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Ontario Court Explains the Law on Relief from Forfeiture

Pridmore v Drenth, 2023 NBKB 38

Reading Time: 6 minutes  (approx.)

By: Weston McArthur

On March 24, 2014, Breanne Pridmore (the Respondent) was involved in a serious ATV accident that left her a complete paraplegic. Tyler Drenth was the driver of the ATV, which was owned by his father, Theodore Drenth. Tyler and Theodore Drenth had the ATV insured under a motor vehicle liability policy with Novex Insurance Company (the Appellant).

Following the accident, Norvex determined that Tyler Drenth violated statutory condition 4(1) of the policy through driving the ATV on a highway without the requisite driver’s license. Statutory condition 4(1) provided: “The insured shall not drive or operate or permit any other person to drive or operate the automobile unless the insured or other person is authorized by law to drive or operate it.”

As a result, Novex denied coverage and held that it did not have to pay out the Respondent for her injuries. The Respondent challenged this finding at the Ontario Superior Court of Justice.

At the first instance, Justice Edwards decided that the Tyler Drenth was not in breach of the above-cited provision, and additionally granted relief from forfeiture if he had been wrong in coming to this decision. This meant that Tyler Drenth was entitled to coverage under the Novex policy. Novex subsequently appealed.

The two lead cases on the doctrine of relief from forfeiture are the Supreme Court of Canada’s decision Saskatchewan River Bungalow v Maritime Life Assurance Co, 1994 CanLII 100 (SCC), and the Ontario Court of Appeal’s decision in Kozel v The Personal Insurance Company, 2014 ONCA 136. Courts will grant relief to insureds from denial of coverage where they find that an insured’s action constituted “imperfect compliance”, which is a relatively minor breach of a insurance policy.

Once the threshold question with respect to imperfect compliance is answered, the Court must consider three factors: firstly, the reasonableness of the breaching party’s conduct; secondly, the gravity of the breach; and thirdly, the disparity between the value of the property forfeited and the damage caused by the breach.

Ultimately, the Ontario Court of Appeal upheld the lower’s court finding. Regarding the threshold question of imperfect compliance, Justice Gillese wrote at paragraph 30 that:

“On the first threshold question, the motion judge concluded that Theodore’s breach of SC 4(1) constituted imperfect compliance with a Policy term, rather than non-compliance. In so concluding, he found that Theodore’s breach was “relatively minor” because:

• Theodore gave Tyler permission to drive the ATV on Central Lane but on no other highway;
• of the short distance Tyler was to take on Central Lane; and
• of the difference in nature between Central Lane and that of a highly travelled highway.”

With respect to the first factor of the doctrine of relief from forfeiture, the Court of Appeal upheld the lower court’s finding that “Theodore’s conduct was reasonable because Theodore gave Tyler permission to drive the ATV on Central Lane solely for the purpose of going from his home to the fields and trails” [para 32].

Regarding the second factor, the Court of Appeal upheld that “the gravity of Theodore’s breach was minor, given the nature of Central Lane” [para 32]. Central Lane was a road adjacent to the Drenth residence from which back roads could be accessed by the ATV.

Meanwhile, neither Court had to rule on the third element because Respondent Novex conceded on that part of the test for relief from forfeiture.

Link: 2023 ONCA 606 (CanLII) | Pridmore v. Drenth | CanLII

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