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Insurance - Auto - Conditions. Pridmore v. Drenth
In Pridmore v. Drenth (Ont CA, 2023) the Court of Appeal considered how the road-trail 'permission' of an insured for their son to operate an ATV effected policy-coverage, here in relation to an 'authorized by law' policy condition.
In these quotes the court cites the motion judge's analysis:[3] Novex denied Theodore coverage on the basis that he was in breach of Statutory Condition 4(1) (“SC 4(1)”) of the insurance policy by permitting Tyler to operate the ATV on a highway when he did not have the requisite driver’s licence. SC 4(1) provides as follows: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. ....
[26] The motion judge then considered whether Theodore’s breach of SC 4(1) “tainted” the entire trip. He found it did not because the breach of a statutory condition must be determined at the specific time of the incident and the incident occurred on a highway on which Tyler had not been given permission to drive.
[27] In reaching his conclusion, the motion judge relied on Becamon v. Wawanesa Mutual Insurance Company, 2007 CarswellOnt 9747 (S.C.), aff’d 2009 ONCA 113, 94 O.R. (3d) 297. In Becamon, Ms. Becamon had a G1 driver’s licence so was required to be accompanied by a fully licensed driver seated beside her. She drove to the mall where the accident occurred without the requisite licensed driver seated by her. The insurance company asserted she was in breach of SC 4(1) but the court did not agree. It ruled that the mall parking area was not a highway and, consequently, Ms. Becamon was not in breach of SC 4(1) at the time of the accident. Therefore, the insurance company had a duty to defend and indemnify her.
[28] Based on the reasoning in Becamon, the motion judge was satisfied that if the incident had occurred on a trail in a field, Novex would be obliged to defend Tyler. In light of his findings on the limited and specific nature of Theodore’s permission for Tyler’s use of the ATV, coupled with his finding that Theodore did not know and ought not to have known that Tyler would drive on any highway other than Central Lane, although Theodore breached SC 4(1) that breach did not taint the entire trip. Accordingly, he found that Theodore was not in breach of SC 4(1) at the time of the incident.
[29] The motion judge then considered whether, if Theodore having allowed Tyler to drive on Central Lane did “taint the entire trip,” relief from forfeiture was warranted. He relied on Kozel v. The Personal Insurance Company, 2014 ONCA 130, 119 O.R. (3d) 55, in which this court applied the three-part test in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490. At para. 31 of Kozel, this court directed that, in exercising its discretion, the court must consider three factors: (1) the reasonableness of the breaching party’s conduct; (2) the gravity of the breach; and (3) the disparity between the value of the property forfeited and the damage caused by the breach.
[30] Before considering the three-part test, the motion judge was required to resolve two threshold questions: Kozel, at para. 39. On the first threshold question, the motion judge concluded that Theodore’s breach of SC 4(1) constituted imperfect compliance with a Policy term, rather than non-compliance. In so concluding, he found that Theodore’s breach was “relatively minor” because:. Theodore gave Tyler permission to drive the ATV on Central Lane but on no other highway;
. of the short distance Tyler was to take on Central Lane; and
. of the difference in nature between Central Lane and that of a highly travelled highway. [31] Second, based on Kozel, he found that relief was available under s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43, despite s. 129 of the Insurance Act, R.S.O. 1990, c. I.8.
[32] The motion judge then considered the three-part Saskatchewan River Bungalows test. On the first factor, he found that Theodore’s conduct was reasonable because Theodore gave Tyler permission to drive the ATV on Central Lane solely for the purpose of going from his home to the fields and trails. On the second factor, the motion judge found the gravity of Theodore’s breach was minor, given the nature of Central Lane. On the third factor, he accepted Novex’s concession that Breanne had satisfied it. In these quotes the court states it's own conclusions:[39] ... Novex concedes that the motion judge applied the correct legal principles in determining whether Theodore was in breach of SC 4(1) at the time of the incident. In my view, the motion judge’s findings are not “clearly wrong” nor are they “unsupported by the evidence”: Kerr v. Danier Leather Inc. (2005), 2005 CanLII 46630 (ON CA), 77 O.R. (3d) 321 (C.A.) at para. 171, aff’d 2007 SCC 44, [2007] 3 S.C.R. 331, citing H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401. Consequently, there is no basis for appellate intervention with the motion judge’s determination that Theodore is entitled to the third-party coverage.
[40] In terms of the legal principles, the motion judge correctly approached the critical issue of the terms of the permission that Theodore gave Tyler for use of the ATV on the day in question. He divided his analysis into two parts. First, he set out the law for interpreting “permit,” in the context of SC 4(1), in accordance with this court’s decision in Miller. Permission connotes “knowledge, wilful blindness, or at least a failure to take reasonable steps to inform one’s self of the relevant facts”: Miller, at para. 6. Based on that, the motion judge found that Theodore was in breach of SC 4(1) when he permitted Tyler to drive the ATV on Central Lane, because Central Lane is a highway and Tyler’s G1 licence barred him from driving on a highway without a licensed driver seated next to him.
[41] The motion judge then proceeded to the second part of his analysis. The fact that Theodore was in breach of SC 4(1) when he permitted Tyler to drive on Central Lane, to access the fields and to return home, does not automatically disentitle Theodore from coverage under the Policy. As the motion judge stated, to determine whether Theodore was entitled to coverage, the breach of SC 4(1) had to taint the trip, including at the time the incident took place. Based on Becamon, because Theodore did not know nor ought to have known that Tyler would drive the ATV on a highway other than Central Lane, the motion judge concluded that Theodore was not in breach of SC 4(1) at the time of the incident.
[42] It is within this framework that Novex’s submissions on appeal must be considered. In my view, it is simply not correct that the motion judge’s findings are flawed as Novex alleges. He made factual findings as required by the applicable legal principles. In so doing, the motion judge acknowledged and addressed Novex’s arguments relating to the facts and gave compelling reasons for rejecting those arguments.
[43] The motion judge’s reasons for concluding that Theodore was not in breach of SC 4(1) at the time of the incident include the following. The ATVs were under lock and key in the shed. Only Theodore had the key. Whenever Tyler wanted to use an ATV, he had to have his father’s permission. Theodore knew that Tyler could not drive unaccompanied on a highway because he had only a G1 licence. While Theodore had permitted Tyler to drive on Central Lane, that was based on his mistaken belief that Central Lane was not a highway.
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