The issue of vicarious liability in contractual relationships was called into question in the British Columbia Court of Appeal when a tragic car accident required the court to consider the parties' intentions when entering the contract and the purpose of the applicable legislation. 

Facts
In the case of Harris v. Ward¹,  a customer had entered the dealership looking to trade in her old car and purchase a new one. The defendant car dealership had allowed the customer to keep possession of the new car for 10 days while the dealership tried to find financing that would allow the customer to purchase the vehicle. The dealership knew that the customer was only conditionally approved, however, it had done business with her in the past and was confident that financing would go through. 

The dealership prepared a cash bill of sale, and the plan was to complete a fresh bill of sale when the financing officially went through. The view of the cash bill of sale “was that it would be [used] if the dealership did not have enough time to complete everything, but the purchase was ‘final enough’ for transfer and insurance”. The trial judge noted that even the customer felt like the arrangement seemed almost too simple. 

On the ninth day of the agreement the customer permitted another person (“the driver”) to use the car, and unbeknownst to her, the driver had consumed alcohol and methamphetamine. The driver fell asleep at the wheel, crossed the median, and catastrophically injured the Plaintiff and killed the Plaintiff’s passenger.  

The Law
Under section 86 of the British Columbia Motor Vehicle Act, an ‘owner in possession’ who expressly or impliedly gives their consent to another driver will be jointly and vicariously liable with that driver for accidents caused by that driver.² 

The dealership argued at trial, and again on appeal, that it was not the owner, that it was not in possession and that it did not consent to the use of the car. They were unsuccessful on each line of argument at both court levels. 
 
Ownership - The ‘Interim’ Contract
In the trial judge’s view, the 10-day cash bill of sale, which the dealership alleged constituted a binding contract, was not sufficient to shift ownership from the dealership to the customer. The Court of Appeal agreed, indicating that usually where there is a written contract the terms of that contract will be presumed to be determinative. However, both courts found that all the circumstances displaced that presumption. They did not consider the contract as a valid final agreement of purchase and sale because it was missing essential terms, namely financing, and because the parties did not have a true understanding of the terms of the contract. Most notably, they found the fact that the cash bill of sale was never meant to be final as a factor against it being a final contract of sale and purchase; the dealership indicated that at the end of the 10-day period, it would be ‘ripped up’ and replaced with a fresh bill of sale. It was an “interim measure” “intended merely as a document to be shown to police in the event [the customer] was stopped during those ten days”.

Defining Possession
Since ownership never transferred from the dealership to the customer, the question of who had possession was also at issue. The trial judge interpreted possession broadly according to the legal definition, as opposed to the dictionary definition, and found that the dealership did have possession. The dealership gave the customer a set of keys and knew where the car would be, it could easily retrieve the car if it wanted to, it was in communication with the customer over the ten days, and it had some control regarding what terms and conditions the customer could use the car. The Court of Appeal agreed. 

Consent – Purpose of the Legislation
Given that the car was in the possession of its owner, the final step to establish the dealership’s liability was to determine whether it consented to use by the driver. The trial judge found that dealerships are in the business of selling and knew that when they sold a car, others, not just the customer, would likely be driving the car. Although the driver in this case was intoxicated, that fact was not known to the customer and would not have been known to the dealership. The trial judge concluded that if a 25-year-old with a full driver’s license had asked the dealership to borrow the car, the answer would have been “Of course”. 

The Court of Appeal took no issue with that reasoning and went a step further by looking at the purpose of the legislation. The primary purpose of section 86 of the Motor Vehicle Act is to provide remedies to victims of car accidents. They decided that the provision should not be construed narrowly so as shelter parties who should and would qualify as owners in possession or to exclude circumstances where implied consent could be found. In fact, they found the requirement that all drivers have insurance was a reason to broadly construe who would qualify as an owner in possession giving consent. 

Takeaways
This case appears to significantly lower the bar for findings of vicarious liability for owners and lessees of a vehicle. The court’s interpretation of section 86 of the Motor Vehicle Act as a remedial provision broadens the applicability of that section to a greater number of motor vehicle accidents and will broaden the circumstances in which liability will be imposed. Furthermore, attempts at shielding the owner and therefore the insurer are likely to be limited by courts moving forward; the requirement to secure insurance was perceived by the Court of Appeal and several other courts as a reason to impose liability, and shielding any party would unduly limit the remedy available to the victim whom the provision is intended to serve. 

Worthy of note, the equivalent provision of the Ontario Highway Traffic Act similarly stipulates that the owner and lessee of a car will be liable for the negligence of a driver who they permit to drive the vehicle; however, the Ontario legislation deems the consent of the lessee to be the consent of the owner. Therefore, while this case entertained arguments about what the dealership had and had not consented to, Ontario courts are only required to consider if the lessee, in this case, the customer, impliedly or explicitly consented to the use of the car. That consent, if found, will extend automatically to the owner, in this case, the dealership.

________________________ 
 

1. Harris V. Ward 2023 BCCA 478
2. Motor Vehicle Act, R.S.B.C. 1996, c. 318 [“MVA”]