Lumbermens Mutual Casualty Co v Herbison: A Hollow Victory?

During his yearly deer-hunting party, Fred Wolfe was driving to a hunting stand when he spotted what he believed to be a deer. He emerged from his truck, and with the aid of his car’s headlights, shot at the object in question. It was, in fact, the respondent Harold George Herbison, who suffered significant injuries to his knee. On Friday, the Supreme Court of Canada (“SCC”) found that Mr. Wolfe’s tortious actions were not causally linked to the use or operation of his motor vehicle, and his automobile insurance therefore did not have to cover Mr. Herbison’s damages. This Lumbermens Mutual Casualty Co v Herbison, [2007] 3 SCR 393 [Lumbermens], along with its companion case Citadel General Assurance Co v Vytlingam, [2007] 3 SCR 373, draws a definitive yet troubling line in the sand for insurance claims.

At a previous trial, Mr. Wolfe was found negligent, and damages were assessed at $832,272.85 plus interest and costs. As Mr. Wolfe is the named insured under a standard motor vehicle liability insurance policy issued by the appellant Lumbermens Mutual Casualty Company, the Herbison family sued Lumbermans, seeking to have the insurer satisfy this judgment. Their argument was based on section 239(1) of the Insurance Act, RSO 1990, c I.8, as Mr. Wolfe’s automobile policy provides coverage for loss or damage “arising … directly or indirectly from the use or operation” of an automobile owned by the insured. A 1990 amendment to this Act added the words “directly or indirectly,” a turn of phrase that is primarily at issue in this set of appeals.

As Eric Baum has already provided a synopsis of the trial and appeal leading to the SCC decision, I will not review this judicial history in depth. I would, however, like to elaborate on the use of the 1990 amendment as interpreted in the Ontario Court of Appeal case, as it resonates loudly in the SCC decision. At trial, Mr. Herbison argued that his injuries indeed arose “directly or indirectly” from the use or operation of Mr. Wolfe’s truck. While the trial judge found that the negligent shooting was merely incidental to the use and operation of the vehicle, Borins J.A. reversed this decision at the OCA. He justified his finding with the two-part test set out in Amos v Insurance Corp of British Columbia, [1995] 3 SCR 405 [Amos]. These two parts consist of a purpose test (whether the accident resulted from the ordinary activities to which automobiles are put) and a causation test (whether there is a causal relationship between the appellant’s injuries and the ownership, use or operation of his vehicle). Borins J.A. held that the evidence satisfied both branches of the test. In his view, the 1990 amendment to the Insurance Act removed the requirement of an unbroken chain of causation; this led to his finding that there was a “sufficient nexus between [the vehicle’s] use and operation and the damages sustained by Mr. Herbison to find that his damages arose indirectly from the use or operation of the truck.” The amendment essentially allowed Borins J.A. to extend the two-part Amos test and to reverse the trial judge’s finding.

Cronk J.A., the lone dissenter, disagreed with Borins J.A.’s use of the amendment. She found that Mr. Wolfe’s vehicle was not being used for a purpose from which injuries resulted; the negligent shooting was an act independent of the ownership, use or operation of the truck, and there was no nexus or causal connection between the injuries and the operation of the truck. In Cronk J.A.’s view, the “directly or indirectly” amendment should not have been extended as far as Borins J.A. was willing to stretch it.

The disagreement over use of this phrase was resolved last week when the SCC endorsed Cronk J.A.’s interpretation of the amendment. Binnie J., writing for the unanimous court, said that the approach taken by the OCA majority did not give adequate weight to the separate and distinct nature of Mr. Wolfe’s act of negligence. This was done by improperly interpreting the Amos test, and consequently misreading the “directly or indirectly” amendment to the Insurance Act. In Amos, Major J. approved the Michigan Court of Appeal statement that “there still must be a causal connection between the injury sustained and the ownership, maintenance or use of the automobile and which causal connection is more than incidental, fortuitous or but for.” The second prong of the Amos test, according to the SCC, must be more than simply fortuitous or “but for.” By properly using this more exacting assessment, the OCA majority would have had difficulty finding causation in Mr. Wolfe’s negligent actions.

Borins J.A. improperly relied on another case to interpret “directly or indirectly” as eliminating the requirement of an unbroken chain of causation. In Lefor (Litigation Guardian of) v McClure (2000), 49 OR (3d) 557 (ONCA) [Lefor], the driver of a car parked her vehicle on the opposite side of a street and hurried her children across the road to their grandmother’s house. While crossing, her daughter was struck and injured by another car. The mother’s negligent crossing was found to not break the chain of causation, as this post-vehicle conduct was closely intertwined with the negligent parking. From the perspective of causation, the two were not severable. While Borins J.A. utilizes this case as a signal to break the chain of causation, Binnie J. is careful to distinguish Lefor from Lumbermens. The SCC had previously accepted that the intervening act does not break the chain of causation if it is a “not abnormal incident of the risk,” likely to arise in the ordinary course of things. This reasoning, says Binnie J., applies to Lefor because the mother’s road-crossing negligence is not an abnormal incident of the risk of parking dangerously. Yet it does not apply to Lumbermens, since a similar causal connection is not easily seen between the act of driving and shooting an unsuspecting bystander.

After discrediting the Amos and Lefor interpretations, the SCC ultimately found that the OCA reading of “directly or indirectly” had gone too far. It was not enough to say that the use of the motor vehicle in some manner contributed to the injury; some causation link must have been found, and must have constituted a link in an unbroken chain. Here, the source of Mr. Wolfe’s liability was determined to be an independent tort from the use and operation of his truck, and therefore his automobile insurance could not provide coverage for Mr. Herbison.

As Eric speculated in his post, “the SCC will no doubt need to wrestle with these and other serious policy considerations if we are to avoid a slippery slope of litigation involving a newly defined understanding of what constitutes a ‘motor vehicle accident.’” As it turns out, he was correct in two significant ways. While it is clear that the SCC’s decision avoided the slippery slope of automobile insurance litigation, it did not solve the contentious policy issues that arise when insurance claims are denied. One need only read the related Toronto Star article from last Saturday to realize that drawing this judicial line does not resolve Mr. Herbison’s or Mr. Vitlyngam’s hardships. Both men can never work again, their medical bills remain unpaid, and their lives are irrevocably altered. Though such insurance-related decisions surely make sense from a legal standpoint, they leave unaddressed the ways in which innocent victims can ever be compensated.