Clark Wilson LLP Insurance Bulletin
Case Law Review Archive
Proposed BC Rule Change to Compel Disclosure of Insurance
The BC Supreme Court Rules Revision Committee has invited
comments on a proposed amendment to the Rules of Court which
would compel disclosure of insurance applicable to claims made in
an action. The Committee has asked for comments on whether or
not such disclosure is appropriate before judgement is rendered in
an action.
Insurance policy disclosure rules already exist in Ontario,
Manitoba, New Brunswick and Prince Edward Island. The Ontario
rule states,
30.02 (3)
A party shall disclose and, if requested, produce for
inspection any insurance policy under which an insurer
may be liable.
(a) to satisfy all or part of a judgment in the action; or
(b) to indemnify or reimburse a party for money paid in
satisfaction of all or part of the judgment;
but no information concerning the insurance policy is
admissible in evidence unless it is relevant to an issue
in the action
A 1985 Ontario case, Sabito v. Gunning, says the purpose of
the rule is to assist the parties in making informed decisions where
recourse to insurance moneys may play a major role in how the
litigation is conducted and through what stages it should be
pursued.
In effect, the rule amounts to a pre-judgement discovery of one
of the defendant’s assets. Courts have no similar power to compel
a defendant to disclose the size of his or her bank account, amount
of home equity, etc. The proposed treatment of insurance policies
is unique in this regard.
A similar rule change in B.C. would have obvious implications for
the conduct of litigation. On the plus side, plaintiffs might
abandon actions where the defendant has low insurance limits or
has little or no coverage for the claim. On the negative side,
insurers may find themselves exposed to bad faith “blackmail”.
In this scenario, plaintiffs offer to accept the policy limits on a
claim that may or may not be worth that much. The offer comes
with the express or implied threat that the insurer risks a bad faith
claim by its insured if the insurer fails to settle and the insured is
subsequently exposed to a judgment in excess of policy limits.
The rule change will also assist plaintiffs seeking to compel
insurers to attend mandatory mediation under B.C.’s mediation
regulations. Under these regulations, one party to the action
can compel another to mediate. “Party” is defined to include the
insurer of a party in the action. The proposed change to the
Rules of Court will require defendants to identify their liability
insurers who, in turn, can be directly compelled to attend
mediation.
Submissions to the Rules Revision Committee are to be in writing
and are due no later than January 31, 2006. Clark Wilson LLP will
make submissions opposing the Rule change. Anyone wishing to
contribute ideas or comments to our submissions are invited to
contact Glen Boswall at rgb@cwilson.com.
