In applying s. 9(3) of the Fault Determination Rules to a chain reaction collision involving three moving vehicles and one stopped vehicle, the Superior Court has adopted the Court of Appeal’s analysis of s. 9(4) in State Farm Mutual Automobile Insurance Company v. Old Republic Insurance Co. of Canada[1] to find that there must be a direct impact between a heavy commercial vehicle and the vehicle whose insurer seeks indemnification for loss transfer to apply. The involvement of a fourth “stopped” vehicle in the incident is of no consequence.

Kingsway General Insurance Company v. Dominion of Canada General Insurance Company dealt with a chain reaction involving four vehicles. The first vehicle, insured by Kingsway, was a heavy commercial vehicle (vehicle “C”) which struck a moving passenger automobile (vehicle “B”). Vehicle “B” subsequently struck a second moving passenger automobile, which was insured by Dominion (vehicle “A”). Vehicle “A” then struck a third passenger automobile (vehicle “Z”), the only vehicle which was stopped at the time of the chain reaction.

Dominion paid statutory accident benefits to its insured, the driver of vehicle “A”. On the basis of the involvement of the stopped fourth vehicle in the collision (vehicle “Z”), Dominion sought loss transfer from Kingsway pursuant to the ordinary rules of tort law under s. 5 of the FDRs. Given that s. 9(3) requires all of the automobiles involved in the incident to be “in motion,” Dominion took the position that s. 9(3) did not apply.

At the arbitration level, Arbitrator Novick agreed with Dominion and found that s. 9(3) did not apply on the basis that the fourth vehicle involved in the chain reaction was stopped at the time of the accident. In the absence of specific wording in s. 9(3), she did not accept Kingsway’s argument that the FDRs were required to be approached in “clusters” or “groupings” of three vehicles. Applying the ordinary rules of tort law pursuant to s. 5 of the FDRs, Arbitrator Novick concluded that vehicle “C” was 100% at fault for the collision and that Kingsway was therefore required to indemnify Dominion for all statutory accident benefits it paid out to the driver of vehicle “A”. She added that, even if s. 9(3) did apply, Kingsway would still be required to indemnify Dominion despite the fact that vehicle “C” did not directly collide with vehicle “A”.

In allowing Kingsway’s appeal, the Superior Court adopted the Court of Appeal’s analysis of s. 9(4) in State Farm v. Old Republic that the degree of fault for each collision between two automobiles involved in the chain reaction must be determined without reference to any related collisions involving either of those two automobiles. The Superior Court concluded that it makes no sense to conclude that vehicle “A” was responsible for the whole chain reaction if vehicle “Z” (the fourth vehicle) was moving when it was struck by vehicle “C,” but find that vehicle “B” bears 50% responsibility for the collision with vehicle “A” instead of vehicle “C” if vehicle “Z” was either stopped or not involved.

In reiterating the Court of Appeal’s finding that ss. 9(3) and 9(4) are “parallel provisions [that]… must be read consistently,”[2] the Superior Court concluded that s. 9(3) should only consider vehicles “A,” “B” and “C” as illustrated in the diagram in the FDRs, and not any additional vehicles which may be involved farther down the chain. Applying the standard of review of correctness to the question of law at issue, given that vehicles “A,” “B” and “C” were all in motion at the time of the accident, the Superior Court ruled that the arbitrator erred by refusing to apply s. 9(3) to the collision. Ultimately, the Superior Court accepted the Court of Appeal’s reasoning in State Farm v. Old Republic to conclude that s. 9(3) is not available to apportion liability between vehicles involved in the same chain reaction that do not directly collide.

This decision serves as a strong reminder that, unlike determining liability in tort matters, the loss transfer regime is meant to be applied in an expedient, economical and summary manner. Despite the presence of a fourth vehicle (or more) in the context of chain reaction collisions, the insurer of vehicle “A” still cannot “leapfrog” over vehicle “B” and claim loss transfer against the insurer of vehicle “C”. The involvement of additional vehicles, whether stopped or in motion, does not change the way in which fault is strictly determined under s. 9(3) of the FDRs.

See Kingsway General Insurance Company v. Dominion of Canada General Insurance Company, 2017 ONSC 498 (CanLII)