We have invited Zohar Levy, a lawyer in our insurance
defence practice group, to do a guest blog on a topic we thought
might be relevant to some of you.
In the recent decision in Jevco Insurance Company v.
Malaviya, Morgan J. held that an insurer must continue to
defend its insured even after paying out the policy limits to the
plaintiffs. Characterizing the Standard Automobile Policy as taking
"muddled and contradictory drafting to a rarefied level",
the court held that there is a fundamental ambiguity in the
language of the contract as to whether those defence costs should
be covered. The insurer relied on two earlier decisions –
Boreal Insurance Inc. v. Lafarge Canada Inc., and
Dominion of Canada General Insurance Co. v. Kingsway General
Insurance Co. – for the principle that it made no sense
for a duty to defend to arise when there is no possibility of
The court distinguished both cases on the facts, and its
underlying analysis seemed to be coloured by the fact that neither
decision was in the context of the duties owed by an insurer to a
motor vehicle policyholder. Instead of following those cases, the
court interpreted the Standard Automobile Policy in light of public
policy concerns and the language of the Insurance Act. The
court relied on the language in s. 245(b) of the Act to conclude
that the defence costs of a claim are to be borne by the insurer on
a mandatory basis to avoid the problem of self-represented
litigants in the aftermath of a motor vehicle accident. Even after
policy limits are paid out, the duty to defend continues.
In reaching this conclusion, Morgan J. briefly considered the
possibility that an insurer who has no duty to indemnify may wish
for an earlier settlement of the claim. Counsel was indirectly
cautioned not to allow this "counter-incentive for the
insurer" to override the obligation to provide the best
possible advice to the insured party.
Under B.C.'s former and current Limitation Act, the limitation period for a Plaintiff's claim can be extended on the basis of a Defendant having acknowledged in writing some liability for the cause of action.
Automobile drivers, like fine wine, tend to get better with age. Older drivers can draw on a wealth of experience from their years on the road to assist them when faced by a variety of dangerous conditions.
The insurance industry will be interested in Ledcor Construction Ltd v. Northbridge Indemnity Insurance Co because of principles the Supreme Court of Canada applied to the "faulty workmanship" exclusion in a Builders' Risk policy.
For the first time in BC, a Court has decided that an insured is entitled to special costs, rather than the lower tariff costs, solely because they were successful in a coverage action against their insurer.
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