Canadian General Insurance Co. et al. v. Canadian Mercantile Insurance Co., [1979] 2 SCR 17

Supreme Court of Canada

Canadian General Insurance Co. et al. v. Canadian Mercantile Insurance Co., [1979] 2 S.C.R. 17

Date: 1979-05-08

Canadian General Insurance Company et al. (Defendants) Appellants;

and

Canadian Mercantile Insurance Company (Plaintiff) Respondent.

1979: February 5; 1979: May 8.

Present: Pigeon, Dickson, Beetz, Pratte and McIntyre JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Insurance—Motor vehicle insurance—Transfer of car—Car still licenced in transferor’s name—Effect of transfer of ownership on insurance policy—Highway Victims Indemnity Act, R.S.Q. 1964, c. 232, ss. 4, 7—Highway Code, R.S.Q. 1964, c. 234, s. 13.

Early in August 1965 Florent Tremblay (“F”) agreed to transfer ownership of his car to his brother Bernard (“B”). B took possession of it and on August 23, 1965 he lost control of it while at the wheel; he was killed and several persons injured in the accident. At this date the car was still registered in F’s name. Each brother held a liability insurance policy: F’s policy was issued by respondent (“Mercantile”) and B’s by appellant (“Canadian General”). As a consequence of this accident the courts held B jointly liable on account on his fault, and F liable in accordance with s. 4 of the Highway Victims Indemnity Act, which provides that the person in whose name the car is registered will be liable. As the insurers of F Mercantile paid the claims of the accident victims, and sought reimbursement in part from Canadian General, the insurer of B, and in part from the heirs of B, the other appellants. The action was dismissed by the Superior Court but allowed by a majority of the Court of Appeal. Hence the appeal of defendants to this Court.

Held: The appeal should be allowed.

Assuming that the agreement entered into by the two brothers, followed by the handing over of possession of the car from F to B, transferred the ownership, the question arises as to the effect of this transfer on the insurance policy issued by Mercantile with F as the specifically designated insured. Under s. 13(6) of the Highway Code, “the registered owner [who] … has not

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complied with subsections 1 and 2 [returning the certificate of registration and markers to the Motor Vehicle Bureau] … shall be deemed to be the owner for purposes of responsibility and for purposes of insurance against the responsibility resulting from the ownership or use of such vehicle”. This presumption of ownership must be applied to anyone; the only limitation concerns the specific purposes for which it was established. In the case at bar, F must continue to be regarded as the owner of the car for purposes of the section of the policy relating to civil liability. This statutory fiction is valid as to the buyer, whether or not he is the driver. There is no doubt that B had possession of the car with F’s consent, and he was therefore one of the persons insured pursuant to the omnibus clause of F’s policy, just as if F had not acquired ownership of the vehicle, since he is deemed not to have acquired it. It is therefore clear that Mercantile cannot claim payment from B, who is one of the persons insured by it.

The presumption created by s. 13(6) must be given the full scope imposed by the wording of the section; a distinction should not be made where the Act, which is clear, makes none. For the purposes of the liability insurance, there was no transfer of ownership and it is wrong to regard B as owner of the vehicle.

Marquis v. Goupil, [1972] C.A. 207; Traders General Insurance Co. v. Canadian Indemnity Co., [1978] C.A. 328, referred to.

APPEAL from a decision of the Court of Appeal of Quebec[1], reversing a judgment of the Superior Court. Appeal allowed.

André Gagnon, Q.C., for the appellants.

Jean-Paul Bernier, Q.C., for the respondent.

The judgment of the Court was delivered by

PRATTE J.—Appellants are appealing from a majority decision of the Court of Appeal of the Province of Quebec (Bélanger and Dubé JJ.A., Owen J.A. dissenting) which reversed a judgment of the Superior Court for the district of Quebec City (Dorion C.J.) ordering them to pay respondent (“Mercantile”) a total amount of $16,347.75, that is $6,130.18 by appellant (“Canadian General”) and $10,217.57 by the other appellants, the heirs of the late Bernard Tremblay.

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Early in August 1965, Florent Tremblay agreed to transfer ownership of his car, a Volkswagen, to his brother Bernard. Bernard Tremblay took possession of the car and on August 23, 1965, he lost control of it while at the wheel; he was killed and several persons injured in the accident. When the tragedy took place the car was still registered in Florent Tremblay’s name. Each brother held an automobile insurance policy on this car: Florent’s policy was issued by Mercantile, Bernard’s by Canadian General. Under each of the policies, the insurer is required [TRANSLATION] “to indemnify the insured… and, in the same way and to the same extent as if specifically designated herein as the insured, any other person who, with the consent of the insured or of an adult member of his household other than a chauffeur or domestic, personally drives the automobile, against any obligation imposed by law on the insured or any other person as aforementioned as the result of loss or damage resulting from the ownership, use or opertion of the automobile…. and resulting from bodily injury (including death) or damage to property…”.

The victims of this accident sued Florent Tremblay and the heirs of Bernard to obtain a joint and several condemnation in damages. Judgment was rendered in both cases, and the defendants were jointly and severally condemned to pay the plaintiffs a total amount of $6,130.18. St-Germain J. of the Superior Court, who handed down these two judgments, held Bernard Tremblay liable because he concluded that the accident was due to his fault. With regard to the other defendant, Florent Tremblay, St-Germain J. held him jointly and severally liable with the heirs of Bernard in accordance with s. 4 of the Highway Victims Indemnity Act (R.S.Q. 1964, c. 232):

4. When an automobile is registered in the name of a person other than the owner, such person is jointly and severally responsible with the owner unless he proves that the registration was effected by fraud and without his knowledge.

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As a result of these two judgments, the other actions brought by the victims of the same accident were settled by the insurers of Florent Tremblay, Mercantile, who accordingly paid a total amount of $10,217.57.

By its action, the merits of which are the subject of this appeal, Mercantile is seeking reimbursement by the heirs of Bernard Tremblay of this sum of $10,217.57, and reimbursement by Canadian General of the sum of $6,130.18, which is the amount of the awards made by St-Germain J.

This action was dismissed by the Superior Court, but allowed by a majority decision of the Court of Appeal, from which this appeal is brought.

One of the questions raised in the lower courts was whether the agreement between the two Tremblay brothers had the effect of transferring ownership from Florent to Bernard. This problem is not before this Court: appellants are no longer maintaining that, at the time of the accident, Bernard was not the actual owner of the car. It can therefore be assumed that the agreement entered into by the two brothers, followed by the handing over of possession from one to the other, transferred the ownership. Moreover, this is the view taken by a majority of the judges who have considered the question to date.

This being the case, the appeal raises only one problem: that of determining the effect of the transfer of ownership in the automobile on the insurance policy issued by Mercantile, in which Florent was the specifically designated insured.

Section 13 of the Highway Code (R.S.Q. 1964, c. 231) reads in part as follows:

13. (1) In the event of a transfer of ownership of a registered motor vehicle, the registered owner shall remove the markers therefrom and return to the Bureau for cancellation the certificate of registration with a statement signed by him of the name and address of the transferee.

(2) Such owner shall then return the markers to the Bureau unless he applies at the same time for the

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registration in his name of another motor vehicle to which he may affix such markers …

…

(6) So long as the registered owner of a motor vehicle has not complied with subsections 1 and 2 … he shall be deemed to be the owner for purposes of responsibility and for purposes of insurance against the responsibility resulting from the ownership or use of such vehicle.

Subsection 6 creates an irrebutable presumption of ownership, for the purposes indicated, in favour of anyone who has failed to comply with subs. 1 and 2. The provision does not limit the effect of this presumption only to accident victims or to some designated group of persons. In this connection it should be noted that the provision is contained in the Highway Code, rather than in the Highway Victims Indemnity Act; the purpose of the Highway Code is certainly different from that of the Highway Victims Indemnity Act, which Turgeon J.A. described in Marquis v. Goupil[2], as a remedial statute designed to provide highway victims with a recourse.

The legal fiction created by s. 13(6) must be applied to anyone; the only limitation concerns the specific purposes for which it was established: “for purposes of responsibility and for purposes of insurance against the responsibility resulting from the ownership or use of such vehicle”. The s. 13(6) presumption does not apply to all kinds of insurance, only to liability insurance. The section has no application to the other guarantees ordinarily stipulated in an automobile insurance policy, such as inter alia those relating to loss of the insured vehicle or the damage sustained by it.

The wording of the section is clear and precise; there is no reason to alter the meaning ordinarily given to the words used, so as to add limitations which it does not contain, either expressly or by implication. What Paré J.A. said in The Traders General Insurance Company v. The Canadian Indemnity Company[3] with reference to a provision

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of the Highway Victims Indemnity Act is relevant here:

[TRANSLATION] In my opinion there is no doubt that such express language in such a clear provision leaves no room for interpretation. It must be read in the only meaning which can be attributed to it naturally, without limiting its application.

In the case at bar, it is admitted that Florent Tremblay did not comply with subss. 1 and 2 of s. 13; in accordance with subs. 6, therefore, he must continue to be regarded as the owner of the car for purposes of section A of the policy, relating to civil liability. It necessarily follows, therefore, that for purposes of this guarantee the transfer of ownership is deemed never to have taken place; Florent Tremblay is deemed to still be the owner of the automobile, regardless of any contract he may have entered into.

Because this statutory fiction is valid as to all the parties concerned, it applies to the buyer, whether or not he is the driver. Bernard Tremblay, who was driving the vehicle at the time of the accident, may have been its real owner; but s. 13(6) directs that for the purposes of liability insurance the situation is different: the transferor, Florent Tremblay, must be regarded as the owner. Bearing in mind this statutory fiction, there is no doubt that the driver, Bernard, had possession of the car with the consent of the owner, Florent. He was therefore one of the persons insured pursuant to section A of the policy—Civil liability. The omnibus clause must benefit Bernard Tremblay just as if he had not acquired ownership of the vehicle, since under s. 13(6) he is deemed not to have acquired it.

If, therefore, Bernard Tremblay was one of the persons insured by the insurance policy issued by Mercantile in which Florent Tremblay was the specifically designated insured, it seems clear that this insurance company cannot claim payment from its own insured of sums which it paid the victims of the accident. In paying these sums, Mercantile paid its own debt: Picard and Besson,

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Les assurances terrestres en droit français, 2nd ed., Vol. l,No. 406, at p. 568.

In my opinion, therefore, Bélanger and Dubé JJ.A. of the Court of Appeal erred in not giving the presumption created by s. 13(6) the full scope imposed by the wording of the section. Bélanger J.A. observed:

[TRANSLATION] Mercantile insured Florent Tremblay against any obligation resulting from the ownership, use or operation of the car; it also insured anyone who personally drove it with the insured’s consent. In these circumstances, I do not think Bernard Tremblay was insured by Mercantile: in driving the car he was doing so as its owner, he did not need Florent Tremblay’s consent, and in fact the latter could not have prevented him from driving it. Accordingly, only Florent Tremblay can be regarded as having been insured by Mercantile at the time of the accident, if it is assumed that the policy was still in effect.

So far as Canadian General is concerned, it insured Bernard and it must discharge any obligation of the latter resulting from his ownership and use of the car.

Dubé J.A. expressed his view as follows:

[TRANSLATION] In objection to this argument it was maintained that the Mercantile insurance covered not only Florent Tremblay but his brother Bernard Tremblay as well, since the latter was the driver of the vehicle with the permission of Florent Tremblay; I cannot accept this proposition, because the insurance contract protecting Florent Tremblay only existed so long as Florent Tremblay remained owner of the Volkswagen, and it immediately terminated when ownership in the vehicle was transferred to Bernard Tremblay. Under the Indemnity Act, Florent Tremblay remained liable nonetheless, because the vehicle was still registered in his name, and not as owner in the meaning of the contract, and I therefore do not see how it can be concluded that Mercantile had any obligations to the driver of a vehicle no longer owned by its insured, although under the Indemnity Act it continued to protect the insured.

A distinction should not be made where the Act, which is clear, makes none: for the purposes of the liability insurance, there was no transfer of ownership. For the purposes of that insurance, therefore, it is wrong to regard Bernard Tremblay as owner of the motor vehicle in question.

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The insurance policy issued to Bernard Tremblay is not wholly invalid: it is entirely applicable with regard to guarantees other than that against liability; furthermore, if the amounts claimed were higher than those the automobile owner’s insurer was required to pay, Canadian General, Bernard’s insurer, would undoubtedly be liable to the extent provided by s. 7 of the Highway Victims Indemnity Act. However, this possibility does not arise here.

I am therefore of the view that the decision of the Court of Appeal should be set aside, the judgment of the Superior Court restored and respondent’s action dismissed with costs in all courts.

Appeal allowed with costs.

Solicitors for the appellants: Gagnon, de Billy, Cantin, Dionne, Martin, Beaudoin & Lesage, Quebec.

Solicitors for the respondent: Bherer, Bernier, Côté, Ouellet, Houle, Cantin & Poliquin, Quebec.