CAPS ON LESSORS' LIABILITY NOW IN FORCE IN B.C.

Legislative provisions introduced in the Spring of 2007 limiting the liability exposure of lessors, particularly auto dealers and auto leasing companies, has now been brought into force. Order in Council 733/2007 (B.C. Reg. 341/2007) brings into force the provisions of Bill 35, the Miscellaneous Statutes Amendment Act (No. 2), 2007 amending the Insurance (Vehicle) Act and the Motor Vehicle Act. These amendments are intended to address concerns that sellers under conditional sales agreements and lessors were owners of vehicles and therefore exposed to unlimited liability. This liability is now capped so that lessors are only vicariously liable for $1 million. Lessees are otherwise responsible for damages that may be caused while the vehicle is in their possession. Sellers under conditional sales agreements are excused entirely. In an earlier article posted on this website, we commented on the changes to be effected to Bill 35. See http://www.cwilson.com/pubs/insurance/lm3/.

The Order in Council also makes some consequential amendments to the Insurance (Vehicle) Regulation.

Readers will also be aware that the Supreme Court of Canada recently, in a one-statement decision, agreed with the British Columbia Court of Appeal’s decision in Yeung v. Au, which found that section 86(3) of the Motor Vehicle Act, as it existed prior to the above amendments, did not exclude sellers under optioned purchase agreements. This state of the law will, of course, apply to accidents occurring prior to the OIC 733/2007 coming into force, which is November 8, 2007. Accidents occurring after that date will be subject to the new regime.

If you have questions about the new legislation, you are welcome to contact Larry Munn (Telephone: 604-643-3160, E-mail: lm@cwilson.com) or Krista Prockiw (Telephone: 604-643-3105, E-mail: kxp@cwilson.com) or any other member of the Clark Wilson LLP Insurance Practice Group.