Clark Wilson LLP Insurance Bulletin
Case Law Review Archive
No-fault Benefits to be Deducted from Liability
Awards in BC Auto Cases
The Supreme Court of Canada's October 30, 2003 decision
in Gurniak v. Nordquist will be of interest to out-of-province
auto insurers who provide liability coverage for claims arising
in British Columbia, as well as all British Columbia auto insurers.
Section 25(2) of the BC Insurance (Motor Vehicle) Act provides
that "a person who has a claim for damages and who receives
or is entitled to receive benefits respecting the claim, is deemed
to have released the claim to the extent of the benefits".
"Benefits" is defined is 25(1) as meaning:
"a payment that is or may be made in respect of bodily injury
or death under a plan established under this Act, other than a
payment pursuant to a contract of third party liability insurance
or an obligation under a plan of third party liability insurance,
and includes accident insurance benefits similar to those described
in Part 6 of the Insurance Act that are provided under a contract or
plan of automobile insurance wherever issued or in effect."
In Gurniak a Quebec resident was killed in an accident in British
Columbia and his spouse and children received benefits, including
dependants' benefits, under Quebec's no-fault insurance scheme.
The spouse and children brought a tort action in British Columbia
and the defendants (whose primary insurer, and possibly excess
liability insurer, would have been ICBC) sought a declaration,
pursuant to section 25 of the BC Insurance (Motor Vehicle) Act,
that the Quebec benefits should be deducted from any damages
award in the tort action.
The BC Supreme Court, with which the Court of Appeal agreed,
held that the benefits were not deductible because they were not
paid pursuant to a contract of indemnity. The Supreme Court of
Canada disagreed and allowed the appeal. The Supreme Court
held that the Quebec benefits met the test of being "similar" as
required by section 25. Accordingly the amounts were required to
be deducted from the tort award. In coming to this conclusion the
Supreme Court overruled two earlier BC cases, Jang v. Jang and
Buksh v. Franco, to the extent those cases imposed a "matching"
requirement regarding the benefits received.
Insurers will note that the deduction is mandatory, and not merely
discretionary. No-fault benefits can involve substantial sums of
money and thereby reduce the liability award significantly.
There is also case law, namely Beifuss v. Reimer, in which the
BC Supreme Court determined that the section 25 deduction was
available not only to ICBC-insured defendants, but also to
defendants insured by out-of-province insurers. (Non-automobile
insurers cannot take advantage of the deduction.)
It would be prudent for claims examiners and adjusters with auto
claims proceeding in British Columbia to carefully consider the
no-fault benefits being paid to Plaintiffs.
For further information with respect to this and other issues of
insurance law and practice, please contact Larry Munn at
604.643.3180 or Nigel Kent
at 604-643-3135.
