Motor Vehicle Accident Claims Fund v. Wilhelmina Margaret Buckle, 2012 ONFSCDRS 163

Commission des services financiers de l’Ontario

Neutral Citation: 2012 ONFSCDRS 163

Appeal P11-00009

MOTOR VEHICLE ACCIDENT CLAIMS FUND Appellant

and

WILHELMINA MARGARET BUCKLE Respondent

BEFORE: David Evans

REPRESENTATIVES: Janis P. Criger for the Motor Vehicle Accident Claims Fund Douglas O'Toole for Mrs. Margaret Buckle

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:

The appeal of the Arbitrator’s order dated February 3, 2011 is dismissed, and the decision is affirmed.
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 13, 2012

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

On June 14, 2003, Margaret Buckle was a passenger on a golf cart driving down a highway when she fell off and injured herself. Mrs. Buckle had no access to automobile insurance herself, and since the golf cart was not insured under a motor vehicle liability policy, she applied to the Motor Vehicle Accident Claims Fund (the Fund) for statutory accident benefits under the 1996 SABS.¹

By way of background, under the Motor Vehicle Accident Claims Act, R.S.O. 1990, c. M.41, the Fund provides benefits to claimants if they have no access to another insurer.

The Fund denied the claim, relying on the provisions of the Off-Road Vehicles Act, R.S.O. 1990, c. O.4 (the ORVA), and its associated Regulation, R.R.O. 1990, Reg. 863. Its position is that, whether driven on or off a highway, a golf cart is entirely exempt from the requirement to carry motor vehicle liability insurance. As the Fund submits it only provides benefits where there should have been a policy, it claims it is not liable to pay statutory accident benefits.

The Fund appeals the Arbitrator’s finding that, notwithstanding the ORVA, the golf cart was a “motor vehicle” under the Highway Traffic Act, R.S.O. 1990, c. H.8 (the HTA), and accordingly required a motor vehicle liability policy under the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25 (the CAIA) when it was being driven on the highway.

II. BACKGROUND

This is the third decision that I have written of three appeals that were heard jointly, the other two being appeals of Bouchard and Motors Insurance Corporation, (FSCO A09-001616, January 7, 2011), and of Therrien and Motor Vehicle Accident Claims Fund, (FSCO A10‑000094, February 14, 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 Therrien, what type of policy was required.

In Bouchard, the first appeal decision written, a pocket bike was operated off-road on land occupied by the bike’s owner. In those circumstances, the ORVA does not require a motor vehicle liability policy in accordance with the Insurance Act. 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 Therrien, the second appeal decision, Mr. Therrien operated his dirt bike off-road on a private track, therefore, not on property occupied by the bike’s owner. Motor vehicle liability insurance was required under the ORVA. In Motor Vehicle Accident Claims Fund and Therrien, (FSCO P11‑00010, December 7, 2012), I rejected the Fund’s position that the required automobile insurance policy did not include accident benefits.

The facts in this case were agreed to. Mrs. Buckle had been staying as a guest at the property of Earl and Peter Malda, one of whom owned the golf cart. Mrs. Buckle was not operating the golf cart, nor was it being operated by the owner but rather by a George Pitts. Mrs. Buckle was injured when she fell off the golf cart while it was being driven on a highway – and not simply being driven across a highway, which makes a difference in the ORVA. While golf carts are off-road vehicles (ORVs), the ORVA exempts them from its provisions when not driven on a highway, or only directly crossing a highway. However, the ORVA also provides that it does not apply to ORVs driven on highways.

What this means is the central conundrum of this case.

III. ANALYSIS

At the time of the accident, Mrs. Buckle was not insured or named as a driver under a policy of automobile insurance, did not own a car, and was not the spouse of anyone with coverage. While it was believed that Earl Malda was likely insured under an automobile policy with Pilot Insurance Company, Pilot did not respond to the Arbitrator’s request to participate in the arbitration hearing. The matter was decided based solely on the submissions of Mrs. Buckle and the Fund.

If the Fund is liable to pay benefits, its liability arises through s. 268 of the Insurance Act. Subsection 268(1) provides that every motor vehicle liability policy shall be deemed to provide for the statutory accident benefits set out in the SABS; s. 268(2) sets out the rules for determining who is liable to pay statutory accident benefits. If recovery is unavailable against any other insurer under s. 268(2), the occupant or non-occupant has recourse against the Fund. Subsection 3(3) of the 1996 SABS in turn provides that statutory accident benefits shall be paid by the insurer that is liable to pay under s. 268(2) of the Act. Finally, s. 6 of the MVAC Act provides that any person who has recourse against the Fund for statutory accident benefits under s. 268 may apply for payment of benefits out of the Fund, and a reference to an insurer in the SABS shall be deemed to be a reference to the Fund.

Benefits are only payable under the SABS if, first of all, the claimant was involved in an “accident,” meaning “an incident in which the use or operation of an automobile directly causes an impairment…” [Definition of “accident,” SABS, s. 2(1).] The term “automobile” is not defined in the SABS. The parties agree that, of the three-part Adams³ test of whether a vehicle is an “automobile,” the only relevant test is whether it falls within any enlarged definition of automobile in any relevant statute. Pursuant to Morton v. Rabito, 1998 CarswellOnt 4786 (CA), the operative definition of automobile for this purpose is in s. 224(1) of the Insurance Act, namely a motor vehicle required under any Act to be insured under a motor vehicle liability policy. The possible Acts at issue are the ORVA and the CAIA.

Due to the exemption for golf carts in the ORVA and Reg. 863, set out below, until the golf cart was driven onto the highway, it did not need to be insured under a motor vehicle liability policy, and so at least until it was driven on the highway it was not an “automobile.” Mrs. Buckle submits (and the Arbitrator agreed) that when the golf cart was driven on the highway, it fit the definition of “motor vehicle” in the HTA and required insurance under a motor vehicle liability policy pursuant to the CAIA. Once it required insurance, it became an “automobile,” so Mrs. Buckle was involved in an “accident” pursuant to the SABS and could claim benefits from the Fund.

The Fund responds with four main points: (1) pursuant to the ORVA, golf carts are unregulated regarding automobile insurance; (2) the Fund is only liable to pay benefits where a policy could have been issued; (3) there was no evidence of consent to drive the golf cart; and finally, (4) the Court of Appeal in Adams precludes Mrs. Buckle’s recovery due to her illegal act.

1. Are golf carts unregulated regarding automobile insurance?

As noted above, the possible Acts under which insurance may be required of a motor vehicle are the ORVA and the CAIA. However, the Fund submits that the provisions of the ORVA effectively remove golf carts from any regulation of insurance.

The Fund submits that the golf cart was an off-road vehicle. Under s. 1 of the ORVA,

“off-road vehicle” means a vehicle propelled or driven otherwise than by muscular power or wind and designed to travel,

(a) on not more than three wheels, or

(b) on more than three wheels and being of a prescribed class of vehicle.

[Emphasis added]

A golf cart is propelled otherwise than by muscular power or wind, but it has more than three wheels, so you have to turn to Reg. 863 to see if it is “of a prescribed class of vehicle.” Section 3 of Reg. 863 prescribes certain vehicles as ORVs, including dune buggies and certain all-terrain vehicles, but not golf carts. However, golf carts are dealt with in s. 2(1) of Reg. 863, which exempts golf carts from the provisions of the Act and Reg. 863:

(1) The following are designated as classes of vehicles that are exempt from the provisions of the Act and this Regulation:
Golf carts.
Road-building machines.
Self-propelled implements of husbandry.
Wheelchairs.
Off-road vehicles driven or exhibited at a closed course competition or rally sponsored by a motorcycle association. [Emphasis added.]

I have cited the entire subsection because the additional exemptions for “road-building machines” and “self-propelled implements of husbandry” assist in interpreting the ORVA as well as the HTA.

I agree with the Fund that s. 2(1) of Reg. 863 therefore exempts golf carts from the requirement to be insured in s. 15(1) of the ORVA: “No person shall drive an off-road vehicle unless it is insured under a motor vehicle liability policy in accordance with the Insurance Act.” However, the Fund further submits that s. 2(1) of Reg. 863 also exempts golf carts from s. 2(1) of the ORVA, which provides that it “does not apply in respect of off-road vehicles being operated on a highway.” This is the Fund’s basis for submitting that, on or off a highway, a golf cart is exempt from the requirement to carry motor vehicle liability insurance.

However, if you look at the entirety of s. 2 of the ORVA, this proves not to be the case.

Application

(1) This Act does not apply in respect of off-road vehicles being operated on a highway.

Exception

(2) Despite subsection (1) … a holder of a driver’s licence issued under section 32 of the Highway Traffic Act who is not contravening any provision of this Act may drive an off-road vehicle,

(a) directly across a highway; or

(b) on a highway, [if the vehicle meets certain criteria in certain conditions].

Application

(3) Subsection (2) does not apply to … a self-propelled implement of husbandry or a road-building machine as defined in the Highway Traffic Act…. [Emphasis added.]

You will note that s. 2(2) provides that, despite s. 2(1), ORVs may be driven directly across a highway, or certain ORVs may even be driven on the highway, and the ORVA may still apply. However, s. 2(3) then provides a further exception to s. 2(2), which is of interest to us in this case. You will note the terms “a self-propelled implement of husbandry or a road-building machine as defined in the Highway Traffic Act” reappear in s. 2(3). This means that, even if such vehicles are just directly crossing a highway, s. 2(1) still applies to them. If the Fund were correct in its interpretation, then s. 2(3) of the ORVA would be unnecessary. After all, self-propelled implements of husbandry and road-building machines are also listed in s. 2(1) of Reg. 863, exempting them from the provisions of the ORVA. If the Fund is correct, they too would thus be “exempt” from s. 2(1) of the ORVA. However, s. 2(3) specifically provides that self-propelled implements of husbandry or road-building machines are excluded from the exception under s. 2(2) for ORVs driving directly across a highway, in that s. 2(3) states that s. 2(2) does not apply to them. That means by necessary implication that s. 2(1) does apply to them. If s. 2(1) applies to them, it also applies to golf carts.

The end result is that, if Mrs. Buckle had fallen off the golf cart while it was directly crossing a highway, the exception under s. 2(2) of the ORVA would apply, so the golf cart would still be exempt from the requirement to carry insurance under s. 15(1) of the ORVA. However, because the golf cart was actually driving on the highway, s. 2(1) of the ORVA applies, meaning that the entirety of the ORVA does not apply to the golf cart. This is not the same thing as saying that golf carts are entirely unregulated. The ORVA does not apply to golf carts driven on highways – including the exemption for requiring insurance – leaving room for the CAIA to apply.

Therefore, I agree with the Arbitrator’s conclusion that “the exemption of golf carts found in the Off-Road Vehicles Act [cannot] be read so broadly as to say that golf carts are completely unregulated modes of conveyance.”

This then leads us to the CAIA, the other statute that can require a vehicle to carry insurance. Subsection 2(1) of the CAIA sets out the requirement for a motor vehicle operating on a highway to be insured under a contract of automobile insurance:

Compulsory automobile insurance

(1) Subject to the regulations,⁴ no owner or lessee of a motor vehicle shall,

(a) operate the motor vehicle; or

(b) cause or permit the motor vehicle to be operated, on a highway unless the motor vehicle is insured under a contract of automobile insurance.

Section 1 of the CAIA defines “motor vehicle” as having the same meaning as in the HTA. Section 1(1) of the HTA defines “motor vehicle” as follows:

“motor vehicle” includes an automobile, a motorcycle, a motor-assisted bicycle unless otherwise indicated in this Act, and any other vehicle propelled or driven otherwise than by muscular power, but does not include a street car or other motor vehicle running only upon rails, a power-assisted bicycle, a motorized snow vehicle, a traction engine, a farm tractor, a self-propelled implement of husbandry or a road-building machine. [Emphasis added.]

In Adams, it was held that a “motor vehicle” within the definition of s. 1(1) of the HTA is a motor vehicle within the meaning of the CAIA.

Mrs. Buckle submits that there is only one conclusion:

[T]he golf cart in question, a vehicle propelled otherwise than by muscular power, was a motor vehicle within the meaning of the HTA and, while it was being operated on a public highway, it was required to be insured by virtue of the CAIA, and, as such, was an “automobile” within the meaning of s. 224(1) of the Insurance Act.

Indeed, you will note that the vehicles “a self-propelled implement of husbandry or a road-building machine” re-appear in s. 1(1) of the HTA as exclusions from the definition, just as they appeared in the ORVA regarding the exclusions from the exception for ORVs crossing a highway. I agree with Mrs. Buckle’s submission that, since the legislature enumerated specific exceptions to the definition of a motor vehicle, this indicates that anything fitting the general description and not expressly excluded are, by implication, deemed to fall within the meaning of that term. Therefore, since golf carts are not expressly excluded, unlike self-propelled implements of husbandry or road-building machines, they are therefore included in the definition of motor vehicle.

Furthermore, as an illustration of the above, the legislature itself has specifically defined golf carts as being motor vehicles under the HTA, as I will now illustrate using the Liquor Licence Act, R.S.O. 1990, c. L.19 (the LLA). Under R.R.O. 1990, R. 719, the regulation relating to the LLA, s. 75.1 provides the following:

75.1 The holder of a liquor sales licence with a golf course endorsement shall ensure that the following conditions of the endorsement are met:

A person must not drink or hold any liquor while driving a golf cart on a golf course.

However, s. 75.2 of the regulation provides a handy exemption for golf cart drivers who obtained liquor at the clubhouse:

75.2 Any person who obtained liquor at any licensed area of a golf course is exempt from subsection 32 (1) of the [LLA] (conveying liquor in a vehicle) while driving or having the care or control of a golf cart on the playing area of the golf course.

The subsection of the LLA referred to in that exemption reads as follows:

(1) No person shall drive or have the care or control of a motor vehicle as defined in the Highway Traffic Act or a motorized snow vehicle, whether it is in motion or not, while there is contained in the vehicle any liquor, except under the authority of a licence or permit. [Emphasis added.]

Thus, while most individuals are not allowed to drive or have the care or control of a motor vehicle as defined in the HTA while it contains any liquor, an exemption for golf cart drivers exists if they acquired club-purchased liquor. Subsection 32(1) of the LLA only applies to motor vehicles as defined in the HTA. The exemption to s. 32(1) would only be necessary if golf carts were motor vehicles as defined in the HTA. Therefore, it follows that the legislature considers golf carts as being motor vehicles as defined in the HTA.

The golf cart was, therefore, a motor vehicle as defined in the HTA and was on a highway, so according to the CAIA, it required an automobile insurance policy.

2. Is the Fund liable to pay benefits only where a policy could have been issued?

The Fund submits that it

pays only where a policy could, should or would have been present in the first place. The golf cart is not a conveyance for which a policy could, should or would have been present on June 14, 2003. If the Fund is required to pay benefits to Ms. Buckle, it will not be paying in place of an absent insurer. It simply becomes the primary insurer of golf carts in Ontario. This result is inconsistent with the Fund’s limited purpose.

In supporting this statement, the Fund relies on Ontario (Minister of Finance) v. Co-Operators General Insurance Co., 2002 CarswellOnt 4400 (Ont. S.C.J.). However, this was simply a case of a priority dispute between insurers, namely the Fund on one hand and the insurer it put on notice outside the 90‑day investigation period on the other. The Court found that the arbitrator, whose decision was under appeal, was entitled to take into account the nature of the Fund as an insurer of last resort. However, I see nothing in the decision to support the submission made by the Fund. Furthermore, while the Court of Appeal in Adams was invited to find that, since a go-kart cannot meet the legal requirements to be registered under the HTA, then therefore the CAIA cannot require it to be insured, the Court specifically declined to do so.

I find the Fund puts the golf cart before the horse. It says that, since the golf cart cannot be insured, therefore the Fund cannot stand in the place of a non-existent insurer. That is not so clear in the first place since, as noted earlier, there was a suggestion that one of the Maldas was insured by Pilot. Mrs. Buckle also concedes that one of the Maldas was covered under a homeowner’s policy, and the policy has responded to a third-party liability claim brought in the Ontario Superior Court of Justice, so the golf cart may have been insured under a policy that is not under Part VI of the Insurance Act.

Regardless, the issue is not whether a policy could have been in place, but whether the law says it should have been in place. The CAIA says that a motor vehicle on a highway is supposed to have automobile insurance.⁵ The golf cart was a motor vehicle on a highway, so it was supposed to be insured. It was therefore an “automobile” and, accordingly, aside from any other matters, Mrs. Buckle was entitled to any benefits for impairments arising from the accident.

Turning to the consent issue raised by the Fund only on appeal, it will be remembered that the owner of the golf cart was not operating it, and that the CAIA makes the owner of a vehicle responsible for insuring it, but only when the owner causes or permits the vehicle to be operated on a highway. The Fund submits that “Neither alleged owner was operating the golf cart at the time of the incident. There is no evidence that either alleged owner caused or permitted the golf cart to be operated on the highway at the time of the incident.” Therefore, it submits, the CAIA did not apply at the time of the incident.

I do not find this submission persuasive. As noted above, the facts in this case were agreed to. If consent was an issue, it should have been raised before now. Furthermore, the onus would be on the Fund to show lack of consent. As was stated many years ago in Price and Liberty Mutual Insurance Company, (OIC A98-000053, November 27, 1998), “It is trite law that the party seeking to rely on an exclusion has the burden to prove that it applies.” Rather, there was no evidence that the golf cart was being operated without the owner’s consent. It is also not clear to me that, even if there was a lack of consent, this would necessarily exclude Mrs. Buckle from receiving at least some statutory accident benefits. After all, under Part IX of the SABS, s. 30(2)(b) provides that an insurer is not required to pay various weekly accident benefits “in respect of an occupant of an automobile at the time of the accident who knew or ought reasonably to have known that the driver was operating the automobile without the owner’s consent.” Thus, even an occupant who knows there was a lack of consent would be entitled to the benefits that are not excluded.

4. Does Mrs. Buckle’s illegal act preclude her from recovering benefits?

This brings me to the Fund’s final submission, which is in some respects related to the previous point. The Fund submits that Mrs. Buckle participated in the illegal act of driving the golf cart on the highway. It submits that “No insurance is offered against the risks accompanying the commission of illegal acts.” However, as I just pointed out, even claimants who have participated in illegal acts are entitled to at least some accident benefits, so that statement is incorrect. After all, Mr. Therrien was operating his motorcycle on a private track and, although he was supposed to have insured it and did not, he was still entitled to some statutory accident benefits. Furthermore, I agree with Mrs. Buckle’s submission that operating a golf cart is not a group activity, that she was a passenger, and that the Fund “cannot point to a single legislative provision that makes it an offence, of any nature, to be a passenger in a vehicle travelling on a public highway when said vehicle is not properly registered pursuant to the provisions of the HTA.”

The Fund relies on one paragraph in the Adams decision to support its proposition about the “illegality” of Mrs. Buckle’s actions. Adams was the case that decided that a go-kart operated on a private track is not an “automobile” within the meaning of the standard Ontario automobile insurance contract. The same considerations were raised there as here, except the ORVA was not discussed. In any event, it was agreed that the go-kart would only be an automobile if it required insurance. The motions court judge held that, since conceptually a go-kart could drive on a highway, it met the definition of a motor vehicle under the HTA and therefore required insurance, even though it was being driven on a private track at the time of the accident. On appeal, the appellant insurer did not focus on the illegality of driving a go-kart on a highway, but rather on the fact that a go-kart cannot meet the legal requirements of the HTA, so the CAIA, read in context purposively, cannot and does not require that a go-kart be insured by a motor vehicle policy. Regarding that submission, Juriansz J.A. stated the following:

The principle, however, does not apply to this case: there is a difference between an illegal act not obviating the motor vehicle insurance regime where it already applies and an illegal act invoking the application of the motor vehicle insurance regime in the first place. Put another way, by performing an illegal act, an individual cannot make the motor vehicle insurance regime apply to him or her to where it would not otherwise.

However, there is nothing to indicate that Mrs. Buckle herself performed any sort of illegal act that would fit within this passage.

In any event, the passage is obiter, since immediately after the selection quoted, the Court wrote:

That said, this case can be resolved on a narrower basis…. The question whether the go-kart would require motor vehicle insurance if it were illegally driven on a highway did not arise. The proper question was whether it required motor vehicle insurance at the time and in the circumstances of the accident. [Emphasis added.]

To take up the question on which Adams turned, did the golf cart require motor vehicle insurance at the time and in the circumstances of the incident? It did, because it was a motor vehicle under the HTA, and it was being driven on a highway, so pursuant to the CAIA it required insurance. As such, it was an automobile, and Mrs. Buckle suffered an impairment as a result of an accident within the meaning of the SABS.

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.