Executive summary: key legal and evidentiary issues

• Island Insurance Agency Ltd. sought judicial review of a Provincial Court decision that dismissed its application to set aside a default order in a small claims proceeding.

• Imraj S. Gill Law Corporation alleged an oral contract whereby Island Insurance's representative, Mowinder Taggar, agreed to insure a 2018 Land Rover Range Rover but failed to do so, resulting in the vehicle being stolen while uninsured.

• The Provincial Court judge found that Island Insurance had not demonstrated a meritorious defence under the Miracle Feeds test, characterizing the petitioner's evidentiary basis as speculative.

• Central to the judicial review was the judge's misapprehension of text message evidence, conflating messages about a Mercedes-Benz with those concerning the Range Rover.

• Applying the Vavilov reasonableness standard, the BC Supreme Court concluded the lower court's decision was reached on an improper evidentiary basis and could not stand.

• The petition was granted, setting aside the order that had dismissed the application to set aside the default order, with costs awarded to Island Insurance as the successful party.

The underlying dispute and the parties involved

This case arose from a business relationship between Island Insurance Agency Ltd., an insurance company engaged in part in the business of brokering automobile insurance policies between the Insurance Corporation of British Columbia and consumers, and Imraj S. Gill Law Corporation, a law corporation whose director is Imraj S. Gill. Mr. Gill had previously used Island Insurance, through its representative Mowinder Taggar, to insure his vehicles — specifically, a 2017 Mercedes-Benz S63 AMG Coupe and a 2018 Land Rover Range Rover.

The alleged oral agreement to insure the Range Rover

According to the respondent's notice of claim, on February 3, 2025, Mr. Taggar and Mr. Gill orally agreed that Mr. Taggar, of Island Insurance, would insure the Range Rover prior to its existing coverage lapsing on March 26, 2025, for the time period of March 27, 2025 to March 26, 2026. In exchange, Mr. Gill and the respondent would not engage a new insurance broker for their insurance needs, as a result of the error with the Mercedes' insurance. The respondent also provided several text messages as supposed written evidence of the contract. Mr. Taggar had previously also failed to secure insurance for the Mercedes in a timely manner, resulting in a several-day lapse of coverage, though no harm resulted from that incident. The Range Rover's insurance was ultimately not renewed, and the vehicle was stolen during the time in which no insurance was in place. The Range Rover was eventually recovered, but with significant damage which negatively affected its value. The respondent's notice of claim alleges breach of an oral contract to insure, negligence/breach of fiduciary duty, and breach of duty of care, claiming loss and damages as a result.

Default judgment and the failed application to set it aside

The respondent filed its notice of claim on June 19, 2025, and served it on the petitioner on June 25, 2025. No reply was filed. On August 21, 2025, the respondent obtained default judgment. Several garnishing orders were filed and served on the petitioner's banks. The petitioner then filed its application to set aside the default order. In support of this application, the petitioner submitted an affidavit of Harjinder Basra, a director of the petitioner, who denied the factual claims relating to conversations Mr. Gill reportedly had with Mr. Taggar. Mr. Basra described Mr. Taggar as "one of our former producers/salesmen" and stated that all of the claims were denied and that the defendant intended to call Mr. Taggar as a witness to address the allegations. On October 8, 2025, the Provincial Court judge dismissed the application on the basis that the petitioner did not establish one of the factors under the Miracle Feeds test — in particular, that the petitioner failed to provide evidence of a meritorious defence.

The text message evidence at the heart of the dispute

Two separate text chains between Mr. Gill and Mr. Taggar were tendered as evidence before the Provincial Court judge. The first chain, dated February 2025, concerned the Mercedes: Mr. Gill asked Mr. Taggar for insurance on his "s63," Mr. Taggar sent the insurance policy as a PDF file, and when Mr. Gill flagged that the car was not insured from the 26th to the 3rd, Mr. Taggar responded "I got screwed." The second chain, dated April 28, 2025, involved the Range Rover and included only messages sent by Mr. Taggar to Mr. Gill, beginning partway through a message. In it, Mr. Taggar stated that "island insurance has been taking care of all my business" since mid-January, that "I thought I was gonna handle it but they said they're going to do everything going forward," and that "This has nothing to do with me." The petitioner argued on judicial review that the Provincial Court judge conflated these two text chains, mistakenly treating the Mercedes texts as evidence of an admission by Mr. Taggar that he had agreed to insure the Range Rover and failed to do so.

The judicial review and the reasonableness standard

Island Insurance brought a petition for judicial review before the BC Supreme Court, arguing that the Provincial Court judge's decision was unreasonable. Under the Vavilov framework, the standard of review on a judicial review of a Provincial Court order is reasonableness, requiring the decision to be transparent, intelligible, and justified. The petitioner contended that the judge reached his conclusion on an improper basis by misapprehending the text message evidence, and that as set out in Vavilov at paragraph 86, an otherwise reasonable outcome cannot stand if it was reached on an improper basis. The respondent opposed the petition, submitting that the judge's decision was reasonable and should not be set aside, and that the petitioner's attempt to re-argue the case on its merits is not permitted on a judicial review.

The Supreme Court's analysis and findings on the text evidence

Madam Justice Burke, after careful consideration of the parties' materials, the transcript of the application hearing, and the judge's oral reasons, concluded that the judge misunderstood the text message evidence. A review of the transcript suggested that the judge, while hearing submissions, believed the Mercedes texts to be referring to the Range Rover, as evidenced by a question posed to the petitioner's counsel asking whether the "I got screwed" text was an admission by Mr. Taggar that he failed in his obligation to renew the insurance. The notation "S63," however, referred to the Mercedes. The Court found that there was nothing in the Mercedes texts which would constitute evidence of an undertaking to insure the Range Rover. Furthermore, the Range Rover texts, far from constituting an admission, appeared to show Mr. Taggar attempting to exonerate himself from any wrongdoing, claiming that the petitioner had "been taking care of [his] business" since January 2025 and that the claim had "nothing to do with [him]." This evidence would seem to accord with other potential evidence of the petitioner, including an unfiled draft reply to claim stating there was no contract or duties owed, Mr. Basra's affidavit stating the petitioner was unaware of any discussions between Mr. Gill and Mr. Taggar, and the petitioner's intended argument that Mr. Taggar was not an employee or agent but an independent contractor without authority to bind the company. The Court also found that the judge appeared to conflate the two text chains at paragraph 5 of his reasons, where submissions about additional text messages were discussed in respect of the Range Rover texts, when a review of the transcript made clear they were made in reference to the Mercedes texts.

The ruling and outcome

The BC Supreme Court found that these misapprehensions of the text evidence figured prominently in the decision by leading the judge to conclude that the respondent had "a prima facie case" to which the petitioner had no meritorious defence. Applying paragraph 86 of Vavilov, the Court held that what might otherwise have been a reasonable outcome could not stand, having been reached through this misunderstanding of the evidence, and was therefore at odds with the alleged factual context. The Court concluded that the defendant has a meritorious defence to the claim, at least worthy of investigation. The application for judicial review was granted in favour of Island Insurance Agency Ltd., setting aside the Provincial Court judge's order of October 8, 2025, which had dismissed the petitioner's application to set aside the default order. Costs were awarded to the successful party. No specific monetary amount was determined or awarded in the judgment, as the decision addressed the procedural question of whether the default order should be set aside rather than the merits of the underlying small claims dispute.