Middleton v. Heerlein

2015 BCSC 1236 Middleton v. Heerlein

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Middleton v. Heerlein, 2015 BCSC 1236 Date: 20150717 Docket: L150153 Registry: Vancouver Between: Cinda Joyce Middleton Plaintiff And: Siegfried Heerlein and Enterprise Rent-A-Car Canada Limited / Enterprise Location D'Autos Canada Limitee Defendants Docket: M153425 Registry: Vancouver Between: William Leroy Middleton Plaintiff And: Siegfried Heerlein and Enterprise Rent-A-Car Canada Limited / Enterprise Location D'Autos Canada Limitee Defendants Before: The Honourable Mr. Justice Johnston Reasons for Judgment (In Chambers) Counsel for the Plaintiff: L. Giustra Counsel for the Defendants: T.R. Davies Place and Date of Hearing: Vancouver, B.C. July 3, 2015 Place and Date of Judgment: Vancouver, B.C. July 17, 2015 [1] In two applications argued on behalf of two insureds, Progressive Max Insurance Company ("Progressive"), an insurer carrying on business in the United States, seeks to revisit a subrogation issue it litigated unsuccessfully in Matilda v. MacLeod, 2000 BCCA 1. [2] Progressive insured Mr. and Mrs. Middleton, who are the plaintiffs in two separate personal injury actions in British Columbia. Mr. and Mrs. Middleton are husband and wife and ordinarily resident in Washington State at any time relevant to these actions. The Middletons were riding a motorcycle in British Columbia on July 24, 2010, when they collided with a

vehicle owned by the defendant Enterprise Rent-A-Car Canada and operated by the defendant Mr. Heerlein. [3] The Middletons' insurance policy provided that Progressive would pay "reasonable expenses incurred for necessary medical services" received by the plaintiffs as insureds "within three years of the date of a motor vehicle accident." [4] The accident caused injuries that required "necessary medical services" to each of Mr. and Mrs. Middleton: Progressive paid $11,275.16 for Mr. Middleton, and $110,092.28 for Mrs. Middleton (all amounts expressed in United States dollars). [5] In addition, Progressive paid Mrs. Middleton $5,371.25 for wage loss benefits and $2,370.00 for homemaker benefits. These payments were not required by Progressive's policy of insurance, but instead were required by the terms of a power of attorney and undertaking it had filed pursuant to s. 106 of the Motor Vehicle Act, R.S.B.C. 1996, c.

318. By that undertaking, Progressive was obliged to provide to those it insured, who might be injured in a vehicle accident in British Columbia, at least "the kind or class of coverage or coverages required by law" for those insured within British Columbia. The undertaking obliges Progressive to provide to its insureds, who may be injured in a vehicle accident in British Columbia, the same benefits as a British Columbia insured would receive under Part 7 of the Insurance (Vehicle) Regulation, B.C. Reg. 447/83, commonly called no-fault benefits. [6] Mr. and Mrs. Middleton have sued for damages in separate actions, and in each action have brought applications for summary judgment pursuant to Rule 9-6 for their medical, wage loss, and homemaker benefits, paid to them by Progressive. The applications proceeded on the basis of admissions in which, for the purposes of this summary judgment application, all parties admit that there was an accident as described, the authenticity of documents that include the Progressive policy of insurance, the power of attorney and undertaking filed by Progressive in British Columbia, a summary of payments made by Progressive to or on behalf of each of its insured plaintiffs, and written notices of subrogation sent by Progressive to each plaintiff. [7] The issue here is whether Progressive can recover what it paid to the Middletons, in claims brought

in their names, through the exercise of its right of subrogation, or, as the defendants argue, whether those claims are released by s. 83(2) of the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231, which provides: 83. (2) A person who has a claim for damages and who receives or is entitled to receive benefits respecting the loss on which the claim is based, is deemed to have released the claim to the extent of the benefits. [8] Purely for the sake of convenience, I will refer to the applicant in each of these subrogated applications as Progressive, in recognition that the applications represent Progressive's pursuit of its subrogated interests. [9] Progressive raises similar claims in these applications to those it raised by special cases under former Rule 33 in Matilda, in which it sought declarations that it had enforceable rights at common law, or under its contracts of insurance, to recover payments it had made to its insured plaintiffs in two separate actions. At that time, the governing statute was the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c.

231. Matilda was concerned with the interpretation and application of s. 25 of the former Act, although s. 26 was also argued. The Insurance (Motor Vehicle) Act was re-enacted as the Insurance (Vehicle) Act, R.S.B.C. 1996, c. 231, effective June 1, 2007. In the process, ss. 25 and 26 of the Insurance (Motor Vehicle) Act were repealed, and replaced by ss. 83 and 84 of the Insurance (Vehicle) Act. [10] The Court of Appeal in Matilda stated that the issue turned on the application of s. 25(1) and (2) of the Insurance (Motor Vehicle) Act. Progressive had argued that its policy of insurance provided it a right of subrogation, and that British Columbia had no jurisdiction to modify by statute a contract of insurance written outside British Columbia. [11] When Matilda was decided, the relevant portions of s. 25 of the Insurance (Motor Vehicle) Act provided as follows: 25. (1) In this section and in section 26, "benefits" means 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. (2) 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. [12] The court noted at para. 7: As the chambers judge noted, in the absence of any express statutory right of subrogation the insurer's right of subrogation is a derivative right only, which must be advanced in the name of the insured. The insurer is placed in no better position than that of the insured. The revised form of question 1 could be answered "no" simply on the ground that Progressive has no status as a subrogated insurer to advance any claim against the defendants in its own name. The revised question, to which the above answer was given, was stated in this way at para. 2: Does Progressive (the third party) have an enforceable right under the contract or the common-law to recover from the defendants all or part of the funds, being $17,800.00 U.S. paid by Progressive to the plaintiff? [13] It would seem, therefore, that unless the plaintiffs can point to an express statutory right of subrogation, the answer in these cases must be governed by the result in Matilda set out above. [14] In spite of the finding in para. 7, the court in Matilda went on to deal with what it said was a broader issue argued by the parties - provincial legislative competence over extra-provincial insurance contracts, which it

framed in this way at para. 8: The issue is whether the provisions of the Insurance (Motor Vehicle) Act purport to modify the terms of extra-provincial policies and thereby exceed the reach of provincial jurisdiction. In my view, they do not. The focus of s. 25(1) and (2) is on the tort action by Progressive's insureds against ICBC's insureds. The torts are the motor vehicle accidents that occurred within British Columbia and clearly are within provincial jurisdiction. The subsections simply provide that accident benefits cannot be claimed in the B.C. tort actions irrespective of where the policy paying the benefits was made. That does not purport to modify the terms of the extra-provincial policies. It merely limits the damages recoverable in tort whether by the insured beneficially or Progressive as subrogated claiming in the name of its insureds. In my opinion, the subsections address an incident of provincial jurisdiction over torts within the province and do not attempt to legislate terms of extra-provincial contracts. [Underlining added.] [15] Although there is no argument in these applications that the current version of the statute purports to modify extra-provincial contracts, the underlined portions above would appear to offer no comfort to Progressive, as there is no material difference in wording between the section before the court in Matilda and s. 83(1) and (2)

invoked by the defendants in these cases. [16] The court in Matilda then dealt with an argument, also made in these cases, that the purpose of s. 25(2) was to avoid a double recovery, where the insured could claim damages from a tortfeasor for a loss for which he or she had already been compensated as an accident benefit. Progressive argued there, as here, that s. 25(2) was intended to prevent the insured from being paid twice for the same loss, but was not intended to prevent an insurer, that had made its insured whole through payment of benefits, from recovering those payments from the tortfeasor. [17] After canvassing authorities, some of which are also cited on these applications, the court concluded that "the application of s. 25(2) is not limited to cases of double recovery" (para. 10). [18] So far, the decision of the Court of Appeal in Matilda would appear to be a complete answer to Progressive's claims in these applications, but Progressive argues that Matilda is no longer good law as a result of a change made when the Insurance (Motor Vehicle) Act was re-enacted as the Insurance (Vehicle) Act, and s. 26 was repealed and replaced by s. 84. [19] The change to which the plaintiffs point is in the language of s. 84 of the current Insurance (Vehicle) Act, which they contrast with the wording of s. 26 of the former Insurance (Motor Vehicle) Act. The relevant portions of the

two sections from each statute read: 26. (1) On making or assuming liability for payment of benefits or insurance money, the corporation (a) is subrogated to and is deemed to be the assignee of all rights of recovery against any other person liable in respect of the loss, damage, injury or death of a person to whom, on whose behalf or in respect of whom the benefits or insurance money are paid or to be paid, and (b) may bring action in the name of the insured or in its own name to enforce the rights referred to in paragraph (a). (2) If money is recovered under subsection (1) and the burden of the loss is shared by the insurer and insured, the net amount, after deduction of the costs of recovery, must be divided between them in the same proportions as they bear the loss. 84. (1) On making a payment of benefits or insurance money or assuming liability for payment of benefits or insurance money, an insurer (a) is subrogated to and is deemed to be the assignee of all rights of recovery against any other person liable in respect of the loss, damage, bodily injury or death of a person to whom, on whose behalf or in respect of whom the payment of benefits or insurance money is made or to be made, and (b) may bring action in the name of the insured or in its own name to enforce the rights referred to in paragraph (a). (2) If money is recovered under subsection (1) and the burden of the

loss is shared by the insurer and insured, the net amount, after deduction of the costs of recovery, must be divided between them in the same proportions as they bear the loss. [Underlining added to both.] [20] Nothing turns on the difference between the two statutes in the language defining "benefits". The underlined words, "the corporation" in the former statute, and "an insurer" in the current statute, constitute the difference that Progressive says makes Matilda no longer an obstacle to their current claims. Progressive argues that the effect of this change is to now afford it the same unique status as was given to ICBC under the previous wording, referred to at para. 11 of Matilda: The appellants contended that the position of ICBC under s. 26 of the Insurance (Motor Vehicle) Act with respect to the recovery of benefits paid on behalf of an insured is inconsistent with the "matching principle" interpretation of s.

25. ICBC has a statutory right of subrogation under s. 26 but s. 26 only applies to ICBC. I do not think that ICBC's unique status under s. 26 affects the position of other insurers under s.

25. This argument overlooks the definition of "insurer" in s. 1 of the current statute: "insurer" means (a) the corporation, or (b) the person who undertakes, agrees or offers to provide insurance under an optional insurance contract; Progressive meets neither branch of the definition. [21] I conclude that Matilda governs the interpretation of s. 83, is not affected by the change in wording from s. 26 to s. 84, and is a full answer to these applications. [22] Both applications are dismissed with costs to the defendants. "R.T.C. Johnston, J." The Honourable Mr. Justice Johnston