Vollick et al. v. Sheard et al.
[Indexed as: Vollick v. Sheard]
75 O.R. (3d) 621
[2005] O.J. No. 1601
Court of Appeal for Ontario,
Catzman, Gillese and Lang JJ.A.
April 28, 2005
Insurance -- Automobile insurance -- No-fault provisions -- Protected defendant -- Employee causing accident while driving employer's vehicle in course of his employment -- Employer enjoying protected defendant status under s. 267.5 of Insurance Act as owner of automobile but not protected defendant with respect to its vicarious liability as employer -- Insurance Act, R.S.O. 1990, c. I.8, s. 267.5.
S was driving a tow truck owned by his employer AT in the course of his employment when he collided with a bicycle ridden by V, seriously injuring her. V brought an action against S and AT. As the facts emerged, it became clear that S as the driver and AT as the owner of the tow truck were "protected defendants" under s. 267.5 of the Insurance Act. However, the parties disagreed whether AT continued to enjoy protected defendant status in its capacity as employer of S. The parties moved by way of special case for a determination of the question. The motion judge concluded that AT was not a protected defendant in its capacity as S's employer, and granted a declaration to that effect. AT appealed.
Held, the appeal should be dismissed.
AT's vicarious liability as employer superseded the restriction against its liability as owner. An owner qua employer does not have immunity for the negligent operation of a motor vehicle by an employee in the course of his or her employment. The motion judge correctly concluded that AT was not a protected defendant in its capacity as S's employer.
APPEAL from the order of Bryant J. of the Superior Court of Justice declaring that the party was not a protected defendant, reported at (2004), 2004 ONSC 7100, 75 O.R. (3d) 609, [2004] O.J. No. 2762 (S.C.J.).
Harrison v. Toronto Motor Car Ltd. and Krug, 1944 ONCA 86, [1945] O.R. 1, [1945] 1 D.L.R. 286 (C.A.), folld Hechavarria v. Reale (2000), 2000 ONSC 22711, 51 O.R. (3d) 364, [2000] O.J. No. 4288, 12 M.V.R. (4th) 149 (S.C.J.), not folld Carter (Litigation guardian of) v. Sanders, [2004] O.J. No. 3558, [2004] O.T.C. 765 (S.C.J.); Co-operators Insurance Assn. v. Kearney, 1964 SCC 21, [1965] S.C.R. 106, 48 D.L.R. (2d) 1, affg 1963 ONCA 25, [1964] 1 O.R. 101, 41 D.L.R. (2d) 196 (C.A.) [Leave to appeal to S.C.C. dismissed, [1965] S.C.R. 106], affg 1963 ONSC 123, [1963] 2 O.R. 1, 38 D.L.R. (2d) 290 (H.C.J.); Derksen v. 539938 Ontario Ltd., [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27, 205 D.L.R. (4th) 1, 273 N.R. 356, [2001] I.L.R. ÂI-4029, 2001 SCC 72, 15 M.V.R. (4th) 1, affg 1999 ONCA 3749, [1999] O.J. No. 2743, 45 M.V.R. (3d) 6 (C.A.), affg [1998] O.J. No. 3723, 75 O.T.C. 133, 37 M.V.R. (3d) 59 (Gen. Div.); Harroun (Litigation Guardian of) v. Turriff (2000), 2000 ONCA 16810, 50 O.R. (3d) 634, [2000] O.J. No. 3037, 190 D.L.R. (4th) 39, 5 M.V.R. (4th) 263 (C.A.); Pugsley v. Rahbar, 2002 ONSC 79674, [2002] O.J. No. 2779, [2002] O.T.C. 475, 41 C.C.L.I. (3d) 62 (S.C.J.); Tutton v. Pickering (Town) (1999), 1999 ONCA 1452, 46 O.R. (3d) 503, [1999] O.J. No. 4811, 183 D.L.R. (4th) 160, 48 M.V.R. (3d) 321, 8 M.P.L.R. (3d) 107 (C.A.); Walker v. Ritchie, 2003 ONSC 90084, [2003] O.J. No. 5596, 20 C.C.L.I. (4th) 285 (S.C.J.), consd Other cases referred to Gignac v. Neufeld (1999), 1999 ONCA 2182, 43 O.R. (3d) 741, [1999] O.J. No. 1295, 41 M.V.R. (3d) 230 (C.A.) [page622] Statutes referred to Automobile Insurance Rate Stability Act, 1996, S.O. 1996, c. 21 (Bill 59) Family Law Act, R.S.O. 1990, c. F.3 Highway Traffic Act, R.S.O. 1937, c. 288, s. 47 Insurance Act, R.S.O. 1990, c. I.8, ss. 266 [as am.], 267.1, 267.3, 267.5 [as am.] Insurance Statute Law Amendment Act, 1990, S.O. 1990, c. 2 (Bill 68) Insurance Statute Law Amendment Act, 1993, S.O. 1993, c. 10 (Bill 164)
James L. Vigmond and Brian M. Cameron, for respondents. D. Kevin Carroll and Richard A.N. Heyd, for appellants.
The judgment of the court was delivered by
CATZMAN J.A.:--
The Appeal
1In April 2001, Cory Sheard was driving a tow truck on Memorial Avenue in Orillia. The tow truck was owned by his employer, Atherley Towing, and Sheard was driving it in the course of his employment. Sheard's tow truck collided with a bicycle ridden by Bonnie Vollick, who was seriously injured. She sued Sheard and Atherley Towing for general damages, loss of past and future income and past and future health care expenses. Her husband also asserted a claim against Sheard and Atherley Towing for damages under the Family Law Act, R.S.O. 1990, c. F.3.
2As the facts emerged, it became clear that Sheard as the driver and Atherley Towing as the owner of the tow truck were "protected defendants" under the Insurance Act, R.S.O. 1990, c. I.8 (the "Act"), and that their exposure was limited accordingly. However, the parties disagreed whether Atherley Towing continued to enjoy protected defendant status in its capacity as employer of its employee, Sheard, who was driving in the course of his employment.
3To resolve the issue, the parties moved by way of special case for a determination of the question. Bryant J. concluded that Atherley Towing was not a protected defendant in its capacity as Sheard's employer, and granted a declaration to that effect. His decision is now reported in (2004), 2004 ONSC 7100, 75 O.R. (3d) 609, [2004] O.J. No. 2762, 15 C.C.L.I. (4th) 295, 7 M.V.R. (5th) 32 (S.C.J.).
4This is an appeal by Atherley Towing from that decision. For the reasons that follow, I would dismiss the appeal. [page623]
The Provisions of the Insurance Act
5Before 1990, motor vehicle accident victims could sue parties alleged to be at fault for financial compensation for their injuries and their damages 1. In that year, the legislature enacted the Ontario Motorist Protection Plan (Bill 68) 2 that introduced a "threshold no-fault" plan. Bill 68 governed accidents occurring after June 21, 1990 and prior to January 1, 1994. A new regime was introduced by Bill 164 3, which governed accidents occurring on or after January 1, 1994 and prior to November 1, 1996. Bill 164 was in turn replaced by another regime in Bill 59 4, which governed accidents occurring on or after November 1, 1996. The present action falls under that regime.
6Common to all of these regimes -- Bill 68, Bill 164 and Bill 59 -- was a system of no-fault benefits to motor vehicle accident victims and a corresponding contraction of their right to sue an allegedly at-fault party.
7The expression "protected defendant" first appeared in Bill 59. In s. 267.3, it defined that term to mean
... a person who is protected from liability by subsections 267.5(1), (3) and (5).
8At the time of the accident giving rise to this appeal, ss. 267.5(1), (3) and (5) read as follows 5:
Protection from liability; income loss and loss of earning capacity
267.5(1) Despite any other Act and subject to subsection (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for the following damages for income loss and loss of earning capacity from bodily injury or death arising directly or indirectly from the use or operation of the automobile:
Damages for income loss suffered in the seven days after the incident.
Damages for income loss suffered more than seven days after the incident and before the trial of the action in excess of 80 per cent of the net income loss, as determined in accordance with the regulations, suffered during that period. [page624]
Damages for loss of earning capacity suffered after the incident and before the trial of the action in excess of 80 per cent of the net loss of earning capacity, as determined in accordance with the regulations, suffered during that period.
Protection from liability; health care expenses
(3) Despite any other Act and subject to subsections (4) and (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for expenses that have been incurred or will be incurred for health care resulting from bodily injury arising directly or indirectly from the use or operation of the automobile.
Protection from liability; non-pecuniary loss
(5) Despite any other Act and subject to subsection (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61(2) (e) of the Family Law Act, from bodily injury or death arising directly or indirectly from the use or operation of the automobile, unless as a result of the use or operation of the automobile the injured person has died or has sustained,
(a) permanent serious disfigurement; or
(b) permanent serious impairment of an important physical, mental or psychological function.
9Under s. 267.5(1), the owner of an automobile, the occupants of an automobile and any person present at the incident are "protected defendants" and not liable for income loss and loss of earning capacity in excess of defined limits. Under s. 267.5(3), they are not liable for past and future health care expenses, except where the plaintiff is catastrophically impaired. Under s. 267.5(5), they are not liable for damages for non-pecuniary loss, subject to the same exceptions.
10Sheard, as a person "present at the incident", and Atherley Towing, as "the owner of [the] automobile", are both protected defendants under s. 267.5. The issue on this appeal is whether Atherley Towing also enjoys protected defendant status in its capacity as Sheard's employer when he was operating a motor vehicle owned by Atherley Towing in the course of his employment.
The Pre-protected Defendant Cases
Harrison v. Toronto Motor Car Limited and Krug
11Consideration of this issue must begin with a decision of this court rendered many years before the expression "protected [page625] defendant" entered the statutory lexicon. In Harrison v. Toronto Motor Car Ltd. and Krug 6, the plaintiff, Harrison, was a registered nurse. While the defendant Krug was on business in Toronto, he became ill and, through the Central Registry of Nurses, engaged Harrison to provide him with nursing services. Krug also engaged Toronto Motor Car Limited to provide him with chauffeur services. Toronto Motor Car Limited sent a driver named McKenzie to drive Krug's car. Krug asked Harrison to accompany him on the drive to his home. In the course of that drive, McKenzie negligently crossed to the wrong side of the road and collided with another vehicle. Krug was killed, and Harrison was seriously injured.
12Harrison sued Krug's estate and Toronto Motor Car Limited. Section 47(1) of the Highway Traffic Act rendered an owner of a motor vehicle liable for the negligence of its driver 7. But, under s. 47(2) of the statute -- the so-called "gratuitous passenger" provision -- neither the driver nor the owner of a motor vehicle was liable for death or injury to any passenger in the car, unless the vehicle was used in the business of carrying persons for compensation.
13Harrison advanced two arguments in support of her claim against Krug's estate: first, that Krug's motor vehicle was being used in the business of carrying passengers for compensation; and second, that the action against Krug's estate was based not on his ownership of the vehicle but rather on the relationship of master and servant.
14Harrison's action was dismissed at trial against both defendants. She appealed. Her appeal against Toronto Motor Car Limited was dismissed on the ground that McKenzie was under Krug's direction and control at the time and Toronto Motor Car Limited was not vicariously liable for his negligent driving. But her appeal against the Krug estate was allowed. The basis on which her appeal against Krug's estate succeeded is of importance in the case now before us.
15Gillanders J.A., delivering the judgment of the court, said of the Highway Traffic Act provisions, at p. 12 O.R.:
At common law there was no liability on the owner of a motor vehicle merely by reason of ownership for injuries which the motor vehicle might occasion while being driven by another. The liability imposed on the owner by what is now s. 47(1) arises wholly by reason of the statute. It is quite reasonable to read subs. 2, immediately following, as excluding the owner from [page626] the liability specifically imposed by subs. 1 in respect of persons mentioned in the subsection.
and, at p. 13 O.R.:
The provisions now being considered, being directly to the liability of the owner and driver, should be restricted to their liability qua owner and qua driver, and I think may not bar a right of action due to some other relationship. If the appellant has a cause of action against her master by reason of the negligence of his servant, subs. 2 does not take it away, even though at the time it arose she was being carried in her employer's motor vehicle.
16In the result, while Krug was not liable to Harrison in his capacity as owner of the vehicle, he was held vicariously liable to her in his capacity as McKenzie's employer.
Co-operators Insurance Association v. Kearney
17This court's decision in Harrison has not had an altogether unblemished judicial track record. It was revisited by the Supreme Court of Canada in Co-operators Insurance Assn. v. Kearney 8. Kearney was an insurance agent who was injured in a motor vehicle accident. At the time of the accident, he was a passenger in a car driven by Livesey, an insurance adjuster in Co-operators' employ, returning from a meeting to adjust a claim made by one of Co-operators' insureds. The car collided with a train, and Kearney suffered serious injuries.
18Kearney sued Livesey and Co-operators. The trial judge gave judgment against both 9. Both appealed to this court, which allowed Livesey's appeal on the application of the gratuitous passenger provision, but dismissed Co-operators' appeal on the ground that the gratuitous passenger provision did not insulate it from liability in its capacity as employer 10. Co-operators appealed to the Supreme Court of Canada, which by a 3:2 majority, dismissed the appeal. The disposition of the appeal turned on the somewhat rocky reception that Harrison received in that court. Spence J., with whom Taschereau C.J.C. concurred, approved Harrison; Judson J. declined to overrule it and specifically applied it; Ritchie J., dissenting, distinguished it; and Cartwright J., the other dissenting judge, would have found that it was wrongly decided.
19Despite this judicial buffeting, Harrison has been considered and, most frequently, followed in a number of cases in British Columbia, Saskatchewan, Manitoba, Ontario, New Brunswick [page627] and Newfoundland. This court has considered it in 14 of those cases. Except for the judgment of Cartwright J., dissenting, in Co-operators Insurance, none of those cases has suggested that Harrison was wrongly decided and it is, in my view, too firmly fixed in the judicial landscape to advance that proposition now.
Derksen v. 539938 Ontario Ltd.
20Derksen v. 539938 Ontario Ltd. 11 did not involve statutory interpretation. Rather, it turned on the language of insurance policies issued by an automobile insurer, a commercial general liability insurer and an excess loss insurer. The case arose on a motion to determine the respective obligations of the three insurers to respond to claims arising out of an unusual accident. An employee of an electrical contractor, in clearing a work site, placed a steel base plate on a trailer tow bar attached to a supply truck. He failed to stow the plate securely and, as he drove the supply truck along the highway, the plate flew off and through the windshield of an oncoming school bus, killing one child and seriously injuring three others. Stach J. held that all three insurance policies provided coverage. As a preliminary step in making that finding, he considered the application of s. 267.1 of the Act and concluded that, while that section protected the employer in its capacity as owner of the automobile from liability for pecuniary losses, it was not protected in its capacity as employer. He cited Harrison in support of that conclusion.
21This court affirmed the decision of Stach J. In its endorsement, it made this observation about Harrison [paras. 7 and 8]:
Stach J. reviewed the law going back to Harrison v. Toronto Motor Car Ltd., 1944 ONCA 86, [1945] 1 D.L.R. 286 (Ont. C.A.) and concluded that s. 267.1 protected Roy's Electric qua owner but not qua employer.
Stach J. referred to the decision of the Supreme Court of Canada in Co-operators Insurance Association v. Kearney (1964), 1964 SCC 21, 48 D.L.R. (2d) 1, but did not analyze it in his extensive and persuasive reasons. In that case, in dissent, Cartwright and Ritchie JJ. were of the view that Harrison was wrongly decided 12. Spence J., for the majority, accepted it as the law upon the basis that its consequences were well known and the Ontario Legislature had not seen fit in the intervening 19 years to change the law. An additional 35 years has since passed; accordingly, Harrison must be accepted and we agree that the conclusion of Stach J. follows from it.
(Emphasis added) [page628]
22The employer's further appeal to the Supreme Court of Canada was dismissed 13. Major J., speaking for the court, made no reference to Harrison in his reasons.
Tutton v. Pickering
23In Tutton v. Pickering (Town) 14, the municipality was the employer of a work crew whose negligence caused injuries to a woman in a motor vehicle accident. The accident arose from a miscommunication between the work crew, working on a streetlight, and a police officer, directing traffic at an intersection. The work crew was immunized from liability under s. 266(1) of the Act in its Bill 68 form. The trial judge held that the municipality, as employer, was vicariously liable for the work crew's negligence and therefore not immunized by the Act.
24The municipality's appeal to this court was allowed. The court held that the appeal turned on the application of s. 266(5) of the Act. That subsection reads:
(5) In a proceeding involving a plaintiff who cannot recover against the owner of an automobile, the occupant of an automobile or a person present at the incident because of the operation of subsection (1), a defendant is not liable for damages caused by any person who is excluded from liability because of the operation of subsection (1) and is not liable to contribute or indemnify in respect of such damages.
25In the view of Finlayson J.A., who gave the judgment of this court, s. 266(5) made it clear that, in the circumstances of the case, the municipality could not be held liable for damages caused by its employee as "a person present at the incident". In reaching that conclusion, he referred to Harrison, Kearney and Derksen and said, with respect to the subject of vicarious liability, in para. 12:
In this case, the particular relationship which forms the basis for the vicarious liability claim is that of employer and employee. The respondent is quite right in suggesting that the vicarious liability of the employer is not derivative in that an immunization of the employee from liability, by statute for example, does not automatically immunize the employer from vicarious liability. This is the principle for which both Harrison and Kearney stand. Namely, that statutes which immunize specific categories of potential tortfeasors from liability do not remove the possibility of suit against those who may be vicariously liable for the wrongful action in their capacity as employers.
26But he then went on in the next paragraph to observe:
The problem facing the respondent [plaintiff] in this case, however, is that those cases did not deal with any equivalent of s. 266(5). In this case, the [page629] employer is not relying on the immunity of its employees from liability, but is rather asserting that s. 266(5) provides a separate immunity for other defendants and therefore "catches" the vicarious liability situation.
27In other words, the municipality was exonerated by the operation of a statutory provision that specifically addressed the circumstances in Tutton. But, unlike the employer in the present case, the municipality was not the owner of the vehicle involved in the accident and was thus not protected by s. 266(1). In Tutton, this court did not have to confront the question -- as it does in the present case -- whether the defendant municipality would have been liable if it had been both owner of the motor vehicle involved in an accident and the employer of its driver.
Harroun (Litigation Guardian of) v. Turriff
28Harroun (Litigation Guardian of) v. Turriff 15 arose out of a collision between two motor vehicles. The plaintiffs were in one vehicle; the other was being operated by a driver in the course of his employment. The driver's employer did not own the second vehicle. It was owned by, and leased from, a car leasing company.
29On motion for the determination of a question of law raised by the pleadings, the motion judge ruled that the employer was not "a person present at the incident" within the meaning of s. 267.1(1) of the Act (then in its Bill 164 form). That section reads identically with s. 267.1(1) in the Bill 59 version.
30The employer appealed to this court. It argued that the effect of the order of the motion judge was that, while the owner of a motor vehicle is protected by s. 267.1 from the statutory vicarious liability imposed by the Highway Traffic Act for the negligence of the driver, the employer of such a driver is not specifically protected by that section and that, in order to overcome that result, an employer who is vicariously liable for his employee's negligent driving must be considered "present at the incident" within s. 267.1.
31This court rejected that proposition. McMurtry C.J.O., who gave the judgment of the court, referred to a number of cases (including Derksen, Tutton, Harrison and Kearney) from which, he concluded, at para. 13, "[i]t is clear ... that an employer is not a person "present at the incident" merely because one of its employees is involved". However, he accepted the employer's argument that it was not "at fault or negligent" in respect of any pecuniary losses that flowed from its vicarious liability for the acts of its employee, and was therefore entitled to rely on s. 267.1(7) to [page630] immunize it from liability for pecuniary losses caused by its employee and to render it liable only for pecuniary loss for which it was independently at fault or negligent 16.
32Again, it must be observed that, as in Tutton, the employer in Harroun was not the owner of the vehicle that the employee was driving, and the court did not have to determine the question whether the employer would have been liable if it had been both owner of the motor vehicle involved in the accident and the employer of its driver.
The Bill 59 "protected defendant" cases
33All of the foregoing cases were decided before Bill 59 -- and the specifically labelled "protected defendant" provisions of the Insurance Act -- came into being. Since then, there have been decisions of judges at first instance going both ways on the issue that is squarely raised in the present case. Hechavarria v. Reale 17 held that a vicariously liable defendant in the position of Atherley Towing was a protected defendant. Pugsley v. Rahbar 18, Walker v. Ritchie 19 and Carter (Litigation Guardian of) v. Sanders 20 all held that it was not.
Hechavarria v. Reale
34In Hechavarria v. Reale, the deceased was killed in a motor vehicle accident caused by the negligent driving of a driver of a school bus. The bus was owned by Laidlaw Transit Inc., which was also the driver's employer. Laidlaw, as owner of the [page631] school bus, claimed the status of protected defendant. Nordheimer J. held that it was entitled to that status. He indicated, at para. 37, that he had difficulty with the proposition that the same party in the same factual circumstances could be both a protected defendant as owner of the vehicle and an unprotected defendant as the employer of the driver of the vehicle. He distinguished Derksen on the ground that the employee's vicarious liability in that case was independent of the operation of the motor vehicle of which it was the owner, and continued, at para. 39:
The decision does not stand, as I read it, for the proposition that a distinction can be drawn between a party qua owner and a party qua employer where the negligent act, for which the employer is to be held vicariously liable, arises from the actual operation of the motor vehicle of which the employer is the owner. For one reason, such a result would too easily defeat the fundamental purpose of the no-fault legislation which, as the Court of Appeal pointed out in Meyer v. Bright (1993), 1993 ONCA 3389, 15 O.R. (3d) 129, was to control the cost of automobile insurance premiums to the consumer by eliminating some tort claims. Further, there does not appear to be any rational reason for exempting owners of vehicles who are employers from the effects of the no-fault regime while including owners of vehicle who are not employers.
35He distinguished Tutton and Harroun on the ground that, in those cases, the employer was not the owner of the vehicle involved in the accident, and concluded that Laidlaw was a protected defendant under the Act.
Pugsley v. Rahbar
36In Pugsley v. Rahbar 21, the plaintiff, a wheelchair user, was injured while a passenger in a taxi van owned by City Peel Taxi and operated by its employee, Farhad Rahbar. It was alleged that Rahbar was negligent both in the manner in which he loaded and secured the plaintiff's wheelchair and in the operation of the taxi van itself. On a motion to determine before trial, as a question of law, whether City Peel Taxi was a protected defendant under the Act, Molloy J. held that it was not. She noted that Hechavarria was the only case decided under Bill 59 on this question. She reviewed that case as well as Derksen, Tutton and Harroun. With respect to the "no rational reason" passage from the reasons in Hechavarria, set out above, she observed, at para. 29:
However, in my view, it is equally irrational to exempt one employer on the basis that it happens coincidentally to also be the owner of the vehicle involved, while imposing full liability on an employer in precisely the [page632] same situation except that the employee is driving a vehicle which is owned by someone else. Surely, the concept of an employer's vicarious liability for the acts of its employee should be uniformly applied regardless of factors extraneous to the employment relationship (such as ownership of the vehicle).
37She then followed, in para. 30, with these references to Harrison, Kearney and Derksen:
I do recognize the seeming irrationality of limiting the liability of a driver in order to keep insurance rates down, but then holding the driver's employer vicariously responsible for all of the damages, including damages beyond what the employee is liable for. However, that issue was conclusively determined in 1945 by the Court of Appeal in Harrison v. Toronto Motor Car Ltd. and I am bound by that result. In Co-operators Insurance Association v. Kearney (1964), 1964 SCC 21, 48 D.L.R. (2d) 1 (S.C.C.) Cartwright and Ritchie, in dissent, would have refused to follow Harrison on the basis that it was wrongly decided 22. However, the majority of the Supreme Court of Canada held that Harrison was good law, noting that its consequences were well known and the legislature had not seen fit to amend the legislation in the intervening 19 years. In Derksen the Ontario Court of Appeal again held that Harrison was good law. The Court (at para. 8) noted the conflict between the majority and dissenting views in Co-operators Insurance v. Kearney and stated, "An additional 35 years has since passed; accordingly Harrison must be accepted ...".
38Molloy J. then concluded that Harrison was applicable and binding upon her, and held that, if City Peel Taxi were to be found at trial to be vicariously liable for the negligence of its employee in the operation of the taxi van, it would not be a protected defendant under the Act.
Walker v. Ritchie
39In Walker v. Ritchie 23, the principal plaintiff was driving along a paved, two-lane road at about 10:00 p.m. At the same time, the defendant Ritchie was driving home from his day's work in a tractor-trailer. The tractor was owned by Ritchie and the trailer was owned by his employer, Harold Marcus Limited. Ritchie was found to be driving in the course of his employment at the time of the accident. Ritchie's home was on the side of the road on which the Walker vehicle was travelling. Ritchie drove past his laneway, stopped, and endeavoured to back the trailer and tractor into his lane. The rig got stuck, but Ritchie got it moving again and was trying to pull it back as the Walker vehicle approached. The Walker vehicle struck the rear of the trailer and [page633] flipped and vaulted into the ditch. The principal plaintiff suffered very serious injuries. At trial, Ritchie was found to be solely responsible for the accident.
40The decision of this court in Walker v. Ritchie is being released contemporaneously with the decision in the present case. Walker raises a number of issues but, for present purposes, I propose to deal here only with the protected defendant issue. On that subject, Brockenshire J. carefully reviewed most of the cases referred to above, including Hechavarria, Pugsley, Harrison, Kearney, Derksen, Tutton and Harroun. He concluded that review in these words, at para. 24:
In my view, the point that arises from this review is that in 1945, our Court of Appeal found that the Highway Traffic Act provision exempting owners and drivers from liability to gratuitous passengers did not exempt the employer of the driver, even if the employer was also the owner of the vehicle. Nineteen years later, the Supreme Court of Canada agreed with that principle. Our Court of Appeal in all of Derksen, Tutton and [Harroun] found that the reasoning in Harrison applied to s. 266(1) and 267.1(1) of the Insurance Act. Exactly the same wording is carried forward from Bill 68 and Bill 164 into the present Bill 59 and is used in all of s. 267.5(1), (3) and (5).
and, at para. 28:
I conclude that the common law of vicarious liability of employers continues in full force and effect in relation to vehicle owners that are employers of the drivers of their vehicles, that this liability is separate and apart from the statutory liability of a vehicle owner for the negligence of someone driving the vehicle with the owner's consent, that the statutory bar in the Insurance Act that had protected employers has been removed, and that the new limitations on liability in Bill 59 apply only to owners, not employers, even though the employer, like Mr. Krug [in Harrison], is also the vehicle owner. I had found Ritchie to be solely responsible for the accident, and I find Marcus vicariously liable as his employer for the entire damages caused by him to the plaintiffs, without the deductions and limitations that would have limited the quantum of that responsibility under the Insurance Act if the action was against Marcus as owner only.
Carter (Litigation Guardian of) v. Sanders
41The last Bill 59 case on this subject, Carter (Litigation Guardian of) v. Sanders 24, can be covered briefly. The deceased, bound for a holiday in Mexico, called a limousine company to take her to the airport. On that trip, the limousine was struck by a transport driving in the wrong lane. The owner of the transport, which was also the employer of its driver, sought protected defendant status under the Act. McLean J. noted the contrary [page634] decisions on this subject in Hechavarria and Pugsley, found Pugsley to be "much more persuasive on the point" and ruled that the employer did not enjoy protected defendant status.
The present case
42In his reasons in the present case, Bryant J. reviewed the authorities noted above and concluded, at para. 32:
I respectfully decline to follow the reasons and conclusions set out in Hechavarria. I find that the Court of Appeal in Derksen clearly held that Harrison is the accepted law in Ontario. I have reviewed Molloy J.'s reasons for judgment in Pugsley v. Rahbar and Brockenshire J.'s in Walker v. Ritchie. I concur with their decisions that an owner qua employer does not have immunity under Bill 59 for the negligent operation of a motor vehicle by an employee in the course of her or his employment.
43I agree. I share the opinion expressed by Molloy J. in Pugsley that the determination of the protected defendant status in cases such as the present case is governed by the decision of this court in Harrison. Once a court concludes -- as I conclude -- that Harrison is still good law in this province, it follows that Bryant J. correctly decided the question before him.
44In Harrison, a defendant otherwise protected from liability as owner of a motor vehicle was nevertheless held liable to an injured party on the basis of his vicarious liability for the negligence of his employee. So, in the present case, a defendant otherwise enjoying protected defendant status as owner of a motor vehicle is nevertheless liable to an injured party for the negligence of its employee. Hechavarria cannot stand in the face of Harrison. On the question of the employer's vicarious liability, the gratuitous passenger provisions of the Highway Traffic Act and the protected defendant provisions of the Insurance Act are indistinguishable in principle from each other. Just as the employer's vicarious liability superseded the restriction against the owner's liability in Harrison, so, too, in my view, the employer's vicarious liability supersedes the owner's liability in the present case, as, indeed, in all of the cases that have decided the question under Bill 59 except Hechavarria.
A Postscript: S. 267.5(10.1)
45Section 267.5(10.1) was added to the Insurance Act by S.O. 2002, c. 22, and came into force on October 1, 2003. It answered, in the negative, the question whether an employer's exposure for vicarious liability was any greater than his exposure as owner of the vehicle. The amendment reads: [page635]
Vicarious liability
267.5 (10.1) Despite any provision of this Part, a person vicariously liable for the fault or negligence of a protected defendant is not, in respect of the person's vicarious liability, liable for any amount greater than the amount of damages for which the protected defendant is liable.
46Both sides sought to take comfort from this amendment. Counsel for Atherley Towing argued that it was a statutory confirmation of the legislature's original intention to put persons vicariously liable in the same position as any other protected defendant. Counsel for the Vollicks argued that it was a statutory innovation, reversing the previous position that excluded persons vicariously liable from the protection conferred on protected defendants. Neither counsel provided the court with any reference source that would help us to divine what the legislature had in its collective mind when it enacted the amendment. Without the comfort of such reference material, I am not prepared to speculate whether the amendment was meant to have the effect that Atherley Towing urges or the effect that the Vollicks urge, and I have been uninfluenced by s. 267.5(10.1) in reaching my decision.
Disposition
47I would dismiss the appeal. At the conclusion of the argument, counsel indicated their agreement that the successful party on this appeal would be awarded costs of the appeal in the amount of $16,500 and costs of the motion before Bryant J. in the amount of $5,800, both sums inclusive of disbursements and GST. These suggested figures are reasonable, and I would award costs to the respondents in those amounts.
Appeal dismissed.
SCHEDULE A
Court Proceedings For Accidents After The Automobile Insurance Rate Stability Act, 1996
Protection from liability; income loss and loss of earning capacity
267.5(1) Despite any other Act and subject to subsection (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for the following damages for income loss and loss of earning capacity from bodily injury or death arising directly or indirectly from the use or operation of the automobile:
Damages for income loss suffered in the seven days after the incident.
Damages for income loss suffered more than seven days after the incident and before the trial of the action in excess of 80 per cent of the net income loss, as determined in accordance with the regulations, suffered during that period.
Damages for loss of earning capacity suffered after the incident and before the trial of the action in excess of 80 per cent of the net loss of earning capacity, as determined in accordance with the regulations, suffered during that period.
Application
(2) Subsection (1) applies to all actions, including actions under subsection 61(1) of the Family Law Act.
Protection from liability; health care expenses
(3) Despite any other Act and subject to subsections (4) and (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for expenses that have been incurred or will be incurred for health care resulting from bodily injury arising directly or indirectly from the use or operation of the automobile.
Exception for catastrophic impairment
(4) Subsection (3) does not apply if the injured person has sustained a catastrophic impairment, as defined in the regulations, arising directly or indirectly from the use or operation of the automobile.
Protection from liability; non-pecuniary loss
(5) Despite any other Act and subject to subsection (6), the owner of an automobile, the occupants of an automobile and any person present at the incident are not liable in an action in Ontario for damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61(2) (e) of the Family Law Act, from bodily injury or death arising directly or indirectly from the use or operation of the automobile, unless as a result of the use or operation of the automobile the injured person has died or has sustained,
(a) permanent serious disfigurement; or
(b) permanent serious impairment of an important physical, mental or psychological function.
Application of subss. (1), (3) and (5)
(6) Subsections (1), (3) and (5) do not protect a person from liability if the person is defended in the action by an insurer that is not licensed to undertake automobile insurance in Ontario unless the insurer has filed an undertaking under section 226.1.
Amount of damages for non-pecuniary loss
(7) Subject to subsections (5), (12), (13) and (15), in an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the court shall determine the amount of damages for non-pecuniary loss to be awarded against a protected defendant in accordance with the following rules: [page637]
The court shall first determine the amount of damages for non-pecuniary loss for which the protected defendant would be liable without regard to this Part.
The determination under paragraph 1 shall be made in the same manner as a determination of the amount of damages for non-pecuniary loss in an action to which this section does not apply and, in particular, without regard to,
i. the statutory accident benefits provided for under subsection 268(1),
ii. the provisions of this section that protect protected defendants from liability for damages for pecuniary loss, and
iii. the provisions of paragraph 3.
- The amount of damages for non-pecuniary loss to be awarded against the protected defendant shall be determined by reducing the amount determined under paragraph 1 by,
i. in the case of damages for non-pecuniary loss other than damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, the greater of,
A. $15,000, and
B. the amount prescribed by the regulations, and
ii. in the case of damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, the greater of,
A. $7,500, and
B. the amount prescribed by the regulations.
- If fault or negligence on the part of the person entitled to damages for non-pecuniary loss contributed to those damages, the award for damages shall be reduced under paragraph 3 before the damages are apportioned under section 3 of the Negligence Act.
Same
(8) Subsection (7) applies in respect of each person who is entitled to damages for non-pecuniary loss.
Costs
(9) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, the determination of a party's entitlement to costs shall be made without regard to the effect of paragraph 3 of subsection (7) on the amount of damages, if any, awarded for non-pecuniary loss.
Liability of other persons
(10) Subsections (1), (3) and (5) do not relieve any person from liability other than a protected defendant. [page638]
Motion to determine if threshold met; health care expenses
(11) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, a judge shall, on motion made before trial with the consent of the parties or in accordance with an order of a judge who conducts a pre-trial conference, determine for the purpose of subsection (4) whether the injured person has sustained a catastrophic impairment arising directly or indirectly from the use or operation of the automobile.
Motion to determine if threshold met; non-pecuniary loss
(12) In an action for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile, a judge shall, on motion made before trial with the consent of the parties or in accordance with an order of a judge who conducts a pre-trial conference, determine for the purpose of subsection (5) whether, as a result of the use or operation of the automobile, the injured person has died or has sustained,
(a) permanent serious disfigurement; or
(b) permanent serious impairment of an important physical, mental or psychological function.
Determination binding
(13) The determination of a judge on a motion under subsection (11) or (12) is binding on the parties at the trial.
Determination at trial; health care expenses
(14) If no motion is made under subsection (11), the trial judge shall determine for the purpose of subsection (4) whether the injured person has sustained a catastrophic impairment arising directly or indirectly from the use or operation of the automobile.
Determination at trial; non-pecuniary loss
(15) If no motion is made under subsection (12), the trial judge shall determine for the purpose of subsection (5) whether, as a result of the use or operation of the automobile, the injured person has died or has sustained,
(a) permanent serious disfigurement; or
(b) permanent serious impairment of an important physical, mental or psychological function.
Footnotes
- Charron J.A. provided a helpful canvass of the evolution of the regimes described in this paragraph in Gignac v. Neufeld (1999), 1999 ONCA 2182, 43 O.R. (3d) 741, [1999] O.J. No. 1295 (C.A.), at para. 18.
- Incorporated in S.O. 1990, c. 2 [Insurance Statute Law Amendment Act, 1990].
- Incorporated in S.O. 1993, c. 10 [Insurance Statute Law Amendment Act, 1993].
- Incorporated in S.O. 1996, c. 21 [Automobile Insurance Rate Stability Act, 1996].
- I have set out s. 267.5 in its entirety, as it read at the time of the accident giving rise to this appeal, as a schedule to these reasons.
- 1944 ONCA 86, [1945] O.R. 1, 1 D.L.R. 286 (C.A.).
- R.S.O. 1937, c. 288.
- 1964 SCC 21, [1965] S.C.R. 106, 48 D.L.R. (2d) 1.
- 1963 ONSC 123, [1963] 2 O.R. 1, 38 D.L.R. (2d) 290 (H.C.J.).
- 1963 ONCA 25, [1964] 1 O.R. 101, 41 D.L.R. (2d) 196 (C.A.).
- [1998] O.J. No. 3723, 37 M.V.R. (3d) 59 (Gen. Div.), affd 1999 ONCA 3749, [1999] O.J. No. 2743, 45 M.V.R. (3d) 6 (C.A.), affd 2001 SCC 72, [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27.
- This statement is a correct description of the view of Cartwright J. but not of the view of Ritchie J.: see para. 18.
- 2001 SCC 72, [2001] 3 S.C.R. 398, [2001] S.C.J. No. 27.
- (1999), 1999 ONCA 1452, 46 O.R. (3d) 503, [1999] O.J. No. 4811 (C.A.).
- (2000), 2000 ONCA 16810, 50 O.R. (3d) 634, [2000] O.J. No. 3037 (C.A.).
- As noted, the court in Harroun held that s. 267.1(7) of Bill 164 protected the employer from any finding that it was at fault or negligent in respect of pecuniary losses flowing from its vicarious liability for the acts of its employee. The language of s. 267.1(7) of Bill 164 (which governed accidents occuring between January 1994 and October 1996) was not carried forward into Bill 59 (which governed accidents, such as the present case, occuring after October 1996). Presumably, that is why the appellants' factum in the present case referred to Harroun only as authority for the statement of the object and effect of the "no-fault" legislation that began with Bill 68 in 1990. No submission was made to us in argument that Harroun was decisive of the issue in this appeal.
- (2000), 2000 ONSC 22711, 51 O.R. (3d) 364, [2000] O.J. No. 4288 (S.C.J.) (Nordheimer J.)
- 2002 ONSC 79674, [2002] O.J. No. 2779, 41 C.C.L.I. (3d) 62 (S.C.J.) (Molloy J.).
- 2003 ONSC 90084, [2003] O.J. No. 5596, 20 C.C.L.I. (4th) 285 (S.C.J.) (Brockenshire J.). The decision of this court on the appeal in Walker v. Ritchie is being released contemporaneously with these reasons 2005 ONCA 22194, [2005] O.J. No. 2633 (C.A.).
- [2004] O.J. No. 3558, [2004] O.T.C. 765 (S.C.J.) (McLean J.).
- 2002 ONSC 79674, [2002] O.J. No. 2779, 41 C.C.L.I. (3d) 62 (S.C.J.).
- See footnote 12 above. Although Cartwright J. expressed the view that Harrison was wrongly decided, Ritchie J. did not.
- 2003 ONSC 90084, [2003] O.J. No. 5596, 20 C.C.L.I. (4th) 285 (S.C.J.).
- [2004] O.J. No. 3558, [2004] O.T.C. 765 (S.C.J.).
