Introduction
In King v. Aviva Insurance Company of Canada, 2022 BCSC 973, the BC Supreme Court (the “Court”) held that Ms. Paula King (the “Insured”) could not opt out of the mandatory dispute resolution process (“DRP”) she had commenced pursuant to section 12 of the Insurance Act, RSBC 2012, c 1 (the “Act”). Specifically, the Court dismissed the Insured’s application to terminate the DRP and transfer the proceeding to the Court.
Background facts
In April 2019, the Insured experienced a significant water leak in her apartment which caused a considerable amount of damage. The Insured held a homeowners policy (the “Homeowner Policy”) with Square One Insurance Services Inc. (“Square One”), and the strata held a policy (the “Strata Policy”) with Aviva Insurance Company of Canada, Allianz Global Corporate & Specialty, Temple Insurance Company and Lloyd’s Underwriters (collectively, the “Strata Insurers”). The Insured submitted claims under both the Homeowner Policy and Strata Policy. Square One and the Strata Insurers (collectively, the “Insurers”) each retained their own adjusters.
Disagreement arose between the Insured, Square One and the Strata Insurers with respect to the value of the damage caused by the water leak, as well as the nature and extent of the repairs required. As a result, the apartment repairs were significantly delayed, which forced the Insured to live amongst the damage for many months. This caused the Insured to initiate a DRP with respect to the Homeowner Policy and a separate DRP with respect to the Strata Policy pursuant to s. 12 the Act. The Insurers entered into a cooperation agreement in November 2020, wherein they agreed to cooperate with one another throughout the appraisal process.
On April 6, 2021, the Insured filed a Notice of Civil Claim in the Court, commencing a separate action (the “BCSC Action”) while the DPR process was ongoing. She also informed the Insurers that she terminated her relationship with her lawyer and would be representing herself. After the Insurers provided a joint submission brief in the DRPs, the Insured brought the application at issue, advising the Insurers that she no longer wished to participate in the DRP and that all the issues should be dealt with in the Court.
Parties’ positions
The Insured submitted that there were numerous issues and disputes relating to her DRP claims that could not be addressed through the DRPs. She also noted that most delays occurred because of disputes between Square One and the Strata Insurers, as they were unable to agree on the scope of the loss, which caused her to question the appropriateness and intention of the cooperation agreement. She submitted that the Insurers were attempting to use the cooperation agreement to reduce the scope and cost of repairs of the apartment to the Insured’s detriment.
The Insurers collectively took the position that the DRP should be permitted to continue and that they ought not to be terminated and then transferred to the BC Supreme Court. Further, they took the position that the cooperation agreement was intended to avoid duplication and inconsistencies within the appraisal process.
Analysis
The sole issue before the Court was whether the Insured had established that the DRPs ought to be terminated and transferred to the Court. While the Court was sympathetic to the Insurer’s situation, Justice Skolrood held that the matters at issue were statutorily required to be resolved through a DRP pursuant to the Act. He emphasized that the DRP is a mandatory process that was initially triggered by the Insured, and that the issues within the jurisdiction of the DRP were not intertwined enough with the issues raised in the BCSC Action to warrant terminating the DRP, i.e., matters of fact and law that were outside an adjudicator’s jurisdiction to determine.
Furthermore, Justice Skolrood held that the BCSC Action was in the early stages and it would have gone against the principles of proportionality, efficiency and fairness to require the parties to engage in a lengthy and expensive court process. The issue of the Insured no longer having legal representation was also raised. However, the Court held that Insured had enough knowledge of the claim and the underlying issues to make submissions herself.
The Court also found no issue with the cooperation agreement made between the Insurers. The Court held that the cooperation agreement would increase efficiency because the Insured would not have to deal with the issue of apportionment between the parties.
The Court made a point to articulate that the Insured was still permitted to bring this matter and other claims before the Court. Specifically, she still had the opportunity to seek judicial review of the decision on a standard of review of patent unreasonableness.
Takeaway
Once a party triggers the DRP under s. 12 of the Act, said party must proceed under this dispute resolution mechanism unless the matter is beyond an Umpire’s jurisdiction. Underwriters ought to be mindful of the fact that a court is likely to intervene only in instances where the matters at issue are outside the scope of the statutory conditions within the Act. Justice Skolrood was critical of the DRP and questioned whether it met the objective of providing a timely and cost effective dispute resolution mechanism. Therefore, Underwriters who wish to use the DRP should ensure that they have implemented procedures which address the Court’s concerns.
