Why Supreme Court ruling in car theft case offers little comfort to insurers

Liability risk for companies having control of vehicles may be somewhat lessened with the Supreme Court of Canada’s recent ruling in Rankin (Rankin’s Garage & Sales) v. J.J., but a plaintiff injured as a result of a vehicle theft can still sue a garage that had possession of that vehicle when it was stolen.

The top court’s decision means “a commercial entity will not be held liable simply because it failed to properly secure vehicles on its premises,” Kathleen O’Hara, an insurance defence lawyer with Strigberger Brown Armstrong, said of the case outcome on the law firms’ corporate blog site.

But as Supreme Court of Canada Justice Andromache Karakatsanis wrote for the majority, “this is not to say that a duty of care will never exist when a car is stolen from a commercial establishment and involved in an accident. Another plaintiff may establish that circumstances were such that the business ought to have foreseen the risk of personal injury.”

The Supreme Court’s May 11 decision in Rankin arose when a 15-year-old suffered catastrophic brain injury in 2006 as a result of a vehicle collision near Walkerton, Ont. The 15-year-old, known as J.J., as well as his friend (C.C.,. 16 at the time), decided to steal a car from the lot of Rankin’s Garage in Paisley, Ont. The keys to the car had been left in the ashtray and the car was unlocked. C.C. drove the car after drinking. As a result of the accident, J.J. sued C.C., C.C.’s mother (for supplying the teens with alcohol), and Rankin’s garage.

In a ruling released Sept. 25, 2014, a jury found Rankin’s Garage 37% liable, the driver 23% liable, the driver’s mother 30% liable, and the injured plaintiff 10% liable. That ruling was upheld on appeal in 2016 by the court of Appeal for Ontario but overturned by the Supreme Court of Canada decision released last week.

The Supreme Court ruling turned on the specific facts of the case. In essence, the injured 15-year-old did not present enough evidence to convince the court that Rankin’s Garage should have foreseen that a car on its lot would be stolen by a drunken youth who gets in an accident and injures his passenger.

In 2016, the Court of Appeal for Ontario had ruled that Rankin’s Garage ought to have foreseen that minors might steal a customer’s car from its lot. Rankin’s Garage argued that a business does not have a legal duty “to prevent people from committing crimes against that business.”

Justice Karakatsanis noted it was not necessary to consider the question of whether the plaintiff’s illegal conduct means the garage owes no duty of care.

“This case has liability implications for both personal and commercial auto insurers,” O’Hara wrote in her blog posted Sunday. “The court did not accept that anyone [who] leaves a vehicle unlocked with the keys in it should always reasonably anticipate that someone could be injured if the vehicle were stolen, noting this would extend tort liability too far.”