Unifund Assurance Company v. Joseph Beattie, 2015 ONFSCDRS 202

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 202

Appeal P14-00040

UNIFUND ASSURANCE COMPANY Appellant

and

JOSEPH BEATTIE Respondent

BEFORE: David Evans

REPRESENTATIVES: Sharla Bandoquillo for Unifund Assurance Company David Payne for Mr. Joseph Beattie

HEARING DATE: On the record by written submissions received by May 31, 2015

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 September 30, 2014, is allowed. Paragraph 1 of the Arbitrator’s order is revoked, and the following substituted:
On July 8, 2010, Mr. Beattie was not injured while operating an “automobile” within the meaning of subsection 2(1) of The Statutory Accident Benefits Schedule – Accidents on or after November 1, 1996.
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 – January 2014), but as set out below and within 45 days of the date of this decision.

October 5, 2015

David Evans Director’s Delegate

Date

I. NATURE OF THE APPEAL

On July 8, 2010, Mr. Joseph Beattie was operating a “Genie S65 Boom Lift,” a four-wheeled mobile crane propelled by its own motor. It was on private property in a parking lot next to a building at ground level. That level collapsed into the level below, and Mr. Beattie was injured. He applied for statutory accident benefits from Unifund Assurance Company under the SABS —1996¹ on the basis that he had been injured in an automobile accident.

Unifund denied benefits on the basis that the Genie was not an “automobile” as defined in the SABS. It appeals the order of Arbitrator H. Michael Kelly that the Genie was an off-road vehicle requiring automobile insurance and so was an “automobile” under the enlarged definition of “automobile” in the Insurance Act.

II. BACKGROUND

Statutory accident benefits are only payable if an insured suffered an impairment in an “accident,” defined in s. 2(1) of the SABS as “an incident in which the use or operation of an automobile directly causes an impairment...” The Arbitrator stated that the issue of causation was not before him, but only the issue of whether the Genie was an “automobile.” As will be seen, that issue ultimately turns on whether an off-road vehicle has to have a seat.

Regarding the Genie, the Arbitrator stated: “The purpose of the Genie was to elevate Mr. Beattie to enable him to perform a maintenance function (painting or preparation for painting) with respect to the building.” The Arbitrator noted that the parties agreed the Genie did not have a seat designed to be straddled by the operator. In fact, based on the illustrations of the operator’s platform in the Owners’ Manual, he found: “It appears that the platform does not have a seat and that the operator remains standing during the performance of the Genie.” On appeal, there was no dispute that the Genie lacked a seat, and indeed the position of Mr. Beattie on appeal is that the entire case turns on whether an off-road vehicle has to have a seat to be considered an “automobile.”

The Arbitrator found that in performing its normal function, “the Genie will be driven to a position close to the building wall; the Genie will elevate its operator to the desired height on the side of the building; the operator will address his duties at that point while the Genie is stationary; and the operator will then operate the Genie to move to the next point on the building’s wall that requires attention. During its normal operation, the Genie will be stationary at times and moving at times.”

The Arbitrator applied the three-part test in Adams v. Pineland Amusements Ltd., (2007) 2007 ONCA 844, 88 O.R. 3rd, 321, OCA, to determine whether the Genie was an automobile. He found that, as the Genie was neither an “automobile” in ordinary parlance nor in an insurance policy, the issue was whether it fell within any enlarged definition of “automobile” in any relevant statute.

The relevant enlarged definition of “automobile” is in Part VI of the Insurance Act, in particular s. 224(1)(a): “A motor vehicle required by any Act to be insured under a motor vehicle liability policy.” Thus, if the Genie had to be insured under a motor vehicle liability policy at the time and place of the incident, it was an automobile, and statutory accident benefits were claimable.

The Arbitrator found that although the Genie was a motor vehicle under the Highway Traffic Act, R.S.O. 1990, c. H.8, it was not being operated on a highway, so it did not require insurance under the Compulsory Automobile Insurance Act, R.S.O. 1990, c. C.25. Accordingly, under those Acts, the Genie did not fit within the relevant enlarged definition of “automobile.”

The Arbitrator then considered the Off-Road Vehicles Act, R.S.O. 1990, c. O.4 (“ORVA”), which under s. 2(1) may apply where an off-road vehicle is not being operated on a highway. As noted, the Arbitrator found that the parking lot was not a highway. The Genie was also not being driven on land occupied by the owner of the vehicle, so if it was an off-road vehicle, then s. 15 required it to be “insured under a motor vehicle liability policy in accordance with the Insurance Act.” However, vehicles like the Genie, having more than three wheels and propelled or driven otherwise than by muscular power or wind, only meet the definition of “off-road vehicle” in s.1 if they are of a prescribed class.

The prescribed classes are set out in s. 3 of Reg. 863, R.R.O. 1990, set out further below. The Arbitrator found that despite its lack of a seat the Genie met the definition in para. 1.2 of s. 3: “Vehicles designed for utility applications or uses on all terrains that have four or more wheels and a seat that is not designed to be straddled by the driver.”

Accordingly, as an off-road vehicle being operated on land not occupied by its owner, the Genie was found by the Arbitrator to require insurance under a motor vehicle liability policy and thus met the enlarged definition of “automobile” under s. 224(1) of the Insurance Act.

III. ANALYSIS

While Unifund raised a number of issues on appeal, including causation, despite the fact that the Arbitrator stated causation was not an issue before him, I agree with Mr. Beattie’s submission: “This appeal turns entirely on Arbitrator H. Michael Kelly’s interpretation of section 3(1.2) [of] Regulation 863, made under the Off-Road Vehicles Act. Specifically, it turns on the question of whether that section requires a motor vehicle to have a seat in order to be prescribed as an ‘off-road vehicle.’”

I will now set out section 3 to put para. 1.2 in context:

For the purposes of the definition of “off-road vehicle” in section 1 of the Act, the following classes of vehicles are prescribed:
Dune buggies.

1.1 Vehicles designed for use on all terrains, commonly known as all-terrain vehicles, that have steering handlebars and a seat that is designed to be straddled by the driver.

1.2 Vehicles designed for utility applications or uses on all terrains that have four or more wheels and a seat that is not designed to be straddled by the driver.

Suzukis, Model Numbers LT125D, LT50E, LT125E, LT185E, LT250EF and LT250EFF.
Hondas, Model Numbers FL250 series and TRX200.
Yamahas, Model Number YFM 200N.

I will now reproduce Arbitrator Kelly’s discussion of these provisions:

No evidence was called to particularize the type of vehicle represented by the listed Suzuki, Honda, and Yamaha models, or by the term “Dune buggies.”²

Unifund argued that the vehicles covered by Regulation 863 were totally, or at least primarily, sport and recreational vehicles, but no evidence was presented to support that assertion. If it were the intention of the Legislature to restrict the application of Regulation 863 to vehicles used solely for sport or recreational uses, the Legislature would have specifically stated that. Why would the models identified in subsections 3(2), (3), and (4) above have been individually described if they already fit squarely within the definitions in 3(1), (1.1), or (1.2) above?

The definition in subsection 3(1.2) above does not suggest a recreational purpose. It says “designed for utility applications or uses on all terrains that have four or more wheels and a seat that is not designed to be straddled by the driver”. Many sport and recreational vehicles are three-wheeled, and have a seat intended to be straddled by the driver.

I do not interpret subsection 3(1.2) as requiring that the vehicle have a seat. Rather, I interpret that clause as an exclusion if the vehicle has a seat that is designed to be straddled. Neither party addressed the significance, if any, if the Genie had no seat.

As can be seen from the above, the Genie’s lack of a seat played a significant role on appeal.

I find that a plain grammatical review of s. 3(1.2) suggests that a seat is a necessary part of the definition. The requirements under s. 3(1.2) speak to the design, number of wheels, and type of seat. The seat is not optional, and as will be seen, treating the provision as an exclusion contradicts the other provisions in s. 3.

The Arbitrator also queried why certain vehicles were listed if they were already included in the broader definitions, and noted that many sport and recreational vehicles are three-wheeled with straddle seats. However, many such vehicles also have four wheels and a straddle seat.

Furthermore, these very points were discussed in Matheson v. Lewis, 2014 ONCA 542, which dealt with a four-wheeled recreational vehicle with a straddle seat. Unfortunately, the Arbitrator did not have the advantage of having this case before him, as it was only issued on July 11, 2014, and the Arbitration hearing was on July 22, 2014. The vehicle in question was an “unmodified 1986 Honda model TRX 200 SX,” one of the vehicles listed in para. 3 of s. 3. As the court wrote: “It came equipped with four wheels that had contact with the ground; a steering handlebar; and a straddle seat that was designed for a driver only.” The court went on to say:

In this case, a regulation under the Off Road Vehicles Act, R.R.O. 1990, c. O.4, explicitly classifies the Honda ATV model TRX 200 as an “off-road vehicle”: R.R.O. 1990, Reg. 863, s. 3, para. 3. Mr. Matheson has not argued that his Honda TRX 200 SX does not come within this provision. In any case, s. 3 of Reg. 863 also classifies all-terrain vehicles generally as off-road vehicles, so long as they have steering handlebars and a seat designed to be straddled by the driver: para. 1.1.

Thus, the fact the ATV was specifically listed in para. 3 but also included in the broader definition in para. 1.1 created no interpretation problems for the Court of Appeal. Furthermore, the following quote from Matheson answers the Arbitrator’s question why certain models would have been individually described if they already fit within the broader definitions:

The regulations under the Off-Road Vehicles Act have been amended from time to time, as recently as this year. Despite amending the regulatory framework, the legislature has left intact the classification of the Honda ATV model TRX 200 as an off-road vehicle. In 2003, the legislature amended s. 3 of Reg. 863 by adding paragraphs 1.1 and 1.2: O. Reg. 317/03. Rather than referring to specific model numbers, these paragraphs bring whole categories of ATVs within the definition of off-road vehicles. This must be seen as a regulatory choice.

Since four-wheeled vehicles with straddle seats like the Honda ATV model TRX 200 are not excluded but are specifically included as prescribed vehicles in para. 1.1 and para. 3, as seen in Matheson, then para. 1.2 cannot operate as an exclusion for such vehicles, as suggested by the Arbitrator. Therefore, to fit within para. 1.2, the vehicle must have a seat.

Mr. Beattie submits that the Arbitrator’s interpretation of s. 3(1.2) as an exclusion is reasonable and not to be interfered with. However, as stated by the Court of Appeal in Aviva Canada Inc. v. Pastore , 2012 ONCA 642 at para. 28: “The director [or his delegate] determines whether the arbitrator’s decisions of law, including statutory interpretation, are correct. However, his decision need only be reasonable.”

Mr. Beattie submits that if a seat is a pre-requisite under s. 3(1.2), then if an individual removes the seats from the vehicle it would no longer need insurance, and manufacturers would start to design and market off-road vehicles without seats in order to avoid insurance. I find this submission unreasonably hypothetical.

I find that an essential part of the definition in para. 1.2 is the type of seat. Since the Genie did not have a seat, it does not fit within para. 1.2.

Therefore, the Genie was not a prescribed vehicle under Reg. 863, so it was not required to have insurance and was consequently not an automobile within the enlarged meaning of the Insurance Act. Mr. Beattie was thus not involved in an “accident” under the SABS.

The appeal is accordingly allowed, and the Arbitrator’s decision is revoked.

IV. EXPENSES

If the parties are unable to agree on the legal expenses of this appeal, an expense hearing shall be requested within forty-five days 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.

October 5, 2015

David Evans Director’s Delegate

Date

Footnotes

The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended.
In fact, dune buggies are defined in s. 1 of the Regulation as meaning “a self-propelled vehicle with four or more wheels that has been manufactured or modified for off-road use but does not include an amphibious vehicle with six or more wheels.”