COURT FILE NO.: CV-21-00657147-0000
DATE: 20221011
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
The Estate of Arshia Arbabbahrami, Fariborz Arbabbahrami, and Arezoo Fakour
Plaintiffs
– and –
MSH International (Canada) Ltd., Ingle International Inc. o/a Intrepid 24/7, and Berkley Insurance Company
Defendants
Vincent Genova, for the plaintiffs
Michael Blinick and Bogdan Miscevic, for the defendants
HEARD: July 27, 2022
Robert CentA J.
[1] In January 2018, a 17-year-old boy named Arshia Arbabbahrami left his family and moved from the Islamic Republic of Iran to Calgary, Alberta, where he enrolled in high school. As an international student, he was required to purchase a health insurance policy, which provided accidental death coverage for common carrier accidents. Berkley Insurance Company underwrote that policy of insurance.[^1]
[2] In December 2019, Arshia returned to Iran to participate in the national Tai-Chi championship. He visited with his family and, on January 8, 2020, he began his journey back to Calgary. He boarded Ukraine International Airlines Flight No. PS752, which was bound for Kyiv, Ukraine. The plane departed Imam Khomeini Airport in Tehran at 6:12 am local time. Very shortly after takeoff, the airplane was struck by one or probably two surface-to-air missiles. Engulfed in flames, Flight PS752 tried to fly back to the airport but it was too badly damaged to make it. The plane crashed, killing Arshia and all other passengers and crew.
[3] Shortly after his death, one of Arshia’s family members made a claim on behalf of his estate under the insurance policy’s accidental death benefit. The insurers took the position that the benefits were not available. Specifically, the insurers relied on the exclusion contained in paragraph 9 of Section IV – Exclusions:
This policy does not cover losses or expenses related in whole or in part, directly or indirectly to any of the following: …
- an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority.
[4] Arshia’s estate commenced an action seeking payment of the benefits available under the policy and other damages. They then brought this motion for partial summary judgment seeking:
a. Common carrier accident (Accidental Death and Dismemberment) benefit of $100,000;
b. Repatriation benefits to a maximum of $20,000; and
c. Expenses incurred for travel for members of the immediate family to a maximum of $5,000.
[5] The defendant insurers agree that partial summary judgment is appropriate but ask that this portion of the claim be dismissed.
[6] For the reasons that follow, I grant the plaintiffs’ motion in part. I declare that the estate is entitled to payment of the accidental death benefit, but I dismiss the plaintiffs’ request for payment of the repatriation benefits and travel expenses, without prejudice to their ability to prove those damages at trial.
Partial Summary Judgment
[7] Summary judgment is an important tool for enhancing access to justice where it provides a fair process that results in a just adjudication of disputes: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 7. Used properly, it can achieve proportionate, timely, and cost-effective adjudication.
[8] The Court of Appeal for Ontario described the correct approach on a motion for summary judgment in Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, 154 O.R. (3d) 561, at para. 24. I am to:
a. determine if there is a genuine issue requiring a trial based only on the evidence before me, without using the enhanced fact-finding powers under rule 20.04(2.1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194;
b. if there appears to be a genuine issue requiring a trial, determine if the need for a trial could be avoided by using the enhanced powers under
i. rule 20.04(2.1), which allow me to weigh evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence; and
ii. rule 20.04(2.2), which allows me to order that oral evidence be presented by one or more parties.
[9] In para. 66 of Hryniak, the Supreme Court of Canada emphasized that I must focus on whether the evidence before me permits a fair and just adjudication of the dispute and cautioned that judges should not use the enhanced powers where their use would be against the interests of justice:
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[10] Stepping back, I am to determine if the record the parties have filed permits me to make the necessary findings of fact, apply the law, and reach a fair and just determination of the merits. If I can, there is no need for a trial.
[11] In this case, both parties submit that partial summary judgment, which is available only in limited circumstances, is appropriate. Before granting partial summary judgment, I must be satisfied that:
a. dividing the determination of the case into several parts will prove cheaper for the parties;
b. partial summary judgment will get the parties’ case in and out of the court system more quickly; and
c. partial summary judgment will not result in inconsistent findings by the multiple judges that will consider the case: see, Malik v. Attia, 2020 ONCA 787, 29 R.P.R. (6th) 215, at para. 62; NDrive, Navigation Systems S.A. v. Zhou, 2022 ONCA 602, at para. 33.
[12] I find that the issue of whether or not the loss is excluded from the policy coverage is appropriately bifurcated from the remaining litigation.
[13] Deciding this portion of the proceeding through a motion for partial summary judgment will, in my view, prove cheaper for the parties by getting this case in and out of the court system more quickly. A final decision on this portion of the case may go a significant way towards resolving the entire dispute and getting it out of the system more quickly. If I dismiss the plaintiffs’ motion for summary judgment on the merits, the rest of their claim may well be discontinued. Conversely, if I grant the plaintiffs’ motion for summary judgment on the merits, the parties may be in a better position to resolve immediately and consensually one or more of the remaining issues in the litigation.
[14] I also do not see any reasonable prospect of inconsistent findings on this motion and at trial. The balance of the plaintiffs’ allegations in the statement of claim (that the defendants acted negligently, in breach of contract, and in breach of their duty to act in good faith) engage an entirely different evidentiary record and set of legal principles. This is the only part of the action that requires an interpretation of the exclusion clause and an examination of the cause of the plane crash. The judge hearing the trial in this matter will not have to address these issues, which will avoid the possibility of inconsistent findings.
[15] I am satisfied that there is no genuine issue requiring a trial. There are no issues of credibility raised in this motion. There are no eyewitnesses with first-hand evidence. Even mindful of the cautions in Malik, I am satisfied that this is an appropriate case for partial summary judgment.
The record
[16] As part of its responding motion record, the insurers included an affidavit sworn by Farhad Rezaei, which attached his expert opinion. Dr. Rezaei is the Senior Research Fellow at the Philos Project in New York City. He has more than ten years of experience as an academic with a focus on Iran’s internal politics, and its defense and foreign politics.
[17] The plaintiffs object to the admissibility of the opinion. Although they concede the expertise of Dr. Rezaei on the internal politics of Iran, they object to Dr. Rezaei offering an opinion on what the plaintiffs describe as the ultimate issue in the case.
[18] The insurers concede that an expert’s opinion will be inadmissible where the expert opinion goes to a core judicial function, but submit that Dr. Rezaei’s evidence is not of that nature. The insurers state that “instead of determining the matter at issue in this dispute, Dr. Rezaei provides his opinion on the structure of the government of Iran and the IRGC’s role within Iranian society.”
[19] I have difficulty accepting the insurers’ submissions given the way that Dr. Rezaei described the opinion he was asked to provide. Dr. Rezaei’s affidavit describes the scope of his opinion this way:
I was asked by the Defendants to provide my opinion on whether the actions taken by the Islamic Revolutionary Guard associated with the shooting down of Ukraine Air Flight PS752 is considered to be an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority. Attached as Exhibit "1" is my report in this respect.
[20] The insurers asked him, therefore, to provide his opinion on exactly the question that the court has to answer on this motion, not merely on the structure of the government of Iran.
[21] In the body of his opinion, Dr. Rezaei further described his instructions as follows:
I understand that a legal dispute has been initiated by the Estate of Arshia Arbabbahrami and certain of his family members where an aspect of the underlying dispute relates to whether Arshia Arbabbahrami's death was caused by "an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority."
I have been retained to deliver my opinion pertaining to whether the IRGC, also known as the Revolutionary Guards, has become the controlling element in Iran, and can therefore be considered "military or usurped power" or "government or public or local authority," exceeding the power of other sectors in the state.
[22] He concludes his opinion as follows,
The Islamic Revolutionary Guards Corps is an astonishing story of "rags to riches." They have grown to command some sixty percent of the economy from a small band of idealistic revolutionaries. Over time, this control has been translated into political power, primarily through penetration cum cooptation of the government bureaucracy, the parliament, and the giant foundations. The Supreme Leader, constitutionally obligated to oversee the Guards, was forced to relinquish this role as well. Once the "state within the state", the Revolutionary Guards now control all three sectors of the state under a thin veneer of theocratic legitimacy, which the Velayat-e Faqih casts.
As a result of what has been set out above, I believe the actions taken by the Revolutionary Guards on January 8, 2020, can be considered "an act of military or usurped power or requisition by or under the order of any government or public or local authority."
[23] I accept that there is no longer a general rule barring opinion evidence on the ultimate issue before the court, but the closer the testimony gets to the ultimate issue, the more inclined the court is to reject it: R. v. Graat, 1982 33 (SCC), [1982] 2 S.C.R. 819; R. v. Mohan, 1994 80 (SCC), [1994] 2 S.C.R. 9, at p. 415. This rule may be relaxed somewhat in cases without a jury because there may be less of a danger that the judge will abdicate the judge’s role as fact-finder and simply accept the opinion of an impressively credentialed expert: Johnson v. Milton (Town), 2008 ONCA 440, 91 O.R. (3d) 190, at para. 47.
[24] I have a number of other concerns with Dr. Rezaei’s opinion.
[25] First, Dr. Rezaei is an expert in Iranian politics. There is nothing in his background that suggests that he is qualified to give the opinion he has provided on whether the downing of the plane is considered to be an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority within the meaning of the insurance policy. That opinion requires an interpretation of the meaning of the words that are used in the exclusion clause. I do not see how Dr. Rezaei is properly qualified to give the opinion that he swears in his affidavit that he was retained to provide. Expert witnesses should not give opinion evidence on matters for which they possess no special skill, knowledge, or training: Johnson, at para. 50.
[26] Second, if I instead conclude that he is an expert in Iranian politics retained to give an opinion about Iranian politics, the conclusion he offers about whether or not the loss falls within the exclusion provisions of a North American insurance policy, strays far outside his permitted area of expertise. This is just as fatal to the admissibility of his opinion: Johnson, at para. 51.
[27] Third, the bulk of Dr. Rezaei’s opinion is in the form of an essay with references to a wide array of secondary sources including news articles and websites. All of this evidence is hearsay and has not been otherwise proven through admissible evidence. This affects the weight that I can assign to the opinion: R. v. Lavallee, 1990 95 (SCC), [1990] 1 S.C.R. 852, at p. 889-890. Dr. Rezaei includes this information in his report but does not represent that the texts and articles that he references are authoritative in the field. I am left to infer that the publications cited are reliable authorities and can, therefore, be treated as admissible substantive evidence in their own right.
[28] I am required to perform a gatekeeping function. It is a legal error to permit experts to give evidence on matters for which they have no special skill, knowledge, or training. It also wastes both time and resources.
[29] I find that Dr. Rezaei’s opinion is not admissible on this motion. I recognize that since this motion is being heard by a judge, not a jury, I can adopt a more flexible approach. However, that flexibility does not extend to saying that “anything goes”: Johnson, at para. 47.
[30] Admitting this evidence runs the risk of having my decision-making function usurped or severely eroded by an expert who professes to know about the proper interpretation of the insurance policy at issue and has provided a ready-made solution for the contentious (and ultimate) issue in this case. In my view Dr. Rezaei is either unqualified to provide the opinion he tendered, or his conclusion has strayed far outside his admitted expertise.
[31] For these reasons, I exclude Dr. Rezaei’s evidence.
What happened to Flight PS752?
[32] In the fall of 2020, the Minister of Foreign Affairs for Canada formed a Canadian Forensic Examination and Assessment Team consisting of public servants from several federal departments and agencies. The Minister asked the Canadian Forensic Team to analyze all available information (including classified information), evidence, and intelligence on the downing of Flight PS752 and to advise the government on its credibility and probative value.
[33] The Canadian Forensic Team released its report in June 2021. This was after Iran’s Aircraft Accident Investigation Board (“AAIAB”) issued its Accident Investigation Report. The Canadian Forensic Team concluded that the AAIAB was “evasive” and presented a “highly selective explanation of events” that fell well short of providing a credible explanation of how and why Flight PS752 was shot down. The Canadian Forensic Team emphasized that gaps remained in its knowledge and that only Iran had full access to the evidence, witnesses, and the individuals involved in the disaster. It called on Iran to provide a full and credible accounting of the event.
[34] The Canadian Forensic Team Report is the best evidence before me of what happened to Flight PS752. Both parties submitted that I should rely on it. I agree. I rely on it and, with more caution, some of the Iranian government’s statements to make the following findings about what happened to Flight PS752.
[35] Even measured against the long and complicated relationship between Iran and the United States of America, tensions between the states increased in the months leading up to January 2020. On January 3, 2020, the United States launched a drone strike in the territory of the Republic of Iraq that targeted and killed Major General Qassem Soleimani and at least nine other persons, including members of Iraqi state forces.
[36] Gen. Soleimani was the commander of Iran’s Islamic Revolutionary Guard Corps (“IRGC”), Quds Force. The mission of the IRGC is to defend the regime and its system of government from foreign and domestic threats and “remains the main actor influencing and implementing Iran’s security policy.” The Canadian Forensic Team describes the role of the IRGC within the Iranian power structure as follows:
Iran’s constitution sets out the distribution of power in the country. The Supreme Leader is the commander-in-chief of the armed forces with the power to declare war and peace, approve military operations, and exercise command and control (C2). When the Supreme Leader decides to use military force, he informs the Supreme Council for National Security, which alerts the Armed Forces General Staff (AFGS) and Khatemolanbia Central Headquarters (KCHQ) The AFGS and KCHQ pass orders to the regular military (Artesh) or the Islamic Revolutionary Guard Corps (IRGC), which transmit them to respective military services’ chain of command. As demonstrated above, the AFGS technically oversees the IRGC.
The IRGC remains the main - but not the only - actor influencing and implementing Iran’s security policy. Civilian government offices, departments and agencies, including the President and the Ministry of Foreign Affairs, have less influence than the IRGC over decisions in theatres where Iran’s interests are primarily in the security realm. However, these actors have more influence over decisions relating to Iran’s relations with the international community.
Like many bureaucracies, Iran’s system features a division of roles as well as overlapping authorities. Within its military, the Artesh focuses on national defence against external threats; while the mission of the IRGC is to defend the regime and its system of government from any threat, foreign or domestic. Each has their own ground, naval, air, and air defence forces, according to open-source reporting.
Given this dual military structure divided between the Artesh and the IRGC, questions such as who has effective control over Iran’s airspace during periods of heightened alert are hard to answer definitively. Moreover, what remains unclear is not only how well both the Artesh and the IRGC coordinate among themselves but also how they interact with civil authorities such as the Ministry of Roads and Urban Development, particularly on questions of airspace management during times of crisis.
[37] I am satisfied, for the purposes of this motion, that the IRGC forms part of the Iranian state apparatus. If I had considered the opinion of Dr. Rezaei, I would have reached the same conclusion.
[38] On January 8, 2020, in retaliation for the killing of Gen. Soleimani, Iran fired ballistic missiles at two Iraqi airbases used by the United States, including the airbase from which it launched the drone strike that killed Gen. Soleimani. Anticipating a response from the United States, Iran relocated mobile surface-to-air missile units to temporary locations, including close to the Imam Khomeini Airport in Tehran (“IKA”). The air defence system was placed on a higher level of alertness.
[39] At 06:12 local time, approximately four hours after Iran launched the missiles at the airbases in Iraq, Flight PS752 took off from IKA. Two minutes later, an Iranian surface-to-air missile operator fired a missile at PS752. Thirty seconds after that, the same operator fired a second missile at PS752. The first missile hit the plane. The second missile may or may not have hit the plane, but that did not matter. The plane was terribly damaged and engulfed in flames. Six minutes after takeoff, PS752 crashed into the ground and exploded, killing all 176 passengers and crew members on board.
[40] Iranian officials and ministries initially denied that it shot down the plane and claimed that PS752 crashed due to a fire in its engine or other technical issues. However, by the evening of June 10, 2020, facing the publication of irrefutable evidence, Iranian officials admitted that the military had shot down the plane due to human error. Iranian President Hassan Rouhani tweeted the following statement:
Armed Forces’ internal investigation has concluded that regrettably missiles fired due to human error caused the horrific crash of the Ukrainian plane & death of 176 innocent people. Investigations continue to identify & prosecute this great tragedy & unforgivable mistake. #PS752.
[41] On March 15, 2021, the AAIAB released its final report, which represented Iran’s most comprehensive account of the event. The Iranian report stated that Flight PS752 was misidentified as a perceived hostile target, and the operator fired the missiles at the plane because:
a. the surface-to-air missile unit was misaligned 105 degrees off north due to “human error,” which resulted in the operator observing the detected target direction inaccurately;
b. defective communication occurred between the missile unit and the Coordination Center;
c. the missile operator misidentified Flight PS752 as a hostile target; and
d. the missile operator failed to follow military command procedure for missile launch and fired the two missiles without approval.
[42] The Canadian Forensic Team assessed these claims and determined that they provided an incomplete explanation of events. The Canadian Forensic Team, however, found no evidence that the downing of Flight PS752 was premeditated. It concluded that Iran was ultimately responsible for the acts and omissions that led to the missiles bringing down the plane and “was responsible for failing to protect these civilian lives”. The Canadian Forensic Team concluded:
Given the totality of information available, the Forensic Team concludes that a series of acts and omissions by Iranian civil and military authorities caused a dangerous situation where previously identified risks were underestimated and not taken seriously. These acts and omissions were both in the development and the implementation of plans, systems and procedures.
[43] In support of its conclusion, the Canadian Forensic Team made three key findings.
[44] First, Iran failed to take adequate or appropriate measures to ensure the safety of its airspace or to notify airlines of the risks posed by the increasing tensions and the decision to place anti-aircraft systems on high alert. Iran’s plan to protect civilian aircraft was severely flawed and there was a clear and present danger to civil aviation. The risk levels were assessed inadequately and were much higher than Iran admitted. Iran kept its airspace open to civil aircraft and indicated that it would have closed the airspace “in the event of a conflict.” The only risk mitigation measure implemented by Iran that applied to Flight PS752 was to require coordination with the air defence sector prior to permitting take-off. This did not meet internationally recognized standards for ensuring airspace safety. Further, Iran did not provide airlines with pertinent threat-related information to permit airlines to assess if it was safe to fly.
[45] Second, while the act of shooting of the missiles was deliberate and intended, it is unlikely that the operator knowingly shot down a civilian airliner. The Canadian Forensic Team found no information to contradict that Iranian claim that the missile operator misidentified Flight PS752 as a hostile target and fired without receiving the necessary approvals from command and control. It is unlikely that the missile operator would have been authorized to launch missiles without approval from his command. There was no evidence that Iranian officials ordered the operator to shoot at Flight PS752 or that it was premeditated. A misalignment in the radar of 105 degrees should have been detected and corrected in the context of military operations. Iran did not address the broader questions raised about the proficiency and training of the operator and the role of the military in creating this situation. In these circumstances, the international aviation community cannot be assured that a similar tragedy will not happen again.
[46] Third, despite the actions and errors of the missile operator, the shoot-down could have been prevented by a properly functioning command and control operation. The Canadian Forensic Team concluded that “but for a number of deficiencies in planning, mitigating risk and decision making, Flight PS752 would not have been targeted” by the missile operator. The Forensic Team concluded that deficiencies in the missile operator’s immediate command and control chain “played a critical role in the shoot-down and the [missile] operator’s superiors very likely missed numerous opportunities to prevent the downing.” Deficiencies in the “tactical level of command…contributed to creating the conditions in which the [missile] operator could make such a faulty decision.” The misalignment of the unit should have been detected and the unit taken off-line until it was corrected. Communications failures, if they existed, may have been caused by capacity inadequacies. The Iranian report was deficient for failing to provide substantive information on military activities that should have prevented the downing of Flight PS752.
[47] I must decide this motion based on the evidence before me. Having considered all of the evidence, and viewing the statements of Iran and the AAIAB with caution, I make the following findings of fact:
a. The missile operator did not know that he was shooting at a civilian airliner;
b. The missile operator thought that he was shooting at an incoming missile;
c. The Iranian military authorities did not delegate to the missile operator the authority to launch missiles without approval from command;
d. No Iranian official ordered the operator to shoot the missiles and the operator did not have the necessary approvals to fire the missiles;
e. The missile attack on Flight PS752 was not premeditated; and
f. A properly functioning military command and control operation would have prevented the attack on Flight PS752.
[48] Based on these findings of fact, I will now consider if Arshia’s death is a loss that is covered by the insurance policy or is excluded from that coverage.
Principles of interpretation for insurance contracts
[49] Insurance contracts must be interpreted as other contracts, in the light of surrounding circumstances, in order to determine the intent of the parties. However, insurance contracts are a special category of contracts, which are often formed in a situation of markedly uneven bargaining power. The Supreme Court of Canada described the principles applicable to interpreting insurance policies in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 49 to 52; Progressive Homes Ltd. v. Lombard General Insurance Co. of Canada, 2010 SCC 33, [2010] 2 S.C.R. 245, at paras. 23, 24, 26-29; Co-operators Life Insurance Co. v. Gibbens, 2009 SCC 59, [2009] 3 S.C.R. 605, at paras. 25-27; Non‑Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, at para. 71; Consolidated‑Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 10 (SCC), [1980] 1 S.C.R. 888, at pp. 900-902.
[50] In Sam's Auto Wrecking Co. Ltd. (Wentworth Metal) v. Lombard General Insurance Company of Canada, 2013 ONCA 186, 114 O.R. (3d) 730, at para. 37, Laskin J.A. well-summarized the law:
The principles for interpreting insurance policies, and in particular exclusion clauses, are well-established. The policy should be interpreted to promote a reasonable commercial result; provisions granting coverage ought to be construed broadly; provisions excluding coverage ought to be construed narrowly; in the case of ambiguity, the interpretation most favourable to the insured should be adopted; and even a clear and unambiguous clause should not be given effect if to do so would nullify the coverage provided by the policy.
[51] The plaintiffs have the obligation to establish that the loss claimed falls within the initial grant of coverage. The onus then shifts to the insurers to establish that an exclusion to the coverage applies: Progressive Homes, at paras. 26 to 29.
Are the insurers required to pay the death benefit to Arshia’s estate?
[52] The insurers accept that Arshia’s death falls within the initial grant of coverage. He was eligible for coverage within the provisions of Section I – Eligibility and Coverage Period. He suffered a covered loss due to death arising from a common carrier accident, within the meaning of Section III – Benefits, paragraph 20 – Common Carrier Accident. Unless the loss is related to an excluded claim, the insurer is obliged to pay $100,000 to Arshia’s estate.
[53] The burden now shifts to the insurers to demonstrate that the case falls within an exclusion. In this case, the insurers rely on the exclusion contained in paragraph 9 of Section IV – Exclusions:
This policy does not cover losses or expenses related in whole or in part, directly or indirectly to any of the following: …
- an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority.
[54] The insurers rely on only two exclusions:
a. losses related to an act of declared or undeclared war; and
b. losses related to an act of military or usurped power.
Act of declared or undeclared war
[55] The insurers submit that the loss is excluded because it was caused by “an act of declared or undeclared war” within the meaning of the paragraph 9 exclusion. For the reasons that follow, I disagree.
[56] First, the insurers submit that the loss should be considered an act of declared war. However, as counsel for the insurers conceded in response to my question during oral argument, neither the United States nor Iran had declared war against the other at the time of the loss or at any time thereafter. In the absence of a formal declaration of war, I find that the insurers have not demonstrated that the loss is excluded as an act of declared war.
[57] Second, the insurers submit that the loss should be considered an act of undeclared war, “given that it took place in the midst of escalating tensions” between the governments of Iran and the United States and while Iran was preparing for a retaliation by the United States. The insurers submit that the death “fits within the plain and ordinary meaning” of an act of undeclared war but acknowledge that this assessment requires an inquiry into the “broader geopolitical context” associated with the event.
[58] In their submissions, the insurers relied on a dictionary definition of war being “a state of usually open and declared armed hostile conflict between nations.”
[59] While I accept that international law norms may not be determinative, I think it is helpful to consider how Agnès Callamard, the Special Rapporteur on extrajudicial, summary, or arbitrary executions, described the tensions between Iran and the United States. On August 15, 2020, the Special Rapporteur submitted a report titled “Use of Armed Drones for Targeted Killings” to the United Nations General Assembly Human Rights Council pursuant to Council resolution 35/15. This report formed part of the record before me. The Special Rapporteur addressed the issue of targeted killings using armed drones, particularly in light of the proliferation in the use of drones and their expanding capability, and made recommendations designed to regulate and enhance accountability for the use of drones for targeted killings.
[60] The Special Rapporteur paid special attention to the decision of the United States to use a drone strike to kill Gen. Soleimani in January 2020 because it marked the first time that a state-armed drone targeted a high-level official of a foreign state on the territory of a third state. The Special Rapporteur described this as a “significant development and an escalation” of the use of drones. She conducted a legal and policy analysis of the killing of Gen. Soleimani as a “case study” to illuminate the concerns addressed in her report.
[61] The Special Rapporteur considered if the drone strike either initiated or took place as part of an international armed conflict between the United States and Iran. She noted that neither the United States of America nor Iran took any action or made any statement that suggested that either state considered themselves to be at war and that, in the absence of such statements, it was unreasonable to suggest that there was an international armed conflict, or IAC, underway:
Third, in the months preceding the strike, neither the US nor Iran spoke of their being in armed conflict with the other, preferring instead to speak of, or warn against, escalation. Following the Soleimani strike, the US administration officially declared that the "United States is not currently engaged in any use of force against Iran," and that following the strike and Iran's response, "there have been no further uses of force between Iran and the United States". Iran's foreign minister declared the strike an "act of terrorism," and Iran promised revenge. But no action or statement has been made suggesting that either State considered themselves to be at war, either before or after the strike against General Soleimani.
It is well established that a formal declaration of war is not necessary for an IAC to be in effect. It is equally established that an IAC may be triggered notwithstanding the positions to the contrary of the parties to the conflict. Nevertheless, it is reasonable to expect, at the very least, some debates of the issue in the countries concerned and/or internationally. It is somewhat unreasonable to argue retroactively that an IAC between Iran and the United States had been waged for several days, weeks or months prior to the killing in question.
[62] It is important to note that states may engage in an international armed conflict without a formal declaration of war. Armed conflict between states short of a declared war may constitute an international armed conflict. The Special Rapporteur, however, concluded that the United States and Iran were not involved in an international armed conflict before or after the drone strike in Iraq that killed Gen. Soleimani:
- The US and Iran had not been and have not been considered to be involved in an IAC before or after the strike and the strike occurred in a civilian setting in an area outside of active hostilities and in a non-belligerent State.
[63] I accept the finding of the Special Rapporteur that Iran and the United States were not involved in an international armed conflict before or after the drone strike that killed Gen. Soleimani and the Iranian ballistic missile response. This is strong evidence that Arshia’s death should not be excluded from coverage as related to an act of undeclared war.
[64] Moreover, I do not think that the shooting down of Flight PS752 was an act of war (declared or undeclared). To be an act of war, it is not enough that the act occur during a period of hostilities or that the act is one committed by a member of the military during a period of hostilities. I agree with the insurers that the causation inquiry stops at the efficient physical cause of the loss: Pan American World Airways, Inc. v. Aetna Cas. and Sur. Co. (1974), 505 F.2d 989 (2d Cir.), at p. 1006. However, properly understood, the cause of the plane crash was not an act of war.
[65] It is helpful to contrast this case with the case law arising from the infamous sinking of the British steamer the Lusitania. In 1914, Britain declared war on Germany. On February 4, 1915, the Imperial German Government issued a proclamation declaring the waters surrounding Great Britain and Ireland, including the whole English Channel, to be a war zone. The proclamation declared that every enemy merchant ship found in the war zone would be destroyed.
[66] On May 1, 1915, the Lusitania set sail from New York for Liverpool. At the time, the ship was unarmed and carried non-combatants and many citizens of the United States, which at the time was a neutral country. As between the German and British Governments, however, the Lusitania was “an enemy ship as to Germany.” The Lusitania “sailed, undisguised, with her four funnels and a figure so familiar as to be readily discernible, not only by naval officers and mariners, but by the ocean-going public generally”: Re: The Lusitania (1918), 251 F.715 (S.D.N.Y.), at p. 721. On May 7, 1915, the Lusitania was struck by two torpedoes launched from German submarines. The attack was found to have been “deliberate, and long contemplated, and intended ruthlessly to destroy human life, as well as property”: Re: The Lusitania, at p. 732.
[67] The torpedo attack on the Lusitania killed 1,195 passengers and crew. Among the dead was an American man named Alfred G. Vanderbilt. The estate of Mr. Vanderbilt brought an action on his life insurance policy: Vanderbilt v. Travelers’ Ins. Co. (1920), 112 Misc. 248, 184 N.Y.S. 54. The insurers declined payment, relying on an exclusion that read “Nor shall this insurance cover…death…resulting directly or indirectly, wholly or partly, from…war or riot.”
[68] Although Mr. Vanderbilt was not a combatant, and was a citizen of a neutral country, the court held that the loss was excluded from coverage because the death resulted from an act of war. The court held at p. 252:
The concessions of the parties that the Lusitania was sunk in accordance with instructions of a sovereign government, by the act of a vessel commanded by a commissioned officer of that sovereign government, being then operated by that said officer and its crew, all of whom were part of the naval forces of the said sovereign government, and that war was then being waged by and between Great Britain, the sovereign controlling the Lusitania, and Germany, the sovereign controlling the submarine vessel, control the conclusion which must be reached that the casualty resulted from war and that the consequences of the casualty come within the excepted portions of the policy.
[69] The contrast between the sinking of the Lusitania and the downing of Flight PS752 is striking. The plane was operated by Ukrainian Airlines, which was not engaged in any hostilities with Iran. 146 of the passengers killed were travelling on Iranian passports at the time of their death. The airplane was not flying in space that Iran had declared to be a war zone. Iran had not warned that civilian planes in its airspace would be shot down, indeed it cleared Flight PS752 for take-off. The airplane was not readily identifiable to the missile operator as the Lusitania was to the submarine captain.
[70] The shoot-down of the airplane was not deliberate, long-planned, and intended to destroy human life. The missiles were not launched at PS752 in accordance with the instructions of a sovereign government. The missiles were not launched by an operator to whom the government had delegated the authority to make the decision to fire the missiles. Although the Iranian government initially denied responsibility for the downing of the plane, within days, Iranian President Hassan Rouhani tweeted that the “great tragedy and unforgivable mistake” had been caused by human error. This is not how a sovereign government describes its acts of war. None of the features that caused the court to find that Germany sank the Lusitania as an act of war are present here.
[71] In addition, The Canadian Forensic Team concluded that a properly functioning military command and control operation would have prevented the attack on Flight PS752. I accept that conclusion and find that it is fundamentally inconsistent with characterizing the downing of Flight PS752 as an act of war.
[72] Because this is an exclusion clause, I must interpret it narrowly: Sam’s Auto Wrecking, at para. 37. There are other ways the insurer could have attempted to exclude this loss from coverage. For example, the exclusion clauses considered in Universal Cable Productions, LLC v. Atlantic Specialty Insurance Company (2019), 929 F.3d 1143 (9th Cir.), at p. 1148, captured military action beyond acts of declared war and undeclared war:
The relevant exclusions for our analysis are the four war exclusions:
war, including undeclared or civil war; or
warlike action by a military force, including action in hindering or defending against an actual or expected attack, by any government, sovereign, or other authority using military personnel or other agents; or
Any weapon of war including atomic fission or radioactive force, whether in time of peace or war.
[73] While I am not finding that the loss would have been excluded by such language, that language is not before me, it is evidence that the policy could have excluded a wider range of events than it did.
[74] For these reasons, I find that the loss is not excluded as an act of declared or undeclared war.
Military or usurped power
[75] I find it convenient to address together the insurers’ submissions about the exclusions related to military or usurped power. I will again set out the entirety of paragraph 9:
This policy does not cover losses or expenses related in whole or in part, directly or indirectly to any of the following: …
- an act of declared or undeclared war, civil war, rebellion, revolution, insurrection, military or usurped power or confiscation or nationalization or requisition by or under the order of any government or public or local authority.
[76] The insurers submit that the loss is excluded from coverage because it was related to:
a. an act of military; or
b. an act of usurped power.
[77] The insurers submit that the words “military” and “usurped power” should be interpreted to be separate and independent exclusions. The insurers submit that these words do not take any meaning from each other and should be read separately as free-standing exclusions. I disagree. For the reasons that follow, I find that those words, properly interpreted, create a single exclusion “military or usurped power.” These terms, in this order, have appeared in contracts of insurance since at least 1720: Langdale v. Mason, 1 Bennett's Fire Ins. Cas. 16, 17 (K.B. 1780).
[78] Throughout Canadian history, those terms, in this order, have appeared in a wide range of insurance contracts. See for example, Faulkner v. Central Fire Insurance Company (1841), 1841 27 (NB SC), 3 N.B.R. 279 (Q.B.); Ketchum v. Protection Insurance Company (1848), 1848 59 (NB SC), 6 N.B.R. 136 (Q.B.); Frost v. The Liverpool and London and Globe Insurance Co. (1871), 1870 70 (NB SC), 13 N.B.R. 278 (Q.B.); Bowes v. National Insurance Co. (1880), 1880 142 (NB SC), 20 N.B.R. 437 (Q.B.); Pratt v. Connecticut Fire Insurance Co. (1914), 1914 736 (BC CA), 16 D.L.R. 798 (B.C.C.A.); Givens v. Baloise Marine Insurance Co. (1959), 1959 117 (ON CA), 17 D.L.R. (2d) 7 (Ont. C.A.); Astro Tire & Rubber Co. v. Western Assurance Co. (1979), 1979 1664 (ON CA), 24 O.R. (2d) 268 (C.A.); Azevedo v. Markel Insurance Co. of Canada, 1998 ABQB 842, 234 A.R. 168; TJR Interprovincial Projects Ltd. v. Wilford Agencies (1994) Ltd., 2001 ABQB 369, 29 C.C.L.I. (3d) 278; and Braebury Development Corporation v. Gap (Canada) Inc., 2021 ONSC 6210, 158 O.R. (3d) 256.
[79] The clause “military or usurped power” has also been used from time to time in Canadian legislation: see for example, An Act to amend The Saskatchewan Insurance Act, S.S. 1942, c.26, s. 5; An Act to amend The Insurance Act, 1937, S.N.B. 1951(1), c. 23, s. 9; An Act to amend the Insurance Act, 1937, S.N.B. 1942, c. 23, s. 1; An Act to amend The Alberta Insurance Act, S.A. 1943, c. 28, s. 3; An Act respecting Conditions in Policies of Automobile Insurance, S.A. 1923, c. 45, Sch. s. 6; An Act to Secure Uniform Conditions in Policies of Fire Insurance, R.S.S. 1909, c. 80, s. 10.
[80] Although insurance companies have included this phrase in insurance contracts for a long time, courts in Canada, the United States, and Great Britain have not had many occasions to interpret them. However, when courts have considered this phrase, they have consistently interpreted it to create a single exclusion for losses caused by the military activities of a usurping power. In Pan American World Airways, a case relied on by both parties, the United States Court of Appeals for the Second Circuit explained the meaning of “military or usurped power” as follows:
Since 1720, when these terms were first used by the London Assurance Company, see Langdale v. Mason, 1 Bennett's Fire Ins. Cas. 16, 17 (K.B. 1780), the conjunction in "military or usurped power" has been construed as if it were copulative, rather than disjunctive. Thus it is not sufficient that a loss be caused either by a military power or usurped power; it must be caused by a military and usurped power. Cf. Insurance Co. v. Boon, 95 U.S. (5 Otto) 117, 127, 24 L. Ed. 395 (1877). It is also clear that "usurped power" refers to the power exercised by a usurping force. Cf. Page v. Home Insurance Co., 48 F. Supp. 754 (S.D.N.Y.), aff’d 139 F.2d 231 (2d Cir. 1943). The clause 1 exclusion, in plain modern English, secures the all risk insurers from losses caused by the military activities of a usurping power.
[81] In the 1767 decision of Drinkwater v. The Corporation of London Assurance (1767), 95 E.R. 863 (K.B.), Bathurst J. held that military or usurped power can “only mean an invasion of the kingdom by foreign enemies or an internal armed force in rebellion and assuming the power of government, by making laws, and punishing for not obeying those laws.” The gravamen of military or usurped power is the action of an army giving its own law, silencing the law of the land. See also: Barton v. Home Insurance Co. (1868), 42 Mo. 156 (S.C.).
[82] Similarly, the Supreme Court of the United States considered the meaning of the phrase in cases arising out of the Civil War. In the case of Insurance Company v. Boon (1877), 95 U.S. 117, Union soldiers followed their leaders’ orders and deliberately set fire to military stores in City Hall to prevent the stores from falling into the hands of confederate soldiers who were threatening the city. The resulting fire caused the loss of the plaintiff’s goods and the plaintiff sued to recover under its policy of insurance. The insurer denied coverage on the basis that the loss was caused by “military or usurped power.” The plaintiff argued that the “military or usurped power” exemption could not apply in this case because their property was destroyed by the government’s army. At para. 4 The Supreme Court of the United States acknowledged the force of that argument:
It has been very strenuously argued that the words "military or usurped power" must be construed as meaning military and usurped power; that they do not refer to military power of the government, lawfully exercised, but to usurped military power, either that exerted by an invading foreign enemy, or by an internal armed force in rebellion, sufficient to supplant the laws of the land and displace the constituted authorities. There is, it must be admitted, considerable authority, and no less reason, in support of this interpretation.
[83] The Supreme Court of the United States, however, concluded, at para. 4, that the claim was excluded from coverage because the fire happened by means of the rebel invasion and military or usurped power, even if the Union soldiers lit the flame:
In our view of the present case, however, we are not called upon to affirm positively that such is the true meaning of the words in the connection in which they were used in the policy now under review; for, if it be conceded that it is, we are still of opinion that the fire which destroyed the premises of the plaintiffs below "happened," "took place," or occurred by means of a risk excepted in the policy. In other words, it was caused by invasion, and the usurped military power of a rebellion against the government of the United States, as the contracting parties understood the terms "invasion" and "military or usurped power.”
[84] On the basis of the interpretations set out above, I find that the loss is not excluded as having been caused by “military or usurped power.” The operator who fired the missile did not usurp the power of the military within the meaning of that phrase as interpreted above. He acted without instructions from his commander but that is not the same as usurping the power of the state. The IRGC is an element of the Iranian state and, on the evidence before me, it also did not act as a usurping power.
[85] The insurers offer this definition of usurped power:
Usurped Power — a phrase common in insurance policies since the 18th century—and still found in standard war exclusions—that refers to an organized military operation, either foreign or domestic, that seizes the powers legally conferred upon a government. It is distinguished from insurrections and mob uprisings by the requirement that an organized military force must be used. Losses stemming from usurped power, like other related losses attributable to war, are excluded from most forms of commercial insurance.
[86] Even if I adopted the insurer’s definition, I would not exclude this loss. Based on the facts that I have found, there is nothing about this tragedy that suggests that any powers legally conferred upon the government were seized by an organized military operation.
[87] For these reasons, I find that the loss is not excluded as being caused by military or usurped power.
Terrorism
[88] Arshia’s estate submits that the plane was downed through an act of terrorism and that losses caused by terrorism are not excluded from coverage. In oral argument, the defendants conceded that, if the loss was caused by an act of terrorism, the loss would not be excluded from coverage.
[89] The plaintiffs rely on the decision of Belobaba J. in Zarei v. Iran, 2021 ONSC 3377, 67 C.P.C. (8th) 44. In that case, the plaintiffs brought an action against the Islamic Republic of Iran, the IRGC, and the other named Iranian defendants to establish their liability for shooting down Flight PS752.
[90] The primary defendant in the action was a foreign state, which was immune from the jurisdiction of any court in Canada, except as provided by the State Immunity Act, R.S.C., 1985, c. S-18. The State Immunity Act, together with the Justice for Victims of Terrorism Act, S.C. 2012, c. 1, s. 2, permit civil claims against foreign states for losses caused by the state’s “terrorist activity”. In their fresh as amended statement of claim, the plaintiffs alleged that the Iranian defendants’ attack on Flight PS752 was an intentional act of terrorism.
[91] On September 7, 2012, under Section 6.1(2) of the State Immunity Act and the requisite Order-in-Council, Iran was listed as a foreign state sponsor of terrorism. As the Court of Appeal for Ontario explained in Tracy v. Iran (Information and Security), 2017 ONCA 549, 415 D.L.R. (4th) 314, at para. 46:
A plain reading of the Justice for Victims of Terrorism Act, together with the contemporaneous amendments to the State Immunity Act, establishes that Iran’s immunity from civil proceedings related to terrorism was lifted in September 2012, exposing them to liability for acts of terrorism they supported that occurred on or after January 1, 1985.
[92] Justice Belobaba held that under the Acts, the plaintiffs were permitted to sue the Iranian defendants for shooting down Flight PS752 if they could establish that the missile attacks were actions that would be punishable in Canada under any of ss. 83.02 to 83.04 and 83.18 to 83.23 of the Criminal Code, R.S.C., 1985, c. C-46.
[93] Justice Belobaba concluded that the Criminal Code defined terrorist activity to include an intentional act that causes damage to an aircraft in service that renders the aircraft incapable of flight, provided that the act was not committed during an armed conflict. He reviewed the evidence before him and concluded that the shoot down was intentional and did not take place during an armed conflict.
[94] In reaching his conclusion, Belobaba J. relied “mainly on the expert reports filed by the plaintiffs.” These reports do not form part of the evidentiary record before me on this motion. Justice Belobaba held:
[42] I rely mainly on the expert reports filed by the plaintiffs. The expert reports are detailed in their analyses and unequivocal in their conclusions. In the opinion of Dr. Jeldi, an Iranian analyst with the Canadian Society for Persian Studies, “the IRGC knew Flight PS 752 was a civilian airplane and purposefully shot it down with the intent to destroy it.” Dr. Jeldi explains:
Considering the TOR-M1 advanced military capabilities, two radars and control system, pre-approved flight plans and control of the airspace resting with the IRGC, and the firing of not one, but two missiles, it is not possible for two missiles to be fired by mistake as IRGC claims. There are multiple redundant systems and procedures to prevent accidental shooting of civilian aircraft. Also, the IRCG did not target the other aircraft in flight at the same time. The military in Iran controlled the airspace and aircraft within that space and knew that Ukraine International Airways PS 752 was a civil aircraft and was not hostile.
In my opinion, based upon the research I have conducted, the documents reviewed and listed and my experience, the Islamic Republic of Iran, IGRC and other parties listed as defendants in this claim planned and deliberately committed the intentional act of shooting down Ukrainian International Airlines PS 752 on January 8, 2020.
[43] This was also the conclusion of Elireza Nader, Senior Fellow at the Foundation for the Defense of Democracies:
It is my opinion that the IRGC’s shoot down of PS752 was intentional. It is highly unlikely that the IRGC operators mistook PS752 for a U.S. missile as the Iranian government claims. It is highly unlikely that a technical “misalignment” or “human error” caused the IRGC operators to shoot down PS752. The firing of not one but two surface-to-air missiles at PS752 also reinforces the intentional nature of the IRGC’s actions.
[44] Based on these national and international reports and in particular on the detailed analyses in the Jeldi and Nader expert reports, I find on a balance of probabilities that the missile attacks on Flight 752 were intentional.
[95] The reports of Dr. Jeldi and Dr. Nader did not form part of the evidentiary record before me. In addition, their conclusions appear to be inconsistent with the report of the Canadian Forensic Team, which released its report in June 2021, which was after the date Belobaba J. released his decision.
[96] Based on the evidence before me, and as set out above, I have found that
a. The missile operator did not know that he was shooting at a civilian airliner;
b. The missile operator thought that he was shooting at an incoming missile;
c. The Iranian military authorities did not delegate to the missile operator the authority to launch missiles without approval from command;
d. No Iranian official ordered the operator to shoot the missiles and the operator did not have the necessary approvals to fire the missiles;
e. The missile attack on Flight PS752 was not premeditated; and
f. A properly functioning military command and control operation would have prevented the attack on Flight PS752.
[97] I find, on the evidence before me, that the attack on the plane was not intentional and did not meet the test for an act of terrorism.
Conclusion
[98] For the reasons set out above, I find that Arshia’s death is covered by the policy of insurance. I declare that Arshia’s estate is entitled to damages by way of payment of $100,000 being the accidental death benefit under the policy.
Are the defendants required to pay the repatriation expenses?
[99] In their notice of motion, the plaintiffs sought partial summary judgment of $125,000 comprising the accidental death benefit and:
a. Repatriation benefits to a maximum of $20,000;
b. Expense incurred for travel for members of the immediate family to a maximum of $5,000.
[100] The defendants note that the plaintiffs tendered no evidence on the motion for summary judgment to establish entitlement to the repatriation benefits or the travel expenses. In their factum, the defendants submit that:
The Plaintiffs have not delivered any documentation to the Defendants to date to suggest that they have incurred expenses associated with repatriation or travel for members of Mr. Arbabbahrami's immediate family arising from the Underlying Event. Similarly, the Plaintiffs have not delivered any evidence in the within motion to suggest that they have incurred expenses associated with repatriation or travel for members of Mr. Arbabbahrami's immediate family arising from the Underlying Event. As a result, the Plaintiffs have failed to establish that they have incurred expenses and therefore ought to be reimbursed for these expenses in accordance with the Policy's provisions.
[101] Counsel for the plaintiffs conceded that they had not filed any evidence on these aspects of the claim despite putting them in issue in the notice of motion.
[102] The plaintiffs bore the onus of proof on their motion for partial summary judgment. They were required to put their best foot forward on the motion and to lead evidence to satisfy the court that it was entitled to judgment for that part of its claim: Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 326, 30 B.L.R. (6th) 1, at para. 4; Ntakos Estate v. Ntakos, 2022 ONCA 301, 75 E.T.R. (4th) 167, at para. 38. Equally, however, the defendants did not place any evidence before me to allow me to find that the plaintiffs would not be able to demonstrate an entitlement to those expenses on a proper evidentiary record.
[103] I dismiss this portion of the plaintiffs claim without prejudice to their ability to attempt to prove this aspect of their claim at trial.
Costs
[104] If the parties are not able to resolve costs, the plaintiffs may deliver its costs submission of no more than five double-spaced pages to be emailed to my assistant on or before October 18, 2022. The insurers may deliver a single responding submission of no more than five double-spaced pages on or before October 28, 2022. No reply submissions are to be delivered without leave.
Robert Centa J.
Released: October 11, 2022
COURT FILE NO.: CV-21-00657147-0000
DATE: 20221011
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
The Estate of Arshia Arbabbahrami, Fariborz Arbabbahrami, and Arezoo Fakour
Plaintiffs
– and –
MSH International (Canada) Ltd., Ingle International Inc. o/a Intrepid 24/7, and Berkley Insurance Company
Defendants
REASONS FOR JUDGMENT
R. Centa J.
[^1]: The defendants involved in this motion are MSH International (Canada) Ltd. and Berkley Insurance Company. The names of both companies appear on the insurance policy at issue. There is evidence that Berkley underwrote the policy at issue. There is no evidence about the precise role of MSH International (Canada) Ltd., but the defendants have not raised this as an issue. I will refer to both defendants as “the insurers” throughout these reasons for decision.