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Duty to Defend
Published in the August 2008 issue of Transportation Notes - View Article
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, the estate of the deceased pilot and against Michael Zaporzan, a certified aircraft maintenance engineer who had agreed to maintain the aircraft in exchange for flying time.
Although Mr. Zaporzan was a licensed aircraft maintenance engineer, his regular employment was with the Manitoba Government Air Services as a Quality Assurance Manager and Training Coordinator. His employer had nothing to do with the accident aircraft and Zaporzan’s job function did not involve the repair or maintenance of aircraft. Indeed it was not a requirement of his position that he hold a valid, current aircraft maintenance licence.
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 insured’s 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”. This would prove to be the nub of the case.
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 insured’s. 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, labor 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. He was entitled to counsel separate from the owners, but BAIG does have the right to retain counsel of its choice.
Zaporzan v. British Aviation
20003MBQB 196