Ontario’s Courts – creative interpretation to find coverage?

Having celebrated our nation this past weekend, I’m reminded that we as Canadians have much for which to be thankful!

One of the cornerstones to our culture – often absent in other parts of the world – is the high esteem in Canada for justice, the rule of law and due legal process.

To be respected, the law – criminal and civil – needs to be interpreted and applied by the courts in a manner that is generally understood, and seen to be fair and consistent in the eyes of the common citizen.

But in some situations involving insurance, lay persons find the result counter-intuitive.  It almost appears that Ontario courts sometimes bend over backwards to find coverage.  And when they do, all of us pay premiums to indemnify someone who, on the face of their action, would appear not to have qualified for coverage.

Example #1 – Shah v. Beckamon – Ontario Superior Court of Justice, July 2006 - In this situation,  the insured driver possessed an Ontario G1 licence, requiring that she be accompanied by a fully licensed driver with at least 4 years of driving experience.

The driver who usually accompanied her was not available, so the insured headed out onto a busy Toronto street alone for the purpose of purchasing milk.  Approximately 3 km. down the road she turned into a strip mall parking lot where she hit a pedestrian.  When the pedestrian sued, the trial judge decided that the Ontario Highway Traffic Act (HTA) requiring proper licensing, only applied to public roadways.

Because the accident took place in a parking lot – even though the driver had used public roads to get to that parking lot – the insurance company was required to pay defence costs and any subsequent indemnification.

Example #2 -Tut v. RBC General Insurance Company, Ontario Superior Court of Justice, February 2011 – This 20 year old driver with a G2 licence, was required by law to drive only with a blood alcohol level of 0%.  This driver was injured in a vehicle accident and alcohol was discovered in his system, which was not only a breach of the HTA, but also the insurance policy Statutory Conditions.  He was driving his mother’s car.

Predictably, the insurer denied coverage.

However, the court held that although the young man had been drinking at a birthday party (at which his mother was present) both the young man and his mother had reason to believe that his 6-hour sleep was sufficient to eliminate the alcohol from his system.  In other words, although they were wrong and he was driving with an alcohol level over 1½ times the legal limit for any driver, the court overlooked the transgression and ordered the insurance company to pay the claim.

Tags: canada, courts, coverage, interpretation, judgment, legal system, settlement, shah v. beckamon, tut v. rbc general