In the case of Wawanesa v. S.C. Construction Ltd., 2012 ONSC 353, SC Construction gave permission for an employee, whose car had broken down, to drive a company van home and back to work the next morning without checking to ensure that he held a valid Ontario driver’s licence.
Statutory Condition 4(1) of the Ontario Automobile Policy (OAP 1) says that another person cannot be “permitted” to drive an insured automobile unless the other person is “… authorized by law” to drive it. The employee, who did not have a valid driver’s licence, was involved in an accident while driving the company van. The injured party sued both the employee driver (who soon after dissappeared) and the owner of the van, S.C. Construction, for damages sustained.
Wawanesa brought an application for a declaration that their insured, S.C. Construction, breached Statutory Condition 4(1) by letting the employee drive when he was not authorized by law to do so and that Wawanesa therefore had no duty to defend or indemnify S.C. Construction.
In considering the questions before him, Justice Belobaba assessed whether the employer acted reasonably in all the circumstances in permitting the employee to use the vehicle. Justice Belobaba referred to the Supreme Court of Canada’s decision in Co-Operative Fire & Casualty which held, “if an insured who has given someone an unqualified permission to drive his car has no reason to expect that the car will be driven… in contravention of the policy terms, then … he cannot be said to have permitted [the contravening] use within the meaning of the Statutory Condition and he cannot therefore be made liable to his insurer”.
In this case, the Court considered that S.C. Construction had known the employee for 10 years, had seen him drive himself to and from work daily, had observed him driving his car with his wife and children and confirmed that he was not hired to drive a company vehicle. The employer gave evidence that he would never have given the van to the employee if he thought the employee did not have a licence. The Court found that it was not unreasonable to let the employee drive the employer’s vehicle occasionally without first demanding to see the actual licence.
Wawanesa was found to have the duty to defend and indemnify S.C. Construction. It is clear that the unique circumstances of each case will need to be considered in such situations. At HSH, we ensure that all avenues are considered to ensure our clients have access to all available insurance coverage. For more information, contact Meghan Hull Jacquin at mhull@hshlawyers.com.
