This was an application to determine disposition of funds paid into court by ICBC to satisfy all claims against its Insured, the Defendant. Three parties had a claim to the funds, all of whom were injured in motor vehicle accidents for which the Insured was at fault. The funds available were not sufficient to satisfy all claimants; however, two of the claimants had recourse to their underinsured motorist protection (“UMP”) policies for the balance. The third was an infant and was more severely injured, and she did not have recourse for the balance to her UMP policy. Burnyeat J. held that while the usual assumption would be that the funds be paid out on a pro-rata basis to all parties with a valid claim, the legislation was silent on the issue and thus the court had discretion with respect to apportionment. The entirety of the amount held in court was paid out to the infant Claimant.

17. February 2004 0

Insurance Corp. of British Columbia v. Kushneriuk, [2004] B.C.J. No. 281, British Columbia Supreme Court

NS, DP and DK were injured in separate accidents with the Defendant. DP and DK settled their claims for under $1,000,000, while NS was granted judgment over $7,000,000. The insurance policy maintained by the Defendant provided for $1,000,000 in third party liability coverage. Pursuant to section 21 of the Insurance (Motor Vehicle) Act, ICBC paid $1,000,000, the policy limit, into court as discharge of its obligation to the Defendants.

NS, DP and DK all had UMP protection under their own standard policies with ICBC. However, pursuant to the Regulations, the amounts which must be paid out under a UMP policy are reduced by other income received by the claimant, such as Canada Pension Plan benefits. This had the result that DP and DK could look to their UMP policy for satisfaction of any shortfall between the amount in court and their settlement claims. NS could not. DP and DK sought a pro-rata share of the funds in court while NS sought the entire amount.

The court refused to apply the equitable doctrine of marshalling to the benefit of NS on the facts of this case. Holding that where two funds available exist by virtue of different debts, the doctrine does not apply. With respect to the legal arguments, the court held that the Act gave no guidance as to how the court should pay out funds pursuant to section 21. Other Acts were compared, which require the court to distribute the proceeds proportionally or rateably. The court interpreted the absence of such direction in the Act to afford judicial discretion. Finally, the court held that the only prejudice suffered would be by ICBC; however, ICBC’s claim to the funds paid into court was extinguished by section 21(13), and therefore the only financial interests taken into consideration by the court were those of individual parties, and there was no distinction between judgment holders and claimants under a settlement. The entirety of the $1,000,000 and interest was paid out to NS.

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