Neutral Citation: 2008 ONFSCDRS 123 FSCO A06-002205

BETWEEN:

MOHAMED KHAN Applicant

and

CERTAS DIRECT INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Lloyd (J.R.) Richards Heard: May 7, 2008, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Robert Ipacs for Mr. Khan David Murray for Certas Direct Insurance Company

Issues:

On February 15, 2005, the Applicant, Mr. Mohamed Azam Khan, attempted to repair his wife’s van. While repairing the vehicle a fire started. As a result, Mr. Khan sustained burn injuries. The van was completely destroyed. Certas Insurance Company of Canada (“Certas”) refused to pay statutory accident benefits under the Schedule¹, on the basis that Mr. Khan’s injuries did not result from an “accident” as defined under the Schedule. The parties were unable to resolve their disputes through mediation, and Mr. Khan 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:

Was Mr. Khan injured as a result of an “accident” as defined in subsection 2(1) of the Schedule?

Result:

Mr. Khan was not injured as a result of an “accident” as defined in subsection 2(1) of the Schedule.

SUBMISSIONS:

Under subsection 2(1) of the Schedule, “accident” means “an incident in which the use or operation of an automobile directly causes an impairment. …”

Certas maintains that I should not follow Umer and Non-Marine Underwriters, Mbrs. Of Lloyd’s², a case similar to this one which this Commission considered. In Umer, the parties agreed that repair is considered use of an automobile. Certas argues that subsequent to Umer the Supreme Court of Canada in Citadel General Assurance Co. v. Vytlingam³ has clearly stated that repair is not use or operation of an automobile.

Mr. Khan argues that the purpose of no-fault insurance is to provide coverage related to use or operation of a vehicle. Mr. Khan states that people routinely maintain their automobiles. His repair of the automobile in this case was a well known activity to which automobiles are normally put. The automobile ceased working and he developed and maintained an intention to repair the vehicle. There was no event ending his use or operation. He argues that he did not engage in any intervening acts which interrupted his use or operation of the vehicle.

Certas argues that repair of a vehicle is not use or operation of the vehicle. Use should be interpreted as transporting people and things. Repair arises out of ownership, not use. Owners repair cars because they have a statutory obligation to make sure their vehicles are safe. Repair of the automobile in this case constituted an intervening event ending Mr. Khan’s use or operation of the automobile.

EVIDENCE:

The facts of this case are not in dispute. Mr. Khan testified that he does not own a vehicle. However, his wife owns a van. On February 15, 2005, he was attempting to repair his wife’s van. The van had stopped running some distance away from his home and had been towed to his son’s home. The tow truck was instructed to back the van up into the garage. Mr. Khan testified that he has some experience in repairing automobiles, including overhauling and rebuilding automobile engines. He also testified that he performed routine servicing on his wife’s van. Mr. Khan determined that the van was inoperable because of a faulty gas pump.

In order to access the faulty pump Mr. Khan had to remove the van’s gas tank. To remove the gas tank, Mr. Khan first disconnected the fuel line leading from the van’s gas tank to the engine. The garage door was partially open at the time he disconnected the fuel line. After disconnecting the fuel line, Mr. Khan used compressed air power tools to attempt to disconnect the bolts holding the gas tank to the underside of the van. Mr. Khan testified that he used his own “air tools” but that his son owned the air compressor that supplied power to the tools. The compressor was plugged into an electrical power source and positioned near the back of the vehicle.

Mr. Khan testified that at some point while using the compressor and air tools he heard a “pop” and then saw flames. The garage caught on fire. Mr. Khan ran outside and rolled in the grass and snow. Mr. Khan testified that the room over the garage of his son’s house sustained damage to the floor. The van was completely destroyed. Mr. Khan sustained burns to his head and body.

Mr. Khan testified that at the time of the fire the van’s gas tank had been disconnected from the engine. He had successfully removed the fuel line and the van was completely inoperable.

The parties agreed for the purposes of this hearing to accept the Fire Marshall’s determination that a parting arc from the air compressor started the fire. On that basis, I find that an arc from the air compressor ignited the gasoline vapours in Mr. Khan’s son’s garage.

ANALYSIS:

Prior to the enactment of Bill 59 (the current Schedule) on November 1, 1996, an insured person needed only to establish that his injuries were “indirectly or directly” caused by the use or operation of a motor vehicle to be entitled to statutory no-fault accident benefits. The removal of the term “indirectly” from the definition of accident in the current Schedule was intended to narrow the scope of coverage.

A number of arbitration and court decisions have dealt with the direct causation requirement. Both Mr. Khan and Certas relied on Amos v. Insurance Corp of British Columbia⁴ as establishing the basic two-part test for determining whether an incident can be considered an accident. In Amos, the first question to be addressed is whether the incident involves the use or operation of a motor vehicle. This is the purpose test. The second question to be addressed is whether any intervening event ended the use or operation of the motor vehicle. This is the causation test. On the facts in Amos, coverage will apply if an incident occurs when someone engages in an ordinary and well known activity to which automobiles are put. There then have to be no intervening acts independent of ownership, use or operation of the automobile that break the chain of causation.

Amos was considered in Chisholm v. Liberty Mutual Group.⁵ In Amos, the Supreme Court determined that first party benefit claims require applicants to establish that there was some “nexus or causal” relationship between the plaintiff’s injuries and the ownership, use or operation of his car as opposed to the connection being merely “incidental or fortuitous.”⁶ In Chisholm, the Ontario Court of Appeal determined that the deletion of the word “indirectly” from the Schedule required a stronger causal link when applying the causation test. The Court adopted the following definition found in Black’s Law Dictionary (4th Ed.): “The active, efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source.”

Both Amos and Chisholm were considered by the Ontario Court of Appeal in Greenhalgh v. ING Halifax Insurance Co.⁷ In Greenhalgh, the Court reviewed the extensive caselaw and determined that in order to succeed under the Schedule an insured must meet the purpose test as set out in Amos and the stricter causation test as set out in Chisholm. The Court set out the following two questions:

Was the use or operation of the vehicle a cause of the injuries?
If the use or operation of the vehicle was the cause of the injuries, was there an intervening act or intervening acts which resulted in the injuries not being said to be part of the “ordinary course of things”? In that sense, can it be said that the use or operation of the vehicle was a “direct cause” of the injuries?

In considering the causation element as outlined in Chisholm, the Court employed a three-step analysis. The Court determined that “but for” driving his car, Chisholm would not have been injured. However, the Court held that the “but for” test only eliminates from consideration any factually irrelevant causes, but does not conclusively establish legal causation. The Court next stated that an “intervening act” will absolve an insurer of liability if the act cannot fairly be considered a normal incident of the risk created by the use or operation of a car. In Chisholm, an intervening act had made it impossible to find that the use or operation of an automobile was the direct cause of Chisholm’s injuries. The Court then went on to state that where the above two steps have been taken, it is sometimes useful to consider whether the use or operation of the automobile was the “dominant feature” of the accident.

The Supreme Court of Canada again considered the language “directly or indirectly from the use or operation of a motor vehicle” in Citadel General Assurance Co. v. Vytlingam.⁸ The case involved inadequately insured motorist coverage. Vytlingam was an Ontario resident driving in North Carolina. Two individuals packed boulders in their car and drove to a highway overpass. They got out of their car and dropped a boulder on Mr. Vytlingam’s car as it drove under the overpass. Mr. Vytlingam was catastrophically injured. The person who dropped the boulder was inadequately insured. The question was whether the insurer should stand in the shoes of the person who dropped the boulder and pay damages to Mr. Vytlingam. In order for coverage to apply, the injuries suffered by Mr. Vytlingam had to be sufficiently connected to the use and operation of the tortfeasor’s car for it to be concluded that the tort was committed by a motorist. The Court concluded that there was not sufficient connection for coverage to apply.

The Court stated that “insurance policies must be interpreted in a way that gives effect to the reasonable expectations of the insured and the insurer.”⁹ Further, “motorists generally believe that, when an accident occurs while they are making ‘ordinary and well-known’ use of their vehicles, no-fault benefits will be available. This is the mutual expectation of both the insured and the insurer.”¹⁰ The Court recognized that even though no-fault insurance and indemnity insurance rest on different statutory provisions, both are to be interpreted in the context of a motor vehicle policy. The Court affirmed that when applying the “purpose” component of the Amos test, “someone who uses a vehicle for a non-motoring purpose cannot expect to collect motor vehicle insurance.”¹¹

In Vytlingam, the Court appears to narrow the jurisprudence concerning use and operation of an automobile and suggests a common sense approach. The Court cited with approval the decision in Continental Stress Relieving Services Ltd. v. Canada West Insurance Co. of Canada¹², where it was determined that a vehicle repairman whose use of a cutting torch caused gasoline fumes to ignite could not be considered an at-fault motorist. The ordinary and well-known activities to which automobiles are put limits coverage to motor vehicles being used as motor vehicles. The Court affirms that the insured is not using the motor vehicle when he is repairing it in a garage.

Mr. Khan gave evidence that when he was repairing the van it could not be operated. The fuel line had been disconnected and some if not all of the wheels were not touching the ground. This fact clearly removes operation of the vehicle from consideration here. Was Mr. Khan using the vehicle at the time the fire started? According to the reasoning in Vytlingam he was not. He was doing something to the motor vehicle but he was not using the motor vehicle as a motor vehicle. The common sense approach outlined in Vytlingam necessitates concluding that Mr. Khan’s repair of the vehicle in a garage was not use and operation of the vehicle. The vehicle was not being operated and Mr. Khan was not using the van for an ordinary and well known purpose. Mr. Khan was repairing the vehicle so that it could be used when it became road worthy. Mr. Khan’s activities were those of a repairman, not of a motorist.

Even if Mr. Khan’s repair of the van could be considered use of the van, this incident still would not meet the Chisholm causation standard. In Vytlingam, the Court stated that “…if the vehicle’s involvement is held to be more than incidental or fortuitous or ‘but for’, and is ruled severable from the real cause of the loss, then the necessary causal link is not established.”¹³

It is true that “but for” the van not working, Mr. Khan would not have had to repair it. However, in looking at the chain of events, it is clear that the causal link is broken. The van broke down in the street some distance away from Mr. Khan’s home and was towed to another location. Mr. Khan arrived at the repair location some time after the initial breakdown as he had to go home to get his tools. It had been some time since anyone had used the van to transport anyone or anything. The fire was started by Mr. Khan’s use of his tools in repairing the van. Here it can be said that attempting to attach coverage stretches the causal connection test to the breaking point. When the incident occurred, the vehicle was not road worthy, was not being used to transport anyone or anything, and was being worked on with tools that eventually started the fire.

In the facts of this case, the vehicle repair broke the causation chain. The fire that started while Mr. Khan repaired the van was the intervention of a force started and working actively from a new and independent source. That source was the air compressor. The repair of the vehicle was an intervening act which led to injuries that were not a part of “the ordinary course of things.”

Consequently, I find that Mr. Khan was not injured as a result of an “accident” as defined in subsection 2(1) of the Schedule.

EXPENSES:

The parties made no submissions on expenses. They are encouraged to resolve the issue. If they are unable to do so, they may schedule an expense hearing before me according to the provisions of Rule 79 of the Dispute Resolution Practice Code.

July 18, 2008

Lloyd (J.R.) Richards Arbitrator

Date

Financial Services Commission of Ontario