Bad Faith Litigation in ICBC
Claims
Alison Murray, Q.C.
Murray Jamieson
Recent Developments

Branco v. American Home Assurance, 2013
SKQB 98:
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$450,000 in aggravated damages
$4.5 million in punitive damages
Fernandes v. Penncorp, 2013 ONSC 1637:
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$100,000 in aggravated damages
$200,000 in punitive damages
McDonald v. ICBC, 2012 BCSC 283

$75,000 in punitive damages for wrongfully
breaching insured on the basis that she was
impaired.

The overall handling and evaluation of the
claim was overwhelmingly inadequate and
ICBC lacked objectivity.
McDonald v. ICBC, principles
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Do not need an iron-clad case to deny coverage.
Not expected to have skills of a detective.
Not expected to assess information using the
standards of a judge.
Must bring reasonable diligence, fairness, and
appropriate level of skill, thoroughness and
objectivity to the investigation and the assessment
of the collected information.
Bad faith in the denial of first party
coverage

Insurance Corp. of British Columbia v.
Hosseini, 2006 BCCA 4.
Insurer’s obligation of good faith in
defending a third party claim:

Fredrikson v. Insurance Corp. of British
Columbia, (1990) 44 B.C.L.R. (2d) 303.

Shea v. Manitoba Public Insurance Corp.,
(1991) 55 B.C.L.R. (2d) 15.
Guidelines for good faith handling of a
claim:
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1. Promptness.
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2. balanced and reasonable investigation.
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3. fair and proper assessment.
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4. equal consideration to the insured’s interests.
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5 open communication.
Guidelines for good faith handling of a
claim, cont.

A want of reasonable care suggests the
absence of good faith.

What constitutes bad faith depends on the
circumstances of each case.

There is a possibility for punitive damages
even without malicious intent.
The duty of good faith is ongoing

Continues right through to trial:

Khazzaka v. CGU Insurance Company of
Canada, (2002) 66 OR (3d) 390 (ONCA).
Conduct which can attract bad faith
damages:
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Terminating or denying benefits without
advising the insured (e.g., Adams v.
Confederation Life Insurance, [1994] 6
W.W.R. 662).
Deliberately misleading the insured (e.g.,
Ferguson v. National Life Assurance
Company of Canada, [1996] O.J. No. 1329
(Gen Div.) affirmed [1997] O.J. No. 3256).
Conduct which can attract bad faith
damages, cont.
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Erroneously describing legal obligations (e.g., Eddie
v. Unum Life Insurance Company of Canada, (1989)
52 B.C.L.R. (3d) 69, affirmed, 1999 BCCA 507;
Clarfield v. Crown Life Insurance Co., (2000) 50
O.R. (3d) 696).
Only viewing the insured with suspicion and any
self-reporting as suspicious (e.g., Asselstine v.
Manufacturers Life Insurance Co., 2005 BCCA 292).
Wilfully misinterpreting, or recklessly not caring to
understand critical medical data necessary for the
purpose of adjudicating the insured’s claim (e.g.,
Clarfield, supra).
Conduct which can attract bad faith
damages, cont.
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Relying on inadequate information to deny
payment (e.g., Adams, supra; Clarfield,
supra).
Dismissing reports favourable for the insured
(e.g., Asselstine, supra; Adams, supra).
Sending the insured to an expert lacking in
competency and objectivity who is know to
provide services to the insurance industry
(e.g., Ferguson, supra).
Conduct which can attract bad faith
damages, cont.
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Failing to provide an expert with all of the
available relevant information (e.g.,
Ferguson, supra; Asselstine, supra).
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Terminating or denying benefits after receipt
of insurance medical, without sharing the
report with the insured and allowing him an
opportunity to have his doctors comment on it
(e.g., Ferguson, supra).
Pleading Punitive Damages

Whiten v. Pilot, 2002 SCC 18 at paras. 86-87:

A claim for punitive damages must be specifically
pled with some particularity.
What if claim for disability benefits fails?

Andreychuk v. RBC Life Insurance Co., 2008
BCSC 286, appeal dismissed, 2008
BCCA492

Any claim for extra contractual damages must fail
if the action for disability benefits is dismissed
Wilson v. Saskatchewan Government Insurance,
2012 SKCA 106
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Damages awarded for the threat of denial of
no fault benefits.
Costs when a punitive damage claim fails
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Special costs may be appropriate where unfounded
allegations amount to fraud or require the defence of
reputation (Chaplin v. Sun Life Assurance Company,
2004 BCSC 116, paras. 26 and 62; affirmed 2005
BCCA 397).
Special costs awarded for serious unfounded
allegations of bad faith and misconduct in the
context of Part 7 claim (Kalesnikoff v. ICBC, 2006
BCSC 1068).
Punitive damages against insured

Andrusiw v. Aetna Life Insurance Co. of
Canada, (2001) 289 A.R. 1:
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An insured has an obligation to put forward his
claims honestly and in good faith.
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A breach of that obligation constitutes a separate
and actionable wrong for which compensation is
paid.
Bifurcation

Shaffner v. Insurance Corporation of British
Columbia, 2012 BCSC 1263:
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Bad faith claims severed from the claim seeking
entitlement to coverage.
Stay of all discovery and production of documents
relating to the bad faith claim.
Proper defence of good faith would potentially
require waiver of solicitor client privilege.
Aggravated damages and ICBC

Godara v. ICBC, 2008 BCSC 183.
Obiter that:

the nature of Part 7 benefits is more akin to social
welfare benefits.

Not a contractual benefit or a peace of mind
contract.
Aggravated damage claims dismissed

Nicholas v. The Metropolitan Life Insurance
Co. of Canada, 2003 BCSC 506.

Bassett v. Paul Revere Life Insurance Co.,
2001 BCSC 988.

Milner v. Manufacturers Life Insurance
Company, 2005 BCSC 1661.