The case of Pridmore v. Drenth, 2023 ONCA 606, involves a legal dispute after Breanne Pridmore was severely injured while riding as a passenger on an all-terrain vehicle (ATV) driven by Tyler Drenth, and owned by his father Theodore Drenth. The legal dispute is an example of an insurance company denying coverage based on a strict interpretation of the insurance policy – and the court disagreeing with that.

Background of the Case:

The incident occurred in March 2014 around rural Dunnville. Tyler decided to drive along the shoulder of Bird Road and hit a culvert. This caused the ATV to roll over, where Breanne was thrown from the ATV, leaving him paralyzed.

At the time of the accident, Tyler only had a G1 Ontario learner’s driver’s license. G1 license holders in Ontario have to obey several restrictions – one of those restrictions being that G1 license holders cannot drive on highways without a fully licensed driver seated next to them. Tyler’s dad Theodore had granted Tyler permission to use the ATV to drive on trails but not on highways. Theodore did not know Tyler was going to drive on Bird Road.

Theodore had a $1 million third-party liability insurance coverage in place through Novex Insurance Company. Novex denied insurance coverage by asserting that Theodore breached Statutory Condition 4(1) of his insurance policy for the ATV by allowing Tyler, an under-licensed driver, to operate the ATV on a highway. Breanne Pridmore sought a summary judgment motion against Novex to enforce the insurance coverage. Breanne succeeded, and Novex appealed to the Ontario Court of Appeal.

The key issues addressed in the case were whether Theodore’s permission for Tyler to drive the ATV constituted a breach of the insurance policy and whether the timing of any such breach affected insurance coverage at the time of the accident.

The Ontario Court of Appeal dismissed Novex’s appeal, upholding the decision that Theodore Drenth was entitled to coverage under the insurance policy. This case underscores the importance of the nature and timing of consent for vehicle use under insurance policies, as well as the courts’ discretion in granting relief from forfeiture in certain circumstances.

Three Key Points from the Case:

1. Nature and Timing of Consent: The court found that Theodore Drenth had given specific permission for Tyler to drive the ATV on certain conditions which did not include driving on highways, and by extension did not include driving on Bird Road where the accident occurred. This specific permission and the timing of the breach were crucial in determining the coverage. That is, at the time of the accident (on Bird Road), there was no permission from Theodore. This was critical for the court to allow insurance coverage. Had the accident occurred where permission was granted (such permission being in breach of the insurance policy), the court would likely have found no coverage.
2. Imperfect Compliance: The motion judge decided that Theodore Drenth’s action was an instance of imperfect compliance rather than non-compliance with the insurance policy’s conditions. This distinction was significant because it influenced the decision to grant relief from forfeiture, allowing Theodore to retain coverage despite the breach.
3. Relief from Forfeiture: The court held that even if there was a breach of the statutory condition, relief from forfeiture could be granted. Relief from forfeiture is a legal concept that acts like a safety net in contract law, especially in insurance cases. Imagine you have a rule in your house that if someone breaks a dish, they can’t watch TV for a day. But what if breaking that dish was an honest mistake, like the floor was slippery? It might seem too harsh to enforce the no-TV rule. Relief from forfeiture works in a similar way. It allows a court to say, “Even though you technically broke the rules, we’re not going to enforce the strict penalty this time.” In the context of insurance, if you didn’t follow the policy rules exactly—say, you forgot to renew your license on time but were still driving—it allows the court to decide not to cancel your insurance coverage because of that mistake especially if it was minor and didn’t really affect the risk the insurance was covering. It’s about being fair and considering the circumstances rather than just sticking rigidly to the rules.

The court in this case found Theodore’s breach to be relatively minor and granted him coverage, emphasizing that the breach must occur at

• 1.Importance of Understanding Insurance Policy Conditions: The case highlights the critical importance of understanding the conditions and limitations of insurance policies, particularly regarding who is permitted to operate a vehicle under the policy. It serves as a reminder that allowing someone who does not meet the policy’s criteria (such as not having the appropriate class of driver’s license) to operate a vehicle can lead to disputes over coverage in the event of an accident.
• 2.Legal Protections Through Relief from Forfeiture: As mentioned above, this concept can offer protection to insured parties in certain circumstances. It allows for leniency when breaches of policy conditions occur under specific circumstances, especially when the breach is considered minor or does not materially affect the risk covered by the policy. This means that not all breaches of insurance policy conditions will automatically lead to the denial of coverage, providing a safeguard against overly harsh penalties for minor infractions or misunderstandings.

Disclaimer: The above is given as commentary and is not legal advice. If you have been in an accident and have questions about your rights, please contact Legal Focus LLP at info@legalfocus.ca or visit our website at www.legalfocus.ca