B.C. court admits as evidence insurance carrier’s letter marked ‘without prejudice’

A British Columbia judge ruled last week against the estate of a woman killed in an auto accident, which is being sued by a man injured in the same collision.

In the case of Alasdair Robert Coombs v. the estate of Lillian Eva LeBlond, Mr. Justice Allan Betton ruled that a letter from the Insurance Corporation of British Columbia offering to pay Coombs $25,000 was admissible, for the purpose of determining “cause of action,” even though it contained the words “without prejudice.”

ICBC was not a party to Coombs’ lawsuit in a Vernon court against the LeBlond estate but a key issue on the case was a letter written by an ICBC adjuster in December 2008, nearly two years after the accident. That letter included a cheque that was not deposited until more than two years after the accident.

Ultimately, Judge Betton ruled against the LeBlond estate, which applied for dismissal of the case. According to court records, the accident, in which Lillian LeBlond’s vehicle allegedly crossed Highway 97 near Vernon into the path of Coombs’ vehicle, occurred Feb. 6, 2007. The fact that Coombs was alleging a connection between his injuries and the accident  “was made known to representatives of ICBC” the following week.

ICBC initially offered to pay Coombs $12,500 and later raised that offer to $25,000, court records indicate. However, according to ICBC’s records, the minimum Coombs was willing to accept, a year after the accident, was $200,000.

“The plaintiff was aware that he had received physical injuries in the collision almost immediately” after the accident, Judge Betton wrote in background information. “He also became aware of changes to his psychological well being, and drew a connection between those changes and the emotional trauma of the accident.”

Last week’s ruling was not on whether the accident caused the symptoms or on the severity of them but rather on whether ICBC’s letter offering a $25,000 payment was admissible for the purpose of determining the “cause of action.”

B.C. law stipulates the relevant limitation period is two years. According to court records, Coombs did not deposit ICBC’s cheque until after March 5, 2009.

The provincial law states: “If, after time has begun to run with respect to a limitation period set by (the limitations act), but before the expiration of the limitation period, a person against whom an action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for the action by a person having the benefit of the confirmation against a person bound by the confirmation.”

The LeBlond estate is claiming that Coombs cannot rely on ICBC’s letter “as evidence of the defendants’ confirmation of the cause of action because the communication was ‘without prejudice,’” according to court records.

In ruling against the LeBlond estate’s application to dismiss Coombs’ case, Judge Betton quoted from a 29-year-old judgment by the B.C. Court of Appeal, in the case of Belanger v. Gilbert, which also involved an auto accident claim in the province. In that case, a claims adjuster for ICBC had made a written offer of payment to a plaintiff in 1981.

“The act of marking a document with the clause ‘without prejudice’ alone is insufficient to determine whether a document is privileged,” Judge Betton wrote in the Coombs case. “Rather, the two conditions stated in Belanger must be present for a ‘without prejudice’ letter to be privileged.”

Those conditions, Betton added, are that there must be a dispute or negotiation between two or more parties and one must offer terms of settlement. But Judge Betton contended that ICBC’s letter of December, 2008 did not contain terms of settlement.

Therefore, Judge Betton concluded, the effect of ICBC’s cheque and claim payment proposal was to confirm the cause of action and to inform Coombs that ICBC viewed the offer as a “reasonable” settlement offer.

“It does not, however, impose any terms for the settlement of the action,” he wrote of ICBC’s December, 2008 letter to Coombs. “It provides only that there be an acknowledgement of the receipt of the monies and that they would be deducted from any future recovery.”

Quoting from the Court of Appeal in the Belanger case, Judge Betton noted there is a rule “which excludes documents marked ‘without prejudice,’ which is adopted to enable parties in a dispute to engage in discussion for the purpose of arriving at terms of peace.

“It seems to us that the judge must be entitled to look at the document to determine whether the document does contain an offer of terms,” the Court of Appeal stated, adding the rule “has no application to a document which, in its nature, may prejudice the person to whom it is addressed.

“It may be that the words ‘without prejudice’ are intended to mean without prejudice to the writer if the offer is rejected,” the Court of Appeal added in the Belanger case, “but, in our opinion, the writer is not entitled to make this reservation in respect of a document which, from its character, may prejudice the person to whom it is addressed if he should reject the offer…”