Financial Services Commission of Ontario

Neutral Citation: 2010 ONFSCDRS 138 FSCO A08-002263

BETWEEN:

ALANA BRAY Applicant

and

ING INSURANCE COMPANY OF CANADA Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Anne Sone Heard: June 9, 2010, at the offices of the Financial Services Commission of Ontario in Toronto. Final submissions received June 11, 2010.

Appearances: Deanna S. Gilbert for Ms. Bray Eric K. Grossman for ING Insurance Company of Canada

Issues:

The Applicant, Alana Bray, alleges she was injured in a motor vehicle accident on June 24, 2001. She applied for, but did not receive statutory accident benefits from ING Insurance Company of Canada (“ING”), which would be payable under the Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996 (the Schedule). The parties were unable to resolve their dispute through mediation, and Ms. Bray applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act.¹

The preliminary issues are:

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

2. Is ING liable to pay Ms. Bray’s expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

3. Is Ms. Bray liable to pay ING’s expenses in respect of the arbitration under subsection 282(11) of the Insurance Act?

4. Is Ms. Bray entitled to interest for the overdue payment of benefits under subsection 25(2) of the Schedule?

Result:

1. Ms. Bray was not injured as a result of an “accident” as defined in section 2(1) of the Schedule.

2. If the parties are unable to agree on the legal expenses of this case, an expense hearing shall be requested within thirty days of the date of this decision in accordance with Rule 79 of the Dispute Resolution Practice Code. The request shall be accompanied by a Bill of Costs describing the expenses claimed, services received and the costs, as well as submissions regarding entitlement to and/or the amount of such expenses.

EVIDENCE AND ANALYSIS:

Background:

The parties provided an Agreed Statement of Facts, which set out the following:

1. On June 24, 2001, Alana Bray was injured as a result of falling from an all terrain vehicle she was operating in the Province of British Columbia, near the Whistler Ski Resort. On the date of the accident, Alana Bray was a minor and a dependant of her mother, Susan Bray.

2. On October 28, 2005, Alana Bray applied for accident benefits from her mother, Susan Bray’s automobile insurer, the ING Insurance Company.

3. The ING Insurance Company denied the application for statutory accident benefits stating in its OCF-9 dated February 10, 2006, “The injuries you have sustained resulted from an incident that does not qualify as an accident under the SABS”.²

4. Alana Bray made a reservation with the “Blackcomb Snowmobiles Ltd. Guided ATV Tour”. Payment was made and releases were signed.³ Alana Bray was placed in a 125 CC Yamaha.⁴

It is not disputed that as a result of the fall, Ms. Bray suffered injuries.

Legal Framework:

Accident benefits are available only if injuries arose from a motor vehicle accident. The Schedule defines an accident as follows:

2.(1) In this Regulation,

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

The main issue here is whether Ms. Bray’s all terrain vehicle (ATV) incident meets the definition of an “automobile” under section 2(1) of the Schedule.

In Grummett v. Federation of Insurance Co. of Canada,⁵ the judge referred to the “ordinary parlance test,” (which had been raised in courts before). He described it as a three-stage analysis used to decide whether a particular vehicle is an “automobile” for insurance purposes.

The “ordinary parlance” test asks the following questions:

• Whether the vehicle in question is “in ordinary parlance” an automobile?
• If not, whether the vehicle in question is defined as an “automobile” in any insurance policy?
• If not, whether the vehicle falls within any enlarged statutory definition of “automobile”?

I will use these questions to guide my analysis.

Is the ATV an automobile “in ordinary parlance”?

Ms. Bray has conceded, based on the relevant case law, that the ATV would not be considered an “automobile” in ordinary parlance, as the ATV’s primary purpose is not transporting passengers on highways.

Is the ATV defined as an automobile in any insurance policy?

Ms. Bray has conceded that the ATV is not referred to as an “automobile” in the Insurance Corporation of British Columbia (ICBC) Autoplan Optional Policy. The parties did not provide any evidence that established that the ATV is defined as an “automobile” in the Ontario policy⁶ between Ms. Bray’s mother and ING.

Does ATV meet the statutory definition of automobile under the relevant statutes?

As the ATV does not qualify as an “automobile” under the first two steps of “the ordinary parlance” test, the issue is whether the ATV can be described as an automobile in any Act.

The Insurance Act in Ontario provides two separate definitions of “automobile”, as follows:

Section 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.

PART VI

AUTOMOBILE INSURANCE

Subsection 224. (1) DEFINITIONS. In this part,

“automobile” includes,

(a) a motor vehicle required under any Act to be insured under a motor vehicle liability policy, and

(b) a vehicle prescribed by regulation to be an automobile;

In Regele v. Slusarczyk,⁷ the Ontario Court of Appeal considered the two competing definitions, and concluded that the overriding definition of “automobile” is that found in subsection 224(1). In other words, “a motor vehicle required under any Act to be insured under a motor vehicle liability policy.”

The Ontario Court of Appeal revisited the issue of defining “automobile” in the more recent decision of Adams v. Pineland.⁸ In this case, a person was injured while driving a go-kart on a private track. The Court approved the three-part test set out in Grummett. With respect to the conditions set out under subsection 224(1) of the Insurance Act, the Court stated: “The proper question was whether [the go-kart] required motor vehicle insurance at the time and in the circumstances of the accident.” In the Adams case, the Court found that the go-kart did not require automobile insurance, at the time and in the circumstances of that particular incident.

Ms. Bray’s Submissions:

At the time and in the circumstances of Ms. Bray’s accident, the ATV was required to be insured in British Columbia. The ATV was governed by British Columbia’s Motor Vehicle (All Terrain) Act.⁹ Since Blackcomb Snowmobiles Ltd. had rented the ATV to Ms. Bray and her mother, Ms. Bray submits that the following provisions are relevant:

Section 1. In this Act

“dealer” means a person engaged in the business of selling, offering for sale, dealing in or renting out all terrain vehicles;

Subsection 3(2).

The Insurance Corporation of British Columbia must require, as a condition of registration, that each all terrain vehicle to be rented out to the public by a dealer be insured by a public liability policy in the prescribed amount, in the prescribed form and containing the prescribed terms.

Ms. Bray submits that the ATV was not only required by British Columbia law to be insured when being rented, but it, in fact, was insured at the time it was rented. In Ms. Bray’s view, the ATV meets the third prong of the three-part test, and satisfies the definition of “automobile” for purposes of entitlement to statutory accident benefits in Ontario.

Ms. Bray also noted that under subsection 3(2) of the Schedule, that someone could be injured anywhere in Canada and the United States of America, and still get accident benefits.

ING’s Submissions:

Since Ms. Bray conceded that she does not meet the requirements of the first two prongs of the three-part test, set out in Grummett, above, I am not including ING’s submissions on these areas.

As set out in Adams, ING states that the proper question is whether the vehicle in question required motor vehicle insurance at the time and in the circumstances of the accident.¹⁰

Was the ATV required to be insured in Ontario? ING says no. Although this ATV fits the definition of an “off-road vehicle” set out in the Ontario Off-Road Vehicles Act,¹¹ all terrain vehicles only have to be insured “when they are operating on a roadway.” In addition, an off-road vehicle is not required to be insured,¹² where the vehicle is driven on land owned (or occupied) by the owner of the vehicle.¹³ (In this case, the ATV was being operated on Crown lands, specifically leased for use by the owner of the ATV company.)

ING noted that under sections 122 and 123 of the Ontario Insurance Act, the automobile insurance contract ING, as an Ontario insurer, issued to Ms. Bray’s mother shall be construed according to Ontario law.¹⁴

ING provided a detailed review of British Columbia’s laws pertaining to insurance of ATVs. In British Columbia, unlike in Ontario, there appears to be an obligation to insure an ATV, when it is being rented out, irrespective of whether it is being used on private or public property.

However, the insurance required in the Motor Vehicle (All Terrain) Act) is under a general liability policy, and not under a standard automobile insurance policy. ICBC would never be obliged to offer no-fault benefits under their no-fault provisions to Ms. Bray, since this would not be considered a motor vehicle accident.

In addition, the insurance coverage under the general liability policy only applies where the vehicle is operated by a person who is 16 years of age or older; however, Ms. Bray was 14 at the time of the incident.¹⁵

Ultimately, ING submitted that the laws of Ontario governed with respect to interpreting the contract, and that under Ontario law, the ATV did not require insurance. Accordingly, the ATV was not an automobile, and Ms. Bray was not entitled to receive statutory accident benefits. In ING’s view, British Columbia’s laws had no relevance. Even if they did, ING submits that the ICBC would not have paid accident benefits to Ms. Bray, under the circumstances of this case.¹⁶

Ms. Bray’s Reply and ING’s Response:

In her Reply, Ms. Bray noted that what remains in dispute is whether or not the ATV falls under the definition of an “automobile” pursuant to the third prong of the Grummett test. In other words, whether the vehicle falls within any enlarged statutory definition of “automobile.”

Both parties have agreed that subsection 224(1) of the Insurance Act is the governing definition of “automobile” in Ontario. That definition includes: “a motor vehicle required under any Act to be insured under a motor vehicle liability policy.” [Emphasis added.]

Ms. Bray conceded that there was no requirement under the relevant legislation in Ontario, the Off-Road Vehicles Act, that the ATV she was riding be insured; however, she submits that the “any Act” criterion in subsection 224(1) of the Insurance Act is not qualified by the words “in Ontario.”

In Ms. Bray’s view, the issue comes down to one question: whether Ms. Bray’s ATV was required to be insured by the relevant legislation in British Columbia, the Motor Vehicle (All Terrain) Act. Ms. Bray’s answer to this question is yes.

Ms. Bray refers to subsection 3(2) of the Motor Vehicle (All Terrain) Act, which requires that “each all terrain vehicle to be rented out to the public by a dealer be insured by a public liability policy.” In Ms. Bray’s opinion, this provision satisfies the definition of “automobile” under the Insurance Act.

Ms. Bray suggests that ING has attempted to confuse the issue. She states that ING is not distinguishing between when an ATV is required to be insured, and when there will actually be insurance coverage in the event of an accident.

ING has proposed that the policy would not be obliged to offer no-fault benefits to Ms. Bray. She states that it is unnecessary for her to concede or deny this submission, because it is irrelevant to this case. She reiterates that subsection 224(1) of the Insurance Act specifically states that to meet the definition of “automobile”, the vehicle must be required under any Act to be insured under a “liability policy.” There is no consideration – one way or the other – as to whether that policy must also provide accident benefits.

According to Ms. Bray, because the ATV was required to be insured under British Columbia law, the ATV was an “automobile” within the meaning of subsection 224(1) of the Insurance Act. Since she was operating an “automobile” at the time she was injured, she was involved in an “accident” within the meaning of the Schedule.

In response,¹⁷ ING has stated that the ultimate issue in this case is whether Ms. Bray’s ATV was required to be insured under the Ontario Insurance Act, and any related legislation in Ontario.

Since the correct law here is contract law,¹⁸ (as opposed to tort law), ING asserts that under section 123 of the Insurance Act, the contract shall be construed according to the laws of Ontario.

ING also refers to the case of Kingsway General Insurance Company v. Canada Life Assurance Company¹⁹ to support its view that when dealing with the contract between the insurer and the insured, (in a subrogation situation), the policy is to be interpreted according to the laws of Ontario, as the policy itself provides.

ING states that since the ATV does not meet the definition of “automobile” in Ontario, the incident was not an “accident’ within the meaning of subsection 2(1) of the Schedule, and that therefore, Ms. Bray does not qualify for benefits under the Schedule.

DISCUSSION AND CONCLUSION:

The parties agree that only the third part of the three-stage test set out in Grummett remains in issue, namely whether the ATV can be described as an automobile in any Act. The Ontario Court of Appeal in Regele has found that the overriding definition of “automobile” is in subsection 224(1) of the Insurance Act, which states that “automobile” includes a motor vehicle required under any Act to be insured under a motor vehicle liability policy. In Adams, the Ontario Court of Appeal stated that the proper question was whether the vehicle required motor vehicle insurance at the time and in the circumstances of the incident.

Ms. Bray has argued that “any Act” should encompass British Columbia law. Since the ATV requires insurance under British Columbia law, therefore, the ATV should be characterized as an automobile.

On the other hand, ING has argued that since this case involves interpretation of a contract, Ontario law, under which the ATV is not an automobile, should apply.

Even if I accept that the policy between Ms. Bray’s mother and ING should be interpreted in accordance with the laws of Ontario, that does not end the inquiry. Subsection 224(1) includes a motor vehicle required to be insured under “any Act” within the definition of “automobile.”

In order to interpret the key words, “any Act” (from subsection 224(1) of the Ontario Insurance Act), I look to the definitions section of the Legislation Act,²⁰ (formerly the Interpretation Act).²¹

Section 87 states that in every Act and regulation, “Act” means an Act of the Legislature, and “statute” has the same meaning.

“Legislature” means the Lieutenant Governor acting by and with the advice and consent of the Assembly.

“Assembly” (and “Legislative Assembly”) is defined as the Legislative Assembly of Ontario.

In addition, section 46 states that “Every provision of this Part applies to every Act and regulation. Under section 48, section 46 “applies whether the Act or regulation was enacted or made before, on or after the day the Access to Justice Act, 2006 receives Royal Assent.” So even though these sections were enacted after Ms. Bray’s 2001 incident on the ATV, they still apply.

Accordingly, “any Act” as set out in subsection 224(1) of the Ontario Insurance Act refers to any Act of the Ontario Legislature, and specifically refers to Ontario law. I therefore find that Ontario law applies in this case.²² If Ontario law applies, Ms. Bray has conceded that the ATV did not require insurance, was not an automobile, and that she would not be entitled to benefits under the Schedule. As a result, I find that Ms. Bray was not injured as a result of an “accident” as defined in section 2(1) of the Schedule.

EXPENSES:

If the parties are unable to agree on the legal expenses of this case, an expense hearing shall be requested within thirty days of the date of this decision in accordance with Rule 79 of the Code. The request shall be accompanied by a Bill of Costs describing the expenses claimed, services received and the costs, as well as submissions regarding entitlement to and/or the amount of such expenses.

December 8, 2010

Anne Sone Arbitrator

Financial Services Commission of Ontario

Neutral Citation: 2010 ONFSCDRS 138 FSCO A08-002263

BETWEEN:

ALANA BRAY Applicant

and

ING INSURANCE COMPANY OF CANADA Insurer

ARBITRATION ORDER

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

1. Ms. Bray was not injured as a result of an “accident” as defined in section 2(1) of the Schedule.

2. If the parties are unable to agree on the legal expenses of this case, an expense hearing shall be requested within thirty days of the date of this decision in accordance with Rule 79 of the Dispute Resolution Practice Code. The request shall be accompanied by a Bill of Costs describing the expenses claimed, services received and the costs, as well as submissions regarding entitlement to and/or the amount of such expenses.

December 8, 2010

Anne Sone Arbitrator

“Off-road vehicle” means a vehicle propelled or driven otherwise than by muscular power or wind and designed to travel on not more than three wheels, or on more than three wheels and being of a prescribed class of vehicle.”

Footnotes

1. 1R.S.O. 1990, c. I.8, as amended.
2. 2The Schedule.
3. 3Tab 4, Release of Liability, Waiver of Claims, Assumption of Risks and Indemnity Agreement
4. 4Affidavit of Ken Pagenkopf, paragraph 11.
5. 5[1999] CanLII 15103 (Ont.Sup.Ct.).
6. 6Ontario Automobile Policy, Owner’s Policy O.A.P. 1
7. 7[1997] CanLII 3648 (C.A.).
8. 8[2007] CanLII 844 (C.A.).
9. 9R.S.B.C. 1996, c. 319.
10. 10Based on Rougoor v. Co-Operators General Insurance Company, (2010) 2010 ONCA 54, O.J. No. 266 (C.A.) at para. 11, ING submits that Adams directs considering the extended definition of automobile under the relevant legislation, only where the policy definition is not met.
11. 11Off-Road Vehicles Act, R.S.O. 1990, c.O.4, section 1 states:
12. 12Under a motor vehicle liability policy in accordance with the Ontario Insurance Act.
13. 13Off-Road Vehicles Act, R.S.O. 1990, c.O.4, subsection 15 (9).
14. 14See J.-G. Castel, Canadian Conflict of Laws (4th ed.) at pages 593 to 594. This is also the rule for contracts of insurance: Castel at page 629. ING noted, in contrast, that the law to be applied in torts is the law of the place where the activity occurred. See Tolofson v. Jensen (1994), 1994 CanLII 44 (SCC), 3 S.C.R. 1022, at para. 42.
15. 15ICBC Autoplan Optional Policy Unlicensed Vehicle Policy (APV45) sections 2 and 13. Further, the ATV was a 125 cc Yamaha, above the maximum covered by the ICBC, which specifically contemplates application for a vehicle with an engine capacity of 110 cc or less.
16. 16Motor Vehicle (All Terrain) Act does not require a motor vehicle liability policy in accordance with the Insurance Act (of British Columbia) where the vehicle is driven on land occupied by the owner of the vehicle.
17. 17In preparation for the Preliminary Issue Hearing, ING prepared and served a Supplementary Factum and Book of Authorities, in response to Ms. Bray’s Reply submissions. Ms. Bray did not object to the filing of these materials.
18. 18See Imperial Life Assurance Company of Canada v. Colmenares (1967), 1967 CanLII 7 (SCC), S.C.R. 443, at para. 13 and Buchan v. Non-Marine Underwriters, Members of Lloyd’s of London, England (1999) 44 O.R. (3d) 6885 (Ont. Sup. Ct.) at para. 15.
19. 19(2001) 2001 CanLII 14695 (ON CA), O.J. No. 3285 (C.A.) at paras. 12 and 13.
20. 202006, c. 21, Sched.F.
21. 21R.S.O. 1990, c. I.11.
22. 22I also note that it is unlikely that the Ontario Legislature would have intended coverage under the Schedule for an incident that happened in British Columbia, which would not have been covered had it happened in Ontario.