Fridays with Rogers Partners

At our weekly meeting, Eli Feldman discussed the saga of Beaudin v. Travelers Insurance Company of Canada.

On June 15, 2023, the Supreme Court of Canada (the “SCC”) denied Travelers Insurance Company of Canada (“Travelers”) leave to appeal, marking the end of Beaudin v. Travelers Insurance Company of Canada, 2022 ONCA 806 (“Beaudin”). Before arriving on the SCC’s doorstep, Beaudin was originally heard by the Licence Appeal Tribunal (the “LAT”) before making its way through the Ontario Divisional Court (the “Ont. Div. Ct.”) and the Ontario Court of Appeal (the “ONCA”). Despite arriving at different conclusions, Ontario’s various judicial decisionmakers addressed the same basic question: was Mr. Michael Beaudin’s dirt bike required to be insured?

Background

On July 9, 2017, Mr. Michael Beaudin (“Mr. Beaduin”) was catastrophically injured while participating in the Rockstar Energy Motorcross Nationals, a closed-course dirt bike competition sanctioned by the Canadian Motorsport Racing Competition (the “CMRC”) (the “incident”).

Following the incident, Mr. Beaudin promptly applied for accident benefits under his automobile policy with Travelers.

Unfortunately for Mr. Beaudin, his dirt bike was not listed as an insured vehicle under the policy, leading Travelers to deny his bid for accident benefits. In Travelers’ view, the incident did not qualify as an “accident” under s. 3(1) of the Statutory Accident Benefits Schedule (the “SABS”) because it involved a vehicle that did not satisfy the definition of “automobile” as defined in s. 224(1) of the Insurance Act, R.S.O. 1990, c. I.8 (the “IA”).

Mr. Beaudin brought an application to the LAT to overturn Travelers’ denial of benefits.

Issue

Whether Mr. Beaudin’s injury resulted from an “accident” as defined in s. 3(1) of the SABS, thereby entitling him to accident benefits.

The Law

Section 3(1) of the SABS provides that an “accident” means:

“…an incident in which the use or operation of an automobile directly causes an impairment or directly causes damage to any prescription eyewear, denture, hearing aid, prosthesis or other medical or dental device.” [Emphasis added.]

Section 224(1) of the Insurance Act provides that an “automobile” includes:

“(a) a motor vehicle required under any Act to be insured under a motor vehicle liability policy, and

(b) a vehicle prescribed by regulation to be an automobile…”

Section 15(1) of the Off-Roads Vehicles Act, R.S.O. 1990, c. O.4(the “ORVA”)provides that:

“No person shall drive an off-road vehicle unless it is insured under a motor vehicle liability policy in accordance with the Insurance Act.”

Finally, s. 2(1) 5 of R.R.O. 1990, Reg. 863 (“O. Reg. 863”) exempts from the ORVA all “off-road vehicles driven or exhibited at a closed course competition or rally sponsored by a motorcycle association.” Section 1 of O. Reg. 863 defines “motorcycle association” as “a motorcycle club or association that has or is affiliated with a motorcycle club or association that has a published constitution and a membership roster of more than twenty-four persons.”

Application

Essentially, if Mr. Beaudin’s dirt bike was required to be insured under the ORVA, he would be entitled to accident benefits. Conversely, if Mr. Beaudin’s dirt bike was exempt from the ORVA, he would be out of luck.

LAT #1 (Initial Decision)

At first instance, the LAT found that Mr. Beaudin’s dirt bike did not qualify as an “automobile” within the meaning of the IA, rendering him ineligible to receive accident benefits.

Adjudicator Kowal interpreted s. 2(1)5 of O. Reg. 863 to exempt from the ORVA all off-road vehicles engaged in closed course competitions, irrespective of whether the competition was sponsored by a motorcycle association. Alternatively, Adjudicator Kowal found that if closed course competitions needed to by sponsored by a motorcycle association to be exempt, the CMRC qualified as a sponsoring motorcycle association based on its affiliation with the Alberta Motorcycle Sport Association (the “AMSA”).

Mr. Beaudin sought reconsideration of the initial decision.

LAT #2 (Reconsideration Decision)

On reconsideration, the LAT found that Mr. Beaudin’s vehicle was not exempt under the ORVA and O. Reg. 863 and, in turn, was required to obtain insurance under s. 15(1) of the ORVA. The Associate Chair found that Adjudicator Kowal erred in finding that the CMRC was a sponsoring motorcycle association by virtue of its affiliation with the AMSA.

Travelers appealed the LAT reconsideration decision to the Ont. Div. Ct.

Ont. Div. Ct.

The Ont. Div. Ct. dismissed Travelers’ appeal, finding that the Associate Chair made no error of law and justifiably followed a “modern contextual interpretive” approach when interpreting s. 2(1) 5 of O. Reg. 863.

Travelers appealed to the ONCA.

ONCA

On appeal, the ONCA flushed out the “modern contextual interpretive” approach analysis initially considered in the court below.

Borrowing the SCC’s words from Bell ExpressVu Limited Partnership v Rex [2002 SCC 42], Justice Coroza affirmed that:

“…the words of an act ought to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.”

Justice Coroza added that such principle applies equally to regulations, which:

“…must also be 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.”

In essence, Travelers argued that the purpose of the ORVA is to promote public safety and the proper identification and control of off-road vehicles. In the context of organized close course competitions (where drivers pose little risk to anyone but themselves), Travelers argued that public safety is not under threat, making it likely that the legislature intended to exempt Beaudin and other competitors from the risk pool when drafting the ORVA.

Justice Coroza rejected Travelers’ argument on the basis that a broad interpretation of the O. Reg. 863 exemption would defeat the remedial nature and purpose of the ORVA. According to Justice Coroza, the ORVA is a small piece of a larger single scheme of automobile insurance, broadly designed to promote the safe operation of off-road vehicles and protect innocent victims of automobile accidents through the imposition of mandatory insurance.

Again, s. 2(1)5 of O. Reg. 863 only exempts from the ORVA “off-road vehicles driven or exhibited at a closed course competition or rally sponsored by a motorcycle association.” According to Justice Coroza, the underlying basis for this language is that, presumably, motorcycle associations would implement basic safety protocols that would uphold the legislative objectives behind the ORVA and automobile insurance scheme in general.

Although Justice Coroza acknowledged that the event in which Beaudin participated was somewhat “organized,” the LAT Associate Chair had already found that it was not a “motorcycle association sponsored event,” a finding that was not appealable or at issue before the ONCA, leading Justice Coroza to dismiss Travelers’ appeal.

Key Takeaways

In the wake of Beaudin, the entire automobile insurance industry (both insurers and insureds) finds itself at a crossroads.

On one hand, motorsports enthusiasts wishing to engage in high-risk activities (including races, rallies or other competitions) may be surprised to learn that taking out an automobile insurance policy may now be a pre-requisite to their participation. Even more alarmingly, driving an uninsured vehicle at these events may now amount to breaking the law.

On the other hand, automobile insurers may be very reluctant to provide coverage (or, at least, affordable coverage) for what may be seen as ‘disasters waiting to happen’.

Could the future of motorized sports competitions be in jeopardy? Will the wheels soon fall off? Together, we will ‘travel’ down this winding road