Motor Vehicle Accident Claims Fund v. Jason Therrien, 2012 ONFSCDRS 159

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 159

Appeal P11-00010

OFFICE OF THE DIRECTOR OF ARBITRATIONS

MOTOR VEHICLE ACCIDENT CLAIMS FUND

Appellant

and

JASON THERRIEN

Respondent

BEFORE:

David Evans

REPRESENTATIVES:

Robert W. Kerkmann for the Motor Vehicle Accident Claims Fund

David Hollingsworth for Mr. Therrien

HEARING DATE:

October 17, 2011

APPEAL ORDER

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

1. The appeal of the Arbitrator’s order dated February 24, 2011 is dismissed, and the decision is affirmed.

2. If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested pursuant to the Dispute Resolution Practice Code (Fourth Edition − Updated August 2011), but as set out below and within sixty days of the date of this decision.

December 7, 2012

David Evans

Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

Jason Therrien was catastrophically injured when he fell off his uninsured and unregistered motorcycle while riding it on a private motocross track.

Since Mr. Therrien should have insured his motorcycle under a motor vehicle liability insurance policy but had not, he applied to the Motor Vehicle Accident Claims Fund (the Fund) for statutory accident benefits under the 1996 SABS.¹

Section 268(1) of the Insurance Act deems motor vehicle liability policies to include statutory accident benefits that, in the absence of any other insurer, are payable by the Fund under s. 268(2). Similarly, under the Motor Vehicle Accident Claims Act, R.S.O. 1990, c. M.41, the Fund steps into the place of an insurer and provides benefits to claimants if they should have insured their vehicles under a motor vehicle liability policy.

The Fund denied the claim, relying on s. 226(2) of the Insurance Act. This subsection provides that Part VI of the Act, which includes s. 268, does not apply to a contract providing insurance in respect of an automobile not required to be registered under the Highway Traffic Act, R.S.O. 1990, c. H.8 (the HTA), unless it is insured under a contract evidenced by a form of policy approved under Part VI.

The Fund appeals the Arbitrator’s finding that, notwithstanding s. 226(2), and whether or not the motorcycle had to be registered under the HTA, Mr. Therrien is entitled to claim statutory accident benefits.

II. BACKGROUND

This is the second decision I have written concerning three appeals that were heard jointly, the other two appeals being of Bouchard and Motors Insurance Corporation, (FSCO A09-001616, January 7, 2011), and of Buckle and Motor Vehicle Accident Claims Fund, (FSCO A10-000010, February 3, 2011). The parties in all the cases shared their written submissions, attended at the appeal hearing, and were free to hear all parties’ oral submissions.

These cases turned on whether the vehicles involved had to be insured under a motor vehicle liability policy and, in this case, what type of policy was required. Due to the provisions of the Off-Road Vehicles Act, R.S.O. 1990, c. O.4 (the ORVA) and the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25 (the CAIA), the need for insurance depends on where the vehicles were operated: off-road motor vehicles require insurance under the ORVA when operated off-road and not on their owners’ property; motor vehicles require insurance under the CAIA when operated on a highway (except for off-road vehicles simply crossing a highway).

In Buckle, a decision still to be issued, a golf cart was operated on a public highway. Golf carts are a special case, as the Regulation under the ORVA specifically exempts them from the provisions of the Act and the Regulation. The Fund in that case took the position that the Regulation exempts the golf cart from the requirement to carry motor vehicle liability insurance whether it was driven on or off the highway

In Bouchard, the first decision written, a pocket bike was operated off-road on land occupied by the bike’s owner. The ORVA did not require a motor vehicle liability policy in accordance with the Insurance Act in such circumstances. I found that the Arbitrator erred in concluding that, simply because the pocket bike had on occasion been driven on other property, it therefore required insurance: Motors Insurance Corporation and Bouchard, (FSCO P11-00003, June 20, 2012).²

In Mr. Therrien’s case, he operated his dirt bike off-road on a private track, so not on property occupied by the bike’s owner. Motor vehicle liability insurance was required under the ORVA. Pursuant to s. 224(1)(a) of the Insurance Act, the motorcycle was therefore an “automobile” in Part VI of that Act, namely “a motor vehicle required under any Act to be insured under a motor vehicle liability policy.” As already noted above, Part VI deems motor vehicle liability insurance policies to include statutory accident benefits: s. 268(1). However, the Fund took the position that, because of s. 226(2), Part VI did not apply to Mr. Therrien’s motorcycle – since it did not need to be registered under the HTA but rather under the ORVA – and so the required automobile insurance policy does not include accident benefits.

III. ANALYSIS

The parties agreed on these facts:

1. Jason Therrien, at age 22, was catastrophically injured when he fell off his motorcycle while operating it on a private motocross track on April 25, 2009, in Ashton, Ontario.

2. The motorcycle was a 2008 KTM 144 SX. Mr. Therrien did not drive the motorcycle on highways. Mr. Therrien had not applied for a permit under s. 7 of the Highway Traffic Act. The motorcycle was not insured.

3. After the accident, Mr. Therrien applied to the Motor Vehicle Accident Claims Fund for accident benefits.

The motorcycle required insurance under the ORVA:

• It met the definition of an off-road vehicle under s. 1 as “a vehicle propelled or driven otherwise than by muscular power or wind and designed to travel [on] not more than three wheels…”
• It was required to be “insured under a motor vehicle liability policy in accordance with the Insurance Act”: s. 15(1).
• It was not being operated on a highway. The ORVA would not apply if it were: s. 2(1).
• It was not being driven on land occupied by the owner of the vehicle, so the s. 15(9) exception to the insurance requirement did not apply.

If the motorcycle was required to be registered under the HTA and thus required a motor vehicle liability policy under the CAIA, there is no doubt that the required motor vehicle liability policy would have included statutory accident benefits. However, as the Fund notes in its submissions, “The motorcycle driven by Mr. Therrien was not being driven on the highway at the time of the accident, and it was not a highway driven vehicle generally. It was an off-road dirt bike driven off-road.” It also had no motor vehicle permit under the HTA. Accordingly, I agree with the Fund that there was no evidence to suggest that the motor vehicle had to be either registered under the HTA or insured pursuant to the CAIA.

Therefore, the only issue is whether the motor vehicle liability policy required under the ORVA – and the one Mr. Therrien should have obtained – includes statutory accident benefits coverage.

The term “motor vehicle liability policy” is defined in s. 1 of the Insurance Act as meaning “a policy or part of a policy evidencing a contract insuring … the owner or driver of an automobile … against liability arising out of bodily injury to or the death of a person or loss or damage to property caused by an automobile or the use or operation thereof.” Statutory accident benefits in Part VI of the Act are deemed included in such policies by s. 268(1).

Subsection 268(2) then sets out which insurer has the liability to pay those benefits. In particular, s. 268(2)1.iv provides that, in respect of an occupant of an automobile (and the bike was an “automobile” because it required insurance under ORVA), if recovery is unavailable against any insurer, the occupant has recourse against the Fund. (See also s. 6(1) of the MVAC Act.)

The Fund claims that Part VI does not apply, based on s. 226(2) of the Insurance Act. Section 226 as a whole provides:

Application of Part [VI]

226. (1) This Part does not apply to contracts insuring only against,

(a) loss of or damage to an automobile while in or on described premises;

(b) loss of or damage to property carried in or upon an automobile; or

(c) liability for loss of or damage to property carried in or upon an automobile.

Idem

(2) This Part does not apply to a contract providing insurance in respect of an automobile not required to be registered under the Highway Traffic Act unless it is insured under a contract evidenced by a form of policy approved under this Part.

Idem

(3) This Part does not apply to a contract insuring solely the interest of a person who has a lien upon, or has as security legal title to, an automobile and who does not have possession of the automobile.

The Arbitrator held that s. 226(2) does not apply. She found that the Fund was focusing solely on the registration requirement while ignoring the fact that s. 226 deals with various types of contracts of insurance.

In that regard, I agree with Mr. Therrien’s submission that s. 226 is a red herring. Thus, if somebody has an insurance policy on property in a car, or something is stolen after breaking into a car, then statutory accident benefits are not attached. The legislature is simply asking us to look at the contract that exists in a given case, but there was none of the enumerated types here, so that is the end of the matter.

Essentially, the Fund is looking at the matter backwards. Mr. Therrien was required to have a motor vehicle liability policy, and s. 268(1) required it to include statutory accident benefits. Indeed, s. 226(2) suggests that off-road vehicles can indeed have insurance “under a contract evidenced by a form of policy approved under” Part VI, namely contracts including accident benefits. Subsection 226(2) on the other hand does not address the issue here, when there was no motor vehicle liability policy.

That is why I find the Court of Appeal case Young v. Ontario (Minister of Finance) (2003), 2003 CanLII 23640 (ON CA), 68 O.R. (3d) 321, of no assistance to the Fund. Ms. Young was a resident of Ontario who was injured in a single-vehicle accident when she lost control of her pick-up truck in New Mexico. She had registered and insured it there, but declined optional first party medical coverage. Having no recourse against any other insurer, she applied to the Fund for accident benefits. The Court in reversing the lower court found that she was not entitled to benefits under s. 226(2). However, the court looked at both the fact that the truck did not need to be registered in Ontario and that the particular contract in issue did not need to include statutory accident benefits. The Young case is therefore distinguishable.

I also note that the Financial Services Commission of Ontario itself advises consumers with off-road vehicles that they need to purchase statutory accident benefits as part of their automobile insurance. On the Commission web site at p. 229, entitled “Understanding Insurance for Motorcycles, Snowmobiles, and Other Motorized Vehicles,” consumers can read this:

Off-Road Vehicles

Off-road vehicles are two-wheeled motorized vehicles and certain vehicles with four or more wheels, intended for recreational use. These vehicles include moto-cross bikes and four-wheel all-terrain vehicles, which are normally driven over rugged terrain.

To drive an off-road vehicle, you must have at a minimum, a valid G2/M2 or greater driver’s licence unless you are driving on your private property. If you plan to drive the vehicle anywhere other than on the private property of the vehicle’s owner, you must also have the same mandatory insurance coverage as an automobile. [Emphasis added.]

Mr. Therrien was not driving on his private property, so the motor vehicle liability policy he should have purchased would have included the same mandatory insurance coverage as an automobile, namely statutory accident benefits.

In fact, the Fund’s solicitor in the Buckle appeal agreed that there is only one motor vehicle liability policy. She submitted at the appeal hearing that what s. 226(2) contemplates is the possibility of a “contract providing insurance in respect of an automobile” that is not a Part VI motor vehicle liability policy. For example, a golf cart is a vehicle that its owner might want covered under a homeowner’s policy to provide indemnity, but that is not a Part VI policy with accident benefits included.

In other words, s. 226(2) does not even speak to motor vehicle liability policies but rather to automobile insurance contracts that are not contracts evidenced by a form of policy approved under Part VI, such as homeowner’s policies. I agree with this submission.

Accordingly, in the absence of a motor vehicle liability policy in this case, with its attendant statutory accident benefits, the Fund is liable to pay for those benefits, subject to the exclusions under s. 30 of the SABS for housekeeping and income replacement benefits.

The appeal is therefore dismissed.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested within sixty days of the date of this decision. The request shall be accompanied by a Bill of Costs describing the expenses claimed, the services received and the costs, as well as written submissions regarding entitlement to or the quantum of these expenses, or both, as are in dispute.

December 7, 2012

David Evans

Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
2. 2Currently under judicial review.