Canada Insurance Lawyer & Attorney : Michael Thomas of Harper Grey Law Firm : British Columbia, Vancouver

The Manitoba Public Insurance Corporation (MPIC) sought leave to appeal from a decision of the Automobile Injury Compensation Appeal Commission. Pursuant to s. 187(2) of The Manitoba Public Insurance Corporation Act, C.C.S.M., c. P215 leave may only be granted on a question of jurisdiction or of law. 

The insured had been transporting a new propane stove to a friend. She placed it on the back seat of her vehicle and drove to her friend's place. When she arrived, he was absent. She then drove to a park, some five miles outside of town, to walk her dogs. Upon returning to the vehicle, she sat in the driver's seat. Since the stove had been making a lot of noise on the trip to the park, the insured decided to reposition it. From the front seat, and with a lit cigarette in her mouth, she turned around to move the stove. While doing so, she was suddenly enveloped by fire and thrown from her vehicle. She sustained serious burns and other bodily injuries. She sought coverage under Part 2 of the Act for these injuries.

The claim for Part 2 benefits was denied by the MPIC case manager on the basis that an investigation had revealed that the proximate cause of her injuries was smoking in the presence of propane gas and not by an automobile or the use of an automobile. The Commission overturned the internal review officer's decision, finding that the insured's injuries were caused by the use of an automobile or a load. 

In its notice of motion seeking leave to appeal, MPIC identified the issue as follows: "Did the Commission err in law in its interpretation of Sections 70(a) and 71(1) of the Act by finding that [the insured] sustained a bodily injury caused by an automobile, by the use of an automobile or by a load?" MPIC submitted that this was a question of statutory interpretation and question of law. The relevant sections of the Act are as follows:

"70(1) In this Part,

"accident" means any event in which bodily injury is caused by an automobile;

…

"bodily injury caused by an automobile" means any bodily injury caused by an automobile, by the use of an automobile, or by a load, including bodily injury caused by a trailer used with an automobile…

Application of Part 2

71(1) This Part applies to any bodily injury suffered by a victim in an accident that occurs on or after March 1, 1994."

MPIC asked the court to consider how the decisions of Lumbermens Mutual Casualty Co. v. Herbison, 2007 SCC 47, and Citadel General Assurance Co. v. Vytlingham, 2007 SCC 46, might have impacted the Commission's decision.

The insured argued that the Commission, in reaching its decision, was simply applying the established legal principles developed in McMillan v. Thompson (Rural Municipality) (1997), 115 Man.R. (2d) 2, which applied Amos v. Insurance Corp. of British Columbia, [1995] 3 S.C.R. 405.

The court held that the two recent Supreme Court of Canada cases do not deal with no-fault insurance schemes. This the court said was confirmed by the Supreme Court of Canada in Citadel General. As such, the court found that the Commission had been right to apply the test formulated in McMillan which was as follows: "Were the respondent's injuries caused by (in the sense of being related to) the use of an automobile?" As such there was no issue of law to be appealed and the application for leave to appeal was denied.

Arruda was fatally stabbed after a collision involving his vehicle and one or two other vehicles. His vehicle had been brushed by the others and shot at by the occupants before the other vehicles left the scene. Arruda called 911. While waiting for the police arrive, Arruda stood behind his vehicle armed with a baseball bat. The other vehicle returned, its occupants armed with knives. Arruda was unable to defend himself and died at the scene before the police arrived. The occupants of the other vehicle were convicted of manslaughter in Arruda's death.

Arruda's insurance policy provided for the payment of benefits if his death arose directly, and independently from all other causes, from the use or operation of an automobile. At trial, the Court had found that Arruda's death was not caused by an accident arising from the use or operation of an automobile. The Court agreed that Arruda would not have died had he not been driving his vehicle on the night of the incident. However, the Court considered the temporal distance between the end of Arruda's driving and his death. The Court found that the attack was a clear intervening event between Arruda's use of his vehicle and his death, outside the ordinary use or operation of a vehicle, breaking the chain of causation. The Court further found that the use of the vehicle was not the dominant feature of Arruda's injuries, but was merely ancillary. The family of Arruda appealed this decision.

The Court of Appeal dismissed the appeal, finding that the Trial Judge was correct in finding that the case turned on causation. The phrase "directly and independently of all other causes" in the policy narrowed the broad scope of coverage. The chain of causation could not be broken for the policy provision to apply. In this case, no injury resulted or arose directly from Arruda's use of the vehicle. Arruda's injuries and death were caused by the assault, an independent and intervening cause, which precluded recovery under the policy.

The Insurer appealed a decision dismissing its counter-claim against the Respondents, Leanne Giilck and Discount Auto Appraisals, in which it was found that it had no right to compel the Respondent, Rehman Baig (the "Insured"), to attend for an examination under oath pursuant to Statutory Condition 6(4) of the Insurance Act.

The Ontario Court of Appeal allowed the appeal based on the finding that the Statutory Condition does not cease to operate once litigation is commenced and that the scope of examination extends to all matters material to the Insurer's liability, and extent thereof, which the Insurer has an objective and reasonable basis to explore.

The Insurer insured the Insured's 1999 BMW M3 convertible beginning in 2002. The insurance included an endorsement that insured the vehicle for a specified value. To obtain that coverage, the Insured submitted an appraisal report signed by Giilck of Discount Auto Appraisals. Upon receiving the appraisal, the Insurer provided the Insured with an endorsement on the vehicle in the amount of $71,300.

The vehicle was damaged in a collision on December 10, 2004 and the Insured submitted a Proof of Loss to the Insurer claiming the full amount specified in the endorsement. The Proof of Loss indicated that the vehicle had been purchased on February 23, 2002 for $12,500 U.S. "as per salvage price". The Insurer had also learned that Giilck was the common law partner of the Insured and that together they operated Discount Auto Appraisals.

The Insurer required the Insured to attend an examination under oath pursuant to Statutory Condition 6(4). The Insured attended with counsel who refused to allow the Insurer to ask any questions about how the amount of the appraisal had been determined. He took the position that the examination was restricted to the particulars of the claim and did not extend to the appraisal report, which he regarded as a prior underwriting event.

The Insured later commenced an action against the Insurer claiming damages for loss of the automobile, together with punitive, exemplary and aggravated damages of $100,000 each. The Insurer then filed a Statement of Defence alleging that the appraisal prepared by Discount Auto Appraisals had been greatly overstated due to the poor condition of the BMW at the time and that the Insured, Giilck and Discount Auto Appraisals had misrepresented the value of the BMW. The Insurer counter-claimed against the Insured, Giilck and Discount Auto Appraisals for misrepresentation and detrimental reliance.

The Insurer brought a motion for an order compelling the Insured to attend to be examined under oath pursuant to Statutory Condition 6(4) and to answer questions relating to the initial valuation of his vehicle. In response, the Insured, Giilck, and Discount Auto Appraisals sought summary judgment dismissing the counter-claim.

The Motions Judge found that the statutory examination under oath was redundant because the Insurer had a right to examine the Insured for discovery in the lawsuit. The Motions Judge took the view that once the relationship between an insurer and insured becomes adversarial, or at least once a lawsuit is commenced, the examination under Statutory Condition 6(4) is no longer available to the insurer.

The Court of Appeal disagreed finding that there are no words in the provision to indicate that an insurer's right to examine an insured is limited to the situation in which the relationship is not adversarial. The Court of Appeal held that the statutory condition must be applied according to its plain terms. An insured cannot evade the plain requirement to submit to an examination by simply commencing an action. The Court of Appeal found that the potential for redundancy can be eliminated because the Court, in controlling its own procedures, is able to consider questions that have already been asked and answered on a statutory examination improper on a subsequent examination for discovery.

The parties agreed that the scope of the examination is defined by the term "the matters in question", though those words are used in Statutory Condition 6(4) to refer to the Insured's obligation to produce relevant documents in the examination. The Motions Judge took the view that the scope of the statutory examination was limited to the Insured's claim for insurance benefits. In the Motions Judge's view, the Insurer had agreed to the value of the vehicle when the policy was issued; accordingly, its value was not a "matter in question" in respect of the Insured's claim for benefits when the vehicle was damaged two years later.

The Court of Appeal found that the purpose of the statutory examination is to provide insurers with the opportunity to obtain the knowledge of facts necessary to enable them to determine their obligations and to protect them against false claims. Questions that are material to the Insurer's liability and the extent thereof are within the scope of the statutory examination. Whether the initial appraisal of the vehicle was fraudulent is a matter that is relevant to the Insurer's defence to the Insured's action. Therefore, as the Insurer had an objective and reasonable basis for suspecting that the initial appraisal was fraudulent, the Insured was obligated to submit to examination about it.

Denis Potvin was injured while driving a go-kart on a track owned and operated by Pineland Amusements Ltd. ("Pineland") He lost control of his go-kart, he alleged, after colliding with a go-kart driven by his father, Roland Potvin (the "Insured"). Denis's mother and Litigation Guardian, Adams, commenced an action against Pineland and the Insured for damages for injuries suffered by Denis. Pineland filed a cross-claim alleging that the Insured caused or contributed to the injuries of his son. The Insured had an automobile insurance policy with the Insurer (the "Policy"). The Insured issued a Third Party Claim against the Insurer, stating that it had a duty to defend and indemnify him in the main action and in the cross-claim by Pineland. The Insurer issued a Statement of Defence to the Third Party Claim alleging that the Insured's policy did not cover the go-kart. The Insurer brought a motion seeking a determination as to whether the Policy covered damages for injuries from the go-kart accident and whether the Insurer had a duty to defend. The Motion Judge answered both questions in the affirmative. The determination of both questions turned on whether a go-kart was an "automobile".

The Ontario Court of Appeal found that the Policy did not cover the claim made by Adams and that it did not cover damages for injuries resulting from a go-kart accident in the circumstances of the case. The Insurer did not have a duty to defend the Insured in the main action or in the cross-claim by Pineland. The Third Party Claim was dismissed with costs.

The question of whether a go-kart is an automobile was decided pursuant to the three-part test set out in Grummet v. Federation Insurance Co. of Canada (1999), 46 O.R. (3d) 340 (S.C.J.):

"1. Is the vehicle an 'automobile' in ordinary parlance?

If not, then,

2. Is the vehicle defined as an 'automobile' in the wording of the insurance policy?

If not, then,

3. Does the vehicle fall within any enlarged definition of 'automobile' in any relevant statute?"

An affirmative answer to any of these questions leads to the conclusion that the vehicle is insured by the standard Ontario automobile insurance contract.

The Motions Judge decided that a go-kart is not an automobile in ordinary parlance and that the definition of "automobile" in the Policy did not include go-karts. These findings were not challenged on appeal and the only issue was whether the go-kart fell within any enlarged definition of "automobile" in any relevant statute.

The governing definition is set out in section 224(1) in Part VI of the Insurance Act, R.S.O. 1990, c. I.8. Part VI deals with automobile insurance and section 224(1) defines "automobile" as follows:

"(a) a motor vehicle required under any Act to be insured under a motor vehicle liability policy, and

(b) a vehicle prescribed by regulation to be an automobile."

Section 224(1)(b) did not apply and therefore, under section 224(1)(a), a vehicle that is neither an automobile in ordinary parlance nor specifically defined to be one under a policy will be an "automobile" if it is required to be insured under a motor vehicle liability policy.

The Motions Judge concluded that because it was possible for a go-kart to be driven on a highway and, notwithstanding the fact that it would be illegal to do so, section 2 of the Compulsory Automobile Insurance Act prohibits the operation of a motor vehicle "on a highway unless the motor vehicle is insured under a contract of automobile insurance". On that basis, the Motions Judge found that a go-kart is an automobile.

The Court of Appeal disagreed with the Motion Judge's reasoning. The Court of Appeal found that this particular go-kart was not operated on a highway, but on a private go-kart track. Therefore, 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. It did not and therefore was not "automobile" within the scope of the Policy.

The insurer, Aviva Insurance Co. of Canada, brought an application seeking a declaration that Pizza Pizza was not entitled to coverage under a commercial general liability policy for a claim brought by a plaintiff pedestrian who was seriously injured when a Pizza Pizza delivery driver struck her while she was crossing the street. Pizza Pizza also brought an application seeking a declaration that it was entitled to coverage and that Aviva was obliged to defend it in the underlying action. Aviva sought a further declaration that ING Canada was obliged to defend Pizza Pizza under a term of a standard non-owned policy for claims raised against Pizza Pizza in the action. 

The Court found that the pleadings gave rise to the possibility that the Plaintiff's injuries were caused by Pizza Pizza's delivery policy in failure to screen drivers' driving records and that claim was independent of the claim that involved the use or operation of an automobile. The Court found that Aviva did not meet its burden to show that all of the possibile scenarios pursuant to which the injury may have occurred were claims arising from the use of an automobile and none of those scenarios also involved a concurrent nonautomobile-related cause. The Court found that Aviva was required to defend Pizza Pizza in the action under its CGL policy on the nonautomobile-related claim and ING had a duty to defend Pizza Pizza under its non-owned policy on the automobile-related claims.

The Insurance Corporation of British Columbia appealed a Provincial Court decision in which the judge held that because the insured's truck was stationary when it was damaged by another vehicle, the loss was not covered by collision protection and was instead covered by comprehensive protection. The British Columbia Supreme Court allowed the appeal and found that damage caused to a stationary insured vehicle when it is hit by another moving vehicle is damage caused by the collision of a vehicle with another object. The Court noted that to hold otherwise would mean that a vehicle stopped at a red light and hit from behind would be covered under comprehensive rather than collision insurance.

The Plaintiff was a passenger is a motor vehicle driven by Mr. Larkin. Mr. Larkin swerved to avoid a dog, owned by Mr. Hogeterp, and crashed into a telephone pole, causing the Plaintiff to suffer a severe brain injury. An action was commenced by the Plaintiffs against Mr. Larkin and Mr. Hogeterp. In August of 1997, Lombard Insurance entered an Appearance on behalf of Mr. Hogeterp and retained an independent adjuster to investigate the claim. The adjuster obtained two statements from the Defendant Mr. Larkin. Mr. Hogeterp's counsel provided the statements of Mr. Larkin to Mr. Larkin, and to the Plaintiff. The Plaintiff brought an Application seeking production of Lombard Insurance's entire adjuster's file. 

The Chambers Judge ruled that there would have been no waiver of privilege had Mr. Hogeterp's counsel released the statements to Mr. Larkin, as he was the maker of the statements, and was therefore entitled to the statement. The trial Judge relied upon Hanna v. Maritime Life Assurance (1995), 137 N.S.R. (2d) 339 (S.C.) for this proposition. However, the Chambers Judge found that the Plaintiff and Mr. Larkin were adverse in interest and as such, the disclosure of the statements waived privilege over the statements, and all other relevant documents dealing with the same subject matter. The Chambers Judge relied upon Walsh v. Smith (1999), 180 N.S.R. (2d) 173 for guidance with respect to the extent of the waiver of privilege. The Chambers Judge ordered that Mr. Hogeterp had to disclose documents that had any reference to the statements and the circumstances under which they were obtained. However, these references could be severed from the remaining filed documents. 

In determining what documents were privileged and what documents were not privileged, the Chambers Judge determined that the most appropriate method would be to examine the entire file over which privilege was claimed and make an individual assessment of each document.

Cameron Lougheed was a passenger in a vehicle in which the driver lost control, resulting in an accident that killed Mr. Lougheed. The vehicle was insured by Co-operators General Insurance Co. under a policy issued in Alberta, where the driver resided. Under its terms, coverage for third party liability was limited to $500,000.00. Mr. Lougheed's sons obtained Judgement and proceeded to an underinsured motorist's protection arbitration to determine their entitlement to benefits. Although $1,000,000.00 of underinsured motorist protection coverage is mandatory in British Columbia, Mr. Lougheed's sons claimed that they were each entitled to $1,000,000.00 of underinsured motorist protection coverage under the British Columbia legislation, as opposed to $1,000,000 in total. The trial Judge determined that if Mr. Lougheed had survived, he could have recovered no more than $1,000,000.00 underinsured motorist protection for his injuries, and that his sons were therefore limited to the $1,000,000.00 underinsured motorist protection that Mr. Lougheed was entitled to, not $1,000,000.00 each. The matter was appealed to the British Columbia Court of Appeal.

The underinsured motorist protection is found in Part 10, Division 2 of the Revised Regulation (1984) under the Insurance (Motor Vehicle) Act, B.C., Reg, 447/83 promulgated under the Insurance (Motor Vehicle) Act, R.S.B.C. 1996, c. 231 [now the Insurance (Vehicle) Act]. At the date of the accident, the limit of coverage for underinsured motorist protection was $1,000,000.00 per insured person. The issue to be determined by the trial Judge was that the insured person was Mr. Lougheed as opposed to Mr. Lougheed's sons (as well as his spouse). The Court of Appeal noted that the action brought by Mr. Lougheed's sons, and his spouse, was a Family Compensation Act action, and as such the action had to be commenced by the personal representative of Mr. Lougheed on behalf of all the beneficiaries. The key to the Family Compensation action was that the action must be treated as a single cause of action brought on behalf of all Mr. Lougheed's beneficiaries. The Court determined that the "insured" referred to in the Regulations must be the personal representative who is the individual entitled, either directly or indirectly, to maintain a Family Compensation action as a result of the death of Mr. Lougheed, and not each of the beneficiaries. The British Columbia Court of Appeal dismissed the Appeal, and upheld the trial Judge's finding that the beneficiaries were entitled to a total of $1,000,000.00 in underinsured motorist protection coverage.  

A van driven by the Insured, Colleen Morrison, collided with a vehicle driven by Mr. Squance, who was killed. Ms. Morrison, her two sons, and her husband were seriously injured. Mr. Squance was uninsured. For the purpose of this proceeding, it was agreed that Mr. Squance was entirely responsible for the accident and that Ms. Morrison was negligent in not ensuring that her son, Travis, was wearing his seatbelt at the time of the accident. Ms. Morrison’s negligence contributed to Travis’ injuries.

The Insurer accepted that by virtue of Ms. Morrison’s negligence, it was responsible under the liability coverage provisions of its policy for Travis’ damages up to the $1,000,000 limit in the policy. Travis was very badly injured and it was assumed that his damages would exceed $1,000,000. However, he did not claim any entitlement to further recovery from the Insurer under any part of the policy. The dispute was between the Insurer on one side and Ms. Morrison, her husband, and her other son on the other. These Insureds all suffered serious injuries in the accident and Mr. Squance was the only person who had any liability to them for their damages. The Insureds looked to their policy for coverage. Specifically, they claimed to be entitled to recover under the terms of their FPCE, which was attached to their policy. This Endorsement had a $1,000,000 limit. There was no dispute that the Insureds were all eligible “Claimants” and “insured persons” under the definitions of the FPCE. It was also accepted that Mr. Squance fell within the definition of an “inadequately insured motorist” for the purpose of the FPCE coverage.

The FPCE extended the coverage provided for in the main policy by giving the Insureds the same financial protection the Insureds would have if the at-fault driver had insurance in the same amount as the limit of the FPCE purchased by the Insureds. The Insurer took the position that the $1,000,000 in liability insurance available to Travis under Ms. Morrison’s policy had to be taken into account in determining its maximum liability under the FPCE. The Insurer contended that Ms. Morrison was jointly liable with Mr. Squance for the injuries of Travis and that for the purpose of the Endorsement, Travis was an eligible Claimant and Insured as defined in the FPCE, even though he had advanced no claim under that Endorsement. On the Insurer’s interpretation of the Endorsement, its maximum liability was $1,000,000 (the limits of the FPCE) minus $1,000,000 (the amount of motor vehicle liability insurance available to Ms. Morrison, a jointly liable motorist), for a net potential liability of $0. The Insureds’ calculation began with the same $1,000,000, that is, the limit of the FPCE coverage. The Insureds contended, however, that only the amount of Mr. Sqaunce’s liability coverage ($0), and not Ms. Morrison’s liability coverage ($1,000,000), should be deducted from the $1,000,000. The Insureds argued that Ms. Morrison was not “jointly liable” to the Insureds and that any liability coverage available to her in respect of Travis’ injuries was relevant in assessing the Insurer’s maximum liability to those specific Insureds.

The Court found that the Insurer’s approach to this Endorsement required that all Insureds under the policy who suffer bodily harm in the accident be treated as a group for the purpose of considering its maximum liability, even if one or more of the Insureds does not seek indemnification. The Court found that the endorsement imposed a single limit on the cumulative amount of the claims advanced by different Insureds who suffered injuries in the same accident. The maximum liability applies to the total claims made by the Insureds and not the individual claims. The Court could not find anything in the language of the Endorsement that would require that joint liability to an Insured who does not seek recovery can serve to reduce the maximum liability of the Insurer to those Insureds who do seek recovery. On the specific language of this Endorsement, the Court found that the question was not whether the Insurer’s policy has responded to claims under the liability provision in the policy, but whether any Insured under the policy was jointly liable for the damages suffered by the Insureds who are seeking coverage under the Endorsement. On the facts of this case, no Insured seeking indemnity under the FPCE was jointly liable to the Insureds.