Miller, through his Litigation Guardian Miller, et al. v. Carluccio et al. [Indexed as: Miller v. Carluccio]

91 O.R. (3d) 638

Court of Appeal for Ontario,

Doherty, Armstrong and MacFarland JJ.A.

May 12, 2008

Insurance -- Automobile insurance -- Ministry of Transportation having practice of giving notice prior to expiration date of driver's licence -- Insured reasonably relying on Ministry to send out notice of pending expiration of its employee's driver's licence -- Ministry failing to do so -- Insured not "permitting" its employee to drive while not authorized to do so -- Insured covered under policy.

The motion judge found that the corporate insured was not covered by an insurance policy as it permitted its employee driver to drive without a valid driver's licence. The corporate insured appealed.

Held, the appeal should be allowed.

There was evidence before the motion judge that the corporate insured was a small family-run operation, that the employee driver P lived with his mother C, who was the operating mind of the company, and that C had an established method of checking P's mail as well as any mail directed to the company. The Ministry of Transportation had a practice of sending out notice of the pending expiration of a driver's licence, and failed to do so in P's case. The insured took reasonable steps to keep informed of the status of P's licence, and did not "permit" P to drive when he was not authorized by law to do so. The word "permit" connotes knowledge, wilful blindness, or at least a failure to take reasonable steps to inform one's self of the relevant facts. The insured was covered under the policy. [page639]

APPEAL from the order of Walters J. (2007), O.R. (3d) 604, [2007] O.J. No. 3181 (S.C.J.) that the insured was not covered under the policy.

Cases referred to Co-Operative Fire & Casualty Co. v. Ritchie, 1983 CanLII 155 (SCC), [1983] 2 S.C.R. 36; Peters v. Saskatchewan Government Insurance Office, 1956 CanLII 203 (SK CA), [1956] S.J. No. 45, 2 D.L.R. (2d) 589, 18 W.W.R. 80, [1956] I.L.R. Â1-219 at 41 (C.A.)

Ronald P. Bohm, for appellants. Donald G. Martin, Q.C., for respondent.

[1] Endorsement BY THE COURT: -- The motion judge concluded, at para. 25:

There is no evidence before the court that the insured corporation took any steps whatsoever to ensure that its drivers remained in possession of a valid driver's licence. Without that evidence, there can be no finding of reasonable care or due diligence on the insured corporation's part.

[2] Acknowledging the deference due to the motion judge's findings, we cannot agree with her conclusion in para. 25.

[3] There was unchallenged evidence through a solicitor's affidavit that Maria Carluccio, the owner of the corporate appellant and the mother of Pat, the other defendant, routinely and systematically sorted out and checked the mail sent to her home where she lived with Pat. The home was also the corporate headquarters. The corporate appellant is a small family-owned construction business.

[4] According to Mrs. Carluccio's unchallenged statements, no notice was ever received from the Ministry that Pat's licence would expire in January 2006 or that it in fact had expired. According to her, Pat had no history of not renewing his licence or driving with an expired licence. Paragraph 16 of the relevant affidavit reads:

I am advised by Maria Carluccio and verily believe that she believes the licence is a mere clerical or administrative task performed by the Ministry of Transportation of Ontario and that usually notice is given prior to the expiration date of the licence and it always has been in the past.

[5] Implicit in this assertion is that the corporate appellant relied on the Ministry sending out notice of any pending expiration of a driver's licence. In our view, it was not unreasonable for the corporate appellant to rely on the Ministry to do so.

[6] The corporate appellant is off coverage if it "permitted" Pat to drive the vehicle while he was not authorized by law to do so. We think the word "permits" connotes knowledge, wilful blindness, or at least a failure to take reasonable steps to inform one's [page640] self of the relevant facts: see Peters v. Saskatchewan Government Insurance Office, 1956 CanLII 203 (SK CA), [1956] S.J. No. 45, 18 W.W.R. 80 (C.A.); Co-Operative Fire & Casualty Co. v. Ritchie et al., 1983 CanLII 155 (SCC), [1983] 2 S.C.R. 36. In this case, we have regard to the following facts not referred to by the motion judge:

-- This was a small family-run operation and the employee driver Pat happened to live with his mother who was the operating mind of the company and had a well established method of checking Pat's mail as well as any mail directed to the corporation;

-- the Ministry had a well-established and well-known routine for sending out notice of pending expirations which for some reason was not followed in this case; and

-- No notice of the pending expiration was received by Pat.

[7] Having regard to these facts, we think the corporate appellant did take reasonable steps to keep itself informed of the status of Pat's driver's licence. Consequently, it cannot be said that the corporate appellant permitted him to drive when he was not authorized by law to do so.

[8] The corporate appellant is covered under the policy.

[9] We do not, given our determination with respect to the corporate appellant, have to decide whether Pat was off coverage or not as an insured.

[10] In the result, the appeal is allowed, para. 3 of the order of Justice Walters of August 23, 2007 is set aside and in its place an order to go declaring that the respondent, Aviva Insurance Company of Canada, is obligated under the terms of the policy to defend and indemnify to the full extent of the policy the corporate appellant, Carluccio Construction Inc.

[11] The appellant is entitled to its costs here and below. Counsel have agreed that costs in the amount $10,000, inclusive of disbursements and GST is appropriate. This amount covers both the costs of the motion and the costs of the appeal.

Appeal allowed.