Minister of Transport (Ontario) v. Canadian General Insurance, [1972] SCR 234

Supreme Court of Canada

Minister of Transport (Ontario) v. Canadian General Insurance, [1972] S.C.R. 234

Date: 1972-05-17

Minister of Transport for the Province of Ontario (Plaintiff) Appellant;

and

Canadian General Insurance Company (Defendant) Respondent.

1971: May 3; 1971: May 17.

Present: Martland, Judson, Ritchie, Spence and Laskin JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Insurance—Automobile—Indemnity clause covering “lessee and every other person who with the lessee’s consent personally drives the automobile”—Whether vehicle being driven with lessee’s consent—Whether insurer obliged to honour claim for indemnity.

The Court of Appeal for Ontario allowed an appeal from a judgment rendered at trial whereby it was ordered that the appellant Minister should recover $16,456.40 from the respondent insurer. The said sum had been paid in satisfaction of a judgment awarded against M in respect of injuries received by O (an infant) when she was being driven as a passenger in a motor vehicle owned by OL Ltd. and leased to HF Ltd., which was being driven by M at the time when the injuries were incurred. The Minister, who brought the present action as assignee of the judgment against M, appealed to this Court.

HF Ltd. was a private family corporation whose president was the majority shareholder, his wife and father being also shareholders and shares being held in trust for his two minor sons. The leased automobile was used as a family car and no restrictions appeared to have placed on its use by the son D, excepting that it was understood that he would not

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use the car if another member of the family required it more than he did. On the night of the accident D had the car in which O was a gratuitous passenger, and he had permitted it to be driven by his friend M, who did not have a licence to drive and whose negligent driving was the cause of the accident.

The respondent had issued a standard automobile policy indemnifying OL Ltd. as the insured, HF Ltd. as lessee, and “every other person who with the lessee’s consent personally drives the automobile”.

Held (Spence and Laskin JJ. dissenting): The appeal should be dismissed.

Per Martland, Judson and Ritchie JJ.: The matter to be determined was whether the circumstances disclosed by the evidence could be so construed as to justify the finding by the trial judge that the vehicle was being driven with the consent of the lessee. The appellant could not take advantage of the indemnity which the policy extended to “every other person who with the lessee’s consent personally drives the automobile” unless it could be shown that the president and majority shareholder of the insured lessee had in some way acquiesced in his son consenting to the automobile being driven by others, and this could not be said to have been proved without some evidence that the father had at least brought his mind to bear upon the question. In his evidence, the father indicated that in allowing his son to have the automobile he had never given any consideration to the specific question of extending the boy’s authority so as to entitle him to let others drive the car. Accordingly, under the circumstances, the policy did not afford indemnity to M, and the appellant as assignee of the judgment against M could not recover from the respondent.

Per Spence and Laskin JJ., dissenting: The trial judge was justified in finding on the evidence that M was driving with the lessee’s consent when D, without surrendering possession of the car, let him drive while sitting beside him. The fact that D’s father had never directed his mind to the question of strangers driving could not alter the effect of his evidence that he fully entrusted his son with the car. In the circumstances, proof of negative consideration of driving by strangers would be required to erase the effect of the father’s evidence rather than demanding that it be supplemented by further evidence that the father had considered the matter and had not expressed any objection.

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It was not necessary to decide how far the trust reposed in the son carried. It was enough to say, in the present case, that it carried far enough to permit him under the discretion left to him (i.e., “to make the right decision” on the matter of letting someone else drive) to allow a close friend to drive while he sat beside him. Indeed, the evidence supported the inference that subject to the convenience of other members of the family, and to the ultimate control of the father, the son was as unrestricted as his father when in possession of the car.

APPEAL from a judgment of the Court of Appeal for Ontario[1], allowing an appeal from a judgment of Hartt J. Appeal dismissed, Spence arid Laskin JJ. dissenting.

B. O’Brien, Q.C., and A.G.F. MacDonald, for the plaintiff, appellant.

R.E. Holland, Q.C., and R.A. O’Donnell, for the defendant, respondent.

The judgment of Martland, Judson and Ritchie JJ. was delivered by

RITCHIE J.—This is an appeal from a judgment of the Court of Appeal for Ontario allowing an appeal from a judgment rendered at trial by Mr. Justice Hartt whereby he ordered that the appellant should recover $16,456.40 from the respondent, which sum had been paid in satisfaction of a judgment awarded against David C. Mills in respect of serious injuries received by Dianne Oliver (an infant) when she was being driven as a passenger in a motor vehicle owned by Oxford Leaseholds Limited and leased to Homeland Farms Limited, which was being driven by David C. Mills at the time when the injuries were incurred. The Minister of Transport brought the present action as assignee of the Oliver judgment in accordance with the provisions of s. 6 of The Motor Vehicle Accident Claims Act, 1961-62 (Ont.), c. 84.

At all relevant times the respondent was the insurer under a standard automobile policy whereby it agreed to indemnify Oxford Leaseholds Limited and

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…every other person who with the Insured’s consent personally drives the automobile, against the liability imposed by law upon the Insured or upon any such other person for loss or damage arising from the ownership, use or operation of the automobile within Canada,… resulting from bodily injury to or death of any person or damage to property;…

The policy covered “any automobile leased to Homeland Farms Limited” and it was provided by endorsement that:

The Insurer agrees to indemnify in the same manner and to the same extent as if named herein as the Insured the lessee and every other person who with the lessee’s consent personally drives the automobile.

Oxford Leaseholds Limited, the primary insured under the above policy, had leased the motor vehicle here in question to Homeland Farms Limited which was a private family corporation whose president, Fred Cohoe, was the majority shareholder, his wife and father being also shareholders and shares being held in trust for his two minor sons.

The automobile was used as a family car and no restrictions appear to have been placed on its use by the son Daniel, excepting that it was understood that he would not use the car if another member of the family required it more than he did.

On the night of July 2, 1965, Daniel had the car in which Dianne Oliver was a gratuitous passenger, and he had permitted it to be driven by his young friend, David Mills, who did not have a licence to drive and whose negligent driving was undoubtedly the cause of the accident. The sole question to be determined in this action is whether the indemnity provided by the automobile policy hereinbefore referred to, extended to the circumstances under which the accident took place.

The learned trial judge devoted the greater part of his judgment to a consideration of whether there had been a breach of statutory condition 2(b) of the policy by reason of the fact that the vehicle was being driven by a person who was not authorized or qualified to drive, and he decided this question in favour of the appellant

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on the ground that the driver, Mills, had told Daniel Cohoe that he had a licence to drive and could drive and that it was not unreasonable for Cohoe to have believed this. No appeal was asserted to the Court of Appeal for Ontario or to this Court from this latter finding and the only question which remains outstanding is whether it can be said that Homeland Farms Limited had consented to Mills personally driving the automobile. On this question the learned trial judge made the following finding:

With regard to the matter of consent, the onus rests upon the plaintiff and, in my opinion, this onus has been discharged. The evidence was that the lessee was a personal corporation and that the motor vehicle in question was for the family use, the only restriction upon this use being relative to the convenience of the other members of the family. The motor vehicle was being used by Daniel Cohoe, the son, that evening and he allowed David C. Mills to drive. Fred Cohoe, father and controlling shareholder in Homeland Farms Limited, made it clear that there was no restriction on Daniel’s use of the vehicle so long as he used reasonable discretion. In my opinion, in the circumstances, the vehicle was being driven with the consent of the lessee.

A great many of the cases to which we were referred were concerned with whether or not the owner had been able to escape liability under s. 101 of The Highway Traffic Act, R.S.O. 1960, c. 172, by proving that the vehicle was in the possession of another without the owner’s consent and they are to this extent distinguishable; but whether the plaintiff is seeking indemnity by proving affirmatively that there was consent or the defendant is seeking to escape liability under the Highway Traffic Act because there was not, it must be clear in either event that the issue falls to be determined according to the facts of each particular case and that precedents are accordingly of little value.

There is no suggestion in the present case that Homeland Farms Limited, either through its president or otherwise, had actually consented to the vehicle being driven by Mills “personally”

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and the matter to be determined is whether the circumstances disclosed by the evidence can be so construed as to justify the finding that there was implied consent.

As the issue must be decided in accordance with inferences to be drawn from uncontradicted evidence, this is a case in which the Court of Appeal is in as good a position as the trial judge to reach a conclusion. Young Cohoe gave no evidence, and indeed was not questioned, as to whether or not his father had consented to his allowing others to drive the car, and in my view the most revealing evidence in this regard is to be found in the following answers given by Mr. Fred Cohoe to the questions put to him by the learned trial judge at the end of his testimony:

HIS LORDSHIP: Q. Mr. Cohoe, let me put a very direct question to you in relation to—you allowed your son to have the automobile that night?

A. Yes.

Q. Was he, so far as you were concerned, in complete charge in relation to that automobile when he had it in his possession?

A. Yes, I would assume so.

Q. Would that include his rights so far as you are concerned, to allow someone else to drive that automobile?

A. Well, the point is that it had never come up for discussion and I think that any parent would probably discourage the use of other people having the car, but I would assume that this decision had been a decision that had been left to him on this assumption that he was able to make the right decision, but it hadn’t been discussed previously.

The appellant cannot in my opinion take advantage of the indemnity which the policy extends to “every other person who with the lessee’s consent personally drives the automobile”, unless it can be shown that Mr. Fred Cohoe as president and majority shareholder of the insured lessee had in some way acquiesced in his son consenting to the automobile being driven by others, and this cannot, in my view, be said to have been proved without some evidence that the father had at least brought his mind to bear upon the question. Mr. Cohoe’s last answer to the trial judge indicates to me that in allowing his son to have

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the automobile he had never given any consideration to the specific question of extending the boy’s authority so as to entitle him to let others drive the car and I am accordingly of opinion that under the circumstances, the policy does not afford indemnity to David C. Mills against liability imposed upon him by law resulting from the bodily injury sustained by Dianne Oliver and that the appellant as assignee of the judgment against Mills cannot recover from the respondent.

For all these reasons, as well as for those stated by Mr. Justice McGillivray in the Court of Appeal, I would dismiss this appeal with costs.

The judgment of Spence and Laskin JJ. was delivered by

LASKIN J. (dissenting)—The issue in this appeal is whether the respondent insurer is obliged to honour a claim for indemnity under a standard automobile insurance policy taken out by a leasing company as vehicle owner and extended by endorsement to “any automobile leased to Homeland Farms Limited”. The relevant indemnity clause covered “the lessee and every other person who with the lessee’s consent personally drives the automobile”.

Homeland, a family corporation of which the chief shareholder was its president and manager, Fred Cohoe, leased an automobile from the primary insured. Within three months after the effective date of the policy, the car was in an accident while being driven by one David C. Mills, then 18 years of age, with Daniel Cohoe, a close friend and the son of the lessee’s president and manager, sitting beside him. Daniel Cohoe was about one year younger than Mills, and was an employee of Homeland as well as a shareholder whose shares were held for him by his father in trust. He had the car with his father’s consent and, on the day of the accident yielded to Mills’ request to be permitted to drive. Mills drove into a tree from a private farm lane, and a female passenger who was thereby injured sued

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him to judgment for $16,456.40. It was paid by the appellant Minister who then brought action on the policy as assignee of the judgment under s. 8 of The Motor Vehicle Accident Claims Act, 1961-62 (Ont), c. 84.

The right to indemnity under the policy depends, of course, on proof of consent by the lessee Homeland to Mills to drive. It was not contended that Daniel Cohoe could alone give that consent, without other general or special authorization; and hence the inquiry is into the source and range of consent by the lessee and whether Daniel Cohoe’s permission to Mills to drive was the consent of the lessee.

The insurer, in addition to denying that there was the necessary consent, contended that in any event the policy did not cover delegation by the lessee to Daniel Cohoe to give consent to someone else to drive. I do not accept this contention, which appears to be based on a refined association of the word “personally” in the relevant policy clause already quoted. There is neither grammatical nor contextual warrant for such a reading. At the most, the term may import that consent to a person to drive would not alone entitle that person to turn the driving over to another, that there must be something more to enable that other to drive under a delegated consent.

Since the lessee is a corporation, albeit a private family one, the availability of the leased car to officers of the company, to employees or to others must depend on a formal resolution, if any, and on the directions or dispositions of the management. The only evidence bearing on the question of who directed the business and managed the property of the company was that Fred Cohoe, the principal shareholder, was president and manager, and that the other shareholders were his wife and, beneficially, his father and his two sons (of whom Daniel was one). In short, Fred Cohoe was in charge, and it is the evidence

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as to his directions respecting the leased car that is central to the determination of this appeal.

The arrangement made by him for use of the leased car was loose as it related to members of his family. The vehicle was kept at his home and there were two sets of keys one of which was usually kept in the car. Although the car could be put to business use and, indeed, employees had driven it, it was there for the family; and it was open to any member to take it without seeking consent for the particular occasion, subject only to relative need or convenience. There was no limitation upon members of the family as to purpose or time. Daniel Cohoe was thus free to take and drive the vehicle as he did on the day of the accident. The narrow question is whether this freedom to take and drive, so informally and so broadly given, carried with it power on the part of a member of the family to turn the driving over to another, at least while remaining in charge of the car and in it.

This question had not come up before in any of its aspects, but Fred Cohoe’s evidence was that he had no reservations in his mind about entrusting the driving and use of the car to his son Daniel, that his son Daniel was in complete charge of the car when he had it in his possession, and it was left to him “to make the right decision” on the matter of letting someone else drive. I quote the following questions put by the trial judge and Fred Cohoe’s answers:

Q. Mr. Cohoe, let me put a very direct question to you in relation to—you allowed your son to have the automobile that night?

A. Yes.

Q. Was he, so far as you were concerned, in complete charge in relation to that automobile when he had it in his possession?

A. Yes, I would assume so.

Q. Would that include his rights so far as you are concerned, to allow someone else to drive that automobile?

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A. Well, he point is that it had never come up for discussion and I think that any parent would probably discourage the use of other people having the car, but I would assume that this decision had been a decision that had been left to him on this assumption that he was able to make the right decision, but it hadn’t been discussed previously.

In my opinion, the trial judge was justified in finding on the evidence that Mills was driving with the lessee’s consent when his friend Daniel Cohoe, without surrendering possession of the car, let him drive while sitting beside him. The contrary finding by the Ontario Court of Appeal appears to rest in part on the fact that Fred Cohoe had never directed his mind to the question of strangers driving. This cannot alter the effect of his evidence that he fully entrusted his son with the car. In the circumstances, proof of negative consideration of driving by strangers would be required to erase the effect of the father’s evidence rather than demanding that it be supplemented by further evidence that the father had considered the matter and had not expressed any objection.

I need not decide how far the trust reposed in the son carries. It is enough to say, in the present case, that it carried far enough to permit him under the discretion left to him to allow a close friend to drive while he sat beside him. Indeed, the evidence supports the inference that subject to the convenience of other members of the family, and to the ultimate control of the father, the son was as unrestricted as his father when in possession of the car.

I would allow the appeal, set aside the judgment in appeal and restore the judgment at trial. The appellant is entitled to costs throughout.

Appeal dismissed with costs; SPENCE and LASKIN JJ. dissenting.

Solicitors for the plaintiff, appellant: Poole, Bell & Porter, London.

Solicitors for the defendant, respondent: Mitchell, Hockin & Dawson, London.