Neutral Citation: 1995 ONICDRG 26

File No. A-007701

ONTARIO INSURANCE COMMISSION

BETWEEN:

BRIAN C. PORTCH

Applicant

and

MARKEL INSURANCE COMPANY OF CANADA

Insurer

File No. A-008360

AND BETWEEN:

BRIAN C. PORTCH

Applicant

and

ROYAL INSURANCE COMPANY OF CANADA

Insurer

DECISION ON PRELIMINARY ISSUES

Issues:

The Applicant, Brian C. Portch, was injured on September 21, 1992. He initially applied for workers' compensation benefits, but was refused on the basis that he was an independent operator who had not opted for workers' compensation coverage. He then applied for and received statutory accident benefits from the Markel Insurance Company of Canada ("Markel"), paid under Ontario Regulation 672¹. Mr. Portch received weekly income benefits of $600 until October 2, 1993, when they were terminated ($600/week x 47 weeks = $28,200).

Markel claims that it is entitled to recover all of the weekly income benefits that it paid to Mr. Portch because he was not injured in an "accident", as defined in section 2 of the Schedule. In the alternative, Markel submits that if Mr. Portch is entitled to accident benefits, the Royal Insurance Company of Canada ("Royal") is responsible for paying them. Finally, Markel submits that if it is required to pay accident benefits to Mr. Portch, it should be relieved of any further liability if he is found to be entitled to workers' compensation benefits.

Royal adopted the submissions of Markel, except for the priority issue. Royal's position is that if any insurer is responsible for paying accident benefits to Mr. Portch, it is Markel, not Royal.

The parties were unable to resolve their disputes through mediation and, therefore, Mr. Portch applied for arbitration under the Insurance Act. It was agreed at the pre-hearing discussion that the preliminary issues should be dealt with first. Therefore, this hearing did not address whether Mr. Portch continued to meet the eligibility test in section 12 of the Schedule for any period from October 2, 1993, onwards.

The preliminary issues to be determined are:

1. Was Mr. Portch injured as a result of an "accident", as defined in section 2 of the Schedule?

2. If Mr. Portch was not injured in an "accident", should he be required to repay the benefits that he has received from Markel ($28,200)?

3. If Mr. Porch was injured in an "accident":

(a) Which insurance company - Markel or Royal - is responsible for paying the benefits to which he is entitled?

(b) What is the impact of his claim for workers' compensation benefits on his entitlement to accident benefits?

4. Mr. Portch also claims his expenses related to the hearing.

Result:

1. Mr. Portch was injured as a result of an accident, as defined in section 2 of the Schedule. Therefore, he is entitled to weekly income benefits under section 12 for the period during which he is substantially unable to perform the essential tasks of his pre-accident employment or occupation.

2. Mr. Portch is not required to repay benefits received.

3. (a) Royal is the Insurer responsible for paying Mr. Portch's accident benefits.

(b) The payment of accident benefits is subject to the assignment given by Mr. Portch in the event that he is found to be entitled to workers' compensation benefits.

4. Mr. Portch is entitled to his expenses related to this preliminary hearing, payable by Royal.

Hearing:

The hearing was held in North York, Ontario, on September 19, 1994, before me, David R. Draper, arbitrator.

Present at the Hearing:

Applicant:

Brian C. Portch

Applicant's Representative:

David B. Hayward Barrister and Solicitor

Markel's Representative:

Mark Wilson Barrister and Solicitor

Royal's Representative:

Wayne Edwards Barrister and Solicitor

Witnesses:

1. Brian C. Portch - Applicant

2. Paul McIntyre - Price Club employee

3. Laurence Young - Manager of Safety and Compliance, Norris Transport Limited

Exhibits:

The exhibits are listed in Appendix A to this decision.

Reasons for Decision:

1. The Facts

Mr. Portch is 49 years old. He is licensed as a mechanic, and has worked for many years in various aspects of the trucking industry. In October 1991, he purchased a "rig": a 1987 Ford truck and a 1981 Highway trailer. The trailer is approximately 27 feet long and enclosed, with a sliding door on the back.

Mr. Portch began working for Norris Transport Limited in October 1991 as an "owner-operator". Norris Transport is in the business of delivering freight. At that time, it employed a couple of drivers, but owner-operators did most of the deliveries. Mr. Portch drove exclusively for Norris Transport. The name of the company was on his trailer, and he did not use his rig for any other commercial purpose. Although Mr. Portch owned the truck and trailer, Norris Transport held the licence required to use it for hauling freight.

In the past, the owner-operators were covered for workers' compensation through Norris Transport. At the beginning of 1992, however, the Workers' Compensation Board decided that independent operators, such as Norris Transport's owner-operators, had to arrange for their own workers' compensation coverage. The Board sent a "Contractor Request for Personal Coverage" form to each owner-operator, including Mr. Portch. On February 28, 1992, Mr. Portch completed the form, declining personal coverage.

On September 21, 1992, Mr. Portch was injured. Two witnesses, Mr. Portch and Mr. McIntyre, described the incident somewhat differently, but the essential facts for the purposes of this hearing were uncontested.

Mr. Portch was assigned by Norris Transport to deliver a load of fire logs to the Price Club, a large retail store. Norris Transport's drivers, including Mr. Portch, were responsible for loading and unloading their trailers. However, the method varied from job to job: sometimes Mr. Portch did the loading or unloading himself; sometimes he used a fork lift; sometimes someone at the job site either did the loading or unloading, or assisted Mr. Portch.

On September 20, 1992, the shipper loaded Mr. Portch's trailer with fire logs, that were on pallets or skids. Mr. Portch parked the truck overnight close to his home. On the morning of September 21, 1992, he drove to the Price Club to make his delivery.

This Price Club location has a number of loading docks. The loading docks allow trucks to back into a loading area that is level with the floor of the trailer, making loading and unloading easier. Some of the loading docks are affixed with a steel plate designed to be raised and then lowered onto the floor of the trailer. The steel plate has a hinged "lip" at the bottom that must be extended for it to sit flat on the floor of the trailer. When it is in place, the steel plate forms a ramp between the loading area and the trailer. This allows a fork-lift (tow motor) to be driven easily between the loading platform and the trailer. The steel plate is very heavy and, therefore, is designed to be operated through a system of hydraulics.

The complication in this case is that on September 21, 1992, the store was not yet open for business and the loading docks were not fully operational. In particular, the hydraulic system for lifting and lowering the steel plates was not working.

Mr. McIntyre and the manager, Isaac, were the only employees working at the store in September 1992. According to Mr. McIntyre, they had refused a number of deliveries, but had begun accepting a limited number of deliveries from the Price Club's own distribution centre. Because the hydraulic system was not working, Mr. McIntyre and Isaac had worked out an alternate procedure. They connected a chain to the steel plate and to one of the Price Club's fork-lifts. The fork-lift was used to pull the plate up and then to lower it down onto the floor of the trailer. According to Mr. McIntyre, they had used this technique four or five times, without incident.

Mr. Portch and Mr. McIntyre disagreed about how willing the Price Club was to accept his delivery, but that is not crucial to my decision. Mr. McIntyre could not locate the chain that had been used previously, but Mr. Portch had one in his truck. Mr. McIntyre connected the chain to the fork-lift. Mr. Portch then climbed into the trailer to pull out the "lip" of the plate when it was raised. The two men also disagreed about whose idea it was for Mr. Portch to do this, but, again, it is not critical to the decision. Using the fork-lift, Mr. Mclntyre raised the steel plate, and Mr. Portch attempted to extend the "lip". Mr. McIntyre was unable to lower the plate slowly. It crashed down onto Mr. Portch's feet, injuring his feet and left shoulder.

Mr. Portch reported the accident to Norris Transport. He was advised to apply for workers' compensation benefits, which he did. He returned to work, but testified that he was unable to do any heavy lifting. On or about October 26, 1992, he stopped working due to his injuries. At some point, he was advised by the Workers' Compensation Board that he was not entitled to benefits because he had declined coverage. He received formal notice of the Board's decision in a letter, dated November 6, 1992. It states:

Sole proprietors, partners, the spouse of a sole proprietor or partner who is active in the business and does not receive a wage, executive officers of corporations, a contractor/sub-contractor, an executive officer of a limited liability corporation and independent operators are entitled to benefits when they specifically make application for personal coverage in accordance with Section 11 of the Act.

No request was made for personal coverage, therefore, no coverage was in effect on the date of the accident. Your claim for benefits therefore cannot be allowed.

On March 29, 1993, six months after he was injured, Mr. Portch applied to Markel for weekly income benefits under the Schedule. His claim was based on an automobile policy that Markel issued to Norris Transport as a "common carrier". Markel paid him weekly income benefits for 47 weeks, terminating them on October 2, 1993. Markel now says that these benefits were paid in error, and is seeking repayment.

2. Was Mr. Portch injured in an "accident"

Markel and Royal submit that Mr. Portch's injuries did not result from the type of accident covered by automobile insurance. At issue in this case is the scope of the no-fault system.

In June 1990, Ontario moved to a primarily "no-fault" system for compensating people injured in automobile accidents. The injured person's right to recover damages was restricted, but he or she was given access to enhanced "no-fault" benefits. In adopting this system, one of the important public policy considerations was its scope; what types of losses would be included?

The Legislature chose wording similar to that used for many years in insurance policies, and interpreted frequently by Canadian courts. The right to recover damages for bodily injury was restricted "[i]n respect of loss or damage arising directly or indirectly from the use or operation . . . of an automobile (section 266 of the Insurance Act, emphasis added). According to section 12(1) of the Schedule, weekly income benefits are to be paid to those injured "as a result of an accident". "Accident" is defined in section 2 of the Schedule, as follows:

"accident" means an incident in which the use or operation of an automobile causes, directly or indirectly, physical, psychological or mental injury or causes damage to any prosthesis, denture, prescription eyewear, hearing aid or other medical or dental device; [emphasis added]

Senior Arbitrator Rotter considered the definition of "accident" in Gordon McAllister and Dominion of Canada General Insurance Company, December 3, 1992, OIC File No. A-000926. I agree with her analysis, although I would express the test somewhat differently. Mr. Portch must establish that he was injured:

1. as a result of an incident that

2. involved the use or operation of an automobile, and

3. that use or operation caused his injuries, directly or indirectly.

Mr. Portch was clearly injured as a result of an "incident", or discrete event. The dispute is whether the incident involved the use or operation of an automobile and, if so, whether that use or operation caused his injuries, directly or indirectly. Markel and Royal take the position that Mr. Portch was injured as result of the malfunctioning of the steel plate or the fork-lift, and not as a result of any use or operation of his vehicle.

Before the amendments to the Insurance Act and the enactment of the Schedule, the courts had developed two tests for deciding if a person's injuries arose from the use or operation of a motor vehicle:

1. The "purpose test", from the decision of the Supreme Court of Canada in Stevenson v. Reliance Petroleum Ltd.; Reliance Petroleum Ltd. v. Cdn. General Insurance Co., 1956 CanLII 27 (SCC), [1956] S.C.R. 936, 5 D.L.R. (2d) 673 (per Rand J.):

The expression "use or operation" would or should, in my opinion, convey to one reading it all accidents resulting from the ordinary and well-known activities to which automobiles are put, all accidents which the common judgment in ordinary language would attribute to the utilization of an automobile as a means of different forms of accommodation or service.

2. The "chain of causation test", from the decision of the Supreme Court of Canada in Law, Union & Rock Insurance Co. v. Moore's Taxi Ltd. (1959), 1959 CanLII 81 (SCC), [1960] S.C.R. 80, 22 D.L.R. (2d) 264 (per Ritchie J.):

It is sufficient to say that the words "claims arising out of ... the ownership, use or operation ... of any motor vehicle" as used in this exclusion can only be construed as referring to claims based upon circumstances in which it is possible to trace a continuous chain of causation unbroken by the interposition of a new act of negligence and stretching between the negligent use and operation of a motor vehicle on the one hand and the injuries sustained by the claimant on the other.

These tests have been applied in many subsequent decisions involving similar wording in provisions specifying both coverage and exclusions². A number of judges have commented on the broad or liberal interpretation given to the phrase "use or operation". Clearly, "use or operation" extends well beyond driving the vehicle. Injuries resulting from discharging gasoline from a tanker truck (Stevenson), draining or syphoning gasoline from a vehicle (Pioneer Grain and Shelton), and drilling a hole in the trunk of an automobile to connect wires to a trailer (Gramak), have all been found to arise from the "use or operation" of an automobile.

I must assume that the Legislature was aware of the courts' approach when it chose the phrase, "use or operation". Mr. Portch's vehicle is designed for transporting goods. This is reinforced by the fact that trailers are included in the definition of "automobile" in section 224 of the Insurance Act by virtue of section 1(1) of the Compulsory Automobile Insurance Act. As stated by the Supreme Court of Canada in Stevenson, the "use or operation" of a vehicle designed to transport goods includes delivery (see also, Huba v. Schulze et al.). Mr. Portch was injured while preparing his truck to be unloaded. In my opinion, this falls well within the "ordinary and well-known activities" to which a truck and trailer is put.

The more difficult question is whether Mr. Portch's use or operation of the vehicle caused his injuries, directly or indirectly. The traditional test is the "chain of causation" test. However, that test was developed to determine whether an insurer was required to indemnify its negligent policyholder; does the insurance policy cover the person's negligence? In a no-fault scheme, negligence is less important. It is not obvious, therefore, that the chain of causation test is as relevant in the no-fault context. Nevertheless, some judges have continued to apply it. In Tippet v. Doe, et al. (1987), 1987 CanLII 2607 (BC SC), 27 C.C.L.I. 70 (B.C.S.C.), Justice Murphy considered this distinction, but concluded that the chain of causation test could still be used to decide whether injuries arose out of the use or operation of a motor vehicle in a claim for no-fault benefits.

Arbitrator Palmer questioned the applicability of the chain of causation test based on the particular wording used in the Schedule (Nasib S. Mander and Wellington Insurance Company, September 24, 1993, OIC File No. A-002057). The definition of "accident" in section 2 uses the phrase, "causes, directly or indirectly", rather than the more typical, "arising from", or, "arising out of". It is not clear to me why this wording was chosen, or why it differs from the wording in section 266 of the Insurance Act ("arising directly or indirectly"). However, I agree with Arbitrator Palmer that:

the traditional chain of causation may be broken by the words ". . . or indirectly" which appear in the regulation. Although a causal relationship between the use of the automobile and the injuries is required, the present wording does not require the injuries to be the result of the direct or proximate use of the vehicle..

Whether or not the chain of causation test applies to the Schedule, it is clear that a nexus must exist between the use or operation of the vehicle and the injuries. The vehicle must be more than the site of the incident (see Gordon McAllister and Dominion of Canada General Insurance Company, December 3, 1992, OIC File No. A-000926, and Amos v. Insurance Corp. of British Columbia). In this case, however, it is not merely a coincidence that Mr. Portch was injured in his vehicle. His participation in preparing the trailer to be unloaded led to his injuries.

Markel and Royal are urging a rather technical interpretation of the word, "caused". They argue that it was the malfunctioning of the hydraulics, or the fork-lift that "caused" Mr. Portch's injuries. Given the use of the modifiers, "directly or indirectly", and the wording used in section 266 of the Insurance Act, I do not believe that this is the proper approach. A pothole, the blinding sun, or a jaywalking pedestrian may "cause" an accident, but it is difficult to imagine that the injured person would not be entitled to accident benefits.

The first definition of "cause" in the Concise Oxford Dictionary (Eighth Edition) is:

1. a that which produces an effect, or gives rise to an action, phenomenon, or condition. b a person or thing that occasions something. . .

In my view, this definition indicates that "caused" may be read more broadly. Whether the necessary connection exists between the use or operation of the vehicle and the injuries will depend on the particular facts of each case. Where the use or operation is unusual, the analysis is likely to be more difficult, but not fundamentally different.

In this case, Mr. Portch was attempting to connect his trailer to the loading dock. This is a "use" of his vehicle. This use gave rise to or occasioned his injuries. He would not have been injured if he had not been using his vehicle. I do not believe that this connection is severed by the role of the malfunctioning hydraulics or the fork-lift. I conclude, therefore, that he was injured as a result of an accident, as defined in section 2 of the Schedule. Therefore, he is entitled to weekly income benefits under section 12 for the period during which he is substantially unable to perform the essential tasks of his pre-accident employment or occupation.

3. Is Mr. Portch required to repay any benefits to Markel?

Given my conclusion on the first issue, it follows that Mr. Portch is not required to repay any of the benefits that he received.

4. Which insurance company is responsible for paying accident benefits?

At the time of his accident, Mr. Portch had a personal automobile policy with Royal, naming him and his wife as insureds. This policy covered their two personal vehicles. Mr. Portch also paid $250 per month to Norris Transport for "insurance". Norris Transport was insured by Markel as a "common carrier". Although Mr. Portch and the other owner-operators owned their own vehicles, Norris Transport had an owner's policy with Markel that covered "all vehicles owned by a/o operated on behalf of the named insured." I interpret this to mean, all vehicles owned by and/or operated on behalf of Norris Transport. The coverage, therefore, appears to extend beyond the vehicles actually owned by Norris Transport to include the vehicles owned by the owner-operators, but operated on behalf of Norris Transport.

Not surprisingly, Mr. Portch thought of the Markel policy as his "truck insurance" and his Royal policy as his "car insurance". Because he was injured while using the truck, he applied to Markel for accident benefits. Markel initially paid benefits to Mr. Portch, but now takes the position that Royal is responsible for paying. This is an issue between the two insurers, Markel and Royal. Mr. Portch took no position on which insurance company should pay his accident benefits.

At first blush, it seems reasonable that Markel should be responsible for paying Mr. Portch's accident benefits based on injuries arising from the use of the truck that it insured. However, the introduction of no-fault benefits involved a fundamental change in insurance coverage. Automobile insurance policies have traditionally indemnified the owner of the vehicle against liability arising out of the use or operation of the vehicle - the coverage followed the vehicle. The principle behind the no-fault scheme is that the injured person looks first to his or her own insurance company whether or not his or her vehicle is involved - the coverage follows the person.

The priority rules for no-fault benefits are set out in section 268(2) of the Insurance Act, which provides, in part:

268.- (2) The following rules apply for determining who is liable to pay no-fault benefits:

1. In respect of an occupant of an automobile,

i. the occupant has recourse against the insurer of an automobile in respect of which the occupant is an insured,

ii. if recovery is unavailable under subparagraph i, the occupant has recourse against the insurer of the automobile in which he or she was an occupant,

Therefore, Mr. Portch's first recourse is against the insurer of an automobile in respect of which he is an "insured". "Insured" is defined in section 224(1) of the Insurance Act:

"insured" means a person insured by a contract whether named or not and includes every person who is entitled to no-fault benefits under the contract whether or not described therein as an insured person; [emphasis added]

It was agreed that Mr. Portch was an "insured" under both policies. The general rule is that an injured person who is an "insured" under more than one policy may choose the policy under which he or she will claim benefits (section 268(4)). However, section 268(5) provides that if the injured person is a "named insured" under an automobile policy, he or she must claim accident benefits under that policy. Section 268(5) states:

268(5).- (5) Despite subsection (4), if a person is a named insured under a contract evidenced by a motor vehicle liability policy or the person is the spouse or a dependant, as defined in the No-Fault Benefits Schedule, of a named insured, the person shall claim no-fault benefits against the insurer under that policy and, if there is more than one such policy, the person, in his or her discretion, may decide the insurer from which he or she will claim the benefits.

It is clear that Mr. Portch was a "named insured" under his personal policy with Royal. His name appears on the policy as one of the insureds. He could have chosen to claim benefits from Royal. If he had, Royal would have been required to pay his accident benefits, even though his injuries did not result from the use of the vehicles that it insured. However, Mr. Portch submitted his claim to Markel. He is only able to succeed against Markel if he is a "named insured" under its policy, within the meaning of section 268(5).

Norris Transport is listed as the "named insured" on the Markel policy. None of the owner-operators are specifically listed in the policy. Instead, the policy is described as a "fleet policy".

Markel takes the position that Mr. Portch is a named insured only under the Royal policy and, therefore, according to section 268(5), he must claim accident benefits from Royal. Royal submits that he was also a named insured under the Markel policy and, therefore, he can choose to claim benefits from Markel. Two arguments were presented in support of Royal's position. First, it was submitted that the owner-operators, including Mr. Portch, should be treated as named insureds because Norris Transport simply arranged for insurance on their behalf as a matter of convenience. In the alternative, it was submitted that Mr. Portch should be treated "as if a named insured" because he regularly drove the rig on behalf of Norris Transport, the named insured.

"Named insured" is not defined in either the Insurance Act or the Schedule, but I was provided with three decisions that have considered its meaning:

In Daniel Cattrysse and The Westminster Fire Insurance Company; Daniel Cattrysse and Anglo Canada General Insurance Company, June 21, 1993, OIC File Nos. A-001618 and A-001789 (under appeal), Arbitrator Palmer was faced with a dispute between two insurers. Daniel Cattrysse's parents had purchased a Ford Mustang for his use. The vehicle was registered in his mother's name, and was added to his parents' automobile insurance policy issued by the Westminster Mutual Fire Insurance Company. Daniel Cattrysse was listed as "principal driver" of the Mustang.

Daniel Cattrysse was injured in an accident while he was a passenger in a vehicle insured by Anglo Canada General Insurance. He applied to both insurance companies for accident benefits. The issue was whether he was an "an insured" under the Westminster policy and, therefore, obliged by section 268(2) 1 .i to claim accident benefits under that policy.

Arbitrator Palmer concluded that Daniel Cattrysse was "an insured" under the Westminster policy. In her decision, she made the following comments that are relevant to this case:

In addition to the reasons which I have set out above, in my view, the principle of fair exchange or of a fair indemnity received for premium paid in this case also calls for the finding that Daniel Cattrysse was indeed an "insured" contemplated by section 224 and section 270 of the Insurance Act under the Westminster Mutual Fire Insurance Company policy number 51A90-0629. I can do no more than to quote again Mr. Justice O'Brien in the Miller v. Safeco case, where he was dealing with an interpretation question of a statutory accident benefits issue: "...the legislation was of a remedial nature, intended to broaden insurance coverage to include members of family units as persons insured under the policy. Obviously, cases of this kind will be approached on their own particular facts. In my view, however, in considering who is an "insured person", the legislative intent should be kept in mind..."

Accordingly, I am drawn to the inescapable conclusion that Daniel Cattrysse, whose name appears as "principal driver" on a policy of automobile insurance, is a "person insured by but not named in a contract". He is not the named insured, but he is "a person insured by a contract whether named or not" for the purposes of accident benefits coverage.

In this case, I do not purport to "elevate the named driver to the status of a named insured in the policy". I merely find that Daniel Cattrysse, who is shown as the principal driver on the policy, is a "person insured by a contract whether named or not" and is a person included by the words "any person insured by but not named in a contract" for the purpose of receiving accident benefits.

The Cattrysse decision is under appeal to the Director. In Cattrysse, the issue was whether the applicant was "an insured", not a "named insured". Status as a "named insured" was addressed more directly in Dorothy Sittler and Canadian General Insurance Company; Dorothy Sittler and Pilot Insurance Company, December 3, 1993, OIC File Nos. A-000951 and A-004495 (under appeal). At the time of her accident, Mrs. Sittler was driving a taxi owned by Mr. Johnson. Mr. Johnson rented the taxi to her for $395 per week. Mr. Johnson had an automobile policy with the Canadian General Insurance Company, listing him as a named insured. Canadian General was informed that Mrs. Sittler would be driving the taxi, but she was not listed on the policy. Mrs. Sittler owned a personal vehicle that was insured under a policy with Pilot. Mrs. Sittler was a named insured on that policy.

The issue in Sittler was whether Mrs. Sittler had the option of claiming accident benefits from Canadian General under section 268(2)1.i as a "named insured". Arbitrator Makepeace found that the taxi was made available for Mrs. Sittler's regular use and was rented to her. According to section 3(1) of the Schedule, therefore, the Schedule applied to her "as if the individual were a named insured". The question was whether section 3(1) gave Mrs. Sittler the same rights as a named insured for purposes of subsection 268(5) of the Insurance Act. Arbitrator Makepeace considered the expectations of the parties and the fact that it was Canadian General - not Pilot - that assessed the risk involved in Mrs. Sittler driving the cab, and concluded:

I find that subsection 3(1) of the Schedule creates a new class of insureds, who are "as if a named insured". The provision gives these individuals the same rights as a named insured for purposes of no-fault benefits. These rights include the right, under subsection 268(5) of the Act, to elect from which insurer to claim benefits, if the insured person is named (or "as if named") under more than one policy.

I find that Mrs. Sittler is "as if a named insured" under the Canadian General policy issued to Harold Johnson. Mrs. Sittler has elected to claim benefits from Canadian General, as she is entitled to do under subsection 268(5) of the Act. Canadian General is liable to pay any no-fault benefits to which Mrs. Sittler is entitled. . .

Canadian General appealed the decision in Sittler to the Director. In the meantime, Mr. Justice Roberts of the Ontario Court General Division, dealt with this issue in AXA Home Insurance Company and Western Assurance Company, unreported decision, dated February 16, 1994. In that case, AXA had issued an automobile policy to Rotex Electrical Limited for a pick-up truck. Rotex owned the truck, but made it available for the regular use of Mr. Lazaridis. Mr. Lazaridis had his own automobile insurance policy with Western Assurance for his personal vehicles. He was the named insured under this policy.

Mr. Lazaridis was injured while driving the Rotex's truck. Mr. Justice Roberts found that Mr. Lazaridis was "an insured" under both policies. It was admitted that he was a "named insured" under the Western Assurance policy. The issue was whether he could claim accident benefits from AXA as a named insured by virtue of section 3(1) of the Schedule. Mr. Justice Roberts concluded that Mr. Lazaridis must apply to Western Assurance for accident benefits:

I find that Section 3(1) deals solely with the identification of persons covered by the no-fault provisions. It does not extend the definition of "named insured" for any other purposes and, in particular, does not extend the definition of "named insured" under Section 268(5) to include those persons eligible for no-fault benefits as defined in Section 3(1).

I specifically find that the attempt [in Sittler] to extend the definition of named insured in the above manner by the Ontario Insurance Commission was incorrect in law.

Lazaridis was the insured under both policies but was a "named insured" under only one policy, that issued by Western. Section 268(5) therefore applies and is mandatory.

In Mr. Portch's case, it is tempting to look behind the corporate name on the automobile policy issued by Markel. In my opinion, however, "named insured" has a specific meaning in the Insurance Act. Although it is not defined, it is used consistently to mean the person or entity in whose name the policy is issued³. This appears to be the approach taken by the courts, and accepted in Cattrysse and Sittler. I conclude, therefore, that Mr. Portch is not a named insured under the Markel policy.

The next question is whether he can apply to Markel "as if a named insured". It is somewhat awkward to find that Mr. Portch's own vehicle was made available for his regular use, but I will assume that he fits within section 3(1) of the Schedule. I have carefully considered the decisions in AXA Home Insurance and Sittler. In my view, the approach taken in AXA Home Insurance is preferable.

The priorities determination is separate from the issue of entitlement to accident benefits. Section 268(2) of the Insurance Act sets out the rules for determining which insurer is responsible for paying accident benefits. The provisions of the Schedule are relevant, but only for specific purposes. The definition of "insured" in section 229 of the Act requires reference to entitlement under the Schedule. In addition, section 268(5) of the Act incorporates the definitions of "spouse" and "dependant" from the Schedule. "Named insured" is not defined, and nothing in section 268 suggests that its meaning depends upon the Schedule.

Section 3(1) of the Schedule extends the availability of the benefits set out in the Schedule for those who rent a vehicle, or have one available for their regular use. For example, someone who is not involved in an accident, but suffers psychological injury as a result of an accident in which a close relative is injured is not entitled to accident benefits as an "insured person" under section 2, unless he or she is a named insured (or his or her spouse, or a dependant of either of them. However, if an insured automobile was made available for the person's regular use, or was rented to him or her, section 3(1) would extend coverage.

In my opinion, section 3(1) creates a category of "as if a named insured" for purposes of entitlement to accident benefits. It does not follow, however, that it also extends the meaning of "named insured" in section 268(5) of the Act. I conclude that Mr. Portch is a named insured only under the Royal policy and, therefore, Royal is responsible for paying his accident benefits.

This is a somewhat surprising result. It is not initially obvious why the personal automobile insurer should have to pay benefits related to injuries arising out of the use of a commercial vehicle that was covered by a commercial policy. The result, however, is consistent with the principle that the injured person should first look to his own insurer for accident benefits. It is clear that Mr. Portch could have chosen to apply to Royal and Royal would have been required to pay. In addition, finding that Mr. Portch is a named insured under the Markel policy would also lead to surprising results. It would mean that any owner-operator (or even their spouse or dependant) involved in an accident in the family car could choose to claim accident benefits from the fleet policy.

Certainty is an important consideration in establishing priority rules. Uncertainty makes it more difficult for insurers to assess potential risks and set appropriate rates. The danger of uncertainty is that consumers may be forced to pay for overlapping coverage. In my view, therefore, a policy rationale exists for a narrow interpretation of the term, "named insured". Insurers will know that they are primarily responsible for paying accident benefits to individuals listed on their policies as "named insureds", but not to an expanded group.

5. What is the effect of Mr. Portch's application for workers' compensation benefits?

Insurers have a limited responsibility for paying accident benefits to those who are entitled to workers' compensation benefits. The relevant sections of the Schedule provide:

20. The insurer will not pay benefits under this Schedule in respect of any insured person who, as a result of an accident, is entitled to receive benefits under any workers' compensation law or plan.

21.-(1) Despite section 20, the insurer will pay full benefits under this Schedule to a person described in that section until the resolution of any action brought by the person in any court to recover for personal injuries resulting from the accident under which the workers' compensation claims arose or until the person receives payments under a workers' compensation law or plan if,

(a) the person makes an assignment to the insurer of any benefits under any workers' compensation law or plan to which he or she is or may become entitled as a result of the accident; and

(b) the administrator or board responsible for the administration of the workers' compensation law or plan approves the assignment.

As stated above, the Workers' Compensation Board decided that Mr. Portch is ineligible for benefits. My understanding is that he is in the process of appealing that decision, and has made an assignment according to section 21(1). In the meantime, Royal must continue to pay the accident benefits to which Mr. Portch is entitled. If he is eventually found to be eligible for workers' compensation benefits, Royal can recover under the assignment, according to section 21(2) of the Schedule. I do not see any need for a specific order.

6. Expenses

An award for expenses may be made under section 282(11) of the Insurance Act, which provides as follows:

282 (11) The arbitrator may award to the insured person such expenses incurred in respect of an arbitration proceeding as may be prescribed in the regulations to the maximum set out in the regulations.

Arbitrators have consistently granted expenses unless the claim was fraudulent, manifestly frivolous or vexatious, or the applicant's conduct unduly prolonged the proceedings. None of those concerns exist in this case. I conclude that I should exercise my discretion to award Mr. Portch his expenses related to the arbitration, calculated according to Schedule 1 of the Dispute Resolution Practice Code and in Ontario Regulation 664, R.R.O. 1990. Since Royal is responsible for paying Mr. Portch's accident benefits, it is also responsible for paying his costs.

The parties are encouraged to reach an agreement as to the amount of the expenses. However, if an agreement cannot be reached, I remain seized of this matter and either party may apply for an assessment of the expenses.

Order:

1. Mr. Portch was injured as a result of an accident, as defined in section 2 of the Schedule. Therefore, he is entitled to weekly income benefits under section 12 for the period during which is substantially unable to perform the essential tasks of his pre-accident employment or occupation.

2. Mr. Portch is not required to repay benefits received.

3. (a) Royal is the Insurer responsible for paying Mr. Portch's accident benefits.

(b) The payment of accident benefits is subject to the assignment given by Mr. Portch in the event that he is found to be entitled to workers' compensation benefits.

4. Mr. Portch is entitled to his expenses related to this preliminary hearing, payable by Royal.

March 20, 1995

David R. Draper Arbitrator

Date

APPENDIX A

Exhibit 1

"Document Brief", prepared by Mr. Wilson on behalf of Markel, containing photocopies of the following documents:

Tab 1

Statement of Brian Portch

Tab 2

Statement of Paul McIntyre

Tab 3

Statement of Paul Cathcart

Tab 4

Vehicle ownership permits

Tab 5

Photographs

Tab 6

Broker data sheet

Tab 7

Broker account statements

Tab 8

WCB correspondence

Tab 9

Report of Dr. Stanton & clinical notes and records

Tab 10

Policies of insurance

Exhibit 2

A photocopy of a letter, dated May 15, 1992, from the Workers' Compensation Board to Norris Transport Ltd.

Exhibit 3

A photocopy of a letter, dated September 14, 1994, from Markel to Mr. Wilson.

Exhibit 4

A photocopy of a medical form for the Ministry of Community and Social Services, completed by Dr. Stanton on September 15, 1994.

APPENDIX B

Stevenson v. Reliance Petroleum Ltd.; Reliance Petroleum Ltd. v. Cdn. General Insurance Co., 1956 CanLII 27 (SCC), [1956] S.C.R. 936, 5 D.L.R. (2d) 673.

The driver of a tanker truck delivered gasoline to a service station. After connecting the truck's hose to the station's gasoline tank, he pumped the gasoline into the tank, but negligently allowed it to overflow. The gasoline ignited and did extensive damage to the service station.

The trucking company sought indemnification under an insurance policy that provided coverage "against the liability imposed by law upon the Insured . . . for loss or damage arising from the ownership, use or operation of the automobile." The Insurer argued that the loss did not arise from the "use or operation" of the truck.

The Supreme Court held that the "use or operation" of the truck included delivery of the gasoline into the tanks and, therefore, the loss was covered by the policy. The majority of the court also held that it was not covered by a second policy that specifically excluded liability for "any claim arising or existing by reason of . . . Any motor vehicle."

Law, Union & Rock Insurance Co. v. Moore's Taxi Ltd. (1959), 1959 CanLII 81 (SCC), [1960] S.C.R. 80, 22 D.L.R. (2d) 264.

A cab company had contracted to transport developmentally handicapped children from school to their homes. The driver stopped opposite one of the children's homes and let him cross the street alone. The child was hit by a truck and seriously injured. The cab company sought indemnification under a general liability policy that excluded "claims arising out of . . . the ownership, maintenance, use or operation by or on behalf of the Insured of any motor vehicle. . ."

The Supreme Court held that the loss was not excluded from coverage. The loss arose from the driver's failure to perform his duty to conduct the boy across the street, a duty that had "nothing to do with the use or operation of the motor vehicle."

Huba v. Schulze et al. (1963), 1963 CanLII 663 (MB QB), 37 D.L.R. (2d) 570 (Man. Q.B.).

Mr. Huba was helping others load furniture onto a dump-truck with a hinged tail-gate. The tail-gate was raised, but not securely fastened. It fell and seriously injured Mr. Huba. He obtained a judgment for his personal injuries and applied for payment under the provisions of the Unsatisfied Judgment Fund under the Highway Traffic Act. The legislation provided for payment if the damages resulted from injuries "occasioned by, or arising out of, the ownership, maintenance, operation, or use . . . of a motor vehicle." Bastin, J. concluded:

The application before me relates to a truck and the purpose of a truck is to carry loads, so that its loading and unloading are directly related to its "operation or use". I consider that negligence in the course of loading it with household goods is within the scope of s.154(1) of the Highway Traffic Act and, therefore, grant the order applied for and direct payment to the judgment creditor of the sum of $10,000 out of the Unsatisfied Judgment Fund, with costs.

Gramak Ltd. et al. v. State Farm Mutual Automobile Insurance Co. (1975), 1975 CanLII 427 (ON HCJ), 10 O.R. (2d) 518 (Ont. H.C.).

The owner of a vehicle, with the help of a colleague, drilled a hole in the trunk of his vehicle to connect wiring for a trailer. The drill punctured the gas tank, causing a fire that damaged the premises. Judgment was obtained against the owner of the vehicle. The issue was whether he was covered by an automobile policy that indemnified him for "loss or damage arising from the ownership, use or operation of the automobile." Donohue, J. reviewed the decision in Stevenson, and held that drilling a hole in the trunk to connect wires for a trailer fit within "the ordinary and well-known activities to which automobiles are put." Therefore, he was covered by the policy.

Chateauvert v. Economical Mutual Insurance Company, [1980] I.L.R. & 1-1223 (Ont. H.C.).

Two occupants of a van died as a result of carbon monoxide asphyxia caused by breathing fumes emitted by a hibachi smouldering in the van. A claim was made for benefits, including funeral expenses under an insurance policy that covered "bodily injury or death by an accident arising out of the use or operation of an automobile." Pennell, J. held that the "purpose test" was not met because he was unable to find that it is a common practice for vans without permanent living quarters to used for the purpose of eating and sleeping. He also held that even if the purpose test was met, the "chain of causation test" was not. Lighting the hibachi in the van constituted a new, intervening act of negligence. Therefore, he concluded that the victims did not sustain death "by an accident arising out of the use or operation of an automobile", and benefits were not payable.

Tippet v. Doe et al. (1987), 1987 CanLII 2607 (BC SC), 27 C.C.L.I. 70 (B.C.S.C.).

Mr. Tippet was injured when the bicycle that he was riding struck a parked car. He applied for no-fault benefits under British Columbia law. The legislation provided that in order to be entitled to benefits, his injuries must have been caused by an accident "arising from the use or operation of a motor vehicle." Murphy L.J.S.C. held that Mr. Tippet's injuries arose solely from the operation of the bicycle. The involvement of the motor vehicle was by chance only. He might have collided with another bicycle, a pedestrian or a tree. Therefore, his injuries did not arise from the use or operation of a motor vehicle, and he was not entitled to accident benefits.

Pioneer Grain Company Limited v. Wellington Insurance Company and other action, [1989] I.L.R. ¶ 1-2409 (Alb. Q.B.).

Mr. Nielsen was syphoning gasoline from the Plaintiff's truck into a container. He intended to pour the gasoline from the container into his motorcycle. While syphoning the gasoline from the truck, some splashed on the ground. Mr. Nielsen dropped a lighted cigarette that he had been smoking onto the gasoline, igniting the gasoline. The fire spread to the Plaintiff's truck, completely destroying it. The Plaintiff obtained judgment against Mr. Nielsen. It then commenced actions against Mr. Nielsen's automobile insurer and against his father's home insurer. The home insurance policy excluded coverage for "damage arising out of the ownership, maintenance, use, operation or entrustment to others of any motor vehicle." The automobile policy covered "damage arising from the use, or operation of the automobile." Andrekson, J. concluded that refuelling is a well-known activity to which automobiles are put, and that this method of refuelling was not sufficiently unusual to take it outside of the "use or operation" of the vehicle. He also concluded that Mr. Nielsen's negligence in dropping the cigarette did not break the chain of causation.

McIndoe v. Insurance Corp. of British Columbia, [1990] I.L.R. ¶1-2612 (B.C.S.C.).

Mr. McIndoe was a passenger in a vehicle that was being pursued by a police car. When the terrain became rough, the police officer left his cruiser and pursued the vehicle on foot. While running, he drew his service revolver and it accidentally discharged. The bullet grazed Mr. McIndoe, injuring his eye. Mr. McIndoe applied for accident benefits. The legislation provided that in order to be entitled to benefits, his injuries must have been caused by an accident that "arises out of the ownership, use or operation of a vehicle." Skipp, J. concluded:

The discharge of Constable Kirkpatrick's revolver was the most proximate cause of the injury sustained by the plaintiff, but in my view the cause of this injury cannot be solely attributed to the accidental discharge of the revolver. The negligent use or operation of the vehicle by Pasmen [the driver] was a contributing cause and I find therefore the plaintiff to be entitled to Part VII benefits.

Boell v. Schinkel (1991), 1991 CanLII 7210 (ON CTGD), 5 C.C.L.I. (2d) 189 (Ont. Ct. Gen. Div.).

Ms. Schinkel parked her car and went across the street, leaving her dog in the car. Mr. Boell was riding his motorcycle along the same street. The dog left the car, crossing Mr. Boell's path. The motorcycle hit the dog and crashed, injuring Mr. Boell. The issue was whether Ms. Schinkel's insurer was obliged to respond to the claim against her. The decision turned upon whether the incident arose out of the "ownership use or operation" of Ms. Schinkel's car.

Turk, J. concluded that the incident arose out of the use or operation of the motor vehicle and, therefore, Ms. Schinkel's insurer must respond. With respect to the "purpose test", he held:

In the case before the court, I have no hesitation in finding that the transporting of a pet dog by the owner in her motor vehicle and its jumping from the parked car into the path of the motorcyclist fell within the purpose test and the resulting accident resulting from an ordinary and well known activity to which automobiles are put.

With respect to the "chain of causation" test, Turk, J. held:

There is no intervening act of negligence giving rise to liability. The leaving of her dog unsecured in the parked car with the windows slightly open while she crossed the street was an act of negligence in the defendant's ownership and use of an automobile.

Shelton v. Insurance Corp. of British Columbia (1991), 1991 CanLII 14484 (BC SC), 7 C.C.L.I. (2d) 48 (B.C.S.C.).

Mr. Shelton brought his motorcycle into his rented home to do repairs. In order to do the repairs, he drained the gasoline into a plastic container. The gasoline ignited, injuring Mr. Shelton and damaging the house. Mr. Shelton's landlord obtained judgment against him for the damage to the house. Mr. Shelton sought indemnification under both his comprehensive general liability policy and his automobile policy. Lorry, J. determined that he was not covered by his automobile policy because it specifically excluded loss or damage to property "owned or rented by an insured." The comprehensive policy covered liability to the rented premises caused by fire and smoke, but excluded claims arising from "the ownership, use or operation of any motorized vehicle, trailer or water craft . . ." Lowry, J. concluded that Mr. Shelton could not recover under the comprehensive policy because the handling of fuel was an ordinary and well-known activity that is part of the utilization of a motorcycle.

Gordon McAllister and Dominion of Canada General Insurance Company, December 3, 1992, OIC File No. A-000926.

Mr. and Mrs. McAllister set out on a trip in their motor home. They decided to spend the night in a highway rest area. Later, they were awakened by banging on the door. Mrs. McAllister opened the door and was confronted by a man with a gun demanding money. He took their money and then shot both Mr. and Mrs. McAllister, fatally wounding Mrs. McAllister. Mr. McAllister applied for death benefits. According to the Schedule, he had to establish that his wife had died as a result of an "accident", as defined in section 2. Senior Arbitrator Rotter concluded that Mrs. McAllister's death arose in connection with the use of the motor home as accommodation, and not as a result of its use as an automobile. She also concluded that Mrs. McAllister's death was not caused, directly or indirectly, by the motor vehicle; the vehicle was simply the location of the crime that caused her death.

Amos v. Insurance Corp. of British Columbia (1993), 1993 CanLII 2787 (BC SC), 13 C.C.L.I. (2d) 274 (B.C.S.C.).

Mr. Amos was driving his van, when six men surrounded it and attempted to stop him. Mr. Amos kept moving slowly ahead. One of the men shot him in the chest. Mr. Amos then accelerated and left the scene. He applied for no-fault benefits under British Columbia law. The legislation provided that in order to be entitled to benefits, his injuries must have been caused by an accident that "arises out of the ownership, use or operation of a vehicle. Hardinge J. reviewed a number of decisions interpreting similar wording, and concluded:

From the authorities to which reference has been made I have reached the following conclusions. First, both the purpose test and the chain of causation test must be satisfied before injuries caused by an accident can be said to have arisen out of the ownership, use or operation of a motor vehicle. Second, even if anything more than a minimal connection between the ownership, use or operation of a vehicle and accidental injuries is sufficient to establish the required nexus, mere presence in a vehicle when injuries are sustained is not sufficient.

In the present case I am unable to find that the injuries sustained by Mr. Amos resulted in any way from an accident, "which the common judgment in ordinary language would attribute to the utilization of an automobile." He was the innocent victim of an act of wanton criminal violence. There is, however, no evidence that his assailants were attempting to hijack his van or that the van itself in any way contributed to or aggravated his injuries.

Sweeny v. The Canadian Surety Co., [1993] I.L.R. ¶1-2963 (Ont. Ct. Gen.Div.).

Mr. Sweeny drove himself to a secluded area, where he killed himself using a knife. The body was not discovered for approximately three weeks. Due to contamination, the vehicle was no longer fit for use. A claim was made for damages for loss of the vehicle under a clause that covered "direct and accidental loss of or damage to the automobile . . . from any peril other than by collision with another object or by upset." Huneault J. held that Mr. Sweeny's wilful act of killing himself was not intended to cause the contamination. Therefore, the loss was accidental, and damages were payable.

Nasib S. Mander and Wellington Insurance Company, September 24, 1993, OIC File No. A-002057.

A passenger in Mr. Mander's limousine forced him at gunpoint to drive into the isolated countryside. He then made Mr. Mander stop the limousine, leave his money, get out and walk quickly away. Mr. Mander developed a psychological injury that prevented him from driving his limousine for seven weeks. He applied for weekly income benefits under section 12 of the Schedule. The insurer took the position that Mr. Mander's injuries were not the result of an accident, within the meaning of section 2 of the Schedule. Arbitrator Palmer found that the vehicle was more than the location of the crime; his injuries were caused by being forced to drive at gunpoint. She concluded, therefore, that "the use or operation of an automobile" at least indirectly, if not directly, caused Mr. Mander's injury.

Footnotes

1. 1Prior to January 1, 1994, Ontario Regulation 672 was called the No-Fault Benefits Schedule. After that date it became the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994. In this decision, the term "Schedule" will be used to refer to Regulation 672.
2. 2The decisions cited by the parties are summarized in Appendix B.
3. 3"named insured" - see sections 229, 236, 244, 249, 255 and 268 of the Insurance Act. "insured named" - see sections 8, 15, 232, 234, 239 and 241 of the Insurance Act. other uses of "named" - see sections 199, 241, 270 and 275 of the Insurance Act.