Co-Owning a Car and Vicarious Liability
Consider this: Two owners of a vehicle. One held a policy of insurance. The other did not and was never a named insured or listed driver on the co-owner’s policy. The uninsured owner gives consent to a third party to drive the co-owned vehicle. The insured co-owner never had any discussions about possession or operation of the vehicle with the third party. That third party then gets into a car accident.
Is a co-owner of a motor vehicle liable for loss or damage resulting from the negligent operation of the vehicle where a second co-owner consented to the vehicle being in the possession of a non-owner, but the first owner did not?
This was the underlying question of law at the heart of a motion for determination of an issue before trial, heard by Justice ten Cate in Nowakowski v. Campbell et al.[1] The motion judge answered, “yes”. On appeal, the Court of Appeal’s recently released decision addressed an error in the lower court’s reasoning, but ultimately agreed in the result.[2]
The Court of Appeal agreed that liability of the vehicle owner is established under s.192(2) of the Highway Traffic Act, which states:
The owner of a motor vehicle or street car is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle or street car on a highway, unless the motor vehicle or street car was without the owner’s consent in the possession of some person other than the owner or the owner’s chauffeur. [Emphasis added.]
The court noted that the circumstance in which an owner has been found to have consented to possession by a non-owner have been interpreted broadly. The court point to a “long line of authority” supporting the position that personal consent of the owner is not necessary to trigger the owner’s vicariously liability under s. 192(2). This, in turn, narrows the application of the s.192(2) exclusion.
The court cited its decision in Fernandes v. Araujo[3], noting that the expansive interpretation of an owner’s vicarious liability under s. 192(2) is “an integral element of the Highway Traffic Act’s mandatory licensing and insurance scheme to ensure the public safety…by placing legal responsibility on [owners] for loss to others caused by the negligent operation of the vehicle on a highway”.
The Court of Appeal held that the motion judge did err in her interpretation of s.239(1) of the Insurance Act, which provides that:
239 (1) Subject to section 240, every contract evidenced by an owner’s policy insures the person named therein, and every other person who with the named person’s consent drives, or is an occupant of, an automobile owned by the insured named in the contract and within the description or definition thereof in the contract, against liability imposed by law upon the insured named in the contract or that other person for loss or damage,
(a) arising from the ownership or directly or indirectly from the use or operation of any such automobile; and
(b) resulting from bodily injury to or the death of any person and damage to property. [Emphasis added.]
The Court of Appeal made clear that the purpose of s. 239(1) is not to impose liability upon an owner, but simply to identify the liabilities otherwise “imposed by law”, which must be covered by the owner’s insurance policy. The motion judge therefor erred in concluding that s. 239(1) required the insured co-owner’s policy to cover losses suffered by the plaintiff even if that co-owner was not liable for such losses under s. 192(2) of the HTA.
Nevertheless, the court held that if one co-owner consented to the third party operating the vehicle, then the other co-owner is vicariously liable under s. 192(2) of the HTA for any loss or damage caused by the third party’s negligence. This is a “liability imposed by law upon the insured” which must be covered by the insured co-owner’s insurance policy, in accordance with s. 239(1) of the Insurance Act.
These decisions are a reminder of the broad reach that consent to operate a vehicle has, and prompts consideration of implications for both insurers of multi-owner vehicles and co-owners.
[1] 2024 ONSC 6810
[2] 2025 ONCA 762
[3] 2015 ONCA 571, at para 20.