Appeal court clarifies insurance rules

The involvement of an automobile when someone suffers an injury isn’t sufficient on its own to claim statutory accident benefits or indemnity for damages from an insurer, the Ontario Court of Appeal has ruled.

“The use or operation of the automobile must have directly caused the injury,” wrote Justice Eleanore Cronk in a case involving an unusual car-jacking type of incident in which the court tried to clarify its modified causation test.

Applying its test, the Court of Appeal overturned most aspects of the order issued by the motions judge and ruled largely in favour of the insurer in Martin v. 2064324 Ontario Inc. (Freeze Night Club). The appeal court decision, issued on Jan. 17, stemmed from an assault outside a Toronto nightclub more than seven years earlier.

Paul Martin, a part-time audio technician, was loading his car after leaving work at the nightclub at 2:20 a.m. in April 2005 when two unknown men assaulted him. During the assault, the pair hit him on the back of the neck, assaulted him with pepper spray, and forced him into the trunk of his car. They then ordered Martin into the car to help operate the standard transmission while still hitting him on the head. Soon after, they forced him out of the car. The suspects drove over Martin’s right foot as they attempted to flee and soon abandoned the car.

Certas Direct Insurance Co. denied Martin’s claims for no-fault statutory accident benefits and indemnity for damages under his automobile policy. The insurer concluded Martin wasn’t injured as a result of an “accident” within the meaning under the statutory accident benefits schedule or the use or operation of an automobile as set out in the Insurance Act.

Superior Court Justice Douglas Gray denied Certas’ motion for summary judgment and concluded Martin’s vehicle was “part of the instrumentality” through which he was assaulted.

The Court of Appeal, however, found Gray “failed to address and apply the second branch of the modified causation test” previously set out in Greenhalgh v. ING Halifax Insurance Co. That second branch asks whether there was an intervening act that resulted in the injuries and wasn’t part of the “ordinary course of things” in using or operating a vehicle.

In the case of the injuries inflicted upon Martin, “there is a strong argument that Mr. Martin’s car was nothing more than the venue where many of the assaults occurred,” wrote Cronk.

“Forcibly placing a person into the trunk of a car is not in the ‘ordinary course of things’ associated with the use or operation of a vehicle,” she added.

The Court of Appeal applied the same test last year in Downer v. Personal Insurance Co. In that case, it ruled against a plaintiff who suffered injuries related to an attack while in his car at a gas station.

Sergio Grillone, who represented Martin, agrees that if an incident is a “pure assault,” that isn’t what auto insurance is supposed to cover. However, in this case the car “was not just the venue” for the injuries suffered by Martin, says Grillone, a Toronto lawyer.

While granting most of Certas’ motion for summary judgment, the Court of Appeal concluded there was a genuine issue for trial on the injuries to Martin’s right foot that he sustained when the assailants ran him over. At the same time, the court suggested Certas could argue at trial this injury was an intentional tort and “outside the ordinary course of things” associated with the use or operation of a vehicle.

That part of the ruling has the potential to create uncertainty, says Ralph D’Angelo, senior counsel at the Hamilton, Ont., office of Gowling Lafleur Henderson LLP. “How do you deal with isolated injuries in the context of someone who has suffered an array of injuries during one criminal event?” asks D’Angelo, who was in-house counsel in the insurance industry before joining Gowlings.

“The definitions don’t say anything about intentions.”

At the same time, D’Angelo says the Court of Appeal is trying to establish some boundaries for claimants. “We are dealing with automobile insurance policies. There have to be some borders.”

Grillone is reviewing the decision with his client to decide whether to seek leave to appeal to the Supreme Court. But he says he’s happy the Court of Appeal found there’s an issue for trial on the injuries to Martin’s foot.

Ryan Naimark, who acted for the insurer in both Martin and Downer, says while the Court of Appeal indicated it may accept that a portion of the events can be considered an accident, this will be a rare occurrence. “I think the principle is that injuries that arise from an assault and battery will not constitute an accident under the accident benefits schedule,” says Naimark, a partner at Zarek Taylor Grossman Hanrahan LLP in Toronto.

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