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Duty to Defend Extended to “Person Insured”
Published in the August 2008 issue of Litigation Notes - View Article
Synopsis: A maintenance engineer was a “person insured” in an insurance policy issued to aircraft owners and entitled to a defence in a negligence action arising from a crash
In July of 1999 a Mooney Mark 20F aircraft crashed near Winnipeg, Manitoba, killing the pilot and three passengers. The estates of the three passengers commenced action against the owners of the aircraft and against Michael Zaporzan, a certified aircraft maintenance engineer who was responsible for the maintenance of the aircraft.
Although Mr. Zaporzan was a licensed aircraft maintenance engineer he was employed by the Manitoba Government Air Services as a Quality Assurance Manager and Training Coordinator. His job function did not involve the repair or maintenance of aircraft and indeed it was not a requirement of his position that he hold a valid, current aircraft maintenance license. He was maintaining the Mooney pursuant to a barter arrangement with the owners, whereby he received flying time in exchange for the maintenance services that he provided.
The owners of the aircraft were insured by British Aviation Insurance Group (“BAIG”) who was providing them with a defence in the action commenced by the estates of the deceased passengers. Mr. Zaporzan sought coverage from BAIG on the basis that he was a “Person Insured” within the meaning of the policy issued to the owners. The policy extended coverage to any person acting with the permission of the named insureds in the maintenance of the aircraft, but did not extend coverage to “any person in the business of repairing or maintaining aircraft or aircraft components”. BAIG took the position that it had no duty to defend Mr. Zaporzan. Firstly it argued that there was no coverage under the policy at all, because when the crash occurred the aircraft was being used commercially, was overloaded and had an invalid certificate of airworthiness. The Court did not accept this argument, pointing out that BAIG was providing coverage to the other named insureds. The claim against Mr. Zaporzan was one of negligence pertaining to his maintenance of the aircraft and negligence was covered by the BAIG policy. Consequently the duty to defend was triggered by the allegations of negligence, whether or not they had merit.
BAIG also argued that Mr. Zaporzan was not covered because he was in the business of repairing or maintaining aircraft or aircraft components. The Court disagreed. Mr. Zaporzan was not employed by Manitoba Government Air Services as an Aircraft Maintenance Engineer. The Court considered a definition of “business” from Blacks Law Dictionary, which provided that a business is: “employment, occupation, professional or commercial activity engaged in for gain or livelihood… that which habitually busies or occupies or engages the time, attention, labour and effort of persons as principal serious concern or interest or for livelihood or profit”.
The Court concluded that Mr. Zaporzan’s barter arrangement for the maintenance of the aircraft did not fall within the definition of business and that consequently BAIG had a duty to provide him with a defence.
Zaporzan v. British Aviation Insurance Group (Canada) Limited, 2008 MBQB 196 (CanLII)