Ryan v. Newcombe, 2003 NSSC 105

IN THE SUPREME COURT OF NOVA SCOTIA Citation: Ryan v. Newcombe, 2003 NSSC 105 Date: 2003/03/28 Docket: S. T. No. 08242 Registry: Halifax Between: MERNA RYAN PLAINTIFF v. LAWRENCE H. NEWCOMBE,and DARREN MICHAEL NEWCOMBE DEFENDANTS Judge: The Honourable Justice Arthur W.D. Pickup Heard: February 12, 2003, in Halifax, Nova Scotia Written Decision: March 28, 2003 Counsel: Michael Brooker, for the Plaintiff Jeffrey R.

Hunt, for the Defendants Augustus Richardson , for Royal & Sun Alliance Insurance Company of Canada By the Court: [ 1 ] A motor vehicle operated by Darren Michael Newcombe was involved in an automobile accident on August 1 st , 1998. Lawrence Newcombe, his father, was the insured vehicle owner, and had an insurance policy with an SEF 28 Endorsement naming his son, Darren Newcombe, which the insurer argued removed Darren Newcombe from coverage under the automobile insurance policy.

As well, the insurer took the position that since Darren Newcombe did not have the express or implied consent of his father to drive the vehicle, there was likewise no coverage.

[2] The issues, therefore, for determination are:

(1) Did Darren Newcombe (the son) have the implied consent of Lawrence Newcombe (the father) to operate his car on August 1st,1998, and therefore eligible for coverage under the Wawanesa automobile policy in effect at the time;

(2) Did the SEF 28 Endorsement exclude coverage for Darren Newcombe under his father’s policy. [3] Before I deal with these issues, by way of background, Wawanesa Mutual Insurance Company issued an automobile insurance policy to Lawrence Newcombe and at the time of the original policy on March 24th, 1997, Lawrence Newcombe signed an SEF 28 Declaration.

A renewal policy was issued to Lawrence Newcombe for the period October 4th, 1997 to October 4th, 1998 withthe SEF 28 attached. [4] An Originating Notice (Action) and Statement of Claim was filed by Merna Ryan on May 8th, 1999, naming LawrenceNewcombe and Darren Newcombe as Defendants. [5] On May 20th, 1999 a Defence was filed on behalf of Lawrence Newcombe, but no Defence was filed on behalf of Darren Newcombe and default judgment was entered against him on February 8th, 2002. [6] On June 6, 2000 a consent Order was sought and obtained by Royal and Sun Alliance Insurance Company of Canada addingthem as a party intervener. [7] An oral decision was rendered February 12th, 2003 and by letter of March 26th, 2003, the solicitor for the intervenorrequested a written decision.

ISSUE - Consent [8] Where a person who is not named in an owner’s policy of insurance to be considered an insured under the policy, must beoperating the vehicle with the consent of the owner. [9] S. 114(1) of the Insurance Act states: 114

(1) Every contact evidenced by an owner’s policy insurers the person named therein, and every other person who with his consentpersonally drives an automobile owned by the insured named in the contract and within the description or definition thereof in thecontract, against liability imposed by law upon the insured named in the contract or that other person for loss of 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 the property. [10] It is apparent from the evidence that Darren Newcombe did not have the express consent of his father, Lawrence Newcombe, to use his car on August 1st, 1998 and I so find. [11] Since there is no express consent, the issue to be determined is whether Darren Newcombe had the implied consent to use his father’s car on August 1st, 1998. [12] In Palsky v. Humphrey , (SCC), [1964] S.C.R. 580 the Supreme Court of Canada dealt with the issue of

implied consent. The Supreme Court of Canada accepted that the assessment must be a subjective assessment from the point of view ofthe person who was driving. [13] Spence, J. accepted the trial judge’s statement of the applicable test, which reads as follows (at p. 3): It is my conception of the meaning of that statute that in dealing with the implied consent it means that one must approach the problem ina somewhat subjective fashion from the point of view of the person who was driving.

That is to say whether under all of thecircumstances the person, who was driving, would have been justified in deeming that he had an implied consent to drive. [14] In Newman v. LaMarche, (NS SC), [1994] N.S.J. No. 219 Justice Goodfellow confirmed the test waswhether or not the owner of the vehicle has, on a balance of probabilities, satisfied the Court that the operator of the vehicle wasoperating same without the owner’s knowledge or consent, expressed or implied.

Justice Goodfellow, after an extensive review of thecase law, confirmed that the question of whether the operator had the implied consent of the owner is predominately a question of fact. [15] Applying the above, I find that on the weight of the discovery evidence and statements submitted in evidence the son, Darren Newcombe, had the implied consent of his father, Lawrence Newcombe, to operate the motor vehicle on August 1st, 1998. LawrenceNewcombe had permitted his son to use his automobile on a number of occasions following his surgery. Mr.

Newcombe was unable tooperate his motor vehicle for a period of at least six weeks and his wife did not drive. Darren Newcombe often used the vehicle to pickup items including prescriptions for his parents. [16] On prior occasions when he used the vehicle without express consent of either of his parents, no issue was taken by his parentsupon his return of the vehicle. In fact, Lawrence Newcombe took no steps to prevent his son, Darren Newcombe, from accessing thevehicle.

There is no evidence that keys were made inaccessible to Darren Newcombe even though his father knew that he took thevehicle on a number of occasions without Lawrence Newcombe’s express consent. Although from the evidence before me, LawrenceNewcombe could be arbitrary as to whether or not his son could use the vehicle, Darren Newcombe reasonably felt that he could use thevehicle so long as he was not using the vehicle to excess and provided he was not taking the vehicle over-night.

In his statement dated August 7th, 1998, Lawrence Newcombe commented with respect to Darren’s use of his vehicle: Darren has driven my car in the past but I don’t know when. He has been driving my car since I was sick generally to get medication andthings for my wife and I. If I had not have been sick, he would not have been driving my car.

It was a necessity ... [17] From a review of the discovery transcript, which is before me, and hearing counsel in respect of this matter and reviewing theother evidence placed before the Court, applying the test in Newman, supra, I am of the opinion that Darren Newcombe would have been justified in believing that he had an implied consent to drive his father’s vehicle. In particular, on August 1st, 1998, Darren Newcombewas using the vehicle for a purpose consented to by Lawrence Newcombe, namely obtaining Tylenol at a drug store frequented byDarren Newcombe on behalf of his father, Lawrence Newcombe. [18] In

summary, I find that there was implied consent for Darren Newcombe to use his father’s vehicle on August 1st, 1998. SEF 28 Endorsement [19] Lawrence Newcombe was the owner of a 1992 Oldsmobile Cutlass and was the named insured under an SPF 1 motor vehiclepolicy issued by Wawanesa. [20] Under that policy, any person driving the car with Mr. Newcombe’s consent was also an insured for purposes of third partyliability.

Therefore, any person driving Lawrence Newcombe’s automobile with consent had third party liability to the extent of thelimits of his policy, namely $1,000,000.00. [21] The question is whether Wawanesa can avoid that liability through recourse to the SEF 28 Endorsement. The argument putforth by Wawanesa is that the effect of the SEF 28 Endorsement was to remove Darren Newcombe entirely from the insurance policy,

and therefore Darren Newcombe had no third party liability insurance. [ 22 ] The position of Royal and the Plaintiff is that Darren Newcombe did have coverage under the policy but only to the extent of $200,000.00. [ 23 ] The Plaintiff argues that Darren Newcombe cannot be excluded from coverage under the policy, although it acknowledges Wawanesa can reduce the limits of coverage for Darren Newcombe to the minimum statutory limits. [ 24 ] The relevant statutory provisions of the Insurance Act , R.S.N.S. 231, provide as follows: Section 125(1) of the Insurance Act provides that: Every contract evidenced by a motor vehicle liability policy insures, in respect of any one accident, to the limit of at least two hundred thousand dollars, exclusive of interest and costs, against liability resulting from bodily injury to or the death of one or more persons and loss of or damage to property. [ 25 ] Further Section 124 (4) of the Insurance Act states: Nothing in this

Section or this Part precludes an insurer, with respect to a limit or limits in excess of those specified in subsection (1) or (3), from increasing or reducing the limit or limits specified in the contract with respect to the use of operation of the automobile by a named person, but no reduction is effective for a limit less than that required under subsection (1). [ 26 ] The Plaintiff relying upon these provisions argues that while Wawanesa insured Lawrence Newcombe to a limit of $l million, Wawanesa, by virtue of the SEF 28 Endorsement could reduce the liability coverage for the son to the minimum statutory limits of $200,000.00. [ 27 ] I accept the position of the Plaintiff. [ 28 ] The effect of Section 125(4) and Section 133 (9) of the Insurance Act is to oblige Wawanesa to provide coverage to the minimum statutory limits of $200,000.00. [ 29 ] Section 133 (9) of the Insurance Act , is as follows:

(9) Notwithstanding anything therein to the contrary, every contract evidenced by a motor vehicle liability policy shall, for the purposes of this Section, be deemed to provide all the types of coverage mentioned in

Section 124, but the insurer is not liable to a claimant with respect to such coverage in excess of the limits mentioned in

Section 125. [ 30 ] Support for this conclusion can be found in the decision of the Trial Division of the Newfoundland Supreme Court in Clouter v. Janes [2000] N.J. No. 150 . [ 31 ] In that case on similar facts, the Court concluded that “if the legislature had intended that insurers could avoid all liability to third parties by an excluded driver endorsement, the Legislature would have expressly provided for this” (para. 32).

The Defendant, in distinguishing Clouter argues that the Court “hung its hat” on the fact that the Endorsement itself stated that the insurance company was liable up to the statutory minimum. With respect, I disagree. The Newfoundland Court discussed the Automobile Insurance Act of Newfoundland and concluded that this Act did not expressly provide for the “excluded driver” defence. While the Court did indeed refer to the form of SEF 28 itself, it was clear that the Court was relying upon the protection afforded by the minimum public liability insurance provision in the Newfoundland legislative scheme.

[ 32 ] The Defendant also cites Toulouse et al v. Makadebin (1998), 6 C.C.L.I. (3d) 68 and again argued that Darren Newcombe was excluded and not covered by the policy because no contract existed under which indemnity was provided to him. The Defendant also referred to s. 133(1) and (4) of the Insurance Act . From a review of this decision, it is apparent that there is a specific provision dealing with an excluded driver under s. 249 of the Insurance Act , R.S.O. 1990, c. I.8 . and in Nova Scotia there is no equivalent statutory provision.

Indeed, it would appear that the effect of s. 125(4) of the Nova Scotia Insurance Act is to specifically limit an insurer’s right to reduce coverage to the minimum statutory limits of the $200,000.00. I do note on the SEF No. 28 signed by Lawrence Newcombe that the document is referenced as “S.E.F.

No. 28 Reduction of Coverage as Respects Operation by Named Persons Endorsement”. [ 33 ] I find the effect of the SEF No. 28 Endorsement is not to exclude Darren Newcombe from coverage under Lawrence Newcombe’s policy, but to reduce the liability coverage under the Wawanesa policy to minimum statutory limit of $200,000.00. COSTS [ 34 ] After hearing the submissions of counsel, I award costs in the amount of $1,000.00 to the intervenor payable in any event of the cause and costs to the Plaintiff in the amount of $1,000.00 in any event of the cause. J.