In the majority of MVA claims, the facts will be straightforward. There will be one defendant who is adequately insured to compensate your client for her losses. However, situations will arise where this is not the case. My purpose in this paper is to provide a brief overview of some potential sources of compensation when the facts are not as clear cut in your client's favour.

There are many additional potential sources of compensation which should be explored at the initial interview stage, even if inadequate compensation does not immediately appear to be an issue. Amongst the most common are: "indirect" use or operation under s. 239 of the Insurance Act, tavern and social host liability, and employer/commercial general liability policies.

Section 239 cases

Section 239 of the Insurance Act states that an insured person under the policy is covered against liability for loss or damage, "arising from the ownership or directly or indirectly from the use or operation" of the insured automobile.

It has long been understood that the term "indirectly" gives a wide breadth to the possible use or operation of an automobile. The Supreme Court in Amos v. ICBC, [1995] 3 SCR 405, held that accident benefits to a man who was shot while driving should be paid under his own automobile policy. Justice Major established a 2 part test to be used (at para. 17):

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

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

Had he not been driving, Mr. Amos would not have been subjected to the attack, and therefore the test was satisfied.

This decision opened the door for very broad interpretations, including two 2005 Ontario Court of Appeal cases, Vytlingam (Lit. Guardian of) v. Farmer, [2007] 3 SCR 373, and Herbison v. Lumbermens Mutual Casualty Co., [2007] 3 SCR 373.

Briefly, Herbison involved a hunting incident where the plaintiff was shot in the leg by his companion, Wolfe, while they were hunting deer. Wolfe had been driving to the area because of a disability while the others, including Herbison, walked. Wolf though he saw a deer in the headlights, so he stopped and shot. Unfortunately, it was the plaintiff, mistaken for a deer.

The Ontario Court of Appeal found that there was a sufficient causal nexus to meet the Amos test. Justice Borins for the majority held (at para. 102) that "the phrase "directly or indirectly"... has effectively removed the requirement of an unbroken chain of causation test". He observed (at para. 113): "Indeed, it is difficult to contemplate language more broad in its scope that "arising... directly or indirectly from the use or operation" of an automobile". As a result, the plaintiff's injuries were indirectly attributable to fact that Wolf was putting his vehicle to an ordinary use at the time of the shooting.

Vytlingam involved Ontario residents who were travelling in North Carolina, whose vehicle was struck by a large boulder dropped from the overpass by two reprobates. The plaintiff was catastrophically injured and received in excess of $1 million from his accident benefits carrier. Farmer's liability policy was limited to $25,000 US. The overriding issue in the lawsuit related to whether Citadel, the plaintiff's insurer, had an obligation to respond on the inadequately insured claim under the OPCF 44R. Damages had been assessed at more than $960,000.

The Court of Appeal upheld the trial decision in favour of the plaintiff. Justice Macfarland for the majority found that there was a sufficient connection between the use of the Farmer vehicle and the plaintiff's injuries, despite the fact that the defendants were not operating or using it at the time of the incident. It was enough that they had required a car to transport the boulder to the overpass.

These two cases stretched the concept of "indirect use" to its limits. In neither were the defendants actually in their vehicles when the tortious conduct occurred; in both, a weapon was the immediate cause of the injuries. They were heard together by the Supreme Court of Canada in December, 2006 (released in October, 2007).

In the unanimous Herbison decision, despite expressing sympathy for the plaintiff/respondent, the Court rejected the majority decision, and agreed (at para. 1) with Justice Cronk (in dissent) that the shooting "was an act independent of the ownership, use or operation" of the hunter's truck, despite the fact that the headlights allowed the plaintiff to be seen.

Justice Binnie for the court concluded (at para. 14):

While I agree with the Ontario Court of Appeal that the addition of the "directly or indirectly" language to s. 239 relaxed the causation requirement, nevertheless, some causation link must be found and it must constitute a link in an unbroken chain.

Therefore the appeal was allowed.

Similarly, in Vytlingam, Justice Binnie held that the OPCF 44R coverage could not be stretched to cover a boulder used as a projectile, despite "the undisputed and highly sympathetic facts" (para. 4). His Honour pointed out that that the language of the OPCF 44R specifically referred to an inadequately insured motorist, and that the tort was not committed by Farmer in his capacity as a motorist. As well, Amos was not concerned with liability as it was an AB claim, and therefore it could not be held as conclusive in terms of 3rd party liability cases.

Conclusion re "Indirect" ownership, use or operation

These cases remain the ruling precedent on the issue of indirect causation. However, there is still plenty of room under the "indirect" umbrella that can be used to access coverage.

The following decisions have been reached in the wake of the Herbison and Vytlingam appeals:

In Russo v. John Doe, 2009 ONCA 305, the plaintiff was shot while driving. The court held that Vytlingam and Herbison applied, despite the fact that the shooting occurred from a moving vehicle, which was used in order to make the shooting possible.

On the other hand...

In Martin v. 2064324 Ontario Inc., 2011 ONSC 7145, the plaintiff was assaulted by unknown hoodlums. During part of the time the assaults took place, his car was involved. As he was loading his car, he was assaulted then thrown in the trunk. When the assailants could not operate the manual transmission, they forced him to do so. They drove to another parking lot, while continuing their assault, including eventually driving over the plaintiff's foot. The insurer was obliged to respond to the claim.

In Downer v. Personal Insurance Co., 2011 ONSC 4980, coverage was found where the plaintiff was assaulted while stopped to purchase gas. He had pulled in and was getting his wallet out when he was assaulted by several ruffians. The engine was still running. The use of the car had therefore not ended when the assault was commenced.

In Rossy v. Westmount (Ville), 2012 sec 30, the plaintiffs were barred from suing the defendant city when a tree fell on the driver of an automobile, killing him. The Court held that this was an automobile "accident".

Tavern and Social Host Liability

It is well-known that a tavern bears responsibility for its patrons (see for example, Stewart v. Pettie, [1995] 1 SCR 131). In any claim where alcohol service to either party plays a part, it is worthwhile to add the tavern as a defendant. Typically, the tavern will only bear a small portion of the fault.

More interesting for our purposes is the still unsettled question of social host liability. Famously, in Childs v. Desormeaux, [2006] 1 SCR 643, Chief Justice Mclachlin concluded (at para. 1) "that as a general rule, a social host does not owe a duty of care to a person injured by a guest who has consumed alcohol". This has generally been understood to rule out social host liability. However, the Chief Justice's conclusion is actually quite limited in scope. It specifically addresses an innocent 3rd party injured by a guest of the social host (based on the facts in Childs), and not, as many people assume, the guest herself.

At para. 47, Her Honour further concluded:

... that hosting a party at which alcohol is served does not, without more, establish the degree of proximity required to give rise to a duty of care on the hosts to third­ party highway users who may be injured by an intoxicated guest. The injury here was not shown to be foreseeable on the facts as found by the trial judge. Even if it had been, this is at best a case of nonfeasance. No duty to monitor guests' drinking or to prevent them from driving can be imposed having regard to the relevant cases and legal principles. A social host at a party where alcohol is served is not under a duty of care to members of the public who may be injured by a guest's actions, unless the host's conduct implicates him or her in the creation or exacerbation of the risk. (Emphasis added).

In this case, the hosts merely provided the venue and a small amount of champagne. Otherwise it was a BYOB party.

There are, however, many social environments where the host's conduct might implicate him or her in the creation or exacerbation of the risk, both to his guests and to third parties. 

Further, there are "grey areas" between social and commercial hosting, which may attract a more strict duty of care- for instance a work party sponsored by an employer or client of the employer or an out of control Tupperware party.

In many social host situations, the host will have homeowner's insurance (see below).

 Commercial General Liability

Employers are vicariously liable for the actions of their employees. Usually, employers will have a Commercial General Liability policy protecting the business. A standard Insuring Agreement will pay "on behalf of the insured all sums (including pre-judgment interest) that the insured shall become obligated to pay by reason of the liability imposed by law upon the insured or assumed by the insured under "contract", for "compensatory damages" because of

1. "bodily injury" sustained by any person or persons;
2. "personal injury";
3. "property damage" due to an accident or "occurrence."

These policies typically exclude from coverage "bodily injury" or "property damage" arising out of the ownership, use or operation by on behalf of the insured of an "automobile". As a result, if an employee is driving a company automobile in the course of his employment, the CGL may not respond in the event that the employee is at fault for a collision.

"Bodily injury" means bodily or mental injury, sickness, disease, disability, shock, including death resulting at any time and "compensatory damages" for incidental care and loss of services.

"Compensatory damages" means damages due or awarded as indemnification for actual injury and concomitant economic loss.

However, the "automobile" exclusion typically does not apply to "bodily injury" sustained by employees of the insured while acting on behalf of the insured.

It is at least arguable, therefore, that in a situation where your client is an employee injured in a collision in the course of her duties, regardless of fault, the CGL will be required to pay compensatory damages for any bodily injury she suffers.

CGLs often contain a "Non-owned Automobile Endorsement" which extends coverage to employees when they are operating their own or rental vehicles in the course of their employment.

The CGL will be excess of any other policy covering the employee in this situation.

Of course, regardless of whether coverage exists under the CGL, the vicarious liability persists.

Newly Acquired Automobile

A source of compensation that is often overlooked in uninsured/underinsured claims is the "newly acquired automobile" coverage at s. 2.2.1 of the standard Ontario Auto Policy:

A newly acquired automobile is an automobile or trailer that you acquire as an owner and that is not covered under any other policy. It can be either a replacement or an additional automobile. The replacement automobile will have the same coverage as the described automobile it replaces. We will cover an automobile as long as:

1. 1. We insure all automobiles you own, and
   2. Any claim you make for the additional automobile is made against a coverage we

Your newly acquired automobile(s) will be insured as long as you inform us within 14 days from the time of delivery and pay any additional premium required

As an example from my own practice, our client purchased an ATV, and was involved in a collision approximately 10 days after purchase, in which he was run off the road by an unidentified vehicle. He had not insured the ATV or informed the insurer of the purchase. It was written off as a result of the collision. The only insured vehicle in the household was our client's wife's car. Client was not a named insured under the policy. The evidence indicated that he purchased the ATV from pooled savings with his wife.

Predictably, the insurer denied coverage for certain ABs, and took the position that there was no unidentified coverage for tort.

Our position is that the couple owned the car together, and that it was insured in the wife's name for practical reasons. Similarly, the ATV was co-owned, and but for the collision, would have been added to the policy and insured under the wife's name with our client as a listed driver. The fact that no notice was given within the 14 days was moot, because it was written off before that time. So far, so good...

As an aside, the OAP does not specify that the newly acquired vehicle must be insured within 14 days- the insurer must be informed within this period.

Other areas to consider

Leased vehicles

If a vehicle is owned by a leasing company, that entity will likely have insurance on the vehicle over and above any insurance held by the lessee of the vehicle. This is capped at

$1 million per s. 267.12 of the Insurance Act. Under s. 277 (1.1), the following order in which the policies are to respond is set out:

1. Firstly, insurance available under a contract evidenced by a motor vehicle liability policy under which the lessee of the automobile is entitled to indemnity as an insured named in the contract.
   
   
2.  Secondly, insurance available under a contract evidenced by a motor vehicle liability policy under which the driver of the automobile is entitled to indemnity, either as an insured named in the contract, as the spouse of an insured named in the contract who resides with that insured or as a driver named in the contract, is excess to the insurance referred to in paragraph 1.

3. Thirdly, insurance available under a contract evidenced by a motor vehicle liability policy under which the owner of the automobile is entitled to indemnity as an insured named in the contract is excess to the insurance referred to in paragraphs 1 and 2.

Homeowner's Policies

Homeowner's policies will always have an "automobile" exclusion. However, there is the possibility that a "negligent supervision" claim can be advanced against the homeowner's policy- for example, if the insured homeowner failed to supervise a drunk driver (see, for example, Cella (Lit. guardian of) v. McLean, [1997] O.J. No. 2439, where a passenger who failed to prevent the drunk driver from operation the vehicle was covered by his homeowner's policy).

Umbrella Policies

Many well-heeled insured drivers carry umbrella coverage in excess of auto and homeowner's policies. It is certainly worth asking at EDs whether any excess or umbrella coverage exists.

Insurance Brokers?

We have one claim where the tavern we sued has no insurance coverage based on a material misrepresentation. The tavern, a Brampton nightclub, had insured itself as a convention centre. It gave no notice to its insurer that it operated a bottle-service party hall.

We are currently contemplating suing the insurance broker for negligently issuing the policy.