John Caldarola v. Royal Insurance Company of Canada, 1997 ONICDRG 130

Office of the Director of Arbitrations

Neutral Citation: 1997 ONICDRG 130 Appeal: P96-00076

John Caldarola, Appellant and Royal Insurance Company of Canada, Respondent

Before: David R. Draper, Director's Delegate

Counsel: L. Craig Brown (for John Caldarola) Stanley C. Tessis and Marc D. Isaacs (for Royal Insurance)

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. The appeal is dismissed and the arbitration order, dated September 30, 1996, is confirmed.
2. No appeal expenses are payable.

July 15, 1997

David R. Draper Director’s Delegate

REASONS FOR DECISION

I. NATURE OF THE APPEAL

This appeal involves the interpretation of the "not authorized by law to drive" exclusion in section 58(1)(d) of the Statutory Accident Benefits Schedule - Accidents After December 31, 1993 and Before November 1, 1996¹ ("the SABS - 1994").

The arbitrator held that John Caldarola is not entitled to weekly income replacement benefits because he was not authorized to drive a motorcycle at the time of his accident. Mr. Caldarola claims that the exclusion does not apply to him because the accident took place on private property, where no licence is required.

II. BACKGROUND

On May 20, 1995, Mr. Caldarola was seriously injured in a motorcycle accident. He concedes he did not have a motorcycle licence. He also acknowledges that he and his friend, John Acorn, set out for a drive on a public highway on separate motorcycles. The details of the accident are less certain. Mr. Caldarola cannot remember anything after he and Mr. Acorn drove toward the highway. Mr. Acorn did not see what happened because he was riding in the lead. Based largely on his testimony, however, the arbitrator found that after the two men drove some distance along the highway, Mr. Caldarola lost control of the motorcycle and went off the road. Mr. Acorn found him lying on the grass beyond the right shoulder.

Royal Insurance Company of Canada ("Royal") paid various medical and rehabilitation expenses, but refused Mr. Caldarola's application for income replacement benefits based on the following exclusion in section 58(1) of the SABS - 1994:

58. -(1) The insurer is not required to pay income replacement benefits under Part II, education disability benefits under Part III, disability benefits under Part V or loss of earning capacity benefits under Part VI in respect of a person who was the driver of an automobile at the time of the accident,

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

(emphasis added)

Mr. Caldarola contested Royal's refusal to pay income replacement benefits. His argument is ingenious. He claims there is no "accident" until something happens that causes an injury or damage. In his case, he says the accident did not occur until he left the highway and crashed. He contends, therefore, that "at the time of the accident," he was no longer on the highway. Relying on the arbitration decision in Conway and Royal Insurance Company of Canada, (June 16, 1995, OIC A-008945), he submits that because he did not need a licence to drive the motorcycle on private property, the exclusion does not apply.

The arbitration hearing involved both factual and legal questions. Royal not only challenged Mr. Caldarola's interpretation of section 58(1)(d), but also claimed that the evidence did not establish that he was injured on private property.

While the arbitrator expressed doubts about the factual aspects of Mr. Caldarola's claim, she held that even if he was injured on private property, section 58(1)(d) applies. At page 12 of the decision, she states:

I do not accept Mr. Caldarola's contention that the injury causing event alone constitutes the totality of the accident. However, neither do I accept Royal's proposition that the loss of control of the motorcycle on the highway constitutes the extent of the accident.

I think it more reasonable to view the accident as an unbroken chain of events. It can be inferred from the facts that the loss of control of the motorcycle caused Mr. Caldarola and the motorcycle to leave the highway, Mr. Caldarola to sustain his injury and to come to rest in the grass with the motorcycle. Dividing this course of events into segments, I find, creates an artificial and unrealistic conception of the limits of Mr. Caldarola's accident.

As a result, the arbitrator held that Mr. Caldarola was not entitled to income replacement benefits.

III. ANALYSIS

On appeal, Mr. Caldarola presents essentially the same argument he made at the arbitration hearing. He submits that the arbitrator erred in failing to focus on the time of the accident. For the following reasons, I agree with the arbitrator's decision.

Mr. Caldarola's argument rests on the arbitration decision in Conway. In that case, Mrs. Conway and her two children were sitting in their car in the parking lot under their apartment building waiting for Mr. Conway, a licenced driver. Mrs. Conway, who did not have a driver's licence, attempted to drive the car into a parking space to allow someone else to leave the parking lot. In doing so, she collided with another vehicle and was injured.

The issue was whether Mrs. Conway was excluded from receiving weekly income benefits under the "not authorized by law to drive" exclusion in the earlier legislation, the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, R.R.O. 1990, O. Reg. 672 ("the Schedule"). The arbitrator held that because a driver's licence was not required to drive in the parking lot, Mrs. Conway was not excluded by section 17(1)(d) of the Schedule.

Royal does not challenge the analysis in Conway, but submits that it does not apply to Mr. Caldarola's situation. There are clearly differences between the two cases. The most important is that Mr. Caldarola, unlike Mrs. Conway, required a licence to do what he set out to do - drive a motorcycle on a public highway. He does not dispute this, but submits that the exclusion must be applied "at the time of the accident." This, he submits, is the moment the injury occurred.

In support of this argument, Mr. Caldarola relies heavily on the decision of the Divisional Court in Re Vanderwal and State Farm Automobile Insurance Company (1994), 1994 CanLII 10575 (ON CA), 20 O.R. (3d) 401. In that case, Mr. Vanderwal was injured in a motorcycle accident. He had a licence authorizing him to drive a motorcycle, but not on a highway with a speed limit greater than 80 kilometres per hour. According to the Divisional Court, it was apparent from the agreed statement of facts that "at the time of the accident, the respondent [Mr. Vanderwal] was driving his motorcycle on a highway with a speed limit that exceeded 80 kilometres per hour," in contravention of the condition on his licence.

The trial judge held that the "not authorized by law to drive" exclusion in the Schedule only disqualified drivers whose licences were suspended by operation of law. The Divisional Court rejected this interpretation, stating at page 403:

. . . it must be remembered that 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 authorized 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 authorized to drive his motorcycle.

(emphasis added)

I agree with the arbitrator that Vanderwal does not require the kind of microscopic dissection of the accident urged by Mr. Caldarola. The Court was not asked to determine precisely when Mr. Vanderwal's accident happened. The issue was whether he escaped the exclusion because he was generally licenced to drive a motorcycle. The Court did not accept that approach, holding that the question was whether Mr. Vanderwal's licence authorized him to do what he was doing at the time of the accident. Like Mr. Caldarola, he was driving on a highway without a proper licence when something went wrong. There was no suggestion, however, that his unauthorized use of the highway ended before the accident happened. Therefore, the Court in Vanderwal never reached the issue raised in this appeal.

Mr. Caldarola submits that according to dictionary definitions, an accident is a discrete event with two important features. It is unplanned or unexpected, and has an element of suddenness. He claims that by treating the accident as a sequence of events, starting with Mr. Caldarola losing control of the motorcycle and ending with him landing on the grass, the arbitrator erred in ignoring the aspect of suddenness or discreteness.

As I said in J.E and Economical Mutual Insurance Company, (June 25, 1996, OIC P96-000033), dictionary definitions are not directly relevant when the legislation includes a specific definition. "Accident" is defined in section 1 of the SABS - 1994:

"accident" means an incident in which, directly or indirectly, the use or operation of an automobile causes an impairment or causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device;

This definition focuses on the connection between the use or operation of the automobile and the injury. While the use of "incident" means that the injury must be linked to a particular use or operation, I am not persuaded that its plain meaning is limited to the instant the injury occurs or is caused. Taken to its logical extreme, this would mean that a driver ejected from his or her vehicle before being injured on impact was not driving at the time of the accident. It might even be argued that he or she was not an occupant of the automobile for purposes of insurance coverage. In my view, this is not a sensible interpretation.

Finally, the arbitrator's decision is consistent with the purpose of the legislation. The expansion of "no-fault" benefits in the Schedule, and again in the SABS - 1994, gave at-fault drivers significantly more protection. However, coverage was not made absolute. Certain activities, such as driving while intoxicated, driving without insurance and driving without legal authority, were treated as sufficiently serious to disentitle the person from receiving weekly income benefits. The purpose of the exclusions was clearly to discourage the listed activities by creating a penalty. While it is possible to sympathize with Mr. Caldarola, he was engaged in one of the activities the exclusion was meant to penalize.

IV. EXPENSES

As stated in previous appeal decisions, the criteria for granting appeal expenses are different from arbitration expenses. Mr. Caldarola attempted to stretch the legislation to fit his unfortunate circumstances. Given the serious consequences of the exclusion to him, this is understandable. I am not persuaded, however, that Royal should bear the expenses of his efforts.

July 15, 1997

David R. Draper Director’s Delegate

Footnotes

1. 1Ontario Regulation 776/93, as amended by 781/94.