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Insurance (Auto) - Limited Accident Insurance [s.263]. Gaudette v. 1929853 Ontario Limited (Property Maintenance North)
In Gaudette v. 1929853 Ontario Limited (Property Maintenance North) (Ont Div Ct, 2025) the Ontario Divisional Court allowed a Small Claims appeal, here where the deputy-judge "erred in concluding that her case fell within s. 263 and was therefore statute barred". The facts were those of a parked vehicle collision by a contracted backhoe operator clearing snow in a parking lot.
Here the court considers IA s.263(5) [SS: 'Limited Accident Insurances - Accidents involving two or more insured automobiles - Restrictions on other recovery']:[8] I am satisfied that the presiding Small Claims Court Judge erred in law when he concluded that s. 263 operated as a statutory bar to Ms. Gaudette’s claim in the circumstances of this case where it is alleged that Property Maintenance North was operating a backhoe at the time of the alleged collision and in the absence of any evidence that the backhoe was insured by a motor vehicle insurance policy.
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Application of section 263 of the Insurance Act
[10] Section 263(1) of the Insurance Act provides that this section applies if:(a) an automobile or its contents, or both, suffers damage arising directly or indirectly from the use or operation in Ontario of one or more other automobiles;
(b) the automobile that suffers the damage or in respect of which the contents suffer damage is insured under a contract evidenced by a motor vehicle liability policy issued by an insurer that is licensed to undertake automobile insurance in Ontario or that has filed with the Chief Executive Officer, in the form provided by the Chief Executive Officer, an undertaking to be bound by this section; and
(c) at least one other automobile involved in the accident is insured under a contract evidenced by a motor vehicle liability policy issued by an insurer that is licensed to undertake automobile insurance in Ontario or that has filed with the Chief Executive Officer, in the form provided by the Chief Executive Officer, an undertaking to be bound by this section. [11] Section 263(5) of the Insurance Act provides that if s. 263 applies:(a) an insured has no right of action against any person involved in the incident other than the insured’s insurer for damages to the insured’s automobile or its contents or for loss of use;
(a.1) an insured has no right of action against a person under an agreement, other than a contract of automobile insurance, in respect of damages to the insured’s automobile or its contents or loss of use, except to the extent that the person is at fault or negligent in respect of those damages or that loss;
(b) an insurer, except as permitted by the regulations, has no right of indemnification from or subrogation against any person for payments made to is insured under this section. [12] Property Maintenance North submits that s. 253(5) applies to damage caused to an insured’s automobile regardless of what caused the damage. This is incorrect. Section 263 states that the provision applies when damage is caused to an insured automobile by one or more automobiles, at least one of which is insured.
[13] Automobile is not specifically defined under the Insurance Act. Under Part VI of the Insurance Act, s. 224(1) provides that an “automobile” includes a motor vehicle required under any Act to be insured under a motor vehicle liability policy, and a vehicle prescribed by regulations to be an automobile.
[14] Courts have found that the use of the word “includes” in s. 224(1) demonstrates an intent to expand the scope of “automobile” to capture motor vehicles which are not automobiles in the ordinary sense, but which are statutorily required to be insured under a motor vehicle liability policy: Copley v. Kerr Farms Ltd, 2002 CanLII 44900 (ON CA), 2002 CarswellOnt 1421 (Ont.C.A) at para. 12.
[15] The Ontario Court of Appeal has held that defining an “automobile” under s. 224(1) requires a two-step analysis. First the court must determine whether the vehicle in issue is an automobile within the ordinary sense of the word. If it is, that is the end of the inquiry. If, however, the vehicle is not an automobile within the ordinary sense of the word, then it must be determined whether the vehicle comes within the broadened definition of automobile because it is a motor vehicle that is required by statute to be insured under a motor vehicle policy: Copley v. Kerr Farms Ltd., at para.13.
[16] In Morton v. Rabito, 1998 CarswellOnt 4786 (Ont.C.A.), the Court of Appeal held that a backhoe is not an “automobile” under s. 224(1) because it not considered an automobile in the ordinary sense, and it is not subject to automobile insurance.
[17] In this case, Property Maintenance North pled in its statement of defence that it used a backhoe when clearing snow from the parking lot of the Cooperative Housing Unit. While it pled that the action was statute barred by the Insurance Act, it did not plead that it was using an automobile at the time of the alleged incident or that the backhoe had automobile insurance.
[18] It is not surprising that the presiding Small Claims Deputy Judge did not address this issue in his decision because it was not raised directly in either the oral or written submissions provided by either the plaintiff or the defendant. Ms. Gaudette’s oral and written submissions to the court were lengthy and unfocused and it is understandable that this issue may have gone unnoticed and unaddressed.
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