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Insurance - Auto - Motor Vehicle Accident Claims Fund. Burnham v. Co-operators General Insurance Company
In Burnham v. Co-operators General Insurance Company (Ont CA, 2023) the Court of Appeal considers the standard Ontario Automobile Policy insurance issue of whether an innocent passenger being driven in a stolen automobile is still excluded from coverage under the otherwise-applicable 'uninsured motorist coverage' provisions of the policy (they aren't). The appeal was brought by Ontario [the 'Minister of Public and Business Service Delivery', formerly the 'Ministry of Government and Consumer Services'] which is responsible for the Motor Vehicle Accident Claims Fund (which would be otherwise responsible for such a victim's coverage):[13] There is a single issue on this appeal: did the motion judge err in his interpretation of s. 1.8.2 of the Policy by finding that Mr. Burnham, who was a passenger of a stolen vehicle, was precluded from uninsured motorist coverage under this exclusion in the Policy, even if the allegation that he did not know the pickup truck was stolen were proven to be true?
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The Policy
[15] Uninsured automobile coverage is coverage mandated by statute included in every motor vehicle liability insurance policy, subject only to the limits prescribed by regulation, as provided by s. 265 of the Insurance Act, R.S.O. 1990, c. I.8.
[16] The Policy is a statutory contract. It includes uninsured automobile coverage but also includes certain exclusions from coverage. Section 1.8.2 of the Policy includes an exclusion entitled, “Excluded Drivers and Driving Without Permission”, the interpretation of which lies at the heart of this appeal. The exclusion at issue in this appeal reads as follows:1.8.2 Excluded Drivers and Driving Without Permission
Except for certain Accident Benefits coverage, there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of the automobile policy or a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.
Except for certain Accident Benefits coverage, there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent. [17] At issue is whether a passenger in a vehicle whose owner is a policyholder is caught by this exclusion where that passenger does not know or ought not reasonably to know that the vehicle is being driven by someone without the owner’s consent. Recall that this was a r. 21.01 motion in which the allegations in the statement of claim are taken as true, and that Mr. Burnham alleges he did not know the pickup truck involved in the accident was being driven by someone without the owner’s consent. Therefore, the issue is whether on Mr. Burnham’s version of the facts he is exempt from this exclusion, in which case a trial is needed to determine what those facts are, or whether he is not exempt from this exclusion even if his alleged facts are true, and therefore precluded from pursuing his action, as the motion judge found.
[18] Because this exclusion derives from a statutory contract, the principles of statutory interpretation apply. As the Supreme Court of Canada confirmed in Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at pp. 40-41, quoting Elmer Driedger, Construction of Statutes, 2nd ed. (Toronto: Butterworths, 1983), at p. 87, statutory provisions are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and intention of the legislature.
[19] Section 5 of the Policy outlines coverage for injuries arising from accidents involving an uninsured automobile. Section 5.1.2 of the Policy defines an “uninsured automobile” as an automobile whose owner or driver does not have liability insurance. Section 5.1.2 states that a policyholder may not claim uninsured automobile coverage for injuries arising out of the ownership, use or operation of their own automobile since such an automobile, by definition, is not considered to be uninsured. See, for example, in Fosker v. Thorpe (2004), 2004 CanLII 33358 (ON SC), 72 O.R. (3d) 753 (S.C.), at paras. 19-30, where the plaintiff (policyholder) was struck by a thief driving the car she owned. The court found that the plaintiff could not claim uninsured automobile coverage under her policy because her vehicle was by definition insured and explicitly excluded from the definition: at para. 29.
[20] For this reason, the focus of the exclusion in s. 1.8.2 is on passengers in uninsured vehicles (that is, passengers in vehicles not driven by its owner or the spouse of its owner), as in the case at bar. In order to claim under the uninsured automobile provisions of the Policy, a claimant must not otherwise be excluded from coverage under the Policy. Therefore, the exclusion in s. 1.8.2 determines which passengers in uninsured automobiles can claim coverage under s. 5 of the Policy.
[21] The first paragraph of the exclusion sets out that “there is no coverage (including coverage for occupants) under this policy if the automobile is used or operated by a person in possession of the automobile without the owner’s consent or is driven by a person named as an excluded driver of the automobile policy or a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent” (emphasis added).
[22] The second paragraph of the exclusion sets out that, “there is no coverage under this policy for a person who, at the time he or she willingly becomes an occupant of an automobile, knows or ought reasonably to know that the automobile is being used or operated by a person in possession of the automobile without the owner’s consent.”
[23] Each of the two paragraphs that comprise s. 1.8.2 appear to exempt certain passengers from the exclusion who neither know nor ought reasonably to know the vehicle in which they were travelling when injured was driven without permission.
[24] The two questions which must be determined on this appeal are first, which passengers are covered by this exemption to the exclusion under s. 1.8.2 (and how are the two different paragraphs setting out exemptions from the exclusion different from one another); and second, does Mr. Burnham fall into one of the categories of passengers exempted from the exclusion.
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The interpretive principles applicable to the Policy
[42] Section 1.8.2 of the Policy is not without its uncertainties. Both paragraphs appear to extend coverage to innocent occupants injured in stolen vehicles. Additionally, the distinction between “the automobile” and “an automobile” in the two paragraphs is not defined.
[43] Because of this ambiguity, it is important to begin by setting out the key principles applicable to the Policy.
[44] The first applicable principle, as stated above, is that the Policy as a statutory requirement should be read in its entire context and in its grammatical and ordinary sense, harmoniously with the scheme of the Act, the object of the Act, and the intention of the legislature: Rizzo, at para. 21.
[45] The second interpretive principle is that exclusions in insurance policies are interpreted narrowly: Amos v. Insurance Corporation of British Columbia, 1995 CanLII 66 (SCC), [1995] 3 S.C.R. 405, at para. 16. As a general rule, clauses in insurance policies will be granted a liberal meaning “in favour of the insured and those clauses excluding coverage [will be] construed strictly against the insurer”: Chilton v. Co-operators General Insurance Co. (1997), 1997 CanLII 765 (ON CA), 32 O.R. (3d) 161 (C.A.), at p. 167.
[46] The third principle is that the purpose of uninsured automobile coverage is to internalize the cost of driving so that payment is made by insurers rather than the Fund. As Hoy J.A. explained in Bruinsma v. Cresswell, 2013 ONCA 111, 360 D.L.R. (4th) 484, at para. 24:Section 265 requires uninsured automobile coverage. Effective March 1, 1980, uninsured automobile coverage, which had been optional and limited in scope since 1969, became mandatory. The purpose of the provision was to spread the risk of uninsured drivers among drivers (through insurance policies) rather than among the tax base generally (through the Fund): see Chambo v. Musseau (1993), 1993 CanLII 8680 (ON CA), 15 O.R. (3d) 305, at para. 11. Section 265(1) of the Act requires that every contract evidenced by a motor vehicle liability policy provide, inter alia, for payment to an insured of all sums the insured is entitled to recover from the owner or driver of an uninsured automobile as damages for bodily injury, “subject to the terms, conditions, provisions, exclusions and limits as are prescribed by the regulations.” [Italics in original; underlining added.] At paras 47-57 the court applies these principles and concludes that the victim here is covered by the standard policy's 'uninsured motorist coverage', not the 'Motor Vehicle Accident Claims Fund'.
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