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Insurance Law - Automobile insurance - Compulsory government schemes - Rights and duties of insurer

Thursday, September 15, 2016 @ 8:00 PM  

Appeal by the defendant insurers, ICBC and CDI, from a finding that the plaintiffs, Ocean Park Ford Sales (Ocean Park), SCK Motor Company (SCK) and Evans, were entitled to coverage. SCK leased a BMW from Ocean Park. The vehicle was insured by ICBC, with Ocean Park listed as lessor and SCK as lessee. CDI provided excess coverage, conditional upon there being valid compulsory insurance through ICBC. Approximately 11 months later, SCK returned the BMW to Ocean Park and arranged a sale and lease-back transaction for a Mercedes. The Mercedes was involved in an accident later that day prior to registration of the transaction. The plaintiffs took the position that the Mercedes was insured by the defendants at the time of the accident on the basis it was a substitute leased vehicle under the policy covering the BMW. A coverage issue arose, as SCK no longer had an interest in the BMW at the time of the accident. The defendants took the position that Ocean Park was the sole owner of the BMW and, as it had not disposed of its interest in the BMW, could not insure the Mercedes as a substitute vehicle. The chambers judge granted the plaintiffs a declaration they were entitled to coverage under both policies on the basis that their conduct was consistent with a transfer of ownership, and thus the substitute vehicle provision in s. 52 of the Insurance (Vehicle) Regulations applied. The defendant insurers appealed.

HELD: Appeal allowed. The chambers judge incorrectly concluded that SCK, as a lessee, could become an owner of a substitute vehicle for the purpose of s. 52 of the Insurance (Vehicle) Regulations by terminating a lease and leasing a new vehicle. Neither a plain reading of the legislative provisions, nor a contextual reading of s. 52, in light of the universal compulsory automobile insurance plan, yielded an interpretation that permitted coverage to be transferred to a newly leased vehicle where the lessor had not disposed of its interest in the vehicle surrendered by the lessee. The word “owner”, as read in the Act and Regulation, did not encompass lessees given the clear distinctions between the two terms throughout the statutory scheme. The Mercedes was not a vehicle acquired by an owner in substitution for the BMW. The plaintiffs were not entitled to coverage pursuant to s. 52 of the Regulations. The judgment below was set aside and the plaintiffs’ claims were dismissed.