This was an appeal by the Insurance Corp. from British Columbia (“ICBC”) of a trial decision lifting a stay of execution on a judgment obtained by Mr. Hosseini against ICBC. The Plaintiff/Respondent was successful in an action against ICBC. He was also the Defendant in a related but separate action brought by ICBC, seeking contribution to a settlement made on his behalf. ICBC was successful at trial in imposing a stay of execution on the judgment against ICBC, pending resolution of the action for contribution. The Court of Appeal dismissed the appeal holding that there was no basis in law to allow ICBC to seek to set off what it must pay, by any sum it may in due course be adjudged entitled to recover.

22. December 2003 0

Hosseini-Nejad v. Insurance Corp. of British Columbia, [2003] B.C.J. No. 2887, British Columbia Court of Appeal

The Plaintiff was injured in a collision in 1993. He sued and recovered judgment against the driver but was not able to effect recovery. He made a claim against ICBC and obtained an arbitration award pursuant to the uninsured motorist protection relief. In November 2001, he was granted an order entitling him to execute on the award as he would a judgment.

In the meantime, ICBC had settled an action in which Mr. Hosseini was a party. Mr. Hosseini was the operator of a stolen motorcycle when he lost control of the bike and crashed into a barrier, severely injuring a passenger. The passenger sued both Mr. Hosseini and ICBC. ICBC settled the claim for $1.2 million.

ICBC applied for a summary trial seeking to recover the amount of the settlement from Mr. Hosseini. It relied on its rights of subrogation under s. 20(11) of the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231. The court considered whether it was an abuse of process for ICBC to pursue its claim as if Mr. Hosseini was the insured operator in breach of his policy and then, after the settlement, to seek recovery from Mr. Hosseini by arguing he was an uninsured motorist. The court rejected that argument holding that ICBC was not required to elect to proceed with one section or the other as they are not inconsistent and did not demonstrate “game-playing” or bad faith. The court further held that the matter was an appropriate one to consider on a summary basis but reserved judgment.

In November 2001, ICBC sought an order staying execution of the judgment against it. Williamson J. ordered that Mr. Hosseini was entitled to enforce the arbitration award, and refused the stay. At further hearing in December, the learned chambers judge was asked to reconsider imposing the stay. A partial stay was imposed, and ICBC was ordered to make periodic payments totalling $200,000.

In October 2002, the stay was lifted on a motion brought by Mr. Hosseini, but ICBC obtained an order staying execution on the judgment pending hearing of the appeal of the stay.

The majority of the three-member Court of Appeal, found that there was no sound basis upon which a stay could be granted to preclude Mr. Hosseini from recovering the full amount of his arbitration award. To impose a stay in order to permit ICBC sufficient time to pursue an action would be to grant relief before judgment. At the time the appeal was heard, Mr. Hosseini did not owe anything to ICBC and there was no basis to stay the order for judgment.

In dissent, Mr. Justice Thackray held that because of the trial management process, the court had imposed a process whereby the actions for and against Mr. Hosseini were proceeded on a parallel course. Although it was an attempt to deal fairly with both parties, what resulted was a situation where the first to judgment took the spoils. While in most ordinary cases, there would be no room for a stay to be granted to await the outcome of other litigation, in the case at bar, Thackray J. held that the tangled course of this litigation and it was an unusual and an exceptional case.

To stay current with the new case law and emerging legal issues in this area, subscribe here.