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Loss Transfer Between Insurers
Published in the September 2008 issue of Litigation Notes - View Article
Synopsis: A truck had to back onto a highway at night and asked for a spotter, but the driver failed to provide an adequate light or a reflective vest. The spotter was struck by a vehicle on the highway. The truck was “involved in the accident” and its insurer was required to contribute to payment of the damages
The Insurance Act of the province of Ontario includes a scheme for payment of accident benefits to the victim of an automobile accident. The benefits are payable, in the first instance, by the victim’s insurer. However the latter may apply for a transfer of the loss to certain other insurers of vehicles “involved in the accident”. A recent decision of the Ontario Superior Court of Justice considers the application of the loss transfer rules.
In the first place, the scheme calls for the insurers to attempt to allocate fault themselves. If they are unable to do so, the issue is to be determined by an arbitrator under the Arbitrations Act.
The case arose out of an accident which occurred on an early and dark morning in December. Tim Wry was a young man employed at a gas service station located on a country road. A fuel truck which had delivered fuel to the station was ready to depart. The driver asked Wry’s assistance as he needed to back up onto the country road. Wry stepped onto the road to assist in marshalling the truck and was struck by a vehicle proceeding along the road.
Wry’s insurer paid the statutory benefits and applied to have the loss transferred to the insurers of the fuel truck and the two vehicles which struck Wry.
The claim was heard by an arbitrator who found that the driver of the fuel truck was 30% responsible and the owner of the station (Wry’s employer) 20% responsible. The arbitrator found Wry 50% responsible. The drivers of the two vehicles which struck him were without negligence.
The insurer of the fuel truck (Royal) appealed on two grounds. It argued that the fuel truck was not “involved in the accident” and that there was no basis for allocating any loss to it. It also challenged the finding that the drivers of the two cars which struck Wry were without negligence. Wry’s insurer (Aviva) appealed the allocation of responsibility to the owner of the station. As the owner of the station was not the owner of any relevant insured vehicle, it was clear that Aviva would not benefit from any loss transfer as a result of allocation of responsibility to the station owner. It argued that the arbitrator was limited to allocating responsibility among parties which are subject to the loss transfer scheme. Aviva’s argument consumed little time in the hearing of the appeal. There was a division in the meager authority on the point and the appeal judge upheld the arbitrator with little discussion.
All of these appeals failed. The appeal judge first found that significant deference was due to the findings of the arbitrator. She noted that the accident occurred in the dark, that Wry was dressed almost entirely in black and wore no reflective vest. It would have been virtually impossible to see and avoid him as he stepped onto the road.
The second issue raised by Royal involved a legal issue. Was the fuel truck “involved in the accident”. Clearly, it was not involved in a collision, but the sparse authority respecting the meaning of this phrase, appears to establish that it means something broader than “in collision with”. The appeal judge determined the issue by reference to the negligence of the driver of the truck. The driver asked Wry’s assistance, gave him a “useless pen light” as his only safeguard and neglected to suggest he wear a reflective vest. This led the appeal judge to the conclusion that “but for the . . . truck and the negligent actions of its driver, there would have been no accident.” While this is a practical result, it does appear to us to do violence to the construction of the phrase which requires that the truck be involved in the accident. Lovers of Flann O’Brien will be reminded of the wonderful bicycles which travel the roads of eternity, carrying in their metal structure the character and habits of their riders (who are also part bicycle). So it is, apparently, with the vehicles of our more prosaic Ontario country roads. They too are possessed by the negligence of their drivers and would no doubt be arrested by O’Brien’s policemen.
Aviva v. Royal
2008 Can LII 41817