Zenith Insurance Services v. Sheila McAlpine, 2017 ONFSCDRS 149

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2017 ONFSCDRS 149

Appeal P15-00061

OFFICE OF THE DIRECTOR OF ARBITRATIONS

ZENITH INSURANCE SERVICES Appellant

and

SHEILA MCALPINE Respondent

BEFORE: David Evans

REPRESENTATIVES: Linda M. Kiley for Zenith Insurance Services Ian Furlong for Ms. Sheila McAlpine

HEARING DATE: January 24, 2017

APPEAL ORDER

Under section 283 of the Insurance Act, R.S.O. 1990 c. I.8 as it read immediately before being amended by Schedule 3 to the Fighting Fraud and Reducing Automobile Insurance Rates Act, 2014, and Regulation 664, R.R.O. 1990, as amended, it is ordered that:

1. The Arbitrator’s Order of October 2, 2015 is confirmed and this appeal is denied.

2. 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.

May 29, 2017

David Evans Director’s Delegate

Date

REASONS FOR DECISION

I. NATURE OF THE APPEAL

On a concession road in rural Ontario in March 2012, an oncoming ATV driven by Jordan Musclow met a horse rider, Sheila McAlpine, on her horse Indigo. Shortly after the ATV passed Ms. McAlpine and Indigo, Indigo spooked, throwing Ms. McAlpine and trampling her as he tried to extricate himself from mud in a shallow ditch at the side of the road. Ms. McAlpine’s resulting head injury left her with no memory of the incident itself. She claimed automobile accident benefits from her insurer, Zenith Insurance Services.

The issue at the arbitration hearing was whether this was an “accident” as defined in s. 3(1) of the SABS–2010,¹ namely an incident in which the use or operation of an automobile – the ATV in this case – directly caused an impairment. The Arbitrator found that this was an accident because:

• The ATV was being put to an ordinary use

• But for its use, Indigo would not have been spooked

• The chain of causation was not broken by Indigo slipping on the mud

• The ATV was the dominant feature of the incident

• The incident was therefore covered under automobile insurance

For the reasons set out below, I find the Arbitrator did not err in her finding.

II. BACKGROUND

Ms. McAlpine and her sister, Brenda Prentice, set out on horseback on March 31, 2012, from the Prentice farm near Maynooth, Ontario. They made their way to McAlpine Road, a narrow two-lane hardtop road running north/south. The mud in the ditch beside the road’s narrow, graveled shoulder was thick and tacky because of a recent warm spell.

The sisters were riding north, with Ms. Prentice on her horse, Rebel, in the lead and slightly to the left of Ms. McAlpine, on Indigo. Driving south on the same road was Mr. Musclow in his racing ATV, with Ms. Sarah Nichols seated directly behind him.

By way of background, Mr. Musclow testified that while he had never before encountered a horse on the road while on his ATV, his father had taught him over the years to be quiet around horses. Accordingly, he knew to pull in his clutch to quiet the sound of the ATV when approaching the horses to avoid startling them.

The witnesses agreed that Mr. Musclow declutched, the ATV coasted past and about six to eight feet away from the horses, and then Mr. Musclow and Ms. Nichols looked back to see if the horses were okay. The witnesses also agreed that the horses got spooked, leading to Ms. McAlpine landing in the ditch, and that the entire incident, from the time the ATV passed the horses until the time Ms. McAlpine lay injured in the ditch, took only a matter of seconds.

However, with respect to what happened as the ATV passed the horses, the Arbitrator preferred the evidence of Ms. Prentice. She testified that she heard Mr. Musclow’s loud ATV before it crested over a hill in the distance, moving quickly toward them. As he approached, Mr. Musclow stood up on his ATV and, about 25 feet ahead, declutched to quiet and slow the ATV. When Mr. Musclow had just passed her, the muffler came up loud and the ATV’s tires spun up gravel and dust. This spooked Indigo, who then bumped Rebel. Both horses turned towards the ditch. As this happened, Ms. Prentice saw Indigo struggling in the mud and Ms. McAlpine in the throes of being thrown off before she fell and was trampled by Indigo.

The Arbitrator then turned to the legal tests used to determine if an incident was an accident. She set out the two-part test – purpose and causation – to be applied in considering whether the incident was an “accident”:

(i) Did the accident result from the ordinary and well-known activities to which automobiles are put?

(ii) Did such use or operation of an automobile directly cause the impairment?

The purpose test was set out in Amos v. Insurance Corp. of British Columbia, 1995 CanLII 66 (SCC), [1995] 3 S.C.R. 405. As the Arbitrator noted, there was no dispute that the ATV was “an automobile which was engaged in what is perhaps the most ordinary use to which vehicles are put: driving.”

The Arbitrator therefore focused on the causation test. In Greenhalgh v. ING Halifax Insurance Company, 2004 CanLII 21045 (ON CA), [2004] 72 O.R. (3d) 338 (ONCA), the Court of Appeal refined the test it set out in Chisholm, v. Liberty Mutual Group (2002), 2002 CanLII 45020 (ONCA). The court then set out three helpful considerations under this test: but for, intervening act, and dominant feature.

First, the court in Greenhalgh noted that the “but for” test can act as a useful screen. The Arbitrator did not deal with this issue to any great extent, but the Insurer does not really dispute that the incident passed this test. There was no suggestion that Indigo would have spooked but for the ATV passing. However, the “but for” test only serves to eliminate from consideration factually irrelevant causes and does not conclusively establish legal causation.

The second consideration is whether there was an intervening act or intervening acts that resulted in the injuries that could not be said to be part of the “ordinary course of things.” While the Insurer submitted that the mud broke the chain of causation because the mud caused Indigo to panic, which directly caused Ms. McAlpine’s fall, the Arbitrator disagreed. She found that “the mud was a normal risk associated with motoring along a narrow concession road in the spring” and that, even if the mud and the trampling were also a direct cause of Ms. McAlpine’s injuries, the ATV need not be the only cause of the injuries.

The Arbitrator also found that spooking or frightening a horse on a narrow road is an ordinary risk associated with travel on a road in a rural area used by horses and that a spooked horse is not too incidental or remote a consequence of a passing ATV. She noted that both Ms. Nichols and Mr. Musclow testified that they were aware of the risks associated with passing horses on the road and were concerned enough to look back after passing the horses.

The Arbitrator added that “The risk is sufficiently ordinary that it has required legislation to protect against. Section 167 of the Highway Traffic Act contemplates that a horse can be frightened and has put the onus on motorists to exercise caution when passing horses on a road.”

The third consideration that may be of use is the “dominant feature” test. The court in Greenhalgh stated that in some cases 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.” In addition, as set out in CGU Insurance Company of Canada and Irving, (FSCO P03-00022, November 29, 2004) Commission case law has identified four factors as important in defining the nature of the incident – time, proximity, activity and risk. The Insurer submitted that the dominant feature of the accident was an assault on Ms. McAlpine by her horse, drawing an analogy to such cases as Downer v. The Personal Insurance Company, [2012] ONCA 302, and Martin v. 2064324 Ontario Inc. (Freeze Night Club), [2013] ONCA 19]. It also submitted that this was not the kind of risk meant to be covered by automobile insurance.

The Arbitrator rejected the idea that a horse could form the necessary intention to use force or inflict harm. She noted that, by the accounts of those that know him, Indigo is not an anxious horse but a slow and gentle one. She found that the evidence showed Indigo was spooked and that his response was nothing more than a panicked attempt to extricate himself from the mud. She noted that the incident happened very quickly, that the ATV was close to the horses when it caused noise to spook them, and that no physical contact was required for this to be an accident. As noted above, she had already found that the possibility of a car spooking a horse was an ordinary risk of the normal activity of riding a horse on the road. Accordingly, the Arbitrator found “The horse’s reaction to the ATV and to the mud was not an assault but part of the ordinary risk associated with the ATV’s passing the horses and their riders on the road.” Therefore, the use or operation of the ATV was a dominant feature of the incident.

The Arbitrator concluded that Ms. McAlpine was involved in an “accident” when the ATV passed her and she was tossed from her horse.

III. ANALYSIS

As discussed above, the Arbitrator considered the purpose and the causation tests. The starting point is the “purpose” test set out in Amos. Zenith submits that the Arbitrator paid too little attention to the purpose test, as Ms. McAlpine’s injuries did not result from the ordinary and well-known activities to which automobiles are put, but directly resulted from a horseback riding accident. However, as the Arbitrator noted, the ATV, which no one disputed was an automobile, was being used in an ordinary and well-known way. Zenith also submits that this is not the sort of loss that the legislature intended the SABS to cover. That is more appropriately dealt with under the dominant feature test. I find the Arbitrator was correct in finding this incident passes the purpose test.

The other major question to answer is whether or not the impairments were directly caused by the use or operation of an automobile. The causation test was set out by the Court of Appeal in Chisholm and Greenhalgh. It found three considerations helpful in answering the “direct cause” question: but for, intervening act, and dominant feature.

“But For” Consideration

As noted above, Zenith does not really dispute that the spooking of Indigo met the first test: but for the ATV passing Indigo, he would not have spooked, as he was known to be a slow and gentle horse. However, this consideration is only a filter to eliminate factually irrelevant cases.

Rather, the risks of spooking a horse falls under the two remaining considerations regarding causation in this case, intervening act and dominant feature. Zenith submits that such risks are not part of the ordinary course of things, so the incident fails to pass the intervening act consideration. It also submits that the risk falls outside of the pool of risks that are insured under automobile insurance, so it fails under the dominant feature consideration.

Intervening Act Consideration

First, as discussed in Chisholm, a series of events following an act can consist of one incident if they follow from the initiating force. Mr. Chisholm was operating his car when an unknown assailant fired gunshots at him. Laskin, J.A. agreed that, but for Mr. Chisholm driving his car he would not have been shot. However, the use or operation must be a direct cause. He stated that the “motions judge and the Financial Services Commission have essentially adopted the same test of direct causation by relying on a definition of direct cause in Black’s Law Dictionary: ‘The active, efficient cause that sets in motion a train of events which brings about a result without the intervention of any force started and working actively from a new and independent source,’” citing, as an example, Petrosoniak and Security National Insurance Company, (FSCO A98‑000198, November 2, 1998). He further stated that “When one thinks of direct causation one thinks of something knocking over the first in a row of blocks, after which the rest falls down without the assistance of any other act.” He added that “consequences” directly caused are those which follow in sequence from the effect of the defendant's act upon conditions existing and forces already in operation at the time, without the intervention of any external forces which come into active operation later. In that case, the gunshots were an external force that came into operation later.

Regarding the considerations set out above, the Arbitrator found the ATV was the active, efficient cause that set into motion a chain of events which brought about Ms. McAlpine’s injuries without the intervention of any force started and working actively from a new and independent source.

Zenith essentially applies a “but for” test by submitting that but for the mud, Indigo would not have been stuck, would not have panicked and would not have thrown and trampled Ms. McAlpine. The horse and the mud were therefore the instrument of the injury and not the ATV. In support of its position, it relies on cases where the motor vehicles were found to be merely fortuitous or incidental, such as in Chisholm, where the insured just happened to be in his car when he was shot, or Karshe and Lloyd’s, (FSCO A99-000855, December 15, 2000), where a taxi cab driver was beaten after he exited his cab and followed his passengers into a building over a fare dispute. It also relies on Mahadan and Co-Operators General Insurance Company (FSCO A00-000489, March 15, 2001), where the applicant had parked his car, took some bags of groceries from the trunk, closed it, and turned to leave when his foot twisted in a groove in the pavement. Although the subsequent fall against his car caused his injuries, the groove and not the car was the instrument of injury.

However, I find the logic of those cases do not apply here. In the assault cases, the vehicle was just the location and not the cause of the injury, and in Mahadan, the slip and fall incident occurred independently of the use or operation of a motor vehicle. Rather, as the Arbitrator found, in the present case it was the use or operation of a motor vehicle – the ATV passing – that spooked Indigo and caused him to step onto the mud, which resulted in Ms. McAlpine’s fall and subsequent trampling. I find no error in the Arbitrator’s conclusion that Indigo’s stepping into the mud was not a new or independent source of injury, but rather flowed sequentially from the use or operation of the ATV.

Further, with respect to the intervening act test, the court in Greenhalgh asked if the use or operation of the vehicle was a direct cause of the injuries – and the court went out of its way to note that in certain cases there could be more than one direct cause of the injuries – then was there an intervening act or intervening acts that resulted in the injuries that cannot be said to be part of the “ordinary course of things”?

The Arbitrator found that the mud was a normal risk associated with using a narrow concession road in the spring. She also found that spooking or frightening a horse on a narrow road is an ordinary risk associated with travel on a road in a rural area used by horses and that a spooked horse is not too incidental or remote a consequence of a passing ATV. She found that the risk is sufficiently ordinary to require legislation to protect against by means of s.167 of the Highway Traffic Act, R.S.O. 1990 c. H.8. This section provides in part that every person having the control or charge of a motor vehicle on a highway, when approaching a horse that is being ridden, shall operate, manage and control the motor vehicle so as to exercise every reasonable precaution to prevent the frightening of the horse and to ensure the safety and protection of any person riding upon the horse.

Zenith submits that being thrown and trampled by a horse is not a risk normally associated with the use or operation of a motor vehicle. It submits that the Arbitrator erred in relying on s. 167 of the HTA to support her view that the risk of a motorist frightening a horse on a roadway is sufficiently ordinary that it requires legislation to protect against it.

Zenith submits that there are a number of sections in the HTA that do not reflect “the ordinary course of things” associated with the risk of motoring in 2012, such as s. 166(1), which addresses the protocol for a horseback rider passing a stopped streetcar that is taking on or discharging passengers. Accordingly, the mere appearance of a provision in the HTA does not, in and of itself, signify that it reflects the ordinary risks associated with motoring in 2012.

However, nothing indicates that the psychology of horses has changed in the past century. Cars spooked horses 100 years ago, and they can spook them now. As the Arbitrator noted, both the driver and the passenger on the ATV were well aware of this risk and took the initial steps to guard against it. I find no error in her relying on s. 167 of the HTA to support her conclusion that spooking a horse is a part of the ordinary course of things. It is therefore not unreasonable to assume that when an individual gets behind the wheel of an automobile like an ATV, he or she could be the direct cause of a horse throwing and trampling its rider.

As to the reasonable expectations of what is an insurable risk, that falls more appropriately under the dominant feature consideration, as discussed below.

Dominant Feature Consideration

Zenith submits that the remaining analysis under the causation test is to determine if the use or operation of the automobile was the dominant feature of the accident and not ancillary to it.

I set out above what the court in Greenhalgh said regarding the dominant feature consideration of an incident. The Court contrasted Chisholm, where the dominant feature was the gunshots, so the use was ancillary, and Heredi v. Fensom, 2002 SCC 50, [2002] 2 S.C.R. 741, a jarring bus ride, where the dominant feature was held to be the “very operation of the motor vehicle itself.” The Court found that these cases indicated that a factor is a “dominant feature” where it is the aspect of the situation that most directly caused the injuries.

Zenith submits that in Downer and Martin, the dominant features of the injuries were the assaults, just as Indigo “assaulted” Ms. McAlpine. However, I find no error in the Arbitrator’s conclusion that a horse cannot form the intent to assault and no error in her finding that Indigo was acting instinctively in attempting to get out of the mud.

Zenith cites Wawanesa Mutual Insurance Company and Webb, (FSCO P11-00015, July 18, 2012), where the insured fell on snow and ice after leaving her vehicle, so the snow and ice had nothing to do with the use or operation of the automobile. It also cites my discussion of the dominant feature test in Certas Direct Insurance Company and Gill, (FSCO P04-00031, April 27, 2005). However, it does not cite the later portion of Gill, which as we shall see supports Ms. McAlpine’s position regarding the impetus of an automobile causing a slip and fall on a slippery surface, even where the automobile does not contact the insured.

In Gill, the insured was severely injured after rolling out of his car on Highway 401 and jumping off a bridge from the 401 onto Bayview Avenue. The arbitrator found that Mr. Gill suffered a panic attack while driving his own automobile that directly caused him to exit his car, run to the edge of the highway and leap onto Bayview Avenue in “time and space proximity” with the attack. While I thought Mr. Gill’s own automobile met the dominant feature test to the point where he landed on the pavement of the 401, I was not persuaded that the use or operation of Mr. Gill’s automobile could be seen as the dominant feature through to the jump off the bridge. But I then discussed the situation after Mr. Gill left his car in relation to other automobiles on the 401:

However, the evidence I referred to above supports the idea that the other automobiles on the 401 could have been a dominant feature after Mr. Gill left his car. Thus, Mr. Gill submits that his situation was similar to that in Eccleston and Guarantee Company of North America, (FSCO A04-000759, November 3, 2004). In that case, the use or operation of a bus moving towards Ms. Eccleston caused her to step onto snow and ice, resulting in a slip and fall leading to an impairment. The arbitrator accepted that this was an “accident” on the basis that the use or operation of the bus was the dominant feature in the incident and a direct cause of the applicant’s injuries.

It was found in Eccleston that the bus rolling towards Ms. Eccleston set in motion a train of events forcing Ms. Eccleston to step onto the pedestrian island, resulting in her falling on the snow and ice on the island. The Arbitrator in Eccleston stated: “No doubt that slipping on the ice caused her injuries, however, this was ancillary to the bus rolling towards her and forcing her to climb the mound of snow and ice.” The Arbitrator also distinguished incidents where the operation of the motor vehicle ceased before the slip and fall, like Mahadan, with incidents where the operation of the motor vehicle – like the bus moving towards Ms. Eccleston – itself prompted the slip and fall by essentially forcing the pedestrian onto the ice.² I find Webb is similarly distinguishable.

I find there are strong parallels between what happened with Ms. McAlpine’s horse Indigo and with what happened with Ms. Eccleston. Just as Ms. Eccleston was forced to step onto ice, so too was Indigo spooked into stepping onto the mud, ultimately leading to Ms. McAlpine’s injuries. To expand upon what I said in Gill, automobiles can scare people or horses, whether through their proximity or their noise. Accordingly, I find no error in the Arbitrator’s conclusion that the dominant feature in the incident remained the ATV, even though it was the mud that caused Indigo to slip, just as the oncoming bus remained the dominant feature in Eccleston, even though it was the snow and ice that made Ms. Eccleston slip.

Zenith submits that the incident falls outside the reasonable expectations of insurers and insureds. As was stated in Irving, the strength of the dominant feature analysis is that it focuses directly on the scope of coverage under the claimant’s policy, and asks a common sense question about the reasonable expectations of insurers and insured persons. The Arbitrator in this case identified the four factors listed in Irving: time, proximity, activity and risk. The sequence of events were close in both time and proximity. She noted that the witnesses agreed that the entire incident, from the time that the ATV passed the horses six to eight feet away until the time that Ms. McAlpine lay injured in the ditch, took a matter of seconds. She found that the ATV had to pass close to the horses due to the narrowness of the road, and that the horses were spooked by the noise when Mr. Musclow let out the clutch after passing them. Section 167 of the HTA anticipates that horses will ride on highways, so that was not an unusual activity. As to risk, the Arbitrator found that the fact that horses can be spooked are part of the ordinary risks of the normal activity of horse riding. She noted that both Mr. Musclow and Ms. Nichols were aware that horses could be spooked by motor vehicles: Ms. Nichols testified that she squeezed Mr. Musclow to signal the oncoming horses because she was concerned and knew that horses could be spooked; Mr. Musclow squeezed her hands back with his arms to acknowledge that he was aware of the horses; both of them looked back out of concern once they passed the horses to check that the horses had not been spooked.

Nonetheless, Zenith submits that the unpredictability of horses and the risks inherent in horseback riding are not risks that can reasonably be expected to be insured under an automobile policy. It submits that these risks are too remote and fall far beyond the reasonable expectations of insurer and insured, and relies on cases like AXA Insurance (Canada) and MacPhail, (OIC P96-00053, February 7, 1997). That case dealt with a racing accident in an uninsured stock car on a raceway. It was found that extending coverage for car racing was not rationally related to the purpose of the legislative scheme, that the nature of the risk was entirely different, and that the case fell far outside the idea of pooling risks. It also relies on Alchimowicz v. Continental Insurance Co. of Canada, 1996 CanLII 1313 (ONCA), where the insured was driven to a beach, left the car, and then some 25 minutes later dove off a dock and sustained serious injuries. The Court of Appeal held that this incident could not be covered by automobile insurance.

However, Ms. McAlpine was not racing Indigo at a horse track but riding him on a public road, a normal activity. She is also not claiming that she is entitled to benefits because she drove her car to get to the horse who then threw her, which might parallel with Alchimowicz. Rather, the risk of horse riding on a road is shared between riders and automobile drivers because they share the road. This is a common sense answer about the reasonable expectations of insurers and insured persons. Therefore, the link between the operation of the ATV and the trampling by the horse was not too remote to be covered under an automobile insurance policy, and this risk does not fall beyond what can reasonably be expected to be insured under an automobile policy.

Ms. McAlpine’s fall happened while she was engaged in an ordinary activity in a Canadian spring: riding a horse on a public road. This is not an activity that is so unusual that motorists need pay no heed to horse riders. She fell because Indigo was spooked by the ATV and stepped into the mud, which the Arbitrator also found was an ordinary risk. She was injured because after she fell, Indigo trampled her while instinctively trying to get out of the mud. The Arbitrator found as a fact that the ATV caused noise that spooked him, and she also noted the evidence that Indigo was not an anxious horse but a slow and gentle one. There was “a perfect chain” between the events, in my view. Putting it another way, the entire sequence of events was one incident. This distinguishes Ms. McAlpine’s case from the assault cases, and the cases involving unusual hazards that are either unrelated to use or operation of an automobile (like diving) or that should not be covered by insurance (like racing). Given all that, I find the Arbitrator considered the relevant factors in determining the dominant feature of the incident and that she had an evidentiary basis to conclude that the use and operation of the ATV was indeed a dominant feature of the incident. I find no error.

In conclusion, I find that the Arbitrator made no error in finding that the incident passed both the purpose and the causation tests. The ATV was being used for a normal purpose. But for its passing him, Indigo would not have been spooked. His reaction to it and to slipping on the mud beside the road were part of the ordinary course of things. Looking at the factors of time, proximity, activity and risk, the dominant feature remained the ATV throughout the incident, and this was an incident that common sense says should be covered by insurance.

Accordingly, I find no error in the Arbitrator’s conclusion that this incident was an accident as defined in the SABS. Therefore, the appeal is dismissed, and the decision is affirmed.

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.

May 29, 2017

David Evans Director’s Delegate

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Effective September 1, 2010, Ontario Regulation 34/10, as amended.
2. 2See also Wawanesa Mutual Insurance Company and Cooper, (FSCO P08-00015, November 7, 2008), where it was confirmed that a pedestrian injuring herself to get out of the way of an emergency vehicle was in an “accident.”