Van Berlo v Aim Underwriting Limited et al ("Van Berlo") proceeded to trial, was appealed and then was sent back to be reheard anew when the Ontario Court of Appeal decided that the trial judge had used an incorrect standard when coming to her decision.
This case involved a pilot's take-off attempt with a compromised engine that resulted in a crash and the issue was whether such incident was an "accident". Also at issue was whether the plaintiff was in breach of a condition of the subject policy that obligated him to minimize the loss, once the risk materialized and whether his failure to do so, disentitled him to coverage.
This case provides a helpful review of the Supreme Court of Canada decisions regarding the definition of "accident" and confirms that, even if conduct is foolish, simply bad judgment or can be characterized as "gross negligence", the circumstances can still amount to an "accident" and corresponding coverage.
Facts
The 54 year old plaintiff, who was an experienced pilot, owned a single-engine Piper "Cherokee Six" (the "Aztec"). He had logged close to 1,000 hours with this aircraft using it to travel between various states in the United States and Canada. On the morning of August 24, 2009, the plaintiff, in his Aztec, took off from a private airstrip in Delhi, Ontario heading to a town in North Carolina and he had clients with him as passengers. The trip to North Carolina was uneventful, as was the plaintiff's solo return trip of 2 hours and 20 minutes to the airport at Brantford, Ontario. The plaintiff landed at the Brantford airport at about 4:00 p.m. The plaintiff was registered in the "Canpass" programme and accordingly he had confirmed earlier that he would be at the Brantford airport at 4:15 p.m. for the purpose of clearing customs. This protocol required the plaintiff to be present at 4:15 p.m. for the purpose of meeting with a customs official. On a random basis, however, such customs official may or may not attend. If that customs official does not attend, then the person is free to go. On August 24, 2009, no customs official attended at the appointed time and so the plaintiff left and proceeded to the Aztec to fly home, which was a short six-minute flight.
Upon starting the engines of the Aztec, the plaintiff's right engine would not start, but, after his inspection, the plaintiff determined that the starter motor on the right engine would not engage properly or "turn over". The plaintiff's assessment was that the right engine itself was capable of functioning properly although it could not be started via the starter motor. The plaintiff chose not to use the repair facility at the airport because he did not have confidence in it typically using, instead, his own local mechanic to carry out any necessary repairs.
The plaintiff, fatefully, decided he would fly home utilizing a single engine take-off. The right engine had trouble and not the critical left engine that powered the hydraulics. The left engine also had the thrust closest to the fuselage. The Aztec was "light" having no passengers or cargo and only an hour and a half of fuel. Further, the wind was light and blowing in the intended direction of his flight giving him increased lift at take-off. The plaintiff also knew that, while operating on a single engine, the Aztec would tend to "yaw" and, given the direction, he would be heading away from people towards an open field area where he felt that he would not endanger others.
The plaintiff also had multi-engine training with, according to the plaintiff's evidence, over 50% of that training involving single-engine operation of the Aztec. The plaintiff explained in his evidence that the Aztec's ability to fly on one engine was "flawless", although the speed was slower. During cross-examination the plaintiff agreed that he had never attempted a one engine take-off. The plaintiff testified that he considered that the runway had a length of five thousand feet and that, with two engines, if you held the brakes and powered up, the Aztec could be airborne within five hundred feet. With a single-engine take-off, the plaintiff testified that he had to power gradually to the left engine, and "roll into it" being careful not to apply too much throttle or the aircraft would spin. As speed was gained, the plaintiff would have to apply "left rudder" and "more right aileron" to steer the plane down the runway and to counteract the tendency of the plane to veer or "yaw" to the right. The plaintiff expected (or rather he was "hopeful") that he would achieve a speed of 102 miles per hour, whereas, in normal circumstances, a speed of ninety to ninety-five miles per hour would result in liftoff.
The plaintiff's state of mind as to the ability of the Aztec to take-off on one engine was also important. The plaintiff was confident that the Aztec could take off on one engine. He bet his life on it.
The actual one-engine take-off on August 24, 2009 involved the plane being positioned at the beginning of the runway after which he kept "inching the power up" and the speed increased. The Aztec became airborne after it was approximately two-thirds down the runway after which it yawed to the right. The plaintiff applied the necessary controls to counteract the yaw. However, he did not "think" that the plane touched the ground again and he thought he managed to keep the aircraft flying over a cornfield, which was to the right of the runway, and which was actually on the airport property according to the plaintiff.
Once airborne, the plaintiff testified he only had one option and that was to keep flying. If he had tried to put the aircraft back down, the plaintiff testified that he would have ended up in the cornfield at a high rate of speed with potentially "deadly" consequences. The Aztec cleared the cornfield and the estimated speed was 100 miles per hour. The aircraft was climbing but the plaintiff could not recall at what rate. The plaintiff could not quite clear the tree line at the eastern end of the airport and he "nicked" a tree with the Aztec's right wing, which was then damaged. As a result, the plaintiff testified that the Aztec was not capable of flying and so he rolled it to the left with the intention of the Aztec to impact the ground on its left wing to absorb the shock and then perform a cartwheel to avoid a nosedive into the ground. The plaintiff did this but ended up in a different cornfield west of the tree line and not on airport property.
The Court accepted that, on the day in question the Aztec, as it was proceeding down the runway, veered to the right on a grassy infield somewhere close to taxiway Echo, proceeded across taxiway Echo after coming into contact with and breaking one of the taxiway markers, and then continued across another grassy infield until it was airborne. The Court was satisfied on a balance of probabilities that, even though this type of aircraft was not uncommon at the airport, the taxiway tire marks depicted in the photographs filed belonged to the plaintiff's Aztec aircraft and that this aircraft caused the damage to the taxiway marker. The Court also found that, after crossing the taxiway, the Aztec travelled a very brief period of time prior to being airborne, given the plaintiff's evidence as to the speed of the aircraft.
Transport Canada via a Notice of Assessment of Monetary Penalty pursuant to s. 7.7 of the Aeronautics Act assessed a penalty of $1,000 in relation to the plaintiff's conduct in attempting a single-engine take-off in a twin-engine aircraft. The notice also informed the plaintiff of a right of a review by the Transportation Appeal Tribunal of Canada. The notice alleged a contravention of section 602.01 of the Canadian Aviation Regulations. The plaintiff paid the fine and testified that it was simpler to pay the fine because it would have cost more to defend it than to pay the penalty. He did not admit culpability.
The Insurance Policy
The relevant portions of the subject insurance policy ("the Policy") were:
Insuring Agreements
In return for payment of the premium, we will provide the insurance described in this Policy and attached Endorsements, for the Coverages applicable according to the Declaration Page, and subject to the Conditions, Definitions, Limitations and Exclusions contained herein and in the Policy Declaration Page or attached Endorsements.
[Emphasis added]
Law and Jurisdiction
This Policy shall be Governed by the laws of Canada whose courts shall have jurisdiction in any and all disputes whatsoever.
When and Where Coverage Applies
The Insurance applies to claims arising from occurrences which take place during the Policy period shown on the Declaration Page while your aircraft is within or is en route between these places; Canada, the French Islands of St. Pierre and Miquelon, the Republic of Mexico, the Bahamas, the Islands of the Caribbean or the Continental United States of America including Alaska.
[Emphasis added]
Occurrence
This means an accident, or a continuous or repeated exposure to conditions, which results in injury during the term of the Policy, provided the injury is accidentally caused; all damage arising out of such exposure to substantially the same general conditions shall be deemed to arise out of the same occurrence.
[Emphasis added]
Coverage under the Policy is triggered by an "occurrence" which means an "accident". The term "accident" was not defined in the Policy.
Another relevant condition in the policy dealt with the insured's obligation to protect the aircraft, noted below.
Was the Plaintiff's attempt at a one-engine take-off and resulting damage, an "accident" within the meaning of the policy?
(a) The Meaning of "Accident"
The Court looked to the case law to determine the meaning of "accident". In Canadian Indemnity Company v. Walkem Machinery & Equipment Ltd.,1("Walkem"), the Supreme Court of Canada stated at paragraph 10:
[10] Therefore, the only ground remaining to be considered is whether the collapse of the crane was an "accident" within the meaning of the policy. Counsel for the appellant relied heavily on the judgment of the Court of Appeal for Manitoba in Marshall Wells of Can. Ltd. v. Winnipeg Supply & Fuel Co. (1964), 49 W.W.R. 664. In my view, Macfarlane J. was quite correct in preferring to the views of the majority those expressed by Freedman J.A. dissenting, in these words (at p. 665):
With respect, I am of the view that what occurred here was an accident. One must avoid the danger of construing that term as if it were equivalent to "inevitable accident." That a mishap might have been avoided by the exercise of greater care and diligence does not automatically take it out of the range of accident. Expressed another way, "negligence" and "accident" as here used are not mutually exclusive terms. They may co-exist.
The Supreme Court of Canada in Walkem then quoted from and disagreed with the majority judgment of Manitoba Court of Appeal in Marshall Wells, noted above, stating at para. 11 of the Walkem judgment:
[11] Guy J.[A.], for the majority, had said (at p. 669):
Halsbury, (vol. 22, 3rd ed.), uses these expressions at p. 294:
The idea of something haphazard is not, however, necessarily inherent in the word; it covers any unlooked for mishap or an untoward event which is not expected or designed, or any unexpected personal injury resulting from any unlooked for mishap or occurrence. The test of what is unexpected is whether the ordinary reasonable man would not have expected the occurrence, it being irrelevant that a person with expert knowledge, for example of medicine, would have regarded it as inevitable.
In the light of the foregoing, I must agree with the learned trial judge that this was not an unanticipated mishap. Indeed, it is difficult to see how Litz, the insured, can argue that it was an accident and not a calculated risk, in view of his continued insistence that in his conversation with Mr. Coad, superintendent of Winnipeg Supply & Fuel Company, he had pointed out vigorously how dangerous it was to leave the tank in the unsupported condition it was.
A great deal of argument was devoted to the finding of the learned trial judge that he believed Coad, as opposed to Litz, in so far as the alleged critical conversation is concerned. But surely whichever one he believed, both of them agreed that leaving this unsupported hot-water tank was dangerous.
Walkem specifically rejected the analysis of Guy J.A. in Marshall Wells as to the meaning of "accident" preferring a definition of accident as being "any unlooked for mishap or occurrence". The Supreme Court of Canada then stated at para. 12, regarding the analysis of Guy J.A.:
[12] With respect, this is a wholly erroneous view of the meaning of the word "accident" in a comprehensive business liability insurance policy. On that basis, the insured would be denied recovery if the occurrence is the result of a calculated risk or of a dangerous operation. Such a construction of the word "accident" is contrary to the very principle of insurance which is to protect against mishaps, risks and dangers. While it is true that the word "accident" is sometimes used to describe unanticipated or unavoidable occurrences, no dictionary need be cited to show that in every day use, the word is applied as Halsbury says in the passage above quoted, to any unlooked for mishap or occurrence. That this is the proper test rather than the words italicized by Guy J. is apparent from a reading of the two cases on which that passage is based.
The Court in Van Berlo went on to review a further Supreme Court of Canada case, Stats v. Mutual of Omaha Co.,2("Stats") where the issue had centred on the interpretation of a travel accident insurance policy that included coverage in the amount of $25,000 upon death occurring as a result of an automobile accident. The injuries insured against were defined to mean "accidental bodily injuries". The driver of the insured motor vehicle and her passenger were killed when the motor vehicle mounted a sidewalk and hit a brick building. The Supreme Court of Canada agreed that the driver was "grossly impaired" and that the deceased driver's blood alcohol concentration as revealed during the autopsy was 190 milligrams of alcohol in 100 millilitres of blood. The insurer refused to pay the claim. The trial judge dismissed the action of the beneficiary under the insurance policy, finding that the driver was impaired to such an extent as to be incapable of driving a motor vehicle and finding that the collision was the result of the driver's grossly impaired condition. The decision was appealed and eventually, the Supreme Court of Canada in dismissing the appeal from the Court of Appeal for Ontario, stated as follows:
[20] Therefore, I am in agreement with Blair J.A. when, in giving reasons, he said that there was every justification for the learned trial judge's description of the deceased woman's conduct as dangerous and grossly negligent but that that was far different from finding that the insured actually and voluntarily "looked for" or "courted" the risk of the collision that killed her.
[25] ... Pigeon J., in Canadian Indemnity Company v. Walkem Machinery & Equipment, supra , adopted Halsbury's words, "any unlooked for mishap or occurrence", and in Fenton v. Thorley & Co. Limited , Lord Macnaghten said at p. 448:
... the expression "accident" is used in the popular and ordinary sense of the word as denoting an unlooked-for mishap or an untoward event which is not expected or designed.
[26] These two definitions would bring within the term "accident" those which result from the negligence of the actor whose acts are being considered even if that negligence were gross. With this view, I agree for the reason that to exclude from the word "accident" any act which involved negligence would be to exclude the very largest proportions of the risks insured against. ...
The Stats case3 also considered the relevance of a person's state of mind in deciding whether an occurrence was an accident. In the Court of Appeal, Blair J.A, at para. 13, stated,
[13] Rarely is an accident purely fortuitous. In most cases, some human act, usually of the insured, initiates the chain of circumstances from which the mishap results. The test of whether that mishap is an accident is the actual mental state of the actor at the time the act leading to it is performed. [Emphasis in text]
In Stats, the Supreme Court of Canada considered that where a person has been found to be negligent, or even grossly negligent that the person at the time the acts were performed may not have thought the acts to be negligent; however, where a person realizes the danger of his actions and deliberately assumes the risks, then the actions are not an accident. At para. 28 (referring to the decision of Grant J. being the case of Candler v. London & Lancashire Guarantee & Accident Co.,4:
[28] Negligence is a finding made whereby the conduct of a person is judged by the concept of a reasonable man under certain circumstances. A person may be found to have been negligent or even grossly negligent but at the time that that person performed the acts in question he might never have thought himself to be negligent. If, on the other hand, the person realized the danger of his actions and deliberately assumed the risk of it then in Grant J.'s view his actions could not be characterized as accidental. I agree with the Court of Appeal that such analysis does not apply to the circumstances in this case and I agree, therefore, with the view of the Court of Appeal that this occurrence was an "accident" within the words of this policy. [Emphasis in text]
The Court in Van Berlo then cited the Supreme Court of Canada's decision in Cooperative Fire & Casualty Co. v. Saindon,1975 CanLII 180 (SCC), ("Saindon"), which involved a comprehensive liability policy. In that case, the plaintiff and defendant, who were neighbours, were involved in an incident where the plaintiff's was injured after the defendant raised his lawnmower above his own head as a threat but then connected with the plaintiff's hand severing his fingers and hurting his right wrist. The defendant testified that he only intended to scare, not injure, the plaintiff. The defendant sought indemnity under his liability policy. The trial judge's dismissal of the claim against the insurer was restored upon appeal to the Supreme Court of Canada.
The Supreme Court of Canada in Saindon stated that at p. 748:
No doubt the word "accident" involves something fortuitous or unexpected, but the mere fact that a wilful and culpable act – which is both reckless and unlawful – has a result which the actor did not intend surely does not, if that result was one which he ought to reasonably have anticipated, entitle him to say that it was an accident.
The Court then noted Cooperators Life Insurance Co. v Gibbens,6 ("Gibbens") where the insured had unprotected sex and acquired genital herpes which led to a rare complication resulting in total paralysis from the mid-abdomen down. The insured claimed compensation under his group insurance policy, which stated that coverage was only provided for "bodily injury occasioned solely through external violent and accidental means".
In Gibbens, the Supreme Court of Canada, cited the definitions in Walkem and Stats and other cases, stating at para. 22:
[22] What then is the "ordinary meaning" of "accident"? In Canadian Indemnity Co. v. Walkem Machinery & Equipment Ltd., 1975 CanLII 141 (SCC), [1976] 1 S.C.R. 309, at pp. 315-16, Pigeon J. suggested that an accident is "any unlooked for mishap or occurrence" (p. 316). This definition was endorsed in Martin [Martin v. American International Assurance Life Co., 2003 S.C.C. 16], at para. 20. Martin also quoted Stats which similarly held that "'accident' ... denot[es] an unlooked-for mishap or an untoward event which is not expected or designed". ...
The Court in Van Berlo, also noted that recently, in Progressive Homes Ltd. v. Lombard General Insurance Company of Canada7, the Supreme Court of Canada approved the definitions of "accident" as discussed in the cases cited above being Walkem, Gibbens, and Martin.
At paragraph 72, the Court held that the definition of "accident" as discussed in the various cases should be applicable to the policy in Van Berlo and, quoting from Stats8, above, stated that "accident" must be, apart from specific definitions in specific policies, similarly interpreted in both accident and indemnity policies.
The Decision: Was the Attempted Take-Off an "Occurrence" amounting to an "Accident" under the Policy?
The Court stated that the scope of the decision to be made by it was not whether a failed one-engine take-off in a twin-engine aircraft constitutes an "accident" but, rather, was the decision by the plaintiff to take-off in his Aztec knowing that one of the two engines was not functioning, and then crashing, an "occurrence" that amounts to an "accident" within the meaning of the Policy?
The Court accepted the plaintiff's evidence that the plaintiff believed a one-engine take-off could be safely accomplished and accepted the plaintiff's evidence regarding his experience, during training, as to the strong performance of the Aztec while flying on one engine even though the plaintiff had not done a one-engine take-off in the Aztec. Further there were other factors enumerated above regarding the plaintiff's belief as to why such a take-off would be successful.
The plaintiff, the Court noted, knew that the Aztec could fly on one engine and it was only a six-minute flight home. From his perspective, all he had to do was to get the aircraft off the ground and he believed he could do it for all of the described reasons.
The Court accepted limited hearsay evidence as to what other pilots told him about the Aztec's ability to take-off on one engine and such evidence was admissible only on the issue of the plaintiff's state of mind as to the Aztec's ability, and not for the truth of those statements. The plaintiff, based on his own experience, the weather and other conditions, and his discussion with others, believed "one hundred percent" that the aircraft was capable of a single-engine take-off.
Further, the flight manual did not specifically state that a single-engine take-off should not be attempted and there was no placard warning against a one-engine take-off in the Aztec though there was no real suggestion that such one engine take-off was in any way condoned by the manufacturer.
The plaintiff's state of mind was also influenced by the contents of the flight manual, the proper pre-flight check procedure (that requires two operating engines), and the plaintiff's knowledge that a dead engine was regarded by the manufacturer as an emergency condition.
The Court concluded that the plaintiff's decision to attempt a single-engine take-off was bad judgment amounting to negligence but that the incident was still an "accident" – or an "unlooked for mishap or occurrence" per Walkem and Stats above. An accident can occur where the conduct of the insured constitutes negligence and even gross negligence, where it still would amount to an accident on the facts of the Van Berlo case.
The Decision: Was the Plaintiff So Reckless to Bring Conduct Outside of Coverage?
The Court did not agree with the insurer defendant's submission that the plaintiff was so reckless that his conduct was outside the scope of coverage under the Policy and that the plaintiff realized the dangers of his actions and deliberately assumed the risk. Further, the Court did not agree that the plaintiff "courted" the risk and that he ought to have reasonably anticipated the result. The Court did not agree that a single-engine take-off so increased the risk that the incident could not be characterized as an "accident" even though there were monetary penalties for breach of the Canadian Aviation Regulations. Nor did the Court agree that the plaintiff's conduct amounted to an occurrence that was outside the risks that were intended to be insured under the Policy in this heavily regulated area.
The Court at para. 92 stated, "It cannot be said, on the facts, that the plaintiff realized the danger of his actions and deliberately assumed the risk; nor can it be said that the plaintiff's conduct rose to a level of recklessness or culpability such that the occurrence was no longer an accident."
The Court disagreed with the defendant insurer's submission that the path of the aircraft supported its position. The Court found that the damage to the marker was a minor incident and the time spent by the aircraft on the grassy infield areas was not significant given its speed as it was approaching the point of being airborne. The Court accepted that it might not be normal to veer off a runway during take-off but found that the path taken by the Aztec was a product of the plaintiff's negligence in his attempt to make a one-engine take-off, but that did not render the occurrence one which fell outside the scope of an accident.
The Decision: Was the Plaintiff in Breach of the Aircraft Protection Condition in the Policy?
As an alternative argument, the insurer defendant argued that the plaintiff violated the aircraft protection condition and was thereby disentitled to coverage. The Policy stated:
Physical Damage to Your Aircraft
Protection of your Aircraft. You must protect your aircraft from any further loss or physical damage. Any loss or physical damage due directly or indirectly to your failure to protect your aircraft shall not be recoverable under this Policy. We will pay all reasonable expenses that you incur to protect your aircraft from further loss.
The argument was that this section of the Policy obligated the plaintiff to minimize the loss once the risk had materialized or when the aircraft first left the runway and contacted the grassy infield area and then hit the taxiway marker. The plaintiff could have, it was argued, and should have, stopped the aircraft; but instead continued his reckless attempt to take-off.
The Court disagreed stating that the plaintiff was well aware of and was prepared for the aircraft to "yaw" to the right. The aircraft travelled only a short distance while in the grassy areas, and given its speed, was soon airborne and the plaintiff's evidence was accepted that he would have had to land in the cornfield on the airport property with potentially deadly consequences.
The Court found that the plaintiff was not in a position to bring the aircraft safely to a stop, and that the reasonable course of action as taken by the plaintiff was to continue the liftoff attempt. Further, there was insufficient evidence to conclude that the aircraft's movement to the right along the ground, shortly before take-off, was a serious enough situation to consider aborting the take-off.
The Court found that the plaintiff was not in breach of the aircraft protection condition and pronounced judgment in favour of the plaintiff for $140,000 and left the issues of costs from the first trial and prejudgment interest to written submissions.
Finally
This matter went through two trials and an appeal. The cost of pursuing and defending such a matter would have seemed prohibitive given that the damages sought were only $140,000 plus costs and interest. However, the issues of whether the incident was an "accident" and whether there was a breach of a condition in the subject policy, were crucial and Underwriters may be expected to employ due diligence in analyzing and testing the merits of any insurance claim.
Footnotes
(1) 1975 CanLII 141 (SCC), [1976] 1 S.C.R. 309
(2) 1978 CanLII 38 (SCC), [1978] 2 S.C.R. 1153 (S.C.C.)
(3) 1976 Carswell Ont 534 (C.A.)
(4) 1963 CanLII 155 (ON SC), [1963] 2 O.R. 547 (Ont. H.C.)
(5) [1976] 1 S.C.R. 735
(6) 2009 SCC 59 (CanLII) at para 47
(7) 2010 SCC 33 (CanLII),
(8) at para 24
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.