The recent BC Supreme Court decision
Arsenovski v. Bodin, 2016 BCSC 359, illustrates, by way of
an extreme example, the risk insurers run by overzealous denial of
an insured's claim.
The case arose from the insurer's decision to deny the
Plaintiff's benefits claim after a motor vehicle accident on
the basis of an alleged fraud. The insurer went so far as to
recommend the Crown pursue criminal charges against the
In response, the Plaintiff brought an action against the insurer
and its agents for malicious prosecution and negligent
investigation. The Honourable Madam Justice Griffin found the
insurer and its agents jointly and severally liable to the
Plaintiff for the tort of malicious prosecution and awarded $30,000
for emotional suffering and made the extraordinary award of
$350,000 in punitive damages.
The claim arose when the Arsenovskis, recent immigrants to
Canada, were walking home from an English class on a rainy evening
and a left-turning vehicle struck Mr. Arsenovski. It was unclear
whether Ms. Arsenovski was struck by the vehicle, but she also fell
to the ground sustaining bruises. Both were taken to the
A week later, the Arsenovskis reported the accident to their
insurer. Ms. Arsenovski did not advance a claim for bodily injury,
as her injuries were mild. She sought only benefits to pay for her
medical treatment. The insurer's representatives keyed in on a
"false statement" Ms. Arsenovski made that appeared in
the hospital records from the night of the accident. The
hospital records suggested Ms. Arsenovski was unable to recall, or
adequately explain, how she ended up on the ground after her
husband was struck.
The insurer refused to pay for Ms. Arsenovski's treatment,
taking the position that she had made a "willfully false
statement". It maintained this position despite the fact that
the ambulance record, the hospital records, the records kept by Ms.
Arsenovski's physician, and eyewitness accounts each provided
at least some support for her version of events. Justice Griffin
concluded that the only alternatives to Ms. Arsenovski's
account of the accident were "rather absurd",
"It is extremely unlikely that after only a few months in
Canada, Mrs. Arsenovski was so quick-thinking and devious and
knowledgeable about ICBC claims, that after her husband was hit by
the car she threw herself to the ground in order to create
injuries, all with the intention of advancing a fraudulent claim
A more plausible explanation for the unsatisfactory hospital
record was simple miscommunication. Ms. Arsenovski had limited
English skills and had also just been through a traumatic
Six months later, the insurer's investigator submitted a
Report to Crown Counsel, recommending Ms. Arsenovski be charged
with fraud over $5,000 and making a false statement. The Crown
proceeded only with the fraud charge. That charge, untenable as
supported only by the questionable statement made at the hospital,
was stayed by the Crown on the day the criminal trial was set to
In seeking to prove malicious prosecution, Ms. Arsenovski had to
prove four elements, as set out by the Supreme Court of Canada in
Nelles v. Ontario,  2 S.C.R. 170:
the proceedings were initiated by the defendant;
the proceedings were terminated in favour of the
there was an absence of reasonable and probable cause for the
defendant's conduct; and
the defendant was actuated by malice or a primary purpose other
than carrying the law into effect.
The Defendants admitted the first two elements, but denied the
last two elements.
Justice Griffin found the investigator had neither objectively
reasonable grounds for suspicion nor a subjective belief in Ms.
Arsenovski's guilt. The investigator's primary purpose was
the deterrence of a civil claim for damages. As such, the
court made the extremely high punitive damages award against the
This case is a good reminder that insurers must be willing to
reassess their position as evidence develops to ensure at all times
that they are acting reasonably and in good faith to their
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).