Neutral Citation: 1996 ONICDRG 29

File No.: A-007156

ONTARIO INSURANCE COMMISSION

BETWEEN:

DAVID HYRSKI

Applicant

and

ZURICH INSURANCE COMPANY

Insurer

DECISION

Issues:

The Applicant, David Hyrski was very seriously injured in a motorcycle accident on May 1, 1993. As a result of his injuries, Mr. Hyrski was rendered a paraplegic and is confined to a wheelchair.

A number of issues concerning Mr. Hyrski's entitlement to statutory accident benefits as an insured under a motor vehicle liability policy were referred to arbitration. Under the terms of a settlement reached between the parties, it was agreed that Zurich Insurance Company was responsible for any benefits payable. Zurich and Mr. Hyrski settled all issues, with one exception.

Mr. Hyrski was driving a motorcycle at the time of the accident. He was licensed to drive a car but not to drive a motorcycle. The issue for determination is whether Mr. Hyrski is disqualified from receipt of weekly benefits under s. 17(1)(d) of the statutory accident benefits regulations (the Schedule)¹ This requires a finding whether Mr. Hyrski was authorised by law to drive the motorcycle.

Mr. Hyrski was represented by Paul Barrafato. Zurich's representative was A. Jarvis Scott. Both representatives are lawyers. Mr. Hyrski testified at a hearing in February 1995, in the course of which the other issues between the parties were settled. Both parties submitted written submissions in June, 1995, on the question remaining before me.

The Facts:

The facts are not in dispute. They are summarised, as follows:

1. Mr. Hyrski was aged 20 at the time of the accident.

2. He held a valid licence to drive a car: a class G licence.

3. He did not hold a licence to drive a motorcycle: a class M licence.

4. At the time of the accident, Mr. Hyrski was operating a 1989 Yamaha motorcycle owned by Daniel B. Jan. The single vehicle accident occurred on Palmer Road, a highway within the meaning of the Highway Traffic Act.

5. A motorcycle is an automobile and a motor vehicle as defined in the Insurance Act and the Highway Traffic Act.

6. Mr. Hyrski was familiar with the safe operation of motorcycles and was competent to drive the motorcycle.

7. At the time of the accident, Mr. Hyrski was considering buying a motorcycle. He was taking the motorcycle for a test run, with a view to possible purchase.

The Regulatory Context:

Every motor vehicle liability policy contains the statutory accident benefits set out in the Schedule. Section 17 of the Schedule relieves an insurer, in certain circumstances, of liability for payment of weekly income benefits or weekly benefits to the driver of the vehicle being operated at the time of the accident. The relevant parts of s. 17 state:

(1) The insurer is not required to pay benefits under subsection 12 (1) or 13(1) in respect of a driver of an automobile at the time of the accident,

(d) if the driver was not authorised by law to drive the automobile;

(2) Clause 1(d) does not apply to a driver who is not authorised by law to drive an automobile only by reason of a suspension of a license for failure to pay a fine.

The Highway Traffic Act, R.S.O. 1990 c. H.8, sets out legal requirements in order to drive in the Province of Ontario. Section 32(1) states:

No person shall drive a motor vehicle on a highway unless the motor vehicle is within a class of motor vehicles in respect of which the person holds a driver's licence issued to him or her under this Act.

Section 32(5) provides:

The Minister may issue a driver's licence to any person who meets the requirements of this Act and the regulations authorizing the person to drive on a highway,

(a) any motor vehicle within a class or classes of motor vehicle;

(b) subject to any conditions or endorsements; and

(c) for the period of time,

prescribed by the regulations and set out or referred to in the licence.

Ontario Regulation 585, R.R.O. 1990 prescribes classes of driver's licences. It states:

2(1) Subject to sections 3 and 4, a driver's licence of the class prescribed in Column 1 of the Table is authority to drive a motor vehicle of the corresponding class prescribed in Column 2 and the classes of motor vehicles prescribed in Column 3.

The Regulation creates a separate class of licence for motorcycles. Motorcycles are specifically excluded from the class of motor vehicles covered under a Class G licence. At the time of the accident, Mr. Hyrski was prohibited from driving a motorcycle on a highway under the terms of the Highway Traffic Act because he did not have a valid Class M licence to drive a motorcycle. He was however licensed to drive a regular motor vehicle, excluding a motorcycle, under a Class G licence.

Both court and arbitration cases have equated the term "authorised by law to drive" under the Insurance Act regulations with driver licensing requirements. A relationship between the two statutory schemes is suggested by the use of parallel language, with both referring to the authority to drive a motor vehicle/automobile. The reference to licensing in the exemption set out in s. 17(2) of the Schedule also suggests that the exclusion is concerned with licensing requirements.

The scope of subsection 17(1)(d) was recently considered by the Ontario Divisional Court in Vanderwal v. State Farm Mutual Automobile Insurance Company, (1994) 1994 CanLII 10575 (ON CA), 20 O.R. (3d) 401.²

The plaintiff in Vanderwal was injured in a motorcycle accident. He held a valid Class R beginner's driver's licence, which permitted him to operate a motorcycle, subject to certain restrictions. These included a prohibition on driving on a highway with a speed limit of more than 80 kilometres an hour. When the accident occurred, the plaintiff was driving his motorcycle on a highway which had a speed limit of 100 kilometres an hour. The Divisional Court, on appeal, held that the applicant was not authorised by law to drive:

On the facts of this case, any lawful authority which the respondent had to drive a motorcycle on a highway in this province was entirely dependent upon the licence which the Minister of Transportation had seen fit to issue to him.

...while it is true that the respondent's class R licence authorised him to drive a motorcycle, ...s. 17(1)(d) focuses in on the time of the accident and requires a determination as to whether, at that specific time, the driver was or was not authorised by law to drive the motor vehicle. In our view, the words "at the time of the accident" are clear and unambiguous. They refer to the moment in time when the accident occurred.

Regrettably for the respondent, at the time of the accident, having regard to the circumstances which then existed, he was not authorised by law to drive his motorcycle. Instead, he was specifically prohibited by law from doing so by virtue of condition (3) of his licence, which condition appeared on the face of the licence.

The Divisional Court's reasoning is consistent with a line of previous decisions. In these cases, the provisions were framed somewhat differently. They excluded coverage where the insured was not "authorised by law" to drive and/or "qualified to drive". The wording of the standard Ontario automobile policy in place before the enactment of the new no-fault benefits scheme in 1990 required satisfaction of both these conditions before the exclusion applied.³ The cases have generally held that "qualified to drive" refers to competency to drive and "authorised to drive" refers to holding a valid licence, and complying with any conditions attached to it.

In Ferreira v. The Manitoba Public Insurance Corporation, 1979 CanLII 3147 (MB QB), [1980] I.L.R. 1-1207, (Q.B.), the driver held an learner's permit. When the accident occurred, she had a passenger in the car, in contravention of the conditions of her licence. The court held that the driver was neither qualified to drive nor authorised to do so.

In Blatter v. Insurance Corporation of British Columbia, (1984), 1984 CanLII 560 (BC SC), 13 D.L.R. (4th) 156, (B.C.S.C.), the plaintiff was injured while carrying a passenger on a motorcycle in contravention of the restrictions on his learner's licence. He was held to be disqualified from benefits.

Likewise, in Jassat v. Hera, 1991 CanLII 1276 (BC SC), [1991], 5 C.C.L.I. (2d) 251 (B.C.S.C.), another British Columbia case, the plaintiff was denied coverage in circumstances in which he was required to have a licensed driver seated beside him, but was alone in the vehicle at the time of the accident. A similar result was reached in Manitoba Public Insurance v. Brandt, 1991 CanLII 11856 (MB QB), 72, Man R, (2d) 137, 75 Man R. (2d) 315.

Two decisions by arbitrators at the Ontario Insurance Commission were also cited to me. These were Traganis and Security National Insurance Company, O.I.C. File No. A-001198, July 30, 1993, (Arbitrator Makepeace) and Bagheri and Allstate Insurance Company of Canada, O.I.C. File No. A-002514, March 10, 1994, (Arbitrator Mackintosh). In both cases, the applicants held a valid driver’s licence but did not have insurance. Although the cases are not directly on point, both arbitrators agreed that subsection 17(1)(d) was concerned with licensing requirements. In Conway and Royal Insurance Company of Canada, O.I.C. File No. A-008945, June 16, 1995, the applicant did not have a valid driver’s licence. Arbitrator Manji also held that the exclusion related to legal requirements to drive under the Highway Traffic Act. However, she held that, on the facts, the applicant was not operating the vehicle on a highway at the time of the accident.

The plaintiff succeeded in Kloppenburg v. Pitts Insurance Company, [1980] I.L.R. 909, a decision of the Ontario High Court, but only because the then applicable exclusion was disjunctive. The insured, who was injured while driving a motorcycle, did not hold the requisite licence. Mr. Justice Maloney equated the holding of a valid motorcycle licence with authority to drive, but found that the applicant was not disentitled because he was qualified, i.e. competent, to drive.

In the face of this formidable body of jurisprudence, counsel for Mr. Hyrski made several arguments. He submitted that case-law decided prior to the institution of the Ontario no-fault scheme of benefits was inapplicable, and that a strict interpretation of the exclusionary provisions is contrary to the purpose of the scheme and to public policy. He suggested that, in the context of restricted tort rights, many accident victims would be denied recovery of accident benefits,

without recourse to the courts, although they were not responsible for the accident. Mr. Hyrski’s counsel contrasted liberal developments in the common law governing recovery of damages for injuries sustained in the course of wrongdoing - the ex turpi causa doctrine.

Counsel argued that the phrase "authorised by law to drive" should be liberally interpreted and should not be restricted to an inquiry into compliance with licensing requirements. Counsel raised the situation of the driver who is forced to drive by necessity. He argued that, in the particular circumstances of Mr. Hyrski's case, his competence to drive should be a factor.

Counsel submitted that the decision of the Divisional Court in Vanderwal is incorrect. He submitted that an arbitrator, as an administrative tribunal, is not bound by a court’s ruling on the interpretation of the Insurance Act and regulations; he urges me to disagree with the decision and to reach a different conclusion.

The applicable principles of statutory interpretation are well established. The regulatory scheme is remedial legislation, and its provisions should be interpreted in their ordinary, grammatical sense, in context and in harmony with the scheme and objects of the Act. Insofar as there is any ambiguity in the exclusionary provisions, the ambiguity should be resolved in favour of the insured.

The Divisional Court in Vanderwal found no ambiguity in the language of the exclusion. I find the reasoning of the Divisional Court compelling and there is no basis upon which to distinguish it, in this case.

An ordinary and grammatical reading of the phrase "authorised by law to drive" indicates that the applicant must have legal authority to drive at the relevant time. Although Mr. Hyrski had a Class G driver's licence to operate a car, the statute requires that at the time of the accident Mr. Hyrski was authorised by law to drive the automobile. Unfortunately, at the relevant time, Mr. Hyrski had no legal authority to operate the motorcycle he was driving, because he did not have a valid motorcycle licence. Therefore, the exclusion applies.

A different result was reached, on similar facts, in Sutcliffe v. Insurance Corporation of British Columbia [1985] I.L.R. 1-1892. (B.C.S.C.); however, the statutory language was quite different. An applicant, who was licensed to drive a car, was injured while driving a motorcycle. The exclusion was held to be inapplicable because the statutory language referred to authority to drive a motor vehicle and was not restricted to the particular motor vehicle being operated at the time of the accident. This interpretation is not open under the language of the Ontario policy. As in the other decisions cited to me, the court regarded the licence as equivalent to the authority to drive.

Counsel urged me to have regard to Mr. Hyrski's competence in driving motorcycles. It is not disputed that Mr. Hyrski was capable of driving a motorcycle. However, he was not authorised by law to so. In effect, counsel is asking me to re-write the regulation so as to re-instate the language of the former policy. This, I cannot do.

I accept that this result is harsh. I am sympathetic to Mr. Hyrski’s unfortunate situation. However, I am bound to apply the provisions of the Schedule as enacted by the Legislature.

I find that the exclusion set out in subsection 17(1)(d) applies in respect of Mr. Hyrski. He is therefore disqualified from weekly benefits under the terms of the policy. Mr. Hyrski is entitled to his expenses in relation to adjudication of this issue, under s. 282(11) of the Insurance Act.

Order:

1. Zurich Insurance Company is not required to pay benefits under subsection 12(1) or subsection 13(1) of the Schedule to David Hyrski.

2. David Hyrski is entitled to his arbitration expenses.

February 16, 1996

Susan Naylor

Arbitrator

Date

Footnotes

1. 1Statutory Accident Benefits Schedule - Accidents before January 1, 1994, Ontario Regulation 672/90; Ontario Automobile Policy Form 1, s. 2.40(d).
2. 2Application for leave to appeal to the Court of Appeal filed October 19, 1994; appeal abandoned.
3. 3Insurance Act, R.S.O. 1980, c. 218, as amended, Schedule C, Subsection 3, subsection (2)(b)(ii)