with the figure
ICBC sought to recover from her, being the damages paid to Ms. To, and work up
from there. That approach does not resonate with the Whiten principles.
[266] I conclude
that, in this case, an award in the amount of $75,000 is appropriately proportionate
and rationally accomplishes the objectives of punitive damages.
·
Summary
[267] I declare
that the plaintiff is entitled to indemnity from ICBC for all claims arising
from the accident, including the To Action.
[268] I also award
her the sum of $75,000 in punitive damages.
[269]
If the parties are unable to agree as to costs, they may file written
submissions implementing a time table of their choosing that incorporates a
final deadline of May 15, 2012.
S.
Ballance, J.