Express prohibitions to a borrower does not diminish an owner’s responsibility, and thereby his or her vicarious liability for a motor vehicle accident
Segal’s Motor Vehicle and Impaired Driving Newsletter
By: Murray D. Segal
Fernandes v. Araujo, 2015 CarswellOnt 12037, 2015 ONCA 571, 81 M.V.R. (6th) 1 (Ont. C.A.), affirming (2014), 123 O.R. (3d) 294, 2014 CarswellOnt 15548, 2014 ONSC 6432 (Ont. S.C.J.):
The case involved an all-terrain vehicle (ATV). The owner’s insurer contended that it should be found as a fact that the operator was told she could drive the ATV on farm property but not on the highway and that it follows that the owner is not vicariously liable in a highway accident. Finlayson v. GMAC Leaseco Ltd./GMAC Location Ltée, 2007 CarswellOnt 4953, 2007 ONCA 557, 50 M.V.R. (5th) 1, 86 O.R. (3d) 481 (Ont. C.A.), a line of authority going back to 1933, affirmed that as vicarious liability of an owner rests on possession rather than operation of a vehicle, the owner will be vicariously liable if the owner consented to possession even if the borrower operated the vehicle in a way prohibited by the owner. But in Newman v. Terdik (1952),  O.R. 1,  O.W.N. 8,  1 D.L.R. 422, 1952 CarswellOnt 123 (Ont. C.A.), the court held that where the owner gave the driver permission to drive on private property but expressly prohibited the driver from operating on a highway, the owner is not vicariously liable where the person in possession violated the prohibition. Sitting as a 5 person court it was held Newman was inconsistent with the Finlayson line and, in the interests of clarity, Newman ought to be overruled.
One cannot base the test on the subjective belief of the person in possession. That is inconsistent with s. 192(2) of the Highway Traffic Act (Ont.). The purpose of the section is to protect the public by imposing, on the owner of a motor vehicle, responsibility for the careful management of the vehicle. The focus of the sections are on the actions of the owner who is in charge with the responsibility of exercising appropriate caution when giving another person possession of the vehicle.
Newman was wrongly decided. It is inconsistent with the reasoning and principle expressed in a long line of cases that the owner will be vicariously liable even if there is a breach of a condition imposed by the owner relating to the use and operation of the vehicle. Newman ought to be overruled.