Court File and Parties

COURT FILE NO.: 2240/18 DATE: 2024-12-05 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Sarah Nowakowski Plaintiff

– and –

Katrina Campbell, Allison Malcolm, Shaun Le Brun and Allstate Insurance Company of Canada Defendants

-- and –

Economical Insurance, added by Order pursuant to s. 258(14) of the Insurance Act, R.S.O. 1990, c. I.8, as amended Statutory Third Party

Counsel: Johanna Drennan, for the Plaintiff Beau Chapman, for the Defendant, Allstate Insurance Company Allison Malcolm, Self-represented, Observing Mahdi Hussein, for the Defendant Katrina Campbell No one appearing for the Defendant, Shaun Le Brun Cameron Foster and Mark O’Donnell, for the Third Party

HEARD: November 19, 2024

Reasons for Decision

TEN CATE, j.

Introduction

[1] Before the court is a motion for a determination of an issue before trial relating to a question of law pursuant to Rule 21.01(1)(a) of the Rules of Civil Procedure.

[2] The question put to me on this motion is whether, pursuant to section 239(1) of the Insurance Act, the “personal” consent of the co-owner is required for a motor vehicle policy to provide insurance coverage for liability imposed by law arising from the use of an automobile insured under the policy.

The Agreed Statement of Facts

[3] Further to my earlier order, the parties filed an Agreed Statement of Facts:

a. the Defendants, Allison Malcolm and Shawn Le Brun, were joint registered owners of a 2003 Dodge pick-up truck;

b. at the time of the accident, Ms. Malcolm held a policy of insurance with Economical Insurance;

c. Mr. Le Brun was never a named insured or listed driver on the policy;

d. the Defendant, Katrina Campbell, was never a named insured or listed driver on the policy;

e. the Defendant, Ms. Campbell was involved in an accident on November 15, 2016 while operating the Dodge truck;

f. Ms. Malcolm never had any discussions with Ms. Campbell about whether she could possess or operate the Dodge truck at any time prior to and including the day of the accident;

g. all of Ms. Campbell’s alleged discussions about possession and operation of the Dodge truck were solely with Mr. Le Brun;

h. Ms. Malcolm had no knowledge whatsoever that Ms. Campbell was going to be possessing/operating the Dodge Truck at any time prior to and including the date of the accident. In particular, Ms. Malcolm had never seen Ms. Campbell possess/operate the Dodge truck at any relevant time; and

i. On the date of the accident, Mr. Lebrun may have provided the Ms. Campbell with his express permission to possess and operate the Dodge truck.

Analysis

[4] This dispute is between Economical Insurance, which issued a policy of insurance to Ms. Malcolm, and Allstate Insurance Company of Canada, which insured the Plaintiff, Sarah Nowakowski, pursuant to the OPCF 44R (Family Protection Endorsement) on her own policy of insurance. Ms. Nowakowski and Allstate are the moving parties and Ms. Campbell supports their position.

[5] Automobile insurance is compulsory in Ontario pursuant to the Compulsory Automobile Insurance Act. The purpose of this legislation is to protect victims of automobile accidents “from having no means of seeking damages from persons who might have caused those damages without having the protection of automobile insurance”. See for instance, Matheson v. Lewis, 2014 ONCA 542, at para. 36 and Michaud-Shields v. Gough, 2018 ONSC 4977 at para. 15.

[6] The owner of a motor vehicle is liable for accidents caused by its operation under s. 192 of the Highway Traffic Act except where subsection (2) applies, which provides as follows:

Section 192 (2) The owner of a motor vehicle or street car is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle or street car on a highway, unless the motor vehicle or street car was without the owner’s consent in the possession of some person other than the owner or the owner’s chauffeur.

[7] The purpose of s. 192(2) was noted in Fernandes v. Araujo, [2015] ONCA 571, quoting Gillese J. in Finlayson v. GMAC Leasco Ltd., [2007] ONCA 557 at para. 21:

…“to protect the public by imposing, on the owner of a motor vehicle, responsibility for the careful management of the vehicle”. The provision is an integral element of the Highway Traffic Act ’s mandatory licensing and insurance scheme to ensure the public safety. The owner has the right to give possession of the vehicle to another person, but this provision “encourages owners to be careful when exercising that right by placing legal responsibility on them for loss to others caused by the negligent operation of the vehicle on a highway”. Fernandes v. Araujo, [2015] ONCA 571 at para. 20.

[8] If the motor vehicle is driven by a person who has the owner’s consent and is involved in an accident, s. 3.2 of the Ontario Automobile Policy (OAP) provides coverage: “You are covered when you, or anyone else in possession of a described automobile with your consent, uses or operates it. We will consider these other people insured persons.” If there is no consent (express or implied), the vehicle owner is not held liable for the actions of the unauthorized driver. The vehicle is treated as uninsured. Michaud-Shields, supra, at para. 18.

[9] The Insurance Act mandates a scheme to provide for limited insurance coverage where the operation of an uninsured automobile injures a person. The coverage is provided by the person’s own insurer, but coverage is limited to the minimum required by s. 251 of the Insurance Act, which is $200,000 for liability claims. Michaud-Shields, supra, at para. 19.

[10] To mitigate the consequences of being injured by an uninsured or underinsured motor vehicle, purchasers of automobile insurance in Ontario can buy, for an additional premium, added coverage known as the OPCF 44R (Family Protection Endorsement). Michaud-Shields, supra, at para. 20. The Plaintiff in this case purchased such coverage from Allstate.

[11] Section 239(1) of the Insurance Act is the legislative provision which gives effect to the OAP:

[Subject to section 240], every contract evidenced by an owner’s policy insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract and within the description or definition thereof in the contract, against liability imposed by law upon the insured named in the contract or that other person for loss or damage,

(a) arising from the ownership or directly or indirectly from the use or operation of any such automobile; and

(b) resulting from bodily injury to or the death of any person and damage to property. [Emphasis added.]

Section 240 of the Insurance Act deals with situations in which the liability policy names an “excluded” driver which requires the owner and driver to sign a prescribed form called an OPCF 28A. In this case, neither Mr. Le Brun, nor Ms. Campbell were excluded drivers; therefore s. 240 does not apply.

[12] Simply put, s. 239(1) states that an owner’s policy insures the named person and anyone else who drives their vehicle with their consent.

[13] Economical takes the position that for its policy to respond, Ms. Malcolm’s “personal” consent was required. It relies primarily upon a 1960 case called Barham v. Marsden, [1960] O.J. No. 60 (C.A.) which was decided pursuant to the former s. 50(1) of the Highway Traffic Act, R.S.O. 1990, c. H.8:

The owner of a motor vehicle shall be liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle on a highway unless the motor vehicle was without the owner’s consent in the possession of some person other than the owner or his chauffeur, and the driver of a motor vehicle not being the owner shall be liable to the same extent as the owner.

[14] The court in Barham decided that where the co-owner did not provide his consent personally to the third-party driver, the co-owner was not vicariously liable for the loss. However, when Barham was decided, the motor vehicle policy coverage section of the Insurance Act, R.S.O. 1950, c. 183, s. 208 read:

Section 208 -- Every driver’s policy shall insure the person named therein against the liability imposed by law upon such insured for loss or damage,

(a) arising from the operation or use by him of any automobile, other than an automobile owned by or registered in the name of such insured, while he is personally in control as driver or occupant of such automobile within Canada or the United States of America, or upon a vessel plying between ports within those countries; and

(b) resulting from,

(i) bodily injury to or death of any person, or

(ii) damage to property, or

(iii) both. [Emphasis added.]

[15] In 1980 the Insurance Act, R.S.O. 1980, c. 218, s. 209(1) was amended to read:

Section 209(1) Every contract evidenced by an owner’s policy insures the person named therein and every other person who with his consent personally drives an automobile owned by the insured named in the contract and within the description or definition thereof in the in the contract against liability imposed by law upon the insured named in the contract or that other person for loss or damage,

(a) arising from the ownership, use or operation of any such automobile; and

(b) resulting from bodily injury to or the death of any person, and damage to property. [Emphasis added.]

[16] At the time Barham was decided, motor vehicle policies only provided insurance coverage to the named insured while “personally in control as driver or occupant”. The issue of “consent” to someone else driving the vehicle therefore did not arise.

[17] In Collins v. Wright, [1988] O.J. 389 (H.C.J.), decided in 1988, the court was faced with a similar fact situation to ours. Prior to the accident, a woman purchased a car, registered it in her name, and purchased a policy of insurance. Her son was listed as a principal driver. The son agreed that only the two of them could drive the car. They also agreed that he would pay her for the car and that ultimately the car would be transferred to him. The son made some payments and took the car with him when he moved out of his mother’s home. He then loaned it to his girlfriend, who was involved in an accident.

[18] The court followed Barham and concluded that pursuant to s. 209(1) of the Insurance Act, R.S.O. 1980, c. 218, s. 209(1), because the mother did not “personally” provide her consent, the insurance policy provided no coverage to the girlfriend.

[19] In 1990, s. 209(1) was amended to remove the word “personally” such that s. 239(1) now reads, “who with the named person’s consent drives”; the rest of the section is identical.

[20] The parties agree that in the 34 years since the removal of the word “personally”, Collins has not been referred to or been followed in any decisions related to the interpretation of the consent provision of the current s. 239(1).

[21] The moving parties take the position that the removal of the word “personally” from the operative section of the Insurance Act is fatal to Economical’s position because its duty to respond and indemnify does not arise from the vicarious liability provisions of the Highway Traffic Act, but rather from its statutory and contractual obligations to respond to the loss pursuant to section 239(1) of the Insurance Act. In other words, the duty to respond arises independently from the current vicarious liability provision of the Highway Traffic Act. I am urged to conclude that the effect of the 1990 amendment to the Insurance Act is that under current law, for a motor vehicle policy of insurance to respond to a loss where the driver was not a named insured under the policy, the driver now only requires the named insured’s “consent” to drive the insured vehicle, and not the named insured’s “personal consent”.

[22] Unlike when Collins was decided, consent under section 239(1) can be delegated to another individual without the named insured’s knowledge and even contrary to their express wishes: Finlayson v. GMAC Leaseco Ltd., [2007] ONCA 557, at paras. 23-29. The “consent” of the named insured flows from the named insured through an intermediary to another individual drive and can be express, implied or both. See for instance, Michaud-Shields v. Gough, 2018 ONSC 4977 at para. 23.

[23] The Court of Appeal, in Cummings v. Budget Car Rentals Toronto Ltd., (1996) O.R. (3d) 1 (C.A.) considered the status of section 239(1) in the context of the vicarious liability provisions of the Highway Traffic Act.

[24] In Cummings, the owner of a motor vehicle (a rental company) consented to the possession of its vehicle to an individual who then loaned it to a third-party. Although the main issue before the court was whether the insurer had a duty to defend, one of the questions posed for determination was whether s. 192 of the Highway Traffic Act applied in determining whether the driver was driving with the owner’s consent within the meaning of the insurance policy and s. 239(1) of the Insurance Act.

[25] When answering this question, the Court of Appeal stated, in part:

Section 192 was enacted for the benefit of the innocent victims, not the negligent driver. It is significant as well that “consent” under s. 192 is different than consent under s. 239 of the Insurance Act. The consent under s. 192 is to possession of the vehicle. The consent under s. 239 of the Insurance Act, and hence under the insurance policy, is to driving or occupancy of the vehicle. The two concepts are not identical. Cummings, supra, at page 28.

[26] The Court of Appeal then stated:

While the route to consent is no doubt more difficult if the appellant cannot rely upon s. 192 of the Highway Traffic Act, I cannot say that it is not arguable or that the possibility that the insurer will be required to indemnify the appellant rests on nothing but speculation. Cummings, supra, at page 29.

[27] In my view, the Court of Appeal left open the door for this court to find that section 239(1) provides coverage without determination of whether the Highway Traffic Act also applies. Cummings makes it clear that there are two separate and independent schemes which interpret “consent” in the context of motor vehicle liability, such that section 239(1) of the Insurance Act operates independently from section 192(2) of the Highway Traffic Act. While normally these sections operate in tandem, in this case, which is particular on its facts, they diverge.

[28] The problem in this case is much simpler than as framed by counsel.

[29] The parties agree that Ms. Malcolm and Mr. Le Brun were registered co-owners of the vehicle. Although Mr. Le Brun was not listed as a named insured on the Economical policy, section 239(1) is triggered as soon as the named insured (Ms. Malcolm) gives express or implied consent to any intermediary, who then gives express or implied consent to the driver. Implicit and incident to co-ownership is Mr. Le Brun’s right to possess the vehicle with Ms. Malcolm’s consent, otherwise his ownership would be meaningless. As a result, pursuant to s. 192(2) of the Highway Traffic Act, Ms. Malcolm’s consent flowed through Mr. Le Brun to Ms. Campbell.

Disposition

[30] Therefore, I determine that pursuant to s. 192(2) of the Highway Traffic Act, and therefore s. 239(1) of the Insurance Act, the “personal” consent of Ms. Malcolm was not required for her motor vehicle policy to provide insurance coverage for liability imposed by law arising from the use or operation of the vehicle by Ms. Campbell.

Costs

[31] If the parties cannot agree on costs, they may make cost submissions limited to three pages (exclusive of Bills of Costs) within two weeks of the release of these reasons. There shall be no right of reply without leave of the court. If I do not receive submissions, I will assume the parties have settled the issue.

Justice E. ten Cate Released: December 5, 2024