Insurance Corp. of British Columbia v. Kushneriuk,  B.C.J. No. 281, British Columbia Supreme Court
NS, DP and DK were injured in separate accidents with the Defendant. DP and DK settled their claims for under $1,000,000, while NS was granted judgment over $7,000,000. The insurance policy maintained by the Defendant provided for $1,000,000 in third party liability coverage. Pursuant to section 21 of the Insurance (Motor Vehicle) Act, ICBC paid $1,000,000, the policy limit, into court as discharge of its obligation to the Defendants.
NS, DP and DK all had UMP protection under their own standard policies with ICBC. However, pursuant to the Regulations, the amounts which must be paid out under a UMP policy are reduced by other income received by the claimant, such as Canada Pension Plan benefits. This had the result that DP and DK could look to their UMP policy for satisfaction of any shortfall between the amount in court and their settlement claims. NS could not. DP and DK sought a pro-rata share of the funds in court while NS sought the entire amount.
The court refused to apply the equitable doctrine of marshalling to the benefit of NS on the facts of this case. Holding that where two funds available exist by virtue of different debts, the doctrine does not apply. With respect to the legal arguments, the court held that the Act gave no guidance as to how the court should pay out funds pursuant to section 21. Other Acts were compared, which require the court to distribute the proceeds proportionally or rateably. The court interpreted the absence of such direction in the Act to afford judicial discretion. Finally, the court held that the only prejudice suffered would be by ICBC; however, ICBC’s claim to the funds paid into court was extinguished by section 21(13), and therefore the only financial interests taken into consideration by the court were those of individual parties, and there was no distinction between judgment holders and claimants under a settlement. The entirety of the $1,000,000 and interest was paid out to NS.
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