S.C.C. Allows Appeals in Herbison and Vytlingam

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.

Vytlingam

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:

  1. 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)?
  2. 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.”

Herbison

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,

  1. arising from the ownership or directly or indirectly from the use or operation of any such automobile; and
  2. 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:

  1. 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?
  2. 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.”

Postscript

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.

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2 Responses to S.C.C. Allows Appeals in Herbison and Vytlingam

  1. David Cheifetz says:

    Another place to watch, for the next few years, is the effect of Herbison on the S.C.C.’s decision in Heredi v. Fensom on the interpretation of Highway Traffic Act limitation periods, for example in Giustini v Poppa – see the discussion here – and the Ont C.A.’s suggestion in GCNA v Mercedes-Benz that its own Karakas v. General Motors might have been wrongly decided.

    Recall that what happened in Karakas was that a car parked in a house-garage caught fire due to some electric component failure. The house attached to the garage (and the garage) were destroyed. The action was commenced more than 5 years after the fire. The issue was whether prescription was the old Highway Traffic Act provision – 2 years for damages occasioned by a motor vehicle or the old 6 year limitation period for actions in tort.

    Do we now use, for the remaining HTA cases and the interpretation of the HTA limitation provision, an analogous approach to what the S.C.C. set out in Herbison? If so, from Herbison:

    1. 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?

    2. 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”?

    I think we should be able to agree that 2 is satisfied in Karakas. There was an unbroken chain. That means the question is 1: “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?”

    But, what if we are already supposed to be using what amounts to proposition 1 of Herbison in Karakas-type cases; that is, in the analysis of the application of the old Highway Traffic Act “damages occasioned by a motor vehicle” limitation?

    Some readers will recall that in Heredi v. Fensom, [2002] 2 S.C.R. 741, 2002 SCC 50 the S.C.C. wrote, in para. 35:

    35. In other words, the true intent of the statute is that “damages occasioned by a motor vehicle” requires that the presence of a motor vehicle be the dominant feature, or constitute the true nature, of the claim. Conversely, claims, whether framed in contract or in tort, where the presence of a motor vehicle is a fact ancillary to the essence of the action, ought not be regarded as within the scope of that phrase.”

    If we apply Herbison, by analogy, isn’t it the case that there was at least “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”? This isn’t a mechanical application of but-for. The involvement of the vehicle in the fire wasn’t simply “fortuitous”.

    On the other hand, if we argue that Herbison is saying about the same thing for the interpretation of “arising from the ownership or directly or indirectly from the use or operation of any such automobile” as Heredi did for “damages occasioned by a motor vehicle”, then I suppose Herbison doesn’t provide any real help. After all, in Heredi, at para 32, the S.C.C. said that the mere “presence of a motor vehicle presence of a motor vehicle in the chain of causation leading to damages for which the action is brought is [not] sufficient to invoke the limitation [period]”. And, at at para 33: “While there may be instances in which a motor vehicle might be the central player in the causation of damages while not engaged in travelling on a highway, these instances will be somewhat rare.” The vehicle in Karakas wasn’t “engaged in travelling on a highway”. Actually, it wasn’t engaged in travelling at all (except in time, but that doesn’t matter.) It was parked in the garage. However, the fire was still held to have been caused by a motor vehicle for limitation purposes; more precisely, the action was for “damages occasioned by a motor vehicle”. One could reasonably argue that parking the vehicle in a garage where it will stay until it is next used is the use of the vehicle as a vehicle and not for some other purpose.

    The quotations from paragraphs 32 and 33 of Hensom certainly seem like versions of proposition 1 in Herbison. So maybe Herbison doesn’t help to answer the Karakas/Mercedes-Benz conundrum because, if there is reason to doubt Karakas despite Heredi, then there’s nothing in Herbison to dispel the doubt.

    Or, maybe there is. Look again paragraph 1 of Herbison. What you’re about to read is rewritten to accommodate the facts of Karakas .

    1. Can it be said that when a vehicle owner leaves his defective, negligently maintained, vehicle in the garage, and the vehicle catches fire because of the defect in the vehicle and the fire damages an adjacent building, that the damage was occasioned by a motor vehicle within the meaning of the Highway Traffic Act? The Ontario Court of Appeal gave an affirmative answer to this question so dismissed the action. It reasoned (accepting the motion judge’s reasoning – 2004 CanLII 48168 at para 22) that “[t]he very presence of the motor vehicle and the alleged defect in the motor vehicle are central to and the essence of the claim. The appellant homeowners’ position is that that not every circumstance or activity associated with the use or operation of a motor vehicle will engage the limitation provision of the HTA and that the parking of a defective motor vehicle in the garage “was an act independent of the ownership, use or operation of” the vehicle.” I disagree. I agree with Court of Appeal. Applying the Supreme Court of Canada’s substantive approach in Heredi, in essence echoed in Herbison, I conclude that the claim is one for “damages occasioned by a motor vehicle”. The appeal should be dismissed.

    On the whole, the better argument seems to be that Herbison supports Karakas. Having said that, the statement in para. 10 of Herbison that one needs a “causal connection” between the “damage” and the “basis of … tortious liability” is odd because tortious liability already requires a causal connection of some kind, even if it’s only the “possibility” of such a connection. That is, there can’t be legal liability for damage absent some sort of legal relevant causal connection, whether actual or fictional.

    Oh well, interesting times.

    Cheers

    David Cheifetz

  2. David Cheifetz says:

    Bearing in mind that the SCC made it clear in both cases that the issue was causation, I think, Vytlingham and Herbison have to be understood to be about proximate cause (remoteness) not factual cause. Then, however, the problem is that the SCC hasn’t given us any clear enough advice on when what is, in fact, part of the factual causal chain will not be part of the legal factual causal chain. It has told us that the event won’t be part of the legal chain where a subsequent event (stated to be a tortious event, though I wonder if the SCC meant to go that far) breaks the chain of causation. But, unless they’re tell us that any subsequent tortious event necessarily breaks the chain – I doubt that – then they haven’t told us how to tell before going to court to find out.

    Look at least at paras. 11 and 12 of Herbison. The tell me what you think these paragraphs tell us about the SCC’s understanding of but-for, of causa sine qua non.

    11. …. In para. 21, Major J. quoted with approval from Kangas v. Aetna Casualty & Surety Co., 235 N.W.2d 42 (1975), where the Michigan Court of Appeals stated, at p. 50: . . . there still must be a causal connection between the injury sustained and the ownership, maintenance or use of the automobile and which causal connection is more than incidental, fortuitous or but for. [Emphasis added by Binnie J.]

    12. In this appeal, of course, we are not concerned with no-fault statutory accident benefits payable to an insured. In Amos, the focus was necessarily on the use of the claimant’s car; the focus here is on the use of the tortfeasor’s vehicle. The questions are, firstly, whether the Herbison claim is in respect of a tort committed by Wolfe in using his motor vehicle as a motor vehicle and not for some other purpose and, secondly, whether there is an unbroken chain of causation linking the Herbison injuries to the use and operation of the Wolfe vehicle which is shown to be more than simply fortuitous or “but for”. The first question is easily disposed of. Wolfe was using his vehicle for transportation, which is its usual and ordinary use. It is the second question (causation) that is the claimant’s difficulty. Wolfe interrupted his motoring to start hunting. 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. [my underlining]

    14. … It is simply not enough to find that the use or operation of the tortfeasor’s motor vehicle “in some manner contributes to or adds to the injury” … [emphasis in original]

    In Vytlingam, at para. 18, Binnie J used “effective cause”: “Firstly, even if transporting rocks across the countryside had been the effective cause of the Vytlingams’ injuries, which it wasn’t …”

    There are similar comments elsewhere in both cases. Has the SCC has now explicitly equated but-for with incidental or fortuitous? That would be startling, though that’s seemingly what the text asserts.

    Let’s assume the SCC didn’t mean to equate coincidental or fortuitous consequences with but-for conduct or consequences, then what?

    We conclude that the SCC has it said the cases have consequences which are incidental or fortuitous. They’re not enough. And said we have consequences which might be more than merely incidental or fortuitous in which case they are but-for consequences, but these are still not enough. We still need something more. What’s that something more?

    If the SCC didn’t mean to equate coincidental or fortuitous with but-for, then hasn’t the SCC just said that causation, in these cases, required conduct which was more than incidental, and more than fortuitous, and more than but-for?

    What’s more than but for?

    Or was the SCC saying that this was but-for conduct but not relevant but-for conduct. If so, the SCC moved from factual causation to proximate cause – the remoteness control.

    Let’s go back to para 14 of Herbison, where the SCC specifically admits that Wolfe’s vehicle related conduct could be held to be contributing factor. If some conduct is a contributing factor, it is at least a scientific, historical, factual cause. I’m assuming that the SCC didn’t intend to overrule Athey v Leonati or, for that matter, Resurfice v Hanke. And, there’s no suggestion that the concept of causation the SCC is using in Herbison or Vytlingam is somehow something unique to the meaning of causation for the insurance policies? Or, was that what it was trying to tell us.

    But, if that’s the case, wouldn’t we have at least some clear enough explanation of that? Perhaps when the SCC, in Vytlingham, called on the standard insurance policy interpretation cases to explain what it was doing?

    So, if we don’t assume that his apparent problem – if it is a problem not just an apparent problem – in the court’s use of causation isn’t just an example of a slip ‘twixt pen and lip (or, in this case, lip and pixel), then what, now?

    David Cheifetz

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