An ICBC Class Action for Over Charging and Under Paying and Liability for a Car Dealership

When it comes to understanding the intricate legalities surrounding car accidents and insurance monopolies, there's no better guide than Michael Mulligan from Mulligan Defence Lawyers. In a revealing podcast episode, Mulligan elucidates murky financial arrangements at the Insurance Corporation of British Columbia (ICBC), a Crown corporation with a grip on British Columbia's vehicle insurance.

The episode delves into a class action certification that shines a light on ICBC's financial transactions. Allegedly, ICBC made payments to the BC government for medical expenses that were not mandated, essentially imposing an unsanctioned tax on the ratepayers. This raises profound questions about the government's use of Crown corporations for financial cosmetics and the impact these actions have on individuals involved in car accidents.

Mulligan further explores the repercussions of these payments, including the potential inflation of insurance rates and the deprivation of benefits for at-fault drivers. The discussion extends to the monopoly ICBC holds and its complex involvement in the medical funding realm. Listeners gain insights into the implications of insurance monopolies, like ICBC, and the significant effects they have on both legal responsibility and the overall financial landscape for drivers in British Columbia.

Shifting the focus to vehicle ownership and liability, the episode examines a perplexing case from Central Saanich that links back to a Victoria car dealership. Mulligan breaks down the legal entanglements resulting from a car dealership's aggressive sales tactics that led to a complicated court battle. This case study highlights the critical importance of understanding the nuanced legal definitions of ownership and permission, particularly in light of the evolving insurance systems, such as the move to a no-fault system.

The podcast provides a valuable lesson in the importance of due diligence when lending vehicles, as well as the increased responsibility that accompanies it. This knowledge is increasingly relevant in the context of the changing landscape of car accident liability and insurance rates.

Through the course of the podcast, listeners are equipped with the tools to navigate the precarious world of car accident liability and insurance. Mulligan's expertise offers a compelling examination of the hidden truths behind government payments, legal responsibilities on the road, and the influence of insurance monopolies.

By the end of the episode, you are more informed about the dynamics of insurance, ownership, and responsibility. With Mulligan's legal acumen, the complexities of ICBC's financial entanglements and the subtleties of car accident liability are decoded, offering clarity and a wealth of knowledge to anyone looking to understand these significant issues.

Follow this link for links to the cases discussed and a transcript of the show. 

Transcript

Adam Stirling: 0:00

It's time for Legally Speaking with our regular guest Barrister and Solicitor, with Mulligan Defense Lawyers, michael Mulligan. Morning, michael, how we doing. Hey, good morning, I'm doing great. Always good to be here. On the agenda. I'm reading Court of Appeals certifies a class action against ICBC for making payments to the BC government for medical expenses that it wasn't required to allow. There's a lot here. I didn't think we could sue ICBC because it was no fault. How does all this work now?

Michael Mulligan: 0:27

There's a lot going on here. One of the big issues that kind of overrides this particular case is a sort of an issue about Crown corporations and how they're used by governments, provincial and federal. One of the things that goes on there is that it is incredibly tempting for a government to dip into money that might be available in a Crown corporation. We've seen that in the past with things like the government extracting money from entities like ICBC or BC Hydro, requiring them to pay money to the government. By doing so, the government can try to appear more financially responsible. They say look, we don't have a deficit. This happens to be a great big loan taken out by BC Hydro. That's just some problem at the ferry company, whatever that is over there we balance our budget. It's great. That is extremely tempting. It's a honey jar that the provincial government has of all stripes dipped into over the years. Often there are implications of that. We've seen that, for example, with ICBC over the years.

Michael Mulligan: 1:39

This particular piece of class action is a really interesting one because it has an element of the provincial government allegedly dipping into the sweet honey of the money that ICBC has. The class action is premised on the basis that ICBC was gratuitously paying money to the provincial government and has been doing so apparently allegedly for a very long time decades to pay for medical expenses relating to car accidents and injuries when there was no legal obligation to do that. It's gratuitously paying the money to the province, and one of the arguments being made in this case is that that amounts to a tax which is imposed on people who are paying ICBC insurance fees. Because you've really got the argument is look, you've got the insurance corporation of British Columbia, which is a monopoly by legislation. You must buy your car insurance from it, and the argument is it's charging higher rates in order to subsidize the medical system by paying it when it performs medical services when there's no obligation to do that. And so the argument is on behalf of people paying ICBC insurance, they're effectively being taxed by the provincial government when that tax hasn't been authorized by the legislature. And so the argument is that some constitutional tax imposed on ICBC ratepayers Interesting the other group being sought here and they're trying to go at it from both sides is that people who are very seriously injured and this would be an issue prior to no fault.

Michael Mulligan: 3:32

I mean, we're now in the land where we don't care really who caused the accident, right. These things just happen. But prior to that, when we did care about who was causing the accident, even if you were the careless person who rear ended somebody and injured them, we would still help the rear ender, right, the person who caused it, and they would get things called part seven benefits, and parts of the benefits would pay for things like medical expenses or equipment or lost wages or things like that, and so we would pay them, even for the reckless driver. When you hear about the language the provincial government uses to describe no fault as enhanced care, really what's been enhanced is the care and money provided to the person causing the accident at the expense of the person who gets piled into. Right Now, we don't have to figure out who caused the accident, we just pay everyone the same, and so the argument on behalf of the people who were causing car caused car accidents but still we're getting benefits from ICBC for serious injuries in the past is that the amount that they would get had a limit, and ICBC was apparently deducting these gratuitous payments made to the provincial government from the amount of money they would give out to those people to pay for things they needed as a result of their car accident and there was no authority to do that and they shouldn't have been doing it. And so that's the other group that they sought to be certified here because it had an impact on them. On that one I see BC argued that oh yes, that may have happened, but they described it as something that occurred arose from by error from time to time. That didn't. That didn't get much traction, and both at the trial level now the court of appeal, they said look, this is quite arguably a systemic thing that they were doing, paying money to the province to cover the health expenses and then improperly reducing how much they would give to the people who were hurt in the car accidents. And so that was certified by the trial judge and has been certified by the court of appeal.

Michael Mulligan: 5:38

The issue with respect to everyone else everyone paying too much for their insurance because ICBC has been gratuitously turning money over to the provincial government to pay for medical expenses the provincial government and ICBC were the defendants to this, and so that's why they argued that the ICBC was not a government entity and therefore this wasn't some kind of an unconstitutional tax. This was just some kind of a fee that this thing that just happens to exist out. There is charging, and that didn't get much traction in the court of appeal. The court of appeal concluded that the fact that the government gives ICBC a government granted monopoly over car insurance and the only entirety of ICBC is at least very arguably makes ICBC a government entity. This isn't just some private insurance company that happens to have gratuitously paid money to the provincial government right and some windfall, and so that didn't get any traction. And so the court of appeal has now certified both of those classes for the class action, the class of people who are the injured, people who said we were denied the amount of benefits we should have received because they deducted money that they gave gratuitously to the provincial government from how much we could get. Those people have been certified.

Michael Mulligan: 7:04

And then the other group which the court of appeal has certified is everyone else who is paying ICBC fees on the basis that the basis of the argument that this is a amounts to a tax not approved by the legislature, as would be required for a tax. And they didn't have much time for the argument that this is just some non-government entity that might have done this. And how is this? The province's responsibility, which to my mind, does seem like a pretty compelling argument. When you give a legislative monopoly to an insurance company and you own that entire insurance company and you control it in every possible way, to make an argument that that's not a government entity, that's just some sort of independent business that might be applying a fee or something, just doesn't seem to be a very compelling argument. And so this will now be allowed to proceed and we will eventually get a determination as to whether this is.

Michael Mulligan: 8:04

This does amount to a unconstitutional tax imposed by ICBC, the other interesting argument. I should say that doesn't appear to have been the focus here, because I think the focus of the litigation is saying look, icbc is just the government, right, it's just a part of government, it's not an independent thing that just happens to have handed money over. And that's, I think, sort of central to the argument that this is an unconstitutional, unapproved tax. When you just have the entity that you own and control completely and grant a monopoly, pay you money that it wasn't required to pay you. That's really the heart of it. But there would be an alternative view of it that if this isn't a government entity, if it is just some free-floating entity out there that just gratuitously pays money to the government. Good news for the government. There will be another issue about if they are required to do that, like whether that would amount to an effort at indirect taxation, which isn't something a provincial government is permitted to do.

Michael Mulligan: 9:04

In the Constitution Act we permit the federal government to collect taxes by essentially any means, but provincial governments can only collect taxes that are direct taxation, that is to say taxes that are paid for by the person who is required to pay them, which you might then think to yourself well, what about the provincial sales tax? How does that work? Because that's a private company that's charging you money and passing it along to the government. Doesn't that seem kind of indirect? Yeah, that would be great. The legal gymnastics that are required to make that even lawful are that businesses are deemed to be an agent for the provincial government in collecting the provincial sales tax and to submit that in a legal way. What the province does.

Michael Mulligan: 9:54

When a business is required to charge UPST and pass it along to the government, the government says well, that's not an indirect tax on you by taxing the business, that's just the business doing, acting as our agent to collect the taxes from you, and the province then pays a really tiny amount of commission to private businesses that are required to collect PST. It's like a small percentage, it amounts to a very tiny amount. But then the argument is hey, this isn't just, this isn't an indirect tax, this isn't a tax on one person paid by another, because we can't do that. This is just a tax where that businesses are happy agent, collecting PST for us directly, and, look, we've been paying them a tiny commission to do so, and so that's the basis upon which a provincial sales tax remains inside constitutional bounds. And so that's the other interesting thing.

Michael Mulligan: 10:48

If the government's argument here is that ICBC is just a kind of a free floating non-government entity out there at arm's length, then what's going on here is you've got this free floating entity collecting money from ratepayers and passing that along to the government in a gratuitous way, and so there may be a head scratcher there about whether that amounts to an indirect form of taxation, but the central argument here is no, it's not, that this is really just an organ of the government, and they're having their own monopoly organ of the government collect money from you and pass it along to the government to use for whatever purposes, and that's not authorized by law. So very interesting case and it will really be one to keep an eye on because it could have very big implications, because this has been going on allegedly for decades.

Adam Stirling: 11:41

Yeah, wow, really interesting Legally speaking with Michael Mulligan from Mulligan Defense Lawyers. We'll continue right after this on CFAQs. Back to legally speaking here on CFAQs 1070 with Michael Mulligan from Mulligan Defense Lawyers. Up next, a Victoria Cardiola ship's liability, it says here, upheld on appeal for an accident in a car it lent to a potential purchaser, despite a quote bill of sale created to show the police If the potential purchaser was stopped. What is happening here?

Michael Mulligan: 12:12

Nothing good, all right. The case is a tragic one and it is local. It's from Central Saanich and there were two women who sisters, who wrote for a walk back in 2018. And without warning, a Jeep hit both of them, killing one of them Very, very seriously, injuring the other sister, who survived, but life changing, catastrophic injuries.

Michael Mulligan: 12:41

And the issue here became liability for the car lot that either, depending whose side of it you were on, was the owner or not of the vehicle. And the reason that's important is that the insurance motor vehicle act at the time of section 86, can make the owner of a vehicle libel for accidents damage caused by it when they expressly or by implication permit somebody else to use it. And the idea of that section is you want people to be responsible when they're letting other people use their car. Right, if you know your you know uncle is a maniac driver or drunk or something, you say, yeah, go ahead and take my car and it crashes into something. The idea would be to make you responsible for that. Well, once again, I guess we're now in the land of no fault, so I'm not quite sure where that lands now.

Michael Mulligan: 13:40

But that was the concept at the time. And so the status of this vehicle was a really interesting one, and it provided an insight into how this car dealership operated, which apparently wasn't unique to this car dealership. And the way it worked is somebody would walk on to the lot sales person would go and greet them, ask them some questions about how much they wanted to spend and how much money they had, and then they would essentially try to sort of get the person to sort of select a vehicle and at all costs try to prevent them from leaving without that car, even if, for example, they weren't able to sort out financing for it. And so that was what happened here. This woman attended this car dealership and expressed an interest in this Jeep, but it was unclear whether she was going to be able to qualify to finance it on terms she could afford. But in order to try to keep the sale process going, the dealership would try to make sure that the person left with a thing and will try to get that financing worked out. And so what the dealership did is that, rather than using dealer plates I guess they didn't have enough of them or didn't want to use them they tried to make use of a section or provisions that allow in some limited circumstances they should cause some limited circumstances read all of them to transfer plates to a new vehicle you've purchased from your existing car. For 10 days. In some limited circumstances you can do that, and so the dealership was wanting to use that loophole to allow this woman to just don't let her leave without the car if we wanted to buy this Jeep. And so they told her to move your plates over to the Jeep and then said well, we'll fill out this bill of sale. And the idea there was that, if you could, one of the requirements to transfer your plates is you must have bought the new vehicle. You can't just put your plates on anyone else's car and drive it around. There'd be chaos. And so they made up this thing called a bill of sale, and the idea was well, just keep that with you, and if the police pull you over and ask you about these plates what they're doing on this car, your response is well, I bought the car. Look, here's my bill of sale. That was the concept, but it was very unclear whether this person would ever actually be able to purchase the Jeep. They were working on it, but they hadn't come about.

Michael Mulligan: 15:56

Then what happened is the physical Jeep was at this woman's house. I think her husband was there. Husband fell asleep and, unbeknownst to them, the driver, who was impaired, took the car, drove and caused this horrific accident, resulting in some. The financial ward, which wasn't even an issue, was some $4 million, again back at $4.3 million, which is catastrophic injuries for the woman who survived. And so then the issue became okay, well, who's potentially responsible to pay for that? And, not surprisingly, the person who irresponsibly drove, fell asleep and crashed into them didn't have $4.3 million. And so the argument was well, the car dealership is still the owner of it. They can be the person who's responsible under that section of the act. And that's what the trial judge found and that's what was being appealed to the court of appeal. The dealership was saying no, no, no, this was actually sold to this person, it wasn't ours, we can't be liable under that section to try to avoid having to pay the $4.3 million. That did not work.

Michael Mulligan: 17:06

The court of appeal had to interpret what that section meant, and it uses language about the owner in possession and then language about permission to have something expressed or implied. And the court of trial judge and the court of appeal analyzed well, what was the legislative purpose of that section? Why do we have that? How should that be interpreted? Should it be interpreted in a very narrow way, on the idea that, well, you don't physically have the car in your possession anymore because the dealership did this maneuver with the license plate swap and the bill of sale to show the police? Is that, should that be included or excluded?

Michael Mulligan: 17:44

And the court of appeal came to the conclusion that the trial judge was right, that the Section was intended to be meaningful because it's intended to encourage people to be careful before they lend their vehicle to someone, and that, I think, is an important idea. And it's another example of what's lost in the land of no fault. Right, you want people to exercise some judgment before they allow somebody else to take their car. Right, you should want to make some inquiry that person's safe or they're sober? What's going on over there, right? Anyways, we've done away with that essentially.

Michael Mulligan: 18:23

But here, because the case predated all of that, the woman was able to sue and there was liability, and the Court of Appeals upheld it. And so that sales process of here's just something we'll call a bill of sale. We'll swap your plates over, take the thing home. Just for heaven's sakes, don't leave this car a lot without a car. It's not a sound practice because, as they discovered here, the implications can be very large, and so the result of this is that the dealership is on the hook for the $4.3 million in damages caused when they're they still owned it. Jeep was driven in that way and crashed into these two women, causing that terrible outcome, and so that's the outcome from the Court of Appeal in terms of liability for lending your vehicle, and don't rely on some. The document wasn't enough to avoid that.

Adam Stirling: 19:22

Interesting and we've got just over three minutes left and up next is is the Court of Appeal changes the test for when a civil case can be dismissed for delay?

Michael Mulligan: 19:32

Yeah, that's right, and so there are a couple of things that are bound up in this. One is that particular outcome and the other is the work. Commenting on is how that happened in court, when the law changes right, and the origin of this thing was a piece of complicated construction litigation involving all of these entities suing over allegedly defective HVAC system in a building. That's the background of it, but the specific application here was by one of the entities being sued saying, well, hey, you haven't gotten on with this in a timely way. The litigation was started in 2019 and nothing had happened all the way up to now, and so they said, hey, this should be dismissed for want of prosecution. This is just taking too long. They haven't done anything, and in civil cases, parties have to make things happen. Right, if you're suing somebody, that's kind of your responsibility Serve them documents and fix a court date. Nobody's there nannying you. You've got to get on with it. You're the one suing, move along. And that wasn't happening here, and so the test has been sort of a.

Michael Mulligan: 20:38

They would look at first of all was there a? Was the delay inordinate? Was it inexcusable? And then the final part was was there prejudice to the defendant. That was a standalone requirement. And here the judge, hearing the initial application, found that well, there's just no prejudice to this corporate defendant. You know there can be prejudice when things like witnesses might forget or you might lose documents or things like that. There can be real reasons why delay can cause prejudice. But here they found, well, there's just no prejudice. You know this is coming. You're a corporate entity yes, you're kind of grumbling about this being slow, but you're not really prejudiced in your ability to defend this claim over the allegedly faulty HVAC system. So your application for dismissal for not getting on with it is self-dismissed.

Michael Mulligan: 21:21

They appealed that to the court of appeal and they said well, there should be a change to the test and when there's some issue about whether the existing law and in this case a law with respect to that test for dismissing something for want of prosecution might be changed, the court of appeal will ask here often sit as a five-member court. There's no legal requirement to do it, that's just a matter of practice. The court of appeal can sit with three members, but often they'll sit a larger panel if they're kind of reconsidering whether an existing legal test should be updated or changed. And so that's what they did here and indeed they found that it should be changed and they found that those first two parts of the test were good and should stay. Was there an inordinate delay and is it an excusable? But that final part, which is a standalone issue of can you show there is prejudice, has been changed.

Michael Mulligan: 22:09

And so now it's a broader issue about whether dismissing it would be in the interest of justice, which can include a concept of prejudice. But it can also be broader than that, because the court of appeal found that there is a general obligation to maintain confidence in the civil justice system, that things move along and there's a public interest in that, even if the party is a prejudice. It's not good for the system generally in confidence in it if people can just drag their feet for years and years and years. There should be authority to dismiss cases even if you can't show you were prejudiced, because that undermines public confidence in the justice system. And so the five-judge panel changed the test. That's the new test.

Michael Mulligan: 22:51

The test got changed but it didn't help the defendant here. They found this was a complicated case, the public confidence wouldn't be undermined, and so it wasn't dismissed. The test changed, they got that much, which will have long-term implications. But this corporate entity applying for the application didn't get to stay in this particular case. So that's the new test. It's broader than whether there's prejudice and it now incorporates a public interest consideration, because we all have an interest in these things being resolved and not just lingering out there for years and years. So that's the new test.

Adam Stirling: 23:24

Michael Mulligan with Mulligan Defense Lawyers, legally speaking. Merry Christmas and all the best to you and yours, michael. We'll talk to you in a week. Thank you so much. Have a great day. All right, talk to you in a week. Michael Mulligan with Mulligan Defense Lawyers. Quick break. We're back right after this.