Neutral Citation: 2008 ONFSCDRS 203 FSCO A06-002668 and A08-002218

BETWEEN:

DANIEL JOHNSTON and OSCAR JOHNSTON Applicants

and

PEEL MUTUAL INSURANCE COMPANY Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Maggy Murray Heard: November 18, 2008, at the offices of the Financial Services Commission of Ontario in Toronto.

Appearances: Richard Halpern and Robert Brent for Mr. Daniel Johnston and Mr. Oscar Johnston Philippa Samworth for Peel Mutual Insurance Company

Issues:

The Applicants, Daniel Johnston and Oscar Johnston, were injured in an incident on July 26, 2005. They applied for statutory accident benefits from Peel Mutual Insurance Company (“Peel Mutual”), payable under the Schedule.¹ Peel Mutual refused to pay them benefits on the basis that they were not injured as a result of an “accident” as defined in section 2 of the Schedule.

The Applicants disagreed. The parties were unable to resolve their disputes through mediation, and they 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 issues are:

Were the Applicants involved in an “accident” as defined in section 2(1) of the Schedule?
Is Peel Mutual liable to pay the Applicants' expenses in respect of the arbitration under section 282(11) of the Insurance Act?
Are the Applicants liable to pay Peel Mutual’s expenses in respect of the arbitration under section 282(11) of the Insurance Act?

Result:

The Applicants were involved in an “accident” as defined in section 2(1) of the Schedule.
The issue of expenses is deferred.

EVIDENCE:

The matter proceeded by an Agreed Statement of Facts² which states:

Daniel Johnston, nine years old at the time of the accident (date of birth, December 19, 1995), was involved in an incident on the afternoon of July 26, 2005 as a result of which he sustained serious injuries, the most serious of which was a significant brain injury.
Peel Mutual Insurance Company issued a policy of automobile insurance bearing Policy No. 52795A01 to Daniel's parents, Andrew and Roberta Johnston. The policy covered a 2003 Dodge truck and a 1997 Chevrolet Geo with an effective policy period of January 7, 2005 to January 7, 2006.
On July 26, 2005, Daniel and his older brother Oscar together with their cousin Andrew Germann were travelling in a 2000 Chevrolet Silverado pickup truck owned by Three Eighths Inc. and insured in the name of Elmira Pump Co. Inc., where Andrew Germann was employed. Andrew Germann's supervisor at Elmira Pump was his father, Tony Germann, one of the company's owners.
The pickup truck was towing a trailer that was owned by William Germann, Andrew Germann's uncle. The trailer was not separately insured under any automobile policy. William Germann had loaned the trailer to another relative, Joseph Kuntz, who then had dropped the trailer off at the premises of Elmira Pump with the understanding that Tony Germann would return the trailer to William Germann.
The box of the trailer was approximately eight to ten feet long. The front of the trailer when parked was supported by a vertical metal post, called a "jack" which stood on a caster wheel. There was no locking mechanism for the wheel, which could swivel in all directions. William Germann had asked Tony Germann to ensure bricks, located on the driveway at 18 Mair Court, were used to chock the wheels of the trailer.
Andrew Germann, who was 25 years old at the time of the accident, was instructed by Tony Germann to return the empty trailer to William Germann's house at 18 Mair Court in St. Clements, Ontario. Andrew Germann did this while in the course of his employment with Elmira Pump, after returning to Elmira Pump about 1:00 p.m. following his lunch break.
Daniel and Oscar were on summer vacation from school that day. Oscar had accompanied his mother, Roberta Johnston, who worked at Elmira Pump, to the office that day. Daniel Johnston was dropped off by his father at Elmira Pump after lunch. The boys would often spend time at Elmira Pump during the summer, helping put with chores like sweeping, weeding and collecting garbage. They would accompany Andrew Germann from time to time when he would run errands in the pickup truck. On July 26, 2005, they accompanied Andrew Germann in the pickup truck as he embarked to deliver the trailer to 18 Mair Court, after which they were to return to Elmira Pump.
Arriving at 18 Mair Court about 2:20 p.m., Andrew Germann reversed the pickup truck so that the trailer backed onto the concrete driveway of the property. The driveway is on an incline, with the slope descending from the garage doors of the house to the street level.
Andrew Germann parked the pickup truck with the back of the trailer close to the garage and turned the vehicle off. All three occupants exited the vehicle. As the two boys stood watching from beside the trailer, at the edge of the driveway, Andrew Germann disconnected the trailer from the pickup truck as follows:

a) He moved the metal stand at the front of the trailer, which had been fixed in a horizontal position while the trailer was being towed, into a vertical position and then, using a hand crank he lowered the stand toward the driveway until the stand and attached caster wheel were supporting the weight of the trailer;

b) He disconnected the trailer's pull chains and electric wires from the truck and lifted the front of the trailer off the truck's trailer hitch; and

c) He positioned the caster wheel at the base of the stand on the driveway, parallel with a small half-inch lip on the driveway surface and perpendicular to the slope of the driveway, where there was a gap between two slabs of concrete. Although police later indicated that there were two bricks on the driveway, intended to be used as chocks for the trailer wheels, Andrew did not use the bricks to secure the trailer wheels including the caster wheel on the trailer stand. The width of the caster wheel was greater than the width of the crack on the driveway.

Immediately after disconnecting the trailer, Andrew Germann re-entered the pickup truck. He had been out of the vehicle for no more than 20 to 30 seconds. He started the vehicle and began to pull it forward, down the driveway toward the street. Daniel and Oscar started running toward the pickup truck, intending to get back into the vehicle. The boys were playing a game that they had engaged in before with Andrew, where he would start to pull the vehicle forward slowly while the boys would race and wrestle with each other to see which of them could reach the passenger door first.
The trailer began to roll forward and down the slope of the driveway towards the street. Andrew looked in the rear view mirror or over his shoulder, saw that the trailer was moving, and saw that Daniel had stopped running towards the pickup truck and was moving towards the trailer in an attempt to stop it from rolling. Oscar and Andrew watched as the momentum of the trailer pushed Daniel into a large concrete utility pole adjacent to the driveway. Daniel's injuries were caused as he was crushed between the trailer and the utility pole. Andrew is not aware of anything that Daniel or Oscar did that caused the trailer to start rolling. At the time that Andrew Germann stopped the pickup truck, it was still partly on the driveway.
On or about September 13, 2005, Daniel's father Andrew Johnston submitted an Application for Accident Benefits to Peel Mutual claiming entitlement to accident benefits on Daniel's behalf. That Application was denied by the insurer on or about October 11, 2005.

ANALYSIS:

Did the Applicants sustain an impairment within the meaning of section 2 of the Schedule as a result of an accident?

If the above events are an “accident” within the meaning of s.2(1) of the Schedule, the Applicants are eligible to receive statutory accident benefits. If the above events are not an “accident” within the meaning of s.2(1) of the Schedule, then the Applicants are not eligible to receive statutory accident benefits.

The Applicants argued that: (a) their impairments resulted from an “accident” as defined in s.2(1) of the Schedule because their injuries arose directly from the use or operation of a motor vehicle; or, in the alternative, (b) the trailer is an “automobile” because it was “used in connection with”³ an automobile pursuant to the standard Ontario Automobile Policy (“OAP”).

Peel Mutual argued that: (a) the Applicants were not involved in an “accident” as defined in s.2(1) of the Schedule; or, in the alternative (b) at the time of the incident, the trailer was not being “used in connection with the automobile;”⁴ or, in the further alternative (c) Peel Mutual did not insure the pickup truck involved in the incident.

The relevant portion of s.2 of the Schedule states:

“accident” means an incident in which the use or operation of an automobile directly causes an impairment … (emphasis added)

Whereas the definition of “accident” in the Statutory Accident Benefits Schedule - Accidents after December 31, 1993 and before November 1, 1996 (Bill 164) included incidents that were both “directly or indirectly” caused by the use or operation of an automobile, the current Schedule⁵ (Bill 59) narrowed the scope of coverage to incidents caused “directly” by the use or operation of an automobile.⁶ The requirement that the incident is “directly” caused by the use or operation of the automobile means that the causation test in Amos⁷ is no longer applicable to cases under the current Schedule.⁸

The Schedule’s definition of “accident” requires answers to the two questions: (1) Did the incident involve the use or operation of an automobile? Stated differently, did the incident result from the ordinary and well-known activities to which automobiles are put? This is also known as the “purpose” test in Amos.⁹ (2) If so, was such use a direct cause of the Applicants' injuries?¹⁰ The Applicants must demonstrate that the use of the vehicle or its operation directly caused their injuries.

1. Purpose Test:

The pickup truck was used to tow and deliver the trailer to 18 Mair Court, which is a customary use of an automobile. The use of the pickup truck directly caused an “uninterrupted chain of events”¹¹ that resulted in the Applicants' injuries after the trailer was unhooked and the pickup truck was moved as Daniel and Oscar ran towards it. Every aspect of this incident involved the direct use and operation of the pickup truck to deliver the trailer. That conclusion flows from the following:

a) By not properly securing the trailer, it was stationary only so long as the pickup truck was in place to prevent it from sliding down the driveway. It was the operation of the pickup truck that directly caused the trailer to move, diverting Daniel from his attempt to enter the truck. There is no evidence of any intervening act that would explain the trailer rolling down the driveway;

b) Until Andrew Germann had properly secured the trailer with the bricks available for chocking the swivel wheel,¹² the process of unhitching the trailer was not complete;

c) Daniel was an occupant of the automobile¹³ because he was in the process of getting into the pickup truck¹⁴ when the incident occurred. He was trying to stop the trailer;

d) Andrew, Daniel and Oscar were on a journey that was set to continue after the trailer was delivered to 18 Mair Court.¹⁵

For the above reasons, I find that the purpose test is satisfied.

2. Direct Cause Test:

Law:

Justice Laskin, in Chisholm v. Liberty Mutual Group,¹⁶ held that: “When one thinks of direct causation one thinks of something knocking over the first in a row of blocks, after which the rest falls down without the assistance of any other act.”¹⁷ A direct cause is “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.”¹⁸

Factors such as: (a) time; (b) proximity; (c) activity; and (d) risk¹⁹ are important in examining the connection between the use or operation of the automobile and the resulting injury. “Direct cause” does not necessarily mean “only cause.”²⁰ In addition, physical contact with an automobile is not required,²¹ and a subsequent contributing cause does not necessarily break the chain of causation if it is “part of the ordinary course of things.”²²

Analysis:

Applying the above factors, I find the following relevant in determining causation: The accident occurred within 20-30 seconds²³ of Andrew turning off the truck, disconnecting the trailer, and getting back into the pickup truck. The Applicants were on or at the edge of the driveway²⁴ where the pickup truck was parked. The pickup truck was still partly on the driveway when Andrew stopped it after Daniel was crushed between the trailer and the utility pole.²⁵ The use of a pickup truck is an ordinary use which is also used in connection with a trailer. Unhooking a trailer from a pickup truck and driving the pickup truck are “a normal incident of the risk”²⁶ of motoring.

I find each link in the “uninterrupted chain of events”²⁷ that led to the Applicants' injuries was “part of the ordinary course of things.”²⁸ It was the pickup truck’s movement down the driveway that “started the ball rolling”²⁹ and led to the Applicants' injuries. The use of the truck and trailer did not end until the trailer was detached and secure.

Whether the Trailer was an “Automobile” for the Purpose of the OAP:

Was the trailer an “automobile” as defined in s.224(1) of the [Insurance Act]³⁰ while it was “used in connection with”³¹ the pickup truck? According to the OAP, “any trailer used in connection with the automobile is insured for … accident benefits.”³²

In Prajza and AXA Insurance (Canada),³³ the claimant fractured his hand as he was trying to hook a trailer up to the back of his van, which he intended to tow to the city garbage dump. He parked his vehicle 10 or 15 feet from the trailer and was pulling the trailer when he slipped. The trailer continued to roll and crushed his hand against a wall.³⁴

Arbitrator Evans found that Mr. Prajza’s impairment was caused by the use or operation of the trailer, and that connecting the trailer to the van was an integral part of the use of the trailer. In doing so, he considered whether the trailer fell within the definition of an “automobile” for the purposes of the OAP, noting that section 2.2 of the OAP states that an automobile includes a trailer “if used in connection with an automobile covered by the policy”. Referring to dictionary definitions of “connection”, the Arbitrator held that “in connection with” has a broader meaning than “connected” and a complete physical connection is not required for a trailer to be used in connection with the van. On this basis, the Arbitrator concluded that:

once Mr. Prajza started pulling the trailer towards his van he was engaged in the act of connecting the trailer with the van… I therefore find that the trailer was being “used in connection with the automobile,” namely the van, and accordingly the trailer was also an automobile and was insured for accident benefits by the terms of the Policy³⁵ [emphasis added]

The Arbitrator held that the impairment had directly resulted from the use or operation of an automobile (i.e., the trailer) and that Mr. Prajza was injured in an “accident” as defined by s.2(1) of the Schedule.

On the same basis, the trailer that injured the Applicants was used in connection with the pickup truck. The fact that the trailer was lifted off the pickup truck’s hitch³⁶ does not mean that it was not being used “in connection with” the pickup truck, just as in Prajza the fact that the trailer had yet to be connected to the van did not mean that it was not being used in connection with the van.

I find that a properly chocked front wheel was needed to complete the disconnection process. Since the trailer was being used in connection with the pickup truck, the trailer was an “automobile” for the purposes of the OAP. The Applicants' injuries, therefore, arose directly from the use of an automobile.

Support for this is found in the Compulsory Automobile Insurance Act, in which “motor vehicle” is defined to include trailers, accessories and equipment.³⁷

Peel Mutual relied upon Copley v. Kerr Farms Limited³⁸ in support of its position that the trailer was not an automobile. Copley, after backing his truck up to a tomato wagon and connecting the truck's electrical system and air brake lines to it, tried to complete the connection by backing the truck into the tomato wagon. Copley had to get out of his truck and manually align the gear by turning the crank attached to the gear. While he was attempting to do so, the crank struck him in the face, causing serious injuries. The Court of Appeal addressed whether the trailer was “of a motor vehicle” at the time of the incident in order to satisfy the definition of a “motor vehicle” in the Compulsory Insurance Act. The Court of Appeal held:

The mere fact that the tomato wagon was a trailer did not suffice to bring it within the definition of motor vehicle in the Compulsory Automobile Insurance Act. It had to be a trailer "of a motor vehicle". The phrase "of a motor vehicle" is meant to draw a distinction between trailers which are under the power and control of a motor vehicle and those which are not. A trailer sitting in the field is not a trailer "of a motor vehicle". Only trailers which are attached to and under the power and control of a motor vehicle can properly be described as "trailers . . . of a motor vehicle".³⁹

I find that Copley is distinguishable on the facts. It did not involve accident benefits and “the responsibility of Mr. Copley’s own automobile insurer for first-party benefits (was) not in issue.”⁴⁰ The responsibility of Peel Mutual, “for first-party benefits is the issue in these proceedings so Copley does not set out the relevant law.”⁴¹ However, even if Copley was applicable, I find that because the trailer was not secure, it moved down the driveway after the pickup truck was moved. Therefore, the trailer was “under the power and control of a motor vehicle.”

Liability for Accident Benefits:

Although this is not a priority dispute, Peel Mutual submitted that it did not insure the pickup truck involved in this incident⁴² and was not liable for accident benefits because the OAP is a contract between an insured and its insurer.⁴³ I disagree. The logical extension of Peel Mutual’s submission is that in Prajza,⁴⁴ Mr. Prajza would be entitled to accident benefits but in the same circumstances, if someone other than Mr. Prajza, who was not insured under Mr. Prajza’s policy, was pulling the trailer and was involved in an accident, he or she would not be entitled to accident benefits.

Both occupants and non-occupants of automobiles have recourse for accident benefits against the insurer of an automobile in respect of which they are insured.⁴⁵ Because the Applicants are dependants of their parents, they are required to look to Peel Mutual for payment of their accident benefits.⁴⁶ If this was not so, the Schedule would provide some people with coverage and others without coverage in the same fact situations.

EXPENSES:

I exercise my discretion to award the Applicants their expenses in this preliminary issue hearing. If the parties are unable to agree on the issue of quantum, they may make submissions in accordance with Rule 79 of the Dispute Resolution Practice Code – Fourth Edition.

December 24, 2008

Maggy Murray Arbitrator

Date

Financial Services Commission of Ontario