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Mamo v. Morgan, 2020 ONSC 7829

Is a rental car company responsible for the harm its renter causes in a car accident with the rented car?

Yes.

What if the renter used a stolen identity to rent the car and paid in cash?

Yes.

What if the renter did all that and then let their spouse use the car, without telling the car rental company, and the spouse caused an accident?

Yes.

What if the renter did all that, and the spouse crashed the car while fleeing police?

Same answer. Yes.

In the Mamo v. Morgan case, all of these things came up. And all of them were decided in favour of the rental car company’s insurer having to pay for the actions of the renter.

That is referred to as “vicarious liability”: the rental car company did not directly do anything that caused the car accident, but they permitted the renter to rent the car, and therefore became responsible for the renter’s negligence.

In Mamo, the Plaintiffs’ vehicle was struck when a rented vehicle drove on the wrong side of the road, while fleeing police.

Two days before the collision, the Defendant Leanne Jordan rented the car. But she rented it using someone else’s identity, Sabrina McIntyre. Jordan paid cash for a one-week rental. The car rental company, Practicar, took no steps to verify Jordan’s identity.

Jordan then let her common law spouse Defendant Chevonie Morgan use the car. Somehow, he ended up being pursued by police, drove in the oncoming lane of traffic, and struck the Plaintiffs vehicle.

The Defendants Jordan and Morgan made no effort to participate in the lawsuit, and were noted in default. The Plaintiffs sued the OPP, the pursuing police officer, the car rental company “Practicar”, and the Plaintiffs’ two insurers, PAFCO and The Personal, for the purposes of underinsurance.

The remaining Defendants brought a summary judgment motion to determine which insurance company had “priority” or would be required to pay for the settlement. In particular, they sought to resolve the question of whether the car rental company would take priority, given the facts above.

The car rental company was found liable for the accident.

Section 192 of the Highway Traffic Act, imposes vicarious liability on “owners” and “lessees” (which includes car rental customers).

The Court found that “while owners have the right to give possession of their vehicles to another person, vicarious liability encourages owners to be careful when exercising that right, by placing legal and financial responsibility on them for losses and harms caused by the negligent operation of their vehicle.”

Practicar owned the vehicle. Practicar granted permission to the Defendant Jordan to take possession of the car. The fact that Jordan lied about being someone else was found not relevant. Practicar made an oral agreement with Jordan herself; it did not matter that she signed a different name on the rental agreement.

Practicar argued if it could be vicariously liable for Jordan’s actions, it could not be vicariously liable for her spouse Morgan’s actions when he fled police. Practicar argued it did not consent to Morgan driving the car. But the Court found Jordan was the “lessee” and the Highway Traffic Act clearly states “the consent of the lessee to the operation or possession of the motor vehicle by some person other than the lessee shall be deemed to be the consent of the owner.”

So, again, Practicar was liable.

Lastly, and according to the Court “nonsensically”, Practicar argued that it had entered a contract with “Sabrina McIntyre”, the woman whose identity the Defendant Leanne Jordan had stolen and assumed when she rented the car. Ms. McIntyre was not at all involved in the dealings with Practicar and there was no evidence to indicate she knew anything about what happened.

A prohibition in the car rental agreement concerning Jordan consenting to someone else using the vehicle did not hold any weight. Section 192(4) deems that Jordan’s consent to Morgan’s use became Practicar’s consent, too.

This decision emphasizes the power of s. 192 of the Highway Traffic Act, and suggests that where an individual rents a car, or even lets someone borrow their car, and the car is somehow involved in an accident, the car rental company’s insurer may have a difficult time arguing they should not be required to pay for harm caused by their customer.

Section 192 of the Highway Traffic Act is as follows:

192 (1) The driver of a motor vehicle […] is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle […] on a highway.

(2) The owner of a motor vehicle […] is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle […] on a highway, unless the motor vehicle […] was without the owner’s consent in the possession of some person other than the owner or the owner’s chauffeur.

(3) A lessee of a motor vehicle […] is liable for loss or damage sustained by any person by reason of negligence in the operation of the motor vehicle […] on a highway, unless the motor vehicle […] was without the lessee’s consent in the possession of some person other than the lessee or the lessee’s chauffeur.

(4) Where a motor vehicle is leased, the consent of the lessee to the operation or possession of the motor vehicle by some person other than the lessee shall, for the purposes of subsection (2), be deemed to be the consent of the owner of the motor vehicle.

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