September 11, 2025 • 21 mins
What happens when a legal system designed for small claims is used to tackle complex issues involving international companies and constitutional requirements? Barrister and Solicitor Michael Mulligan takes us inside a fascinating recent case that exposes serious flaws in British Columbia's Civil Resolution Tribunal system.
Originally created to efficiently handle disputes under $5,000 and minor strata disagreements, the CRT has been expanded into areas far beyond its capabilities. The recent decision involving Twitter/X reveals a troubling reality: secret decisions and unenforceable orders against international companies, with no authority to address constitutional challenges, and vulnerability to exploitation through AI-generated submissions. The tribunal found itself ordering a Texas company to mail a $100,000 penalty to a Victoria PO box - an exercise in futility that undermines confidence in our justice system.
The conversation then shifts to a cautionary tale about insurance coverage that every homeowner needs to hear. A family lost hundreds of thousands in coverage when their house burned down from a prayer candle fire - not because of any wrongdoing related to the fire, but because they failed to disclose an abandoned marijuana grow operation in a distant outbuilding. This case demonstrates the critical "utmost good faith" principle in insurance: failing to notify your insurer in writing about any material change in risk can void your coverage completely, even when that change has nothing to do with your claim. Consider all the renovations, changes, or activities on your property that might constitute "material changes in risk" - your financial security may depend on proper disclosure.
Follow this link for a transcript of the show and links to the cases discussed.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Adam Stirling (00:00):
It's time for our regular segment, joined as
always by Barrister andSolicitor with Mulligan Defence
Lawyers.
It's Legally Speaking on CFAX1070 with Michael Mulligan.
Good afternoon, Michael.
How are we doing?
Michael Mulligan (00:10):
Hey, good afternoon.
I'm doing great.
Always good to be here.
Adam Stirling (00:12):
Up first.
Multiple problems, it says here, involving the Civil Resolution
Tribunal.
It seems to be somewhat of atheme.
Michael Mulligan (00:21):
Well, first of all, I should say we've talked
about the Civil ResolutionTribunal from time to time, and
not everything about it is bad.
It was originally created forthe purpose of dealing with tiny
small claims disputes, likeamounts less than $5,000, and
dealing with things like minorstrata disputes Think whether
(00:45):
the person should have abarbecue on their patio, that
kind of thing and the conceptbehind it was to create a kind
of a more efficient hearingprocess for small claims, very
small claims, which can often bedone completely online, with
the idea of each party sendingin emails or maybe a telephone
call or video connection ifnecessary to allow an
(01:07):
adjudicator to make a decision.
And insofar as all of that goes, it's a great idea, right?
If somebody doesn't have totake the day off work to go to
court, you probably don't needto have a provincial court judge
spending their day sorting outa $300 dispute over a bicycle or
something, or a barbecue with apatio.
All good, right.
The trouble, however, is thatthe provincial government has
(01:32):
chosen to expand the role of theCivil Resolution Tribunal to
deal with things that aren'treally amenable to that kind of
process, which is appropriatefor those barbecue disputes and
$300 bike repairs and thingslike that, which it does just
fine, and one of the areas thatthey expanded it into that's
(01:53):
inappropriate from a principledperspective is that they have it
deciding disputes involving thegovernment or crown
corporations, like ICBC disputes, and that's not appropriate
because the people who work atthe Civil Resolution Tribunal
are just employees of thegovernment on renewable
contracts, subject to beingfired or not having their
contract renewed, and so that'snot the sort of person that
(02:15):
should be deciding a disputewith ICBC, for example, because
if the government doesn't likewhat some tribunal member is
doing, they may just find well,no renewal of your contract next
year.
So that's not appropriate.
Another area that they've triedto put into the civil resolution
tribunal is the issue ofdealing with intimate images,
(02:37):
and so BC has this thing calledthe Intimate Image Protection
Act, which is intended to allowfor somebody to make an
application to try to get likeintimate naked images themselves
removed from the Internet.
Now I pause here for a momentto say there's also now a
criminal offense of distributingthat kind of material, which
would be dealt with as acriminal matter.
But what the government's doneis that they've allowed this
(03:01):
process whereby a person canapply to the Civil Resolution
Tribunal using like an onlineform to get an order to, for
example, require some picturesto be taken down or to order a
service provider to take downimages.
And that brings us to thisrecent decision that
demonstrates several veryserious problems with what's
(03:23):
going on over at the CivilResolution Tribunal trying to
implement this Intimate ImageProtection Act, and so this
decision that just came outrecently was a decision dealing
with Twitter, or X, andapparently there was an
application made through thisonline form process asking that
some images or image or imagesbe taken down, and apparently
(03:47):
the Civil Resolution Tribunalmade such an order directing X
to take down some image orimages.
Fine, I guess.
Now the response, though, from Xwas well, you have no authority
outside of British Columbia,certainly outside of Canada, and
so their response to this civilresolution tribunal order was
(04:07):
to block anyone in Canada frombeing able to access the images,
but their view was we have noauthority to order what's going
on in other countries, sorry, no.
And that then led to thisdecision where there was an
application made by theapplicant, led to this decision
where there was an applicationmade by the applicant for a
penalty against X for notblocking these things worldwide,
(04:30):
and also a request for moneycompensation.
So that brings us to thisinteresting decision.
It came out on September the4th, so just recently.
Now, the first thing that'snotable about it and this is a
serious principled problem theadjudicator who wrote this
(04:54):
decision confirmed accuratelythat the Civil Resolution
Tribunal Act, which ordinarilyrequires that decisions that the
Civil Resolution Tribunal makebe published online so people
can read them.
It's kind of a you know, thereis no physical place to go and
watch what the Civil ResolutionTribunal is doing.
It's just somebody sitting athome and their bunny slippers
are in an office somewhere, Iguess, right.
Adam Stirling (05:11):
I don't know.
Michael Mulligan (05:11):
There's no courtroom.
Yeah, one would hope they'rewearing bunny slippers.
You want to be comfortable whenyou're making these kind of
calls.
And so the adjudicator pointsout that the legislation has
(05:37):
been amended so that the CivilResolution Tribunal does not
publish these orders abouttaking down or not taking down
images, because the legislationhas been amended to not require
that.
Problematic, because when youhave decisions being made by
adjudicative tribunals or courts, particularly when there's
absolutely no way to watch themor go down there and walk down
to the courthouse and go inthere and watch what's going on
any day, you like right, and soit should be right.
We don't live in China where youget dragged out some secret
(05:57):
courtroom.
It's public, it's open, it'stransparent and that's good.
This isn't.
That's not good and just notacceptable.
From a principled perspective.
It would be entirelyappropriate, as with this
decision, which they did chooseto publish, although they had no
obligation to and they say inthis decision they don't usually
do so.
There's no problem with, forexample, using initials in this
(06:20):
case initials that aren't realinitials so that you're not
drawing attention to the person.
That's completely appropriate.
Courts do that routinely, right, but that doesn't interfere
with your ability to read thedecision or go down there and
watch if you wanted to.
So there are ways to deal withit that don't require complete
secrecy, which is apparently howthis has been operating.
So that's problem, oneidentified by this recent
decision.
(06:40):
We've got secret decisions froman administrative tribunal that
no one can know about.
That's not good.
The next problem which isapparent here is what I alluded
to, which was X's argument waswell, look, they're not in
breach of this order in thesense that from their
perspective and they hadauthority for this dealing with
(07:01):
a Google decision that the CivilResolution Tribunal, in fact
the province of British Columbia, has no authority to order
things to happen in other partsof the world.
It's sort of your authorityruns to the border and that's
about it.
And so their position was look,we've complied with your order
insofar as you have jurisdictionto make such an order.
And I must say, there'sdisputes going on in other parts
(07:26):
, like in Southeast Asia at themoment, with various
authoritarian regimes orderingsocial media companies to take
down material that is criticalof the government, for example,
and the social media company'sresponse has been sorry, no,
we're not doing that, we're nota censorship organ of your
(07:48):
country.
And so the problem on thatfront in terms of using the
Civil Resolution Tribunal, andagain the adjudicator's correct.
The Civil Resolution Tribunal isnot a court of competent
jurisdiction to determineconstitutional disputes.
Just think about it right it'sa system whereby people are
filling out forms and uploadingpictures and stuff like that Not
(08:09):
really a forum to deal withserious constitutional disputes.
So the adjudicator in this case, when X said well, look, you
don't have any authority to dothis.
The provincial governmentdoesn't have any authority to do
this.
They certainly couldn'tdelegate it to you.
We're a Texas company and wehave absolutely nobody in
British Columbia or Canada.
You just can't order us aroundall over the world.
The response from theadjudicator was we have no
(08:33):
authority to decide this, so Ijust must assume it's
constitutional and proceed.
That's not really satisfactory.
No, no, it's not.
Adam Stirling (08:40):
I'm sorry, I just I wasn't ready for that, okay.
Michael Mulligan (08:43):
Yeah, so that's, that's what.
That's the second problem thisidentifies.
The third problem identified bythis decision, unrelated to
these other problems, is thatthe adjudicator points out that
the quote complainant in thiscase, who's identified only by
initials, of course, there'ssecret has was found to have, uh
(09:04):
, provided misleadingsubmissions generated by
artificial intelligence anddoing things like quoting cases
inaccurately or decisions thatdidn't exist, and the
adjudicator found that they wererepeatedly doing that, despite
being warned to stop.
And so the person whoever thisinitials are is sending in
(09:25):
misleading, ai-generatedsubmissions and they're seeking
money from X.
Now think about that.
First of all, that's veryproblematic.
Next, of course, this is someonline process.
It's unclear whether there'seven an actual human being here,
right?
If you were an enterprisingcriminal, you might think great,
(09:46):
we've got this online processto make application for things.
It's also trivial, of course,to create.
Think great, we've got thisonline process to make
application for things.
It's also trivial, of course,to create images, right?
So you just put that together.
Somebody anywhere in the worldcould decide well, what I'm
going to do is post on Xintimate image generated by AI,
and then I'm going to have myalter ego generate some AI
submissions asking the civilresolution tribunal to order
(10:08):
that I get some compensation.
I never have to appear anywhere.
I can't appear anywhere.
It's a form I fill out and,frankly, if you succeed, the
decision isn't even beingpublished anywhere For all we
know.
This is going on all day long.
There's no way of knowing.
It's all happening in secret,and so that's just completely
unacceptable.
(10:29):
That you have a circumstancewhere you've got AI-generated
misleading submissions from aperson who may or may not be a
real person seeking financialcompensation from.
It could be individuals here or, in this case, some company in
some other country.
That's just completely notappropriate and terribly thought
out, and so that should notexist.
(10:49):
There must be some processwhereby you can properly.
I mean, I appreciate why theywant to make this quick and easy
.
Everyone likes what's the threethings?
It's cheap, fast or good.
You know, they've got cheap andfast.
The good part is seriouslylacking.
The final serious problem thatthis case identifies at the end
of it is that the adjudicatoreventually decides that, because
(11:10):
they just have to assume thisis constitutional and they're
assuming this complainant's areal person and not an AI
seeking money to I don't know,buy more CPUs and take over the
world or something they havedecided that they were going to
impose the maximum possiblepunishment per day of $100,000.
And then, kind ofembarrassingly, at the end of it
(11:31):
it says that the ex should mailthe administrative penalty to a
post office box in Victoria,which is you know, come on.
Adam Stirling (11:45):
It's a Texas company.
Michael Mulligan (11:46):
You know you've got this decision from
the Civil Resolution Tribunalsaying please submit payment to
the via PO Box 9220, provincialStation, victoria BC.
Come on, it's unenforceableright.
The law in Texas, as Iunderstand it, they do not
enforce judgments for penaltiesperiod from other jurisdictions,
(12:10):
and you can imagine why that isright.
I mean, just think about thisfrom the perspective of I don't
know.
Let's say, the provincial courtof Zimbabwe has ordered some I
don't know CFACs to take downsome article on their website on
pain of paying $100,000, right,just think about that.
Right?
The response is going to be Idon't think so.
(12:32):
Zimbabwe Provincial CivilResolution Online Tribunal.
Very unlikely that's going tobe responded.
Nor would you want acircumstance where the Civil
Resolution Tribunal from theprovince of Zimbabwe is somehow
ordering that you know a mediaoutlet or online service starts
mailing checks to them, as ifthat's ever going to happen, and
(12:54):
you shouldn't have a processwhich is, you know, meaningless
in terms of making these kindsof orders.
That just undermines generalconfidence in the administration
of the justice system.
So this single decisionidentifies for, to my mind,
fatally problematic elements towhat the provincial government
(13:14):
has created here.
It's taken a process the CivilResolution Tribunal very well
suited for what it wasoriginally intended to do.
And, in the interest of beingcheap, they bolted on these
things to it which it just hasno meaningful capacity to deal
with.
And just like it should not bedealing with disputes where the
(13:35):
government is one party and theadjudicators are not independent
of the government.
That is inappropriate.
It's inappropriate to havesecret decisions.
It's inappropriate to have acircumstance where you may not
be able to identify whethersomebody is a real person.
It's not appropriate to have anentity that can't figure out,
has no authority to decidewhether what it's doing is
constitutional, or to be makingunenforceable orders by yelling
(13:56):
into the ether that you shouldmail a check to a post office
box.
So this one, to my mind, thissingle decision makes clear why
this needs to be completelyrethought, and maybe the answer
is that of course, this is nowcriminal, and perhaps that's a
better way to deal with this,rather than having chatbots
potentially trying to get moneyout of X by applying to the
(14:18):
Civil Resolution Tribunal in anonline form.
By applying to the CivilResolution Tribunal in an online
form.
So that's the latest decisionof the CRT on the Intimate Image
Protection Act in BritishColumbia.
Adam Stirling (14:28):
Michael Mulligan with Mulligan Defence Lawyers,
legally speaking on CFAX.
Continues right after thisLegally speaking continues with
Michael Mulligan from MulliganDefence Lawyers, on CFAX.
1070.
Michael up next it says notadvising an insurance company of
a marijuana grow operation.
Back to 1070.
Michael up.
Next it says not advising aninsurance company of a marijuana
grow operation is a breach ofduty to inform of changes in
risk and not doing so is a validreason for cancelling coverage
(14:50):
and not paying for a house fire.
Seems reasonable, but thecourts are grappling with it.
Michael Mulligan (14:55):
All the same, you're quite right and I must
say.
Here's the interesting thingabout it and why I think this is
a very important decision andthing for people to know about.
So it would seem obvious topeople.
I think if you were running agiant grow operation in your
house, you didn't tell yourinsurance company about it and
the house burned down because ofthe grow operation, I think
most people would probablyintuitively say, yeah, probably
(15:17):
that wasn't covered, right.
Adam Stirling (15:19):
Yeah.
Michael Mulligan (15:19):
But that's not what happened here and it's
important to know just how broadthe circumstances can be that
can result in you effectivelybeing uninsured.
And the starting point for theanalysis it comes from this
proposition that an insurancecontract is what's referred to
sometimes as a contract ofutmost good faith, meaning both
(15:40):
the insurance company and theperson buying the insurance need
to act with good faith towardsthe other.
Ok, and in BC we actually havea provision in the Insurance Act
that has like statutoryconditions that are made part of
policies pursuant to how thatact works.
And one of the requirementsthere and it flows from that
general idea of this being acontract of utmost good faith is
(16:04):
that where there is a materialchange in risk, the insured must
promptly give notice in writingto the insurer or its agent of
the change if it's a materialchange of risk.
Now here's why that matters inthis particular case.
The house fire here hadabsolutely nothing to do with
(16:24):
the marijuana.
The fact pattern was thatthere's a house on a very large
property, big acreage, and thehouse had an outbuilding which
was some 200 meters away fromthe main house.
You could see it, but it's thisold, dilapidated building, and
in the main house a fire startedin one of the kids' rooms.
In fact it was sparked by aprayer cabinet candle.
(16:46):
I guess the prayer cabinetcandle wasn't working very well
on several levels, including thecapacity to catch things on
fire, and the dad smelled smokeand wound up trying to put the
fire out, running back and forthusing a salad bowl, trying to
throw water in it but wasn'table to put it out, and the
whole house burned down,destroying all kinds of things.
(17:07):
Very, very large, tragic fire.
Absolutely nothing to do withthe marijuana in the bar or in
the outbuilding.
But what happened is that theinsurance adjuster showed up and
they said well, what's overthere in that outbuilding?
And the homeowner said well,what's over there in that
outbuilding?
And the homeowners well, whatare you talking about?
Does that have to do withanything?
And indeed there was even adispute about whether the
(17:28):
outbuilding was insured.
The homeowner said he'd askedthat it not be insured to save
money on the policy because itwas falling down and dilapidated
.
But nonetheless the insuranceadjuster went over and looked in
there and found what was not anactive marijuana grow operation
.
In fact it took some picturesand it was clear to the judge
(17:48):
that this was kind of anabandoned marijuana grow
operation in this outbuilding,like a bunch of dead plants,
basically right, no lights on,nothing was actually going on.
It certainly didn't cause thefire in the bedroom bedroom and
it wasn't even active at thetime.
But the judge found that indeedthis had been active since they
(18:09):
had lived in, since theypurchased this property several
years earlier.
I must say the homeowner saidno, we didn't even know about
what was in this old outbuilding.
But judge didn't believe that.
And so the decision was basedon the fact that having a
marijuana grow operation in anoutbuilding on the property is a
material change incircumstances in terms of the
(18:31):
risk, material change to therisk because that could have
caught fire when it wasoperating and because the
homeowner didn't notify theinsurance company in writing
about that.
The net result was it was abreach of the statutory
provision to provide notice inwriting and as a result,
wal-mart Insurance Company waspermitted to cancel the policy
(18:55):
and not pay.
And so that outcome unlike theactual thing catching fire and
spreading to the house I don'tthink many people would
appreciate that.
You may find you are, despitepaying your premiums for years
and years, you may find out thatyou in fact have no insurance.
If something occurred on yourproperty that amounted to a
(19:18):
material change of risk it neednot be a marijuana grow
operation.
It could be all kinds of thingsthat you might do what amounts
to a material change of risk.
It need not be a marijuana growoperation.
It could be all kinds of thingsthat you might do what amounts
to a material change of risk.
And even if you did that andthen stopped doing it, you may
still be in breach of yourpolicy.
Right, and I should say here,interestingly, these people they
actually had in the past at aprior property the judge
(19:40):
referred to this they actuallyhad a permit to grow marijuana.
Oh wow, so it wasn't the factthat that might have been
illegal, it was just that youdidn't tell the insurance
company about it.
And so just think about that,think about all the things that
somebody might do in their homethat might have at some point
created some increased fire risk.
(20:01):
Right, maybe you've you knowsomething.
Say you're parking some kind ofa vehicle in your garage, or
maybe you made some change toyour house, or maybe you did
some renovations, or you canjust imagine all kinds of things
.
There are even cases here thatwere referred to, and there's
some differing authority forwhen the owner that's got the
insurance doesn't even knowabout the increased risk, like
(20:23):
what happens if you have aproperty and you rent it out and
your tenant does something thatincreases risk, like starts
growing marijuana in it.
There's conflicting authorityabout that, and so what is your
duty?
To know about that and informthe insurance company.
So, cautionary tale, that's theoutcome here.
That is the law, and so you'dbe well advised that if you make
(20:44):
any kind of a material changeto your property that could
impact the risk, even if itdoesn't, and even if you're well
advised to send notice, do itin writing, send an email, and
that way, if your house doescatch fire, because your prayer
candle in your kid's roomcatches fire, you're not going
to find out that you'reuninsured for, in this case,
$300,000 or $400,000.
(21:04):
Wow, so that's the latest onthe Walman East Insurance
Company.
Adam Stirling (21:07):
Michael Mulligan, mulligan, fence Lawyers,
legally speaking, second half ofour second hour every Thursday.
Thank you so much.
Pleasure as always.
Thanks so much.
It's always great to be here.
All right, talk to.
It's time for our regular segment, joined as
always by Barrister andSolicitor with Mulligan Defence
Lawyers.
It's Legally Speaking on CFAX1070 with Michael Mulligan.
Good afternoon, Michael.
How are we doing?
Michael Mulligan (00:10):
Hey, good afternoon.
I'm doing great.
Always good to be here.
Adam Stirling (00:12):
Up first.
Multiple problems, it says here, involving the Civil Resolution
Tribunal.
It seems to be somewhat of atheme.
Michael Mulligan (00:21):
Well, first of all, I should say we've talked
about the Civil ResolutionTribunal from time to time, and
not everything about it is bad.
It was originally created forthe purpose of dealing with tiny
small claims disputes, likeamounts less than $5,000, and
dealing with things like minorstrata disputes Think whether
(00:45):
the person should have abarbecue on their patio, that
kind of thing and the conceptbehind it was to create a kind
of a more efficient hearingprocess for small claims, very
small claims, which can often bedone completely online, with
the idea of each party sendingin emails or maybe a telephone
call or video connection ifnecessary to allow an
(01:07):
adjudicator to make a decision.
And insofar as all of that goes, it's a great idea, right?
If somebody doesn't have totake the day off work to go to
court, you probably don't needto have a provincial court judge
spending their day sorting outa $300 dispute over a bicycle or
something, or a barbecue with apatio.
All good, right.
The trouble, however, is thatthe provincial government has
(01:32):
chosen to expand the role of theCivil Resolution Tribunal to
deal with things that aren'treally amenable to that kind of
process, which is appropriatefor those barbecue disputes and
$300 bike repairs and thingslike that, which it does just
fine, and one of the areas thatthey expanded it into that's
(01:53):
inappropriate from a principledperspective is that they have it
deciding disputes involving thegovernment or crown
corporations, like ICBC disputes, and that's not appropriate
because the people who work atthe Civil Resolution Tribunal
are just employees of thegovernment on renewable
contracts, subject to beingfired or not having their
contract renewed, and so that'snot the sort of person that
(02:15):
should be deciding a disputewith ICBC, for example, because
if the government doesn't likewhat some tribunal member is
doing, they may just find well,no renewal of your contract next
year.
So that's not appropriate.
Another area that they've triedto put into the civil resolution
tribunal is the issue ofdealing with intimate images,
(02:37):
and so BC has this thing calledthe Intimate Image Protection
Act, which is intended to allowfor somebody to make an
application to try to get likeintimate naked images themselves
removed from the Internet.
Now I pause here for a momentto say there's also now a
criminal offense of distributingthat kind of material, which
would be dealt with as acriminal matter.
But what the government's doneis that they've allowed this
(03:01):
process whereby a person canapply to the Civil Resolution
Tribunal using like an onlineform to get an order to, for
example, require some picturesto be taken down or to order a
service provider to take downimages.
And that brings us to thisrecent decision that
demonstrates several veryserious problems with what's
(03:23):
going on over at the CivilResolution Tribunal trying to
implement this Intimate ImageProtection Act, and so this
decision that just came outrecently was a decision dealing
with Twitter, or X, andapparently there was an
application made through thisonline form process asking that
some images or image or imagesbe taken down, and apparently
(03:47):
the Civil Resolution Tribunalmade such an order directing X
to take down some image orimages.
Fine, I guess.
Now the response, though, from Xwas well, you have no authority
outside of British Columbia,certainly outside of Canada, and
so their response to this civilresolution tribunal order was
(04:07):
to block anyone in Canada frombeing able to access the images,
but their view was we have noauthority to order what's going
on in other countries, sorry, no.
And that then led to thisdecision where there was an
application made by theapplicant, led to this decision
where there was an applicationmade by the applicant for a
penalty against X for notblocking these things worldwide,
(04:30):
and also a request for moneycompensation.
So that brings us to thisinteresting decision.
It came out on September the4th, so just recently.
Now, the first thing that'snotable about it and this is a
serious principled problem theadjudicator who wrote this
(04:54):
decision confirmed accuratelythat the Civil Resolution
Tribunal Act, which ordinarilyrequires that decisions that the
Civil Resolution Tribunal makebe published online so people
can read them.
It's kind of a you know, thereis no physical place to go and
watch what the Civil ResolutionTribunal is doing.
It's just somebody sitting athome and their bunny slippers
are in an office somewhere, Iguess, right.
Adam Stirling (05:11):
I don't know.
Michael Mulligan (05:11):
There's no courtroom.
Yeah, one would hope they'rewearing bunny slippers.
You want to be comfortable whenyou're making these kind of
calls.
And so the adjudicator pointsout that the legislation has
(05:37):
been amended so that the CivilResolution Tribunal does not
publish these orders abouttaking down or not taking down
images, because the legislationhas been amended to not require
that.
Problematic, because when youhave decisions being made by
adjudicative tribunals or courts, particularly when there's
absolutely no way to watch themor go down there and walk down
to the courthouse and go inthere and watch what's going on
any day, you like right, and soit should be right.
We don't live in China where youget dragged out some secret
(05:57):
courtroom.
It's public, it's open, it'stransparent and that's good.
This isn't.
That's not good and just notacceptable.
From a principled perspective.
It would be entirelyappropriate, as with this
decision, which they did chooseto publish, although they had no
obligation to and they say inthis decision they don't usually
do so.
There's no problem with, forexample, using initials in this
(06:20):
case initials that aren't realinitials so that you're not
drawing attention to the person.
That's completely appropriate.
Courts do that routinely, right, but that doesn't interfere
with your ability to read thedecision or go down there and
watch if you wanted to.
So there are ways to deal withit that don't require complete
secrecy, which is apparently howthis has been operating.
So that's problem, oneidentified by this recent
decision.
(06:40):
We've got secret decisions froman administrative tribunal that
no one can know about.
That's not good.
The next problem which isapparent here is what I alluded
to, which was X's argument waswell, look, they're not in
breach of this order in thesense that from their
perspective and they hadauthority for this dealing with
(07:01):
a Google decision that the CivilResolution Tribunal, in fact
the province of British Columbia, has no authority to order
things to happen in other partsof the world.
It's sort of your authorityruns to the border and that's
about it.
And so their position was look,we've complied with your order
insofar as you have jurisdictionto make such an order.
And I must say, there'sdisputes going on in other parts
(07:26):
, like in Southeast Asia at themoment, with various
authoritarian regimes orderingsocial media companies to take
down material that is criticalof the government, for example,
and the social media company'sresponse has been sorry, no,
we're not doing that, we're nota censorship organ of your
(07:48):
country.
And so the problem on thatfront in terms of using the
Civil Resolution Tribunal, andagain the adjudicator's correct.
The Civil Resolution Tribunal isnot a court of competent
jurisdiction to determineconstitutional disputes.
Just think about it right it'sa system whereby people are
filling out forms and uploadingpictures and stuff like that Not
(08:09):
really a forum to deal withserious constitutional disputes.
So the adjudicator in this case, when X said well, look, you
don't have any authority to dothis.
The provincial governmentdoesn't have any authority to do
this.
They certainly couldn'tdelegate it to you.
We're a Texas company and wehave absolutely nobody in
British Columbia or Canada.
You just can't order us aroundall over the world.
The response from theadjudicator was we have no
(08:33):
authority to decide this, so Ijust must assume it's
constitutional and proceed.
That's not really satisfactory.
No, no, it's not.
Adam Stirling (08:40):
I'm sorry, I just I wasn't ready for that, okay.
Michael Mulligan (08:43):
Yeah, so that's, that's what.
That's the second problem thisidentifies.
The third problem identified bythis decision, unrelated to
these other problems, is thatthe adjudicator points out that
the quote complainant in thiscase, who's identified only by
initials, of course, there'ssecret has was found to have, uh
(09:04):
, provided misleadingsubmissions generated by
artificial intelligence anddoing things like quoting cases
inaccurately or decisions thatdidn't exist, and the
adjudicator found that they wererepeatedly doing that, despite
being warned to stop.
And so the person whoever thisinitials are is sending in
(09:25):
misleading, ai-generatedsubmissions and they're seeking
money from X.
Now think about that.
First of all, that's veryproblematic.
Next, of course, this is someonline process.
It's unclear whether there'seven an actual human being here,
right?
If you were an enterprisingcriminal, you might think great,
(09:46):
we've got this online processto make application for things.
It's also trivial, of course,to create.
Think great, we've got thisonline process to make
application for things.
It's also trivial, of course,to create images, right?
So you just put that together.
Somebody anywhere in the worldcould decide well, what I'm
going to do is post on Xintimate image generated by AI,
and then I'm going to have myalter ego generate some AI
submissions asking the civilresolution tribunal to order
(10:08):
that I get some compensation.
I never have to appear anywhere.
I can't appear anywhere.
It's a form I fill out and,frankly, if you succeed, the
decision isn't even beingpublished anywhere For all we
know.
This is going on all day long.
There's no way of knowing.
It's all happening in secret,and so that's just completely
unacceptable.
(10:29):
That you have a circumstancewhere you've got AI-generated
misleading submissions from aperson who may or may not be a
real person seeking financialcompensation from.
It could be individuals here or, in this case, some company in
some other country.
That's just completely notappropriate and terribly thought
out, and so that should notexist.
(10:49):
There must be some processwhereby you can properly.
I mean, I appreciate why theywant to make this quick and easy
.
Everyone likes what's the threethings?
It's cheap, fast or good.
You know, they've got cheap andfast.
The good part is seriouslylacking.
The final serious problem thatthis case identifies at the end
of it is that the adjudicatoreventually decides that, because
(11:10):
they just have to assume thisis constitutional and they're
assuming this complainant's areal person and not an AI
seeking money to I don't know,buy more CPUs and take over the
world or something they havedecided that they were going to
impose the maximum possiblepunishment per day of $100,000.
And then, kind ofembarrassingly, at the end of it
(11:31):
it says that the ex should mailthe administrative penalty to a
post office box in Victoria,which is you know, come on.
Adam Stirling (11:45):
It's a Texas company.
Michael Mulligan (11:46):
You know you've got this decision from
the Civil Resolution Tribunalsaying please submit payment to
the via PO Box 9220, provincialStation, victoria BC.
Come on, it's unenforceableright.
The law in Texas, as Iunderstand it, they do not
enforce judgments for penaltiesperiod from other jurisdictions,
(12:10):
and you can imagine why that isright.
I mean, just think about thisfrom the perspective of I don't
know.
Let's say, the provincial courtof Zimbabwe has ordered some I
don't know CFACs to take downsome article on their website on
pain of paying $100,000, right,just think about that.
Right?
The response is going to be Idon't think so.
(12:32):
Zimbabwe Provincial CivilResolution Online Tribunal.
Very unlikely that's going tobe responded.
Nor would you want acircumstance where the Civil
Resolution Tribunal from theprovince of Zimbabwe is somehow
ordering that you know a mediaoutlet or online service starts
mailing checks to them, as ifthat's ever going to happen, and
(12:54):
you shouldn't have a processwhich is, you know, meaningless
in terms of making these kindsof orders.
That just undermines generalconfidence in the administration
of the justice system.
So this single decisionidentifies for, to my mind,
fatally problematic elements towhat the provincial government
(13:14):
has created here.
It's taken a process the CivilResolution Tribunal very well
suited for what it wasoriginally intended to do.
And, in the interest of beingcheap, they bolted on these
things to it which it just hasno meaningful capacity to deal
with.
And just like it should not bedealing with disputes where the
(13:35):
government is one party and theadjudicators are not independent
of the government.
That is inappropriate.
It's inappropriate to havesecret decisions.
It's inappropriate to have acircumstance where you may not
be able to identify whethersomebody is a real person.
It's not appropriate to have anentity that can't figure out,
has no authority to decidewhether what it's doing is
constitutional, or to be makingunenforceable orders by yelling
(13:56):
into the ether that you shouldmail a check to a post office
box.
So this one, to my mind, thissingle decision makes clear why
this needs to be completelyrethought, and maybe the answer
is that of course, this is nowcriminal, and perhaps that's a
better way to deal with this,rather than having chatbots
potentially trying to get moneyout of X by applying to the
(14:18):
Civil Resolution Tribunal in anonline form.
By applying to the CivilResolution Tribunal in an online
form.
So that's the latest decisionof the CRT on the Intimate Image
Protection Act in BritishColumbia.
Adam Stirling (14:28):
Michael Mulligan with Mulligan Defence Lawyers,
legally speaking on CFAX.
Continues right after thisLegally speaking continues with
Michael Mulligan from MulliganDefence Lawyers, on CFAX.
1070.
Michael up next it says notadvising an insurance company of
a marijuana grow operation.
Back to 1070.
Michael up.
Next it says not advising aninsurance company of a marijuana
grow operation is a breach ofduty to inform of changes in
risk and not doing so is a validreason for cancelling coverage
(14:50):
and not paying for a house fire.
Seems reasonable, but thecourts are grappling with it.
Michael Mulligan (14:55):
All the same, you're quite right and I must
say.
Here's the interesting thingabout it and why I think this is
a very important decision andthing for people to know about.
So it would seem obvious topeople.
I think if you were running agiant grow operation in your
house, you didn't tell yourinsurance company about it and
the house burned down because ofthe grow operation, I think
most people would probablyintuitively say, yeah, probably
(15:17):
that wasn't covered, right.
Adam Stirling (15:19):
Yeah.
Michael Mulligan (15:19):
But that's not what happened here and it's
important to know just how broadthe circumstances can be that
can result in you effectivelybeing uninsured.
And the starting point for theanalysis it comes from this
proposition that an insurancecontract is what's referred to
sometimes as a contract ofutmost good faith, meaning both
(15:40):
the insurance company and theperson buying the insurance need
to act with good faith towardsthe other.
Ok, and in BC we actually havea provision in the Insurance Act
that has like statutoryconditions that are made part of
policies pursuant to how thatact works.
And one of the requirementsthere and it flows from that
general idea of this being acontract of utmost good faith is
(16:04):
that where there is a materialchange in risk, the insured must
promptly give notice in writingto the insurer or its agent of
the change if it's a materialchange of risk.
Now here's why that matters inthis particular case.
The house fire here hadabsolutely nothing to do with
(16:24):
the marijuana.
The fact pattern was thatthere's a house on a very large
property, big acreage, and thehouse had an outbuilding which
was some 200 meters away fromthe main house.
You could see it, but it's thisold, dilapidated building, and
in the main house a fire startedin one of the kids' rooms.
In fact it was sparked by aprayer cabinet candle.
(16:46):
I guess the prayer cabinetcandle wasn't working very well
on several levels, including thecapacity to catch things on
fire, and the dad smelled smokeand wound up trying to put the
fire out, running back and forthusing a salad bowl, trying to
throw water in it but wasn'table to put it out, and the
whole house burned down,destroying all kinds of things.
(17:07):
Very, very large, tragic fire.
Absolutely nothing to do withthe marijuana in the bar or in
the outbuilding.
But what happened is that theinsurance adjuster showed up and
they said well, what's overthere in that outbuilding?
And the homeowner said well,what's over there in that
outbuilding?
And the homeowners well, whatare you talking about?
Does that have to do withanything?
And indeed there was even adispute about whether the
(17:28):
outbuilding was insured.
The homeowner said he'd askedthat it not be insured to save
money on the policy because itwas falling down and dilapidated
.
But nonetheless the insuranceadjuster went over and looked in
there and found what was not anactive marijuana grow operation
.
In fact it took some picturesand it was clear to the judge
(17:48):
that this was kind of anabandoned marijuana grow
operation in this outbuilding,like a bunch of dead plants,
basically right, no lights on,nothing was actually going on.
It certainly didn't cause thefire in the bedroom bedroom and
it wasn't even active at thetime.
But the judge found that indeedthis had been active since they
(18:09):
had lived in, since theypurchased this property several
years earlier.
I must say the homeowner saidno, we didn't even know about
what was in this old outbuilding.
But judge didn't believe that.
And so the decision was basedon the fact that having a
marijuana grow operation in anoutbuilding on the property is a
material change incircumstances in terms of the
(18:31):
risk, material change to therisk because that could have
caught fire when it wasoperating and because the
homeowner didn't notify theinsurance company in writing
about that.
The net result was it was abreach of the statutory
provision to provide notice inwriting and as a result,
wal-mart Insurance Company waspermitted to cancel the policy
(18:55):
and not pay.
And so that outcome unlike theactual thing catching fire and
spreading to the house I don'tthink many people would
appreciate that.
You may find you are, despitepaying your premiums for years
and years, you may find out thatyou in fact have no insurance.
If something occurred on yourproperty that amounted to a
(19:18):
material change of risk it neednot be a marijuana grow
operation.
It could be all kinds of thingsthat you might do what amounts
to a material change of risk.
It need not be a marijuana growoperation.
It could be all kinds of thingsthat you might do what amounts
to a material change of risk.
And even if you did that andthen stopped doing it, you may
still be in breach of yourpolicy.
Right, and I should say here,interestingly, these people they
actually had in the past at aprior property the judge
(19:40):
referred to this they actuallyhad a permit to grow marijuana.
Oh wow, so it wasn't the factthat that might have been
illegal, it was just that youdidn't tell the insurance
company about it.
And so just think about that,think about all the things that
somebody might do in their homethat might have at some point
created some increased fire risk.
(20:01):
Right, maybe you've you knowsomething.
Say you're parking some kind ofa vehicle in your garage, or
maybe you made some change toyour house, or maybe you did
some renovations, or you canjust imagine all kinds of things
.
There are even cases here thatwere referred to, and there's
some differing authority forwhen the owner that's got the
insurance doesn't even knowabout the increased risk, like
(20:23):
what happens if you have aproperty and you rent it out and
your tenant does something thatincreases risk, like starts
growing marijuana in it.
There's conflicting authorityabout that, and so what is your
duty?
To know about that and informthe insurance company.
So, cautionary tale, that's theoutcome here.
That is the law, and so you'dbe well advised that if you make
(20:44):
any kind of a material changeto your property that could
impact the risk, even if itdoesn't, and even if you're well
advised to send notice, do itin writing, send an email, and
that way, if your house doescatch fire, because your prayer
candle in your kid's roomcatches fire, you're not going
to find out that you'reuninsured for, in this case,
$300,000 or $400,000.
(21:04):
Wow, so that's the latest onthe Walman East Insurance
Company.
Adam Stirling (21:07):
Michael Mulligan, mulligan, fence Lawyers,
legally speaking, second half ofour second hour every Thursday.
Thank you so much.
Pleasure as always.
Thanks so much.
It's always great to be here.
All right, talk to.
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