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B.C. Appeal Court upholds arbitrator’s definition of ‘roadworthy’


November 10, 2010   by Canadian Underwriter


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A British Columbia arbitrator’s definition of “roadworthy” has withstood a challenge at the B.C. Court of Appeal, in a case in which the province’s auto insurer revoked its accredited status of a collision repair shop.
The Insurance Corporation of B.C. (ICBC) cancelled the status of Hanna Collision Repair as an ICBC accredited collision repair shop and express repair shop in July 2005.
In terminating its contract with Hanna, ICBC noted it could cancel its accreditation without notice if “the accredited collision repair shop fails to complete repairs and related road work required to make a vehicle roadworthy.”
Hanna appealed the contract termination to an arbitrator, noting that ‘roadworthy’ is not defined in the agreement.
The arbitrator observes in his decision that “the evidence is that roadworthy has no industry accepted meaning.” He then considers definitions proffered by both Hanna and ICBC.
Ultimately, the arbitrator found that “roadworthy means the vehicle is capable of normal operations and free of any safety concerns for an indefinite period. This standard excludes cosmetic or trivial concerns from the standard of roadworthiness but includes all safety concerns of significance and any defect which may interfere with a vehicle’s reasonable operation.”
Hanna appealed the arbitrator’s finding to the courts, arguing that the arbitrator had exceeded his powers by ascribing or “reading in” a meaning to an uncertain contractual term.
Mirroring the decision of a chambers judge, the B.C. Court of Appeal rejected Hanna’s argument, finding that the arbitrator had been asked, in fact, to settle the meaning of the term in order to resolve the arbitration.
“The arbitrator was asked to determine what roadworthy meant,” B.C. Court of Appeal Justice Nicole Garson wrote. “Each party advanced evidence and arguments as to what standard of roadworthiness should be used in interpreting the contract.
“Hanna’s real complaint is that the standard it advanced was not the one selected by the arbitrator.”