The insurer was not required to provide the insured with a defence in an action arising out of a motor vehicle accident because there was a clear breach of the mandatory condition that the insured shall not drive or operate an automobile while his licence to drive or operate an automobile is suspended

Insurance law – Automobile insurance – Actions – Duty to defend – Breach of policy – Pleadings

MacLellan v. Intact Insurance Co., [2017] N.S.J. No. 92, 2017 NSSC 58, Nova Scotia Supreme Court, March 13, 2017, D. Boudreau J.

A motor vehicle accident occurred on January 1, 2012 and Holly Grue commenced an action against the owner of the vehicle involved in the accident, in addition to Ryan MacLellan, the driver of the vehicle. There was a dispute in the action regarding whether Mr. MacLellan had consent to drive the vehicle at the time of the accident.

The insurer took the position it had no duty to defend Mr. MacLellan because the pleadings did not allege Mr. MacLellan had consent from the owner of the vehicle and as a result the pleadings did not raise the possibility that the claim was covered by the insurance policy. Further, the insurer took the position Mr. MacLellan breached the mandatory condition prohibiting operation of a motor vehicle while his licence was suspended and therefore the insurer was not required to provide Mr. MacLellan with a defence.

The statement of claim alleged the owner of the vehicle was negligent by “entrusting his motor vehicle to an incompetent, or impaired or inexperienced driver, namely Ryan MacLellan,” and “failure to properly instruct the defendant, Ryan MacLellan, in the proper operation of the defendant’s motor vehicle”. The court found that it must give wide latitude to allegations in pleadings and found that although the word “consent” was not used the pleadings clearly alleged that Mr. MacLellan was driving the vehicle with the permission of the owner. Accordingly, the court found the statement of claim did trigger the possibility that the claim was covered by the owner’s policy.

The insurer also took the position Mr. MacLellan breached a mandatory condition of the policy and therefore disentitled himself to coverage. Mandatory condition 2(1)(b) states “the insured shall not drive or operate the automobile while his licence to drive or operate an automobile is suspended, or while his right to obtain a licence is suspended or while he is prohibited under order of any court from driving or operating an automobile”. Mr. MacLellan acknowledged and admitted that he was suspended from driving at the time of the accident. Mr. MacLellan’s admission that he was suspended from driving led to a finding he breached a condition of his contract. The court found that this disentitled him from coverage and the insurer was not required to provide Mr. MacLellan with a defence.

This case was digested by Aaron D. Atkinson and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected] or review their biographies at http://www.harpergrey.com.

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