Defence + Indemnity: December 2017 - II. Liability Issues

by Field Law

Field Law

A. The 2009 amendments to the Traffic Safety Act and the Insurance Act with respect to the liability of a renter, lessor or lender of a vehicle were intended to cap their vicarious liability for the driver’s negligence at $1 million and to make the driver’s insurer the first loss insurer, and nothing more. Thus, WCB payments to the injured driver are not deductible from the liability of the renter, lessor or lender.
Hobin v. Enterprise Rent-A-Car Company, 2017 ABQB 670, per Goss, J. [4247]
Hobin was injured in a motor vehicle accident on March 22, 2012, where the at-fault driver (Shaw) was driving a truck owned by the Defendant Enterprise Rent-A-Car (“Enterpise”).  At the time, Hobin was on the job and a “worker” within the meaning of s. 22 of the Worker’s Compensation Act, RSA 2000, cW-15. Shaw was also on the job and a “worker” whose employer was an “employer” covered by the Worker’s Compensation Act. Section 23 of the Worker's Compensation Act prevented Hobin from bringing a claim against either Shaw or Shaw's employer. However, he was not precluded from bringing a claim against the owner of the vehicle Enterprise Rent-A-Car for being vicariously liable for Shaw's negligence. Enterprise was a “renter" within the meaning of the Traffic Safety Act, R.S.A 2000, c.T-6 s. 187(0.1)(c.1).
Hobin received compensation for his injuries from the Worker's Compensation Board under the Worker's Compensation Act.
Enterprise argued that its liability to Hobin ought to be reduced with respect to any amounts of benefits he was paid from by the WCB pursuant to s. 187(2.1) of the Traffic Safety Act which provides as follows:


(2.1)  Notwithstanding any other provision in this Division except subsections (5) and (6), in an action for the recovery of loss or damage sustained by a person by reason of a motor vehicle on a highway, the maximum amount for which a lender, lessor, renter or seller of the motor vehicle is liable in respect of the same incident in its capacity as a lender, lessor, renter or seller of the motor vehicle is the amount determined under subsection (4) less any amounts that:

  1. are recovered for loss or damage under the third party liability provisions of contracts evidenced by a motor vehicle liability policy issued to a person other than a lender, lessor, renter or seller,
  2. are in respect of the use or operation of the motor vehicle, and
  3. are in respect of the same incident.
The WCB benefits were “compensation costs” within the meaning of s. 22(1) of the Workers Compensation Act. Section 22(5) provides that an action vested in the WCB in the name of the injured worker for the value of compensation costs. With respect to proceeds of settlement or judgment from such an action, s. 22.1(11) provides that payment of “compensation costs” was to be distributed in priority to payment of the balance of any judgment or settlement to the injured worker:

(11) All proceeds of settlement or judgment resulting from an action, including any costs and disbursements recovered, shall be paid to the Board or its designate and shall be distributed in the following order:

  1. payment of any compensation costs;
  2. payment of the balance, if any, to the claimant.
Enterprise applied for a decision on an issue in advance of trial, i.e. as to whether or not its liability and damages to Hobin should be reduced for any amounts received by him from the WCB pursuant to s. 187(2.1) of the Traffic Safety Act. Enterprise argued that the provisions of s. 187(2.1) should be read disjunctively such that Enterprise’s liability as a “renter” of the at-fault vehicle could be reduced by any one of the three items listed in section 187(2.1)(a) – (c).
The Plaintiff argued that those three factors should be interpreted conjunctively, i.e. that a deduction from Enterprise’s liability as a “renter" would only be justified where all three factors were met.
II. HELD: For the Plaintiff; application dismissed.  
  1. The Court summarized the applicable principles of statutory interpretation.
    1. In general, the Court noted as follows:
​[19]   Section 10 of the Interpretation Act, RSA 2000, c I-8, directs that an enactment shall be construed as being remedial, and shall be given the fair, large and liberal construction and interpretation that best ensures the attainment of its objects. The Supreme Court of Canada has confirmed that statutory interpretation cannot be founded on the wording of the legislation alone. The words of an Act must 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. The legislature does not intend to produce absurd, ridiculous or frivolous consequences or consequences that are extremely unreasonable or inequitable, illogical or incoherent, or incompatible with other provisions or with the object of the legislative enactment or that defeat the purpose of a statute or render some aspect of it pointless or futile:  Rizzo & Rizzo Shoes Ltd, Re, 1998 CanLII 837 (SCC), [1998] 1 SCR 27, [1998] SCJ No 2 at paras 21 and 27.
[20]   In McDonald v McDonald, 1998 ABCA 241 (CanLII), [1998] AJ No 802 at paras 24-27, the Court held that the context of an enactment includes the legal environment of the provision, the other provisions of the statute and related statutes, the circumstances which led to the enactment, the aim and purpose of the legislature, the legislator’s value system and linguistic habits.
[21]   This Court noted in Continental Stress Relieving Services Ltd v Stang (1991) 115 AR 90, [1991] AJ No 191 (QB) that courts should not expand or extend the social policy formulations of the legislature. As outlined by Master Smart in 1597130 Alberta Ltd v Condominium Corp No 1023241, 2016 ABQB 195 (CanLII), [2016] AJ No 315 at para 16, there are also a number of presumptions that apply when interpreting any statute:
  1. The legislature is a competent and careful user of language and skillful crafter;
  2. Legislatures use simple, straightforward and concise language;
  3. The legislature avoids superfluous or meaningless words and does not repeat itself or speak in vain; and
  4. The legislature uses language carefully and consistently so that the same words have the same meaning and different words have different meanings.
  1. In particular, with respect to the use of the word “and” between clauses, the Court concluded that this generally meant that the clauses should be read conjunctively but this was not mandatory:

[22]   The use of the word “and” between clauses should generally be read conjunctively, but this interpretation is not mandatory. Moshansky J. in Austin v Omand, 2002 ABQB [415] at paras 48-50 cited R Sullivan, Statutory Interpretation (Irwin Law: Concord, Ontario, 1997) and S Edgar, Craies on Statute Law, 7th ed (Sweet & Maxwell: London, 1971). According to those authorities, the word “and” is always conjunctive in the sense that it signals the cumulation of the possibilities listed before and after it. However, “and” is ambiguous in that it may be intended to mean either joint or joint and several. In the case of a joint “and,” every listed possibility is necessarily included. In the case where “and” is joint and several, all the possibilities may, but need not, be included. The determination of which meaning is appropriate depends on the context. Where “and” is used before the final item in a list of powers, for example, it is normally joint and several. In most legislation, “and” is joint rather than joint and several. Where the idea of “and/or” is intended, typically the inclusive “or” is used. The legal and the grammatical meaning of a statute must be determined. Where the grammatical construction is clear, then that construction should be employed unless there is some strong reason to the contrary such that the apparent grammatical construction cannot be the true one.

  1. The Court held that the amendments to the Traffic Safety Act and Insurance Act of 2009, including the introduction of s. 187(2.1) into the Traffic Safety Act, were intended to cap the liability of lenders, renters and lessors to $1 million and to make insurers of persons renting or leasing the vehicles the first loss payors, changing the situation previously whereby the renters/lessors/lenders policy was the first loss payor, and nothing more. It was not intended to add additional reductions in liability to the lenders, lessors and renters:

[27]   In my view, the proper interpretation of the provisions in question is informed by the larger legislative context. The operation of s. 187(2.1), if interpreted disjunctively as suggested by the Applicant, would reduce a renter’s liability by the Benefits paid to or on behalf of a claimant under the WCA. Such Benefits are defined as “compensation costs” in the WCA. Section 22(11) provides for the order of distribution of all the proceeds of settlement or judgment resulting from an action that are paid to the WCB. Those proceeds would be lowered or reduced by the Benefits deducted. Section 22(11)(f) provides that payment of any compensation costs (or the Benefits) is to be in priority to payment of the balance, if any, to the claimant. In this manner, the Benefits can be deducted twice from the balance of all proceeds of settlement or judgment available to the claimant. In my view, there is nothing to suggest that this outcome was intended by the legislature in enacting s. 187(2.1) and indeed it would appear to be unduly punitive to claimants.
[28]   The amendments to the Insurance Act and the TSA which came into force on March 1, 2011 changed the priority in terms of which motor vehicle liability policy is responsible for the payment of damages caused by the operation of these vehicles, such that insurers of persons renting or leasing vehicles became the first loss payors in responding to a claim, prior to looking to the insurer of the lender, lessor, renter or seller of the motor vehicle covering the same peril. The amendments also capped the vicarious liability of owners of leased, rented, conditionally sold or financed vehicles to a $1 million limit when their vehicles are operated by a lessee, rentee, buyer or other driver. An exemption exists where there was a non-arm’s length relationship with the day-to-day operator of the vehicle.
[29]   The amendments to s. 187(2.1) address the priority of insurance; I am not satisfied that the intent of the section was to do more than this. Specifically, I am not satisfied that the intent of the section was to add additional reductions in liability available to lenders, lessors, renters or sellers beyond the deduction of payments made under third party liability by another motor vehicle liability insurer. This interpretation coincides with the ordinary grammatical use of the conjunctive “and.” Had the legislature sought to specifically reduce liability in the way suggested by the Applicant, it would not have been difficult to draft the provision so as to make this clear.
[30]   This conclusion is bolstered by the difficulties posed by the alternative proposed interpretation. Clearly, for benefits to be deducted, they must always arise out of the same incident. Furthermore, all motor vehicle liability policies require use and operation to trigger third party liability coverage in all cases. Such qualifications may state the obvious, but the provisions are absurd and ridiculous standing on their own.
[31]   The interpretation proposed by the Applicant would allow lenders, lessors, renters or sellers to deduct amounts in respect of the use or operation of the motor vehicle and/or amounts in respect of the same incident, without qualification. Such an overly broad opportunity to reduce liability could not have been intended. The only rational and logical interpretation of section 187 (2.1) is that the three items noted in s. 187(2.1) are to be read conjunctively, as a joint list, consistent with the grammatical construction of the provision.

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