While an acid spill may destroy hundreds of vehicles, it does not follow that hundreds of subrogation claims are necessary or desirable

Insurance law – Automobile insurance – Actions – Subrogation – Right of insurer to subrogation – Practice – Summary judgments

Insurance Corp. of British Columbia v. Teck Metals Ltd., [2020] B.C.J. No. 295, 2020 BCSC 259, British Columbia Supreme Court, February 26, 2020, W.P. Riley J.

The plaintiff insurers applied for an order allowing each insurer to proceed with a single action in the insurer’s own name, on behalf of all insured owners whose vehicles were allegedly damaged in acid spills on a highway that allegedly caused unrepairable damage to more than 800 vehicles. The plaintiff insurers also sought a determination that they had each made out the requirements of s. 84(1) of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231 (the “Act”), which is in effect a codification of subrogation rights for vehicle insurers in British Columbia. The plaintiffs argued that addressing these issues early would allow the litigation to focus on substantive issues of liability, causation, and damages.

The defendants agreed that each plaintiff insurer should be allowed to proceed with a single action in its own name but did not agree that the issue of meeting the requirements of s. 84(1) of the Act could be resolved separately from the other issues or by summary trial, and that the evidence was insufficient to meet the requirements of s. 84(1) of the Act. The Court agreed that all three actions were properly constituted and ordered that each plaintiff insurer is entitled to commence a single action in its own name on behalf of or in the place of all insured owners whose vehicles were allegedly damaged in the acid spills.

The Court commented generally that s. 84(1) of the Act strengthens the principle of subrogation in several respects. It does not require that the insured be made whole before the right of subrogation arises, only that money be paid or liability assumed. Additionally, it allows the insurer to bring an action in its own name or the name of the insured. Lastly, the Act applies to any insurer that writes policies within British Columbia.

Further, the Court concluded that there will be significant savings of time and expense to have a determination on whether the substantive requirements for subrogation under s. 84(1) have been met and that is a compelling reason to separate that issue from the others and deal with it by summary trial. The Court accepted that the plaintiffs need only prove evidence of a payment or an assumption of liability with a bona fide intention of covering the insured’s loss under a valid British Columbia insurance contract, in order to take the benefit of s. 84(1) of the Act, and that that test was met.

Finally, the Court granted an order that certain plaintiffs were permitted to add several owners of Alberta-registered vehicles to their action as named plaintiffs. However, the Court did not include these vehicle owners in their orders that the substantial requirements of s. 84(1) of the Act were proven, as that section only applies to British Columbia policies.

This case was digested by Mark A. McPhee, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Mark A. McPhee at mmcphee@harpergrey.com.

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