Court rules against Insurance Corporation of B.C. in fatal truck collision

A British Columbia court last week ruled against the provincial government’s auto insurance provider, which was sued by a commercial client whose accident claim was denied.

In a decision released March 5, Madam Justice Lauri Ann Fenlon ruled that Streeper Contracting Ltd. did not forfeit its right to insurance on a heavy truck involved in a fatal head-on collision seven years ago after giving incorrect route information to the Insurance Corporation of British Columbia.

Streeper’s claim arose from a collision that caused the loss of both its truck and that of the third party, the death of the third-party driver and serious injury to the driver operating Streeper’s truck.

ICBC denied coverage, alleging Streeper president and CEO Bill Streeper made a willful misstatement. ICBC sought, in a counter claim, to recover $172,495 paid to the affected parties.

In its lawsuit, Streeper alleged ICBC breached its contract, and, in the alternate, that ICBC acted in bad faith in investigating the claim. Streeper was claiming $120,000 for its lost truck. Judge Fenlon did not make a ruling on the allegation of bad faith because Streeper said it would only seek punitive damages for bad faith if the court found that coverage was not available. Judge Fenlon did rule that coverage was available to Streeper.

Both Streeper and ICBC agreed that Bill Streeper provided incorrect information to ICBC. Judge Fenlon ruled that although Streeper had been careless, she accepted his assertion the incorrect statement to an adjuster was made in error.

Streeper hauls oil rig equipment between sites in oil and gas fields in northeastern B.C. In December, 2005, one of its trucks, dubbed Unit 50, picked up cargo from a site near Elmworth, Alta, near the B.C. border about 500 km northwest of Edmonton. Unit 50 was supposed to be driven north to Fort Nelson, B.C., spend the night there and then proceed to a site southeast of Fort Nelson, about 100 kilometres south of the Northwest Territories border.

The collision occurred 45 km from the pickup site, but the total distance for the purpose of insurance was the 700 km drive from the loading to unloading sites.

On the day of the accident, Unit 50 had a lower rate of insurance than necessary for the trip, but the company substituted coverage from a truck insured for an unlimited distance, known as Unit 39, which was not in use that day.

B.C. Regulation 447/83 on vehicle insurance specifies that in some  circumstances, coverage on a higher-rate vehicle can be used to cover a lower-rated vehicle provided that the higher-rated vehicle is not in use at the time.

ICBC contended that on the day of the delivery, Streeper had other trucks on the same job operating beyond the 550-km distance for which they were insured. Both Streeper and ICBC agreed there were seven trucks that day rated for distances of up to 550 km – a shorter distance than the planned route — and ICBC argued the substitution rule is workable if one vehicle, but not more, are operating at distances beyond their insured coverage.

“Because the substituted insurance provision is ‘automatic’ and does not require the filling out of a form or notification to ICBC of an intention to use the provision, there would be no way to track which of the many underinsured vehicles the owner actually intended to cover with the higher rated vehicle’s insurance,” according to court records. “Since some trucks were not correctly rated for the distance travelled, ICBC submits that none of the trucks in that group” can be used by Streeper to take advantage of the regulation.

But Judge Fenlon wrote that the requirement to have every vehicle correctly rated according to its use “makes sense if the ‘use’ refers to the general use to which a vehicle is put.”

She added Streeper normally does short hauls of 100 km or less, so the Dec. 28, 2005 job was out of the ordinary.

“There was no evidence to suggest that Streeper’s trucks were not insured in accordance with their general use,” she wrote in  her decision. “This interpretation accords with the objective of managing risk through compulsory insurance:  an owner of a group of vehicles who has them properly insured for the way he uses them day-to-day gets the benefit of the substituted coverage provision, whereas an insured who has been consistently operating outside of the scope of his coverage would not.”

She added Unit 50, the vehicle that was in the accident, was doing what Unit 39, the unused vehicle rated for an unlimited distance, could have done. Had any of the vehicles other than Unit 50 been involved in an accident, they would not have been insured, but that risk would have been borne by Streeper Contracting, not ICBC, Judge Fenlon wrote.

“It will always be a question of fact whether an insured has proved that a proper one-to-one substitution was in place,” she noted in her decision. “In cases such as this one, in which multiple underinsured vehicles were on the road at the same time as the vehicle the insured asserts was the one ‘borrowing’ the higher rated vehicle’s insurance, the owner will have to overcome a natural skepticism about what was really going on.”

Several months after the accident, according to court records, Bill Streeper told an ICBC adjuster that Unit 50 was travelling from Elmworth to the rig up site southeast of Fort Nelson, a distance of 558 kilometres. But according to court records, it turns out the actual planned route was longer. 

The route initially described to the adjuster by Bill Streeper would have had Unit 50 travelling on a decommissioned logging road and a seismic line, dubbed the Klua Lakes Route.

“The independent adjuster hired by ICBC to investigate this claim, James Klassen, was not aware that vehicles of this size could travel on seismic lines,” according to the court decision. “From the outset, having driven past the access point at Klua Lakes Road, (Klassen) assumed that such travel was impossible and that Mr. Streeper was therefore blatantly lying.”

But evidence from other people familiar with the area “was to the contrary,” according to court records.

Judge Fenlon found that Bill Streeper “was careless in giving ICBC an incorrect route, but did not intentionally or willfully mislead the insurer.”

There were several facts that led Judge Fenlon to her conclusion, that Bill Streeper’s contention that his misstatement was due to an error, and not intentional, should be accepted.

“The route Mr. Streeper described was a logical one,” she wrote. “It had the trucks travelling east off of the Alaska Highway in almost a straight line to the rig up site.  The actual route chosen by the truck push and dispatchers went considerably farther north and then east and south to the rig up site.  In other words, the route initially identified by Mr. Streeper was a much more direct route.  Mr. Streeper, knowing that the Klua Lakes Route had been used by Streeper Contracting in the past, assumed that it would be used on this job as well.”

Judge Fenlon also suggested Bill Streeper could not be expected to micro-manage the routes of all jobs.

“At the relevant time, Streeper Contracting had 84 employees, including 30 truck drivers, ten swampers, five mechanics, and four pilot car drivers, as well as office staff,” she wrote. “It is not surprising that Mr. Streeper would not be aware of every detail of every job.”

In addition, Judge Fenlon noted, Bil
l Streeper told Klassen, without prompting, in a second interview four months after the accident that he had made a mistake about the original statement he provided to ICBC.

“Mr. Streeper said he had discovered that error in about mid-April 2006, but did not think it was of particular importance given the unlimited distance rating on the substitute insurance,” she wrote. “His lack of concern about the distance and the corresponding lack of an incentive to lie about it is also apparent from his initial suggestion to Mr. Klassen that Mr. Klassen speak to the drivers on the job rather than to him.  It was Mr. Klassen who insisted on speaking to the ‘man at the top.'”