When backseat driving goes too far: no insurance coverage when a passenger intentionally interferes with the driver

The Supreme Court of British Columbia recently considered the question of whether or not a passenger, when intentionally interfering with the driver, could be considered a user or operator of the vehicle such that their actions brought them under the driver’s third party liability insurance. In Felix v Insurance Corporation of British Columbia, 2014 BCSC 166, the answer was “no”.

In Felix, the Plaintiff driver lost control of the vehicle when her intoxicated boyfriend, seated in the passenger’s seat, grabbed the steering wheel, resulting in an accident. The Plaintiff successfully sued the estate of the passenger. ICBC was put on notice, but declined to participate. The Estate could not pay the judgment amount. The Plaintiff therefore sought to have the judgment amount paid by ICBC pursuant to s. 21 of the Insurance (Motor Vehicle) Act, RSBC 1996 c 231 (the “Act”).  Section 21 of the Act reads as follows:

21 (1)  Even though he or she does not have a contractual relationship with the corporation, a person having a claim against an insured for which indemnity is provided by an owner’s certificate under a plan or part of a plan is entitled, on recovering judgment against the insured or settlement with the corporation, to have the insurance money payable under a plan or part of a applied toward his or her judgment or the settlement and toward any other judgments or claims against the insured covered by the indemnity; and he or she may, if a settlement is not made, on behalf of himself or herself and all persons having judgments or claims, maintain an action against the corporation to have the insurance money so applied.

At the time of the accident, the Act had been amended by the Insurance (Motor Vehicle) Amendment Act, SBC 2003 c 94, and renamed the Insurance (Vehicle) Act, but it had yet to come into force. The transition provisions of the amending legislation indicated that the Act and the Revised Regulation (1984) thereto, BC Reg 447/83, (“Revised Regulation”) was to continue to apply to insurance policies in place before the amendments came into force. The scope of third party liability insurance provided under an owner’s certificate is addressed in Part 6 of the Revised Regulation as follows:

Interpretation

63 In this Part, “insured” means

(a) a person named as an owner in an owner’s certificate,

(b) an individual who, with the consent of the owner or while a member of the owner’s household, uses or operates the vehicle described in the owner’s certificate,

Indemnity

64 Subject to section 67, the corporation shall indemnify an insured for liability imposed on the insured by law for injury or death of another or loss or damage to property of another that

(a) arises out of the use or operation by the insured of a vehicle described in an owner’s certificate …

Extension of indemnity to passenger

66 Indemnity under this Part is extended to a passenger in a vehicle described in an owner’s certificate who, by operating any part of the vehicle while the vehicle is being operated by an insured, causes

(a) injury or death to a person who is not an occupant of the vehicle …

Mr. Justice Saunders considered these provisions in the context of the Revised Regulation as a whole. He determined that considering ss. 63 and 64 in isolation may lead to the conclusion that the passenger was making “use” of the vehicle. However, he noted that this interpretation would render s. 66, which extends indemnity to passengers who harm people outside of the vehicle, redundant:

[56]         Looking at the Revised Regulation as a whole, I am – unfortunately – led to conclude that the foregoing interpretation of ss. 63 and 64 is incompatible with s. 66. The latter extends indemnity explicitly to a passenger who causes injury or death to a person not occupying the vehicle, by operating any part of the vehicle while the vehicle is being operated by an insured. On its face, this section would appear to be intended to encompass situations such as a passenger opening a door and thereby interfering with a passing cyclist. If, however, s. 64 were interpreted so that any passenger is deemed to be using the vehicle, s. 66 would be redundant; all passengers would be covered for liability arising out of their use, and there would be no need for the Revised Regulation to include a separate coverage extension.

Accordingly, after a consideration of statutory interpretation guidelines, Mr. Justice Saunders concluded that the passenger could not have been “engaged in use of the vehicle” within the meaning of s. 64 and the Plaintiff’s claim for indemnity therefore failed.

Mr. Justice Saunders specifically addressed the potential policy implications of his decision on designated driver programs. However, he noted the legislature is the appropriate forum to address any limitations in the Act and the Revised Regulation.

Recent media coverage indicates that the Attorney General of British Columbia has expressed concern about a potential chilling effect on the use of designated driver programs and is currently reviewing the decision.