Summary
The Supreme Court held the insurer liable to indemnify the insured despite the licensing authority’s inability to verify the driver’s licence. An owner who checks an apparently genuine licence and satisfies herself of the driver’s competence need not routinely verify it with the licensing authority without reason for suspicion. The insurer had not alleged wilful negligence, and the driver had performed competently. The National Commission’s contrary decision was set aside.
Issues
- What diligence an insured must exercise when checking an employed driver’s licence.
- Whether inability to verify the licence alone justified repudiation of these insurance claims.
Held
- An owner hiring a driver must check the driving licence and satisfy herself of driving competence. If the licence appears genuine, further investigation with licensing authorities is not ordinarily required without cause to doubt it. (¶¶ 8, 11)
- An invalid, fake or absent licence alone does not establish the insured’s breach. The insurer bears the burden of proving inadequate reasonable care or wilful breach; the governing principle also applies to a claim by the insured and is not confined to third-party claims. (¶¶ 9, 10, 11)
- The position differs where the owner knows or has notice that the licence is invalid or fake, or is called upon to verify it, but fails to act appropriately and permits the driver to continue. (¶¶ 8, 11)
- Here the licence had been checked, the driver was competent, and there was no reason to doubt its authenticity. The licensing authority’s missing records and the absence of any allegation of wilful negligence did not justify absolving the insurer. (¶ 12)
Result
Appeals allowed; National Commission judgment set aside and insurer held liable to indemnify the appellant.