Category: Coverage

Butterfield v. Intact Insurance Company, 2022 ONSC 4060

Background

The Applicant Brett Butterfield suffered a psychotic episode while visiting a firearms store in 2019. He formed the delusional belief that the store owner, Mr. Carr, had raped and murdered his female friend. Feeling threatened, Mr. Butterfield left the store, retrieved a hunting knife, and upon re-entry began stabbing the store owner in the head and neck, yelling “you raped and killed my girlfriend”, and “murderers need to be murdered”.
Mr. Butterfield underwent two forensic psychiatric assessments following his arrest. Both psychiatrists diagnosed him with schizophrenia and concluded that he was not criminally responsible, as he had not had the capacity to appreciate that the attack was morally wrong due to his delusion. At trial, the Ontario Court of Justice found that Mr. Butterfield had committed a criminal offence, but ruled that the defence of Not Criminally Responsible (“NCR”) applied.

Mr. Carr sued Mr. Butterfield for negligence because he had attended his store and applied for a firearms licence when it was reasonably foreseeable that he would injure or kill someone due to his mental illness. At the time of the incident, Mr. Butterfield held a Condominium Unit Owners’ Policy with Intact Insurance Company (“the Policy). The Policy included third party liability insurance, under which the insurer had a duty to defend and indemnify the insured against certain claims of up to a limit of $2 million. The Policy also stated that Intact did not cover claims arising from bodily injury caused by any intentional or criminal act by an insured person. Intact denied coverage to Mr. Butterfield using this exclusionary clause, stating that although his claim fell within the scope of the Policy, it was barred because his actions had been intentional and criminal in nature.

Mr. Butterfield brought an application for a declaration that Intact had a duty to defend him in the action against him. The issue at trial was whether the exclusionary clause for intentional or criminal acts applied to Mr. Butterfield’s claim.

Analysis

Justice Braid first addressed whether an intentional act or criminal act could be claimed by the respondent insurer when the Plaintiff was only suing for negligence. Referring to case law,[1] she noted that in considering an exclusionary clause of an insurance policy, the court was not limited to the allegations found in the Statement of Claim. If the negligence claimed arose from the same harm as the intentional tort, the exclusion would be found to apply. Upon review of the Statement of Claim, Justice Braid found that the negligence claim was based on the intentional tort as the damages arose directly from Mr. Butterfield’s assault.

Justice Braid then examined whether Mr. Butterfield’s actions were criminal. She stated that ‘criminal act’ as defined in the Policy referred to any breach of the Criminal Code, regardless of the intent or lack thereof to cause harm. At his criminal trial, Mr.. Butterfield had been found to have committed the crime of aggravated assault. Despite Mr. Butterfield being exempted from conviction by reason of being NCR, Justice Braid held that Mr. Butterfield’s actions satisfied the definition of a criminal act under the Policy.

Justice Braid then examined whether Mr. Butterfield’s actions were criminal. She stated that ‘criminal act’ as defined in the Policy referred to any breach of the Criminal Code, regardless of the intent or lack thereof to cause harm. At his criminal trial, Mr.. Butterfield had been found to have committed the crime of aggravated assault. Despite Mr. Butterfield being exempted from conviction by reason of being NCR, Justice Braid held that Mr. Butterfield’s actions satisfied the definition of a criminal act under the Policy.

Lastly, Justice Braid referred to two cases in determining whether Mr. Butterfield’s assault was an intentional act under the Policy.[2] The case law stated that insurance policies, in speaking of intentional acts, referred to civil responsibility instead of criminal responsibility. The test in civil law for whether an individual with a mental disorder was responsible for their tortious act asked whether they were able to appreciate the nature and consequences of the act.[3] The inability of the individual to realize that their actions were wrong did not grant relief from liability.[4] Justice Braid found that Mr. Butterfield’s words and actions demonstrated a clear intent to harm or kill Mr. Carr with his knife. She concluded that Mr. Butterfield’s actions met the definition of an intentional act.

Seetaram v. Allstate Insurance Company of Canada, 2019 ONSC 683

The respondent issued a policy of auto insurance to the applicant parents. Upon renewal of the policy, the applicant parents failed to disclose to the respondent that the applicant son was a licensed driver in their household. As of the date of the renewal, he held a G2 license. He previously held a G1 license. The applicant son was involved in a motor vehicle accident and the respondent took the position that the policy was void for the applicants’ failure to disclose a material change in risk. The applicants sought a declaration that the policy was valid, and in the alternative for relief from forfeiture from any breach of the policy on their part. The court accepted that this change was material to the respondent, who would have increased the premium almost two-fold based on a high-risk teenage male driver with a G2 license living in the household. As a result, Justice Glustein accepted that the policy was void for the applicant’s breach of statutory conditions. Justice Glustein further held that relief for forfeiture was not available to the applicants because their failure to disclose a material risk was not imperfect compliance with a policy term, rather it was non-compliance with a condition precedent.

National Art Gallery v. Lafleur de la Capitale Inc., 2018 ONSC 2921

A janitor had a fatal slip and fall incident in the course of his work at a gallery. The deceased employee’s family members commenced actions against the gallery for damages. The gallery commenced third party claims against the janitorial company. The gallery was an additional insured on the janitorial company’s CGL policy and argued that the company and its insurer had a duty to defend it. The court held that neither the janitorial company nor its insurer owed the gallery a duty to defend. The court reasoned that the allegations of fault against the gallery made in the statements of claim did not have any bearing on the janitorial company.

Liberty Mutual Insurance Company v. Cronnox Inc., 2018 ONSC 1578

The insured engineering company had two different insurers over two policy periods. Both policies were “claims made and reported” policies. A fire occurred on a project in which the insured was involved. During the first policy period, the insured received correspondence warning of intention to commence a claim against it and inviting the engineering company’s insurer to participate in testing to investigate the cause of the fire. The insured responded that it could not be liable in light of the nature of its retainer but agreed to participate in testing. During the second policy period, a statement of claim was served upon the insured with no further notice. The second policy excluded coverage for claims which the insured had notice of before the commencement of the policy period. On the basis of the “prior notice” exclusion, the court held that the insured was not entitled to coverage under the second policy.

Aviva Insurance Company v. Intact Insurance Company, 2018 ONSC 238

In cases involving “other insurance” clauses, the clauses only apply where the policies cover the same risk. In this case, the Aviva and Intact policies covered the same insured, but one was for business risks (CGL) and the other was for personal risks (homeowner’s policy). As such, the “other insurance” clauses did not apply, both insurers were primary, and they both had a duty to defend and indemnify the insured.

Horsefield v. Economical Mutual Insurance Company, 2017 ONSC 4868

The tenant of a rental home was repairing the brake line on his automobile stored in the attached garage when the gas tank fell to the floor and sparked a fire. The fire caused damage of over $150,000.00. The landlord’s insurer, North Waterloo Mutual Farmers Insurance, paid for the cost of the repair and sought indemnification from the tenant’s policy with Economical Mutual Insurance Company. Economical denied coverage on the basis of an exclusion for “claims made against [the insured] from…the ownership, use or operation of any motorized vehicle”. Justice Faieta concluded that the loss arose from the use or operation of the tenant’s vehicle and that the tenant’s policy with Economical did not cover the loss.

Oliveira v. Aviva Canada Inc. et al, 2017 ONSC 6161

A hospital employee improperly accessed a neighbour’s medical records. The employee was not in the neighbour’s circle of care. The neighbour sued the employee for mental anguish arising from intrusion upon seclusion. The hospital’s liability policy provided coverage for all employees of the hospital while acting under the direction of the hospital. The court held that the insurer owed the employee a duty to defend. The policy’s explicit provision of coverage for invasion or violation of privacy and for invasion or violation of the right of policy by definition offered coverage for highly offensive conduct, which logically must cover access to records outside of the circle of care.