An insurer has an obligation to advise an insured of all potential benefits that are available to him. If the insurer fails to advise the insured of potential benefits and the insured suffers an injury as a result of not receiving benefits, the insurer is liable for damages arising from the injury even if the limitation period for obtaining benefits has expired.

McIlvenna v. ICBC, [2006] B.C.J. No. 2793, British Columbia Supreme Court

In 1995, Connor McIlvenna (the “Infant Plaintiff”) was hit by a car. He was six years old. He suffered a head injury. Initially he appeared to make a full recovery. In the months immediately following the accident, the Insurance Corporation of British Columbia (“ICBC”) paid a small amount of benefits under its First Party Insurance provision. In 2001, intellectual and learning impairments became apparent in the Infant Plaintiff and his mother requested rehabilitation assistance from ICBC. ICBC refused to provide any benefits because the two-year limitation period set out in the Regulations had expired. The limitation period applies even if a child is involved.

The Infant Plaintiff commenced an action against ICBC for failing to advise the Infant Plaintiff’s mother about his entitlements to first party benefits, including advice about the kind of therapy and treatment that could have been funded and the existence of a limitation period; and for failing to recognize the possible future implications of a brain injury in a child, including a failure to make further inquiries and, if necessary, specifically recommend or initiate appropriate therapy or treatment. ICBC brought a summary application to have the Statement of Claim struck on the basis that the pleadings did not disclose a reasonable cause of action.

In determining whether a viable cause of action existed, Smith J. relied upon Cooper v. Hobart et al, [2001] 3 S.C.R. 537, for the proposition that the Court must apply a two-part test set out in Anns v. Merton London Borough Council, [1978] A.C. 728. The two part test requires the Court to first decide whether there was sufficient proximity between the parties to create a prima facie duty of care, and if so, whether there were any factors negating such a duty.

Smith J. concluded that the first pleading, the duty to advise the Infant Plaintiff’s mother about his entitlement to benefits, fit within a well established category of negligent misstatement in circumstances where one party is reasonably relying on another parties’ superior knowledge or expertise. Smith J. noted that Fletcher v. Manitoba Public Insurance Corp., [1990] 3 S.C.R. 191, is an example of such a case. In Fletcher, the Supreme Court of Canada held that a public insurer had a duty to advise purchasers of liability insurance that underinsured motorist coverage was also available. The Court held that the relationship between the insurance customer was of sufficient proximity to impose liability for negligent misstatement. Smith J. distinguished this situation from Esau v. Co-operators Life Insurance Co., 2006 BCCA 249 and Pekarek v. Manufacturer’s Life, 2006 BCCA 250 on the basis that the Plaintiffs in those cases knew or ought to have known that the insurer was taking a position adverse to their interest. The adversity changed the relationships between the parties and negated any suggestion of reasonable reliance on advice from the insurance companies.

Smith J. determined that the second duty alleged by the Plaintiff, that in addition to his duty to advise about what benefits are available, the insurer owes a duty to independently recognize treatment and therapy needs and take the initiative in recommending or providing them, does not fall within the same established category. Smith J. noted that the Claimant’s own treating doctors and therapists did not recognise any care that was needed at the time that the benefits were denied. He determined that an independent duty on ICBC to ensure treatment could create an intolerable situation for a claimant if ICBC, in furtherance of its duties, recommended or initiated a course of treatment that the Claimant’s own doctor did not agree with. Smith J. struck the second cause of action on the basis that it did not disclose a reasonable cause of action, but allowed the first cause of action.

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