Insurer correctly relied on intentional or criminal act exclusion clause in denying coverage: court
In a recent case, the Ontario Superior Court of Justice has ruled that an insurer properly invoked the exclusionary clause placed in an insurance policy when it denied coverage to a schizophrenic man involved in a knife attack.
In Butterfield v. Intact Insurance Company, 2022 ONSC 4060, the applicant, Brett Butterfield, is insured by the respondent, Intact Insurance Company, pursuant to a condominium unit owners policy. The policy includes third-party liability insurance, which imposes a duty on the respondent to defend and indemnify the applicant against certain claims up to a limit of $2 million.
The policy also includes an exclusion clause stating that the respondent does not insure claims arising from bodily injury or property damage caused by an intentional or criminal act by the applicant.
In 2019, the applicant suffered a psychotic episode while at a firearms store. He stabbed the store owner, Dean Carr, in a “deluded belief” that he was defending himself and his family. He was charged with aggravated assault but found “not criminally responsible” due to his schizophrenia.
Carr then sued the applicant for negligence in attending his store and applying for a firearms licence when it was reasonably foreseeable that he would injure or kill someone. He sought damages in the amount of $600,000. The applicant sought to be defended by the respondent in the lawsuit. The respondent denied coverage based on the intentional or criminal act exclusion clause in the policy.
The applicant commenced an application to declare that the respondent had a duty to defend him. He argued that there was no mention of intentional or criminal acts in the statement of claim made by Carr. Thus, the claim was solely based on negligence and did not fall within the exclusions.
In dismissing the application, the Superior Court found that the respondent correctly relied on the intentional or criminal act exclusion clause in denying coverage and refusing to defend the applicant.
The court first determined the nature of Carr’s claim against the applicant. Based on his statement of claim, the alleged negligence claim was based on the same harm as an intentional tort of assault if it had been pleaded, the court said. Thus, while the applicant may have been negligent in applying for the firearms permit, “there is no causal link between that negligence and the damages sought without the intentional tort of assault.”
“A plaintiff cannot convert the intentional tort of assault into an action in negligence solely to ensure that the defendant’s insurer will provide the necessary ‘deep pocket’ to make a judgment recoverable,” Justice Catrina Braid wrote. “The negligence claim is derivative of an intentional tort, which is the true nature of the claim.”
The court then proceeded to determine whether the applicant’s actions during the knife attack were both criminal and intentional.
The court found that the damages claimed in the action were caused by a criminal act of the applicant. When an accused person is found to have committed a crime while suffering from a mental disorder that deprived them of the ability to understand the nature of the act, the court said that the judge shall render a verdict that the accused committed the act but is “not criminally responsible.”
But before a finding of “not criminally responsible” is made, both the actus reus and the mens rea of the offence must have been established.
According to the court, the actus reus and mens rea of the offence of aggravated assault had been proven beyond a reasonable doubt when the trial judge found that the applicant committed the criminal act and held him “not criminally responsible.”
The court also determined that the applicant intended to injure or kill Carr with a knife based on the following circumstances: First, he left the store and went to retrieve a hunting knife. Second, he returned to the store with the knife in hand. Third, he walked up to Carr and stabbed him, yelling that he needed to be murdered.
“The applicant understood the physical nature and consequences of his act,” Justice Braid wrote. “He clearly did not appreciate that what he was doing was morally wrong given the schizophrenia diagnosis, but that does not change the fact that his actions were intended to harm Mr. Carr.”
