In Gudzinski v Allianz the estate of Nicholas Gudzinski sought recovery of the value of Gudzinki's Cessna Cardinal after it was destroyed in a crash (for further details please see "Aviation insurance policy gets narrow interpretation" and "Aviation insurer decision to deny coverage upheld"). Gudzinksi, the owner and pilot of the aircraft at the time, perished in the accident along with three passengers.
At issue in this case was whether insurance coverage was in force, due to the fact that Gudzinski was "out-of-medical" when the accident occurred. The nub of the matter was the insurance policy's stipulation that it "applies only if [the insured's] aircraft is flown by an approved pilot who has the required licence…to fly".
The estate's argument was difficult to accept. Its position was that Gudzinksi did indeed have the required licence but, because of the particular wording of Section 403.03 of the Canadian Aviation Regulations, was merely not permitted to exercise the privileges of the licence unless he held a valid medical certificate.
Incredibly, the master hearing the case at first instance accepted this argument, applying the rule of contra proferentem (ie, that any ambiguity in the contract will be construed against the party that drafted the contract) to find that coverage was in place.
The master's decision was overturned on appeal to the Alberta Queen's Bench. However, in order to reach this decision Allianz had to move to introduce the following new evidence:
- a copy of a standard form pilot's licence, which reads on its face: "This Licence is valid only for the period specified in the Medical Certificate (Form 26-0055) which must accompany this licence"; and
- the wording on medical certificates in use at the time, which reads: "This certificate is part of a…Permit or Licence issued under the Canadian Aviation Regulations".
The court noted that each of these documents, by their own wording, incorporates the other by reference. With the new evidence, the Alberta Queen's Bench had no trouble reversing the master's decision by finding that there was no longer any ambiguity on the issue of whether Gudzinski had the required licence. The estate appealed.
The Alberta Court of Appeal completely upheld the decision of the Queen's Bench, adding that a reference to a licence means, in law and in ordinary speech, a licence that is in force. It stated that "[a] former licence is not a licence and does not let one fly. In law, it is wastepaper". Allianz was successful in having the appeal dismissed – meaning that its decision to deny coverage was upheld.
Because Allianz raised neither the "winning point" nor the facts (ie, the forms of licence and medical certificate) before the master, the parties were ordered to bear their own costs in all three levels of court.
For further information on this topic please contact Carlos P Martins at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800), fax (+1 416 982 3801) or email ([email protected]).