Is a school bus company making a bus available for an employee driver’s regular use “at the time of the accident”, if she is not allowed to use the bus at the time of an accident?
In TD Insurance v. Dominion, the claimant worked for a school bus company, providing pick-up and drop off services before and after school. The school bus company operated during school hours, Mondays to Fridays. The company was closed on weekends.
On an unfortunate Sunday afternoon, the claimant was visiting a relative and was injured between two cars. She applied for accident benefits to TD Insurance, who was one of the insurers of a vehicle involved in the accident. TD brought a priority dispute against Trafalgar Insurance (the other insurer of a vehicle involved in the accident) and Dominion, the insurer of her school bus.
The claim against Dominion was based on the regular use provisions under the policy, which states that a person is deemed to be the named insured under a policy insuring a vehicle if, at the time of the accident, a company is making the vehicle available for her regular use.
The evidence was that the school bus driver was allowed to bring the bus home and park it on her driveway, which she did. She was allowed to use the bus for personal use between her morning and afternoon runs. But she was not allowed to use the bus at all after business hours and, particularly, on weekends when schools were closed.
At the time of the Sunday accident, the school bus was parked at her home. The evidence was that all drivers of this school bus company were not allowed to use any buses on Sundays. The wheels on the bus were not going round and round. The horn on the bus was silent. The wipers did not go swish swish swish. The people on the bus did not go up and down (because there were no people on the bus). On her driveway. Not all over town.
The arbitrator found that at the time of the accident, the school bus company was not making a bus available for the claimant’s use because, quite to the contrary, she was not allowed to use the vehicle on a Sunday. She found that the phrase “being made available” by a company required an act or active attention on the part of company to make the vehicle available.
On appeal, the Superior Court found that the arbitrator’s decision was reasonable and consistent with existing case law on regular use. The judge held:
In her decision, the Arbitrator considered the language of the statutory provision, the case law interpreting the provision, and the circumstances of Ms. Singh’s accident. Her conclusion that the school bus was not made available to Ms. Singh for regular use at the time of the accident and that, therefore, she was not a named insured pursuant to s. 3(7)(f)(i) of the SABS, was reasonable. Given the deference that must be accorded to the decision of an arbitrator interpreting her home statute in determining a priority dispute, I find no basis on which to disturb the Arbitrator’s decision.
The appeal decision is another example of how the courts are giving arbitrators deference and are becoming more reluctant to interfere with arbitration decisions. This highlights how important it is these days for insurers to win at the arbitration level.
The recent Superior Court decision of Nemchin v. Green by Corthorn J. is a significant win for auto insurers dealing with the deductibility of collateral benefits from large future loss of income awards. The plaintiff was injured in a motor vehicle accident in 2010. A trial took place in April, 2017. At the time of the trial, the plaintiff continued to receive long-term disability benefits from a third party insurer. At trial the plaintiff was awarded $600,000.00 for future loss of income. This was reduced to $540,000.00 for contributory negligence.
After the trial, two issues arose. First, the defendant sought an assignment of the plaintiff’s ongoing long term disability benefits pursuant to section 267.8(12(a)(ii), of the Insurance Act. Second, despite the finding in the recent El-Khodr and Cobb decisions, the plaintiff sought to have the judge use her discretion to alter the pre-judgment interest rate from 1.3% to 3.5%.
Regarding the assignment, the plaintiff opposed the defendant’s request because she argued it was not possible to match the $540,000.00 lump sum temporally to the ongoing disability benefits. She pointed out that the defendant opposed a jury question requiring the jury to break down any future payments by annual loss and duration. The defendant argued that the statutory provision or case law did not require “temporal matching”. Corthorn J. noted that the law in this area remained unsettled and the Court of Appeal was assembling a five member panel to hear Cadieux v. Saywall, 2016 ONC 7604, where they were expected to address the deduction of collateral benefits. However, the parties required finality in this matter and so she rendered her decision.
Corthorn J. granted the defendant an assignment until the plaintiff turned age 65 (when her LTD coverage ceased), or when the $540,000.00 had been fully paid by the LTD insurer. She also found that there was no basis to utilize her discretion to adjust the pre-judgment interest rate from 1.3% to 3.5%.
In her analysis, Corthorn J. confirmed that the burden of proving an assignment fell to the defendant. She addressed four main issues in determining whether the assignment should be granted. First, she found that it was undisputed that the plaintiff was in receipt of LTD benefits at the time of the jury verdict and would remain in receipt for as long as she met the disability test. Second, Corthorn J. agreed with the defendant that there was no requirement for “temporal matching”. Therefore, it fell to the trial judge to determine the duration of the assignment based on the record. Third, she found a global award for future loss of income did not preclude her from deciding the relevant issues. Finally, she found there was no risk the plaintiff would be undercompensated. The defendant is only entitled to an assignment once the plaintiff was paid the $540,000.00. At which point, the plaintiff would be fully compensated for her future loss of income. Relying on the decision of El-Khodr, Corthorn J. found the Court of Appeal’s commentary on the deductibility of Statutory Accident Benefits payments to be applicable.
This decision should be considered a significant success for defendants. It continues a growing trend in the case law where the deductibility of collateral benefits is addressed in a practical and holistic fashion. Overly technical jury questions requiring awards to be matched, year by year for a specific duration will not be required for a defendant to raise a claim for assignment.
Following the creation of the tort of intrusion upon seclusion in 2012, we have seen numerous cases that have clarified the application of same. In the most recent pronouncement, Oliveira v. Aviva Canada Inc., the Court of Appeal dealt with whether the duty to defend extends to an employee who allegedly improperly accessed the Plaintiff’s confidential information.
The facts of the underlying claim were as follows. The Plaintiff, J.L., was admitted to the emergency department of a hospital because of postpartum psychosis. Ms. Oliveira was a nurse at the hospital. The Plaintiff was treated there and at another hospital for approximately 18 days. Following her return home, the neighbour’s son began asking pointed questions about her health. J.L.’s health status, however, had never been shared with the neighbour. The Plaintiff became suspicious after she realized that the neighbour was a relative of Ms. Oliveira. When J.L. complained to the hospital, an investigation revealed that Ms. Oliveira had repeatedly accessed the Plaintiff’s hospital record without any valid reason.
Ms. Oliveira brought an Application for coverage under the hospital’s insurance policy. In this decision, the Court noted that the Hospital was insured by Aviva pursuant to a “Professional and General Liability and Comprehensive Dishonesty, Disappearance and Destruction Insurance Policy.” Hospital employees, like the Applicant, were additional insureds under the policy. Aviva argued that they did not owe a duty of care to Ms. Oliveira because the policy only applied where employees were “acting under the direction of” the Hospital and “only in respect of liability arising from the operations of” the Hospital. Since the Applicant was not doing either, then there was no duty to defend.
Specifically, Aviva alleged that Ms. Oliveira was a “lone wolf, deliberately engaging in activities that [were] not in any way related to her employment at the Hospital, and in fact [were] contrary to her obligations as an employee of the Hospital.” As she abused her position to access private information, she could not be acting under the direction of the Hospital. The Application judge rejected this argument because the policy specifically provided coverage for “invasion or violation of privacy” and for “invasion or violation of the right of privacy.” The policy did not limit coverage for privacy breaches or other torts to Hospital employees within a patient’s circle of care. The only qualification was that the employee had to be acting under the direction of the Hospital. The Judge held that whether an employee was acting under the direction of a named insured (in this case the Hospital) did not turn on whether there was actual personal control at the moment of the incident. Rather, control flowed from the relationship generally and from the employer’s ability to terminate the employee’s employment. The Court found that Ms. Oliveira was acting under the direction of the Hospital for the purposes of determining whether Aviva owed her a duty of care.
The second component that needed to be satisfied in order for the duty of care to be extended was that it only covered employees of the Hospital in respect of liability “arising from the operations” of the Hospital. On this point, Aviva argued that since Ms. Oliveira was not within the patient’s circle of care, her conduct did not arise from the Hospital’s operations. The Judge noted that in a hospital setting, intrusion upon seclusion captured inappropriate access to medical records. As a result, Aviva sought to use the very act that they agreed to insure against as an excuse to deny the duty to defend. The Court held that to accept Aviva’s argument would nullify a significant portion of the privacy coverage that the policy purported to afford. This was improper.
Aviva’s appeal was dismissed by the Court of Appeal who found that the language of the policy clearly covered claims for the invasion of privacy which included intrusion upon seclusion. Specifically, the Court of Appeal held:
The applicant was employed by the hospital as a nurse and while on duty, in the course of the hospital’s operations, to use the language of the policy (which would include the maintenance of patient’s health records), she accessed the records that she had apparently no business doing because she was not involved in J.L.’s care. The applicant was employed by the hospital, (she was essentially an employee 24/7) but was only acting under the direction of the hospital when she was on duty as such.
The Court of Appeal held that the common sense interpretation of the language supported a finding that Ms. Oliveira was entitled to a duty to defence. It was plain that the policy, in covering invasion of privacy, intended to cover the type of conduct alleged by the Plaintiff.
In light of this decision, in instances where the policy provides for broadened privacy coverage, the insurer is unlikely to be able to rely on those same provisions to deny a duty to defend. It remains to be seen, however, whether a duty to indemnify will be ordered in similar circumstances.
A recent Court of Appeal decision outlined the breadth of an insurer’s duty to defend.
In Ernst v. Northbridge Personal Insurance Corporation, the application judge ruled that the insurer had a duty to defend the driver of an ATV. The insurance policy extended coverage to an ATV if it was owned by the defendant driver and the defendant was not an occupier of the property on which the accident occurred (note, we are seeing more and more of these types of cases). The defendants were in the process of purchasing both the ATV and the property from the former owners, however the accident occurred before the closing date. The insurer denied coverage on the basis that at the time of the accident, the ATV was being operated on the ATV owner’s private property, and therefore was not considered an automobile.
In coming to the decision that the insurer was obligated to defend the defendant driver, the application judge explored possible outcomes rather than simply evaluating the pleadings, and he assumed that the defendants were not occupiers of the property (thereby triggering a duty to defend) because the former/potential current owners of the ATV were occupiers of the property at the time of the accident. Of note, it was unclear at the time of pleadings whether the defendants had finalized the purchase of the ATV from the original owners, as they were in the process of doing so.
On appeal, the Court of Appeal noted the law governing pleadings explained in Monenco Ltd. V. Commonwealth Insurance Co.,  2 S.C.R. 699, 2001 SCC 49 (CanLII), stating:
Whether an insurer is bound to defend a particular claim has been conventionally addressed by relying on the allegations made in the pleadings filed against the insured, usually in the form of a statement of claim. If the pleadings allege facts which, if tru, would require the insurer to indemnify the insured for the claim, then the insurer is obliged to provide a defence. This remains so even though the actual facts may differ from the allegations pleaded.
[I]t is not necessary to prove that the obligation to indemnify will in fact arise in order to trigger the duty to defend. … The mere possibility that a claim falling within the policy may succeed will suffice.
The Court noted that the pleadings included allegations both that the defendants were owners of the ATV and occupiers of the property, and that the ATV’s original owners were the owners of the ATV and occupiers of the property at the relevant time. The application judge found that the pleadings alleged facts that would permit a finding that the original ATV owners, and not the defendants, were the occupiers at the relevant time. Even if this was not ultimately factual, it was sufficient to trigger the appellant’s duty to defend. The Court found that there was no requirement that the allegations against the defendants be expressly pleaded in the alternative for the duty to defend to arise. The Court took no issue with the application judge reading the pleadings widely, and adopting a reading of the pleadings that supported a duty to defend.
The takeaway from this decision is that courts will read pleadings with a wide latitude in order to find a duty on an insurer to defend an insured. If there is a possibility, based on the pleadings, that there may reasonably be a situation in which the insurer will have the duty to defend, even though those facts might ultimately be proven false, there is a high possibility that a court will find a positive duty to defend. Insurers should hesitate to refuse to defend their insured if the pleadings are structured in a way that a court would find that a duty is possible. If you are unsure of your exposure in this regard, contact your lawyer to provide their opinion.
Gabe Flatt has an insurance law practice that has focused exclusively on insurance defence for the past 8 years. He has developed an expertise in complex priority and loss transfer disputes as well as general coverage issues.
On April 10, 2018, the Divisional Court released an important decision regarding ATV incidents outside of Ontario. Specifically, in Benson v. Belair Insurance Co. Inc., the Divisional Court considered whether the Claimant was entitled to statutory accident benefits arising from an incident while in British Columbia.
Mr. Benson was a resident of Ontario who had been living in British Columbia. He was injured after he fell from an ATV that was being driven on a public trail owned and occupied by the Northern Rockies Regional Municipality. The ATV was owned by a resident of British Columbia. Since there was no requirement that the ATV be insured in British Columbia, it was not.
At the time of the accident, Mr. Benson had his own insurance policy with Belair in Ontario. The policy was a standard OAP-1 that did not include coverage for any ATVs.
The Claimant applied under his own insurance policy for accident benefits. The Insurer denied coverage because the ATV was not an “automobile” within the meaning of the Statutory Accident Benefits Schedule – Effective September 1, 2010. The Claimant filed a dispute with the Financial Services Commission of Ontario. The Arbitrator found that the ATV was not an automobile. While the Claimant appealed the finding, the Director’s Delegate dismissed the appeal.
On Judicial Review, the Divisional Court noted that the question to be determined was whether an ATV that was owned, registered and operated in British Columbia was an automobile covered by the Ontario SABS.
The Divisional Court held that the appropriate legislation to be applied was the legislation in British Columbia. The ATV was operated and the accident happened in British Columbia. The decision to have, or not to have, insurance for this vehicle was made in British Columbia. As a result, British Columbia legislation must determine whether there is entitlement to benefits resulting from the accident.
Reference was made to the Court of Appeal’s decision in Adams v. Pineland Amusement Ltd. (2007 ONCA 844) which found that in determining a case of liability insurance, “the proper question is whether the vehicle [involved in the accident] required motor vehicle insurance at the time and in the circumstances of the incident.” Applying this question in the present case, at the time and in the circumstances of this accident, the ATV was not insured.
The Divisional Court also held that there was no basis to claim that Mr. Benson had a legitimate expectation that Belair would cover an accident involving ATVs as there were no ATVs listed on the subject insurance policy.
The last issue considered by the Divisional Court was the Ontario Off-Road Vehicle Act which stated that “no person shall drive an off-road vehicle unless it is insured under a motor vehicle liability policy” under the Ontario Insurance Act. The Divisional Court concluded that it was reasonable to assume that the provision only required this of ATVs in Ontario, not ATVs in British Columbia.
This decision is of assistance to insurers who are presented with claims outside of Ontario. It is clear that in determining whether the vehicle is an “automobile” within the meaning of the SABS, the trier of fact will consider the applicable law in the jurisdiction where the incident occurred; not the law in Ontario. A word of caution, however, the Divisional Court has left the door open for another party to argue that there was an expectation that the vehicle they were operating was an “automobile” under the SABS. This limited exception is only where a similar vehicle was listed on their own Ontario insurance policy.
Employers often provide their employees with access to long-term disability benefits through a group benefit plan. These benefits are usually provided and administered by a third party insurer. The insurer’s role is to manage the disability claim and adjust the file according to the available medical evidence. The employer’s role is to hold the employee’s position and accommodate a return to work as necessary. Ideally, the management of an injured employees return to work should be a collaborative process between employer, long-term disability insurer, and employee. Unfortunately, once an employee is injured and in receipt of disability benefits, misconceptions regarding the parties’ respective roles can expose them to increased risk and liability.
Misconception #1: The employer is no longer involved in the disability process
An insurer’s acceptance of a long-term disability claim does not end the employer-employee relationship. The employer has an ongoing obligation to accommodate the employee’s disability. This may be as simple as keeping their position available while benefits are being paid. It can also require the employer to significantly modify the workspace or duties of the employee to assist in a return to work. The employee has a reciprocal obligation to fully participate in any accommodation process. Failure to participate may give grounds for the employer to terminate their employment due to frustration. It may also give grounds for the insurer to discontinue benefits. To determine whether a claim of frustration is appropriate, employers should to obtain updates on their employee’s functional abilities at regular, but not excessive, intervals.
Misconception #2: If the employee receives disability benefits for 2 years, their employment can be terminated
Ontario’s Human Rights Code,prevents employers from terminating employees on the basis of disability. The exception is when an employer can prove that they have accommodated to the point of “undue hardship” and the contract of employment has been “frustrated” by the employee’s disability. Frustration is a legal doctrine that refers to an intervening event that prevents the further performance of a contract. Depending on the wording of the contract of employment, this doctrine may relieve parties from any further obligation to each other, with the exception of statutory minimum entitlements to notice, severance, or pay in lieu of notice under the Employment Standards Act.
Most frustration claims arise at the two year mark. This is in part due to the change of disability tests contained in many long-term disability policies. Usually, after two years, the policy’s disability definition changes to the “any occupation” definition. This is a stringent test requiring the employee to unable to engage in any occupation they are reasonably suited for by age, experience, and training. Employers may believe that if an employee meets this test of being able to unable to perform any job, their contract is frustrated.
However, the courts have found that the two year mark is not definitive in satisfying the employer’s burden. Frustration of contract is a fact driven analysis that will take into account the nature of the worker’s position, disabilities, and the employer’s meaningful steps to accommodate. Where an employer has taken a “hands off” approach due to misconception #1, their claim for frustration may not succeed.
Misconception #3: If the employee no longer meets the policy definition of disability, they must return to work
An employer is required to accommodate its employee even where the insurer has discontinued benefits. A long-term disability insurer’s decision to terminate benefits is not determinative of the employee’s ability to engage in his occupation. Potential accommodation may entail allowing the employee to remain off work without pay. It may also require the employer to accept a gradual return to work, starting with part time hours. However, an insurer’s denial of benefits may be a good time for an employer to seriously consider instituting a formal return to work program with relevant checkpoints and milestones. If an employee is unable, or unwilling, to participate in this program, the employer may have a better case for frustration.
Avoiding Exposure Through Collaboration
When dealing with an injured employee, benefit entitlement, accommodation, and potential termination of employment are areas of significant risk and exposure for both the employer and the long-term disability insurer. The overlap of contractual, statutory and common law obligations between the three parties make the management of long-term disability claims particularly complex. If an employer fails to take positive steps to accommodate an employee or terminates their employment prematurely, the insurer may face an individual with no incentive to return to the work force. This may result in a protracted disability claim. Similarly, an employer who prematurely terminates an employee exposes themselves to wrongful dismissal and human rights claims.
Properly evaluating the employer’s obligations in the context of a long-term disability claim is a necessary step in avoiding these risks. For further information on how to successful avoid these pit falls, contact the long-term disability and employment lawyers at Strigberger Brown Armstrong LLP.
Devan Marr’s practice has focused on bodily injury, long term disability, statutory accident benefits, and employment claims.
The Court of Appeal recently released their much anticipated decision dealing with the impact of waivers. The Court heard two cases together that dealt with patrons who were injured while skiing at resorts. In both instances, the patrons executed the ski resorts’ waivers of liability as a condition of purchasing their tickets but nevertheless sued for personal injuries. The issue was what impact the Consumer Protection Act, 2002 and the Occupiers’ Liability Act had on these waivers.
The Court of Appeal noted that while the Occupiers Liability Act established a primary duty of care that occupiers owe to persons entering their premises, there was an exception. Under this exception, the duty of care exempted risks willingly assumed provided that the occupier did not create a danger with the deliberate intent of doing harm or damage and did not act with a reckless disregard of the presence of the individual. The Court of Appeal recognized that part of the rationale for including this exception was to encourage private landowners to voluntarily make their property available for recreational activities by limiting their liability.
In reviewing the Consumer Protection Act, 2002, the Court of Appeal noted that there were four sections of particular importance. They were:
Section 7(1): The substantive and procedural rights given under this Act apply despite any agreement or waiver to the contrary;
Section 9(1):The supplier is deemed to warrant that the services supplied under a consumer agreement are of a reasonably acceptable quality;
Section 9(3):Any term or acknowledgement, whether part of the consumer agreement or not, that purports to negate or vary any implied condition or warranty under the Sale of Goods Act or any deemed condition or warranty under this Act is void; and,
Section 9(4):If a term or acknowledgement referenced in subsection (3) is a term of the agreement, it is severable from the agreement and shall not be evidence of circumstances showing an intent that the deemed or implied warranty or condition does not apply.
In reviewing the provisions, the Court of Appeal found that there was a “clear and direct conflict” between the two pieces of legislation. On the one hand, the Occupiers’ Liability Act permitted an occupier to obtain a waiver of liability. On the other hand, the Consumer Protection Act, 2002, precluded a supplier from obtaining a waiver. The bottom line was that what the one permitted, the other prohibited.
In the face of clear conflict, the Court of Appeal looked to the principles of statutory interpretation which urged an approach that allowed both statutes to maintain their maximum application and effectiveness. The Court of Appeal opined that in the specific situation, the Occupiers’ Liability Act must be reasonably seen as dealing directly with the core issue, that is, the ability of occupiers of premises to obtain waivers of liability. This legislation dealt directly and substantially with activities on someone’s premises. In contrast, the Consumer Protection Act, 2002 dealt with all forms of consumer transactions in a general way. The Court of Appeal noted that buying a ski pass was but one of “a myriad of consumer transactions” that the legislation could apply to. The Court concluded that the Consumer Protection Act, 2002 did not operate to void the otherwise valid waivers executed under the Occupiers’ Liability Act.
This decision is seen as a victory for recreational businesses that use waivers to protect themselves from liability in activities that have inherent risk. These organizations are able to continue to rely on their waivers as a means of protecting themselves from claims brought by third parties.