IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20140815

Docket: M144423

Registry:
New Westminster

Between:

Donald Dadey

Plaintiff

And

Insurance
Corporation of British Columbia

Defendant

Before:
The Honourable Mr. Justice Jenkins

Reasons for Judgment

I.                
Overview

[1]            
The plaintiff has owned and operated a mobile crane service for many
years. On October 28, 2011, Pacific Coast Terminals (“PCT”) hired the plaintiff
to use the crane to move large rolls of conveyor belt from a stockpile at the
Port Moody premises of PCT a distance of approximately thirty feet to another
area where the conveyor belt rolls were to be held by the crane and unrolled by
other equipment onto a large conveyor belt assembly. Each roll of the conveyor belt
weighed approximately five tons.

[2]            
During one of the lifts, as the plaintiff was backing his truck into
position on a sloped portion of the premises, the conveyor belt, which was
attached to the crane, fell off of the deck of the truck, pulling the truck and
crane over onto one side. As the boom of the crane had been partially extended
and attached to the conveyor belt roll, as the truck rolled onto its side the
boom struck a nearby vehicle owned by PCT causing considerable damage to the
vehicle.

[3]            
The plaintiff claims indemnity from the Insurance Corporation of British
Columbia (“ICBC”) for the costs incurred due to the damage to the PCT vehicle.
A restriction on indemnity in the plaintiff’s insurance policy excluded “damage
arising, directly or indirectly, out of the operation of attached equipment at
a site where the attached equipment is being operated…”. There were listed
exceptions to the exclusion which the parties agree are not applicable to the
facts of this case.

[4]            
The issue before the Court boils down to whether the loss or damage to
the PCT vehicle was caused by the operation of the crane as opposed to the
operation of the truck.

II.              
Facts

[5]            
The statement of agreed facts included the following facts under the
headings “The Description of the Truck Crane and its Operation” and “The
Accident”:

THE DESCRIPTION OF THE TRUCK CRANE AND ITS OPERATION

8.         The crane has a telescoping boom and is equipped
with chains, straps, hooks, slings and shackles (“the rigging”) used to lift
and move heavy items. Before using the boom and rigging to lift and move a load
“outriggers” would be placed on either side of the truck to stabilize it. In
order to move the truck, the outriggers would be put back into their “stowed”
position.

9.         The controls for the outriggers and the Crane are
outside the cab of the truck on the flatbed portion of the truck.

10.       The Crane cannot be operated unless the parking
brake of the truck is on. Likewise the truck cannot be operated if the Crane
power is in operation.

11.       When transporting the truck on a highway the boom
is normally retracted and down, secured and parallel with the flat bed of the
truck.

THE ACCIDENT

12.       On the day of the accident the plaintiff
successfully completed moving one conveyor belt roll as required by PCT. The
accident occurred while the plaintiff was moving a second roll (“the roll”) of
conveyor belt material.

13.       To move the roll the plaintiff parked the truck and
put the outriggers in position beside the stockpile where the roles of conveyor
belt material were located. The boom was extended at least 8 feet and swung
towards the roll on the passenger side of the truck. The roll was attached to
the crane rigging by way of a sling and hook and the Crane was used to lift it
and place it on the truck with the axis of the roll parallel to the length of
the flatbed.

14.       After placing the roll on the flat bed of the truck
the plaintiff slackened off the tension in the rigging but left the crane hook
attached to the sling. The roll was not otherwise secured to the truck bed. The
crane boom was left extended towards the back of the truck and in the raised
position.

15.       The plaintiff then backed his truck up
approximately 30 feet to a location where he had offloaded the first roll.
After stopping the truck the plaintiff then determined that he would need to
back up a further 5 feet to be in the desired location for placement of the
roll.

16.       The plaintiff did not realize that the pavement was
uneven and sloped a bit. In the process of backing up the truck a further few
feet, the back of the truck leaned to the passenger side. The roll then rolled
off the passenger side of the flat bed and onto the ground. Once it landed on
the ground the conveyor belt continued to roll away from the truck and with the
sling used to lift it still hooked to the rigging. As it did so, it reached the
end of the slack, pulled the tip of the boom around to the passenger side of
the truck, continued rolling away and eventually pulled the truck and crane
right over.

17.       When the truck and
crane flipped over, the boom of the crane landed on the PCT truck, damaging it.

[6]            
Mr. Dadey testified at trial and the following evidence from his
testimony is also relevant to the description of the truck and crane, and the
accident. Mr. Dadey’s evidence can be paraphrased as follows:

a)    At
the time of the accident the crane was in the “up” position and was extended
approximately six feet. The boom was extended straight over the back of the
deck of the truck.

b)    The
boom had been locked in place by Mr. Dadey so it could not swing.

c)     Once
the roll was lifted and placed on the flatbed of the truck, Mr. Dadey lifted
the outriggers, took the crane pump out of gear, got off of the flatbed portion
of the truck and entered the cab. He then released the truck brake in order to
back up to the location near the conveyor apparatus for unloading.

d)    The
roll was not suspended over the deck of the truck but was placed on the deck
with the rigging still connected to the roll with several feet of slack in the
rigging, i.e. the roll was sitting under its own weight. When the roll had been
picked up, Mr. Dadey had noticed that the roll had a flat spot on the bottom
where it had been sitting in the PCT yard.

[7]            
The plaintiff was indemnified by ICBC for the damages caused to his
truck and crane but ICBC refused to indemnify the plaintiff for the damage to
the third party vehicle. The plaintiff claims damages amounting to just over
$17,000 for the damage to the PCL vehicle. At the time of this incident, Mr.
Dadey held a valid motor vehicle insurance policy for his Freightliner truck.
The policy was subject to certain restrictions on indemnity which are listed in
s. 72(1)-(2) of the Insurance (Vehicle) Regulation, B.C. Reg. 447/83.

III.            
Issues

[8]            
The issue before me is whether the restrictions on indemnity in s. 72 of
the Insurance (Vehicle) Regulation prevent Mr. Dadey from recovering
from ICBC monies paid by him as a result of the damage to the PCT truck caused
by the accident.

[9]            
Section 72 of the Insurance (Vehicle) Regulation states, in part:

72 (1) in this section “attached equipment” means
machinery, apparatus or equipment that is:

a)     mounted or
attached to a vehicle, and

b)     not
required for the safe operation of the vehicle on a highway.

(2)The corporation shall not indemnify an insured for
liability imposed by law for injury, death, loss or damage arising, directly or
indirectly, out of the operation of attached equipment at a site where the
attached equipment is being operated, unless the attached equipment …

There are exceptions to the exclusion which are not
relevant to the case at bar.

[10]        
The parties agree the crane mounted on the back of the truck constitutes
“attached equipment” under s. 72(1) of the Insurance (Vehicle) Regulation.
They agree that the vehicle was being operated at “a site” as the term is used
in this section. They also agree that the crane was not required for the safe
operation of the truck on a highway.

[11]        
The main interpretation issues, on which the parties disagree are:

a)    whether
the words “directly or indirectly” in s. 72(2) relate to the damage caused by
the operation of the equipment or the nature of the operation being undertaken
with the equipment; and

b)    whether
the damage arose out of the “operation” of attached equipment (the crane).

IV.           
Discussion

A.             
Principles of Interpretation

[12]        
Neither party provided me with persuasive or binding authority on the
interpretation of the above phrases, either relating to the provision in issue
or similarly-worded ones. I must therefore rely on principles of interpretation
to evaluate the meaning of the phrases in issue.

[13]        
I accept that, as the plaintiff submits, there are particular principles
of interpretation that apply in insurance coverage cases. In Wormell v.
Insurance Corp. of British Columbia, 2010 BCSC 1028, [2010] B.C.J. No. 1459
in which Madam Justice Loo stated;

1. Principles of Construction

14.       The general principles that apply when interpreting
coverage and exclusion provisions of insurance policies are as follows:

1.     coverage
clauses should be construed broadly; and

2.     exclusion
clauses should be construed narrowly.

See: Amos v. Insurance Corp.
of British Columbia, [1995] 3 S.C.R. 405 at paras. 18-19; Derksen v.
539938 Ontario Ltd. [2001] 3 S.C.R. 398 at paras. 49-52; and Marjak
Services Ltd. v. Insurance Corp. of British Columbia, 2004 BCCA 455 at para.
40.

[14]        
Loo J. goes on to state that this applies alongside the general
principles of statutory construction:

15.       Although there are principles that apply
specifically to interpretation of insurance policies, the general principles of
statutory construction still form the foundation for statutory interpretation.

16.       Section 8 of the Interpretation Act, R.S.B.C.
1996, c. 238 directs the manner in which legislation is to be interpreted:

Every enactment must be construed as being remedial, and
must be given such fair, large and liberal construction and interpretation as
best ensures the attainment of its objects.

[15]        
Section 72 of the Insurance (Vehicle) Regulation must therefore
also be analysed according to the contextual or modern approach to statutory
interpretation set out in Elmer Driedger’s second edition of the Construction
of Statutes (Toronto: Butterworths, 1983) at p. 87:

Today there is only one
principle or approach, namely, the words of an Act are to 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.

This principle was adopted in Rizzo & Rizzo Shoes
Ltd. (Re), [1998] 1 S.C.R. 27.

[16]        
Bearing in mind these principles, I will now consider the two phrases in
issue in the instant case.

B.             
Do the words “directly or indirectly” relate to how the damage was
caused or the nature of the operation?

[17]        
The plaintiffs submits that the words “directly or indirectly” in s.
72(2) relate to how the damage was caused by the operation of the equipment,
and not to the nature of the operations being undertaken with the equipment.
More specifically, counsel submits in his written argument:

For instance, if while using the
crane Mr. Dadey struck a pole [presumably with the boom of the crane] which in
turn fell down and struck and damaged a car, the damage to the car was caused
“indirectly” by the use of the crane.

[18]        
The defendant submits that the words “directly or indirectly” refer to
the operation of the equipment. The defendant submits that the rules of
statutory interpretation require the words of the statute “to be looked at
carefully” and that the word “indirectly” was “used deliberately to include a
broader range of perils including loss or damage caused by something less than
the direct operation of the crane”.

[19]        
I accept the submission of the plaintiff relating to the inclusion of
the words “directly or indirectly” in s. 72(2). Reading the phrase “directly or
indirectly” in the context of the provision and in its grammatical sense, it is
clear that the phrase modifies the words “injury, death, loss or damage arising”
before it, and the words “operation of attached equipment”. In my view, if the
legislature had intended the phrase “directly or indirectly” to refer to how
the equipment was operated, the statute would have read “…arising out of the
direct or indirect operation of the attached equipment”. This reading is also harmonious
with the scheme of the act and regulations, given similar legislation and the
common law principles, which impose liability for directly and indirectly
caused damage. It is also the common sense interpretation as distinguishing
between direct and indirect operation of the attached equipment is meaningless
and does not make sense; the attached equipment was either operated or it was
not operated.

[20]        
I conclude that words “directly or indirectly” in s. 72(2) relate to the
damage caused by the operation of the equipment and not to the nature of the
operation being undertaken with the equipment.

C.             
Did the damage arise from the “operation” of the attached equipment?

[21]        
Section 72(2) refers to “liability imposed by law for injury, death,
loss or damage arising, directly or indirectly, out of the operation of
attached equipment”  and does not refer to risks other than risks that may
arise from the “operation of attached equipment”. The question that must be
answered in this case is whether the crane was being operated at the time of
the accident. If so, the plaintiff is not entitled to be indemnified for the
losses related to the damage of the PCT vehicle.

[22]        
The plaintiff submits that the accident and subsequent damages occurred
as a result of the use and operation of the truck, not the crane, while the
plaintiff was backing the truck into place so the roll could then be lifted
into place by the crane and unravelled by PCT staff onto the conveyor assembly.
It is submitted that the plaintiff was not operating the “attached equipment”
at the time of the accident as the crane was in a locked position, could not be
operated from the cab of the truck, and could not be operated while the truck
was in motion.

[23]        
In addition to the defendant’s argument that s. 72 expressly contemplates
indirect operation, which I have rejected, the defendant submits that there was
continued operation of the crane. Counsel stated, in her written submissions:

10.       It is the defendant’s
submission that from the moment the boom truck first set down its stabilizers
to lift the first roll, the “operation” of the crane began and it would have
continued until the last task for which the mobile crane was required, which in
this case would have been after the installation of the second roll of conveyor
belt, had been completed, the stabilizers retracted, the boom retracted,
lowered and secured on the boom rest, making the Freightliner ready for travel
on public roads and highways on to the next worksite where the crane was going
to be operated, had not the accident intervened and resulted in the crane &
truck simultaneously toppling over.

[24]        
Counsel for the defendant adds that the rigging, including the chains
and hook continued to be connected to the roll and hence connected to the crane
and that the crane continued, even after the roll was placed on the flatbed, to
perform an active role in the “operation” for which the crane had been
retained. Counsel adds:

17.       The defendant submits
that the facts that (1) the roll was still attached to the crane by its
rigging, (2) not secured to the flatbed, (3) the boom was extended and (4)
raised, constitute continued operation of the crane.

[25]        
Counsel provided me with authorities in which the term “use or
operation” was judicially considered. Cases dealing with this expression often
treat the phrase as a whole rather than separating “use” and “operation”. The
cases that deal with the two together and fail to distinguish between them are,
for the most part, unhelpful as it seems that “use or operation” has a distinct
legal meaning in the automobile insurance context that is different from the
word “operation” by itself. In Strickland v. Miller, [1998] O.J. No.
2762, Taliano J. noted the difference between the two words:

39        The cases provide a
broad definition of the term "use" within which Miller’s act of
changing the vehicle’s tires can clearly be captured. It has been suggested,
however, that the term "use" is broader than "operation"
(Stevenson, supra, at p. 674 and pp. 676-677). The term
"operation" falls within the comprehensive category delineated by
"use" (Alberta Motor Assn. v. Thakur (1997), 42 C.C.L.I.
(2d) 271 (Alta. Q.B.)). However, it is not synonymous with, and is of a
narrower import than, the word "use". "Use" is not
necessarily "operation" of the vehicle. For example, in the case
of Hykawy v. Man. Public Insurance Corp. (1988), 36 C.C.L.I. 279
(Man. Q.B.), a coverage clause described an insured to be one who was
"driving, riding in or on, or operating, a motor vehicle, trailer, or
semi-trailer…". The Court held that the applicant who was injured when
he was towed along the frozen Red River on an inner tube tied behind the
vehicle, while arguably "using" the motor vehicle, was not
"operating" it within the coverage of the regulation. The Court’s
reasoning appeared at pp. 285-286:

The key issue still remains
the extent of the words "or operating". The words are not defined in
either the Regulation or the Act… .

Applicant referred the Court
to a number of decisions in which the words "operation and use" or
"use and operation and use" are discussed including a decision of
Bastin J. in Huba v. Schulze (No. 2) (1963), 41 W.W.R. 530, 37 D.L.R. (2d) 570 (Man. Q.B.), which provides a discussion and review
of all the cases cited by applicant. The reading of that decision persuades
me that if s. 5(1) of the Regulation provided for use and operation, applicant,
all things being equal, would be a party to whom the section applied. That,
however, is not how the section reads and even giving the section the widest
possible interpretation I cannot presume to read in the word "use"
with the word "operation". The words "use and operation"
are a standard phrase in the field of automobile insurance as demonstrated by
the decisions cited to me by applicant and if the word "use" does not
appear in s. 5(l), I have to assume that its omission was intentional. I
conclude, therefore, that applicant is not a person contemplated to be covered
by s. 5(1) of the Regulation. (emphasis added)

[Underlining emphasis added.]

[26]        
Taliano J. went on to note at para. 40 that:

"Operation" seems to
import the ability to regulate and control the management of the machine as a
machine, an element which may or may not be part of "use".

However, Tailano J. also noted at para. 48 that a
conservative definition of “operate” may no longer be appropriate in light of
the Supreme Court’s ruling in Amos v. Insurance Corp. of British Columbia,
[1995] 3 S.C.R. 405. (I note that while the case provides useful comments, it
does not decide what is covered by the term “operation” as Tailano J. only had
to determine if there was a possibility that the claim fell within the
coverage. He found that what was included in “operation” was an open question.)

[27]        
The line of authority summarized by Loo J. in Wormell at para.
14, states that exclusion clauses must be construed narrowly. In my view, this
requires that the word “operate” be interpreted conservatively. I adopt the narrower
definition from Strickland, that “operation” requires the ability
to regulate and control the management of the machine as a machine.

[28]        
This definition accords with the grammatical and ordinary sense of the
word. Applying the principles of statutory interpretation set out by Driedger,
I must look at the grammatical and ordinary sense of the word “operate”. The
definition set out in the Canadian Oxford Dictionary, K. Barber, ed.
(Toronto: Oxford University Press, 1998) defines “operate” as follows:

1. tr. manage,
work, control; put or keep in a functional state.

These two definitions appear to limit operation to the time
when the crane was actually being directly controlled.

[29]        
The plaintiff placed the roll on the deck or flatbed of the truck, albeit
with the rigging still attached to the roll. Only the truck was being operated,
as Mr. Dadey was, at the time of the accident, in the process of backing up the
truck to get it into position for the PCT staff to unroll and connect the
rubber conveyor belt. Contrary to the defendant’s submission, operation of the
crane was not continuous, and did not continue while Mr. Dadey was driving the
truck as he could not “operate” the crane within the meaning of s. 72(2) of the
Insurance (Vehicle) Regulation. While Mr. Dadey was driving the truck,
although the crane may not have been in use, he could not “manage”, “regulate”,
“work” or “control” the crane as a machine as the truck was in motion and there
was a separate set of controls for the crane which could not be operated at the
same time.

[30]        
Therefore, having examined the broader scheme, the context and the grammatical
and ordinary sense of the words, and in light of the principle of narrowly
construing exclusion clauses, I am satisfied that the crane may have been in
“use” but was not in “operation” at the time the accident occurred.

V.             
Conclusion

[31]        
For the foregoing reasons, I have found that the crane was not being
operated within the meaning of s. 72 of the Insurance (Vehicle) Regulation
at the time the damage arose. Thus, Mr. Dadey is entitled to be indemnified for
the damage to the PCT truck.

[32]        
Unless there are matters of which I am unaware, the plaintiff is
entitled to his costs.

“Jenkins J.”