Your Potential Liability When Renting a Motor Vehicle

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Your Potential Liability When Renting a Motor Vehicle

This case involved whether or not a rental company is liable in an accident when the person renting the vehicle did not pay for or disclose that there would be additional drivers other than the renter. Terms of the rental contract stipulate under the heading “Additional Authorized Drivers” that “except as required by law none permitted without owner’s written consent”. The renter did not identify any additional persons for which she sought permission of the defendant rental company to drive the vehicle.

Thereafter the defendant in the lawsuit, who was driving the rental car at the time and not authorized to drive under the terms of the rental contract, was in an accident. Sole issue for determination was whether the rental company, as owner of the automobile driven by the unauthorized driver was, by virtue of s. 187(2) of the Traffic Safety Act (Alta) vicariously liable for negligence of the unauthorized driver. Court decided in favour of the rental company and dismissed the claim against the rental company, holding that the driver of the vehicle was aware that she was operating a rental vehicle and knew that consent, if sought, would not have been granted as a matter of course. The renter of the vehicle was not the owner of the rental vehicle and could not provide consent to possession of the rental vehicle to another person without the rental contract providing as such and thus the deeming provisions under s. 187 of the Act were not triggered. Therefore claim against the rental company dismissed and unauthorized driver personally liable for damages to the plaintiff victim.

November 11, 2013 update: As an example of the ever-changing state of the law in Alberta, the above case, which did not place any liability on the Edmonton rental company, was overturned on an appeal launched by the Edmonton personal injury lawyer for the innocent victim.

In the appeal case cited as Garraway v. Enterprise Rent-A-Car Canada Ltd., 2013 ABQB 10, Madame Justice Veit of the Edmonton Court of Queen’s Bench overturned the Edmonton Provincial Court decision and held that the Provincial Court Judge erred in law when he concluded that there was no trial evidence about whether Enterprise Rent-A-Car had impliedly consented to the non-listed driver on the rental contract driving the Enterprise vehicle.

Madame Justice Veit, on the contrary, said there was some evidence of implied consent including not only evidence that the renter of the Enterprise vehicle and the driver of the vehicle were in the rental car together at the time of the accident, and that the relationship between them at the time was friendly, but, most importantly, unchallenged evidence that Enterprise Rent-A-Car in Edmonton, as a commercial operator of the vehicle rental business knew that renters of their vehicles might allow non-authorized drivers to operate Enterprise rental vehicles.

Judgment was granted against Enterprise Rent-A-Car. However, in an important finding by the Edmonton Court of Queen’s Bench, Enterprise Rent-A-Car, although liable to the innocent victim in the other vehicle, has a claim against the renter on the contract and the driver who was not noted on the Enterprise contract. In other words, Enterprise Rent-A-Car will pay the damages to the Edmonton innocent victim but Enterprise can then turn around and pursue recovery of this amount from the individual on the contract who rented the vehicle and the driver of the vehicle who was not listed on the rental car contract.

So the moral of the story is still the same in Edmonton or Calgary or elsewhere in Alberta: Be very careful when renting a motor vehicle if there will be additional drivers. Make sure to list those additional drivers and to pay the additional fee on the rental contract or that additional driver and the person on the contract will be liable to the rental car company for any property damage or personal injuries or fatalities an unlisted driver causes with the rental vehicle. This is the way the law should be as the innocent victim has his/her recovery for the personal injuries or fatality against the rental car company, and then that rental car company has a claim back against the people who allowed the rental vehicle to be driven by an unlisted driver. This could be a catastrophic loss to the additional uninsured unlisted driver who is wealthy or has some assets if he or she causes severe personal injuries or death to an innocent victim.

Finally, note this is the law in Alberta. As an Albertan you are more likely to be renting a vehicle on a holiday somewhere such as Kelowna or Victoria, British Columbia and so the international rule is that the law of the jurisdiction where the contract was made governs the outcome. So if you rented a car in Vancouver, B. C. the law of B.C. will apply, which may be different than the law in Alberta cited above.

Brent L. Handel, Q.C.

By | 2017-07-14T18:17:32+00:00 June 1st, 2013|Insurance Claim Issues|0 Comments

About the Author:

Mr. Brent Handel, J.D., Q.C. is the head of the Personal Injury and Fatal Accident Group at Handel Law Firm.

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