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No-Fault Auto Insurance: Supreme Court Determines What Is An Auto Accident

January 09, 2013

In the provinces whose auto insurance schemes include a no-fault, public component, there is often contention as to where liability for bodily injuries arising out of auto accidents and the ability to sue will ultimately lie. The provinces in question all have legislative schemes providing for insurance coverage to compensate for bodily injuries incurred as a result of accidents that are caused by automobiles, but the question of whether or not a given accident is ‘caused by an automobile’ has been the topic of much debate. This article seeks to summarize the relevant legislative provisions and older case law, and then discuss a new test recently set out by the Supreme Court of Canada.

Beginning with a look at the relevant provincial insurance legislation with respect to no-fault public auto insurance in Manitoba, Quebec, and British Columbia, a few general rules emerge.

First, compensation is provided by the provincial public insurer for any bodily injury suffered by victims in accidents. For example, under Part 2 of The Manitoba Public Insurance Corporation Act, CCSM c P215 (the MPIC Act), entitled “Universal Bodily Injury Compensation”, section 71(1) provides that,

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

Similar bodily injury compensation legislation can be found in Title II of Quebec’s Automobile Insurance Act, RSQ c A-25 (the Auto Insurance Act), entitled “Compensation for Bodily Injury” (at sections 5 – 6), and in Part 7 of British Columbia’s Insurance (Vehicle) Regulation, B.C. Reg 447/83 (the Insurance (Vehicle) Regulation), entitled “Accident Benefits” (at section 79). Note: Saskatchewan’s The Automobile Accident Insurance Act, RSS 1978, c A-35, also includes certain public insurance elements, but it allows insureds to choose between no-fault coverage and tort-based coverage (see section 40.2(1)). As such, the arguments made below are not relevant in Saskatchewan and its provisions will not be considered further.

Second, the legislation in Manitoba, Quebec, and British Columbia all defines the term “accident”, generally calling it an event in which damage or bodily injury is caused by an automobile. The terms “damage caused by an automobile” (Quebec) and “bodily injury caused by an automobile” (Manitoba) are defined to include any damage or bodily injury caused by an automobile, by the use thereof, or by a load (including trailers attached to autos), but not damage caused by the autonomous acts of animals that are in the auto or by actions performed to maintain, repair, alter or improve an auto. For further detail, see Manitoba’s MPIC Act at section 70(1), and Quebec’s Auto Insurance Act at section 1. British Columbia’s legislation does not appear to include similar provisions.

Third, the provinces define who is a victim (or, as B.C. calls it, an “insured”) for purposes of their compensation provisions. Generally, the legislation provides an entitlement to compensation for accident victims or insureds who are either residents of the province in question, occupants of vehicles registered in the province in question, or non-residents in some circumstances (in Manitoba and Quebec, a non-resident will be entitled to compensation if the non-resident is not at fault for the accident, or if the non-resident’s home jurisdiction has some kind of agreement with Manitoba or Quebec providing for reciprocal coverage; British Columbia appears not to have a provision for non-resident coverage). For further detail, see sections 74 – 75 of Manitoba’s MPIC Act, sections 7 – 9 of Quebec’s Auto Insurance Act, and sections 78 – 79 of British Columbia’s Insurance (Vehicle) Regulation.

Fourth, each province’s legislation also sets out certain exceptions to the universal bodily injury compensation provisions. In Manitoba and Quebec, the public insurer will not compensate victims or insureds for bodily injury caused by: i) independently operated devices mounted on or attached to the auto (while the auto is not in motion), ii) farm tractor accidents that occur off of highways, iii) accidents involving off-road vehicles, snow vehicles, or motorized mobility aids that do not involve automobiles, or iv) accidents occurring as a result of automobile contests, shows, or races. British Columbia’s exceptions are slightly different. For further detail, see section 71(2) of Manitoba’s MPIC Act, section 10 of Quebec’s Auto Insurance Act, and section 96 of British Columbia’s Insurance (Vehicle) Regulation.

Most importantly from a private insurer’s perspective, the Manitoba and Quebec legislation both provide that if the universal bodily injury compensation provisions therein apply in a particular situation, then the public compensation stands in lieu of any civil rights of action. For example, section 72 of Manitoba’s MPIC Act reads:

Notwithstanding the provisions of any other Act, compensation under this Part stands in lieu of all rights and remedies arising out of bodily injuries to which this Part applies and no action in that respect may be admitted before any court.

See also section 83.57 of Quebec’s Auto Insurance Act, which is substantially similar to the Manitoba provision above. The British Columbia legislation and Insurance (Vehicle) Regulation do not appear to include a similar provision limiting civil actions. As a result, the following analysis is not relevant in British Columbia.

Considering all of the legislative provisions discussed, it stands to reason that in Manitoba and Quebec, the fact that the public insurer’s bodily injury compensation scheme can preclude an injured party from commencing a civil action will often be beneficial for a private insurer. For example, say that Shirley sustains an injury while using her auto. Shirley’s injury was caused by Tom. Tom holds liability insurance with a private insurer, so without a public no-fault insurance system in place, Tom (and, in turn, Tom’s private insurer) could be subject to a civil claim in tort from Shirley. However, if the accident is deemed to fall within the ambit of the province’s bodily injury compensation provisions, then these provisions will prevent Shirley from initiating any civil action, thereby insulating Tom and his insurer from liability to Shirley. While the province’s public insurer might have a liability claim against Tom and his insurer, even if the public insurer does pursue that avenue Tom’s insurer is still at an advantage in that the universal bodily injury compensation amounts provided for in the legislation are generally much lower than the anticipated damage award had Shirley’s civil suit been successful.

Based on Shirley’s example, it appears that the determination of whether or not a given accident falls within the scope of Manitoba’s or Quebec’s universal bodily injury compensation legislation is relevant to private insurers. Although the issues of whether the injured party meets the definition of “victim” and whether the accident falls into any of the coverage exceptions are potential areas for concern in attempting to establish that provincial bodily injury compensation legislation applies, they were only canvassed briefly in the above paragraphs because they are not this article’s main focus (the legislation itself is quite detailed with respect to these issues, and should be consulted for clarification). Instead, this article considers the point that was recently discussed at length by the Supreme Court of Canada; namely, whether or not the incident in question actually falls within the definition of “accident”.

In most situations involving bodily injury and autos, the question of whether or not an “accident” has occurred will be answered in the affirmative with little analysis needed. Namely, if an auto hits another auto, a pedestrian, or a piece of property, and injuries to individuals ensue, there is clearly “damage” or “bodily injury” caused by an auto and the legislation will apply. But what about less clear-cut scenarios, such as slip-and-fall injuries occurring outside an auto while a passenger is entering or exiting, or bodily injuries sustained as a result of an independent object falling on an auto? Would these be considered to be injuries “caused by an automobile” or “by the use of an automobile” so as to be “accidents” pursuant to the Manitoba and Quebec legislation?

The courts have adopted various tests for whether or not a victim’s injuries were caused by the use of an automobile. In Amos v. Insurance Corp. of British Columbia, [1995] 3 S.C.R. 405 (SCC), the issue before the Supreme Court of Canada was whether or not gunshot wounds incurred by an auto owner while driving were caused by an accident arising out of the ownership, use or operation of a vehicle for purposes of British Columbia’s public bodily injury compensation scheme. The victim had been the subject of a random attack whereby the assailants were trying to enter the victim’s van and shot him in the process.

The court in Amos ultimately ruled that the shooting did sufficiently relate to the use of the automobile for purposes of insurance coverage, stating that (at paragraph 26):

Generally speaking, where the use or operation of a motor vehicle in some manner contributes to or adds to the injury, the plaintiff is entitled to coverage.

In the process of coming to its decision, the court set out a test for determining whether an accident was caused by an automobile (at paragraph 17):

The two-part test to be applied to interpreting this section is:

1.  Did the accident result from the ordinary and well-known activities to which automobiles are put?

2.  Is there some nexus or causal relationship (not necessarily a direct or proximate causal relationship) between the appellant’s injuries and the ownership, use or operation of his vehicle, or is the connection between the injuries and the ownership, use or operation of the vehicle merely incidental or fortuitous?

This two-part test summarizes the case law interpreting the phrase “arising out of the ownership, use or operation of a vehicle”, and encompasses both the “purpose” and “causation” tests posited in the jurisprudence.

In 1997, Manitoba’s Court of Appeal interpreted the words “caused by an automobile” and “caused by the use of an automobile” broadly and liberally in McMillan v. Thompson (Rural Municipality), 1997 CanLII 11522 (MB CA). In McMillan, the court was faced with a situation where the victim was driving his vehicle at the time of the incident, but the incident occurred as a result of the victim’s driving over a washed out bridge. As such, the issue was whether the incident should still be considered to be “caused by” the victim’s automobile when its actual cause was probably the faulty bridge.

In finding that the victim’s incident was caused by the use of an automobile, the court in McMillan makes the following expansive comments about the appropriate test (at paragraphs 63, 105, and 107):

…Clearly, the legislative intent was to include in the insurance scheme compensation for all injuries which are incurred in the ordinary use of an automobile.

[105] All of the above-noted cases support the reasoning that where the words “caused by” are used, there must be some link between the injuries sustained and the use of the automobile. An ordinary reading of s. 70(1) leads to the same conclusion. The legislation does not require more. It does not seek out causation in terms of the accident.

[107] … It was unnecessary for the motions judge to ascribe “a special meaning” to the words ‘caused by the use of an automobile’ to accept the appellant’s submission. The only question which required determination was: Were the respondents’ injuries caused by (in the sense of being related to) the use of an automobile?

Most recently, the Supreme Court of Canada revisited the issue of the meaning of “caused by an automobile” in Westmount (City) v. Rossy, 2012 SCC 30. The facts in Rossy involve a man who was killed while driving his automobile in the City of Westmount. A tree owned by the City fell on the automobile, causing Mr. Rossy’s death. The deceased’s family attempted to sue the City in negligence. The City argued that the claim was statute-barred by section 83.57 of Quebec’s Automobile Insurance Act which, as noted above, precludes civil actions for bodily injury arising from accidents covered by the legislation. The lower Quebec courts decided in favour of Mr. Rossy’s family, noting that the incident’s cause (the tree falling) was completely independent from Mr. Rossy’s driving of the auto at the time, and therefore that his accident did not fit within Quebec’s bodily injury legislation as it was not an accident caused by an automobile. However, the Supreme Court agreed with the City, finding that the incident actually did constitute an “accident” within the meaning of the Act.

After considering the prior jurisprudence, the Supreme Court sets out a test for whether or not an accident is “caused by an automobile” and determines that Mr. Rossy’s unfortunate incident was such an accident (at paragraphs 52-53):

[52] Each case must be considered on its facts. However, at a minimum, an accident arising out of the use of a vehicle as a means of transportation will fall within the definition of “accident” in the Act and will therefore be “caused by an automobile” within the meaning of the Act. Any civil action in connection with the damage caused by that accident will be barred and victims will have to file a claim with the SAAQ. The vehicle’s role in the accident need not be an active one. The mere use or operation of the vehicle, as a vehicle, will be sufficient for the Act to apply. This interpretation follows from a straightforward application of the principles developed in Pram. It is in line with the jurisprudence and the literature, and it gives effect to the objective of the legislative scheme.

[53] On the facts of this case, the Act applies to Mr. Rossy’s accident. Although the vehicle may have been stationary or moving through an intersection, the evidence on the record is that Mr. Rossy was using the vehicle as a means of transportation when the accident occurred.

Thus, the test to be used in determining whether an incident is or is not caused by an automobile or by the use of an automobile for purposes of universal bodily injury compensation provisions in no-fault auto insurance legislation appears to be widening in scope. According to the Supreme Court in Rossy, the auto need not take an active role in the accident so long as it is being used as a means of transportation at the time of the accident. Furthermore, an auto can be stationary at the time of the accident and still considered to be in use as a means of transportation.

In provinces with mandatory no-fault auto insurance, where the legislation both provides for universal bodily injury compensation and precludes civil actions for claims where the legislation’s bodily injury compensation scheme applies, the Rossy judgment and its broad definition of the phrase “caused by an automobile” will likely serve to include within the public compensation scheme many incidents of bodily injury where an auto is involved, and thereby limit the number of potential civil claims in the field. This could have a significant impact in terms of curtailing liability claims against insureds when said claims have any relation to autos. However, it should be noted that this line of reasoning is only applicable in Manitoba and Quebec, the two provinces with universal bodily injury compensation schemes that preclude civil actions.

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