Good news for auto insurers today from the Supreme Court. The insurers’ appeals in Citadel General Assurance Co. v. Vytlingam and Lumbermens Mutual Casualty Co. v. Herbison were successful. Both cases turned on the interpretation of the phrase, “arising directly or indirectly from the use or operation of an automobile”. Today’s rulings will dictate a considerably narrower interpretation than the one applied by the Ontario Court of Appeal. The Supreme Court also distinguished its own earlier decision in Amos v. Insurance Corp. of British Columbia, whose two-part test has hitherto been the Rosetta stone in “ownership, use or operation cases”.
Both of today’s rulings were made by a unanimous court, in which the reasons were written by Mr. Justice Binnie.
In this case, the plaintiff Michael Vytlingam had been catastrophically injured when the car in which he was driving was struck by a boulder thrown from a North Carolina overpass by “two local thrill seekers…high on alcohol and drugs”. The miscreants had driven to the overpass in a car that had liability insurance limits of only US$25,000 (a very small amount these days!)
The issue before the court was whether Vytlingam and his family, who were Ontario residents, were entitled to access their “underinsured motorist” insurance coverage (OPCF-44R). The answer to that question, in turn, depended on whether the injury to Vytlingam had arisen, “directly or indirectly from the use or operation of an automobile”.
Amos v. Insurance Corp. of B.C.
In both Vytlingam and Herbison, the Court of Appeal had relied on an earlier ruling of the Supreme Court of Canada in Amos v. Insurance Corp. of British Columbia. An important consequence of today’s decisions is that Amos is to be read more narrowly than lower courts have done to date.
The Amos case involved a dispute over no fault benefits and the Supreme Court had had to interpret the phrase, “in respect of death or injury caused by an accident that arises out of the ownership, use or operation of a vehicle”. Justice Major had devised a two-part “relaxed causation” test, which has been widely applied ever since.
The first part of the Amos test addresses “purpose”: Did the accident result from the ordinary and well-known activities to which automobiles are put?
The second element is the “causation” requirement: Is there some nexus of causal relationship (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 between the injuries and the ownership, use or operation of the vehicle merely incidental or fortuitous?
The S.C.C.’s modified test
The Court distinguished Amos, saying that the latter case had involved a dispute over no-fault statutory accident benefits. Thus, in that case, the focus was on the use of the claimant’s car, where in both of today’s appeals, the focus was on the use of the tortfeasor’s car.
The Supreme Court put forward a somewhat different two-part test to suit the different facts of this underinsured motorist claim:
- Is the claim in respect of an inadequately insured tortfeasor whose fault occurred in the course of using a motor vehicle as a motor vehicle and not for some other purpose (the “use” test)?
- Is the chain of causation linking the claimed loss or injuries to the use and operation of the motor vehicle, which is shown to be more than simply fortuitous or “but for”, unbroken (the “causation” test)?
In answering the first question, the Court rejected the insurer’s argument, that transporting rocks to an overpass for the purpose of throwing them at passing motorists did not constitute use of a motor vehicle as a motor vehicle. To the contrary, Justice Binnie said that transportation, “is what motor vehicles are for”.
It was on the causation test that the insurer’s submissions found favour with the Court. Justice Binnie held that the majority in the Court of Appeal had incorrectly applied a “but for” causation test that cast the indemnification net too widely. In Justice Binnie’s opinion, “for coverage to exist, there must be an unbroken chain of causation linking the conduct of the motorist as a motorist to the injuries in respect of which the claim is made”. [Emphasis added]
In colourful language, Binnie J. said that the approach to causation that had been taken by the majority in the Court of Appeal, “invites indemnification claims for everything from stag party assaults…to self-immolations”. It also quoted from an equally colourful turn of phrase by counsel for Citadel: “No amount of carrying rocks all over the country for whatever purpose gives rise to one iota of civil liability. Liability comes from dropping those rocks.”
The facts in this case were also quite unusual. Justice Binnie stated the main elements of the case succinctly in one opening sentence:
Can it be said that when a hunter steps away from his pick-up truck under cover of darkness, leaving the engine running, and negligently shoots at a target he cannot see 1,000 feet away, and hits a companion in the leg thinking him to be a deer, that the injury arose “directly or indirectly from the use or operation” of the insured truck within the meaning of s. 239(1) of the Insurance Act, R.S.O. 1990, c. I.8?
Section 239(1) of the Insurance Act mandates liability coverage in Ontario auto owner’s policies and provides that the contract:
insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract and within the description or definition thereof in the contract, against liability imposed by law upon the insured named in the contract or that other person for loss or damage,
- arising from the ownership or directly or indirectly from the use or operation of any such automobile; and
- resulting from bodily injury to or the death of any person and damage to property.
So once again, the question was whether the “loss or damage” arose “from the ownership or directly or indirectly from the use or operation” of the vehicle.
Justice Binnie acknowledged that “in a tragic case like the present, it is tempting to look to an insurer’s deep pockets as the only available source of compensation for a seriously injured and innocent victim” but he emphasized that the insurance in question was automobile insurance and that for there to be coverage, “some causation link [between the injury and the ownership, use or operation of the vehicle] must be found and it must constitute a link in an unbroken chain”. [Emphasis in original]
Here, the Court accepted that a 1990 amendment to s. 239(1), adding the word, “indirectly”, had relaxed the causation requirement somewhat. But even applying that lower standard, it concluded that the shooting of the plaintiff “was a tort quite independent of the use and operation of [the tortfeasor’s] truck”.
As it had done in Vytlingam, the Court distinguished the two-part test in Amos, as having been laid down in a different context. Instead, it put forward the following test, which mirrored the one in Vytlingam:
- Is the claim in respect of a tort committed by the insured in using his motor vehicle as a motor vehicle and not for some other purpose?
- Is there is an unbroken chain of causation linking the injuries to the use and operation of the insured vehicle which is shown to be more than simply fortuitous or “but for”?
As it did in Vytlingam, the Court held that the “use” test had been met, but the “causation” test had not. Although the tortfeasor was using his vehicle in a usual and ordinary way (i.e., transportation), that use was interrupted when he began hunting. As Binnie J. observed, “Herbison doesn’t complain about Wolfe’s use and operation of the insured truck. He complains about the gunshot that put the bullet in his knee.”
One corollary of today’s decisions that we will watch with interest, is the effect that Herbison and Vytlingam will have on the interpretation of automobile exclusion provisions in non-automobile insurance situations. For example, homeowner’s and CGL policies typically exclude coverage for ownership, use or operation of “motorized vehicles”. Frequently, there is a contest between an auto insurer and a homeowner’s insurer, with each arguing that its policy does not cover. Will a narrower construction of auto policies result in courts more readily finding coverage in non-auto policies? We’ll have to wait and see.