The Court of Appeal in the August 10th, 2015 decision in
Fernandes v. Araujo et al. addressed the vicarious
liability of an owner of a vehicle for the negligence of a person
who had possession of the vehicle with the owner's consent. The
Statutory Third Party Insurer for the owner of the ATV was denying
third party coverage to the Defendant driver and was relying upon
the 1952 decision in Newman and Newman v. Terdik, which
The owner is not vicariously liable for damages sustained as a
result of a highway accident when the person with possession of the
vehicle violated the condition and drove the vehicle on a
However, the Court of Appeal
Affirmed a long line of authority going back to 1933 holding
that as the vicarious liability of an owner rests on possession
rather than operation of the vehicle, the owner will be vicariously
liable if the owner consented to possession, even if the driver
operated the vehicle in a way prohibited by the owner.
What is the basis for this finding?
1. The Highway Traffic Act
s. 192 (2) of the Highway Traffic Act provides:
192(2) 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.
This provision therefore places the onus on the owner of the
vehicle to be careful in who is being provided responsibility for
the operation of the vehicle.
2. Was the decision in Newman wrongly
The Court of Appeal held that:
The proposition upon which Newman rests, namely, that
"possession can change from rightful possession to wrongful
possession, or from possession with consent to possession without
consent" where the person in possession violates a condition
imposed by the owner, is inconsistent with the reasoning of this
line of authority.
The Court of Appeal cites many cases contrary to the findings in
Newman. Although it grapples with its authority to
overturn Newman, the Court of Appeal ultimately finds
Overruling Newman would enhance rather than undermine
the interest of clarity, coherence and predictability in the law.
Accordingly, it is my view that we should overrule the case and
declare that it no longer represents the law of Ontario.
What does this mean?
1. If possession is given, the owner will be
liable even if there is a breach of a condition attached to that
possession, including a condition that the person in possession
will not operate the vehicle.
2. Breach of conditions placed by the owner on
a person's possession of the vehicle, including conditions as
to who may operate the vehicle, do not alter the fact of
Therefore, be careful with regard to who borrows your
1 Seegmiller v. Langer (2008), 301 DLR (4th)
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