Eleanor Carr v. TD General Insurance Company, 2015 ONFSCDRS 276

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2015 ONFSCDRS 276

Appeal P15-00062

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ELEANOR CARR, A MINOR BY HER LITIGATION GUARDIAN, AMY THOMPSON

Appellant

and

TD GENERAL INSURANCE COMPANY

Respondent

BEFORE:

Delegate Lawrence Blackman

REPRESENTATIVES:

Ms. Siona V. Sullivan for the Appellant, Eleanor Carr by her Litigation Guardian, Amy Thompson

Mr. Robert Garay for the Respondent, TD General Insurance Company

HEARING DATE:

Written submissions due December 21, 2015. Order issued December 23, 2015.

PRELIMINARY APPEAL ORDER

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

1. The Arbitrator shall exercise her discretion whether to arrange and to hear expense submissions as to the quantum of arbitration legal expenses payable to the Respondent and to make an order in that regard. However, payment of any arbitration expense order is stayed pending the conclusion of this appeal, subject to any further or other order of an appellate officer.

2. The legal expenses of this preliminary appeal decision are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

December 31, 2015

Lawrence Blackman Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL AND BACKGROUND

Eleanor Carr was born December 25, 2005. On June 18, 2011, when she was five years old, she was injured when she fell down the steps of a fire truck and hit her head on an asphalt driveway. Ms. Carr had been attending a classmate’s birthday party to which a fire truck had been brought.

As a result of her injuries, Ms. Carr’s applied to her first-party automobile insurer, the Respondent, TD General Insurance Company, for statutory no-fault benefits available under the 2010 Schedule.¹ The Respondent denied Ms. Carr’s claim on the assertion she was not injured as a result of an accident, as defined in subsection 3(1) of the 2010 Schedule. The latter provides:

“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;

The parties came before Arbitrator Fry of ADR Chambers (the “Arbitrator”) to determine whether Ms. Carr was injured as a result of an accident, as defined.

In determining whether the Appellant met the requisite definition of accident, the Arbitrator’s October 30, 2015 decision addressed the “purpose test.” The Arbitrator enunciated that test as “[d]id the incident result from the ordinary and well-known activities to which the fire truck was put?” The Arbitrator held that getting out of a fire truck is the normal use or operation of a vehicle and that the evidence indicated that the use of the fire truck at the birthday party was a normal use or operation of the fire truck in the circumstances.

The Arbitrator, however, went on to find that the use or operation of the fire truck in this instance did not involve it being used as a motor vehicle, but rather for entertainment and/or educational purposes. She held that although the evidence indicated this was a legitimate use of the truck, it was not a type of use or operation contemplated by subsection 3(1) of the 2010 Schedule. The Arbitrator concluded that the incident did not meet the purpose test. She found that it was not necessary to consider the second part of the established two-part test, whether there was a direct causal relationship between the injuries and the operation of the fire truck (the causation test).

The Arbitrator awarded the Respondent its legal costs of the arbitration hearing. The Notice of Appeal sought a stay of this order on the following grounds:

1. The appeal is genuine.

2. The Arbitrator made substantive errors in her decision.

3. There are important legal issues for determination.

4. The Appellant does not have the financial means to pay the Respondent’s legal expense.

5. The Respondent has the financial ability to wait for the appeal to be heard.

The Respondent argues that its expenses “should be payable forthwith” arguing, in part:

1. The Appellant has raised issues of fact, not law. Only questions of law may be appealed.

2. The Arbitrator was correct in finding the normal use or operation of a fire truck is to transport firefighters to fires. That is a factual determination.

3. Ms. Carr was using the vehicle for a non-motoring purpose. Accordingly, she cannot be expected to receive benefits from a motor vehicle policy.

4. That Ms. Carr fell in the vicinity of the fire truck is incidental.

5. The Arbitrator correctly concluded that educational purposes are not a normal use of the vehicle.

6. The appeal is without merit and is not genuine.

7. The Appellant’s financial means are an irrelevant ground for delaying payment of its legal expenses. No deference should be granted the Appellant.

II. ANALYSIS

My November 17, 2015 acknowledgement letter stated, in part:

Subsection 283(6) of the Insurance Act provides that an appeal does not stay the order of an arbitrator, unless so ordered. Thus, as stated in Guardian Insurance Company of Canada and Armstrong, (FSCO P00-00037, July 20, 2000), a stay from the order of an arbitrator is the exception, not the rule. The following criteria pertain to whether a stay should be granted:

1. The bona fides of the appeal;

2. The substance of the grounds for appeal; and,

3. The hardship to the respective parties if the stay is granted or refused.

In Menard and Royal Insurance, (OIC P-001055, October 22, 1992), Director Sachs held that an appeal affecting an arbitrator’s control of the process must be seen as a rare request for an exercise of appellate discretion requiring special circumstances.

Included in the case law put before the Arbitrator was Economical Mutual Insurance Company and Whipple, (FSCO P10-00020, October 6, 2011). That decision addressed the subsection 2(1) definition of accident in the predecessor Statutory Accident Benefits Schedule– Accidents on or After November 1, 1996, Ontario Regulation 403/96. The definition of accident is identical to subsection 3(1) in the 2010 Schedule.

The Divisional Court, in Economical Mutual Insurance Company v. Whipple, 2012 ONSC 2612, in dismissing the application for judicial review from Delegate Evan’s appeal decision, confirmed the purpose test as whether the accident resulted from the ordinary and well-known activities to which automobiles are put. The Court summarized the Delegate’s decision as finding that the insured in that case doing a headstand while “cavorting around the ‘stripper pole’” inside a “party vehicle” constituted an ordinary use of the specific vehicle in question.

It is presently difficult to fathom why a five-year old child walking down the steps of a fire truck being used for “entertainment and/or educational purposes,” which the Arbitrator found to be a legitimate and normal use or operation of the vehicle, did not meet the purpose test. It is presently difficult to fathom why a fire truck meets the statutory definition of accident only when it is used to “transport firefighters to fires.”

I am persuaded as to the bona fides of this appeal. I am persuaded there is substance to the argued grounds for appeal. I find that the respective hardship if a stay is or is not granted is a necessary and proper consideration in whether to exercise such discretion. The Respondent does not argue any hardship if payment of its expense award is delayed. Nor does it dispute the Appellant’s argued hardship. I am persuaded that the hardship criterion also favours the Appellant.

The Arbitrator determined that the Respondent is entitled to its arbitration legal expenses. I am not advised that the Arbitrator has ordered a specific monetary award or that an arbitration expense hearing has been arranged.

Following Menard, noted above, the Arbitrator shall exercise her discretion whether to arrange and to hear expense submissions as to the quantum of arbitration legal expenses payable to the Respondent. However, following the criteria in Armstrong, I am persuaded to exercise my discretion to stay payment of any arbitration expense order pending the conclusion of this appeal, subject to any further or other order of an appellate officer.

Regarding my consideration of the criteria in determining whether to exercise my discretion to grant a stay of an arbitration order, I note the following comments in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53:

A court considering whether leave should be granted is not adjudicating the merits of the case … A leave court decides only whether the matter warrants granting leave, not whether the appeal will be successful … This is true even where the determination of whether to grant leave involves, as in this case, a preliminary consideration of the question of law at issue. A grant of leave cannot bind or limit the powers of the court hearing the actual appeal …

III. LEGAL EXPENSES

The legal expenses of this preliminary appeal order are deferred to the conclusion of this appeal, subject to any further or other order of an appellate officer.

December 31, 2015

Lawrence Blackman Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.