Ontario Court of Appeal upholds denial of coverage to driver who was unaware of license suspension

In cases in which insureds are not aware that their drivers licenses have been suspended, trial judges do not have discretion under s. 129 of Ontarios Insurance Act to overturn the insurers denial of auto insurance coverage, Ontario Appeal Court has ruled.In Guy Williams v. York Fire & Casualty Insurance Company, the Appeal Court effectively slammed the door on any such discretion, as implied by an Ontario lower court decision in Quarrie v. State Farm Mutual Automobile Insurance Co. (1997).In the Williams case, in May 2004, Williams lost control of his vehicle while driving on the highway in British Columbia. The vehicle rolled over and sustained serious damage.Williams, originally from Ontario, made a claim.At trial, Williams acknowledged he had four unpaid speeding tickets at the time of the collision. The tickets caused the suspension of his license Williams said he was unaware of the suspension at the time of the accident and York Insurance denied coverage on the basis of the suspended license.Section 7.2.2 of the York policy refers to illegal use of a vehicle and states: We wont pay for loss or damage caused in an incident if you drive the automobile while not authorized by law.At the lower court level, Williams relied on the decision in Quarrie, which notes the wording of s. 129 of the Ontario Insurance Act.The act says: Where there has been imperfect compliance with a statutory condition as to the proof of loss to be given by the insured or other matter or thing required to be done or omitted by the insured with respect to the loss and a consequent forfeiture or avoidance of the insurance in whole or in part and the court considers, it inequitable that the insurance should be forfeited or avoided on that ground, the court may relieve against the forfeiture or avoidance on such terms as it considers just.In Quarrie, the judge forefeited the denial of coverage on the basis that the driver did not know his insurance had lapsed four hours before the accident.In my view, however, Quarrie was incorrectly decided, Ontario Court of Appeal Justice Jean MacFarland wrote in Williams. Section 129 does not give judges a broad discretion to grant relief from forfeiture generally where the conditions of an insurance policy are breached. To do so would grant the court power to alter the terms of a policy or conditions of coverage; this power was never envisioned by s. 129.The operative words in s. 129, MacFarland noted, are whether the breach was somehow related to the proof of loss, which, in the Williams case, the breach (license suspension) was not related to the proof of loss.