Insured entitled to third-party coverage in ATV accident case: Ont. CA

Passenger thrown from vehicle suffers serious injury resulting in complete paraplegia

Insured entitled to third-party coverage in ATV accident case: Ont. CA

The Ontario Court of Appeal affirmed a judge’s finding that a vehicle owner was entitled to third-party liability insurance coverage as he did not give the driver permission to operate on highways at the time of the accident.

The respondent in this case was a passenger on a four-wheeled all-terrain vehicle (ATV) running on Bird Road – a highway in rural Dunnville, Ontario – in March 2014. She was thrown from the ATV and suffered serious injuries resulting in complete paraplegia.

The driver, who had a G1 driver’s licence, was operating the ATV with his father’s permission. The father, who was the ATV’s registered owner, had third-party liability coverage of $1,000,000 with Novex Insurance Company. The father has since passed away.

At the time of the incident, the insurance policy insured the driver, his father, and the father’s spouse, who was acting as his litigation administrator in this case.

Novex denied the father coverage. It argued that he breached the policy’s Statutory Condition 4(1) (SC 4(1)) when he permitted his son to operate the ATV on a highway despite lacking the required driver’s licence.

The respondent filed a summary judgment motion. She asked the court to order Novex to provide the full third-party policy limits available to the father.

A judge of the Ontario Superior Court of Justice granted the motion. He decided that the father was entitled to coverage and that relief from forfeiture was warranted if he breached the policy. Novex appealed.

Father covered by policy: court

In Pridmore v. Drenth, 2023 ONCA 606, the Ontario Court of Appeal dismissed the appeal. It saw no basis to intervene with the motion judge’s conclusion that the father was entitled to the third-party liability coverage.

The judge applied the correct legal principles to decide whether the father was in breach of SC 4(1) during the accident, made findings that were not clearly wrong or unsupported by the evidence, and gave compelling reasons to reject Novex’s arguments, the appellate court ruled.

The judge properly approached the critical issue of the terms of the permission that the father gave his son for using the ATV that day, the appellate court said. The judge divided his analysis into two parts.

First, the judge stated the law for interpreting “permit” in the context of SC 4(1) and found that the father breached it when he let his son drive the ATV on Central Lane, which was a highway, given that the G1 licence barred him from driving on a highway without a licensed driver seated next to him.

However, the judge determined that the breach of SC 4(1) had to taint the trip and that in this case the father was not breaching it at the time of the accident because he did not know or ought to know that his son would drive the ATV on a highway other than Central Lane.

The judge held that the father gave his son clear and specific permission that day to drive the ATV to the fields via Central Lane, to assist his friend in extricating an ATV stuck in the mud, and to return home using the same path.

The judge found that the father was not breaching SC 4(1) at the time of the accident, given the following circumstances:

  • Whenever the son wanted to use an ATV, which was under lock and key in the shed, he had to get his father’s permission
  • Only the father had the key
  • The father knew that his son could not drive unaccompanied on a highway because he had only a G1 licence
  • The father allowed his son to drive on Central Lane because he mistakenly believed that it was not a highway

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