Ontario court rules farmer driving uninsured ATV on road not foreclosed from claiming income replacement

A recent court ruling against a Perth, Ont. mutual insurance firm has made at least one insurance lawyer nervous.

Last Wednesday, the Ontario Superior Court of Justice ruled that Arthur Matheson and his family are not barred from making a claim against Lanark Mutual Insurance Company and a driver over an accident in 2008 when Matheson was rear-ended and catastrophically injured. Matheson was driving an uninsured Honda all terrain vehicle, which he used to work on his farm, on a public road between two points on his farm.

The central issue in the case was whether Matheson’s ATV was a “self-propelled implement of husbandry.” Matheson’s lawyer argued it was and Mr. Justice Kenneth E. Pedlar agreed, meaning the ATV did not have to be insured.

The defendants had argued that Matheson’s ATV did meet the definition of “automobile” under the Insurance Act because it is a self-propelled vehicle. They also contended that Ontario Regulation 316/03 “provides that all off-road vehicles shall be insured in accordance with section 2 of the Compulsory Automobile Insurance Act and section 15 of the Off-Road Vehicles Act.”

However, Judge Pedlar ruled that although some ATVs are purchased for recreational use only, a reasonable person “would readily discern the character and function of the vehicle driven by … Matheson … as being an implement manufactured and designed for a specific use in farming and animal husbandry.”

The Highway Traffic Act excludes self-propelled implements of husbandry (as well as street cars, power-assisted bicycles, motorized snow vehicles, traction engines, farm tractors and road-building machines) from the definition of “motor vehicle.”

Daniel Strigberger, a Miller Thomson lawyer who has represented property and casualty insurance firms (but was not involved in this case), agreed with Judge Pedlar’s conclusion that in Matheson’s case, his ATV was a “self-propelled implement of husbandry” and therefore did not require insurance.

“Although much of the decision is based on the facts of this case, the analysis could have an impact on other cases where insurers try to deny coverage to occupants of uninsured vehicles,” Strigberger wrote in a post on Miller Thomson’s Ontario Insurance Litigation Blog.

But Judge Pedlar also based his ruling on a “fair, large and liberal construction and interpretation” of the Compulsory Automobile Insurance Act, suggesting that the true intent, meaning and spirit of the law is “best achieved” by finding in favour of Matheson.

Strigberger suggested in his blog post that Judge Pedlar was commenting on the “remedial purpose” of the CAIA, “noting that if the defendants were successful the innocent claimant would be left without” accident benefits.

“There was no need to interpret the CAIA liberally or as remedial to find for the plaintiff, having already found that he was driving a vehicle that did not need to be insured,” Strigberger wrote. “I guess as an insurance lawyer, I get nervous whenever I read a decision where the tribunal interprets a statutory provision as being remedial.”

Judge Pedlar’s April 24 ruling was on pre-trial motions. He found that the Matheson family is not barred, by the Insurance Act, from taking legal action against the defendants because he agreed that Matheson’s ATV was a self-propelled instrument of husbandry. He also found that Matheson’s claims against Lanark Mutual for accident benefits and income replacement “are not foreclosed” by the Statutory Accident Benefits Schedule (SABS).

Lanark Mutual, based about 100 kilometres southwest of Ottawa in the town of Perth, was the insurer of Matheson’s car and truck. Court records indicate that although the other driver’s vehicle was insured by Intact, it was Lanark Mutual that responded to Matheson’s application for accident benefits.

Lanark Mutual argued that section 30(1(a)) of the SABS provides that a carrier “is not required to pay certain specified accident benefits to a person … who is the driver of an automobile at the time of the accident if the driver knew, or reasonably ought to have known, that he or she was operating the automobile while it was not insured under a motor vehicle liability policy.”

Lanark Mutual argued that the benefits it should not have to pay Matheson are income replacement, non-earner benefits, lost educational expenses, visitors expenses and housekeeping and home maintenance. The defendants argued that the Insurance Act provided a bar to “recovery of loss or damage from bodily injury where a plaintiff was in contravention of the Compulsory Automobile Insurance Act … at the time of the accident” and that Matheson “did not meet the exceptions for an uninsured vehicle to be operated on a public highway.”

According to court records, Matheson is a fifth-generation cattle and sheep farmer near Perth, who owns one 500-acre farm and leases another 400-acre farm. He purchased his ATV in 1997 and was advised by his insurance agent to purchase insurance for it, but he did not.

On Oct. 11, 2008 Matheson was travelling from one part of his farm to another over a stretch of road of less than half a kilometre to check on pastured sheep. Although he could have accessed the sheep without leaving the farm court records indicate he said “it was faster just to go out on the front driveway, turn left, and drive up the road, which would take about 30 seconds or less.”

Matheson was struck from behind by a truck, whose driver was a named defendant.

“As a result of that collision, Arthur Matheson has been left with permanent cognitive and physical deficits which, all parties agree, amount to a catastrophic injury,” Judge Pedlar wrote, adding that the investigating police officer had concluded that Matheson’s ATV was a “self-propelled implement of husbandry” as defined by the Highway Traffic Act and did not require a motor vehicle liability policy. However, the police officer’s conclusion was not binding on the court.

The driver of the truck that rear-ended Matheson was convicted of careless driving, breach of probation and obstruction of justice in connection with the accident.

Quoting from an Ontario Court of Appeal case which ruled that “a vehicle that is ‘manufactured’ or ‘designed’ for a specific use in farming has an objectively discernable character or function that does not depend at all on the particular use intended by the end user,” Lanark Mutual stated there is “no such objectively discernible character or function” relating to Matheson’s ATV that “compels one to the conclusion” that it was not an ATV.

But Judge Pedlar noted several witnesses had testified that Matheson’s model of ATV is commonly used in farming.

“I find it to be matter of common sense that to accurately, objectively, discern that the character of a self-propelled vehicle demonstrates that it was designed for a specific use in farming, and used for farming purposes, would require that the person making such objective assessment of that character, or use, be reasonably well informed about agricultural life, specifically animal husbandry,” he wrote.

“That objective discernment may not accurately exist in the person of a Bay Street lawyer living in Rosedale, or in a downtown high rise condominium, in Toronto. I find that such objective, accurate discernment does ex
ist, not just in Arthur Matheson, but in the other persons well versed in the agricultural community in Eastern Ontario …”