Vicarious Liability: Restricted Use Of Vehicles Will Not Shield Owners From Liability

The recent decision in Fernandes v Araujo ("Fernandes") is of interest to Ontario businesses or any person that allows employees or others to use their vehicles. A vehicle owner is liable for damages caused by a driver if the owner gave consent for the driver to possess the vehicle. In the earlier case of Newman v Terdik ("Newman"), the Court of Appeal for Ontario held that an owner had not consented to possession, and therefore was not liable, where the driver violated a condition of use imposed by the owner (i.e. not to drive the car on public roads). However, in Fernandes, the Court overruled its prior decision in Newman, finding that an owner who consents to possession is responsible for damages even if the driver breached the conditions imposed by the owner.