Jevco vs Drews May 2003
Jevco Insurance Co. v. Drews
IN THE MATTER OF the Commercial Arbitration
Act, R.S.B.C. 1996, c. 55
AND IN THE MATTER OF an arbitration pursuant
to Section 148.2(1) of the Insurance (Motor
Vehicle) Act, revised Regulation (1996)
Jevco Insurance Company, petitioner,
Barry Drews and Insurance Corporation of
British Columbia, respondents
 B.C.J. No. 1082
2003 BCSC 721
49 C.C.L.I. (3d) 195
122 A.C.W.S. (3d) 150
 B.C.T.C. 721
Vancouver Registry No. L022551
British Columbia Supreme Court
Vancouver, British Columbia
Heard: April 23, 2003.
Judgment: May 8, 2003.
Insurance — Automobile insurance, compulsory government schemes — Uninsured or underinsured motorist coverage — Out of province accidents — Extent of coverage — Duties of insurer.
Appeal by Jevco Insurance from an arbitration award. Jevco was a Quebec insurance company, authorized to conduct business in British Columbia. The respondent, Drews, lived in British Columbia and had a licence from that province. Drews was injured in an accident in New Brunswick. Drews was insured by Jevco. The arbitrator decided that Jevco was the primary insurer for underinsured motorist protection. Jevco argued that the arbitrator was wrong, as it did not provide this type of coverage.
HELD: Appeal dismissed. Jevco was subject to British Columbia insurance legislation and regulations, and agreed to abide by them. The legislation established a system of universal compulsory automobile insurance. Such insurance was required to include underinsured motorist protection. Jevco’s right to conduct business in British Columbia meant that it could not claim that it did not offer this type of coverage. This was a defence that was not available to any insurance company operated in British Columbia.
Statutes, Regulations and Rules Cited:
Commercial Arbitration Act, R.S.B.C. 1996, c. 55, s. 31.
Financial Institutions Act, R.S.B.C. 1996, c. 141.
Financial Institutions Act Regulation, B.C. Reg. 84/91, s. 2(2), 2(2)(b).
Insurance Act, R.S.B.C. 1979, c. 200, s. 32(5), 32(5)(a).
Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231, s. 7.
Insurance (Motor Vehicle) Act Regulation, B.C. Reg. 447/83.
B.J. Murray, for the petitioner.
Y. Gertsoyg, for the respondent, Barry Drews.
S.B. Stewart and M. Wilhelmson, for the respondent, Insurance Corporation of British Columbia.
1 WILLIAMSON J.:– This is an appeal from the decision of an arbitrator. It is brought pursuant to s. 31 of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55. The question before the arbitrator was whether a Quebec company authorized to conduct insurance business in British Columbia, the Petitioner Jevco Insurance Company (“Jevco”), was the primary insurer of a claim for under-insured motorist protection arising out of a motor vehicle accident. The motorcycle involved was registered in Quebec. The accident occurred in New Brunswick. The respondent Barry Drews, a resident of British Columbia and the holder of a British Columbia driver’s licence, was injured.
2 The arbitrator decided that in these circumstances Jevco is the primary insurer with respect to a claim for under-insured motorist protection. The petitioner says the arbitrator was wrong. All parties agree that the standard of review of the arbitrator’s decision is correctness.
3 At the time of the accident, July 26, 1992, Jevco was the insurer of the motorcycle. The relevant policy provided liability coverage. It provided coverage for neither no fault accident benefits nor for under-insured motorist protection. The no fault issue was determined in Drews v. Insurance Corp. of British Columbia (1998), 55 B.C.L.R. (3d) 281, a decision of Tysoe J. In that case it was determined that Drews was entitled to no fault benefits because in an action commenced in British Columbia Jevco was precluded by statute from setting up the defence that its policy did not include such coverage. The question of under-insured motorist protection, the issue in the arbitration here, was not considered.
4 Because Jevco is an out-of-province insurer authorized to sell insurance in British Columbia, it is subject to regulations passed pursuant to the Financial Institutions Act, R.S.B.C. 1996, c. 141.
5 B.C. Reg. 84/91 s. 2(2) states, in part, that
(2) In an action brought in British Columbia …under a contract of automobile insurance made outside British Columbia, the insurance company shall not set up any defence to the action
(b) … that might not be set up if the contract were evidenced by a motor vehicle liability insurance policy issued in British Columbia…
6 In this province, as is well known, there is a system of universal compulsory automobile insurance. The Insurance (Motor Vehicle) Act R.S.B.C. 1996, c. 231, s. 7, requires that ICBC administer a plan of universal compulsory automobile insurance. The interpretation section of the B.C. Reg. 447/83, passed pursuant to that Act, states that “universal compulsory automobile insurance” means insurance providing coverage under Parts 6, 7, and 10. Part 10 is the section dealing with under-insured motorist protection.
7 Under-insured motorist protection can arise either from an owner’s certificate of a vehicle or from a driver’s certificate which is issued to those who, like Drews, hold a British Columbia drivers licence.
8 An out-of-province insurance company that wishes to sell insurance within this province must sign an undertaking by which it agrees, among other things, to abide by B.C. Reg. 84/91 quoted above.
9 I am satisfied, having listened to counsel and reviewed the various regulations, that it cannot be said the arbitrator was wrong in the conclusion which he reached.
10 First, one must look at the policy manifest in the various regulations. I am guided in this by the observations, although obiter, of Esson J.A. in Shannon v. Insurance Corporation of British Columbia,  B.C.J. No. 2313, (B.C.C.A.) at para. 7:
It is not necessary for the purposes of this appeal, which is concerned only with the issue of a stay, to delve deeply into those provisions, but it is enough to say that the general scheme of the legislation in the various provinces which have it is to the effect that, where the limits of coverage or other terms required by law are more favourable in the province in which the accident takes place, then the claimant, whether under a liability insurance policy or a no fault provision, will be entitled to those superior benefits even though they are not provided for in the coverage in the policy.
11 Counsel for Jevco stresses that Esson J.A. in the following paragraph referred to Anderson v. Co-operators General Insurance Company (1990), 51 B.C.L.R. (2d) 93. In Anderson, at page 102, Legg J.A. referred to s. 32(5) of the Insurance Act R.S.B.C. 1979, c. 200. At the time, that was the section which dealt with the prohibition of an out-of-province insurer setting up a defence to an action which could not be raised under a contract of liability insurance issued in B.C. Section 32(5)(a) specifically included the statement that it referred to “any action in the Province against the licenced insurer or its insured arising out of an automobile accident in the Province…” (emphasis added). That section was repealed in 1987 and replaced by B.C. Reg. 84/91, which I have quoted above, which does not include the phrase “arising out of an automobile accident in the Province”.
12 Nevertheless, counsel for Jevco points to Court v. Alberta Motor Association Insurance Company,  B.C.J. No. 948 (S.C.), a case after that change in the wording of the regulation, and notes that at para. 15 of that decision Scarth J. wrote;
…the policy referred to in s. 32 (5) was a policy which provided no fault benefits. The Court of Appeal adopted a purposive approach to the legislation, and as a result of that approach determined that for actions brought in British Columbia an out-of-province insurer is bound to provide the same coverage, third party and no fault, as provided by a motor vehicle liability policy issued by ICBC.
13 Counsel seizes upon the words “third party and no fault”, and notes that under-insured motorist protection is not mentioned. With respect, I would not so limit that statement. To do so is inconsistent with taking a purposive approach.
14 In my view, the issue in this case requires a consideration of the case of Park v. Insurance Corporation of British Columbia,  B.C.J. No. 1741, 2002 BCSC 1114, a decision of this court. In Park, the petitioner sought a declaration concerning the obligation of ICBC and an Alberta insurance company to provide her with under-insured motorist protection. The petitioner was a passenger in a car registered and insured in British Columbia. She was a resident of Alberta and held an insurance policy with Royal and Sun Alliance Insurance Co.
15 Humphries J. concluded, at para. 27, that the Alberta insurance company was bound:
…when conducting business in British Columbia, not to set up any defence that might not be set up if the contract were evidenced my a motor vehicle liability insurance policy issued in British Columbia. The definition of “motor vehicle liability policy” in the [Financial Institution Act] regulation is wide; it encompasses the form, the coverages, and the amounts required by law. It is not open to [the Alberta insurance company] to argue that this might mean the type of policy issued by a private insurer under the Insurance Act. This means the type of policy issued by ICBC.
16 This was a considered decision. In my view, it flows inexorably from a line of cases which proceeded it which were reviewed by the learned trial judge.
17 I am satisfied that it is the intent of the legislation, including the regulations, that an out-of-province insurer such as the petitioner is bound by the Financial Institutions Act regulations. As Humphries J. said in Park, such a company cannot set up a defence which would not be available to ICBC on a policy which it issued in this province. The universal compulsory insurance scheme in this province requires, by statute, the provision of under-insured motorist protection.
18 In the result, I cannot say that the arbitrator was wrong. I decline to set aside the arbitrator’s decision. The respondents will have their costs at scale 3.