MAHMUD JIVRAJ, ANISH REMTULLA, AYISHA REMTULLA by her Next Friend ANISH REMTULLA v. NATASHA, 1999 ABCA 185

Source: Court of Appeal of Alberta

Date: 1999-06-17

Jurisdiction: Alberta

Docket: 97-17425

Citation: 1999 ABCA 185

Opinion

Jivraj v. Edwards, 1999 ABCA 185 Date: 19990617 Docket: 97-17425 IN THE COURT OF APPEAL OF ALBERTA THE COURT: THE HONOURABLE MR. JUSTICE FOISY THE HONOURABLE MADAM JUSTICE CONRAD THE HONOURABLE MR. JUSTICE O’LEARY BETWEEN: MAHMUD JIVRAJ, ANISH REMTULLA, AYISHA REMTULLA by her Next Friend ANISH REMTULLA and NATASHA REMTULLA by her Next Friend ANISH REMTULLA Respondent (Plaintiff) - and - GORDON C. EDWARDS, JR., and GORDON C. EDWARDS, SR., ADMINISTRATOR AD LITEM OF THE ESTATE OF IRENE EDWARDS, DECEASED Appellant (Defendants) - and - STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

Third Party (Respondent) AND ROSHANARA VIRANI Respondent (Plaintiff) - and - GORDON C. EDWARDS, JR. and GORDON C. EDWARDS, SR., ADMINISTRATOR AD LITEM OF THE ESTATE OF IRENE EDWARDS, DECEASED Appellant (Defendants) - and - STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY Third Party ( Respondent ) APPEAL FROM THE HONOURABLE MR. JUSTICE LOMAS DATED SEPTEMBER 18, 1997 ____________________________________________________ REASONS FOR JUDGMENT RESERVED ____________________________________________________

REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE FOISY CONCURRED IN BY THE HONOURABLE MADAM JUSTICE CONRAD DISSENTING REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE O’LEARY COUNSEL : James A. Butlin For the Appellant, (The Administrator of the Motor Vehicle Accident Claims Fund) Dale E. Johns and M. J. Shewchuk For the Respondent, (State Farm Mutual Automobile Insurance Company) _____________________________________________ REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE FOISY _____________________________________________ Introduction [ 1 ] The issue in this appeal is the

interpretation of s. 320(5) of the Insurance Act , R.S.A. 1980, c. I-5 . A dispute has arisen between the Administrator of the Motor Vehicle Accident Claims Fund (the “ Administrator ”) and a private insurer, State Farm Mutual Automobile Insurance Company (“State Farm”) as to which of them is liable to pay the judgments of innocent third parties injured in a motor vehicle accident. Facts [ 2 ] For the purposes of the action, the parties prepared an Statement of Agreed Facts, which is set out in the trial judgment.

Essentially, State Farm issued a standard automobile insurance policy to Irene Edwards, purporting to insure a vehicle licensed and registered in her name. In fact, the car had been purchased and was solely driven by Gordon Edwards, Jr., the son of Irene Edwards. The son, who did not live with his mother, had been convicted of driving with an excessive blood alcohol level, and was disqualified to hold a driver’s licence. While driving the vehicle, the son was involved in an accident which caused injury to third parties. That accident was caused solely by the son’s negligence.

The third parties brought legal actions to recover their damages, and State Farm and the Administrator both denied liability. By agreement between State Farm and the Administrator, the Administrator has paid the third parties’ claims, reserving the right to be reimbursed by State Farm. State Farm has refunded the premium to the estate of Irene Edwards and has treated the insurance policy as void ab initio since learning of the true ownership of the vehicle. The Administrator and State Farm agreed to submit the following issue to the court:

In the particular facts of this case, as set out in the Statement of Agreed Facts, is State Farm liable under s. 320 of the Insurance Act, R.S.A. 1980, c. I-5 to pay the judgments held by Roshanara Virani and Mohamud Jivraj against Gordon Edwards Jr.? Trial judgment [ 3 ] The trial judge, after carefully reviewing the two conflicting lines of authority interpreting sections analogous to s. 320(5), found that Irene Edwards had no ownership, either in fact or in law, in the subject vehicle.

She therefore had no insurable interest in the subject matter of the policy, and the insurance contract had never come into existence. Since there was no valid insurance contract, there could be no indemnity provided, and no insurance money was payable. There could therefore be no liability of State Farm under an action purportedly brought under s. 320(1). The trial judge based this on the finding that the policy was not an “owner’s policy.” History of legislative provisions [ 4 ] Prior to 1947, the Insurance Acts of most provinces contained a provision analogous to the present s. 320(1) of the Alberta Act.

It reads: Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, notwithstanding that that person is not a party to the contract, may, on recovering a judgment therefor in any province against the insured, have the insurance money payable under the contract applied in or towards satisfaction of his judgment and of any other judgments or claims against the insured covered by the contract and may, on behalf of himself and all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied. [ 5 ] In 1947 the provincial legislatures added a further section, analogous to the present 320(5): It is not a defence to an action under this

section that an instrument issued as a motor vehicle liability policy by a person engaged in the business of an insurer and alleged by a party to the action to be such a policy is not a motor vehicle liability policy, and this

section applies, with all necessary modifications, to the instrument. The Alberta legislative counsel’s note attached to the amendment stated that the purpose of the amendment was to override the decision in Bourgeois v. Prudential Assurance Co. Ltd. , 1945 CanLII 334 (NB CA) , [1946] 1 D.L.R. 139 (N.B.S.C.A.D.) , and “enable the person recovering the judgment to have recourse to the insurance money even if the policy is not a valid motor vehicle liability policy as between the immediate parties.” In Bourgeois , the registered owner of a truck was the employee of the actual owner.

The insurance policy was taken out in the employee’s name, but the premiums were refunded to him by the employer. The plaintiffs were injured when their car was struck by the truck, which was driven by the employee. The New Brunswick Court of Appeal held that the policy was void by reason of the misrepresentation as to ownership and therefore no money was payable thereunder, since the right of action given to a third party by the legislation was the right to sue on an insurance contract only.

It is worth noting that the general opinion of the legal community prior to the Bourgeois case was that no misrepresentation in respect to the issuance of a motor vehicle policy would affect an injured third party’s rights under the sections analogous to s. 320(1). (See editorial note in the D.L.R. report of Bourgeois ). [ 6 ] Several years earlier, the Ontario Court of Appeal had considered a similar situation in Comer v. Bussell , 1939 CanLII 305 (ON CA) , [1940] 1 D.L.R. 97 , affirmed 1940 CanLII 9 (SCC) , [1940] 3 D.L.R. 417 (S.C.C.) .

In order to avoid the requirements of a municipal by-law with respect to residency, the owner of a taxicab made a fictitious assignment of it to another person, who registered and insured it in his own name. The owner used the cab in his business. The plaintiff was injured in an accident caused by the owner’s employee, who was driving the cab. The Ontario Court of Appeal found there were three grounds on which the plaintiff could not recover against the insurer. First, the policy was not an “owner’s policy” because the insured did not own the car.

Second, even if it was an owner’s policy, the employee was driving the car, not with the consent of the insured, but with the consent of his employer. Third, the misrepresentations in the policy as to the ownership of the car were material and entitled the insurer to void the policy upon discovery. On appeal, the Supreme Court of Canada referred only to the issue of whether there was an owner’s policy and stated that the Court of Appeal’s decision on this point ought not to be reversed. [ 7 ] The

interpretation of s. 320(5) and its counterparts in other provinces has been a matter of considerable judicial focus. All too often the owner of a car involved in an accident is not the named insured on the policy, usually because the owner has had his driver’s licence revoked or because the premiums would be extremely high if he was the insured. Two methods of

interpretation have generally been applied in such cases, one based on the Ontario Court of Appeal decision in Minister of Transport et al v. London & Midland General Insurance Co. (1971), 1971 CanLII 456 (ON CA) , 19 D.L.R. (3d) 643 , and the other based on Marshall v. Law Union & Rock Insurance (1958), 1958 CanLII 317 (NB CA) , 18 D.L.R. (2d) 442 (N.B.S.C.A.D.) .

[ 8 ] The London & Midland approach, which was adopted by the trial judge in this case, can be summarized as follows: the effect of section 320(5) and its counterparts is that if an insurance policy was issued to the owner of a motor vehicle as the result of a misrepresentation, the fact of the misrepresentation does not provide the insurer with a defence against third parties injured as a result of operation of the vehicle by the owner.

However, the other two grounds of the Court of Appeal judgment in Comer are still available to the insurer: first, that the policy is not an “owner’s policy”; and second, that the insured was not in a position to give or withhold consent because he or she did not own the car. This result may arise, in part, from an attempt to apply s. 301(1) of the Insurance Act (and its counterparts in other provinces) to the situation. That

section reads: Every contract evidenced by an owner’s policy insures the person named therein and every person who with his consent personally drives 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 on the insured named in the contract or that other person for loss or damage (

a) arising from the ownership, 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] A misrepresentation as to, for example, an insured’s driving record may well void the policy as between an insurer and the insured, but the insured or a person driving with the insured’s consent would otherwise fall within the parameters of coverage under s. 301(1). Under s. 320(5), the insurer would be precluded from arguing that the contract was void.

However, where the misrepresentation is as to ownership, the automobile would not be “owned by the insured named in the contract”, so coverage would not exist at all. [ 9 ] The London & Midland reasoning has been applied in Nova Scotia, in Prince Edward Island, and until recently, in Ontario. See: Wolfe v. Oliver (1974), 1974 CanLII 1308 (NS CA) , 8 N.S.R. (2d) 313 (N.S.S.C.A.D.) ; Sibbins v. Atkins et al (1982), 1982 CanLII 5386 (NS SC) , 53 N.S.R. (2d) 599 (N.S.S.C.T.D.) ; Dixon v. McCormack (1985), 1985 CanLII 5173 (PE SCTD) , 55 Nfld. & P.E.I.R. 53 (P.E.I.S.C.) ; Companaro v.

Kim (1995), 1995 CanLII 7071 (ON SC) , 16 M.V.R. (3d) 27 (Ont. Ct. Gen Div.) . [ 10 ] The courts applying the Marshall case, on the other hand, interpret the

section more broadly. They hold that the statutory right of recovery covers any misrepresentation, including a misrepresentation as to ownership of the car. This approach has been taken in New Brunswick, Manitoba and Newfoundland. See: State Farm Mutual Automobile Insurance Co. v. General Accident Assurance Co. of Canada (1995), 1995 CanLII 5583 (NB CA) , 127 D.L.R. (4 th ) 648 (N.B.C.A.) ; Dore v. General Insurance Corp. of New Brunswick (1991), 1991 CanLII 12284 (NB KB) , 5 C.C.L.I. (2d) 266 (N.B.Q.B.) ; Blair et al v.

Royal Exchange Assurance (1968), 1968 CanLII 634 (MB KB) , 67 D.L.R (2d) 420 (Man.Q.B.) , affirmed (1968), 1968 CanLII 628 (MB CA) , 69 D.L.R. (2d) 340 (C.A.) ; Thornhill v. Bennett (1985), 1985 CanLII 1854 (NL CA) , 55 Nfld. & P.E.I.R. 81 (Nfld. C.A.) ; Murphy v. Casualty Co. of Canada (1987), 1987 CanLII 197 (NL CA) , 36 D.L.R. (4 th ) 87 (Nfld. C.A.) . [ 11 ] After the trial judgment in this matter was rendered, the Ontario Court of Appeal issued a new judgment in which it expressly overruled the London & Midland case. In Campanaro v. Kim , (September 3, 1998) Docket Nos.

C22408 and C24839, 1998 CanLII 5925 (ON CA) , [1998] O.J. No. 3518 (Q.L.) , the court considered two cases in which the named insured knowingly misrepresented that he was the owner of the insured motor vehicle. Osborne, J.A., for a unanimous panel of five judges, said at para. 50: I do not think that an insurer issuing an instrument that purports to be a motor vehicle liability policy can validly defend a s. 258(1) action on the basis of any misrepresentation by the named insured, including a misrepresentation about the ownership of the insured vehicle.

In my opinion, the characterization of an instrument issued as a motor vehicle liability policy as an owner’s policy, or otherwise, is not relevant to the analysis. Later, at para. 55-56, he said: [W]hether or not the instrument in question purports to be an owner’s policy is a non-issue. Section 258(5) makes no reference to owner’s policies. Instead it refers to “an instrument issued as a motor vehicle liability policy.” While there is no doubt that in most cases, including the two cases before us, the fictitious “owner” applied for coverage under an owner’s policy, I do not think that that fact is of

any significance. Further, s. 258(5) makes no reference to a “contract”; it refers to an “instrument” issued as a motor vehicle liability policy. Whether the instrument is, or is not, a contract or a policy is not material to the insurer’s liability to a third party judgment creditor...The right of action created by s. 258(1) is a statutory right of action. It permits an injured third party who has recovered a judgment to have the insurance money “applied” to the judgment.

The action is not an action by a third party on the policy, owner’s or non-owner’s. [F]or purposes of the analysis required by s. 258, the threshold question is whether the insurer ... issued an instrument “as a motor vehicle liability policy.” How that instrument will be labelled, that is, whether it was intended to be an owner’s or non-owner’s policy, is a matter of no import, so long as the instrument issued by the insurer purports to be a motor vehicle liability policy. With respect to the issue of consent, Osborne, J.A. felt that was properly a coverage issue, not a matter for analysis under the

section in question. At para. 65, he stated: In those cases where there is a misrepresentation as to ownership, the misrepresentation is usually driven by economics (getting coverage at a lower premium)... or insurability (obtaining coverage in circumstances where the true owner would not be viewed as insurable)...In most of these cases, the driver will drive with the named insured’s consent, since that is part of the deal. Decision [ 12 ] The Ontario Court of Appeal has effectively removed the foundation upon which the restrictive approach to

interpretation of s. 320(5) and its counterparts is built. I agree with the reasoning applied by the Courts of Appeal of Manitoba, New Brunswick, Newfoundland and, now, Ontario. [ 13 ] In the Bourgeois case, which prompted the initial enactment of s.320(5), the vehicle was owned by one person, but registered and insured in the name of another. The court held that the misrepresentation as to ownership made the policy void. The legislation was intended to avoid repetition of this result.

Therefore, a misrepresentation as to ownership should not vitiate the contract vis-a-vis third parties injured by the actions of the driver of the vehicle. State Farm submits, however, that the legislative change was only intended to deal with misrepresentation by an insured. It was not meant to bar the two additional grounds set out in Comer .

It in effect draws a distinction between a misrepresentation as to ownership and any other type of misrepresentation, and says that the first type of misrepresentation renders the contract void ab initio and a third party cannot recover from the insurer, because there was no contract. This point was dealt with in Dore v.

General Insurance Corp. of New Brunswick , supra , where Russell, J. of the New Brunswick Queen’s Bench (Trial Division) said at para. 23: In a sense, the Ontario Court of Appeal, in [ London & Midland ] ... subdivided misrepresentation and fraud by creating a legal fiction relating to consent and the ability of a person to give or withhold consent. I cannot see how one could reasonably separate one type of misrepresentation made at the time of application (such as the state of a person’s health) from another (such as the true ownership of the vehicle).

In my view it was intended that any misrepresentation made by the applicant when applying for a policy cannot avail the insurer in an action by a judgment creditor under s. 250 of the Insurance Act. [ 14 ] Osborne, J.A. agreed with this reasoning at para. 59 of Campanaro v. Kim, supra: [I]t makes no sense to me to interpret [the]

section in a way that treats one type of misrepresentation (a misrepresentation about ownership) differently from all other misrepresentations. See Dore v. General Insurance , supra. Moreover, the language of s. 258(5) does not support that

interpretation.

If an insurer can defend a third party judgment creditor’s action brought under s. 258(1) on the basis of a misrepresentation about ownership, but not on the basis of any other misrepresentation, then s. 258(5) did not have “...the effect of overcoming Bourgeois” as Gale, C.J.O. said it did in London & Midland ... [I]f s. 258(5) precludes the insurer from contending that the instrument it issued as a motor vehicle liability policy is not a motor vehicle liability policy, it must follow that the insurer cannot rely on any misrepresentation which, if given effect to, would result in the instrument issued by the insurer as a motor vehicle liability policy being taken not to be a motor vehicle liability policy. [ 15 ] The two remaining grounds in Comer are really merely variations on the theme of misrepresentation of ownership.

If an applicant for an insurance policy has misrepresented himself as the owner of the vehicle, then the arguments that the policy issued was not an “owner’s policy” or that the insured could not give consent because he was not the owner are surely just different ways of saying the same thing. How could the misrepresentation not have the other two consequences?

[ 16 ] As Gushue, J.A. said in Thornhill v. Bennett , supra, at p. 84: It is an accepted fact that an instrument was issued by [the insurer] as a motor vehicle liability policy. That instrument was in existence. Thus, while normally the fact of misrepresentation or lack of insurable interest would allow the insurer to void the policy and successfully defend any claim in respect of it, [the effect of the statute is that] the insurer may not raise the defence that it is not a valid policy for the purposes of a claim by an injured party claiming under subsection (1) ...

The insurer can no longer rely on the normally accepted legal fiction that the contract, i.e. policy, never existed because it was void “ab initio.” [ 17 ] In the result, I agree with the following statement of Gushue, J.A., in Murphy v. Casualty Co. of Canada , at p. 91: ...[O]nce a liability policy has been issued, the issuer may not, under any circumstances, rely on the defence of it not being a valid policy.

Thus, in my view, and hopefully to make the matter completely clear, the expressed intent of s. 26 as a whole is that once an insurer issues a motor vehicle liability policy in respect of a certain vehicle, the insurer may not avoid a third party claim in respect of the operation of that vehicle during the policy period, by the named insured(

s) or any person driving the vehicle with the insured’s concurrence, where there exists a valid claim against either the named or unnamed insured arising out of that operation. [ 18 ] It follows that the appeal must be allowed and that State Farm is liable to pay the judgments held by the plaintiffs against Gordon Edwards, Jr. APPEAL HEARD ON October 8, 1998 JUDGMENT DATED at Calgary, Alberta, this 17th Day of June A.D. 1999 ________________________________ FOISY J.A. I Concur: ________________________________ CONRAD J.A. ____________________________________________________ REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE O’LEARY

____________________________________________________ INTRODUCTION [1] This appeal concerns the defences available to an automobile insurer faced with an absolute liability claim brought pursuant to s. 320(1) of the Insurance Act , R.S.A. 1980 c.I-5 (“the Act ”): Any person who has a claim against an insured for which indemnity is provided by a contract evidenced by a motor vehicle liability policy, notwithstanding that that person is not a party to the contract, may, on recovering a judgment therefor in any province against the insured, have the insurance money payable under the contract applied in or towards satisfaction of his judgment and of any other judgments or claims against the insured covered by the contract and may, on behalf of himself and all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied. [2] The insurer issued a motor vehicle liability policy in the form of an owner's policy to Irene Edwards, the registered owner of the automobile described in the policy, on the strength of her false representation that she was the actual owner of the vehicle.

It was in fact owned by her son, Gordon Edwards Jr., and she had no interest in it or control over it. Third parties were injured as a result of the son's negligent operation of the automobile. The insurer denied coverage. The plaintiffs obtained judgments against Gordon Edwards Jr. totalling less than the minimum liability coverage prescribed by the Act . No judgments were obtained against Irene Edwards. The insurer and the Administrator of the Motor Vehicle Accident Claims Act , R.S.A. 1980, c.

M-21 (" Administrator ") asked the court to determine the liability of the insurer to pay the judgments pursuant to s. 320(1) . [3] The learned chambers judge rejected the Administrator 's argument that the insurer is compelled to pay the judgments. He followed the decision of the Ontario Court of Appeal in Minister of Transport v. London & Midland General Ins. Co. (1971), 1971 CanLII 456 (ON CA) , 19 D.L.R. (3d) 643 ( "London & Midland" ), which held that the Ontario equivalent of s. 320(5) (s. 258(1) of the Ontario statute) did not compel an insurer to respond to third party claims in these circumstances. The

interpretation of s. 320(5) (referred to herein as "the amendment") is central to the resolution of this appeal. It limits an insurer's defences to a s. 320(1) absolute liability claim:

(5) It is not a defence to an action under this

section applies, with all necessary modifications, to the instrument. [4] The Ontario Court of Appeal has since decided Campanaro v. Kim (1998), 1998 CanLII 5925 (ON CA) , 41 O.R. (3d) 545 , 164 D.L.R. (4 th ) 400 , in which a five-member panel reconsidered and reversed London & Midland . It held that the amendment precludes an insurer from defending an absolute liability action on the ground that the policy was void ab initio because of misrepresentation by the named insured as to ownership of the vehicle described in the policy.

The Court went on to hold that the claims against the drivers and actual owners were claims against an insured for which indemnity is provided by a motor vehicle liability policy and therefore the insurer must satisfy the judgments up to the minimum liability limits. [5] I would dismiss the appeal. In my opinion the learned chambers judge correctly held that the insurer was not bound to satisfy the plaintiffs' judgments, but reached that conclusion for the wrong reason.

I respectfully agree with Campanaro , and with the majority judgment in this appeal, that the amendment precludes an insurer from defending an absolute liability claim on the ground that the policy is not an “owner's policy” and is therefore void from the outset due to misrepresentation of ownership. The learned chambers judge erred in basing his decision on that ground. [6] I am of the view, however, that the amendment was not intended to go any further than that. The history and the wording of the amendment does not justify a broader

interpretation. An insurer may still defend such a claim on the ground that the policy does not provide indemnity to the judgment debtor. Here, the judgment debtor, Gordon Edwards Jr., is not entitled to indemnity under the policy. His entitlement to indemnity is a condition precedent to the insurer's liability under s. 320(1) . Nothing in the Act or the insuring agreement extends coverage to Gordon Edwards Jr. in these circumstances.

The amendment does not expressly or by necessary implication deprive an insurer of a defence based on that fact. [7] The plaintiffs did not pursue recovery against the registered owner. It is unlikely they could have obtained judgments against her: Bois v. McDonald , 1975 CanLII 969 (AB CA) , [1975] 5 W.W.R. 739 (Alta. C.A.) .

BACKGROUND [8] State Farm Mutual Automobile Insurance Company (“State Farm”) issued a Standard Automobile Policy in the owner’s form to Irene Edwards, now deceased. She represented to State Farm that she was the owner of the automobile described in the policy. The vehicle was licenced and registered in her name. Her son, Gordon Edwards Jr. (sometimes referred to as "Gordon"), was in fact the owner of the vehicle and his mother had no interest in it or control over it. Gordon paid for it entirely from his own resources and had exclusive control of it.

He resided with his common law spouse and children at a place separate and apart from the residence of his mother. Gordon had been convicted of several driving offences and, at the relevant time, his operator's licence was under suspension. [9] On December 21, 1991, during the currency of the State Farm policy, Gordon was driving the automobile when it collided with a vehicle driven by Mahmud Jivraj. The collision was caused solely by Gordon's negligence. Jivraj and a passenger in his vehicle, Roshanara Virani, were injured. Apparently they did not have the benefit of uninsured motorist coverage.

They each commenced action against Gordon and the estate of Irene Edwards. State Farm denied coverage. No defences were filed on behalf of either Gordon or the estate. The Administrator intervened and filed defences on behalf of both defendants. Subsequently, the plaintiffs, the Administrator and State Farm consented to judgments in favour of each of the plaintiffs against Gordon Edwards Jr. The judgments have apparently been satisfied and the plaintiffs are not parties to the appeal. [10] The Administrator and State Farm disagree about which should be responsible for payment of the judgments.

The Administrator argues that State Farm must pay pursuant to s. 320(1) and that ss. (5) excludes any defence State Farm might otherwise have in the circumstances. State Farm maintains that the amendment does not foreclose the defence it advances here, namely that the judgment debtor is not entitled to indemnity under the Act or the policy in respect of the plaintiffs' claims. They have asked the Court to answer the following question: In the particular facts of this case . . . is State Farm liable under

section 320 of the Insurance Act ... to pay the judgments held by Roshanara Virani and Mohamud [sic] Jivraj against Gordon Edwards Jr.? [11] The learned chambers judge answered the question in the negative. The Administrator appeals. THE INSURANCE ACT [12] Some other provisions of the Act are of interest. Long before the introduction of the amendment, the predecessor to ss. (4) of s. 320 limited an insurer's ability to defend absolute liability claims. That subsection now says:

(4) The right of a person who is entitled under subsection (1) to have insurance money applied on his judgment or claim is not prejudiced by (

a) an assignment, waiver, surrender, cancellation or discharge of the contract, or of any interest therein or of the proceeds thereof, made by the insured after the happening of the event giving rise to a claim under the contract, (

b) any act or default of the insured before or after that event in contravention of this Part or of the terms of the contract, or (

c) any contravention of the Criminal Code (Canada) or a statute of any province or of any state or the District of Columbia of the United States of America by the owner or driver of the automobile, and nothing mentioned in clause (a), (

b) or (

c) is available to the insurer as a defence in an action brought under subsection (1).

[13] The term “motor vehicle liability policy” is defined in s. 1(

o) as: . . . a policy or part of a policy evidencing a contract insuring (i)the owner or driver of an automobile . . . against the liability arising out of bodily injury to or the death of a person or loss or damage to property caused by an automobile or the use or operation thereof. [14] The policy issued to Irene Edwards was an owner's policy.

Section 1(

q) defines “owner’s policy” to mean: . . . a motor vehicle liability policy insuring a person in respect of the ownership, use or operation of an automobile owned by him and within the description or definition thereof in the policy and, if the contract so provides, in respect of the use or operation of any other automobile. [15]

Section 301 defines the mandatory minimum scope of coverage under an owner's form of motor vehicle liability policy:

(1) Every contract evidenced by an owner’s policy insures the person named therein and every other person who with his consent personally drives 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 on the insured named in the contract or that other person for loss or damage (a)arising from the ownership, use or operation of any such automobile, and (b)resulting from bodily injury to or the death of any person, and damage to property.

INSURING AGREEMENT [16] An owner's policy presumes the person identified in it as the owner is in fact the actual owner of the described automobile.

The mandatory liability coverage of such a policy, as prescribed by s. 301(1), is reflected in the insuring agreement in the policy issued to Irene Edwards: The Insurer agrees to indemnify the Insured and, in the same manner and to the same extent as if named herein as the Insured, every other person who with his consent personally drives the automobile . . . against the liability imposed by law upon the Insured or upon any such other person for loss or damage arising from the ownership, use or operation of the automobile and resulting from BODILY INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO PROPERTY [17] The Act prescribes that an owner's policy must extend indemnity to an individual who, with the consent of the named insured , "personally drives an automobile owned by the insured named in the contract ". (emphasis added) The insuring agreement does not contain the "ownership" condition; coverage is extended if the driver is operating an automobile described in the policy with the consent of the named insured.

DECISION OF CHAMBERS JUDGE

[18] The learned chambers judge examined the history of the amendment, including a review of the decisions of the Ontario Court of Appeal and the Supreme Court of Canada in Comer v. Bussell (1939), 1939 CanLII 305 (ON CA) , [1940] 1 D.L.R. 97 (Ont. C.A.) , [1940] 3 D.L.R. 417 (S.C.C.) , and of the New Brunswick Supreme Court, Appeal Division, in Bourgeois v. Prudential Assurance Co. Ltd. , 1945 CanLII 334 (NB CA) , [1946] 1 D.L.R. 139 . He accepted the decision of the Ontario Court of Appeal in London & Midland with respect to the

interpretation of the amendment, expressed in the Ontario equivalent of the amendment. In his view, it does not prevent an insurer from defending an absolute liability claim in these circumstances. He concluded, as did the Court in London & Midland , that there never was a valid owner’s policy in force because of the misrepresentation of ownership by Irene Edwards. The amendment does not prevent State Farm from relying on this defence.

After referring to the definition of “owner’s policy” in s. 1(q), the chambers judge held that Irene Edwards had no insurable interest in the automobile and “[a]s a result no valid contract of insurance ever came into force.” (A.B. 53, para. 25) [ 19 ] He referred to the amendment at para. 27: If there is no valid contract of insurance then there can be no indemnity provided by a contract and there is no insurance money payable under the contract.

Even if there exists an instrument issued as a motor vehicle liability policy, if there is no indemnity provided by the instrument or no insurance money is payable under the instrument then there can be no liability of the insurance company under an action purportedly brought under subsection (1). [ 20 ] The learned chambers judge commented that it was not necessary to consider the issue of whether the judgment debtor was operating the vehicle at the relevant time with the consent of the named insured, Irene Edwards.

He did, however, refer to the scope of coverage of an owner's policy as set out in s. 301(1) and the insuring agreement and concluded at para. 30: If there is no consent from the person named in the policy for another person to drive an automobile owned by the named insured, then the coverage under the policy would not extend to that other person. HISTORY OF THE AMENDMENT [ 21 ] I would give the amendment a more limited effect than the majority.

In my view it was intended to prevent an insurer from defeating an absolute liability claim on the ground that the policy was void ab initio, that is, that it never came into existence. It was not designed to compel an insurer to pay third party judgments recovered against persons not entitled to indemnity under a policy deemed valid and existing.

To determine the intention of the legislature in enacting the amendment it is necessary to consider its history. [ 22 ] Because the amendment was enacted to override the decision in Bourgeois , that decision must be considered, along with the earlier judgments of the Ontario Court of Appeal and Supreme Court of Canada in Comer v. Bussell . In both Comer and Bourgeois the statutes contained provisions like s. 320(1) permitting third parties with unsatisfied judgments to claim directly against the judgment debtors' liability insurers and limiting the defences available to the insurers as set out in s. 320(4).

Comer v. Bussell [ 23 ] In Comer, Johnson, the owner of a taxicab, transferred registration of the vehicle to Seaman in order to satisfy a residence condition for a taxi licence. Seaman obtained liability insurance in his own name, falsely representing to the insurer that he was the actual owner. Seaman had no interest in the automobile and no control over it. Johnson's employee, Kowaluk, while driving the taxi with Johnson's knowledge and consent, negligently injured a third party who later recovered a judgment for damages against Johnson and Kowaluk. His absolute liability action against the insurer failed.

On appeal, Robertson C.J.O., for the Court, observed that there was no judgment against Seaman, the named insured, and the claim under the statute was (p. 99): ... not based upon any indemnity to which Seaman is alleged to be entitled.

The claim is that Kowaluk, the driver, although not named in the policy, is covered by it by virtue of s. 198 of the Insurance Act [ s. 301 of the Act ], and also by the terms of the policy itself, which contains a somewhat usual clause by which the insurer agrees to indemnify in the same manner and to the same extent as if named as the insured, every other person who, with the insured's consent, uses the automobile, against the liability imposed by law upon such persons for loss or damage arising from the use or operation of the automobile.

There was no judgment against the named insured, Seaman, and no suggestion that Johnson was entitled to indemnity under the policy.

The foundation for the direct claim was the judgment against Kowaluk. He was not entitled to indemnity unless there was a motor vehicle liability policy extending indemnity to him. [ 24 ] The Court of Appeal based its judgment on three grounds: (

i) The Policy Was Not an Owner’s Policy: The source of Kowaluk's claim to indemnity was the statutory extension of indemnity to unnamed individuals driving with consent of the named insured and the corresponding wording of the insuring agreement. Since the named insured, Seaman, was not the owner, the policy could not be an owner’s policy as defined in the statute and the purported extension of indemnity to Kowaluk under the statute and the policy was ineffective. (ii) Material Misrepresentation as to Ownership: The defence-limiting provisions of the equivalent to s. 320(4) did not assist the judgment creditor.

Those provisions presume the existence of a valid policy. They do not preclude an insurer from denying that a policy came into existence. Seamans' false representation that he was the owner was a material misrepresentation made before the issue of the policy. It rendered the contract void ab initio .

Since there was no policy in existence, no right to indemnity could accrue to Kowaluk and the basis for an absolute liability claim did not exist. (iii) No Consent of Named Insured : Even if the policy were a valid motor vehicle liability policy and could provide indemnity to an unnamed driver, Kowaluk was not “in any proper sense of the term ... using the motor car with Seaman’s consent” (p. 98). Because Seaman could not have prevented the use of the vehicle by withholding consent, Kowaluk could not logically have been driving with his consent.

In any event, there was no evidence of consent by Seaman to Kowaluk's use of the vehicle. [ 25 ] The judgment creditor appealed to the Supreme Court of Canada. The appeal was dismissed on the sole ground that, since Seaman did not own the vehicle, the policy was not an owner’s policy and so provided no coverage for unnamed drivers operating with the consent of the named insured. Duff C.J.C. stated the issue at p. 418: The appellant has no judgment against Seaman, who, it is argued, is the owner of the car within the meaning of certain other sections of the statute. ...

The precise point to be decided is whether the driver, against whom the appellant has a judgment, is one of the persons entitled to indemnity under the policy by force of s. 198 [which defines the scope of indemnity afforded by an owner's policy as in s. 301(1) of the Act ]. He then referred to the definition of "owner's policy" in the statute and observed that the extension of coverage to Kowaluk depended on the automobile being owned by Seaman within the meaning of the definition.

The Court agreed with the Court of Appeal that in the absence of an owner's policy, Kowaluk was not entitled to indemnity and the third party could not recover against the insurer. The Court did not refer to the second and third grounds cited by the Ontario Court of Appeal. In particular, the Court left open the defence that the policy was void ab initio and never came into existence. Bourgeois v. Prudential Assurance Co. Ltd. [ 26 ] In Bourgeois , Poirier was the registered owner of a truck and the named insured in the policy. The true owner was Nadeau, for whom Poirier worked.

Nadeau reimbursed Poirier for the insurance premiums and paid him for driving the truck. Poirier's negligent driving caused an accident. He was found liable in damages to a third party. The third party sued the insurer under the absolute liability

section of the New Brunswick statute. [ 27 ] The facts in Bourgeois differ from those in London & Midland and Campanaro . In the latter cases, and in the case at Bar, the true owners were driving the vehicles at the relevant times and were the judgment debtors whose liability and alleged right to indemnity founded the absolute liability claims. In Bourgeois , the driver was not the actual owner but was the insured named in the policy. The case at Bar would be identical if Irene Edwards were driving the vehicle. The issue of consent of the named insured did not arise.

Nor was it relevant that the policy was or was not an owner’s policy. The simple issue was whether Poirier's misrepresentation that he was the owner rendered the policy void ab initio . The Court decided that Poirier had made a material misrepresentation sufficient to render the policy void ab initio. The judgment creditor was precluded from recovering as the policy never came into existence. The existence of a valid contract of motor vehicle liability insurance was an essential condition to recovery in the direct action. [ 28 ] The Court considered the New Brunswick equivalent of s. 320(4).

That provision, it was held, only comes into play once it has been found that a policy was validly issued and in effect at the relevant time. The misrepresentation of ownership was held to prevent a contract being formed in the first place. In the words of Baxter C.J.N.B.: “[the] misrepresentation did not avoid the policy but prevented the making of a contract of insurance”. (p.140) Harrison J.A. observed that in Comer v. Bussell one of the defences was

misrepresentation, a defence accepted by the Ontario Court of Appeal, but not dealt with by the Supreme Court of Canada. [ 29 ] In the result, the Court held that Poirier's misrepresentation rendered the policy void ab initio . It never came into effect and Poirier was not entitled to indemnity under it even though he was the named insured and the judgment debtor. [ 30 ] In response to the Bourgeois decision, most of the provincial legislatures, in uniform legislation, enacted the amendment that is now ss. (5) of s. 320 .

The amendment was added to the absolute liability provisions of the provincial insurance statutes for the specific purpose of overriding the decision in Bourgeois . This is confirmed by the legislative notes to the amendment in Ontario and Alberta. The Ontario note was cited by the Ontario Court of Appeal in Campanaro , and reads as follows:

Section 205 of the Act was intended to create an absolute liability on the part of the insurer toward a person injured by a person insured under a motor vehicle liability policy . In the case of Bourgeois v. Prudential Assurance Company the Supreme Court of New Brunswick on the same

section of their Act held that where a material misrepresentation was made prior to the issue of the policy which resulted in the applicant never being actually insured , the provisions of the

section were not applicable. This amendment has the effect of making the

section applicable in any case where an instrument is issued as a motor vehicle liability policy by a person engaged in the business of an insurer which is alleged by a party to the action to be such a policy. [emphasis added] [ 31 ] The draftsman acknowledged that the amendment fixed an insurer with liability to a judgment creditor only when the latter is injured by "a person insured under a motor vehicle liability policy", that is, a person entitled to indemnity under the policy in issue. The Alberta legislative note also makes it clear that the amendment was intended only to override the decision in Bourgeois :

Section 4 of the Bill adds a new subsection (3a) to

section 278 of the Act . That

section which is in the Part of the Act dealing with automobile insurance deals with the rights which a person who has recovered judgment against an insured person has against the money payable under the insurance policy. In a recent case in the Appeal Division of the Supreme Court of New Brunswick it was held that where a policy was void as between the immediate parties by reason of misrepresentation, etc., the person who had recovered a judgment against the insured lost his rights against the money otherwise payable under the policy.

The purpose of this amendment, which has been approved by the Superintendents of Insurance of the Provinces, is to override the above judgment and enable the person recovering the judgment to have recourse to the insurance money even if the policy is not a valid motor vehicle liability policy as between the immediate parties. [emphasis added] [ 32 ] The stated purpose of the amendment was to overcome the defence successfully advanced in Bourgeois that the contract was void ab initio because of the applicant's ownership misrepresentation.

The legislative notes assumed the judgment creditor's right to recover directly against the insurer was predicated on the judgment being against "an insured person", that is, a person entitled to indemnity under the policy. The wording of the amendment accomplished its purpose. It was not, in my view, intended to go any further. Minister of Transport v. London & Midland General Ins. Co. [ 33 ] London & Midland was decided by the Ontario Court of Appeal in 1971, long after the amendment became part of the absolute liability provisions of the insurance statutes of Ontario and most other provinces.

Dolson, the true owner, who had no driver’s licence, prevailed upon his friend Bassert to register and insure his automobile in her name as the owner and named insured. The Minister of Transport paid a judgment against Dolson who negligently injured the judgment creditor while driving his vehicle. The Minister received an assignment of the judgment and sought recovery against the liability insurer pursuant to the absolute liability provisions of the Ontario statute. The Minister argued that the amendment took away any defence the insurer might otherwise have.

The insurer conceded that the policy was an instrument issued as a motor vehicle liability policy by a person engaged in the business of an insurer. It was agreed that the named insured was not the true owner. The Court conceded that since the amendment, a misrepresentation by an applicant will not render the contract void and provide a defence on that basis. It was noted, however, that the other two grounds for the decision of the Ontario Court of Appeal in Comer v. Bussell remained intact and were not affected by the amendment.

The insurer could therefore defeat the absolute liability claim by establishing either that the policy was not an owner's policy or that the judgment debtor was not driving the vehicle at the relevant time with the consent of the named insured. [ 34 ] The Court upheld the trial judge and dismissed the claim. Speaking for the Court, Gale C.J.O. concluded at p. 645:

[I]f a policy is issued to the owner of a motor vehicle as a result of his misrepresentation, then the fact of the misrepresentation will not provide an insurance company with a defence against third parties who are injured as a result of the operation of the vehicle by the owner. In other words, it has the effect of overcoming the results achieved in the decisions of Comer v. Bussell . . . and in Bourgeois et al. v. Prudential Assurance Co. Ltd. . . . .

However, it is our opinion that it does not have any further effect and that the first two grounds of the Court of Appeal decision in Comer , which judgment was sustained by the Supreme Court of Canada, are still available to the respondent. This policy does not cover this risk not only because it is not an owner’s policy but also because it cannot be said that Dolson had Miss Bassert’s consent to operate the car at the time the accident occurred.

We say that because she was not in a position to be able to give or withhold consent. . . . [ 35 ] By finding that the policy did not cover the risk because it was not an owner's policy, Gale C.J.O. held, in effect, that while the amendment prevents an insurer from relying on other misrepresentations by the named insured to avoid absolute liability, it does not preclude reliance on a misrepresentation as to ownership. In substance, a misrepresentation of ownership by the applicant and named insured renders the policy void ab initio .

As noted earlier, the learned chambers judge adopted this reasoning and held that no valid owner's policy came into effect. CAMPANARO V. KIM [ 36 ] In Campanaro , a five-member panel of the Ontario Court of Appeal reconsidered and reversed the Court's earlier decision in London & Midland that a motor vehicle liability policy issued on the strength of a misrepresentation as to ownership was not a valid owner's policy and therefore no policy existed.

The judgment was based on a finding that the Court in London & Midland misinterpreted the Bourgeois amendment and consequently erred in creating an exclusion from absolute liability in cases of misrepresentation as to ownership of the vehicle described in the policy. [ 37 ] In Campanaro the Court considered two appeals, each involving facts similar to those in the case at Bar. In each case the named insured misrepresented to the insurer that he was the actual owner of the vehicle. In one case (" Campanaro "), the named insured was also the registered owner.

In the other (" Truelove "), the actual owner of the all-terrain vehicle was apparently the registered owner but was not the named insured. In Campanaro third parties were injured as the result of negligent operation of the vehicle by the actual owner. In Truelove , third parties were injured when the vehicle was negligently operated by an individual driving with the consent of the actual owner.

The Court stated the issue as follows at para. 2 (D.L.R. 404): These two appeals ... raise the same issue - can the insurer defend the action contemplated by s. 258(1) [ s. 320(1) of the Act ] on the basis of its insured's misrepresentation as to the ownership of the insured automobile, notwithstanding the provisions of s. 258(5) [ s. 320(5) of the Act ]. Put another way, the issue is whether the defence-limiting provisions of s. 258(5) apply when the misrepresentation in issue is a misrepresentation as to the ownership of the insured automobile. [ 38 ] So stated, the issue before the Court was a narrow one.

It questioned the correctness of the finding in London & Midland that the amendment left open the defence that the policy was void ab initio where the misrepresentation was as to ownership. The Court overruled London & Midland on that point and I respectfully agree with that conclusion. [ 39 ] With respect to the issue of misrepresentation, the judgment in Campanaro is summarized in paras. 50 and 51 (D.L.R. 417): [50] . . .

I do not think that an insurer issuing an instrument that purports to be a motor vehicle liability policy can validly defend a s. 258(1) action on the basis of any misrepresentation by the named insured, including a misrepresentation about the ownership of the insured vehicle. In my opinion, the characterization of an instrument issued as a motor vehicle liability policy as an owner’s policy, or otherwise, is not relevant to the analysis.

Thus, State Farm cannot defend the claims made against it on the basis of the misrepresentation about ownership by the named insured in either action .... [51] I think that it is clear that the 1947 Insurance Act amendment was intended to overcome the effect of Bourgeois and preclude an insurer from defending an innocent third party judgment creditor’s claim on the basis of any material misrepresentation, including a misrepresentation as to ownership of the insured automobile.

Although the Legislature’s intention seems to me to be clear, the question remains whether the amendment did overcome Bourgeois in those cases where the misrepresentation in issue is a misrepresentation about the ownership of the insured automobile. The Court added at para. 59 (D.L.R. 420):

In my opinion, if s. 258(5) precludes the insurer from contending that the instrument it issued as a motor vehicle liability policy is not a motor vehicle liability policy, it must follow that the insurer cannot rely on any misrepresentation which, if given effect to, would result in the instrument issued by the insurer as a motor vehicle liability policy being taken not to be a motor vehicle liability policy. [ 40 ] The Court went on to find the insurer liable on the ground that the judgment debtors in each case were presumed to be using the vehicle with the consent of the named insured and the insurer had not shown that the use was without that consent.

The Court said at para. 65 (D.L.R. 421): In those cases where there is a misrepresentation as to ownership, the misrepresentation is usually driven by economics (getting coverage at a lower premium), or insurability obtaining coverage in circumstances where the true owner would not be viewed as insurable). In most of these cases, the driver will drive with the named insured’s consent, since that is part of the deal. Here, there is no evidence in the Campanaro action that Ki-Jin Kim was driving the insured automobile without the consent of the named insured, his brother, Ki-Suk Kim.

Similarly in the Truelove action there is no evidence that Scott Thompson was driving the insured ATV without the consent of the named insured, Alan Hamilton. DISCUSSION [ 41 ] In my view, the learned chambers judge erred in basing his decision on a finding that the policy was not an owner's policy and therefore not a valid contract of insurance.

I agree with the observation in Campanaro at para. 56 (D.L.R. 419) that this characterization is irrelevant: In my opinion, for purposes of the analysis required by s. 258, the threshold question is whether the insurer . . . issued an instrument “as a motor vehicle liability policy”. How that instrument will be labelled, that is, whether it was intended to be an owner’s or non-owner’s policy, is a matter of no import, so long as the instrument issued by the insurer purports to be a motor vehicle liability policy. [ 42 ] The policy purported to be a motor vehicle liability policy.

The amendment precludes the insurer from denying that the policy was in force as such at the relevant time. That is what the Ontario Court of Appeal said in Campanaro and I agree. [ 43 ] I say the learned chambers judge reached the right conclusion because this motor vehicle liability policy does not provide indemnity to the judgment debtor, Gordon Edwards Jr., in these circumstances.

A s. 320(1) action is a statutory action in the sense that a person not a party to the insurance contract is given the right to sue the insurer directly to compel payment of the amount payable under the policy to satisfy his judgment and the judgments of others in a like position. An insurer's defences to such an action are limited by ss. (4) and (5) of s. 320 . The right of a judgment creditor is, however, by the express terms of s. 320(1) and the insuring agreement, subject to the judgment debtor being entitled to indemnity under the motor vehicle liability policy.

The amendment was not intended to and does not by its wording alter this fundamental concept. [ 44 ] In the circumstances of this case, Gordon Edwards Jr. is not a person entitled to indemnity under the policy. His use of the vehicle at the relevant time cannot, in logic or common sense, be said to have been with the consent of the named insured, Irene Edwards. In the absence of consent, Gordon Edwards Jr. is no more entitled to indemnity than a thief.

Consent by the named insured to use of the vehicle by another supposes a power to grant or withhold permission and an exercise of that power in favour of that other person. Here, Irene Edwards had no control whatsoever over the automobile and hence no power to give or withhold consent to its use. Her son was not driving the vehicle with her consent.

He was driving it because it was his and he had exclusive control of it. [ 45 ] Although London & Midland was decided on the basis that the policy was not an owner’s policy, the reasons of Gale C.J.O. also discussed the issue of consent by the named insured to the judgment debtor’s use of the vehicle. His comments apply in the circumstances of the case at Bar. He said at p. 645:

This policy does not cover this risk ... because it cannot be said that Dolson had Miss Bassert’s consent to operate the car at the time the accident occurred. We say that because she was not in a position to be able to give or withhold consent. . .. [ 46 ] In Campanaro the Court commented on the issue of consent and its relevance to a judgment creditor's right to recover in an absolute liability action under s. 320(1) . At paras. 62 and 63 (D.L.R. 420-421), the Court said: [62] I do not view consent to be an issue that is properly part of the s. 258 analysis. . . .

I accept that there will be cases where an insurer may successfully contend that the driver causing an accident by his or her negligence was not driving with the consent of the named insured. In such a case, the insurer’s obligation to pay an injured third party is controlled by the insuring agreement in the policy in question. . . .

Once it is accepted that the insurer cannot defend a s. 258(1) action by taking the position that the instrument that it issued was not a motor vehicle liability policy, in my view, consent is properly viewed as a coverage issue. [63] Coverage under an owner’s policy is statutorily prescribed in s. 239(1) of the Insurance Act [s. 301(1) of the Alberta Act]. As they must, the insuring agreements in the two policies in issue here have to provide the coverage set out in s. 239(1). [ 47 ] Consent has a critical bearing on the right of the judgment creditor to recover against the insurer.

Both s. 320(1) and the statutorily prescribed insuring agreement make a finding of consent to the judgment debtor's use at the relevant time a condition of his right to indemnity. The existence of that right is, in turn, an element that must be established by the judgment creditor seeking recovery under s. 320(1). [ 48 ] In my view, it is not enough to dispose of the issue of consent to say that the named insured consented to the use of the vehicle by its actual owner as part of the fraudulent scheme. Here, Irene Edwards never at any time had the slightest interest in or control over the vehicle.

She cannot be said to have consented to its use by the actual owner. CONCLUSION [ 49 ] The issue of consent by the named insured to operation of the described vehicle by the judgment debtor is a critical element in the determination of the right of a judgment creditor to maintain an absolute liability claim under s. 320(1).

The amendment does not preclude an insurer from defending such a claim on the ground that the motor vehicle liability policy does not extend indemnity to the judgment debtor. [ 50 ] The Ontario Court of Appeal in Campanaro properly concluded that the amendment prohibits an insurer from defending an absolute liability claim on the ground that the policy is not a valid owner's policy and therefore there is no policy to provide indemnity. To the extent that London & Midland held to the contrary, it misinterpreted the amendment and was wrongly decided.

I do not agree, however, that consent of the named insured to operation by the actual owner is to be implied in the circumstances of Campanaro or the case at Bar. [ 51 ] I conclude that Gordon Edwards Jr. was not driving with the consent of Irene Edwards when the accident occurred. He was using the vehicle because it was his and he had exclusive control over it. I would dismiss the appeal. APPEAL HEARD on October 8, 1998 REASONS FILED at Calgary, Alberta, this 17 th day of June, 1999 ______________________________

O’LEARY J.A.

Loading document…