The Superior Court has released a decision dealing with whether
an owner of an ATV can be held vicariously liable for a
driver's negligence, even though no consent was given to
operate the vehicle.
In Fernandes v Araujo, Fernandes was seriously injured
while a passenger on an ATV. The ATV was owned by Carlos Almeida
and insured by Allstate. Eliana Araujo was the driver of the ATV;
she had a G1 licence at the time of the accident.
Carlos was fixing a fence on his farm with some of his friends,
including Eliana. Carlos told Eliana that she could drive the ATV
on the farm, while Carlos' cousin, Jean Paul, told Eliana not
to leave the farm on the ATV. Carlos did not expressly forbid
Eliana and Fernandes to leave the farm, although later he said if
Eliana and Fernandes had asked him to leave the property he would
have said no.
Eliana and Fernandes left the property to drive over to a nearby
farm on a public road without permission. While returning back from
the nearby farm, the ATV rolled over and Fernandes was seriously
Allstate brought two summary judgment motions: the first dealt
with whether Allstate was liable to provide insurance coverage when
the owner of the ATV did not give his consent for Eliana and
Fenandes to drive it.
The second summary judgment motion asked the court to dismiss
Eliana's third party claim because she was operating the ATV
without the owner's consent and was operating the ATV contrary
to Statutory Condition (4.1) of O.Reg 777/93, which states that an
insured shall not operate, drive or permit another person to
operate or drive a vehicle unless they are authorized by law to do
Allstate's motion in the main action was dismissed and was
granted in the third party action.
In the main action, the judge relied on the Court of
Appeal's decision in Finlayson v. GMAC Leasco Ltd. In
Finlayson, the Court of Appeal held that vicarious
liability under section 192(1) of the Highway Traffic Act
is based on possession, not operation, of a vehicle, following an
old line of authority (Thomson v. Bouchier). In
Finlayson, it was stated that if an owner gives possession
of a vehicle to another, and the owner expressly prohibits that
person from operating the vehicle, the owner is nonetheless
vicariously liable for the negligent operation of that vehicle.
The judge had to reconcile this decision with the Court of
Appeal's decision in Newman v. Terdik. In
Newman, Terdik was a tobacco owner who gave his worker
permission to use the defendant's automobile to travel down a
laneway between two tobacco farms, but was expressly forbidden from
driving on the highway. The worker drove on the highway where he
hit the plaintiff, Newman, who sustained injuries. The Court of
Appeal held that the worker did not have possession of the vehicle
with consent; therefore, Terdik was not vicariously liable. The
Court of Appeal found that possession is a fluid concept; it can
change from rightful to wrongful possession or to possession with
or without consent.
The judge found that Newman was distinguishable because
Carlos did not expressly impose any restrictions on Eliana's
operation of the vehicle; he gave her possession of that vehicle.
The fact that Carlos' cousin expressly forbid Araujo from
leaving the property could not be attributed to Carlos. However,
the judge went further, stating that Newman may be wrongly
decided as it did not follow Thompson v. Bourchier.
Accordingly, the judge found that there was consent as Carlos
gave Eliana possession of the ATV.
With regard to the third party action, the judge held that
Araujo was not licensed to drive an ATV because she was not
authorized by law to drive it. Section 18 of O.Reg 316/03 states
that a driver of an off-road vehicle requires a valid A, B, C, D,
E, F, G, G2, M, or M2 driver's licence. Further, section 32(1)
of the Highway Traffic Act states that no person shall
operate a vehicle on a highway unless they hold a valid licence.
Finally, Statutory Condition 4.1 states that an insured shall
not operate, drive or permit another person to operate or drive a
vehicle unless they are authorized by law to do so.
Araujo was operating the ATV with a G1 licence, and therefore,
the judge found that she breached Statutory Condition 4.1 under the
This decision confirms that vicarious liability is based on
possession, not operation. Even if a person is expressly prohibited
by the owner from operating the vehicle, the owner will be found
vicariously liable if possession has been granted. The fact that a
driver of a vehicle is operating without the owner's consent is
irrelevant if the owner has given possession of the vehicle to the
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