Canadian Underwriter

Alberta company liable for collision caused by employee prohibited from driving

August 25, 2014   by Canadian Underwriter

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The Court of Appeal of Alberta recently ruled against a company which owned a vehicle involved in a collision in Calgary but said its employee was prohibited from driving the company truck and only had keys in order to get access to tools and to keep warm during breaks.

On Dec. 24, 2007, Marc Carroll was driving a Dodge Ram owned by All-Pitch Roofing Ltd. in southwest Calgary, according to court records. He had been working at a job site to which he was driven by one of All-Pitch Roofing’s owners.

But Carroll drove the vehicle from the job site and got into a collision with a Toyota Corrolla driven Xhevat Mustafi, who was injured. Mustafi sued both Carroll and All-Pitch Roofing.

In February 2013, Mr. Justice E.C. Wilson, of the Court of Queen’s Bench of Alberta ruled that Carroll “did not have the consent of All-Pitch to operate its truck at the time of the accident and that All-Pitch bears no liability for the allegedly negligent driving of Carroll.”

But Justice Wilson’s ruling was reversed, in a 2-1 decision released Aug. 20, 2014.

At the time of the original trial, Carroll had disappeared and was noted in default to Alberta’s motor vehicle accident claims program. Motor Vehicle Accident Recoveries, the collection unit of the Motor Vehicle Accident Claims Program, compensates victims of bodily injury accidents, in which the at-fault party was uninsured, and determines the amount that at-fault parties must pay.

The administrator of that program appealed the original Court of Queen’s Bench ruling, contending that Justice Wilson erred in law both in concluding that Carroll “did not have the implied consent of All-Pitch to operate the vehicle at the time of the accident” and in interpreting the Traffic Safety Act.

Section 187 (2) of the Traffic Safety Act states:

“In an action for the recovery of loss or damage sustained by a person by reason of a motor vehicle on a highway, a person who, at the time that the loss or damage occurred,

a) was driving the motor vehicle, and

b) was in possession of the motor vehicle with the consent, expressed or implied, of the owner of the motor vehicle, is deemed, with respect to that loss or damage,

(c) to be the agent or employee of the owner of the motor vehicle,

(d) to be employed as the agent or employee of the owner of the motor vehicle, and

(e) to be driving the motor vehicle in the course of that person’s employment.”

Of the three judges hearing the appeal, two ruled against All-Pitch Roofing.

“The legislation is intended for the benefit of users of highways and that benefit should not be circumvented by conditions imposed by owners by agreement or otherwise,” Mr. Justice Alan Macleod wrote on behalf of himself and Mr. Justice Brian O’Ferrall.

“The policy favours innocent third parties seeking compensation for injuries suffered at the hands of negligent automobile drivers. The recourse for owners is to exercise more care when entrusting their vehicles to another and to obtain insurance in excess of the statutory minimum limits.”

Mr. Justice Clifton O’Brien dissented.

“An owner will ordinarily be vicariously liable for loss or damage arising from the negligence of a driver to whom he has voluntarily given possession of his vehicle,” Justice O’Brien wrote. “However, what started as possession with consent may be transformed by theft, or another unlawful act, into wrongful possession to which no consent was given.”

Both All-Pitch Roofing and the accident claims fund administrator cited an Alberta Court of Appeal ruling, in 2004, in the case of Mugford versus Kodiak Construction. In 1999, Myron Weber rear-ended another vehicle while driving a vehicle owned by Kodiak, his employer. Weber kept the company vehicle at his home and had agreed not to use the company vehicle for personal use. But on the day of the collision with the Mugfords’ vehicle, Weber had made a detour on his way home and drank alcohol, according to court records.

In ruling in 2004 that Kodiak was vicariously liable, The Court of Appeal of Alberta wrote that Section 181 of the Traffic Safety Act does not permit “conditional consent” to the possession of a motor vehicle.

“Placing conditions upon the use of the vehicle or the manner of driving is not sufficient to exculpate the owner from the vicarious liability imposed in s. 181 because, in most cases, another purpose of the section, giving victims of negligent driving recourse to mandatory insurance, would be subverted and could give rise to absurd results,” the appeal court explained in Mugford vs Kodiak.  “If, for example, the owner imposed the condition that the person could drive as long as the driving was not negligent, then owner liability would be avoided in almost every accident where s. 181 was intended to make the owner liable.”

In applying that decision to Mustafi vs All-Pitch Roofing, Justice Macleod noted that companies have “control” over the people they hire.

“The employee must have access to the vehicle in order to carry out his employment,” Justice Macleod wrote. “The condition not to drive the vehicle is unwritten and can be vitiated at the employer’s convenience with one phone call.” Such conditions, he added, “should not be enforced to the detriment of innocent victims of negligent driving.”