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ICBC Lawyer Vancouver

ICBC vs Hamo 2008

Case Name:

Insurance Corp. of British Columbia v. Hamo

Between

Insurance Corporation of British Columbia, Petitioner,

and

Azez Hamo, Geena Hamo, and Saiyad Khan, Respondents

[2008] B.C.J. No. 2415

2008 BCSC 1700

69 C.C.L.I. (4th) 115

2008 CarswellBC 2701

[2009] I.L.R. I-4775

173 A.C.W.S. (3d) 392

Docket: S083688

Registry: Vancouver

British Columbia Supreme Court

Vancouver, British Columbia

G.D. Burnyeat J.

(In Chambers)

Heard: November 7, 2008.

 Judgment: December 10, 2008.

(23 paras.)

Civil Litigation — Civil Procedure — Payment of money into court — When money may be paid out of court — Application by the respondent Azez Hamo for an order that money be paid out of Court allowed — The amount for post-judgment interest was payable pursuant the regulations regardless of whether there was a subsequent reduction in the amount payable — It would not be fair to require the respondent to wait for the petitioner to make an offer and then await the outcome of trial before receiving some or all of the amount found to be owing to him — It would not be fair to allow the respondent to commence proceedings against Khan when at least some of that sum would be payable by the petitioner on behalf of Khan — Rules of Court, Rules 58(5).

Application by the respondent Azez Hamo for an order that money be paid out of Court in satisfaction of a certificate of costs and that the petitioner pay pre-judgment and post-judgment interest. The respondent Hamos brought an action against the respondent Khan claiming damages arising out of a motor vehicle accident caused by Khan’s negligence. The claims of the plaintiffs were severed and at the trial of the claim of Azez Hamo he was awarded judgment in the amount of $705,891, pre-judgment interest of $10,775 and his costs on scale b. The petitioner, ICBC, paid into court the sum of $995,155 being the third party liability policy limit and the sum of $10,775 for pre-judgment interest. The petitioner opposed the application on the basis that costs payable by it were limited as a result of the regulations and that no amount should be paid out of Court in satisfaction of the certificate of costs obtained by the respondent until there was a determination of the claim of Geena Hamo.

HELD: Application allowed. The amount for post-judgment interest must be paid pursuant to s. 69(d)(ii) of the regulations regardless of whether there was a subsequent reduction in the amount payable as calculated pursuant to s. 69(c). Post-judgement interest on the sum represented by the certificate of costs was also payable pursuant to the regulations. It would not be fair to the respondent to have to wait to see whether the petitioner makes an offer and then to await the outcome of the trial before he could receive some or all of the amount found to be owing under his certificate of costs. It would also not be fair to allow the respondent to commence proceedings to recover this amount from Khan when at least some of that sum would be payable by the petitioner on behalf of Khan.

Statutes, Regulations and Rules Cited:

Insurance (Vehicle) Act, RSBC 1996, CHAPTER 231, s. 76(1), s. 76(2), s. 78

Regulations to the Insurance (Vehicle) Act, s. 63, s. 64, s. 67(1), s. 69, s. 69(c), s. 69(d), s. 69(d)(ii), s. 148.1, s. 148.2

Rules of Court, Rule 37B, Rule 58(5)

Counsel:

Counsel for Insurance Corporation of British Columbia: W.E.C.

Sernè.

Counsel for Azez Hamo: Y. Gertsoyg.

Reasons for Judgment

1     G.D. BURNYEAT J.:– Applying pursuant to Rule 58(5) of the Rules of Court, Azez Hamo asks for an order that the sum of $111,271.79 be paid out of Court in satisfaction of an August 22, 2008 Certificate of Costs. Mr. Hamo also seeks an order that the Petitioner pay post-judgment interest on the principal amount of his judgment as well as post-judgment interest on the amount found owing under the Certificate of Costs. These proceedings arise as a result of an action commenced by Mr. Hamo and his sister, Geena Hamo.

ACTION NO. M021566 (VANCOUVER REGISTRY (“MVA ACTION”)

2     In the MVA Action, Azez Hamo and Geena Hamo as Plaintiffs sued Saiyad Khan claiming damages arising out of a motor vehicle accident where both plaintiffs claimed that the accident was caused by the negligence of Mr. Khan. At an April 4, 2008 pre-trial conference, the claim of Azez Hamo was severed from the claim of Geena Hamo for trial purposes. It is estimated that the trial of the claim of Geena Hamo will take approximately five weeks. A trial date has not been set to hear her claim.

3     In the trial of the claim of Azez Hamo, an offer of settlement was made of $150,000.00. The trial of the Azez Hamo claim commenced before a jury and, on May 5, 2008, judgment in the amount of $705,891.70 plus pre-judgment interest of $10,775.99 was awarded to Azez Hamo. Also awarded were his costs on a Scale “B” basis.

THIS ACTION (“I.C.B.C. ACTION”)

4     Pursuant to s. 78 of the Insurance (Vehicle) Act, R.S.B.C., c. 231 (“Act”) and pursuant to a June 19, 2008 Order, the Petitioner was at liberty to pay into Court the sum of $995,155.10, being the third party liability policy limits in effect of $1,000,000.00 minus $4,844.90 already paid under the policy. Also paid into Court was the sum of $10,775.99 for pre-judgment interest on what had been awarded by the jury. Under that Order, I.C.B.C. was also at liberty to pay into Court any costs and interest as prescribed by paras. 69(c) and 69(d) of the Regulations to the Act with those monies being paid: “… in satisfaction of its liability to indemnify its insured, Saiyad Khan, under his I.C.B.C. third party motor vehicle liability insurance policy … in relation to claims arising out of a motor vehicle accident which occurred on August 22, 2001.”

5     In the MVA Action, the Bill of Costs and Disbursements of Azez Hamo were assessed at $111,271.79 and a September 5, 2008 Certificate of Costs was issued reflecting that amount. That sum was paid into Court in this Action on October 16, 2008. At the same time, the sum of $5,686.81 was paid into Court representing post-judgment interest on the $705,891.70 awarded by the Jury.

6     Mr. Hamo applied to have some of the funds paid out of Court. That application was opposed by I.C.B.C. on the basis that any such application was premature by virtue of paragraph 69 of the Regulations to the Act. On June 27, 2008, the following order was made:

  1. 1.             The sum of $655,891.70 be paid out of court in trust to counsel for the Respondent Azez Hamo in satisfaction of the principal judgment amount awarded by order of the Honourable Mr. Justice Goepel, dated May 5, 2008, in the action of Azez Hamo et al. v. Khan, Vancouver Registry Number M021566, the “Azez Hamo Action”, from the sum of $995,155.10 paid into court, pursuant to paragraph 1(a) of the order of the Honourable Mr. Justice Masuhara, paragraph, dated June 19, 2008.
  2. 2.             The sum of $10,775.99 paid into court, pursuant to paragraph 1(b) of the order of the Honourable Mr. Justice Masuhara, paragraph [sic], dated June 19, 2008, be paid out of court in trust to counsel for the Respondent Azez Hamo in satisfaction of the pre-judgment interest amount awarded by order of the Honourable Mr. Justice Goepel, dated May 5, 2008, in the Azez Hamo Action.
  3. 3.             The sum of $50,000 be paid out of court in trust to counsel for the Respondent Geena Hamo, to be repaid in trust to counsel for the Respondent Azez Hamo, with pre-judgment court-order interest, calculated from the date of receipt of said sum to the date of repayment, upon receipt of the settlement or judgment funds in the action of Geena Hamo et al. v. Khan, Vancouver Registry Number M021566, the “Geena.Hamo Action”, in the following amounts:
  1. a.              In full, if the settlement or judgment in the Geena Hamo Action, does not exceed the $289,263.40 of the funds remaining in court; or
  2. b.             Reduced by the amount that the settlement or judgment in the Geena Hamo Action, exceeds the $289,263.40 of the funds remaining in court, up to the maximum deductible amount of Azez Hamo applicable pursuant to sections 148.1 and 148.2 of the Regulations pursuant to the Insurance (Vehicle) Act, [RSBC 1996] Chapter 231, excluding the amount recoverable as Azez Hamo’s pro-rata share of $995,155.10;
  1. 4.             In the event that the settlement or judgment in the “Geena Hamo Action”, exceeds the $289,263.40 of the funds remaining in court, then Azez Hamo shall pay to Geena Hamo the difference between $705,891.70, and his pro-rata share of $995,155.10, the “pro-rata difference”; and as security shall assign to Geena Hamo, to the amount of the pro-rata difference, the proceeds of his settlement or arbitration funds, pursuant to his entitlement to Underinsured Motorist Protection Coverage, pursuant to sections 148.1 and 148.2 of the Regulations pursuant to the Insurance (Vehicle) Act, [RBC 1996] Chapter 231;
  2. 5.             The Respondents Azez Hamo and Geena Hamo release the Petitioner, Insurance Corporation of British Columbia and the Respondent Saiyad Khan from any and all liability arising out of the arrangement that they have made for the distribution of these funds, as provided by this order only.

REGULATIONS UNDER THE ACT AND PROVISIONS UNDER THE ACT

7     The following Regulations under the Act apply:

63 In this Part, “insured” means

(a)           a person named as an owner in an owner’s certificate,

64 Subject to section 67, the corporation shall indemnify an insured for liability imposed on the insured by law for injury or death of another or loss or damage to property of another that

(a)           arises out of the use or operation by the insured of a vehicle described in an owner’s certificate,

67(1) Subject to sections 18(4) and 77(1) of the Act, where an insured is liable for injury or death of another or loss or damage to property of another, the liability of the corporation to the insured for payment of indemnity under this Part in respect of all claims against the insured arising out of the same occurrence is limited to the applicable amount set out in section 1 of Schedule 3. [Here: $1,000,000.00]

69 In addition to the amount by which liability is limited under section 67, the corporation shall …

(c)           pay that proportion of the costs taxed against an insured in an action respecting a claim under this Part that

(i)            the amount offered by the corporation as its total liability for indemnity to the insured under this Part in an offer to settle delivered in accordance with the Supreme Court Rules

bears to

(ii)          the aggregate of all special and general damages awarded in respect of the occurrence for which the claim is made,

(d)          pay

(i)            prejudgment interest under the Court Order Interest Act or similar legislation of another jurisdiction, and

(ii)          post-judgment interest under the Interest Act (Canada) or similar legislation of another jurisdiction

on that part of the judgment that is within the applicable limit set out in section 1 of Schedule 3, and

8     The following sections of the Act also apply:

76(1) In this section and sections 77 and 78, “claimant” means a person who has a claim or a judgment against an insured for which indemnity is provided by the plan or an optional insurance contract.

(2)          Even though he or she does not have a contractual relationship with the insurer, a claimant is entitled, on recovering a judgment against an insured or making a settlement with the insurer, to have the insurance money applied toward the claimant’s judgment or settlement and toward any other judgments or claims against the insured who is covered by the indemnity. …

78(1) The insurer may apply to the court without notice to any person for an order allowing it to pay the insurance money into court, and the court may so order, on the notice, if any, it considers necessary if

(a)           a person obtains a judgment against an insured and is entitled to bring an action under section 76 (3), and

(b)          there are or may be other claimants, or there is no willing person capable of giving and authorized to give a valid discharge for payment.

CASE AUTHORITIES AND DISCUSSION

9     The present application of Mr. Hamo is opposed by the Petitioner on the basis that costs payable by it in addition to the $1,000,000.00 third party liability policy limits of Mr. Khan are limited as a result of s. 69(c) of the Regulations under the Act and that, until it can decide whether it wishes to make an offer of settlement to Geena Hamo and until there can be a determination of the damages and assessed costs available to Geena Hamo after settlement or trial, no amount should be paid out of Court in satisfaction in whole or in part of the Certificate of Costs obtained by Mr. Hamo.

10     By agreement of the parties, the amount for post-judgment interest is $5,874.33. This is an amount which must be paid pursuant to s. 69(d)(ii) of the Regulations under the Act whether or not there is a subsequent reduction in the amount payable as calculated pursuant to s. 69(c) of the Regulations under the Act: Reilly v. Insurance Corporation of British Columbia (2007), 69 B.C.L.R. (4th) 226 (B.C.C.A.); and [2005] B.C.J. No. 2660 (B.C.S.C.) at paras. 25-6. Accordingly, I order that the sum of $5,874.33 plus any interest accruing on that sum be paid out of Court to counsel for Mr. Hamo.

11     As well, post-judgment interest on the sum represented by the Certificate of Costs is also payable pursuant to s. 69(d)(ii) of the Regulations under the Act: Reilly, supra. Accordingly, I also order that I.C.B.C. pay post-judgment interest on $111,271.79 from and after August 22, 2008.

12     Regarding that part of the application of Mr. Hamo that the sum of $111,271.79 be paid out of Court, the August 22, 2008 Certificate of Costs represents a judgment for $111,271.79 that Mr. Hamo has against Mr. Khan. Mr. Hamo is in a position to commence proceedings against Mr. Khan to satisfy in whole or in part the amount of the Judgment obtained. This application deals with the question of what part of that judgment for costs must be paid by I.C.B.C. in satisfaction of the obligations it owes to Mr. Khan arising out of his policy of insurance and pursuant to the obligations owed by I.C.B.C. to Mr. Hamo as a result of s. 76(2) of the Act.

13     The position taken by I.C.B.C. on the question of what sum should be paid out of Court to Mr. Hamo arises because of the wording of s. 69(c) of the Regulations under the Act. If there had only been one person involved in one accident (the “occurrence”), if the policy limit had been $1,000,000.00, and if a judgment for $705,891.70 had been obtained, I.C.B.C. would be required to pay the full amount of any Certificate of Costs obtained. If there had only been one person involved in one accident, if the policy limit had been $1,000,000.00, if an offer to settle for $1,000,000.00 had been delivered under Rule 37B of the Rules of Court, and a judgment for $1,500,000.00 had been obtained, I.C.B.C. would have been required to pay only two-thirds of any costs, with Mr. Khan having to pay the balance.

14     Section 69(c) of the Regulations under the Act protects I.C.B.C. if the judgment amount is in excess of the policy limit. Just as Mr. Khan and not I.C.B.C. would be responsible for paying any special and general damages in excess of $1,000,000.00, so also I.C.B.C. would only be obligated under the policy to pay a portion of the total amount of costs assessed. The balance of the costs are payable directly by the insured without the necessity of I.C.B.C. indemnifying the insured for the overage. In this regard, see Hajric v. Ricard, [1990] B.C.J. No. 2377 (B.C.S.C.); LaPlante (Guardian ad litem of) v. LaPlante (1996), 19 B.C.L.R. (3d) 12 (B.C.S.C.) at para. 10; Coleman v. Spong (2003), 37 C.P.C. (5th) 89 (B.C.S.C.); and Reilly v. Insurance Corp. of British Columbia (2007), 69 B.C.L.R. (4th) 226 (B.C.C.A.).

15     Regulation 69(c) only applies if the following has occurred: (a) I.C.B.C. makes an offer under Rule 37B for the “total liability for indemnity” applicable under a policy; and (b) the total amount of the special and general damages available is in excess the “total liability for indemnity”. To date, I.C.B.C. has not made an offer delivered in accordance with the Supreme Court Rules for $1,000,000.00. Rather, an offer in the “Mr. Hamo Action” was $150,000.00. To date, there has been no offer made to Ms. Hamo in accordance with the Supreme Court Rules. As well, there has been no determination that the total combined amount of the special and general damages available to Ms. Hamo and Mr. Hamo is in excess of $1,000,000.00. In this Action, I.C.B.C. has paid the “total liability for indemnity” or $1,000,000.00 to the credit of this Action. I am satisfied that this is not “an offer to settle delivered in accordance with the Supreme Court Rules”. Rather, it is a payment into court pursuant to s. 78 of the Act.

16     A number of pre-conditions to the applicability of s. 69(c) may not occur. First, an offer under Rule 37B may not be made relating to the liability of Mr. Khan to Ms. Hamo; second, the amounts available to Mr. Hamo and Ms. Hamo after trial or settlement may not be in excess of $1,000,000.00. I am satisfied that, it is only if those pre-conditions are met, that the provisions of s. 69(c) of the Regulations under the Act will apply.

17     If any offer to Ms. Hamo brings the total of the offers up to $1,000,000.00 and if the ultimate amount awarded to both Mr. and Ms. Hamo is in excess of $1,000,000.00, then I.C.B.C. will only be obligated to pay $1,000,000.00 as well as a percentage of the amounts available to Mr. Hamo and Ms. Hamo for their assessable costs. Mr. and Mrs. Hamo will have to look to Mr. Khan for the balance of their damages over $1,000,000.00 and for the balance of the costs not payable by I.C.B.C.

18     For instance, if I.C.B.C. was to make an offer to Ms. Hamo to bring the total of offers made to $1,000,000.00, if the total damages available to Mr. Hamo and Ms. Hamo was to equal $1,500,000.00, then the liability of I.C.B.C. to pay the assessed costs of Mr. Hamo and Ms. Hamo would be limited to two-thirds of those assessed costs, being the $1,000,000.00 (“total liability for indemnity to the insured”) in relation to $1,500,000.00 (“the aggregate of all special and general damages awarded in respect of the occurrence”). Assuming that the assessed costs of Ms. Hamo was also to total $111,271.79, I.C.B.C. would not be responsible to pay $222,543.58 but would be required to pay on behalf of Mr. Khan only two-thirds of that amount or $148,362.38. Assuming all of that, the amount that would have been payable to Mr. Hamo, being $74,181.19 (or half of $148,362.38) is $37,090.60 less than the amount of $111,271.79 which Mr. Hamo requests be paid out of Court.

19     I.C.B.C. does not wish to be in a position to seek to recover the difference from Mr. Hamo in order that it can satisfy its obligations to Mr. Khan by having part of its obligations available to be paid to Ms. Hamo. I.C.B.C. wishes to have part of the $111,271.79 available to satisfy its obligations to pay a portion of the assessable costs available to Ms. Hamo on the assumption that the total special and general damages available to Mr. and Ms. Hamo are in excess of $1,000,000.00 where an offer pursuant to Rule 37B has been made for the full $1,000,000.00.

20     I am satisfied that it would not be fair for Mr. Hamo to have to wait to see whether I.C.B.C. makes an offer to bring the total amount of the offers up to $1,000,000.00 and to then await the outcome of a trial that has not been set for hearing and which may take as long as five weeks to be heard before he can receive from I.C.B.C. some or all of the $111,271.79 found to be owing under his Certificate of Costs. I am also satisfied that it would not be fair to allow Mr. Hamo to commence proceedings against Mr. Khan to recover all of the $111,271.79 when at least some of that sum will be payable by I.C.B.C. on behalf of Mr. Khan.

21     I order that the sum of $111,271.79 plus any interest which has accrued on that sum since it was paid into Court be paid out of Court to counsel for Mr. Hamo subject to the following:

In the event that I.C.B.C. makes offers to settle delivered in accordance with the Supreme Court Rules totalling at least $1,000,000.00 and in the event that the settlement or judgment for general and special damages in favour of Geena Hamo exceeds $289,263.40, then Azez Hamo will pay to Geena Hamo the difference between what must be paid by I.C.B.C. pursuant to s. 69(c) of the Regulations under the Act and the entitlement of Geena Hamo to receive funds from I.C.B.C. in partial satisfaction of any Certificate of Costs that she may obtain; and, as security, shall assign to Geena Hamo the proceeds of his settlement or arbitration funds, pursuant to his entitlement to Uninsured Motorist Protection Coverage, pursuant to ss. 148.1 and 148.2 of the Regulations pursuant to the Insurance (Vehicle) Act, R.S.B.C., 1996, c. 231.

22     If it is no longer possible for Mr. Hamo to assign to Ms. Hamo the proceeds of his settlement pursuant to his entitlement to Uninsured Motorist Protection Coverage, then I order that it will not be necessary for Mr. Hamo to provide such security.

23     Additionally, Azez Hamo will be entitled to his costs in this Action throughout on a Scale B basis.