COURT FILE NO.: CV-16-55866
DATE: 2023/02/01
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Breanne Pridmore
Plaintiff
- and -
Tyler Drenth and The Estate of Theodore Drenth by its Litigation Administrator, Sandra Drenth
Defendants
-and-
Novex Insurance Company
Third Party
Counsel: Daniel Strigberger and Leah Burlock for the Plaintiff Matthew Wells and Manvir Manku for the third party
HEARD: January 31, 2023, via Zoom
The Honourable Justice D. L. Edwards
JUDGMENT
[1] The Plaintiff brings this summary judgment against the Third Party and seeks a judgment declaring that the full third-party limits under Novex policy number AA3840420 were available to Theodore Drenth at the time of the incident of March 29, 2014.
[2] The Third Party seeks a dismissal of the summary judgment motion and a declaration that it was correct, on a balance of probabilities, to deny coverage.
[3] The Defendants did not file any materials on the motion, nor did they make any submissions.
[4] For the reasons set out below, I grant the Plaintiff’s summary judgment motion.
Background
[5] This action arises from an incident that occurred in Dunnville, Ontario on March 29, 2014, when Breanne Pridmore was a passenger on a four-wheeled all-terrain vehicle driven by Tyler Drenth and owned by Theodore Drenth.
[6] In 2013 Theodore purchased two new ATVs. He was the registered owner of both ATVs, but one was intended as a birthday present for Tyler. The ATVs were locked in the shed and only Theodore had a key to the shed.
[7] Theodore insured both ATVs with the Third Party under a standard Ontario automobile policy, number AA3840430, which included third party liability coverage of $1 million. Theodore and his spouse, Sandra were named as insureds on the policy. Tyler was also an insured on the policy when he operated the insured vehicle with Theodore’s consent.
[8] The Drenth home borders rural Dunnville and is a half-block from the rural fields with trails, where they rode the ATVs.
[9] They began and ended their rides by driving on Central Lane that was adjacent to rear of their house and this provided access to the off-road trails and fields.
[10] Since the incident Theodore has died and Sandra Drenth now acts as his litigation administrator.
The Incident
[11] On the day of the incident Tyler was asked by a friend to bring his ATV to a field bordered by Hutchinson Road and to use the winch on his ATV to pull his friend’s ATV out of the mud.
[12] As Theodore’s ATV was larger and more powerful than Tyler’s ATV and would be better able to pull the stuck ATV out of the mud, Tyler obtained his father’s consent to take his father’s larger ATV.
[13] Tyler first drove the ATV to Breanne’s apartment which was approximately a block from the Drenth home. She joined Tyler on the ATV.
[14] They then proceeded from her residence down Central Lane to the fields. After driving along various trails he reached his friend and then extracted his friend’s ATV from the mud. Next, they went to his friend’s home for lunch, during which time Tyler consumed a beer or two.
[15] On the way home, because of a snow squall, Tyler decided to get off the trails and travel along the shoulder of Bird Road. While driving along the shoulder of Bird Road, Tyler drove the ATV into a culvert between the shoulder of the road and a farmer’s field. The ATV rolled over, injuring both Breanne and Tyler.
[16] On the day of the incident Tyler possessed a G1 driver’s licence which required a licenced driver to be seated next to him when driving a motor vehicle on Ontario highways.
[17] Tyler was convicted of two Highway Traffic Act offences: driving the ATV on a highway and for operating a vehicle on a highway without a proper licence.
Agreed or Conceded Facts
[18] For this motion the following are agreed or conceded facts. At the time of the incident,
a) Novex policy number AA3840420 was in effect, naming Theodore and his spouse, Sandra Drenth, as named insureds.
b) Tyler was insured under that policy when he was operating a motor vehicle with Theodore’s consent.
c) Tyler was driving the ATV with the consent of Theodore.
d) With Theodore’s consent, Tyler routinely drove from their residence along Central Lane to access the trails on the fields, which was a distance of between 500 to 1000 yards
e) Central Lane is a highway as defined by the Highway Traffic Act.
f) Tyler possessed a G1 driver’s licence.
g) Tyler was driving the ATV on a highway.
h) Tyler violated the conditions of his G1 licence by driving the ATV on a highway, after consuming a beer; and
i) Tyler is not entitled to third party liability coverage from the Third Party.
Law on Summary Judgment Motions
[19] There is no issue as to the test for granting summary judgment. Hyrniak[^1], the Rules of Civil Procedure, and cases after Hyrniak make it very clear.
[20] I must grant summary judgment if I am satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. There is no genuine issue requiring a trial when I am able to reach a fair and just determination of the merits of the motion for summary judgment.
[21] This will be true when the process allows me to make the necessary findings of fact, to apply the law to those facts, and the process is a proportionate more expeditious and less expensive means to achieve a just result.
[22] As noted in Hyrniak, I should first determine if there is a genuine issue requiring a trial based only on the evidence before me, solely on the written record filed, and without using the fact-finding powers permitted in Rule 20.04(2.1) of the Rules of Civil Procedure.
[23] If there appears to be a genuine issue requiring a trial, I should then determine if the need for trial can be avoided by using the new powers under Rules 20.04(2.1). I may at my discretion use those powers, provided that their use is not against the interests of justice.
[24] In determining whether there is a genuine issue requiring a trial, Rule 20.04(2.1) grants me the power to weigh evidence, evaluate the credibility of deponents, and draw any reasonable inference from the evidence.
[25] Courts have developed basic principles for a summary judgment motion, and they include:
The moving party bears the legal and persuasive burden to establish that there is no genuine issue requiring a trial;
The responding party bears an evidentiary burden to establish that there is a genuine issue requiring a trial;
Each party must put their best foot forward and cannot rest upon allegations only; and
The court is entitled to assume that the record before it contains the core substance of the evidence the parties will present at trial.
Law regarding Driver’s Licences
[26] The Highway Traffic Act governs driving motor vehicles on Ontario highways. Section 32 of the Highway Traffic Act prohibits anyone from driving a motor vehicle on a highway unless they have a proper driver’s licence, and subsection 32(9) prohibits a person from driving a motor vehicle on a highway, while contravening a condition contained in their driver’s licence or imposed by the regulations.
[27] According to S.1(1) of the Highway Traffic Act, a “highway” includes
“common and public highway, street, avenue, parkway, driveway, square, place, bridge, viaduct or trestle, any part of which is intended for or used by the general public for the passage of vehicles and includes the area between the lateral property lines thereof”.
[28] A “highway” includes the shoulder of the road.[^2]
[29] Pursuant to Section 5 of Regulation 340/94, Driver’s Licences, a person possessing a G1 licence is required to have an accompanying G licenced driver seated next to him when driving on a highway.
[30] Further, section 44.1 Highway Traffic Act requires that a person possessing a G1 licence must have a blood alcohol concentration level of zero, while driving a motor vehicle on a highway.
[31] The Off-Roads Vehicle Act does not require a driver to be licenced while operating an ATV off-road, but the Act does not apply when the vehicle is operated on a “highway”. The definition of highway in this Act is the same as is contained in the Highway Traffic Act.
Novex Policy
[32] The Novex Policy is governed by Part VI of the Insurance Act and applicable Regulations. The policy contains Statutory Conditions pursuant to section 234 of the Insurance Act. 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 operates it.”
[33] If a driver breaches a condition of their driver’s licence, then they are not authorized by law to drive within the meaning of the automobile policy.
Position of the Parties
[34] The Plaintiff asserts that the sole issue to be determined in this motion is whether Theodore permitted Tyler to drive the ATV at the time of the incident when he was not authorized by law to drive it.
[35] The Third Party submits that Theodore permitted Tyler to drive the ATV when he knew or ought to have known that Tyler was operating the ATV in breach of a statutory condition on a highway, and therefore coverage should be denied.
Analysis Of Coverage
[36] The parties agree that this is an appropriate matter for a summary judgment motion. I agree.
[37] The parties also agree that the onus is on the Third Party to prove its case.
[38] The parties agreed upon certain pertinent facts.
[39] First, the uncontradicted evidence of Tyler and Theodore is that, on the day of the incident, Tyler was driving the ATV with Theodore’s consent, and that to access the trails in the fields, Tyler drove his ATV from his residence along Central Lane to the fields.
[40] The Plaintiff concedes, and I agree, that Central Lane is a highway as defined by the Highway Traffic Act.
[41] Based upon the definition of a “highway” in the Highway Traffic Act, and the evidence provided, Central Lane is a “highway”. Therefore, each time Tyler drove his ATV on Central Lane he breached Statutory Condition 4(1).
[42] Second, it is conceded by the Plaintiff that on the day of the incident Tyler breached the Statutory Condition 4(1) by driving on the shoulder of Bird Road, after having consumed a beer or two.
[43] Third, it is conceded by the Third Party that whether Theodore breached Statutory Condition 4(1) is a separate question from whether Tyler breached Statutory Condition 4(1).
[44] Fourth, the Third Party agrees that the breach of Statutory Condition 4(1) must occur at the time of the incident for coverage to be lost.
[45] The first question that arises from this analysis is whether Theodore knew or ought to known that Tyler would breach Statutory Condition 4(1) when he consented to Tyler driving his ATV on the day of the incident.
[46] Both Tyler and Theodore’s evidence was that they did not know that a G1 licence had special provisions or restrictions when a person holding such a licence drove an ATV on a highway. Given that Theodore was the owner of two ATVs and Tyler was the operator of one of them, their ignorance of this is no defence, nor is the fact that they did not consider Central Lane to be a highway.
[47] As was noted in Miller,[^3] the word “permits in the context of statutory condition 4(1) connotes knowledge, willful blindness, or at least a failure to take reasonable steps to inform oneself of the relevant facts”. It would be reasonable and prudent for an owner and operator of an ATV to inform himself of the laws and regulations related to its use.
[48] I find that Theodore ought to have known that a person driving alone on an ATV on Central Lane and holding a G1 driver’s licence, was a breach of Statutory Condition 4(1).
[49] The nature of the consent given to Tyler by Theodore is an important fact which I must determine.
[50] The parties disagree upon the terms of Theodore’s consent. The Third Party asserts that, in addition to Theodore granting consent to Tyler to drive on a highway—Central Lane—to access the fields, Theodore also granted Tyler permission to drive on the shoulder of roads, as he was under the mistaken belief that the shoulder did not constitute part of the highway. This, he asserts, constituted a breach of Statutory Condition 4(1).
[51] Further, the Third Party asserts that even if I find that Theodore did not consent to Tyler driving on shoulders of roads, since Theodore permitted Tyler to drive on Central Lane, which is a highway, should Tyler drive on another highway, Theodore could not then assert that he did not permit Tyler to do so.
[52] The Plaintiff asserts that Theodore consented to Tyler driving the ATV on Central Lane for the sole purpose of accessing the trails and returning home. He did not consent to Tyler driving on the shoulder of any road. Counsel asserts that safety was a primary concern of Theodore, and it is clear that Theodore’s consent did not include a consent for Tyler to drive on shoulders of roads.
[53] In Tyler’s statement to the insurer, he stated “Most of the time my ATV is driven off the road on trails and in fields. I normally did not drive on the roads, just on the shoulders.”
[54] In Theodore’s statement he stated, “Tyler normally rides the ATV in fields and on trails and on the shoulders of roads to get to other trails,” and “[w]e never ride the ATVs on the roadway, but we would sometimes cross over the roads to go to the trails”.
[55] In his examination for discovery, in response to a question about where he drove the ATV, Tyler answered, that “I would take them off road, on trails and farms and fields”.
[56] During Theodore’s discovery he agreed that he was careful to make sure that his ATV was not on the roadway and said “Yeah. We always stayed right to the side”.
[57] Finally in Tyler’s affidavit dated December 19, 2022, he deposed that
a) On the day of the incident his father consented because he thought that Tyler would drive directly to the open fields, via Central Lane, to assist his friend and then return the same way.
b) His father did not know, and Tyler did not tell him, that before he assisted his friend, he was picking up Breanne Pridmore at her residence, nor that he would go to his friend’s house after retrieving his friend’s stuck ATV, as he knew that his father would not have granted him permission to take the ATV, had he known.
c) His father did not allow Tyler to drive on the shoulder of the road in the past, but on occasion they would cross over the road or shoulder to get from one trail to another trail.
[58] From this evidence I can make several findings of fact. First, I find that in his discovery and subsequent affidavit, Tyler has clarified the ambiguity contained in his first statement raised by the word “normally”. He has clarified that his father did not allow him to drive on the shoulder of roads, but on occasion he would cross over the road or shoulder to get from one trail to another.
[59] Second, I find that Theodore provided specific consent to Tyler to drive on one highway--Central Lane---for the sole purpose of going from their residence to the open field and back home.
[60] Third, Theodore did not otherwise permit Tyler to drive on highways, except for the purpose of crossing the road to access the next trail.
[61] I find that on the day of the incident Theodore’s consent was clear. He authorized Tyler to drive the ATV from their residence onto Central Lane to the open field. From there Tyler was to drive, via trails, to his friend’s stuck ATV. Once the ATV was retrieved, Tyler was to drive home the way he came.
[62] Since Theodore knew or ought to have known that Tyler would breach Statutory Condition 4(1) by driving the ATV on Central Lane to get to the fields, does this constitute a breach void insurance coverage for the entire trip.
[63] The courts have stated that reasonable foreseeability is the correct test in assessing whether a vehicle would be operated in breach of the statutory conditions of the insurance policy.[^4]
[64] I do not accept the position that, since Theodore granted permission to Tyler to drive on Central Lane for the purpose of accessing the open field and returning home, that he is precluded from asserting that he did not give permission for Tyler to drive on any other highway. Theodore gave a very specific and limited consent to Tyler to drive on Central Lane, namely, to solely to access the open field from their residence and back again.
[65] An important factor in this analysis is Tyler and Theodore’s mistaken belief that Central Lane was not a highway. Although they were in error, this is relevant. Since neither Tyler nor Theodore believed that Central Lane was a highway, in both of their minds, Theodore had not granted Tyler permission to drive on a highway.
[66] I find that Theodore did not know and ought not to have known that Tyler would drive the ATV on any highway other than Central Lane. His consent did not include permitting Tyler to drive on any other highway.
[67] The question, therefore, is does the breach by Theodore of Statutory Condition 4(1) by permitting Tyler to drive on Central Lane mean that coverage for the entire trip is obviated. Does that breach taint the entire trip.
[68] For example, had this incident occurred on a trail in a field, rather than on a highway, would Theodore lose his third-party coverage because he granted permission to Tyler to breach a statutory condition by driving on Central Lane to get to the trails on the fields and back home.
[69] Is the answer to this question different where the incident occurs on a highway for which Tyler had not received permission to drive on.
[70] The case of Beacomon[^5] is instructive.
[71] In that case Ms. Becamon was licenced to drive by virtue of a G1 class driver’s licence. This required that she be accompanied by a holder of a class A, B, C, D, E, F or G driver’s licence, seated beside her.
[72] Ms. Becamon drove into a mall where the accident occurred. She did not have the required licenced driver seated beside her. The insurance company asserted that she was in breach of that statutory condition, thereby obviating potential liability of the insurer and its duty to defend her.
[73] The court held that the mall parking area was not a highway, and therefore Ms. Becamon was not in breach of the statutory condition at the time of the accident. The court ordered that the insurance company had a duty to defend and indemnify her.
[74] Using similar logic, I am satisfied that had the incident occurred on a trail in a field, the Third Party would be obligated to defend Tyler and would have potential liability.
[75] Counsel for the Third Party acknowledges that the breach of a statutory condition must occur “at the time of the incident” and they have been unable to find any precedent for the proposition that an insured who permits someone who is not authorized by law to operate the vehicle must know or ought to know on which exact highway, or when, or in what manner, the incident would occur.
[76] I have found that Theodore’s consent was clear and defined. Tyler was not permitted to drive the ATV anywhere other than on trails in the fields and on Central Lane for the purpose of going to and from their residence. Theodore did not consent to Tyler driving the ATV on any other highway.
[77] Also, as the conditions of consent had been established by past usage, it was not necessary for Theodore to explicitly repeat those instructions.
[78] In my view, had I found that Theodore had granted Tyler permission to generally ride the ATV on the shoulders of roads, Theodore would be precluded from asserting that, he should have coverage if an accident occurred on a road which Tyler did not have permission to be driving on. However, that is not the situation here.
[79] I find that Theodore did not know and ought not to have known that Tyler would drive on any highway other than Central Lane. Tyler drove on the shoulder of Bird Road without Theodore’s consent, and contrary to the terms of the consent that he had received from his father.
[80] In our circumstances I find that, although Theodore did breach statutory condition 4(1), he only did so with respect to permitting Tyler to drive the ATV on Central Lane. That does not taint the entire trip. Theodore did not breach statutory condition 4(1) with respect to the balance of the trip or at the time of the incident.
[81] I grant the Plaintiff’s summary judgment motion.
Law of Relief from Forfeiture
[82] Section 98 of the Courts of Justice Act states that “[a] court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just”.
[83] Section 129 of the Insurance Act provides:
Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against forfeiture or avoidance on such terms as it considers just.
[84] The Court of Appeal noted that “[i]n insurance cases, the purpose of the remedy is to prevent hardship to beneficiaries where there has been a failure to comply with a condition for receipt of insurance proceeds and where leniency in respect of strict compliance with the condition will not result in prejudice to the insurer”.[^6]
[85] In exercising its discretion, the court must consider
a) The conduct of the applicant
b) The gravity of the breach, and
c) The disparity between the value of the property forfeited and the damage caused by the breach.[^7]
[86] The court stated that there are two threshold questions to resolve before undertaking the three-part analysis.
[87] First, does the breach constitute imperfect compliance with a policy term or non-compliance with a condition precedent to coverage?
[88] Second, is relief available under s. 98 of the Courts of Justice Act despite the existence of a specific relief against forfeiture provision in the Insurance Act.
[89] In analyzing the distinction between imperfect compliance and non-compliance, the “focus [is] on whether the breach of the term is serious or substantial.” [^8]
[90] Relief from forfeiture is not available if the breach of the term is serious or substantial, but it is available if the breach is incidental.[^9]
[91] In Kozel, the failure to renew a driver’s licence on time was not a fundamental or serious breach, but the court gave the example of the situation where a driver been driving heavily prior to driving and stated that in those circumstances she may have been barred from obtaining relief from forfeiture.[^10]
Analysis of Relief form Forfeiture
[92] Had I not already found in favour of the Plaintiff I would grant relief from forfeiture for the following reasons.
[93] Turning to the first threshold question, what is Theodore’s breach.
[94] I have found as a fact that Theodore consented to Tyler driving the ATV on Central Lane, but on no other highway.
[95] Theodore’s breach of the statutory condition was permitting Tyler to drive the ATV on Central Lane to access the trails on the fields and to return home. I have found that this breach does not taint the entire trip.
[96] However, if I am in error on this determination, and it is necessary for the Plaintiffs to seek relief from forfeiture, I find that this breach was a relatively minor breach. The distance on Central Lane was relatively short; the nature of the lane, although legally a highway, was different as compared to a highly travelled highway. The breach was not serious or substantial.
[97] I am satisfied that Theodore’s conduct constituted imperfect compliance with the terms of the policy.
[98] With respect to the second threshold question, Kazel makes it clear that relief under s. 96 of the Courts of Justice Act is available, notwithstanding the provisions of s.129 of the Insurance Act.
[99] Having resolved the two threshold questions in the Plaintiff’s favour, I will analyze the three factors.
[100] First, was the conduct of the breaching party reasonable.
[101] It is Theodore’s conduct and not Tyler’s conduct that is relevant. I find that Theodore’s conduct was reasonable. He provided Tyler with consent to drive the ATV on trails in fields and on Central Lane solely for the purpose of going from his residence to the trails.
[102] Second, what is the gravity of the breach.
[103] I have already found that Theodore’s breach, namely permitting Tyler to drive on Central Lane, was a minor breach, given the nature of Central Lane.
[104] Third, what is the disparity between the value of property forfeited and the damage caused by the breach. The Third Party concedes that the Plaintiff has satisfied this factor, and I agree.
[105] Here, as in Kozel, the disparity is huge. Theodore’s breach, (granting Tyler permission to drive on Central Lane), caused no prejudice to the Third Party, whereas Theodore’s estate stands to lose $1 million in insurance coverage.
[106] Had I not granted the Plaintiff’s summary judgment motion, I would grant relief from forfeiture for the reasons set out above.
Adjournment of the Trial
[107] During the hearing of the motion, I canvassed this issue with all parties, including the Defendants. (Although counsel for the Defendants was not present, an articling student had been sent to observe the motion.) All parties agreed that the trial be adjourned from the February 2023 trial sittings to the May 2023 trial sittings.
[108] I agree that in the circumstances that is an appropriate order and I so order.
Summary
[109] The Plaintiff’s motion for a summary judgment is hereby granted.
[110] I declare that the full Third-Party policy limits available under Novex policy number AA3840420 were available to Theodore Drenth at the time of the incident on March 29, 2014.
[111] The trial of this action is adjourned from the February 2023 trial sittings to the May 2023 trial sittings.
[112] An order to go in the form of the draft order signed by me.
[113] If the parties cannot agree upon costs, the Plaintiff may submit her cost submission within 14 days; the Third Party shall have 10 days thereafter to submit its cost submission and any reply shall be provided within 5 days. All submissions excluding Cost Outline and case law shall be no longer than 3 pages. If the Plaintiff does not file her submissions within the aforesaid 14 days, I shall assume that the parties have reached agreement on the issue of costs.
D.L. Edwards J.
Released: February 1, 2023
FILE NO.: CV-16-55866
DATE: 2022/01/25
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Breanne Pridmore
Plaintiff
- and –
Tyler Drenth and The Estate of Theodore Drenth by its Litigation Administrator, Sandra Drenth
Defendants
- and -
Novex Insurance Company
Third Party
JUDGMENT
D.L. Edwards J.
Released: February 1, 2023
[^1]: Hryniak v. Mauldin, [2014] SCJ No 7 (QL), 2014 SCC 7 [^2]: R. v. Mouradian, 2009 ONCJ 162 CarswellOnt 2017, 83 W.C.B. [^3]: Miller (Litigation Guardian of) v. Carluccio (2008), 2008 ONCA 370, 91 O.R. (3d) 638 ( Ont. C.A.) at para. 6 [^4]: Co-operative Fire & Casualty Co. v. Richie, 1983 CarswellNS 127 [^5]: Beacomon v. Wawanesa Mutual Insurance Co., 2007 CarwellOnt. 9747 [^6]: Kozel v. The Personal Insurance Company, [2014] OJ No 753 (QL), 2014 ONCA 130, para 30 [^7]: Kozel at para 31 [^8]: Kozel para 41 [^9]: Korzel para 41 [^10]: Kozel para 56-58