An individual who is a sole proprietor may make an insured vehicle available to himself for his regular use. Where this is shown, the individual will be deemed to be a named insured under the policy insuring the vehicle for the purposes of s. 66(1) of the SABS and the insurerer of the vehicle will be the priority insurer for statutory accident benefits.

[2012] O.J. No. 4749

2012 ONCA 683

Ontario Court of Appeal

J.M. Simmons, R.P. Armstrong and S.E. Pepall JJ.A.

October 11, 2012

Two cases with comparable facts were decided differently by two different arbitrators interpreting s. 66(1) of the Statutory Accident Benefits Schedule - accident on or after November 1, 1996, O. Reg. 403/96 ("SABS"). This section provides that an individual who is living and ordinarily present in Ontario shall be deemed for the purpose of the SABS to be the named insured under the policy insuring an automobile at the time of an accident if, at the time of the accident, the insured automobile is being made available for the individual's regular use by a corporation, an unincorporated association, partnership, sole proprietorship or other entity.

A person to which s. 66(1) applies is deemed to be a named insured for the purpose of s. 268(2) of the Insurance Act affecting the priority which insurers are to pay statutory accident benefits. These two appeals concerned priority disputes between insurers as to who was obligated to pay statutory accident benefits.

In both matters, a truck driver operating as a sole proprietorship owned a truck. The driver, in the name of his sole proprietorship, entered into an owner/operator agreement with a trucking company whereby the driver would operate the commercial truck he owned solely for the services required by the trucking company and not for personal use. In both agreements, the truck was to be enrolled under the trucking company's insurance for its fleet of vehicles. The trucking companies were the named insureds on the commercial policies. The drivers were responsible for paying deductibles for the insurance on their commercial vehicles.

The drivers were injured while performing their obligations under the agreement. The drivers were named insureds in policies for their personal use vehicles. After the accident the personal vehicle insurers paid statutory accident benefits to the respective driver but claimed the insurers which had issued the commercial policy providing coverage to the truckign companys' fleets were responsible for paying these benefits. A priority dispute arose in relation to whether the drivers were named insureds on the commercial policies under the regular use provisions of the SABS.

The two insurers that were unsuccessful at the arbitration stage appealed to the Superior Court. The difference between the two arbitration decisions was with respect to whether a sole proprietor could make a truck available to himself as the indvidual operating the sole proprietorship. The Superior Court held the plain meaning of s. 66(1) allowed for the possibility that an insured vehicle may be made available by an individual who is a sole proprietor to himself. The drivers were deemed to be named insureds under the policy insuring the vehicle.

The Court of Appeal agreed with the Superior Court. Pursuant to the regular use provisions under the SABS, a sole proprietor can make a vehicle available for his or her regular use. If this is shown, the commercial insurer is in priority to the personal use vehicle insurer if the accident occurred in the course of the commercial arrangement. The intent of the legislature for the regular use provisions was to make the commercial insurer responsible for the accident benefits arising out of the operation of a commercial vehicle.

The Court of Appeal referred to the leading case, Axa Insurance v. Markel (Arbitrator Fidler, December 9, 1996), aff'd [1997] O.J. No. 2186 (Gen. Div). in which it was held that in these types of trucking arrangements, the contractor was making the vehicle available for use by the transport company rather than the transport company making the vehicle available for the use of the contractor. The Court of Appeal distinguished this case and held the question of whether, for the purposes of s. 66(1), the sole proprietorship could make the vehicle available to the individual who was the sole proprietor was never considered. Applying the reasoning to the case at hand, the Court concluded the sole proprietors were operating under their business names and it could be said that the sole proprietorships regularly made the insured vehicles available to the individuals operating the sole proprietorship. Therefore, the insurers of the commercial vehicles were solely responsible for payment of the statutory accident benefits to the drivers, rather than the personal use vehicle insurers.