In a decision handed down on August 18th, 2000 in Axa Pacific Insurance Company v. Elwood, the British Columbia Supreme Court found that in an insurer under a Homeowner’s Policy had no duty to defend a claim against an insured arising out of personal injuries suffered by a passenger of a motor vehicle who alleged that the insured, also a passenger in the vehicle, had grabbed the steering wheel causing the driver to lose control of the vehicle.
The Homeowner’s Policy contained the usual exclusion of coverage for claims arising from the ownership, use or operation of any motorized vehicle. The allegations against the insured passenger were that she:
(a) negligently interfered with the driving of the vehicle;
(b) distracted the driver of the vehicle;
(c) grabbed the steering wheel; and
(d) entered the motor vehicle when she was intoxicated and knew or ought to have known from her past history that she would interfere with the driving of the vehicle.
The decision is one of the first in which the Court has been called upon to consider the two part test established by the Supreme Court of Canada in Amos v. Insurance Corporation of British Columbiain the context of a policy exclusion.
Prior to the decision in Elwood, there had been a number of conflicting decisions regarding whether a claim against a passenger for damages resulting from tortious conduct on the part of the passenger in either assaulting the driver or grabbing the steering wheel amounted to a claim for damages arising out of the use of a vehicle. In one instance, on the same facts, the Supreme Court of Canada upheld a conviction of the passenger on a charge of dangerous driving and the Ontario High Court found that the injuries suffered by the driver of the vehicle did not arise out of the operation of a motor vehicle . In a number of subsequent decisions, all of which preceded the decision of the Supreme Court of Canada in Amos, Canadian Courts found that the act of a passenger in grabbing a steering wheel or assaulting a driver did not amount to the operation of the vehicle.
The two part test for determining whether an injury arises out of the ownership, use or operation of a vehicle established in Amos is:
1. Did the accident result from the ordinary and well known activities to which automobiles are put?
2. Is there some nexus or causal relationship (not necessarily a direct or proximate causal relationship) between the Appellant’s injuries and the ownership, use or operation of his vehicle, or is the connection between the injuries and the ownership, use or operation of the vehicle merely incidental or fortuitous?
In Elwood the Court had no difficulty in concluding that the injury (which occurred while the vehicle was being operated upon a public roadway) arose out of the ordinary and well known activities to which automobiles are put. In considering the second part of the test in Amos, the Court concluded that the insured’s conduct in grabbing the steering wheel or interfering with the operation of the vehicle lead directly to the vehicle being involved in an accident and that there was nothing which broke the chain of causation between the use of the vehicle on the one hand and the injuries suffered by the Plaintiff on the other. The Court went on to conclude that upon a fair and literal reading of the language of the Homeowner’s Policy as a whole, the Policy was not intended to provide personal liability coverage for the type of claim advanced against the insured in the underlying action. In the result, the Court declared that the insurer was not obligated to provide a defence to the insured in the underlying action.
In addition to considering the exclusion clause in the Homeowner’s Policy, the Court dealt with a number of procedural issues which were raised in the course of argument. The Plaintiff and a co-Defendant in the underlying action had sought to be joined as parties to the Petition in which the declaration respecting coverage had been sought. The insured had also proceeded by way of Summary Trial in Third Party proceedings which had been commenced against the insurer in the underlying action. In a carefully considered judgment, the Court found that, in British Columbia, the proper procedure for obtaining a declaration respecting coverage is to proceed by way of Petition in a separate proceeding to that in which the underlying claim is advanced and that the only parties with standing to address the issue of coverage prior to judgment in the underlying action are the insurer and the insured.