Neutral Citation: 2002 ONFSCDRS 118

FSCO A01-000855

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

MOHAMMAD BAWAR AYUB

Applicant

and

LANGDON INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before:

Deena Baltman

Heard:

July 2 and 3, 2002, at the offices of the Financial Services Commission of Ontario in Toronto.

Written submissions were received on July 8, 2002.

Appearances:

Manoucher Baradaran for Mr. Bawar Ayub

Catherine Ann Korte for Langdon Insurance Company

Issues:

The Applicant, Mohammad Bawar Ayub, was injured in a motor vehicle accident on June 4, 2000. He applied for statutory accident benefits from Langdon Insurance Company ("Langdon"), payable under the Schedule.¹ Langdon denied benefits on two bases: first, Mr. Ayub was operating an uninsured vehicle; second, he had made a material misrepresentation that induced Langdon to enter a contract of insurance. The parties were unable to resolve their disputes through mediation, and Mr. Ayub applied for arbitration at the Financial Services Commission of Ontario under the Insurance Act, R.S.O. 1990, c.I.8, as amended.

The preliminary issues are:

1. Is Mr. Ayub barred from recovering benefits under the Schedule because he knew or ought reasonably to have known that at the time of the accident he was operating an automobile that was not insured under a motor vehicle liability policy, contrary to subsection 30(1) of the Schedule?

2. Alternatively, is Mr. Ayub barred from recovering benefits under the Schedule because he made a material misrepresentation that induced Langdon to enter into a contract of automobile insurance?

Result:

1. Mr. Ayub is barred from recovering benefits under the Schedule because he knew or ought reasonably to have known that at the time of the accident he was operating an automobile that was not insured under a motor vehicle liability policy, contrary to subsection 30(1) of the Schedule.

2. In view of my finding on the first issue, it is not necessary for me to consider the second.

EVIDENCE AND ANALYSIS:

1. BACKGROUND:

a) Mr. Ayub's personal and work history

Mr. Ayub, now 33 years old, was born in Afghanistan, where he successfully completed highschool and four years of post-secondary education. He attended a military academy where he studied to become a pilot and then completed training in Russia to become a fighter pilot. On completion of service in Afghanistan, he moved to Russia, Germany and Holland, and eventually immigrated to Canada in 1994. He is married and has a young daughter.

At the time of the accident giving rise to this claim Mr. Ayub was self-employed as a produce supplier. He had approximately 120 clients, including restaurants, fruit markets, convenience stores, and pizza vendors. Mr. Ayub took orders for fruits and vegetables from his clients, filled the orders at the Ontario Produce Centre, and then delivered the produce to his clients.

Mr. Ayub conducted all his business dealings in English and provided invoices in English, when required. He testified that he has no difficulty conversing with his clients in English.

Mr. Ayub obtained his Ontario driver's license in 1995. Since then he has placed seven insurance policies on ten vehicles with numerous insurers, including Kingsway General, Royal, General Accident, Commercial Union, Wellington Facility and Halifax Insurance. He testified that he was the actual and registered owner of all the ten vehicles that he insured.

b) The dispute giving rise to this claim

On June 4, 2000, Mr. Ayub was driving a cargo van in which his wife, sister-in-law and mother-in-law were passengers. He was exiting Highway #404 southbound near Fairview Mall when he lost control of the vehicle and struck a wall. He claims that the brakes on the vehicle failed.

The vehicle involved in the accident was a silver 1988 Dodge Ram, bearing a Vehicle Identification Number (VIN #) ending with the digits 311939 (hereinafter referred to as the "1988 Dodge"). Mr. Ayub did not own this vehicle at the time of the accident but claims nonetheless that Langdon had insured it. Langdon claims that the only vehicle it insured for Mr. Ayub is a 1983 Dodge van (hereinafter referred to as the "1983 Dodge"), which he does own, and which bears a VIN # ending with the digits 156841. Langdon maintains that the 1988 Dodge operated by Mr. Ayub at the time of the accident was not insured, and on that basis has denied him benefits.

Langdon relies upon section 30(1) of the Schedule, which provides that the insurer is not required to pay specified benefits to the person driving the automobile at the time of the accident "if the driver knew or ought reasonably to have known that he or she was operating the automobile while it was not insured under a motor vehicle liability policy." Much of the dispute turns on what really took place in a meeting between Mr. Ayub and his insurance broker, Mr. Rajah Balendra, on March 20, 2000.

2. THE MEETING OF MARCH 20, 2000

a) Mr. Ayub's version

Mr. Ayub testified that he attended Mr. Balendra's office in the morning and requested insurance for a 1983 Dodge. He produced an ownership slip to Mr. Balendra which identified him as the owner of a 1983 Dodge. Mr. Balendra told him to return after lunch by which time he would have the papers filled out for Mr. Ayub to sign.

Mr. Ayub testified that by the time he returned after lunch, he had changed his mind, and wished instead to insure a 1988 Dodge. This was a larger, safer vehicle which Mr. Ayub believed more suitable for his business than the 1983 Dodge. He explained to the broker that the vehicle was currently owned by a friend named Inayatullah Changazi, but that he intended to arrange for the ownership to be transferred in the near future. According to Mr. Ayub, he produced to Mr. Balendra a copy of Mr. Changazi's ownership slip for the 1988 Dodge, and Mr. Balendra agreed to insure Mr. Ayub for the 1988 Dodge instead of the 1983 Dodge originally discussed.

At the conclusion of the meeting, Mr. Balendra provided Mr. Ayub with a pink slip verifying insurance on a 1988 Dodge Ram. Although it contains the VIN# from his 1983 Dodge, Mr. Ayub alleges that he honestly believed himself to be insured for the 1988 Dodge that he had yet to purchase.

b) Mr. Balendra’s version

Mr. Balendra testified that only one meeting occurred on March 20, 2000. Mr. Ayub asked him to insure a 1988 Dodge and produced an ownership form which listed Mr. Ayub as owner and referred to a Dodge van. Mr. Balendra looked at the permit portion of the ownership and saw what he believed to be the numbers "88" beside the word "year." He assumed that the ownership form pertained to the 1988 Dodge that Mr. Ayub wished to insure and copied out the VIN# on the insurance application. Mr. Ayub never suggested to Mr. Balendra that he did not own the 1988 Dodge. Had he done so, Mr. Balendra would have refused to insure it for him.

It was only during the course of this arbitration proceeding that Mr. Balendra learned that Mr. Ayub never owned a 1988 Dodge, and that the ownership that Mr. Ayub produced to him on March 20, 2000, in fact pertained to the 1983 Dodge that Mr. Ayub owned. That's why the pink slip and subsequent insurance certificate that Mr. Balendra issued to Mr. Ayub lists a 1988 Dodge with a VIN # pertaining to the 1983 Dodge.

3. FINDINGS:

Where there is conflict in the evidence of Mr. Ayub and Mr. Balendra, I prefer Mr. Balendra's version. For reasons set out below, I do not find Mr. Ayub to be a credible witness. I find that he deliberately mislead Mr. Balendra during the March 20, 2000 meeting. He falsely represented to Mr. Balendra that he was the owner of a 1988 Dodge. He knowingly produced ownership documentation relating to a 1983 vehicle, hoping to convince Mr. Balendra that it pertained to the 1988 Dodge that he wished to have insured in his name.

I do not accept Mr. Ayub's evidence that he advised Mr. Balendra that he was not the actual owner of the 1988 Dodge. Rather, I accept Mr. Balendra's evidence that Mr. Ayub never produced Mr. Changazi's ownership slip for the 1988 Dodge, but instead produced only the ownership slip for the 1983 Dodge, showing himself as owner. I find that Mr. Balendra honestly (albeit mistakenly) believed that the 1983 ownership slip, which listed Mr. Ayub's name and referred to a Dodge vehicle, pertained to the 1988 Dodge that Mr. Ayub declared he wished to insure.

I conclude that at the time of the accident Mr. Ayub knew that the 1988 Dodge was not properly insured. At best, Mr. Ayub may have believed that he had successfully duped Mr. Balendra into providing a pink slip that purported to insure a 1988 Dodge but which was, to Mr. Ayub's knowledge, invalid because he had no insurable interest in the vehicle. I base my findings on the following factors:

a) Mr. Ayub never followed through with the purchase of the 1988 Dodge. He obtained insurance on March 20, 2000 and the accident didn't happen until June 4, 2000. The Application for Transfer on the back of Mr. Changazi's ownership slip was never filled out within that two and a half month period; therefore at the time of the accident Mr. Changazi remained the registered owner. Mr. Ayub produced neither a bill of sale nor Mr. Changazi to substantiate his story.

Mr. Ayub testified that shortly after the March 20^th meeting he had to travel to Vancouver and Montreal on urgent business and didn't return to Toronto until just before the accident, and therefore hadn't had an opportunity to transfer the ownership. He declared that he was intending to arrange for the transfer on the date the accident occurred. Aside from the fact that the accident occurred on a Sunday, when the vehicle license office would have been closed, I find Mr. Ayub's explanation unpersuasive.

b) I also find it significant that instead of obtaining new plates for the 1988 Dodge, Mr. Ayub transferred the license plate from his 1983 Dodge to the 1988 Dodge, where it remained until the accident. Mr. Ayub conceded in cross-examination that he knew that this was improper but stated that he did not consider it a serious offence.

c) Mr. Ayub gave contradictory evidence regarding the meeting of March 20^th. In examination in chief he testified that he returned after lunch with a money order to pay for the insurance premium. In cross examination he stated that when he returned to Mr. Balendra's office after lunch, with a money order, he learned that he would have to pay a higher premium for the 1988 Dodge and therefore went downstairs in the same building to a place where money orders were sold in order to purchase a second money order, which he gave to Mr. Balendra that same day. Still later in cross-examination he suggested that he may not have come up with the necessary money order until the day after the meeting.

As it happens, none of these versions is correct. Mr. Ayub provided Mr. Balendra with two cheques on March 20^th, 2000 and then provided a money order 7 days later because he was closing one of his bank accounts and realized that one of his cheques would therefore not be honoured.

d) I find it plausible that Mr. Balendra accepted the 1983 ownership certificate as evidence that Mr. Ayub owned a 1988 Dodge; Mr. Ayub produced this document to Mr. Balendra immediately after telling him he wished to insure a 1988 Dodge, the certificate listed Mr. Ayub's name, and it referred to a Dodge vehicle. The notation beside the word "year" on the vehicle portion is in fact "83" but is partly obscured and could easily be read as "88". Although the notation on the permit portion more clearly indicates "83," I accept Mr. Balendra's evidence that the common practice among brokers is to look principally at the vehicle portion.

e) Mr. Ayub made several deceptive statements to Langdon and his treatment providers:

• When asked on the application for insurance to "give details of all accidents or claims arising from the ownership, use or operation of any automobile...during the last 6 years," he listed only his accident of January 2000 and omitted reference to two other accidents in which he was involved, on January 19, 1996 and October 22, 1999, respectively. I am not persuaded by Mr. Ayub's explanation that he understood the question to apply only to accidents for which he was at fault.

• In his statement of June 8, 2000, to the insurance adjuster, he falsely indicated that he had "never been involved in a car accident before."

• According to the report of October 11, 2000, from Dr. S. Daei (the treating psychotherapist), Mr. Ayub "denie[d] being involved in any previous motor vehicle accidents."

• When asked on the insurance application whether he was "both the registered Owner and the Actual Owner of the described automobile, being the 1988 Dodge, he answered "yes." In cross-examination Mr. Ayub admitted that he has never been the registered owner of the 1988 Dodge.

• When asked for the "total number of automobiles in the household or business," Mr. Ayub indicated "1," even though he was then in possession of both the 1983 Dodge and the 1988 Dodge.

When faced with these inconsistencies on cross-examination, Mr. Ayub attributed them to difficulties with the English language, and noted that he signed the documents without the benefit of an interpreter. I reject that assertion; both the documentary evidence and Mr. Ayub's presentation at the hearing suggest that he is a fairly sophisticated businessman who communicates easily and effectively in English. Although Mr. Ayub's evidence at the hearing was translated by an interpreter, on several occasions he answered the question in English before it had been interpreted into Farsi. His answers were coherent and responsive to the questions. In the two years since his accident he has communicated with several treatment providers in English, without either he or they ever suggesting any language barrier. Since 1995 he has successfully placed at least 7 insurance policies on 10 vehicles involving a number of different insurers. At no time did he request an interpreter. He is well-educated, well-travelled, experienced in business, and communicates successfully in English with a wide range of clients.

f) Mr. Ayub has admitted to two criminal convictions relating to forged immigration papers. Although my decision in this case does not turn upon that evidence, it adds some support to Langdon's assertion that Mr. Ayub is not a credible individual.

4. CONCLUSION:

On the basis of the above findings I conclude that Langdon never agreed to insure the 1988 Dodge, because Mr. Ayub never had an insurable interest in the vehicle. I further conclude that Mr. Ayub knew or ought reasonably to have known that he was operating that vehicle while it was not insured. It follows that Mr. Ayub is barred from recovering benefits under the Schedule according to section 30(1).

EXPENSES:

I encourage the parties to resolve this issue on their own, failing which I may be consulted by no later than 20 days from the date of this decision.

July 30, 2002

Deena Baltman

Arbitrator

Date

Neutral Citation: 2002 ONFSCDRS 118

FSCO A01-000855

FINANCIAL SERVICES COMMISSION OF ONTARIO

BETWEEN:

MOHAMMAD BAWAR AYUB

Applicant

and

LANGDON INSURANCE COMPANY

Insurer

ARBITRATION ORDER

Under section 282 of the Insurance Act, R.S.O. 1990, c.I.8, as amended, it is ordered that:

1. Mr. Bawar Ayub is barred from recovering benefits under the Schedule because he knew or ought reasonably to have known that at the time of the accident he was operating an automobile that was not insured under a motor vehicle liability policy, contrary to subsection 30(1) of the Schedule.

July 30, 2002

Deena Baltman

Arbitrator

Date

Footnotes

1. 1The Statutory Accident Benefits Schedule — Accidents on or after November 1, 1996, Ontario Regulation 403/96, as amended by Ontario Regulations 462/96, 505/96, 551/96, 303/98 and 114/00.