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Insurance (Auto) - Vicarious Liability. Nowakowski v. Campbell
In Nowakowski v. Campbell (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, here where the issue was whether "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".
Here the court considers the insurer's 'vicarious liability':[1] 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?
[2] The motion judge answered “yes” to this question,[1] finding that such liability flows from both s. 192(2) [SS: 'Liability for loss or damage'] of the Highway Traffic Act, R.S.O. 1990, c. H.8 (the “HTA”) and s. 239(1) of the Insurance Act, R.S.O. 1990, c. I-8 (the “Insurance Act”) [SS: 'Policy coverage - Coverage of owner’s policy, specific automobile'].
[3] The appellant, Economical Insurance (“Economical”), argues that the motion judge erred in her interpretation of both statutory provisions. Economical submits that s. 192(2) of the HTA treats co-owners of motor vehicles as “separate pillars” such that the liability of each co-owner must be assessed independently of the other. Thus, if one owner of a jointly owned motor vehicle consents to the possession of the vehicle by a non-owner, only that owner is vicariously liable for the negligent operation of the vehicle by the non-owner. Moreover, because the owner who did not provide consent is not vicariously liable under s. 192(2) of the HTA, the non-consenting owner’s motor vehicle policy is not required to provide coverage under s. 239(1) of the Insurance Act.
[4] Although I conclude that the motion judge erred in her interpretation of s. 239(1) of the Insurance Act, I would nevertheless dismiss the appeal.
[5] Contrary to Economical’s submissions, s. 192(2) of the HTA does not treat co-owners of motor vehicles as “separate pillars” or require that their vicarious liability be assessed independently of each other. Rather, as the motion judge correctly found, if either co-owner has consented to the possession of their jointly owned vehicle by a non-owner, both are vicariously liable pursuant to, and in accordance with, s. 192(2) of the HTA.
[6] Economical is correct that s. 239(1) of the Insurance Act does not establish a vehicle owner’s liability, but merely requires that any liability legally imposed on an owner in respect of certain losses or damage be covered by the owner’s motor vehicle insurance policy. The motion judge therefore erred in holding that an owner’s liability could be founded on s. 239(1) of the Insurance Act. However, this error makes no difference in these circumstances since, because both co-owners are liable under the HTA if either one of them consents to the possession of their vehicle by a non-owner, s. 239(1) of the Insurance Act requires that any such liability be covered by the relevant owner’s insurance policy.
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2. The vehicle owner’s liability under s. 192(2) of the HTA
[15] Section 192(2) of the HTA makes an owner of a motor vehicle liable for any loss or damage caused by negligence in its operation on a highway, except where the vehicle was in the possession of someone other than the owner “without the owner’s consent” (the “s. 192(2) Exclusion”). For ease of reference, I set out the full text of the provision: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.] [16] The circumstances in which an owner of a motor vehicle has been found to have consented to possession by a non-owner have been interpreted broadly, which has the effect of narrowing the application of the s. 192(2) Exclusion. This includes a scenario where the owner consents to the possession of the vehicle by a second person and that second person allows a third person to operate the vehicle, even though the owner may have expressly prohibited the third person from operating the vehicle: Thompson v. Bourchier, 1933 CanLII 106 (ON CA), [1933] O.R. 525 (C.A.); Henwood v. Coburn, 2007 ONCA 882, 88 O.R. (3d) 81; Connors v. D-Angelo, 2017 ONSC 1104. In these circumstances, the consent provided by the second person is attributed to the owner, thereby making the s. 192(2) Exclusion inapplicable and engaging the owner’s vicarious liability for the loss or damage caused by the third person’s negligence.
[17] This 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”: Fernandes v. Araujo, 2015 ONCA 571, 127 O.R. (3d) 115, at para. 20.
[18] What of the circumstances posited here, where Le Brun is assumed to have consented to the possession and operation of the Vehicle by Campbell, but Malcolm did not? If Le Brun, an owner, provided such consent, it is evident that the s. 192(2) Exclusion would not apply for the simple reason that Campbell was not in possession of the Vehicle “without the owner’s [i.e. Le Brun’s] consent”.
[19] Economical does not appear to dispute the inapplicability of the s. 192(2) Exclusion in respect of determining Le Brun’s vicarious liability. But Economical nevertheless maintains that the s. 192(2) Exclusion would apply in respect of Malcolm, because she did not consent to Campbell possessing or operating the Vehicle.
[20] The difficulty with Economical’s interpretation of the provision is that it presupposes that one co-owner can be vicariously liable under s. 192(2) of the HTA, while another co-owner is not. This ignores s. 67 of the Legislation Act, 2006, S.O. 2006, c.21, Sched. F, which provides that the use of the singular in a statute imports the plural. Thus, the reference in the opening words of s. 192(2) to “the owner” includes “the owners” in circumstances where a vehicle has more than one owner. This rules out the possibility of only one owner being liable under the provision, since the liability of one will necessarily engage the liability of any others.
[21] Economical seeks to avoid this result by relying on the decision of this court in Barham v. Marsden, [1960] O.J. No. 60 (C.A.), where two co-owners of a motor vehicle had previously agreed that no one else was permitted to drive their jointly owned vehicle. In breach of this condition, one of the co-owners allowed a third party to drive the vehicle and that third party negligently caused damage to the plaintiff. This court held that the owner who had not consented was not liable for loss or damage suffered by the plaintiff — despite a provision in the HTA at the time that was substantially identical to the current version of s. 192(2). Economical argues that Barham has never been overruled and that it limits the application of vicarious liability under s. 192(2) in the “unique circumstance of joint owners”.
[22] Economical’s reliance on Barham is misplaced. Barham proceeds on the assumption that an owner of a motor vehicle is subject to vicarious liability under s. 192(2) only where they personally consent to the possession of the vehicle by a non-owner. As noted above, there is a long line of authority from this court holding that no such personal consent is necessary to trigger the owner’s vicarious liability under s. 192(2). Indeed, the owner will be vicariously liable even if the person granted possession of the vehicle by the owner violates an express condition or limitation that the owner imposed on its use.
[23] Nor is there anything unique about a circumstance where a motor vehicle is owned by more than one person. As the motion judge pointed out, this court held in Mazur that it is unnecessary for the purposes of s. 192(2) for one owner to have the consent of the other owner before liability will attach to both owners: at para. 12.
[24] Economical attempts to distinguish Mazur on the basis that it involved an owner driving the vehicle, whereas in the present case the Vehicle was driven by a third-party non-owner. But this is a distinction without a difference. The relevant point is that the s. 192(2) Exclusion does not apply in both scenarios, albeit for slightly different reasons: in Mazur the vehicle was never in possession of “some person other than the owners”, whereas in this case the Vehicle was never in the possession of some person other than the owners “without the owners’ consent”. As we have already seen, where the s. 192(2) Exclusion does not apply, the owner or owners are liable for loss or damage suffered by “any person by reason of negligence in the operation of the motor vehicle…on a highway.” This means that both Malcolm and Le Brun would be liable for the plaintiff’s losses by virtue of Le Brun’s consent to Campbell’s possession and operation of the Vehicle.
[25] Although Barham has never been explicitly overruled by this court, Barham sits uncomfortably with a long line of authority from this court, including Fernandes, where a five-judge panel held that an owner may be vicariously liable for a driver’s negligence even if the driver was operating the vehicle in a manner forbidden by the owner: at paras. 39-40. As this court explained in Henwood, at para. 14, “the fact that the driver may be operating the vehicle without the consent of the owner, or even contrary to the express wishes of the owner, is irrelevant provided that the person to whom the owner entrusted the vehicle is in possession of the vehicle”. None of these cases made any reference to Barham.
[26] I therefore conclude that Barham has been overtaken by the court’s subsequent jurisprudence on s. 192(2) of the HTA with the result that if Le Brun consented to Campbell’s possession and/or operation of the Vehicle, then the vicarious liability of both Le Brun and Malcolm under s. 192(2) is engaged.
3. Section 239(1) of the Insurance Act identifies the liabilities covered by an owner’s insurance policy, but does not create those liabilities
[27] As noted above, the motion judge found that s. 239(1) of the Insurance Act requires a vehicle owner’s insurance policy to cover injuries suffered by persons driving in the vehicle, even if the owner was not vicariously liable for those injuries by virtue of s. 192(2) of the HTA.
[28] Section 239(1) of the Insurance Act provides as follows: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.] [29] As the emphasized portions of the provision indicate, an owner’s policy of insurance is required to insure against “liability imposed by law upon the insured named in the contract”. As such, 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 therefore erred in concluding that s. 239(1) required Malcolm’s Economical Policy to cover losses suffered by the plaintiff even if Malcolm was not liable for such losses under s. 192(2) of the HTA.
[30] Nevertheless, this error makes no difference in the circumstances of this case. If Le Brun consented to Campbell operating the Vehicle, then Malcolm is vicariously liable under s. 192(2) for any loss or damage caused by Campbell’s negligence. This is a “liability imposed by law upon the insured” which must be covered by Malcolm’s insurance policy, in accordance with s. 239(1).
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