In death and injury actions,
Supreme Court of Canada holds that, despite Ontario statute barring pecuniary
recovery for motor vehicle negligence in Canada and United States, concurrence
of two forms of negligence as equal causes of injuries triggered coverage by
both auto negligence and work site insurance policies
Insurer No. 1 insured Roy’s
Electric (a.k.a. 539938 Ontario Limited), the defendant contractor under an
automobile policy. For the purposes of a building project involving a laying of
cable, defendant also held a commercial general liability policy (CGL) from
insurer No. 2. (There was an additional excess coverage or “umbrella” policy
from insurer No. 3 designed to cover any shortfall under the first two
policies.) The CGL Policy excluded coverage for bodily injury or property
damage arising out of the ownership, use or operation of an automobile, and for
bodily injury or property damage with respect to which an automobile policy was
“in effect.”
On December 5, 1994, adverse
weather conditions suddenly arose at the work site so Douglas Zub, a
defendant’s shareholder and employee, did a rapid clean up so as to leave the
site early. He stowed a sign and its shaft inside the truck but left the steel
base plate lying unsecured on the tow bar of a compressor connected to the rear
of the truck. As Mr. Zub was driving along the highway, the plate flew off the
bar into an oncoming school bus, killing one child and seriously injuring three
others.
The representatives of the
deceased and injured children filed civil damage suits in the Ontario courts
against Roy’s Electric as contractor and Zub as owner and driver of the truck.
The suits alleged that the contractor-defendant through its employee had been
careless at the work site as well as in operating the truck on the highway.
The Insurance Act, R.S.O. 1990,
c. I.8, s. 267.1 barred the plaintiffs from claiming pecuniary loss in relation
to negligent operation of the vehicle. It provides in pertinent part that
“[d]espite any other Act and subject to subsections (2) and (6), the owner of
an automobile, the occupants of an automobile and any person present at the
incident are not liable in a proceeding in Ontario for loss or damage from
bodily injury or death arising directly or indirectly from the use or operation
of the automobile in Canada, the United States of America or any other country
designated in the Statutory Accident Benefits Schedule.” The plaintiffs can,
however, claim against the contractor for pecuniary loss caused by the
negligence of its employees at the work site, this being an action distinct
from that of motor vehicle negligence.
On plaintiffs’ motion to
determine insurance coverage, the motions judge found that there were two
concurrent causes of the accident: (1) the negligent clean‑up of the work site
and (2) the careless operation of the vehicle. He also concluded that the CGL
policy covered pecuniary and non‑pecuniary losses that were not auto‑related,
while policy No. 1 covered non‑pecuniary losses that were auto‑related. Thus,
all three policies provided coverage. Insurer No. 2 sought review of the
decision of the Ontario Court of Appeal affirming the ruling. The Supreme Court
of Canada granted review but dismisses the appeal.In the Court’s view, the
motions judge properly found that there were two concurrent causes, neither
being dominant, where the accident would not have occurred but for both causes.
“The cause of the accident was not solely the ‘use or operation’ of the
automobile. The work site negligence cannot be characterized as being part of
the loading of the automobile. Nor was the use of the automobile the ‘proximate
cause’ of the accident. His conclusion in respect of causation is reasonable
and supported by the law and by the agreed statement of fact, and should not be
interfered with.” [para. 40] In the absence of express exclusion of coverage
where the use of a vehicle was involved in part, the second of CGL insurer was
liable in respect of the aspects of the loss which its policy did not expressly
rule out. The loss which was not recoverable under the automobile policy was
not one for which the policy could be found to be in effect.
“It is a given that there is a
motor vehicle policy ‘in effect.’ This does not automatically mean that there
is no coverage under the CGL policy. The extent to which the motor vehicle
policy is ‘in effect’ must be determined within the context of the Insurance
Act and in accordance with the principle that exclusion clauses are to be given
a narrow interpretation.”
“As found by the courts below,
the Insurance Act allows plaintiffs to exercise an unfettered right to sue
defendant owners, drivers and persons present at the scene of an accident for
negligence other than that excluded by s. 267.1. Therefore, where both auto‑related
negligence and non‑auto‑related negligence of the same person contributed to
the same bodily injury, there must be a percentage apportionment of fault to
each type of negligence, just as there would be an apportionment if the injury
were caused by two different people.”
“In these circumstances, the
automobile policy cannot be said to be ‘in effect’ with respect to pecuniary or
non‑pecuniary loss attributable to non‑auto‑related negligence. Thus, clause
(e)(2) does not totally exclude coverage under the CGL policy. Rather, only
that portion of the loss that is attributable to auto‑related negligence is
excluded by clause (e)(2).” [paras. 64-66]
Citation: Darken v. 539938
Ontario Ltd., 2001 A.C.W.S.J. 232078; 108 A.C.W.S. (3d) 893 (Can. Sup. Ct.
October 19).
**** Mr. Richard Ehrlich is a specialist in Corporate, Estate and Personal Financial Planning in Florida. In the course of his career, he has prepared hundreds of estate plans and helped hundreds of small businesses navigate the various issues involving insurance, retirement and employee retention. He has helped numerous families deal with the difficulties of taking care of elderly relatives and assisted with all of their long-term planning and long-term care needs. Finally, he has helped investors with their losses in unsuitable investments. LinkedIn Profile: https://www.linkedin.com/in/richard-ehrlich-777b513/; Attorney Profile: http://www.eldercounsel.com/profile/richard-ehrlich-ehrlich-law-center-pa/; Attorney Profile: https://solomonlawguild.com/richard-ehrlich%2C-esq; Attorney News: https://attorneygazette.com/richard-ehrlich%2C-esq#c35a1098-f039-43ab-b0dc-06cff6dabf61
