AXA Insurance (Canada) v. Ronald MacPhail, 1997 ONICDRG 27

Ontario Insurance Commission

Commission des assurances de l’Ontario

Neutral Citation: 1997 ONICDRG 27

Appeal P96-00053

OFFICE OF THE DIRECTOR OF ARBITRATIONS

AXA INSURANCE (CANADA)

Appellant

and

RONALD MacPHAIL

Respondent

Before:

Susan Naylor, Director's Delegate

Counsel:

Geoffrey D.E. Adair (for AXA)

Christine H. Mauro (for Mr. MacPhail)

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 The appeal is allowed and the arbitration decision dated May 29, 1996, is rescinded. The following order is substituted:

Ronald MacPhail is not an "insured person", who sustained injuries as a result of an "accident". Therefore, he is not entitled to accident benefits under his policy with AXA Insurance (Canada).

2. Ronald MacPhail is entitled to his appeal expenses.

February 7, 1997

Susan Naylor Director's Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Ronald MacPhail was seriously injured in a racing accident on May 23, 1993. He was driving an uninsured "stock car" in a race at Mosport International Speedway in Ontario, when his car collided with one of the other cars.

Racing is a high-risk activity. Mr. MacPhail 's stock car was not required to be insured. It is agreed that no insurer licensed in the Province of Ontario would have insured his vehicle under a motor vehicle liability policy because it was to be used and operated as a racing car.

Mr. MacPhail and his wife owned four cars, which they insured under a standard owner's policy (OPF No. 1) issued by AXA Insurance (Canada), (AXA). Mr. MacPhail claims that his AXA policy covers the injuries he sustained while driving his stock car. While this may seem a surprising proposition, Mr. MacPhail put forward a number of arguments that deserve attention. These arguments persuaded the arbitrator to allow his claim for accident benefits. AXA appeals from that decision.

II. FACTS

Mr. MacPhail's car was what is known colloquially as a stock car of the "Late Model Sportsman Class". The detailed specifications of this class of stock car are set out in the Official Rule Book of Mosport International Speedway Ltd. The exterior of the vehicle looks like a modified road car. The arbitrator's decision summarises the vehicle's design features at pages 2 to 3:

The stock car was equipped with a front mounted V-8 engine. Many of its mechanical components, including the suspension, steering and braking systems, differed from those used on the average automobile driven on the highway. The vehicle was equipped with a single seating position for the driver. Driver controls included accelerator, brake and clutch pedals, steering wheel, engine tachometer, an odometer, and various gauges. The vehicle had body panels, wind shield, rear windows, and rear side windows. The driver's side window was open and equipped with a net to provide driver restraint. There were no opening doors or trunk lid, and the front and rear bumpers were made of rigid welded steel tubes that had been covered by body panels.

The vehicle was intended for off-road racing. It is of a racing class that is required to have body panels of a shape generally similar to a North American-built car of the last ten years, in this case, a 1988 Buick. Neither the body panels, nor the frame (a custom-welded structure of tubes) was manufactured by Buick; its designation as a Buick vehicle was solely by virtue of its body shape, rather than the source of manufacture.

The vehicle was assembled from components and not intended for retail sale. It did not have lighting of any kind nor visible reflectors; it had no horn. The tires were designed "not for highway use and had no tread. There was no outboard rear-view mirror.

The parties agreed, aside from the issue of insurance, that the stock car could not legally be driven on the highway because it did not meet the minimum legal requirements to do so.

III. ANALYSIS

Accident benefits are a mandatory part of the protection contained in every motor vehicle liability policy. The Insurance Act , R.S.O. 1990 c. I.8 ("Act") establishes the framework for such policies and specifically requires every policy to provide accident benefits. However, the details of what benefits are to be provided is left to regulations: specifically, the Statutory Accident Benefits Schedule - Accidents Before January 1, 1994, ("Schedule") R.R.O. 1990, Reg. 672, a regulation authorised under sections 268(1) and 121(1) of the Act.

Mr. MacPhail is claiming accident benefits under a particular motor vehicle liability policy - one issued by AXA in respect of his personal vehicles. As required by the Act, the policy provided for the accident benefits set out in the Schedule. According to section 2 of the Schedule, Mr. MacPhail qualifies if he was an "insured person" and his injuries were caused by "the use or operation of an automobile".

Section 2(c) of the Schedule defines insured person "in respect of a particular motor vehicle policy" to include:

(a) in respect of accidents in Ontario, an occupant of the insured automobile,

(c) the named insured, his or her spouse and any dependant of either of them while the occupant of any other automobile,

"Accident" is defined in the same section to mean:

"an incident in which the use or operation of an automobile causes,..... injury.....".

(Emphasis added)

Mr. MacPhail was not driving any of the vehicles specifically insured under the policy - the "insured automobile" - but claims that the stock car he was driving was "any other automobile" under subsection 2(c).

"Insured automobile" is defined in the Schedule but not "automobile". Both the Schedule and the standard form owner's policy define the types of vehicles that are specifically insured by that policy, but it is agreed that these definitions have no application here.

There are two definitions of automobile in the Insurance Act itself, one in the general definition section that applies to the whole Act and one in the definition section that applies only to automobile insurance in Part VI.

Section 1 states:

1. In this Act, except where inconsistent with the definition sections of any Part,

"automobile" includes a trolley bus and a self-propelled vehicle, and the trailers, accessories and equipment of automobiles, but does not include railway rolling stock that runs on rails, watercraft or aircraft.

(Emphasis added)

Part VI of the Insurance Act, which deals specifically with automobile insurance, has its own definition of automobile in section 224(1):

In this Part,

"automobile", includes a motor vehicle required under any Act to be insured under a motor vehicle liability policy;

(Emphasis added)

The Schedule is the controlling set of rules for accident benefits and to the extent that it contains its own definitions and provisions, they prevail.¹ However, in the absence of a definition of "automobile" in the Schedule, it is difficult to see how the definitions in the Insurance Act can be ignored. Both the Act and the Schedule use the same term throughout, and there is a strong presumption in statutory interpretation that terms playing a key role in a legislative scheme have a consistent meaning, unless the context dictates otherwise.²

The definition of "automobile" in section 1 has been in the Act since 1922, and in its present form since 1966. The definition in section 224(1) is a more recent addition, coming in as part of the package of reforms that included enhanced no-fault benefits and restrictions on personal injury actions enacted under the Insurance Statute Law Amendment Act, 1990, S.O. 1990, c. 2.

The costs of providing compensation to automobile accident victims is spread among the totality of owners and drivers purchasing insurance, as required by law. Most motor vehicles that operate on a highway are required to be insured. The obligation to do so is set out in the Compulsory Automobile Insurance Act, R.S.O. 1990 c. 25 and is closely linked to Highway Traffic Act³ requirements. The Compulsory Automobile Insurance Act uses the same definition of motor vehicle set out in the Highway Traffic Act. Snowmobiles⁴ and certain off-road vehicles⁵ must also be insured under a motor vehicle liability policy whether operated on or off a highway. Mr. MacPhail's stock car did not have to be insured under any of these rules.

Mr. MacPhail's position is that the governing definition is section 1 of the Act: Simply put, his stock car was a self-propelled vehicle and therefore an automobile. AXA argues that the governing definition is section 224(1): the stock car was not required to be, and was not, insured under a motor vehicle liability policy; therefore it is not an automobile.

AXA argues that section 224(1) restricts the meaning of "automobile" to vehicles required to be insured. It further argues that even if the meaning of automobile is extended to, rather than restricted to, motor vehicles that require insurance, the term otherwise should be given its ordinary meaning - a passenger car - which would exclude a stock car - rather than a broad statutory definition encompassing a self-propelled vehicle.

Mr. MacPhail argues that section 224(1) expands the meaning of automobile, so that it includes, but is not limited to, any motor vehicle required to be insured. Further, even if automobile means a passenger car, Mr. MacPhail's stock car qualifies.

I was provided with case law dealing with language similar to section 1. However, I did not find any of these cases sufficiently similar to be of much assistance. Not only did they involve different facts, but, except for one case decided under the present legislative regime, the legislation under consideration did not include a provision similar to section 224(1).

The over-arching principle is set out in Driedger on the Construction of Statutes at page 132:

There is only one rule in modern interpretation, namely courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning. After taking these into account, the court must then adopt an interpretation that is appropriate.

Mr. MacPhail's argument that vehicles that are not required to be insured under a motor vehicle liability policy are not necessarily excluded from being "automobiles" by virtue of section 224(1) has considerable merit. The language and immediate context of the provision support his proposed interpretation. In particular:

• Both section 1 and section 224(1) use the term "includes" rather than "means". Under principles of statutory construction, "means" usually is exhaustive. It limits the scope of the definition to the words used. "Includes" is normally used as a term of extension, to extend the defined term's usual meaning or to give examples of its meaning, without being exhaustive.⁶

• There is a clear pattern of expression in section 224(1), which suggests that the defined term is not intended to be exhaustive. Every other definition in section 224(1) uses the word "means". "Includes" is used only in the definition of automobile.

• " automobile" in section 224(1) has a comma immediately after it. Grammatically, the use of this punctuation suggests that the definition there is neither exhaustive nor self-contained.

• Section 226(2) suggests that the term "automobile" in Part VI must mean more than a motor vehicle required to be insured. It states:

This Part does not apply to a contract providing insurance in respect of an automobile not required to be registered under the Highway Traffic Act unless it is insured under a contract evidenced by a form of policy approved under this Part.

The qualification in section 226(2) contemplates that vehicles not required to be insured are nonetheless "automobiles". Although this section might be taken to suggest that such a vehicle will only attract coverage for occupants or pedestrians it strikes if it is insured under a motor vehicle policy, the provision only applies to the contract of insurance, if any. Here, Mr. MacPhail is claiming under his own automobile insurance policy. If the drafters, by leaving "automobile" open-ended in section 224(1) merely meant to allow scope for vehicles brought in under section 226(1) they could have achieved this less awkwardly.

• The definition in section 224(1) is not deprived of meaning when read with section 1. It redresses specific gaps in coverage e.g. the exclusion of TTC street cars under section 1, identified in Punja v. Toronto Transit Commission, [1979] 1.L.R. 1-1103 (Ont. Div. Ct.).⁷

• The result is consistent with the decision of Justice Binks in Heath v. Co-operators General Insurance Company (1994) 1994 CanLII 19781 (ON CTPD), 24 C.C.L.I. (2d) 183, (Gen. Div.). This case concerned a collision between an uninsured farm tractor travelling on a highway and a motorcycle, ridden by the plaintiff. The plaintiff sought to recover from his own insurer under the uninsured automobile coverage provisions in Part D of the policy. Justice Binks held that the tractor was an "uninsured automobile" because the definitions of automobile in the Act were inclusive, not exhaustive, and there was no specific exclusion in the policy.

Even if I accept, however, that Mr. MacPhail's stock car is a self-propelled vehicle and an automobile as commonly understood, it does not follow that it must be an automobile under the Schedule, entitling him to accident benefits under his own policy. The scope of statutory language must be interpreted not merely by reference to the words used on their own, but having regard to the context in which they appear and to the purpose and scheme of the legislation and regulations. Having established the ordinary meaning of the words, it is necessary then to go on to determine whether there is anything in the context or legislative purpose to justify qualifying their scope as they are applied to Part VI or the Schedule.

Walker v. Allstate Insurance Company of Canada (1986) 1986 CanLII 2698 (ON HCJ), 19 C.C.L.I. 6 is helpful in this regard. Justice Watt considered whether a motorcycle was an automobile. In addition to the plain meaning of the phrase "a self-propelled vehicle", he considered the statutory context, the practice of the insurance industry and underwriting considerations and the legislative purpose.

He concluded at page 14:

In my respectful view, the definition of "automobile" in s. 1 of the Insurance Act, the practice in the automobile insurance industry of insuring motorcycles under a standard automobile policy and the decision in TWA,⁸ compel but one conclusion, namely that a motorcycle is an "automobile" for the present purpose of ascertaining the potential liability of an automobile insurer to respond to the infant plaintiff's judgement. Indeed, to hold otherwise, would be either to permit an automobile insurer to accept a premium without risk or to leave uninsured, for practical purposes, motorcycles. Neither result is necessary or desirable.

The principles underlying automobile insurance are summarised in Hernandez v. Palmer (1992) 15 C.C.L.I. (Ont. Gen. Div.) at pages 1-2:

Automobile insurance is a mechanism whereby the insured pays a certain amount, the premium, in exchange for a contractual promise by the insurer to pay future covered claim amounts resulting from the ownership, use or operation of an automobile.

The premiums paid by all motorists go to pay the losses of the few. Automobile insurance therefore represents a pooling of risk in which actual losses resulting from motor vehicle related accidents are distributed amongst the whole group of motorists who potentially run the risk of incurring similar losses.

Mr. MacPhail is asking that a standard automobile insurance policy covering his other vehicles should extend to the extraordinary risk involved in driving his stock car, even though he could not insure that risk at all under a motor vehicle liability policy. The nature of the risk involved in this kind of racing is entirely different from the ordinary operation of a motor vehicle. Indeed, it is so extreme that no automobile insurer in this Province will insure against it under a motor vehicle liability policy. It falls far beyond the pooling of risks described in Hernandez v. Palmer.

This makes the case fundamentally different from Heath. There, the uninsured tractor was travelling on a highway. The plaintiff was exposed to a risk of injury not dissimilar to that experienced by other drivers. Given this, it is reasonable to ask why the fact that the tractor in question did not require insurance should affect the plaintiff's ability to recover under his own automobile policy in the event the risk materialised.

That is not to say that only such vehicles travelling on highways are included. I willingly accept that accident benefit coverage is much broader than this. Nor is it to suggest that people injured in the course of racing their motor vehicles are excluded from accident benefits. It is clear that the general prohibition on using a vehicle in a race or speed test contained in the statutory conditions does not apply to accident benefits. Save for certain exceptions set out in the Schedule, accident benefits are paid without regard to fault and extend to conduct that might otherwise disqualify a injured person from recovering compensation.

Here, however, it is both the nature of Mr. MacPhail's stock car and the use to which it is put that presents difficulty. The vehicle was custom-designed and built to race on a racetrack. That was its function and that was the use to which it was put when the accident occurred. I cannot find that extending coverage for accident benefits in such circumstances is rationally related to the purpose of the legislative scheme.

The consequences of accepting Mr. MacPhail's position are troubling. He agreed with the suggestion that if he did not have his own automobile policy, the provincial Motor Vehicle Accident Claims Fund may be obliged to pay him benefits. Track officials and spectators involved in race-track accidents may also be eligible for accident benefits.

In my view, the extension of accident benefits to this case goes beyond the purpose of the Schedule - to compensate people injured in motor vehicle accidents.

Relying on Heath, it was suggested that, had the statutory drafters meant to exclude a stock car used for racing, they would have done so expressly. However, there is nothing to suggest that the legislative changes in 1990 were intended to broaden the scope of accident benefit coverage to this extent. There is also no prior judicial precedent ordering recovery in similar circumstances, despite the broad language of section 1 and the number of years it has been in effect. If the intention was to include a generally uninsurable risk like autoracing, I would expect much clearer language in the Schedule. Had the statutory drafters included a specific exemption, it may have avoided any uncertainty on the point. But the absence of a specific exclusion in this case is not determinative.

I conclude that AXA's appeal of the arbitrator's order is well-founded and that the arbitrator's decision cannot stand. I therefore allow the appeal.

Mr. MacPhail raised important arguments about the scope of the Act. He is entitled to his appeal expenses.

February 7, 1997

Susan Naylor Director's Delegate

Date

Footnotes

1. 1Alchimowicz v. Continental Insurance Company of Canada (1996) 1996 CanLII 1313 (ON CA), 37 C.C.L.I. (2d) 284, (C.A.).
2. 2Driedger on the Construction of Statutes, 3rd ed. By Ruth Sullivan, (Toronto: Butterworths, 1994), p.167 & 246.
3. 3R.S.O. 1990, H.8.
4. 4Motorized Snow Vehicles Act, R.S.O. 1990, c. M.44.
5. 5Off-Road Vehicles Act, 1990, c. O.4. Reg. 863, R.R.O. 1990, section 2(1)5 exempts off-road vehicles driven or exhibited at a closed course competition or rally sponsored by a motor cycle association.
6. 6See Heath v. The Co-operators General Insurance Company (1994), 1994 CanLII 19781 (ON CTPD), 24 C.C.L.I. (2d) 183 (Ont. Gen. Div.) citing R. v. Mansour, [1979] S.C.R. 916 at 920. Drafting Conventions of the Uniform Law Conference of Canada, attached as Appendix 1, s. 21(4), Driedger on the Construction of Statutes.
7. 7In Punja, the Divisional Court held that a TTC street car fell within the exclusion in section 1. Cf. 1(2) of the Compulsory Automobile Insurance Act, which deems a street car to be a motor vehicle.
8. 8TWA v. Co-op. Fire & Casualty Co. , 1973 CanLII 1665 (BC SC), [1974] 1 W.W.R. 476 (S.C.C.).