Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2010 ONFSCDRS 43

Appeal P09-00003

PEEL MUTUAL INSURANCE COMPANY Appellant

and

DANIEL JOHNSTON and OSCAR JOHNSTON* Respondent

BEFORE: David Evans

REPRESENTATIVES: Philippa Samworth for Peel Mutual Insurance Company Richard C. Halpern for Daniel and Oscar Johnston

HEARING DATE: September 22, 2009

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

The appeal of the Arbitrator’s order dated December 24, 2008 is dismissed.
If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code.

April 8, 2010

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Peel Mutual Insurance Company appeals the Arbitrator’s decision that on July 26, 2005, Daniel and Oscar Johnston, the Applicants, “were involved in an ‘accident’ as defined in section 2(1) of the Schedule”¹ and that Peel is the insurer liable to pay accident benefits.

II. BACKGROUND

The Arbitrator’s decision reproduced the Agreed Statement of Facts about the incident. The parties agree that on July 26, 2005, Daniel Johnston, 9, and his older brother Oscar, 11, were in a pickup truck driven by their cousin, Andrew Germann, who in turn was towing a trailer to a certain house in St. Clements, Ontario. As he had on prior occasions, when Mr. Germann arrived at the house, he backed up onto the driveway, stopped, and let everybody out.

In order to prop up the trailer, Mr. Germann set the trailer’s front stand to a vertical position and lowered it. He disconnected the trailer’s pull chains and electric wires from the pickup truck and lifted the front of the trailer off the pickup’s trailer hitch. The front stand had a swivelling caster wheel that he positioned in a small gap on the downward-sloping driveway. Although there were bricks available to chock the wheels, it is agreed that he had never chocked them previously and did not intend doing so on this occasion.

Mr. Germann then slowly drove down the driveway in the pickup while the boys ran after it in a game to see who would ride in the passenger seat. Para. 11 of the statement of facts continues:

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.

Daniel Johnston suffered serious injury. His father Andrew Johnston claimed against his own insurer, Peel, for various benefits for Daniel as well as for Oscar.² Peel denied the claims on the basis that the incident in question was not an “accident” as defined in the SABS and that the claim should have been made against the pickup truck’s insurer.

The Arbitrator found that Daniel was involved in an accident on several bases. I agree with her conclusion that his impairments arose directly from the use or operation of the trailer and that the trailer was an automobile under the standard Ontario Automobile Policy³ (“OAP 1”) because it was being used in connection with the pickup truck. This follows my decision in Prajza and AXA Insurance (Canada), (FSCO A02-000286, November 14, 2002), in which I found that a trailer was an automobile under the OAP 1 while in the process of being hooked up to a van.

While I disagree with the Arbitrator’s alternate conclusion that the pickup truck was the direct cause of Daniel’s injuries, this does not affect my agreement with her ultimate finding. I also agree with her finding that Peel is responsible for paying accident benefits.

III. ANALYSIS

Subsection 2(1) of the SABS–1996 defines the term “accident” as meaning “an incident in which the use or operation of an automobile directly causes an impairment.”

With respect to the trailer, there is no doubt that it directly caused Daniel an impairment. The significant issue was whether or not the trailer was an automobile. The Court of Appeal for Ontario set out the test in Adams v. Pineland Amusements Ltd. (2007), 2007 ONCA 844, 88 O.R. (3d) 321:

(i) Is the vehicle an “automobile” in ordinary parlance?

If not, then,

(ii) Is the vehicle defined as an automobile in the wording of the insurance policy?

If not, then,

(iii) Does the vehicle fall within any enlarged definition of “automobile” in any relevant statute?

No one argued that the trailer was an “automobile” in ordinary parlance under (i). It had no engine and could not move on its own.⁴ It then falls to be determined under (ii) whether the trailer is defined as an automobile under the OAP 1. Section 1.3 of the OAP 1 distinguishes between a described automobile – any automobile specifically shown on the Certificate of Automobile Insurance – and the automobile – that is, a non-described automobile. The OAP 1 states that any trailer can be the automobile and be insured for accident benefits in the circumstance set out in s. 2.2.4,⁵ namely when “used in connection with the automobile.”

In Prajza, I considered the meaning of “in connection with” and found it has a broader meaning than simply “connected to.” In that case, an insured was injured by his trailer while moving it towards his van to connect the two vehicles. I found that once Mr. Prajza started pulling the trailer towards his van he was engaged in the act of connecting the trailer with the van. He had pulled the trailer a large way towards it down a laneway and was in the process of trying to turn it towards his van when he fell. I found that the trailer was being “used in connection with the automobile,” namely the van, and accordingly the trailer was also an automobile.

In this case, the Arbitrator cited Prajza and then stated that, equally, a trailer can be used in connection with an automobile while being disconnected from it, finding that

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 hitch 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.

I find that the arbitrator erred in law with that last sentence. The trailer could be used “in connection with” the pickup truck whether or not these vehicles were physically connected, so it is unnecessary to notionally extend the disconnection process until the trailer was secure. The trailer could be sitting there in the driveway for an unlimited time, since Mr. Germann never chocked the wheels, but at some point it cannot be considered to be an automobile. I find the approach taken in Seale and Belair Insurance Company Inc., (FSCO P02‑00005, January 28, 2003) and Souchuk and State Farm Mutual Automobile Insurance Company, (FSCO P02-00039, January 8, 2004) helpful. These decisions stated that there should be a common sense focus on the nature of the risk covered by automobile insurance, and that various factors are relevant in evaluating the connection between the use or operation of the automobile and the impairment – time, proximity, activity and risk.

Similar factors apply when considering whether or not a trailer is being used in connection with an automobile. In this case, the trailer moved very shortly after it had been disconnected from the pickup truck. The trailer was still very near to the pickup truck, since the truck was still partly in the driveway when it came to a stop. The trailer also created great risk for those nearby. This was all essentially one continuous action. Given this, I see no error in the Arbitrator’s finding that the trailer was still being used “in connection with” the pickup truck and thus, in those specific circumstances, it was still an automobile.

That is sufficient to dispose of the appeal, but I will comment about some of the Arbitrator’s other findings, in light of the extensive submissions I heard about them.

The Arbitrator also considered (iii) under Adams, the “any enlarged definition of automobile” test, and found that the trailer fell within an extended definition of “automobile” in the legislation. However, since the Arbitrator issued her decision, the Court of Appeal in Rougoor v. Co-Operators General Insurance Company, 2010 ONCA 54, [2010] O.J. No. 266, stated that “Adams directs consideration of the any extended definition of automobile under relevant legislation only where the policy definition is not met. In our respectful view, the application judge erred by deciding the case on the basis of the legislation rather than on the plain language of the policy. Accordingly, we find it unnecessary to decide whether he correctly interpreted the legislation.” [Emphasis in the original.] Therefore, it was not necessary for the Arbitrator to decide this point, nor do I need to consider whether she correctly interpreted the legislation.

Turning to the pickup truck, as it is an automobile in ordinary parlance, the issue is causation: did the use or operation of the pickup truck directly cause Daniel’s impairment? The Arbitrator cited several grounds to show that this was so: the pickup truck’s movement made the trailer move; Daniel was going to continue his journey; the pickup truck’s use or operation did not end until the trailer was secured; Daniel was an occupant of the pickup truck. Whatever the relevance or merits of these factors, the trailer’s intervening act completely outweighs them. The Arbitrator failed to consider the guidance of the Court of Appeal of Ontario in Greenhalgh v. ING Halifax Insurance Co., 2004 CanLII 21045 (ON CA), 72 O.R. (3d) 338, namely that in considering intervening acts “it may be useful to ask if the use or operation of the automobile was the dominant feature of the accident; if not, the link between the use and operation and the impairment may be too remote to be called ‘direct’… [A] factor is a ‘dominant feature’ where it is the aspect of the situation that most directly caused the injuries.” [Emphasis added.]

I find that the issue of direct causation turns on the dominant feature in this accident and that the Supreme Court of Canada in Québec (Highway Victims Indemnity Fund) v. Federal Fire Insurance Co. of Canada, 1979 CanLII 221 (SCC), [1979] 2 S.C.R. 289 gave the definitive answer regarding unhitched trailers. The plaintiffs in Highway Victims were injured when their car was struck by a trailer that had suddenly separated from a car traveling in the opposite direction. They sued the insurer of the other car. The Supreme Court stated that “[i]f …damage is caused first and foremost by the use of the trailer, it cannot also be said that the same damage is caused by the use of the automobile… [T]he damage for which repayment is sought was caused first and foremost by the use of the trailer, rather than by use of the automobile itself, apart from the trailer.”

Furthermore, the Supreme Court specifically rejected the idea that the automobile could be the cause of damage when it was the trailer that was the actual cause. As Pratte J. noted, “Appellants argued that the use of the automobile, strictly speaking, was the cause of the damage suffered by them, since if the trailer had not been coupled to the automobile it could not have separated from it, and there would have been no accident. I am not persuaded by this reasoning…”

In this case, the trailer caused all the injuries to Daniel. The combined effect of Highway Victims and Greenhalgh is that the trailer and not the pickup truck was the direct cause of the accident. The trailer and not the pickup was the dominant feature with respect to causation and as such its role outweighed any possible causal connection between the pickup and the accident.

However, as already noted above, these concerns do not change the result.

The other issue under appeal is the Arbitrator’s finding that Peel is liable to pay accident benefits. The trailer was not specifically insured, and Peel did not insure the pickup truck. Peel submitted that the pickup truck’s insurer – and not it – should be responsible for paying accident benefits. All the same, s. 268(5) of the Insurance Act provides that “if a person is … under a contract evidenced by a motor vehicle liability policy … a dependant, as defined in the [SABS], of a named insured, the person shall claim statutory accident benefits against the insurer under that policy.” In other words, Daniel, as a dependant of his father, who was a named insured, was required by s. 268(5) to claim against Peel. The only role the insurance policy on the pickup truck played was in determining that the trailer was an automobile.

The Arbitrator’s decision is confirmed and the appeal is dismissed.

IV. EXPENSES

If the parties are unable to agree about expenses of this appeal, an expense hearing may be arranged in accordance with Rule 79 of the Dispute Resolution Practice Code, Fourth Edition.