Defendant’s Insurer ordered to pay full Settlement arising from Snowmobiling Accident

Snowmobiling is a very popular sport in Canada, but it is also the most dangerous winter sport in this country. And, although many participants practice safe snowmobiling, there are also frequent incidents of reckless actions every winter in Ontario, that result in serious accidents and injury for both drivers and passengers.

A Feb 13 news story reported that 14 people had died in snowmobile accidents so far this winter which, according to Ontario Provincial Police (OPP), constituted 8 more deaths than last year at the same time. The larger amount of snowfall at the onset of winter meant there were more opportunities to snowmobile. However, OPP media relations coordinator, Sgt. Peter Leon, stated that many riders are not following “the simple rules of snowmobiling”, through such actions as riding off-trail in unknown or dangerous terrain (including over bodies of water); driving faster than the 50 km/hr speed limit; riding while impaired; and/or failing to respect the rules of proper conduct on trails. The vast majority of snowmobile accidents are not random events that could happen to anyone, but often result when someone takes a risk or engages in a reckless action.

Drivers of off-road vehicles, such as snowmobiles, motorbikes and ATVs, can be held liable if their negligence caused injuries to innocent accident victims, as applies to any motor vehicle driver. A recent personal injury case arose when a passenger on a snowmobile, Tyler Middleton, was seriously injured in an accident near Lake Simcoe, Ontario. The plaintiff settled a claim for damages against the driver of the snowmobile, and the injured man’s mother, Susan Middleton, claimed damages under the Family Law Act.

The plaintiffs’ claim was settled for $900,000 and each insurer was ordered to pay 50 per cent, with the provision that the insurer determined responsible for indemnifying the claim would be required to repay the successful insurer the amount above the $200,000 statutory minimum limit, after the coverage issue is determined. A trial, Middleton v Pankhurst (2016), proceeded to resolve the issue of which insurer is obligated to pay the remaining $700,000 of the settlement.

Based on the standard vehicle insurance provision, ‘Statutory Condition 4’, Aviva denied the defendant defence in this action. Statutory Condition 4(1) states, “The insured shall not drive or operate or permit any other person to drive or operate the automobile unless the insured or other person is authorized by law to drive or operate it”. Aviva argued that the defendant was not authorized by law to drive due to the terms of his probation order (which arose from a previous conviction for careless driving). Under the terms of his probation, Mr. Pankhurst was prohibited from operating a motor vehicle between 7 p.m. and 5 a.m. and was also was not permitted to have any alcohol in his blood when driving, for a period of 6 months. Aviva paid (and did not dispute) the $200,000 statutory minimum coverage in this action.

Unifund Assurance Company, was the other defendant and Susan Middleton’s insurer. Unifund was added as a party to the claim, with respect to coverage for under or uninsured claims. Unifund took the opposite position as Aviva, arguing that Mr. Pankhurst had a valid unrestricted driver’s licence and was authorized to drive and therefore, Aviva cannot rely on Statutory Condition 4. Alternatively, Unifund sought relief from forfeiture on the basis that Mr. Pankhurst only drove the snowmobile in order to rescue his friend, the plaintiff, who was lost on the ice on a very cold winter night.


Circumstances of the Accident

In January 2009, the defendant, Mr. Pankhurst (who was 22-years-old at the time) was invited by the plaintiff to participate in ice fishing on Lake Simcoe. The two friends arranged to meet at ice hunts on a remote location on the lake. The defendant was an experienced snowmobile operator and owned a Ski-Doo which was insured under the Aviva vehicle insurance policy and was stored at another friend’s home near the lake. Mr. Pankhurst met his friend, Mr. Taylor, in the mid-afternoon, to pick up his snowmobile, and both men rode their snowmobiles to the ice huts.

Drinking alcohol was a common activity for the group of friends that had gathered at the ice huts for ice fishing, on the day of the accident. Some of the friends, including Mr. Pankhurst, planned to stay in the ice huts and others headed back to shore in the early evening. The plaintiff was among the latter group, although he had consumed alcohol before heading back. At about 10:45 p.m., Mr. Pankhurst received a call on his cell phone from the plaintiff, who was lost, disoriented and unable to find his way to shore. The plaintiff asked Mr. Pankhurst to pick him up, but Mr. Pankhurst instead tried to direct his friend over the phone, by suggesting he try to look for landmarks, such as treelines.

After the plaintiff’s call, the group of friends in the hut continued to discuss Mr. Middleton’s situation, and Mr. Pankhurst asked others in the group if they could pick up the plaintiff because he was not able to go, due to his driving restrictions. However, no one else volunteered to look for their lost friend. Mr. Middleton called Mr. Pankhurst two more times in a panic at around 11 p.m. Then, because Mr. Pankhurst was worried that the plaintiff was inadequately dressed and might freeze to death and not make it to shore, he decided that his friend’s problem exceeded his own dilemma and he drove his Ski-Doo to look for Mr. Middleton. Mr. Pankhurst located his friend fairly quickly, when the latter ran out in front of his snowmobile, and they drove together to shore. Mr. Pankhurst only had one helmet, so Mr. Middleton rode without a helmet.

When they reached shore, Mr. Pankhurst proceeded to drive Mr. Middleton home along the shoulder of Lake Drive but lost control at a bend in the road. The snowmobile overturned and both riders were ejected, and unfortunately, Mr. Middleton struck his head on a telephone pole and suffered serious injuries. Mr. Pankhurst immediately called 911 and his friend was transported to hospital.

Due to the severity of his head injury, the plaintiff did not remember the accident. His injuries included extensive right subdural hemorrhage, widespread brain contusions, multiple skull fractures, fractures to his ribs and vertebrae, bilateral pneumothoraces, and a fracture of the left scapula.

Mr. Pankhurst registered a fail on a roadside alcohol test administered by police officers at the scene, and the two breathe tests at the station registered 89 and 89 mgs of alcohol in 100 mills of blood, respectively (although York Regional Police rounded the results down to 80mgs each). Mr. Pankhurst later pled guilty to, and was sentenced for careless driving.

Trial arguments and decisions

During the trial, Mr. Pankhurst was questioned whether he could have availed himself of other options to rescue Mr. Middleton. He testified that he did not call 911 at the ice hut because he thought he would be ‘blowing things out of proportion”. There was evidence that, even if he had done so, an airboat search by emergency responders would likely have taken a few hours and may not have been successful. In fact, Justice Matheson concluded that there may not have been any options that could have been deployed in time to successfully locate Mr. Middleton in the dark and at a remote location. Based on the undisputed testimony of two experts, one of whom was an expert in hypothermia, it was concluded that the defendant would likely not have survived the night and Mr. Pankhurst probably saved the plaintiff’s life. On the other hand, the judge found that once they reached shore, Mr. Pankhurst had other options, such as phoning for help or asking a nearby cottager for assistance.

At the time of the accident, Mr. Pankhurst held a valid, class G driver’s licence, which has no restrictions on night driving and does not require ‘no alcohol’. Although he had a previous licence suspension, in January 2009, the defendant’s licence was unrestricted in its terms and in good standing. On the question of whether Mr. Pankhurst was ‘authorized by law” to drive, based on Statutory Condition 4(1), Justice Matheson decided that Mr. Pankhurst was entitled to full coverage under his Aviva insurance policy for the claims advanced in the plaintiff’s action against him. With respect to the defendant’s breach of the terms of his probation, under the Insurance Act s. 118, the judge noted that “unless the insurance contract provides otherwise, a contravention of any criminal or other law does not eliminate coverage except if committed ‘with intent to bring about loss or damage’”. Justice Matheson asserted that in this case, Mr. Pankhurst had no such intent; he was simply trying to rescue his friend and put himself at risk by doing so.

The liability portion of Aviva’s standard vehicle insurance policy does not contain any exclusions for circumstances when an offence has been commitment. However, Aviva argued that the terms of Mr. Pankhurst’s probation order are like the terms of licences for novice drivers. Justice Matheson rejected this argument, which he noted was unsuccessfully argued by the insurer in Kereluik v. Jevco Insurance Company (2012), but the court found that the additional conditions applying to persons holding G1 and G2 licences are the terms set by the Ministry of Transportation, unlike Mr. Pankhurst’s terms of probation.

Justice Matheson concluded Aviva is obligated to fully indemnify Mr. Pankhurst in the claims advanced by the plaintiffs.

On the issue of whether (in the alternative), Unifund should be granted relief from forfeiture, Justice Matheson considered the decisions in Kozel v. Personal Insurance Co. (2014), pertaining to the Courts of Justice Act, c.C.43. Section 98 of the Courts of Justice Act states, “a court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just”. However, the judge noted that relief from forfeiture is normally sought by the insured, but Mr. Pankhurst has not claimed such relief and there is reason to question why Unifund would be entitled for relief on its own behalf.

As found in Kozel, relief from forfeiture is equitable and the party seeking relief has the onus of proving its case for it. Relief from forfeiture can be granted in cases of imperfect compliance, but not for non-compliance of the insurance contract (which results when a breach of the condition was serious and prejudices the insurer). The judge noted that “statutory condition 4 is neither a condition precedent nor a fundamental term” and even if one determines that the breach was serious because it entailed alcohol and a probation order, there is no evidence that there was prejudice to the insurer. Mr. Pankhurst’s premiums were paid up and based on normal risk, including driving while impaired and at night. Also, the snowmobile was appropriately covered by a vehicle clause.

The judge stated that the threshold for access to relief from forfeiture would be crossed if the Statutory Condition 4 had been broken. Three factors set out in Kozel, to be considered in making this determination are: the conduct of the insured; the gravity of the breach; and the disparity between the value of the property forfeited and the damage caused by the breach.

In his assessment of the reasonableness of Mr. Pankhurst’s conduct as it relates to his contractual relationship with his insurer, the judge found that he was acting reasonably when he decided to rescue the plaintiff, even though he was breaching his probation. Despite his good intentions, however, the defendant should have reconsidered his options when they reached shore, such as calling friends, family or a taxi to pick them up. The gravity of the breach of the probation order was substantial, in terms of failing the alcohol test; nevertheless, there was no prejudice to Aviva established at trial.

On the last issue, Justice Matheson noted that Mr. Pankhurst was not seeking relief and was not called upon to pay the settlement. Also, the plaintiffs have not forfeited any property and have benefit of the under/uninsured coverage, so Unifund has no basis to seek relief on the plaintiff’s behalf. Finally, when Unifund provided coverage to Susan Middleton, it simply met a risk that was part of the coverage she paid for. On the basis of all these factors, the judge concluded that he would not exercise his discretion to grant relief from forfeiture if Statutory Condition 4 had been breached.

In accordance with Justice Brown’s decision on July 26, 2013, Aviva was ordered to pay Unifund $350,000, which constitutes the 50 per cent of the settlement payment Unifund had made to the plaintiffs.


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