Executive Summary: Key Legal and Evidentiary Issues

• Whether the applicant was driving without a valid license, triggering a policy exclusion under statutory automobile insurance conditions.

• If the applicant demonstrated due diligence in attempting to maintain a valid driver’s license and schedule a road test.

• Whether the insurer was justified in denying coverage on the grounds of expired licensing and alleged false statements.

• Credibility of the applicant’s evidence versus hearsay and speculative assertions by the insurer.

• Application of equitable relief from forfeiture under the Courts of Justice Act and Insurance Act.

• Procedural fairness issues arising from the insurer’s failure to give timely notice of all grounds for denial.

Background and accident circumstances

The applicant, Urban Lennox Gibbs, suffered a sudden medical episode while driving on July 3, 2021, resulting in a rear-end collision. The accident led to a personal injury lawsuit in which Mr. Gibbs was named a defendant. The automobile insurer of the injured party, Definity Insurance Company, also became a defendant and filed a crossclaim against Mr. Gibbs. At the time of the accident, Mr. Gibbs was insured by Security National Insurance Company.

Denial of insurance coverage

Security National acknowledged its responsibility for property damage but denied coverage for the personal injury claim. It asserted that Mr. Gibbs was driving with an expired G2 license, which breached a statutory condition requiring drivers to be legally authorized. Security National also alleged that Mr. Gibbs had made false statements about his whereabouts and attempts to renew his license, thus forfeiting his right to coverage under section 233(1)(c) of the Insurance Act.

Mr. Gibbs’ application and legal defences

Mr. Gibbs brought an application under Rules 14.05(3)(d) and (h) of the Rules of Civil Procedure. He argued that he was entitled to insurance coverage on the basis of due diligence in attempting to renew his license. Alternatively, he sought relief from forfeiture under section 98 of the Courts of Justice Act and section 129 of the Insurance Act.

Court’s findings on due diligence

The court accepted that Mr. Gibbs had exercised due diligence. He had booked a road test for February 18, 2020, ahead of his license expiry, but the test was cancelled by DriveTest on short notice. He made multiple reasonable efforts to rebook the test over the following months, which were unsuccessful due to COVID-19 disruptions and international travel for family emergencies. The court found his mistaken belief that the COVID-related grace period applied to him was reasonable in the circumstances. It rejected Security National’s hearsay evidence and requests for adverse inferences regarding Mr. Gibbs’ travel history and lack of phone or passport data.

Alternative relief from forfeiture

Even if due diligence had not been established, the court held that Mr. Gibbs would be entitled to relief from forfeiture. The court emphasized that Mr. Gibbs acted in good faith, paid his insurance premiums on time, and did not intentionally breach any condition. The court found that the breach—driving with an expired license—was minor and did not impact road safety or prejudice the insurer. On the other hand, denial of coverage would expose Mr. Gibbs to significant financial liability. The court followed the analysis from Kozel v. The Personal Insurance Company in granting equitable relief.

Rejection of false statement allegations

The court strongly rejected the insurer’s claim that Mr. Gibbs had willfully made false statements. It found no credible evidence supporting this assertion and criticized Security National for raising serious allegations of dishonesty late in the process without prior notice. The court held this conduct to be procedurally unfair and inconsistent with good faith practices expected of insurers.

Final outcome

The court granted a declaration that Mr. Gibbs is entitled to insurance coverage under his Security National policy. He was also awarded costs, with the parties directed to attempt resolution or return to the court for a timetable on costs submissions.