Vehicle repair mishap engages both home and auto insurance: B.C. Court

The Insurance Corporation of British Columbia is partly responsible for paying legal defence costs of a homeowner being sued by a guest who was injured when the homeowner was repairing his classic car.

On Aug. 9, 2015, Gary Upton was using a sledgehammer to pound a metal plate on a concrete step at Upton’s home. Tyson Sexsmith was visiting Upton’s home. The metal plate was part of the steering mechanism of Upton’s 1955 Chevrolet Belair, which had steering problems.

Upton removed the metal plate from the car and was trying to straighten the metal plate with the sledgehammer. At one point, the plate flew into the air and hit Sexsmith in the face.

Sexsmith, a hockey player, is suing Gary Upton and his wife, Nancy Upton.

In Wawanesa Mutual Insurance Company v. Insurance Corporation of British Columbia, released Apr. 1, 2021 by the Supreme Court of British Columbia, Justice Gary Weatherill ruled that ICBC must pay half of Wawanesa’s costs (back to Apr. 12, 2019) to defend the Uptons.

Wawanesa is the Upton’s home insurer while ICBC is the auto insurer.

Allegations that the Uptons were negligent have not been proven in court. The merits of Sexsmith’s lawsuit against the Uptons was not before Justice Weatherill, who was only ruling on a coverage dispute between Wawanesa and ICBC.

The Uptons initially reported to their home insurer, Wawanesa, that they were being sued. They did not report the claim to ICBC.

But the Uptons’ home insurance with Wawanesa excludes claims arising from the “use or operation” of “any motorized vehicle.” Wawanesa reported the claim in 2019 to ICBC.

As a result of the Apr. 1 ruling, ICBC did not convince the court that ICBC does not have a duty to defend.

The question of whether ICBC would ultimately have to indemnify the Uptons if Sexsmith’s lawsuit were ultimately successful was not before the court.

ICBC tried to argue that Sexsmith’s lawsuit against the Uptons did not arise from use and operation of the Belair owned by Upton and insured by ICBC.

The injury ended Sexsmith’s career as a goalie, Justice Weatherill noted.

Separate published reports indicate that Sexsmith was drafted in 2007 by the San Jose Sharks NHL team. Later on, Sexsmith played for the Vancouver Giants and other teams in the Western Hockey League.

Gary Upton’s ICBC auto policy has a $5-million limit while the couple’s home insurance with Wawanesa has a $1-million limit. A trial in the lawsuit is tentatively scheduled for May 2022.

In April 2019, two years after Sexsmith filed notice that he is suing the Uptons, Wawanesa notified ICBC of the claim. In 2020, Wawanesa asked the B.C. Supreme Court for a declaration that ICBC must provide the Uptons with a legal defence and that Wawanesa does not have a duty to defend.

In the alternate, Wawanesa asked for a declaration that ICBC owes Wawanesa 50% of the legal defence costs – starting from the day in 2019 when Wawanesa first notified ICBC of the claim. This is ultimately the relief that Wawanesa got from the court.

Justice Weatherill ruled against ICBC on several points, including ICBC’s argument that ICBC is prejudiced by the fact that ICBC was not notified of the claim until 2019.

The “true nature” of Sexsmith’s lawsuit is a claim for damages, either in misfeasance at common law or non-feasance under the B.C. Occupiers Liability Act, for a vehicle repair gone wrong, Justice Weatherill ruled in his 34-page ruling.

There is a “direct unbroken chain of causation between the ‘use’ of the Bel Air as a motor vehicle” and the plaintiff’s injuries, wrote Justice Weatherill. So without the Bel Air’s steering issue, there would have been no need to repair the metal plate, which was an integral part of the Bel Air’s steering.

Both the home and auto insurers must share the duty to defend because the auto-related claim and the non-auto related claims are concurrent causes of action, Justice Weatherill ruled.

Sexsmith does make standalone allegations against the Uptons for alleged breaches of their duties under the Occupier’s Liability Act that fall outside the vehicle exclusion clause in the Wawanesa policy and are capable of giving rise to independent liability, he reasoned.

Justice Weatherill cited Derksen v. 539938 Ontario Ltd., released by the Supreme Court of Canada in 2001.

Derksen arose in 1994 when a numbered company operating as Roy’s Electric was laying phone cable near Fort Frances, Ont. A truck owned by Roy’s was later hauling a steel base plate from a sign assembly along a highway. That base plate flew off and through the windshield of an oncoming school bus, killing one child and seriously injuring three others. In the resulting lawsuit, a dispute arose over whether the defendant’s auto or commercial general liability (CGL) policy would apply. The CGL had an exclusion for use and operation of a motor vehicle.

Ultimately the Supreme Court of Canada ruled that both the CGL and auto insurance applies.

In Derksen, the court reasoned that both the worksite cleanup and driving activities were necessary for the accident to occur, Justice Weatherill wrote in 2021 in Wawanesa Mutual Insurance Company v. Insurance Corporation of British Columbia.

If it was not for allegedly failing to keep Sexsmith safe on the Upton property, Sexsmith would not have been in a position to be struck in the face, Justice Weatherill suggested. Conversely, without the auto repair, Sexsmith would not have been injured.

“This is the classic case of concurrent claims. Neither cause of action is dominant.”

Feature image via iStock.com/da-kuk