Nageeb Abdulkarim v. Wawanesa Mutual Insurance Company, 2007 ONFSCDRS 155

Financial Services Commission of Ontario

Commission des services financiers de l’Ontario

Neutral Citation: 2007 ONFSCDRS 155

FSCO A05-002913

BETWEEN:

NAGEEB ABDULKARIM

Applicant

and

WAWANESA MUTUAL INSURANCE COMPANY

Insurer

DECISION ON A PRELIMINARY ISSUE

Before: Jeffrey Rogers

Heard: July 12, 2007, in London, Ontario.

Appearances: Mr. Faisal Joseph, solicitor for Mr. Abdulkarim

Mr. James R. Adams, solicitor for Wawanesa Mutual Insurance Company

Issue:

Is Mr. Abdulkarim precluded from coverage by operation of section 1.8.4 of the Ontario Automobile Policy (OAP 1) which provides as follows:

Garage Workers Not Covered- No person who sells, repairs, maintains, stores, services or parks automobiles as part of a business is covered by this policy while involved in conducting that business, unless the person, in fact, owns the automobile involved in the accident or is the partner or employee of the owner.

Result:

Mr. Abdulkarim is not precluded from coverage by operation of section 1.8.4 of the OAP 1.

Background:

Mr. Abdulkarim was injured in a motor vehicle accident on September 7, 2004. He applied for statutory accident benefits from ING Insurance (“ING”). ING had issued a standard Ontario garage policy to the owner of the dealer plates that were attached to the vehicle Mr. Abdulkarim was driving. ING took the position that, under the priority rules, Wawanesa Mutual Insurance Company (“Wawanesa”) was liable to pay any benefits because Mr. Abdulkarim was principally dependent for financial support on his father, Mohamed Abdulkarim, Wawanesa’s named insured under an OAP 1.

Before the priorities issue was decided, Arbitrator Snider held a hearing on the preliminary issue of whether Mr. Abdulkarim was barred by section 30 of the Schedule¹ from receiving claimed non-earner benefits, because he knew or ought reasonably to have known that he was operating the automobile when it was not insured under a motor vehicle liability policy. For oral reasons given on February 2, 2007, Arbitrator Snider found that Mr. Abdulkarin was not precluded from receiving the benefits.

In a decision dated March 30, 2007, Arbitrator Bruce Robinson accepted ING’s position on the priorities issue. Wawanesa therefore replaced ING in this arbitration. Wawanesa then took the position that Mr. Abdulkarin is precluded from coverage by operation of section 1.8.4, contained in the OAP 1 issued to Mr. Abdulkarim’s father. Wawanesa claims that Mr. Abdulkarim sold cars as part of a business and that he was involved in conducting that business when the accident occurred.

Mr. Abdulkarim’s position is that his involvement in the sale of cars cannot be considered a business and, in any event, he was not involved in that activity, when the accident happened.

FACTS AND ANALYSIS:

For ease of reference, section 1.8.4 of the OAP 1 is produced again. It provides as follows:

The policy is approved by the Superintendent under section 227 of the Insurance Act.

Section 1.8.4 of the OAP 1 mirrors section 247(a) of the Insurance Act, which provides as follows:

The insurer may provide under a contract evidenced by a motor vehicle liability policy, in either or both of the following cases, that it shall not be liable,

(a) to indemnify any person engaged in the business of selling, repairing, maintaining, servicing, storing or parking automobiles for any loss or damage sustained while engaged in the use or operation of or while working upon the automobile in the course of that business unless the person is the owner of the automobile or is an employee of the owner of the automobile.

Mr. Abdulkarim does not fit within the exception to the exclusion, because he did not own the car he was driving, nor was he a partner or employee of the owner.

The questions to be answered are therefore:

Did Mr. Abdulkarim sell, repair, maintain, service or park automobiles as part of a business?
Was he involved in conducting that business when the accident occurred?

The parties agree, and I find, that the onus is upon Wawanesa to prove that Mr. Abdulkarim falls within the exclusion.

Facts

The relevant facts are agreed². Mr. Abdulkarim was born on May 18, 1983. He was 21 years old at the time of the accident. He lived with his parents and younger brother. He was unemployed and had not worked for about five months before the accident. He had applied to attend Georgian College in the fall of 2004, but had not yet received a response to his application.

In or about May 2004, Mr. Abdulkarim and his older brother Taleb entered into an agreement with Mike Meddaoui, the owner of York Auto Sales Limited. Taleb is about 7 years older. He worked as an assembler with the Ford Motor Company. In 2003, Taleb had obtained a licence to sell automobiles. The agreement with Mike Meddaoui was for the lease of a dealer’s plate from York Auto so that the brothers could buy and sell cars. The brothers paid $1,400 to lease the plate and agreed to pay a further $200 whenever they sold a vehicle.

At the time of the accident, they were in the process of implementing their plan to buy and sell used automobiles for profit. Their plan was to buy vehicles privately, arrange for necessary repairs, and then sell them to private individuals. The brothers advertised their vehicles in the Auto Trader and relied on word of mouth. Taleb was the one principally involved in selling the vehicles. Mr. Abdulkarim contributed to the cost, took them for repairs, cleaned the vehicles and prepared them for sale.

Between May 2004, when they made the agreement and September 2004, when the accident happened, they had purchased and sold one car, using the dealer plates. They made a profit of about $1,000, which they split equally. At the time of the accident, they had purchased a second car, but they had not yet sold it. It was being repaired at an auto repair shop called Automotive Solutions.

At the time of the accident, Mr. Abdulkarim was driving a 1992 Toyota Tercel, owned by Mohamoud Omar, the sole proprietor of Automotive Solutions. Mr. Omar had bought the Toyota three or four days earlier, intending it to be used by his brother. Mr. Omar had his own dealer plates, which he used to transport the Toyota to his facility.

On the date of the accident, Mr. Abdulkarim took the Toyota for a test drive and to obtain an automotive part. He may or may not have had an interest in buying it for resale. He was making use of the dealer plates the brothers had leased when operating the Toyota. The accident happened during this test drive.

Did Mr. Abdulkarim sell, repair, maintain, service or park automobiles as part of a business?

The area of dispute is narrow. There is no dispute that buying and selling cars for profit, as the brothers contemplated, could be a business. The real question is whether at the time of the accident the enterprise was sufficiently developed to be considered a business.

The parties made submissions on the application of the contra proferentum rule. This rule usually applies to the construction of insurance contracts. It would require that ambiguities be construed against the insurer. Wawanesa submitted that I should adopt the approach of the Court in Pilliteri v. Priore³. The Court found that the rule does not apply for three reasons. First, the section is not ambiguous. Second, the rationale for applying the rule, i.e. construing a contract against the party that drafted it, does not exist because the insurer did not draft the contract and could not change it to suit its own interests. The insurer must use the form of the policy approved by the Superintendent. Third, it makes no sense to apply the rule when its application would lead to the absurd result that one approach would be taken to construing the term in the policy and a different one taken to construing the same term in the Insurance Act.

In Hope v. Canadian General Insurance⁴, the Court of Appeal considered whether the rule applied to construing provisions of the Schedule and did not exclude its application. The Schedule is no more a document of insurers than the standard policy. I therefore find that the contra profenentum rule must be considered. I note that if applied, the rule does not lead to conflicting approaches in interpreting the term in the policy and the Insurance Act, because the consumer protection nature of the legislation would require that ambiguities in the Act also be construed in favour of the insured.

As the Court noted in Hope, the rule is triggered by ambiguity in the impugned language. The existence of a factual dispute between the parties does not render the language ambiguous.

Mr. Abdulkarim submitted that the rule does apply, but pointed to no ambiguity in the language that would trigger its application. I find none. For that reason, I find that the rule does not apply here.

“Business” is not defined in the policy or the Insurance Act. The term must therefore be given its ordinary meaning, in the context used, consistent with the intent of the parties. There is no case directly on point. The parties pointed to several dictionary definitions of the term and cases that have considered its meaning in various contexts. Each case turns on its facts. I will focus on the narrow area of dispute.

The cases that consider the issue of what paid activities qualify as businesses draw a distinction between casual or irregular activities and ongoing enterprises, and between personal and commercial activities. The relevant factors are summarized by the Court in its decision in Rocovitis v. Dominion of Canada General Insurance Co⁵:

From the cases reviewed earlier, it appears that not all activities generating profits, especially nominal profits, are to be automatically classified as “business” activities. Whether activities generating earnings will be found to be personal or business in nature will depend on all of the circumstances. Activities that

routinely and regularly generate a livelihood will generally be held to be business activities…Casual, one off or irregular activities undertaken for “pin money” to help others may be personal activities…Activities that are clearly personal and those that are clearly of a business nature are at opposite ends of the spectrum.

I appreciate that in Rocovitis, the insurance policy at issue contained a definition of business. However, in making the above comment, the Court addressed the general meaning, rather than the specific definition.

I find that, although the brothers had a clear business plan, their plan was not sufficiently implemented at the time of the accident for their enterprise to be considered a business. Several factors lead to that conclusion. First, their investment was a modest one. Assuming that they each invested half of the initial $1,400, their risk was $700.00 each. Although they could have gone on to expand their enterprise, they could just as well have decided to quit, without great financial penalty. The small investment allowed them the option of limited commitment to the success of their enterprise. Second, they had not shown great commitment of time and energy to implementing their plan, in the months after the initial investment. Between May 2004 and September 2004 they had sold one car and had recouped all but $400 of their investment. They were certainly not engaged in this enterprise on anything approaching a full-time basis. Third, the returns from the enterprise were modest. The brothers did not and could not survive on its “profit”.

Upon sale of the car that was being repaired at the time of the accident, they would likely have recouped their entire investment. With no knowledge of the specifics of their future plans and no reliable indicators of them, the enterprise must be assessed only upon what the brothers had done at the time of the accident. At that time, they were at best dabblers in the used car market. I find that, based upon the facts, the brothers could not reasonably claim at the time of the accident that they had been in the business of selling cars.

Issue Estoppel

Before I address the issue of whether Mr. Abdulkarim was involved in business at the time of the accident, I must resolve the question of issue estoppel. At the hearing, Wawanesa for the first time took the position that Arbitrator Snider decided the question of whether Mr. Abdulkarim was involved in the business of selling cars when the accident occurred. Counsel indicated that he intended to argue that the principle of issue estoppel therefore precluded Mr. Abdulkarim from arguing otherwise.

Mr. Abdulkarim objected on the grounds that this was a new issue that Wawanesa should not be allowed to include in the hearing when the scope of the hearing had been earlier defined. I ruled that Wawanesa was not raising a new issue but was seeking to advance a new argument on the issue already before me. Therefore, the question to be addressed was whether the argument could be advanced, without prejudicing Mr. Abdulkarim. I proposed that I would hear the argument and that Mr. Abdulkarim would be allowed to reserve his decision on whether to address it before me, or by way of further, written submissions. Having heard the argument,

Mr. Abdulkarim chose to address it before me.

I find that the principle of issue estoppel does not preclude Mr. Abdulkarim from arguing that he was not involved in the business of selling cars when the accident happened. The requirements of issue estoppel are:

The same question has been previously decided;
The judicial decision creating the estoppel is final;
The parties to the judicial decision or their privies were the same persons as the parties to the proceeding in which the estoppel is raised or their privies.

Because there has been no appeal from Arbitrator Snider’s decision, it is final. I find that the two other requirements of issue estoppel are not met.

Wawanesa concedes that Arbitrator Snider made no specific finding on the issues before me. Arbitrator Snider made the finding of fact that when Mr. Abdulkarim used the dealer plates to drive the Toyota, he thought he was using them for the purposes he had leased the plates. Wawanesa argued that Arbitrator Snider could not have made that finding of fact, without deciding also that Mr. Abdulkarim was involved in the business of selling cars. I disagree.

In making that finding, Arbitrator Snider did not turn his mind to the question of whether

Mr. Abdulkarim was operating a business of even whether Mr. Abdulkarim thought he was involved in operating a business. Arbitrator Snider’s finding is simply that Mr. Abdulkarim thought his use of the plates was within the scope of permitted uses. He made no finding as to the parameters of Mr. Abdulkarim’s belief on the permitted uses.

The parties before Arbitrator Snider were Mr. Abdulkarim and ING. Wawanesa then replaced ING after the priorities dispute was decided. Because the dispute resolution scheme required ING to respond to Mr. Abdulkarim’s claim, despite its claim that Wawanesa was liable for the claimed benefits, there would likely be privity of interest between ING and Wawanesa if their insurance policies were identical. That was not the case here. The garage policy that ING issued did not contain the exclusion clause upon which Wawanesa relies. ING therefore had no interest in the issue before me.

Was Mr. Abdulkarim involved in conducting the business when the accident occurred?

I find that, even if Mr. Abdulkarim was in the business of selling cars, he was not involved in that business when the accident occurred. The agreed facts are that Mr. Abdulkarim took the Toyota for a test drive and to obtain an automotive part. He may or may not have had an interest in buying it for resale. Those facts disclose no clear reason that Mr. Abdulkarim was driving the Toyota. It may be that he was on the test drive, but we do not know whether the test was because he was considering buying it or some other reason. It may be that he was getting an automotive part, but we do not know who the part was for or whether it was related to the car that the brothers planned to resell.

The onus is upon Wawanesa to prove that Mr. Abdulkarim falls within the exclusion. The agreed facts do not show that, on a balance of probabilities, Mr. Abdulkarim was involved in conducting business, when the accident happened.

EXPENSES:

The parties made no submissions on expenses. I reserve the issue to the hearing Arbitrator. However, should the parties resolve the matter without a hearing but are unable to resolve the issue of expenses, either party may make an appointment for me to determine the matter in accordance with Rules 75 to 79 of the Dispute Resolution Practice Code (4th Edition, Updated 2003).

August 13, 2007

Jeffrey Rogers Arbitrator

Date