Coverage denied to driver and owner of ATV due to driver’s breach of license conditions, but granted for the owner by summary motion

The Court of Appeal dismissed the insurer’s appeal of a finding of coverage for an ATV owner who was sued when the ATV’s passenger was injured in an accident because the owner had provided specific permission to the driver and the driver’s breach occurred outside the parameters of the permission provided, which the owner could not have foreseen.

Insurance law – Automobile insurance – Consent to drive – Practice – Leave to appeal

Pridmore v. Drenth, [2023] O.J. No. 4017, 2023 ONCA 606, Ontario Court of Appeal, September 15, 2023, E.E. Gillese, M.L. Benotto and J.M. Copeland JJ.A.

The insurer appealed a finding by summary judgment that an ATV owner was entitled to coverage for an ATV accident. In 2014 the passenger on an ATV was injured in an accident on a rural highway. The ATV driver had permission from the owner to operate the vehicle, but the insurer denied coverage because the driver did not have the required level of driver’s license.

The ATV driver did not have a license to allow him to drive without accompaniment by another license holder on the ATV. He believed that the ATV would be driven off-highway, although did not know that the lane directly behind his home was in fact a highway. The ATV was however driven on a different highway, and the driver had also consumed some alcohol after having taken out the ATV. The ATV was in an accident along the highway shoulder and the driver’s passenger was thrown off the vehicle and injured. The insurer denied coverage to both the owner and driver because the ATV was driven on-highway and after the driver consumed alcohol, and the owner knew or ought to have known the driver would operate the vehicle contrary to his license conditions.

The motion judge considered the terms of the owner’s permission to the driver and concluded he gave clear and specific consent to the driver to operate the ATV, which did not include driving on the highway where the accident occurred. Additionally, the breach had to be determined at the specific time of the incident and therefore the breach did not apply to the entire trip. The motion judge also concluded that if there was a breach, relief from forfeiture was warranted.

On appeal, the court dismissed the insurer’s arguments that the motion judge committed palpable and overriding error, finding that the owner gave the driver limited and specific permission that did not include driving on highway shoulders.

This case was digested by Mark A. McPhee, and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter. If you would like to discuss this case further, please contact Mark A. McPhee at mmcphee@harpergrey.com.

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