





CITATION:
Tut v. RBC General Insurance Company, 2011
          ONCA 644



DATE: 20111017



DOCKET: C53375



COURT OF APPEAL FOR ONTARIO



Weiler, Cronk and Watt JJ.A.



BETWEEN



Nagraj Singh Tut and Gurmeet Kaur Tut



Applicants (Respondents)



and



RBC General Insurance Company



Respondent (Appellant)



and



Coseco
          Insurance Company



Intervenor (Intervener)



John D. Dean and Amber Small, for the appellant



David A. Zuber and Joseph Villeneuve, for the respondents



Kerri Kamra, for the intervener



Heard: September 6, 2011



On appeal from the order of Justice
          E. Eva Frank of the Superior Court of Justice, dated February 1, 2011, with
          reasons reported at 2011 ONSC 823.



Weiler J.A.:



BACKGROUND

[1]

The overarching issue in this appeal is whether the
    application judge erred in granting a declaration that the appellant, RBC
    General Insurance Company (RBC), has a duty to defend and indemnify the
    respondents, Nagraj Singh Tut (Nagraj) and Gurmeet Kaur Tut (Gurmeet), in
    two actions arising out of a motor vehicle accident.  A brief contextual
    description is warranted to appreciate the arguments.

[2]

On the morning of June 23, 2007, Nagraj asked his
    mother, Gurmeet, if he could use her car to drive some friends home.  The
    friends had spent the previous night at the Tut familys house celebrating Nagrajs
    20th birthday with him.

[3]

The accident occurred while Nagraj was driving on
    the highway that morning.  At approximately 8:51 a.m., the car went off the road
    as Nagraj was attempting to pass another car using the gravel shoulder.

[4]

Although no charges were laid as a result of the
    accident, the St. Michaels Hospital Laboratory Results Report indicated that Nagraj
    had a blood alcohol concentration of 26.8 mmol/L at approximately 10:45 a.m. on
    the date of the accident.  Nagraj, the holder of a G2 drivers licence, was not
    permitted to operate a motor vehicle with a blood alcohol concentration greater
    than zero: see
Drivers Licences
,

O. Reg.
    340/94, s. 6(1), enacted pursuant to the
Highway Traffic Act
,

R.S.O.
    1990, c. H.8 (
HTA
).

[5]

The passengers in Gurmeets car subsequently sued
    Nagraj and Gurmeet in two actions for damages for the injuries they sustained
    in the accident.

[6]

Both Nagraj and Gurmeet were covered by an RBC
    automobile insurance policy.  However, their coverage was subject to a statutory
    condition that states, 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: see
Statutory
    Conditions - Automobile Insurance
, O. Reg. 777/93, s. 4(1), enacted
    pursuant to the
Insurance Act
, R.S.O. 1990, c. I.8.

[7]

RBC denied coverage to Nagraj because, at the time
    of the accident, he was not authorized by law to drive as his blood alcohol
    content was greater than zero.  RBC denied coverage to Gurmeet because she
    permitted Nagraj to drive on the morning of the accident when she knew or ought
    to have known that he was not authorized by law to do so.  Thus, RBC was not
    obliged to provide counsel to defend them in the damages actions.

[8]

The respondents successfully brought an application
    for insurance coverage.  The application judge agreed that RBC could not deny
    coverage to the respondents on the basis of statutory condition 4(1).  As all
    the subsidiary grounds of appeal arise from the application judges reasons, I
    will summarize them before turning to the issues and my analysis of them.

THE APPLICATION JUDGES REASONS

[9]

The essence of the application judges reasons is
    as follows.  Statutory condition 4(1) precludes insurance coverage for Nagraj if
    he was not authorized by law to drive.  Nagraj would not be authorized by law
    to drive if he contravened s. 6(1) when he drove with a blood alcohol
    concentration greater than zero.  Section 6(1) creates a strict liability
    offence, so will not be contravened if Nagraj took all reasonable care in the
    circumstances.  Accordingly, if reasonable care is established, statutory
    condition 4(1) will not apply to preclude insurance coverage for Nagraj.

[10]

Although the respondents admitted that Nagraj
prima
    facie
contravened s. 6(1) by driving with a blood alcohol content greater
    than zero, the application judge found that Nagraj had a reasonable and honest
    belief that his blood alcohol content was zero when he awoke the morning after
    his party. On the basis of the evidence of those at the party, Nagraj had six
    to nine hours of sleep that night.  His belief that he was qualified to
    drive was a reasonable mistake of fact.

[11]

RBC relied on the report of the toxicology expert,
    Dr. Kalant, to support the conclusion that, based on Nagrajs height and
    weight, it would not have been reasonable for Nagraj to believe that his blood
    alcohol level did not exceed zero per cent that morning.  However, the
    application judge discounted the report on the basis that Dr. Kalant used the
    wrong height and weight for Nagraj in his calculations and based his
    calculations on Nagraj having had several hours of sleep instead of the six
    to nine hours he did have.

[12]

In the case of Gurmeet, statutory condition 4(1)
    precludes insurance coverage if Gurmeet permitted Nagraj to drive when he was
    not authorized by law to do so.  The application judge held that Gurmeet was
    not in breach of the statutory condition.  RBC did not establish that Gurmeet
    knew or ought to have known, under the circumstances, that she was permitting
    Nagraj to drive when he was not authorized by law to do so. Gurmeet questioned
    Nagraj about the party and confirmed that he had slept that night. She had
    previously instructed him not to drive after drinking and there is no evidence
    that he ever failed to comply with that rule. She saw nothing either in the
    house or in her sons manner that would make it necessary for her to question
    him regarding the amount of alcohol he had consumed the night before.  The
    application judge held that Gurmeet acted reasonably in the circumstances.

[13]

Overall, the application judge held that the
    respondents were not excluded from coverage under the RBC automobile insurance
    policy.

THE ISSUES

[14]

RBCs appeal seeks to have the application judges decision
    set aside and the application for coverage dismissed with costs or,
    alternatively, requests a new hearing.  RBC alleges that the application judge made
    the following errors:

(a)
She applied a test of strict liability
    rather than absolute liability to determine whether Nagraj breached s. 6(1).

(b)
In the event s.
6(1) is a strict liability offence, she
    placed the onus of proof on RBC rather than Nagraj after RBC established a
prima
    facie
case.

(c)
          She placed the onus of proof on RBC rather than Gurmeet after RBC
    established a
prima facie
case.

(d)
          She misapprehended and, consequently, discounted the expert opinion of
    Dr. Kalant.

(e)
          She misapprehended the evidence of Gurmeet.

[15]

For the reasons that follow, I would dismiss the
    appeal.

DISCUSSION AND ANALYSIS

1.
Did the application judge err in applying a test of strict
    liability rather than absolute liability to determine whether Nagraj breached
    s. 6(1)?

[16]

RBC acknowledges that there is a presumption that
    public welfare offences are strict liability offences. That is, once a
    contravention of the legislation has been proven, a defence of due diligence,
    that the person took all reasonable steps to avoid the contravention, is
    available. While it is essential for society to maintain high standards of
    public safety through effective enforcement, there is general revulsion against
    punishing the morally innocent.

[17]

As set out in
R. v. Kanda
(2008),

88
    O.R. (3d) 732 (C.A.)
, at para. 19, four factors must be
    considered in determining whether an offence is one of absolute liability, for
    which only the contravening act need be proven, or of strict liability: (1) the
    overall regulatory pattern; (2) the penalty; (3) the precision of the language
    used; and (4) the subject-matter.

[18]

RBC argues that s. 6(1) is an absolute liability
    offence based on the four
Kanda
factors:

1.         The
    overall regulatory scheme is to limit and prevent impaired driving.

2.         The
    penalty is not imprisonment, which would exclude the possibility of the offence
    being an absolute liability offence, but a suspension of the drivers licence.

3.         Section
    6(1) uses the word must in the first of its conditions: The novice drivers
    blood alcohol concentration
must
be zero at all times (emphasis added).
     The language in s. 6(1) is similar to the no person shall or every driver
    shall phraseology used in some absolute liability offences.

4.         The
    subject matter  preventing inexperienced drivers from drinking and driving  and
    legislative intent of zero tolerance are consistent with absolute liability
    offences.

[19]

In
Kanda
,

MacPherson J.A. held that the
    offence of failing to ensure that a passenger under 16 years old properly wears
    a seat belt under s. 106(6) of the
HTA
was a strict liability, and not
    an absolute liability, offence.  In that case, a child passenger was involved
    in creating the violation by undoing his seat belt.  In concluding that the
    offence was one of strict liability, a factor the court considered was that the
    violation may not result directly from the drivers own conduct.

[20]

RBC submits that a violation of the s. 6(1)
    requirement for a blood alcohol content of zero can only arise from the
    drivers own conduct and that, consequently, s. 6(1) ought to be an absolute
    liability offence.  That is simply not the case.  For example, in
R. v.
    Maharaj
(2010), 98 M.V.R. (5th) 316 (Ont. C.J.), the accused probationary
    driver consumed a soft drink that, unknown to him, had been adulterated with
    vodka.  Thus, conduct other than that of the driver can contribute to a
    violation of the zero blood alcohol content requirement.

[21]

RBC relies on two recent cases which held that s.
    6(1) is an absolute liability offence.  Neither case assists RBC.

[22]

The first case,
Maharaj
,

refers to
    this courts decision in
Kanda
, but does not correctly apply it.  The
    court in
Maharaj
takes into consideration the public safety goal of the
    legislation without engaging in any real weighing of societys revulsion
    against punishing the morally innocent.  The latter is why the law recognizes a
    presumption against absolute liability.  Instead,
Maharaj
places
    emphasis on the fact that driving is a privilege, and on ease and efficiency of
    enforcement.  In my opinion, it is wrongly decided.

[23]

The second case RBC relies on,
R. v. Nyaata
,

2005 ONCJ 454, states that the offence of having a blood alcohol content
    greater than zero is an absolute liability offence.  However, the court also held
    that the evidence of a strong odour of alcohol on the accuseds breath and the
    fact he held a G2 licence constituted a
prima facie
case that was
    rebuttable but, as the defence had called no evidence, a conviction would be
    registered.  Holding that the violation of s. 6(1) can be rebutted is
    inconsistent with the offence being one of absolute liability.  This case, too,
    is of no assistance to RBC.

[24]

Applying the factors in
Kanda
to this case,
    I make the following observations:

1.

In
Kanda,
this court was concerned with the same overall
    legislative scheme as here, namely, the
HTA,
and it held that the
    overall regulatory pattern of the
HTA
is neutral.

2.

The penalty for a violation of s. 6(1) is a suspension of the offending
    drivers licence.  This penalty is more severe than the penalty of a modest
    fine for the seat belt infraction in
Kanda
.  This factor tilts more in
    favour of the offence in this case being one of strict liability as compared to
Kanda
.

3.

Some of the sections in the
HTA
create an absolute liability offence
    by specifically excluding a due diligence defence.  The language of s. 6(1) does
    not specifically preclude a due diligence defence.  Section 6(1) also uses the
    mandatory word must but, as noted at para. 38 of
Kanda
, the case law
    does not support the conclusion that mandatory language necessarily results in
    absolute liability.

4.

The important public purpose in
Kanda
was, as here, road safety
    and protection of users of the road.  The court in
Kanda
held that
    classification of the offence as one of strict liability was an appropriate
    balance between encouraging drivers to be vigilant about safety and not
    punishing those who exercise due diligence.  I would reach the same conclusion
    in this case.

[25]

Thus, the application of the four
Kanda
factors
    leads me to conclude that the presumption against the offence being one of
    absolute liability has not been rebutted.  The offence is one of strict
    liability.

[26]

My conclusion is supported by the decision in
R.
    v. Sault Ste Marie,
[1978] 2 S.C.R. 1299.  At pp. 1316-17, the Supreme
    Court of Canada commented favourably on a decision holding that careless
    driving is an offence of strict liability where it is open to an accused to
    show that he had a reasonable belief in facts which, if true, would have
    rendered the act innocent.

[27]

The application judge did not err in characterizing
    the offence as one of strict liability.

2.         Did
    the application judge err in placing the onus of proof on RBC rather than
    Nagraj after RBC established a
prima facie
case?  Did the application
    judge err in misapprehending and improperly discounting the evidence of Dr.
    Kalant?  Did Nagraj satisfy the onus on him?

[28]

RBC had the onus of proving a violation of the statutory
    conditions of the insurance policy.  Once a violation of s. 6(1) was
    established, the onus then shifted to Nagraj to show that he had a reasonable
    belief that his blood alcohol content was zero.  RBC submits that Nagraj failed
    to satisfy this onus given that he had no recollection of the morning of the
    accident, he stated to the adjuster that he intended to consume more alcohol on
    the night of his birthday than he normally would and, when tested approximately
    two hours after the accident, he had a blood alcohol content of 1.5 times the
    legal limit.

[29]

This submission ignores the deference due to the application
    judges finding that Nagraj had a reasonable belief that his blood alcohol
    content was zero.  That finding is supported by the witnesses who observed
    Nagraj on the morning of the accident and who saw no evidence that he was
    impaired by alcohol, as well as by the fact that Nagraj had slept for a number
    of hours before driving.

[30]

RBC also relies on the report of Dr. Kalant, a
    toxicologist, and submits that the application judge misapprehended the report in
    discounting Dr. Kalants opinion.  Dr. Kalants opinion was that, based on the
    St. Michaels Hospital laboratory results, Nagraj probably had at least 10
    standard drinks over the course of his birthday party and that, notwithstanding
    several hours of sleep, he would still have exhibited signs of alcohol in his
    system, such as an odour on his breath and a tired appearance.

[31]

Dr. Kalants report was based on Nagraj being 59
    and 160 pounds, whereas in his cross-examination Nagraj testified he was 511
    and about 200 pounds, a little heavier than at the time of the accident. 
    Besides the discrepancy in height and weight, the application judge found the
    amount of sleep Nagraj had was between six and nine hours, and observed that
    this was less than the amount normally understood by a reference to several
    hours.  RBC takes issue with this latter finding and submits that the
    application judge ought to have preferred other evidence that would lead to the
    conclusion that the range was between five to eight hours.  Overall, RBC submits
    that there was no basis for the application judge to take judicial notice that
    these differences would have substantially impacted the opinion of Dr. Kalant.

[32]

The evidentiary point RBC wished to gain from Dr.
    Kalants report was that signs of alcohol in Nagrajs system would have been observable
    to a casual observer.  Dr. Kalant agreed, both in his report and in his
    cross-examination, that it was difficult to offer an opinion on this point.

[33]

Dr. Kalants concession makes sense.  There are a
    number of factors that could have affected Nagrajs breath or appearance of
    alertness about which there was no evidence, such as whether Nagraj had used
    mouthwash, showered, or consumed coffee on the morning of the accident.

[34]

It is trite law that a court is entitled to accept
    all, some, or none of an expert opinion.  Dr. Kalant was working with an
    inaccurate and incomplete set of facts.  Once that was established, the
    application judge was certainly entitled to place less weight on his opinion.  More
    importantly, Dr. Kalants report was inconclusive.  It failed to establish that
    it would have been apparent to a reasonable person that Nagraj had so much to
    drink the night before that he could not drive in the morning.  The question of
    whether Nagrajs ability to drive was impaired by alcohol is one of fact and
    non-expert witnesses may give evidence as to the degree of a persons
    impairment:
R. v. Graat
,

[1982] 2 S.C.R. 819.  The application
    judge was entitled, as she did, to prefer the evidence of witnesses who had
    seen and spoken with Nagraj on the morning of the accident.

[35]

The application judge found as a fact that Nagraj
    had a reasonable belief he had zero blood alcohol content.  This finding was not
    based on any material misapprehension of the evidence and is entitled to
    deference.  This finding discharged the onus on Nagraj.  Accordingly, after
    making this finding in para. 12 of her reasons, the application judge was
    entitled to comment, as she did in the next paragraph of her reasons, that RBC
    had not met the onus of establishing that coverage for Nagraj was excluded.

3.       Did
    the application judge err in placing the onus of proof on RBC rather than
    Gurmeet after RBC established a
prima facie
case? If the onus was on
    Gurmeet, did she satisfy this onus?

[36]

RBC submits that by simply allowing Nagraj to drive
    her car, Gurmeet was
prima facie
in breach of statutory condition 4(1)
    when Nagraj drove the car with a blood alcohol content greater than zero,

and
    that the onus then shifted to her to show that she had taken all reasonable
    steps to see that the statutory condition was not contravened.  Referring to
    paras. 18 and 25 of the application judges reasons, RBC submits that the
    application judge improperly shifted the onus to RBC.



[37]

RBCs submission assumes it made out a
prima
    facie
case against Gurmeet.  A
prima facie
breach by Nagraj, as the
    driver, was not an automatic
prima facie
breach by Gurmeet, as the owner
    of the car.  As counsel for RBC agreed in oral argument, whether the driver is
    in breach of statutory condition 4(1) is a separate question from whether the
    owner of the car is in breach.  See, for example,
Campos v. Aviva Canada
    Inc.
(2006), 38 C.C.L.I. (4th) 218 (Ont. S.C.), at paras. 14-15. As indicated,
    statutory condition 4(1) requires that the insured 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.  Nagraj was
prima
    facie
in breach by driving with a blood alcohol content greater than zero. 
    For Gurmeet to be
prima facie
in breach, RBC must prove that Gurmeet permitted
    Nagraj to drive with a blood alcohol content greater than zero.

[38]

In
Co-Operative Fire & Casualty Co. v.
    Ritchie
,

[1983] 2 S.C.R. 36, the Supreme Court considered the
    predecessor to statutory condition 4(1), which also used the word permit.  The
    Supreme Court held, at pp. 44-45, [I]f an insured who has given someone an
    unqualified permission to drive his car
has no reason to expect that the car
    will be driven...in contravention of the policy terms
, then...he cannot be
    said to have permitted [the contravening] use within the meaning of the
    statutory condition and he cannot therefore be made liable to his insurer (emphasis
    added).  The word permits in the context of statutory condition 4(1) connotes
    knowledge, willful blindness, or at least a failure to take reasonable steps to
    inform ones self of the relevant facts:
Miller v. Carluccio
(2008), 91
    O.R. (3d) 638 (C.A.) at para. 6.

[39]

The Supreme Court held, at pp. 43-44 of
Co-Operative
    Fire
, that the proper test to be applied to determine whether an insured permitted
    his or her vehicle to be operated in breach of the statutory condition is what
    the insured knew, or ought to have known, under all the circumstances.  In the
    context of this case, the test is whether Gurmeet knew or ought to have known
    under all the circumstances that Nagraj was not authorized to operate her car
    because he had a blood alcohol content greater than zero.

[40]

RBC had the onus of establishing that this test for
prima facie
breach was met.  At para. 25 of her reasons, the application
    judge held that RBC did not discharge its onus.  There is no basis on which to
    interfere with this conclusion.

[41]

The application judge found that Gurmeet acted
    reasonably in the circumstances.  RBC submits she misapprehended Gurmeets
    evidence.  Gurmeets evidence on cross-examination was that she and her husband
    did not see anyone drinking, or any alcoholic beverages at all, before they
    left the house around 9:30 or 10 p.m. on the night of the party.  She and her
    husband returned to the house the morning after Nagrajs birthday party and she
    started to clean up the kitchen.  At that point, she saw no alcohol bottles or
    shot glasses.  She spoke with Nagraj at some point in the morning from a
    distance of between six to eight feet.  (Dr. Kalants evidence was that she
    would have had to have been within three feet to smell alcohol on Nagraj.)  Her
    evidence was that her son did not smell of alcohol and did not look tired; his
    hands were not shaking, his voice was not hoarse, and his speech was not
    impaired.  Although Nagraj said that he intended to drink more than usual on
    the night of the party, there is no evidence that he conveyed this intention to
    his mother.  None of the other witnesses observed any signs of alcohol in
    Nagraj on the morning after his party.  The application judge did not
    misapprehend Gurmeets evidence.  Her finding that Gurmeet acted reasonably in
    the circumstances is entitled to deference.

[42]

RBC also submits that Gurmeet was required to make
    further inquiries of her son and the fact she did not do so means she failed to
    take all reasonable steps to see that the statutory condition was not
    contravened.  In the factual circumstances of this case, Gurmeet had no reason
    to make further inquiry than she did.  The application judge found, in para. 21
    of her reasons, that before Nagraj asked whether he could use Gurmeets car to
    drop off his friends, Gurmeet asked him about his party and confirmed that he
    had slept the night before.  There was no evidence that Nagraj had ever
    disobeyed her previous instructions about not drinking and driving. In the
    circumstances, that Gurmeet did not make further inquiry was not a failure to
    take all reasonable steps on her part.  Nothing in Nagrajs manner and nothing
    Gurmeet saw gave her reason to expect that the car would be driven in
    contravention of the insurance policy.

CONCLUSION AND COSTS

[43]

For the reasons given, I would dismiss the appeal.  I
    would award costs of the appeal to the respondents, without reference to any
    costs respecting the underlying actions, in the amount of $15,000, inclusive of
    all applicable taxes and disbursements.  I would award no costs to the intervener.

RELEASED:  Oct. 17, 2011                                                            Karen
    M. Weiler J.A.

KMW                                                                                           I
    agree E.A. Cronk J.A.

I
    agree David Watt J.A.


