At our weekly meeting, Taya Rosenberg discussed the recent summary judgment decision of the Ontario Superior Court in Pridmore v. Drenth, 2023 ONSC 817.
This action arose from an incident involving a four-wheeled all-terrain vehicle (“ATV”). Breanne Pridmore, the plaintiff, was a passenger on an ATV driven by Tyler Drenth and owned by Theodore Drenth, Tyler’s father (the defendants).
The plaintiff brought a motion for summary judgement against the defendants’ insurer, seeking a declaration that the full policy limits were available to the defendants at the time of the accident.
The defendants and the plaintiff lived in a semi-rural area and resided close to fields and ATV trails. The defendants would drive on Central Lane in order to access these fields and trails.
In 2013, Theodore purchased two new ATVs. He was the registered owner of both vehicles but intended one to be a birthday present for Tyler. Both ATVs were insured by the Novex Insurance Company (“Novex”). The Novex policy included third-party liability coverage of $1 million. Theodore and his spouse were named as insureds on the policy. Tyler was also an insured on the policy, but only when he operated the insured vehicle with his father’s consent.
In 2014, Tyler went to help a friend whose own ATV was stuck in the mud. Tyler obtained consent from his father to take an ATV. The conditions for consent were well-established by previous use: Tyler was allowed to drive on off-road trails and fields and on Central Lane to access these trails.
On his way, Tyler picked up the plaintiff, Breanne. They drove down Central Lane to access the fields and trails, and they successfully rescued the friend’s ATV. They accompanied the friend to his home, where Tyler consumed some alcoholic drinks.
A snow squall developed while Tyler and Breanne were heading home and Tyler decided to travel on the shoulder of a road instead of the trails. While driving on the shoulder, Tyler drove into a culvert; the ATV rolled over and both were injured.
The Insurance Act and the Highway Traffic Act
Regulation 777/93, made under the Insurance Act, lists Statutory Conditions which are deemed to be part of every automobile insurance contract, as per section 234 of the Insurance Act. Statutory Condition 4(1) (“Authority to Drive”) states that:
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 operate it. [emphasis added]
According to sections 32 of the Highway Traffic Act, a person is prohibited from driving a motor vehicle on a highway unless they have a proper driver’s licence, and from driving a motor vehicle on a highway while contravening a condition of their driver’s licence or a condition imposed by the regulations.
Additionally, a person holding a G1 driver’s licence must have a G driver’s licence holder seated next to them when driving on a highway, and G1 license holders must have a zero blood-alcohol concentration level.
At the time of the accident, Tyler had a G1 driver’s licence and the Central Lane and the shoulder of the road on which Tyler and Breanne returned were “highways” as per section 1(1) of the Highway Traffic Act. As Tyler was unaccompanied by a G driver’s licence holder and had consumed alcohol, Tyler was not authorized to drive or operate the ATV, therefore breaching Statutory Condition 4(1). The question was whether Theodore had also breached the condition so as to void his third-party liability coverage.
The plaintiff sought a declaration that the third-party coverage limits were available to Theodore at the time of the incident. She submitted that the key issue to be determined was whether Theodore permitted Tyler to drive the ATV at the time of the incident when he was not authorized by law to drive it.
Novex’s position was that Theodore had consented to Tyler driving the ATV when he knew or should have known that Tyler was operating the vehicle in breach of a statutory condition, so coverage was properly denied. Novex conceded that whether Theodore breached Statutory Condition 4(1) was a separate question from whether Tyler breached said condition and that a breach of a Statutory Condition must occur at the time of the incident for coverage to be lost.
Did Theodore know or should he have known that Tyler would breach Statutory Condition 4(1)?
Theodore and Tyler did not know that G1 licences had restrictions regarding highways, and they also did not consider the Central Lane to be a highway. However, the defendant’s ignorance was not a defence as a reasonable owner and/or operator would educate themselves on the applicable laws and regulations. The judge found that Theodore ought to have known that a person driving alone on Central Lane while holding a G1 driver’s licence was a breach of Statutory Condition 4(1).
Was Statutory Condition 4(1) breached at the time of the accident?
This question required an analysis of Theodore’s consent. Novex argued that Theodore had consented to Tyler driving on Central Lane and the shoulders of roads because he mistakenly believed that neither were highways. Additionally, Novex argued that Theodore was prevented from arguing that Tyler wasn’t allowed to drive on highways because he had, in fact, allowed Tyler to drive on Central Lane. He had therefore provided a broader form of consent for Tyler to drive on highways in general, thus including the shoulder of the road.
The plaintiff argued that Theodore had provided “specific and limited consent.”  On the evidence available, the judge agreed that this interpretation was correct: Theodore had only ever consented to Tyler driving on Central Lane for the sole purpose of getting to and from the trails.
The judge also held that the initial breach did not void coverage for the whole trip. It was not reasonably foreseeable to Theodore that Tyler would drive on any other highway. Importantly, neither defendant believed that Central Lane was a highway. To their minds, Tyler had never been granted permission to drive on any highway. Therefore, although Statutory Condition 4(1) was breached when Tyler was driving on Central Lane, it wasn’t breached at the time of the accident.
Relief from Forfeiture
The judge also held that had he not granted summary judgment, he would have granted relief from forfeiture. According to section 129 of the Insurance Act, where there has been imperfect compliance with a statutory condition but the forfeiture of the insurance policy, in whole or in part, would be inequitable, the court has the discretion to relieve the insured from this penalty.
Following Kozel v. The Personal Insurance Company, the judge considered:
- The conduct of the applicant;
- The gravity of the breach, and
- The disparity between the value of the property forfeited and the damage caused by the breach.
The judge found that Theodore’s conduct regarding the consent given was reasonable, that the breach of allowing Tyler to drive on Central Lane was minor, and that the disparity was significant. Theodore’s breach caused no prejudice to Novex, while the defendants would be denied their third-party liability coverage.
The plaintiff’s motion was granted: coverage was available to Theodore at the time of the accident, and the action is to continue to trial later this year.
 O. Reg. 777/93: STATUTORY CONDITIONS – AUTOMOBILE INSURANCE, under the Insurance Act, R.S.O. 1990, c. I.8, section 4(1); Insurance Act, R.S.O. 1990, c. I.8, section 234.
 Ontario Regulation 777/93: section 4(1).
 Highway Traffic Act, R.S.O. 1990, CHAPTER H.8, sections 32 and 32(9).
 O. Reg. 340/94: DRIVERS’ LICENCES, under the Highway Traffic Act, R.S.O. 1990, c. H.8, section 5; Highway Traffic Act, section 44.1.
 Highway Traffic Act, section 1(1): the definition of a “highway” includes the shoulder of a road as well as common or public highways.
 Pridmore v. Drenth, at para. 64.
 Insurance Act, section 129.
 Kozel v. The Personal Insurance Company, 2014 ONCA 130, at para 31.