Canadian Underwriter

Ontario politicians concerned about uninsured ‘bandit’ taxis vote to increase fines

April 21, 2015   by Canadian Underwriter

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Amid concerns about “bandit taxi cabs” operating without proper commercial auto insurance, Ontario politicians recently voted in favour of a bill proposing to raise fines – and introduce license suspensions and vehicle impoundment on second offence – of drivers caught transporting passengers for compensation without a permit.

Bill 53 would amend Ontario’s Highway Traffic Act to increase the maximum fine for transporting passengers for compensation without a permit

“I know, when I step into a licensed taxi cab, that there is taxi driver insurance,” said Jennifer French, New Democratic Party Member of Provincial Parliament for Oshawa, in the legislature April 16 during a debate on Bill 53. “However, if I’m stepping into an unregulated vehicle, I have no guarantees about that insurance.”

If passed into law, Bill 53 would amend the Highway Traffic Act, increasing the fines to a maximum of $30,000, for picking up a passenger for the purpose of transporting him or her for compensation without a required licence, permit or authorization.

The private member’s bill – originally tabled Dec. 3 by Ottawa South Liberal MPP John Fraser – passed second reading April 16 and was referred to the Standing Committee on Social Policy.

“The City of Ottawa operated its first sting in 2006, which resulted in 100 charges laid against individuals operating bandit taxi cabs,” Fraser told MPPs at Queen’s Park in Toronto. “Subsequent stings have turned up an unlicensed driver who was consuming beer while driving and had a firearm in the trunk. They also found an unlicensed taxicab with no commercial insurance being driven by someone with a suspended licence. They have found unlicensed drivers, drivers with criminal records, drivers operating a vehicle under the influence of drugs or alcohol, drivers operating without car insurance, and drivers misleading vulnerable passengers with regard to the fares.”

If passed into law with no changes, Bill 53 would stipulate that if a police officer “believes on reasonable and probable grounds that a person has committed this offence after having been convicted of the same offence within the preceding five years, the officer shall suspend the driver’s licence and impound his or her motor vehicle for 30 days.”

However, this could violate a person’s right, under the Canadian Charter of Rights and Freedoms, to be secure against unreasonable search or seizure, suggested Michael Harris, the Progressive Conservative party’s transportation critic, and MPP for Kitchener-Conestoga.

Related: IBC surveys carriers on market for taxi insurance in Ontario

“My concern with today’s bill is that it may be too wide a swing, when we intend to target bandit taxis and the series of issues surrounding them,” Harris said. “Let me be clear. Bandit taxis with no background checks and insurance guarantees, and further concerns surrounding criminal issues like theft or sexual assault, do require attention.”

Yasir Naqvi, the Liberal Minister of Community Safety and Correctional Services and MPP for Ottawa Centre, spoke in favour of Bill 53.

“The challenge is that right now the penalties that exist under the Highway Traffic Act are just designated as a mere cost of doing business,” Naqvi said. “They are not sufficient. We need to make sure that that kind of illegal activity is properly targeted.”

Section 91.1 of the Highway Traffic Act prohibits drivers of motor vehicles other than buses from picking up passengers for the purpose of transporting them “where a licence, permit or authorization” is required by either a municipal bylaw, the Public Vehicles Act, a regulation under the federal Department of Transport Act or an airport or airport authority.

Currently, the minimum fine for violating that law is $300 and the maximum is $20,000. Bill 53 proposes to raise the minimum to $500 and the maximum to $30,000.

Bill 53 “has the potential to limit the ability for innovative transportation network companies, such as Uber, to operate here in the province of Ontario,” Harris said.

Harris claimed that Uber drivers “are covered by a $5-million insurance policy” but court records indicate that Uber had asked the Ontario Superior Court of Justice to keep its policy confidential.

Uber’s legal counsel “submitted that the proposed sealing order is primarily intended to keep the insurance policy from Uber’s known or unknown competitors, and not the public at large,” wrote Mr. Justice James F. Diamond, in a decision released March 18. Justice Diamond denied Uber’s request for an order sealing its insurance policy.

The City of Toronto applied for a declaratory order that Uber “operates a taxi cab brokerage and limousine service contrary to” the Municipal Code.

“In support of its application, the City alleges that Uber does not have adequate insurance coverage that would protect drivers and passengers who use Uber services – namely the requesting and accepting of requests for transportation services,” Justice Diamond wrote.

 Related: Cities should consider bans on ride sharing apps carefully, regulator says

Uber contends it has $5 million in coverage but that “disclosure of the insurance policy to the public would cause serious harm to its commercial interests and competitive position.”

Uber had argued that the licensing provisions of Toronto’s Municipal Code “do not apply to those services offered by Uber, and even if those services are found to be subject to the City’s licensing requirements, Uber asserts that such licensing requirements infringe upon, inter alia, its right to freedom of expression under section 2(b) of the Charter of Rights and Freedoms.”

The Financial Services Commission of Ontario (FSCO) recently warned that Ontario’s standard auto policy “excludes coverage when the automobile is used to carry paying passengers or used as a taxi.” FSCO advises drivers people intending to participate in a ride-sharing service as a driver to consult with their auto insurance representatives and to seek independent legal advice before signing on.

“What we lack in so many of these situations with Uber is proper government oversight,” said Arthur Potts, Liberal MPP for Beaches-East York, in the legislature. “What we’re trying to do here is level the playing field, so that people who are getting into a cab on the street – we’re trying to find enforcement for a regulated activity that isn’t being fully enforced, a regulated activity which puts other drivers on an unlevel playing field.”

Harris argued that Uber, “has demonstrated that even without government legislation, it is able to develop high safety standards. On top of the standard criminal background check, Uber drivers must provide a local police record check, as well. For sexual offences, (driving under influence) or serious traffic violations, Uber drivers must provide all records, while taxis are limited to ju
st the past five years.”