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Legislature has ‘drawn a line in the sand’ regarding Off-Road Vehicles Act exemption, court finds

Tuesday, November 29, 2022 @ 3:29 PM | By Amanda Jerome

Last Updated: Wednesday, November 30, 2022 @ 11:45 AM

In a decision finding a “dirt bike was not exempt” from the Off-Road Vehicles Act (ORVA), the Ontario Court of Appeal has upheld a lower court decision, ruling that the Divisional Court “correctly concluded” that the ORVA exemption “applies only” to competitions sponsored by motorcycle associations.

In Beaudin v. Travelers Insurance Company of Canada, 2022 ONCA 806 the court heard that the respondent, Michael Beaudin, was “severely injured” while “driving his dirt bike in a motocross competition.”

“Tragically,” the court noted, “he now has paraplegia” and “will need to use a wheelchair for the rest of his life.”

According to court documents, Beaudin had an automobile insurance policy with the appellant, Travelers Insurance Company of Canada. However, his dirt bike was “not listed as an insured vehicle under this policy.”

Beaudin applied to his insurer for statutory accident benefits, but “Travelers denied coverage on the basis that the incident was not an ‘accident’ as defined in the Statutory Accident Benefits Schedule – Effective September 1, 2010, O. Reg. 34/10 (the ‘SABS’)” because Beaudin’s dirt bike was “not an ‘automobile’ within the meaning of s. 224(1) of the Insurance Act” and “s. 3(1) of the SABS which states that an ‘accident’ must involve an ‘automobile.’ ”

According to court documents, Beaudin “unsuccessfully applied to an adjudicator of the Licence Appeal Tribunal (‘LAT’) for a declaration that he was entitled to accident benefits.”

In October 2018, the LAT adjudicator “decided in favour of Travelers,” finding that “a dirt bike driven in any closed course competition was, by operation of Regulation 863, exempt from the ORVA and therefore not an ‘automobile’ under the Insurance Act.” Therefore, the “incident did not qualify as an ‘accident’ under the SABS.”

However, in September 2019, the tribunal’s associate chair allowed Beaudin’s “request for reconsideration,” setting aside the adjudicator’s decision and holding that “the proper interpretation of Regulation 863 was that only closed course competitions and rallies that were sponsored by a motorcycle association were exempt from the provisions of the ORVA.”

The LAT’s associate chair determined that the “adjudicator had erred in holding that the purpose” of the ORVA is to “protect the public when off-road vehicles are driven in public areas.”

This led Travelers to appeal the LAT’s reconsidered decision to the Divisional Court on “a question of law, pursuant to ss. 11(1) and (6) of the Licence Appeal Tribunal Act.”

However, the Divisional Court dismissed the appeal, “finding that the Associate Chair made no error of law in his decision.” The Divisional Court also determined that the associate chair was “correct to follow the modern contextual interpretive approach in interpreting s. 2(1)5 of Regulation 863.”

Travelers appealed further to the Court of Appeal, raising three grounds: 1) “The Divisional Court erred by concluding that this court in Benson had already ruled that only sponsored closed course competitions are exempt from the ORVA.” 2) “The Divisional Court erred in accepting the Associate Chair’s conclusion that the purpose of the ORVA is to promote universal insurance coverage for all drivers of off-road vehicles.” And 3) the Divisional Court “erred in failing to properly interpret the ORVA within the entire legislative scheme of auto insurance.”

In a decision released Nov. 23, Justice Steve Coroza, writing for the Court of Appeal, agreed with the “conclusion of the Divisional Court that the correct approach to interpreting the exemption in s. 2(1)5 of Regulation 863 is the application of the modern principle of statutory interpretation as set out in” Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 and “followed in Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42.”

He noted that the “ ‘text, context and purpose’ principle applies equally to regulations.”

“However,” he added, “regulations are also read in the context of their enabling Act, having regard to the language and purpose of the Act in general, and more particularly the language and purpose of the relevant enabling provisions.”

Justice Coroza explained at the beginning of his analysis that the “interpretation of the words ‘at a closed course competition or rally sponsored by a motorcycle association’ must have regard to the text and purpose of the ORVA and the related legislation which forms a comprehensive scheme of motor vehicle insurance.”

On the first issue, Justice Coroza acknowledged that to the “extent that the Divisional Court held that this court had expressed firm views of the interpretation of s. 2(1)5,” this was “in error.”

“That said,” he added, “this error is inconsequential.”

In his opinion, the “obiter comments of this court” in Benson v. Belair Insurance Company Inc., 2019 ONCA 840 “about s. 2(1)5 and closed course competitions are correct.”

“That interpretation is entirely consistent with the purposes of the overall scheme of automobile insurance,” he wrote, not giving effect to the first ground of appeal as it did “not impact on the disposition of the appeal.”

On the second issue, Justice Coroza noted that the Divisional Court “identified that the ORVA has multiple purposes, one of which is to promote the safe operation of off-road vehicles, and one of which is to protect innocent victims of automobile accidents through the imposition of mandatory insurance.”

He explained that “any interpretation of the ORVA must keep in mind that it is just one piece of a comprehensive scheme of automobile insurance and that it must be read harmoniously with other legislation that makes up that scheme.”

“The goal of the statutory automobile insurance scheme is to protect victims of automobile accidents by promoting universal coverage. Accordingly, any interpretation of the ORVA must take into account the intent of the overall legislative scheme of automobile insurance,” he added, referencing the court’s decision in Matheson v. Lewis, 2014 ONCA 542.

On the third issue, Justice Coroza found that the Divisional Court’s “conclusion that closed course competitions are not exempt from the ORVA unless they are sponsored by a motorcycle association is consistent with the decision of this court in” Haliburton (County) v. Gillespie, 2013 ONCA 40.

Haliburton, he wrote, “confirms that the starting point is a general rule that off-road vehicles need to be insured under ss. 15(1) and (2) of the ORVA, and that only narrow exceptions are carved out from that general rule.”

Haliburton also confirms that one of the purposes of the ORVA is public safety. Any interpretation of the legislative text that would drastically undermine that objective would not be a harmonious reading contemplated by Rizzo Shoes,” he added, dismissing the third ground of appeal.

The judge noted that the legislature has “drawn a line in the sand – they have decided that only those competitions (closed course or rallies) that are sponsored competitions by motorcycle associations are exempt from the ORVA.”

“If these events are to be held and the participants do not wish to be bound by the ORVA, then they are required to obtain the mandated sponsorship. That interpretation fosters the goals of the ORVA and is consistent with the overall scheme of automobile insurance in Ontario. It is also consistent with the decisions of this court in Haliburton, Matheson, and Benson,” he concluded, dismissing the appeal with Justices Eileen Gillese and Bradley Miller in agreement.

Neil Wilson, a partner at Stevenson Whelton LLP and counsel for the respondent with Sara Romeih, said the “broader takeaways for the profession” in this care are that the “Court of Appeal looked at the statutory scheme and emphasized the importance of looking at the entire legislation in the context of all the statutes involved in the scheme.”

In this case, Wilson noted, the statutes included the Insurance Act, the Compulsory Automobile Insurance Act, and the ORVA.

The Court of Appeal “held that the clear goal of the legislative scheme is promoting universal insurance coverage, with limited exceptions, and also promoting safe driving of off-road vehicles. And those two goals, considered together, lead to the ultimate conclusion that there would be coverage in this case,” he explained.

Wilson emphasized the “importance of looking at the underlying purpose of the legislation and the statutory scheme as a whole” with the “goal of determining what the legislature is trying to accomplish with the specific legislation at issue.”

Peter Cho, a partner at Smitiuch Injury Law and counsel for Beaudin at the court below, said “one of the most important things that lawyers can learn from this decision is that it's important to hold the insurer, Travelers, accountable and tied down to their initial position on the denial of benefits.”

Cho noted that the Beaudin’s incident happened in 2017 and litigation lasted for almost four years “because of the complete denial of his claim.”

Cho and the firm’s accident benefits manager, Chris Jackson, narrowed the “agreement with Travelers down to a narrow issue and a singular question” and submitted an “agreed statement of facts.”

“You will see in the Divisional Court decision, and also in the Court of Appeal decision, that both [courts] referenced that the parties agreed at the outset to narrow the issue and narrow the facts,” he said, noting that Travelers attempted to introduce different “perspectives on the same issue, sometimes citing other legislation” throughout the years.

However, Cho noted, the Court of Appeal at paragraph 81 declined to deal with new submission on appeal. Cho encouraged lawyers to keep insurers “tied down to what the argument really” is and “what the narrowed scope” is.

“That’s the main takeaway of what lawyers can learn from the decision: set the parameters of how the dispute will be litigated early on, maintain those boundaries, and try and get some agreed facts,” he added, noting this was a “unique case” with “a unique statutory interpretation argument.”

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