Neutral Citation: 2003 ONFSCDRS 126

FSCO A02-001163

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PETER KING

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Robert Kominar

Heard:

March 19, 2003, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances:

Bruce Kelly for Mr. King

Patrick Ho for Dominion of Canada General Insurance Company

Issues:

The Applicant, Peter King, was injured in a motor vehicle accident on March 7, 2001. He applied for statutory accident benefits from Dominion of Canada General Insurance Company ("Dominion"), payable under the Schedule.¹ Dominion denied initial entitlement to weekly income replacement benefits. The parties were unable to resolve their disputes through mediation, and Mr. King applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issue is:

1. Is Mr. King excluded from receiving income replacement benefits pursuant to s.30(1)(b) of the Schedule because, at the time of the accident, he possessed a G2 class driver's licence and was operating a vehicle which required an operator to possess, at minimum, a D class driver's licence ?

Result:

1. Mr. King is excluded from receiving income replacement benefits by virtue of s.30(1)(b) of the Schedule.

EVIDENCE AND ANALYSIS:

This preliminary issue hearing proceeded by way of written submissions and an agreed statement of facts, followed by oral submissions and argument on March 19, 2003.

The relevant facts here are simple and uncontested. Mr. King was involved in an automobile accident on March 7, 2001, at which time he was driving a Freightliner Truck which weighed more than 11,000 kilograms. At the time of the accident Mr. King possessed a valid G2 class Ontario driver's licence.

Driver's licences are provided for in law in Ontario in Part IV of the Highway Traffic Act, R.S.O. 1990, c.H.8, and in Ontario Regulation 340/94 made under that statute. Section 2(1) of the regulation sets out the prescribed classes of motor vehicles that one is granted authority to drive while one holds a particular class of driver's licence. For the purposes of this arbitration, the parties agree that operators who possess a valid G2 class licence are authorized to drive vehicles not exceeding 11,000 kilograms gross weight or registered gross weight.

Applicant's Argument:

The applicant argues that absent any definition of "valid driver's licence" in the Schedule, the definition of that same phrase in the regulations made under the Highway Traffic Act should be adopted. The applicant further argues that the change in the criteria for general exclusions in Bill 59 indicates an intention on the part of the legislator to limit the circumstances where this exclusion applies, i.e., specifically to individuals who do not possess any form of valid driver's licence at the time of an accident.

Insurer's Argument:

The insurer responds that the exclusion provisions of the current SABs should be interpreted consistently with those of previous SABs and that even though the wording of the exclusion has changed in Bill 59, the intention of the legislator is still the same; to deny certain benefit coverage to specific classes of people who are driving automobiles in an unauthorized manner. In order to be entitled to income replacement benefits, Mr. King needed to have held a valid driver's licence that authorized him to drive the specific vehicle he was driving at the time of the accident.

Analysis:

The dispute between Mr. King and Dominion arises over the proper interpretation of s.30(1)(b) of the Schedule. S.30 deals with general exclusions from entitlement to the following accident benefits: income replacement benefits, non-earner benefits, lost educational expenses, visitor expenses, and housekeeping and home maintenance benefits. The relevant portions of s.30 for these purposes are the following:

30.(1) The insurer is not required to pay an income replacement benefit, a non-earner benefit or a benefit under section 20, 21 or 22 in respect of a person who was the driver of an automobile at the time of the accident,

(b) if the driver was driving the automobile without a valid driver's licence;

What, on the surface, appears to be a rather simple issue turns out to be more complex, as there is no definition in Bill 59 of the phrase "valid driver's licence." Although the Schedule does not stipulate a definition for the phrase, Ontario Regulation 340/94 made under the Highway Traffic Act, in its definition section, says:

1.(1) In this Regulation

"valid driver's licence" means a driver's licence that is not expired, cancelled or under suspension.

In this case Dominion and Mr. King urge me to adopt quite different interpretations of the proper meaning and scope of this exclusion provision. In essence, Mr. King's argument is that he is not excluded from receiving income replacement benefits because he was in possession of a valid driver's licence at the time of the accident, albeit not one of an appropriate class to be operating the vehicle in question with proper legal authority. Mr. King concedes that he was not operating the vehicle at the time of the accident within the scope of the driving privilege granted to him in his G2 licence; nevertheless, he argues that he did possess a valid driver's licence at the time, in that his G2 licence was not expired, cancelled or suspended.

Dominion, on the other hand, argues that the exclusionary clause, s.30(1)(b), should be read as meaning that the driver of an automobile, at the time of an accident, must possess a valid driver's licence that is of an appropriate class to legally authorize that person to drive the specific vehicle involved in the relevantly specific circumstances. In other words, Dominion argues that Mr. King did not have a valid licence to be driving the Freightliner Truck at the time of the accident, as his licence was only "valid" for driving vehicles weighing less than 11,000 kilograms. In support of this interpretation, Dominion further argues that the definition of "valid driver's licence" found in the Highway Traffic Act's regulations is not relevant and should not be imported or relied upon in any way to interpret the identical phrase when found in the Schedule.

To further thicken the context here it is relevant to note that the framing of this particular exclusionary clause changed in Bill 59 from the text it had in both Bills 68 and 164. There is an exclusionary clause in Bill 68, s.17, that grants Insurers relief from paying weekly income benefits; and as well one under Bill 164, s.58, that grants Insurers relief from paying income replacement benefits if "the driver was not authorized by law to drive the vehicle." As noted above, in Bill 59, the wording of this general exclusion was amended to provide that Insurers are not required to pay income replacement benefits if the driver was driving "without a valid driver's licence."

There is no doubt that the change in the wording in Bill 59 is distinct. The question I have to determine is what interpretation to give to the exclusion in the light of this change in statutory language in the current version of the SABs, alongside the stipulated definition of the phrase "valid driver's licence" found in a different regulation made under a different statute than the SABs?

It is helpful to briefly review the relevant case law that has dealt with exclusion clauses.

The leading judicial decision dealing with the issue is Vanderwal v. State Farm Mutual Automobile Insurance Company (1994), 1994 CanLII 10575 (ON CA), 20 O.R. (3rd) 401, a decision of the Divisional Court. The facts were different than in the present case in that Mr. Vanderwal was involved in an accident while driving a motorcycle. At the time of the accident he possessed a class R beginner's licence, which authorized him to drive his motorcycle on roads that had posted speed limits not exceeding 80 kilometres per hour. The accident took place while Mr. Vanderwal was driving on a road with a higher posted speed limit.

For the Insurer to be warranted in excluding Mr. Vanderwal from the benefits that he claimed, it was necessary to conclude that driving the motorcycle on this particular road with an R class licence amounted to "not being authorized to drive," as that was the exclusionary criterion in effect at the time. The trial judge found that the exclusion should apply only to individuals whose licence had been suspended by operation of law. However, on appeal, the Divisional Court overturned the decision, stating that "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." More specifically the Court noted that the then exclusionary section of the Schedule,² s.17(1)(d), focussed on the actions of the driver at the time of the accident, and therefore it was irrelevant whether he may have been authorized to drive the motorcycle in other circumstances.

Following this decision, the exclusion issue was dealt with at the Commission in Hyrski and Zurich Insurance Company, a decision of Arbitrator Naylor, upheld on appeal by Director's Delegate Draper.³ Mr. Hyrski, like Mr. Vanderwal, was driving a motorcycle. However, in his case he had a G class licence that did not authorize him to drive a motorcycle in any circumstances. At the time of the accident he was taking the motorcycle for a test drive before deciding whether to purchase it. Arbitrator Naylor, agreed with the approach taken by the Divisional Court in Vanderwal, and emphasized that the exclusion clause relates specifically to what was happening at the time of the accident.

In her decision, Arbitrator Naylor traced the legislative history of the exclusion provisions prior to the creation of the no fault system in 1990, and noted that at that time, the standard automobile policy in Ontario allowed for exclusion from benefits if the driver was not "authorised by law" to drive and/or not "qualified to drive." She further explained that this exclusion was generally analysed and interpreted as meaning that the phrase "qualified to drive" referred to the factual issue of one's actual competence to drive, and the phrase "authorised to drive" referred to "holding a valid licence, and complying with any conditions attached to it."⁴

In Bill 164, the wording of the exclusion clause, while applying to differently articulated accident benefits, remained the same as it was in Bill 68. Consistent with the line of judicial and arbitral decisions that had been developing from prior to the no fault era, Arbitrator Allen, in Caldarola and Royal Insurance Company of Canada,⁵ determined that the exclusion applied once again. Mr. Caldarola argued that the "accident" he was involved in did not occur until the moment he impacted on the ground at the side of the road after being somehow thrown off the motorcycle he was driving. Trying to harness the temporal aspects of the exclusion cases to his favour, he argued that he was not driving without legal authority at the precise instant of the accident, as he was already off his motorcycle, and therefore he should not be excluded from claiming benefits. On appeal Director's Delegate Draper determined that the abstract and casuistic approach that Mr. Caldarola urged on the arbitrator was not contemplated by the legislation. An accident cannot be defined down to an infinitesimal and discrete moment in time, unrelated to the causes that came before it or the consequences that flowed from it.

In summary, the consistent outcome of judicial and arbitral decisions dealing with general exclusions has been the common sense one that a driver needs to have legal authority to drive the specific automobile, at the specific time, in the specific circumstances they find themselves in or they risk being excluded from certain accident benefits.

Mr. King acknowledges, through his counsel, that if the wording of the exclusion clause had remained as it was in Bills 68 and 164, he properly could be excluded from receiving income replacement benefits. The question is whether the changed language in Bill 59 alters that.

Exclusions Under Bill 59:

The SABs under Bill 59 introduced a new framing of the exclusionary clause. Whereas before the test was whether the driver was "authorized to drive the automobile," now the test became "whether the driver was driving the automobile without a valid driver's licence."

As I noted earlier, neither the Schedule nor the Insurance Act provide any definition of the phrase "valid driver's licence."

Dominion's argument is that the phrase "valid driver's licence" is functionally equivalent to the text employed in the predecessor legislation, i.e., "authorized by law to drive." Mr. King, however, argues that if the intention of the legislator was to maintain the status quo and, by implication, to endorse the rather uniform line of interpretation that exclusions had received by both FSCO arbitrators and judges, then they would have done nothing, and left the language as it was. The text of the exclusion was "changed," Mr. King argues, not merely tinkered with, and such action can only be read as signalling an intention to alter the criterion for excluding drivers from receiving no fault benefits.

It is not challenged by either party that any legitimate ambiguity over the appropriate interpretation of an exclusion clause must be resolved in favour of Mr. King. Both the Divisional Court in Vanderwal and the Director's Delegate in Caldarola endorse this principle. As well, it is consistent with generally accepted principles of statutory interpretation.

Arbitrator Wilson has considered the new wording of the exclusionary clause under Bill 59 in two cases:

In Troncoso and Co-Operators General Insurance Co.,⁶ the arbitrator was dealing with a driver who, at the time of the accident, was operating a vehicle with a suspended licence. Troncoso dealt with the elimination of the saving provision that existed in Bill 164 which provided that, if one's licence was suspended only as a result of unpaid fines, the exclusion for driving while not authorized by law did not apply. Arbitrator Wilson discusses the effect of the legislative removal of the saving provision in the Bill 59 Schedule. He quotes with approval Ruth Sullivan in Driedger on the Construction of Statutes as supporting the view that legislators are to be presumed not to intend change in the existing law unless they indicate that intent with "irresistible clearness."⁷

In Troncoso, Arbitrator Wilson found that the explicit removal of the saving provision from the exclusion provisions in Bill 59 did provide him with irresistible clarity of legislative intention to change the prior law. Thus the saving provision did not save Mr. Troncoso.

In the recent decision of Sesay and Certas Direct Insurance Company,⁸ Arbitrator Wilson again had the opportunity to deal with the exclusionary provisions in Bill 59. In this case Mr. Sesay was driving an automobile while he possessed a G1 class licence. Graduated licencing in Ontario introduced the concept of "levels" of licences in addition to classes. A G1 level licence does not authorize a driver holding it to drive on specified 400-series highways in Ontario having posted speed limits above 80 kilometres per hour. Mr. Sesay admitted to driving on Highway 401 at the time of the accident, which is a road with a posted speed limit in excess of 80 kilometres per hour.

Mr. Sesay's argument in support of his position was similar to Mr. King's herein. Mr. Sesay argued that, although he was driving beyond the scope of his G1 licence, he nevertheless possessed a "valid driver's licence."

Arbitrator Wilson found that the exclusion applied in the circumstances that Mr. Sesay admitted prevailed at the time of the accident . In effect, the new language of the exclusion clause simply clarifies that the way one becomes "authorized to drive" in Ontario is to have a "valid driver's licence" to drive in specific circumstances. The arbitrator stated:

In my mind, the phrase "not authorized to drive" is equivalent to "driving an automobile without a valid driver's licence."

A licence is the normal means by which legal permission to drive on public highways is granted. A person driving without a valid licence is prima facie not authorized to drive on a public road. Vanderwal makes it clear that driving beyond the scope of one's licence also constitutes driving without a valid licence.⁹[emphasis added]

The most recent arbitration decision dealing with general exclusions is Manzanares and Pembridge Insurance Company (Pafco Ins. Co.),¹⁰ a decision by Arbitrator Sampliner. Mr. Manzanares was operating a vehicle alone while in possession of a valid Gl level driver's licence which required him to have a fully licenced driver with him in the front seat at all times. Arbitrator Sampliner noted that a common sense interpretation of the exclusionary provision could potentially support Mr. Manazanares' argument that he did have a valid driver's licence. However, of overriding importance was the legislative purpose of encouraging safe driving through such programmes as graduated licencing. The arbitrator followed the general line of judicial and arbitral reasoning up through Sesay which holds that a driver must be licenced to do what he or she is doing at the time of the accident. It is simply not sufficient to be authorized to drive some other vehicle, at some other time, in some other conditions.

In addition, Arbitrator Sampliner rejected the submission that the definition of "valid driver's licence" should be imported into the SABs from the regulations made under the Highway Traffic Act. Although it is permissible to look to other statutes for clues to the meaning of vague and ambiguous legislative language, particularly when the term is not defined in the specific regulation of statute under consideration, context is always paramount. I agree with Arbitrator Sampliner that the regulatory purposes of the SABs and the Highway Traffic Act regulations are not so similar as to form a legislative code that would generally require that phrases mean the same thing in both statutory schemes.

The general tenor of the exclusion clause cases has been to encourage drivers to act in accordance with the driving privileges that have been granted to them under the specific terms of their licences. I agree with the consistent approach that the case law has traced so far. Clearly, licences are granted for specific purposes. In Ontario, there is no general licence that grants a driver the authority to drive any vehicle in any manner at any time under any conditions. In fact, the various classes, levels, endorsements and conditions driver licences are now subject to is tortuously complex. To interpret driving without a "valid driver's licence" in the abstract way that Mr. King's counsel suggests seriously discounts the social value of the policy encouraging people to comply with the terms, conditions and limitations of their drivers' licences. I am not prepared to find that the legislator intended such a result.

Therefore, even if I were to accept the argument made on behalf of Mr. King, i.e., that the definition of "valid driver's licence" is the same in the Schedule as it is in regulations made under the Highway Traffic Act, it still is the case, in my view, that the licence that is not "expired, cancelled or suspended" must be one that would authorize the actions the driver was engaged in at the time of the accident. After all, the text of the exclusion provision does reference "the vehicle" and not generic driving activity. To interpret the phrase "driving the automobile without a valid driver's licence" to mean that being in possession of "any" sort of valid licence suffices would lead to a carnival of absurdities that would be inconsistent with general role of exclusion clauses, i.e. to deny certain benefits to drivers who engage in specified unauthorized and often dangerous actions. There is no interpretive ambiguity here open to be resolved in Mr. King’s favour.¹¹

Based on the explicit admission that Mr. King was driving a vehicle heavier than he was authorized to drive by the terms of his driver's licence at the time of the accident, I find that Mr. King is excluded from receiving income replacement benefits.

EXPENSES:

Although there have been a number of decisions dealing with exclusion clauses, this particular exclusion has not been dealt with before. In the circumstances, each party shall bear its own expenses in this Application.

August 27, 2003

Robert Kominar

Arbitrator

Date

Neutral Citation: 2003 ONFSCDRS 126

FSCO A01-001605

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

PETER KING

Applicant

and

DOMINION OF CANADA GENERAL INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. King is excluded from receiving income replacement benefits by virtue of s.30(1)(b) of the Schedule.¹²

2. Each party shall bear its own expenses in this Application.

August 27, 2003

Robert Kominar

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.
2. 2Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996, Ontario Regulation 776/93, as amended by Ontario Regulations 635/94, 781/94, 463/96 and 304/98
3. 3(FSCO A-007156, February 16, 1996), confirmed on appeal (FSCO P96-000035, October 2, 1996).
4. 4Supra note 3, at pg. 7
5. 5(FSCO A96-000274, September 30, 1996)
6. 6(FSCO A00-000167, September 25, 2000), confirmed on appeal (P00-00056, March 13, 2001)
7. 7This phrase Sullivan cites to Justice Fauteux in Goodyear Tire and Rubber v. T. Eaton Co. (S.C.C.), at p. 368.
8. 8(FSCO A02-001141, February 12, 2003).
9. 9Sesay, supra note 8, at p. 7. Emphasis added.
10. 10(FSCO A02-000401, May 27, 2003).
11. 11Driedger in Construction of Statutes, 2nd ed. (Toronto, Butterworths, 1983), at p. 105, sets out the applicable parameters of statutory interpretation as follows: The words of the individual provision to be applied to the particular case under consideration are then to be read in their grammatical and ordinary sense in the light of the intention of Parliament embodied in the Act as a whole, the object of the Act and the scheme of the Act, and if they are clear and unambiguous and in harmony with than intention, object and scheme and with the general body of the law, that is the end.
12. 12The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98, 114/00 and 482/01.