Harroun and Harroun, minors by their Litigation Guardian Cole et al. v. Turriff et al.; Dempster, Ardito and Kirk, Third Parties [Indexed as: Harroun (Litigation guardian of) v. Turriff]

50 O.R. (3d) 634

[2000] O.J. No. 3037

Docket No. C32757

Court of Appeal for Ontario

McMurtry, C.J.O., Goudge and Sharpe JJ.A.

August 21, 2000

Insurance -- Automobile insurance -- No-fault provisions -- Corporate employer of driver of leased vehicle who was involved in motor vehicle accident while in course of his employment was not person "present at the incident" within meaning of s. 267.1(1) of Insurance Act -- Employer was "other person" within meaning of s. 267.1(7) of Act -- Employer protected from vicarious liability for pecuniary losses caused by driver and liable only for pecuniary loss for which it was independently at fault or negligent -- Insurance Act, R.S.O. 1990, c. I.8, s. 267.1(1), 267.1(7).

The appellant was the corporate employer of the driver of a leased vehicle. The driver was involved in a motor vehicle accident while in the course of his employment. On a motion for the determination of a question of law raised by the pleadings, the motions court judge ruled that the appellant was not a person "present at the incident" within the meaning of s. 267.1(1) of the Insurance Act, R.S.O. 1990, c. I.8, and was therefore not relieved from liability pursuant to that section. The appellant appealed.

Held, the appeal should be allowed.

An employer is not a person "present at the incident" merely because one of its employees is involved. Judicial precedents support the proposition that employers are not exempt from liability under s. 267.1(1) by virtue of the doctrine of vicarious liability. The motions court judge was not asked to deal with the interpretation of s. 267.1(7) of the Act, which provides for liability with respect to "other persons" to the extent that they are not "present at the incident" and are not protected by no-fault legislation. The appellant employer qualifies as an "other person" pursuant to s. 267.1(7). This section was not intended to cover only situations contemplated by the Negligence Act, R.S.O. 1990, c. N.1, contrary to the import of earlier case law. A plain reading of s. 267.1(7) indicates that the liability of the "other person" precludes vicarious liability with respect to the person "present at the incident". Consequently, s. 267.1(7) protects the appellant employer with respect to the liability of the employee, but does not afford the employer protection with respect to negligence directly attributable to the employer.

APPEAL from an order on a motion for determination of a question of law.

Derksen v. 539938 Ontario Ltd. (1999), 1999 3749 (ON CA), 123 O.A.C. 232, 45 M.V.R. (3d) 6 (C.A.), affg (1998), 37 M.V.R. (3d) 59, [1998] O.J. No. 3723 (Gen. Div.); Tutton v. Pickering (Town) (1999), 1999 1452 (ON CA), 46 O.R. (3d) 503, 183 D.L.R. (4th) 160, 48 M.V.R. (3d) 321, 8 M.P.L.R. 107 (C.A.), consd Other cases referred to Bluebird Cabs Ltd. v. Guardian Insurance Co. of Canada (1999), 1999 BCCA 195, 66 B.C.L.R. (3d) 86, 173 D.L.R. (4th) 318, [1999] I.L.R. 1-3688 (C.A.); Co-operators Insurance Assn. v. Kearney, 1964 21 (SCC), [1965] S.C.R. 106, 48 D.L.R. (2d) 1; Harrison v. Toronto Motor Car Ltd. (1944), 1944 86 (ON CA), [1945] O.R. 1, [1945] 1 D.L.R. 286, [1945] O.W.N. 29 (C.A.); Kochis v. Dolmage, [1999] O.J. No. 1712 (S.C.J.); Meyer v. Bright (1993), 1993 3389 (ON CA), 15 O.R. (3d) 129, 110 D.L.R. (4th) 354, 48 M.V.R. (2d) 1 (C.A.) [leave to appeal to S.C.C. refused (1994), 17 O.R.(3d) xvi, 172 N.R. 160n]; Mohajer Estate v. Frappier Group Inc. (1996), 1996 8047 (ON SC), 32 O.R. (3d) 222, [1997] I.L.R. 1-3424, 30 M.V.R. (3d) 314 (Gen. Div.); Musson v. Federal Express Canada Ltd., [1996] I.L.R. 1-3326, [1996] O.J. No. 691 (Gen. Div.), supp. reasons [1996] I.L.R. 1-3326 at p. 4033, [1996] O.J. No. 698 (Gen. Div.); T. (G.) v. Griffiths, 1999 693 (SCC), [1999] 2 S.C.R. 570, 63 B.C.L.R. (3d) 1, 174 D.L.R. (4th) 71, 241 N.R. 201, [1999] 9 W.W.R. 1, 44 C.C.E.L. (2d) 169, 46 C.C.L.T. (2d) 49, 99 C.L.L.C. 210-034 (sub nom. J. v. Griffiths, Jacobi v. Griffiths) Statutes referred to Highway Traffic Act, R.S.O. 1990, c. H.8 Insurance Act, R.S.O. 1990, c. I.8 (am. 1993, c. 10, s. 25), ss. 266(1), 267.1

Hillel David and Adam Wagman for plaintiffs/respondents. Karen P. Earl for defendants/respondents. Steven Stieber for defendant/appellant.

The judgment of the court was delivered by

[1] MCMURTRY C.J.O.: -- This is an appeal from the order of Mr. Justice Day as a result of a motion brought for the determination of a question of law raised by the pleadings. The appellant was the corporate employer of the driver of a leased vehicle who was involved in a motor vehicle accident while in the course of his employment. The learned motions court judge ruled that the corporate employer is not a person "present at the incident" within the meaning of s. 267.1 of the Insurance Act, R.S.O. 1990, c. I.8, and therefore not relieved from liability pursuant to the application of that section.

The Facts

[2] This action arises as a result of a motor vehicle accident on June 17, 1995. The plaintiffs, who were occupants of a motor vehicle, collided with a vehicle operated by the defendant, Lindsay Turriff ("the driver") while in the course of his employment with the appellant Canlyte Inc. ("the employer"). At the time of the incident, the driver was operating a leased automobile owned by the defendant AT & T Capital Canada Inc. ("the owner").

[3] The relevant sections of s. 267.1(1) of the Insurance Act are as follows:

267.1(1) Despite any other Act and subject to subsections (2) and (6), the owner of an automobile, the occupants of an automobile and any persons present at the incident are not liable in a proceeding in Ontario for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of the automobile in Canada, the United States of America or any other country designated in the Statutory Accident Benefits Schedule.

(2) Subsection (1) does not relieve a person from liability for damages for non-pecuniary loss, including damages for non-pecuniary loss under clause 61(2)(e) of the Family Law Act, if as a result of the use or operation of the automobile the injured person has died or has sustained,

(a) serious disfigurement; or

(b) serious impairment of an important physical, mental or psychological function.

(6) Subsection (1) does not relieve any person from liability other than the owner of the automobile, the occupants of the automobile and the persons present at the incident.

(7) If, in the absence of subsection (1), the owner of an automobile, an occupant of an automobile or a person present at the incident would have been jointly and severally liable for damages for pecuniary loss with one or more other persons who are not relieved of liability by subsection (1), the other persons are liable for those damages only to the extent that they are at fault or negligent in respect of those damages.

Issues

[4] In my view, there are principally two issues to be determined:

(1) Is the appellant employer relieved from liability pursuant to s. 267.1(1) subject, of course, to s-s. (2) as a person "present at the incident"?

(2) If the appellant employer is not a "person present at the incident", is the appellant employer an "other person" within the meaning of s. 267.1(7) that can be liable only to the extent that "they are at fault or negligent in respect of those damages"?

[5] While the motions court judge dealt with the interpretation of s. 267.1(1) of the Insurance Act, he was not asked to deal with s. 267.1(7).

Interpretation of Legislation

(a) Section 267.1

[6] In Meyer v. Bright (1994), 1993 3389 (ON CA), 15 O.R. (3d) 129 at p. 134, 110 D.L.R. (4th) 354 (C.A.), this court made the following observation as to the purpose of the legislation which preceded Bill 164, which contains s. 267.1:

The legislation appears designed to control the cost of automobile insurance premiums to the consumer by eliminating some tort claims. At the same time, the legislation provides for enhanced benefits for income loss and medical and rehabilitation expenses to be paid to the accident victim regardless of fault.

[7] It is submitted by the appellant that the effect of the order of the motions court judge is that while an "owner" is protected by s. 267.1 from the statutory vicarious liability imposed by the Highway Traffic Act in relation to the negligence of a driver, the employer of a driver is not so protected. It is argued that such an interpretation is clearly inconsistent with the purpose of the legislation and that the employer who is vicariously liable for his employee's negligent driving must, as a result, be considered "present at the incident".

[8] In my opinion, this issue has been conclusively answered in a series of cases dealing with s. 267.1(1) and its predecessor, s. 266(1), which state that these provisions do not exempt an employer from damages based upon the employer's vicarious liability for the actions of an employee. While a review of all the relevant cases is not necessary to make this point, the following cases are quite instructive.

[9] In Derksen v. 539938 Ontario Ltd. (1998), 37 M.V.R. (3d) 59 at p. 74, [1998] O.J. No. 3723 (Gen. Div.), Stach J. stated the following:

While it is true that the more recent authority deals with the language and the immunity provisions in s. 266(1) of the Insurance Act, the immunizing language of s. 267.1(1) is very nearly identical in its terms. Based upon my interpretation of that language and the authorities to which I have already referred, I hold that the statutory immunity granted to the contractor and its employee . . . in their capacity as owner and occupant respectively . . . does not erase either the wrongfulness of earlier acts at the original work site or the contractor's vicarious liability for same. In the result the plaintiffs are not barred by s. 267.1 of the Act from pursuing their common law right of recovery against the contractor qua employer respecting the negligence of its crew at the original work site.

[10] In Derksen v. 539938 Ontario Ltd. (1999), 1999 3749 (ON CA), 45 M.V.R. (3d) 6, 123 O.A.C. 232, this court accepted this interpretation of the legislation. In its endorsement, the court stated that Stach J. was correct in his disposition of the issues, including his conclusion that s. 267.1 protected the defendant "qua owner but not qua employer".

[11] Other trial level decisions have supported this interpretation of s. 267.1 as well. In Mohajer Estate v. Frappier Group Inc. (1996), 1996 8047 (ON SC), 32 O.R. (3d) 222 at pp. 223-24, [1997] I.L.R. 1-3424 (Gen. Div.), Métivier J. stated:

The defendants submit that "owner" [in s. 267.1(1)] must perforce be defined as including employer.

With this proposition, I cannot agree. The legislative scheme set out in the above-noted sections of the Insurance Act was intended to be comprehensive but it does not extend beyond the wording of the Act to become all-exclusive.

The law as to the relationship of employer/employee has developed over many years and provides for very specific rights and obligations, many of which differ significantly from rights and obligations arising in other areas of the law. I do not accept that such rights and obligations, in matters such as this, are intended to be wiped out by the Insurance Act, particularly in the absence of any specific language to that effect.

To similar effect see the decision of Daudlin J. in Musson v. Federal Express Canada Ltd., [1996] I.L.R. 1-3326, [1996] O.J. No. 691 (Gen. Div.), extended reasons offered in [1996] I.L.R. 1-3326 at p. 4033, [1996] O.J. No. 698 (Gen. Div.).

[12] This court also dealt with the predecessor provision, s. 266(1), in Tutton v. Pickering (Town) (1999), 1999 1452 (ON CA), 46 O.R. (3d) 503, 183 D.L.R. (4th) 160 (C.A.). In that case, Finlayson J.A., relying on the decision of this court in Harrison v. Toronto Motor Car Ltd. (1944), 1944 86 (ON CA), [1945] O.R. 1, [1945] 1 D.L.R. 286 (C.A.) and of the Supreme Court of Canada in Co-operators Insurance Assn. v. Kearney, 1964 21 (SCC), [1965] S.C.R. 106, 48 D.L.R. (2d) 1, stated the following [at p. 508]:

The respondent is quite right in suggesting that the vicarious liability of the employer is not derivative in that an immunization of the employee from liability, by statute for example, does not automatically immunize the employer from vicarious liability. This is the principle for which both Harrison and Kearney stand. Namely, that statutes which immunize specific categories of potential tort feasors from liability do not remove the possibility of suit against those who may be vicariously liable for the wrongful action in their capacity as employers.

[13] It is clear from these authorities that an employer is not a person "present at the incident" merely because one of its employees is involved. It was argued in this court in both Derksen, supra, at p. 8 and Tutton, supra, at p. 507, that had the legislature chosen to change this settled principle of Ontario law, it was reasonable to expect that the language employed would have been more explicit. I agree with this proposition. Therefore, I would dismiss this ground of appeal.

(b) Section 267.1(7)

[14] The appellant argues that the plain wording of s. 267.1(7) provides a complete defence to it for any vicarious liability claims arising out of the actions of its employee. It submits that it is included in s. 267.1(7) as one of the other persons liable for damages only to the extent that it is at fault or negligent in respect of those damages. If this interpretation is correct, the respondents would be left with a claim for only those pecuniary losses that can be traced to the independent negligence, as opposed to vicarious liability, of the appellant.

[15] The respondents rely on Kochis v. Dolmage, [1999] O.J. No. 1712 (S.C.J.). In that decision, Misener J. at paras. 69-71, stated the following:

[Counsel] submitted that subsection 267.1(7) prevents the recovery against the Township from exceeding the recovery against Mr. Dolmage simply because the recovery against the Township arises by virtue of its vicarious liability and not because it was "at fault or negligent".

I do not agree. In the first place, as a matter of statutory construction, subsection 267.1(7) was intended to apply to those situations contemplated by Section 1 of the Negligence Act -- viz. -- cases where fault or negligence is apportioned between two or more defendants. The Township's liability in this case does not arise as a consequence on any such apportionment. It arises because the Township, through its vicarious liability, must assume the same percentage of negligence or fault that is imposed upon Mr. Dolmage.

Secondly, even if subsection 267.1(7) does apply, the conceptual basis for the imposition of vicarious liability must, of necessity, deem the Township to be itself "at fault or negligent" to the same degree as Mr. Dolmage. Accordingly subsection 267.1(7) expressly renders the Township liable for any pecuniary loss suffered, to the extent of 40 percent of its assessment.

[16] With respect to the learned trial judge in Kochis, I cannot agree with his conclusions on these issues. I can see nothing in the wording of s. 267.1(7) which supports the interpretation that s. 267.1(7) was only intended to cover situations contemplated by the Negligence Act. In fact, when the words of s. 267.1 are given their ordinary meaning in harmony with the object and scheme of the Insurance Act, it seems clear that the appellant can only be found liable to the extent that it is "at fault or negligent in respect of those damages".

[17] With regard to the respondents' submission that the imposition of vicarious liability deems the appellant to be "at fault", I believe that this assumption rests on a mistaken view of the nature of vicarious liability. It has been held by the Supreme Court in Jacobi v. Griffiths, 1999 693 (SCC), [1999] 2 S.C.R. 570 at pp. 593 and 612, 174 D.L.R. (4th) 71 at pp. 88 and 103, and by our Court in Tutton, supra, at p. 508, that vicarious liability is a "no-fault" regime where liability is imposed for the purposes of providing compensation and deterring future harm. As was stated by Lambert J.A. in Bluebird Cabs Ltd. v. Guardian Insurance Co. of Canada (1999), 1999 BCCA 195, 173 D.L.R. (4th) 318 at p. 324, 66 B.C.L.R. (3d) 86 (C.A):

However, it is argued on behalf of Guardian, as a matter of law, that because of the nature of vicarious liability the acts and conduct of the employee cab drivers must be attributed to their employer, Bluebird Cabs Ltd., and that when that is done the acts and conduct of the employee cab drivers must be said, through that attribution, to have been expected or intended by Bluebird Cabs Ltd., with the result that coverage would be excluded under the policy.

In my opinion that argument represents a misconception of the nature of vicarious liability. It is not the act of the wrongdoer which is attributed to the employer, nor is it the fault or blame of the wrongdoer which is attributed. It is the victim's remedy against the wrongdoer, namely liability for the wrong, which is attributed. There is a danger in resting too heavily on the words used to describe this legal concept . . . but I think it is relevant that the legal principle is not called vicarious acts, vicarious fault, or vicarious blame, but vicarious liability.

(Emphasis added)

[18] I accept this definition of vicarious liability and therefore find that the appellant is not "at fault or negligent in respect" of any pecuniary losses that flow from its vicarious liability for the acts of its employee. Therefore, in the absence of independent negligence, the appellant is entitled to rely on s. 267.1(7).

[19] The purpose of s. 267.1 is to limit some tort claims as a means of stabilizing insurance rates in exchange for enhanced first party benefits and represents a refinement of some aspects of the former Ontario Motorist Protection Plan: see Derksen (Gen. Div.), supra, at pp. 70 and 80-81. Section 267.1(7) should therefore be interpreted in a manner that insulates the appellant from vicarious liability for pecuniary loss caused by a "person present at the incident" but renders it liable for any pecuniary losses for which it is independently and personally "at fault or negligent".

Disposition

[20] For these reasons, I would allow the appeal and set aside the order of the motions court judge. In its place, I would grant an order declaring that by virtue of s. 267.1(7) of the Insurance Act, R.S.O. 1990, c. I.8, the defendant Canlyte Inc. is protected from vicarious liability for pecuniary losses caused by the defendant Lindsay Turriff, and liable only for pecuniary loss for which it is independently at fault or negligent.

[21] As the application of s. 267.1(7) was not raised before the motions court judge, I would make no order as to the costs below. The appellant is entitled to its costs of the appeal to be borne equally by the plaintiffs/respondents and the defendants/respondents United Westburne Inc. and Nedco Ltd.

Appeal allowed.