Vicarious Liability for Vehicle Owners under HTA Based on Possession, not Operation

Gilbertson Davis LLPCivil Litigation, Insurance, Summary Judgment0 Comments

The Superior Court has confirmed that a vehicle owner is vicariously liable for the negligence of another driver under the Highway Traffic Act, even if the owner consents only to the possession of the vehicle, and not its operation on the highway.

In Fernandes v. Araujo et al., the owner’s insurer brought a motion for summary judgment stating that the owner was not vicariously liable for the driver’s negligence as the owner had not given permission to the driver to operate the vehicle, an ATV located on the owner’s farm, on the highway, as the driver only had a G1 license and was not licensed to use the ATV on a highway. The insurer attempted to rely on the similar decision of Newman v. Terdik, where the owner was not found to have given consent as he had expressly forbidden the driver from taking the vehicle off his farm and onto the highway. That decision departed from a long history of earlier case law which held that an owner does not escape liability where the driver breaches any conditions or limitations to the owner’s consent to possession of the vehicle.

In dismissing the motion, the court relied on the earlier case law and confirmed that the liability of the owner under s. 192 of the Highway Traffic Act arises as long as the owner gave permission to the driver to possess the vehicle, even if the owner specifically prohibited the driver from using the vehicle on the highway. The court distinguished Newman by finding as a fact that the owner had not expressly forbidden the driver from going on the highway. The court also opined that Newman was simply wrongly decided, and instead that the earlier series of case law was correct.

However, the court did grant summary judgment to the insurer in dismissing the driver’s third-party claim against the insurer, as there was no genuine dispute requiring trial that the driver was not properly licensed to drive the ATV and therefore in breach of the statutory conditions of the owner’s insurance policy.

The decision is currently under appeal, scheduled to be heard in June.

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