Library:
Case Comment: Eichmanis v. Wawanesa Mutual Insurance Company
Published in the September 2007 issue of Transportation Notes - View Article
The Supreme Court recently refused leave to appeal, with costs, in an action involving the interpretation of a home insurance policy. A central question in that action was whether an act of criminal negligence causing bodily harm is a “criminal act” within the meaning of an exclusion clause in the policy.
RP was a troubled teenager who, at the time of the incident, was living with his aunt and uncle while his father resided in a rehab facility. RP broke into his father’s house with some friends. While showing off his father’s guns, RP aimed a rifle at his friend RE. The firearm accidentally discharged, striking RE in the abdomen and causing permanent and serious injuries.
RP subsequently pled guilty in Youth Court to a charge of criminal negligence causing bodily harm. RE brought a civil action against RP and was awarded damages against RP and his father. The judgment was unsatisfied and pursuant to s. 132 of the Ontario Insurance Act, which permits recovery of an unsatisfied judgment against the debtor’s insurer, RE initiated proceedings against The Wawanesa Mutual Insurance Company (“Wawanesa”) and Commercial Union Canada (“CU”), the insurers of RP’s aunt and uncle and his mother, respectively. RP’s father was uninsured.
The motions judge held that RP was not insured under the CU policy and this was upheld on appeal. However, the motions judge’s finding that RP was insured under the Wawanesa policy and that the exclusion clause did not apply was overturned on appeal.
The main issue on appeal was the interpretation of an exclusion clause in the Wawanesa policy which excluded coverage for actions brought against the insured for “bodily injury or property damage caused by any intentional or criminal act or failure to act by… any person insured by this policy; or any person at the direction of any person insured by this policy.”
The motions judge held that the intentional act exclusion clause did not apply as the insurers must demonstrate an “intentional act plus an intent to injure”, and that RP’s pointing of the gun was intentional but the discharge of the gun was accidental. The judge also held that the criminal act exclusion did not apply. She determined that RP’s conviction for criminal negligence was not caught by the exclusion, as criminal negligence is a subset of negligence and not a “criminal act”. Ultimately, the motions judge relied on s. 118 of the Insurance Act which provides, in short, that unless the contract provides otherwise, any contravention of any law does not by that fact alone, render unenforceable a claim for indemnity under an insurance contract, except where the contravention is committed by the insured with “intent to bring about loss or damage”.
The Ontario Court of Appeal held that RE’s injuries were clearly caused by RP’s criminal act and that RP had acknowledged committing the criminal act by pleading guilty to, and being convicted of, criminal negligence causing bodily harm. The Court had some interesting comments regarding the correct interpretation of the exclusion: “I appreciate that the result of this appeal may appear to be harsh. However, where the language of a contract is unambiguous, as in my view it is in this case, courts should not give it a meaning different from that expressed in clear language, unless the contract is unreasonable or is contrary to the intention of the parties.”
The Ontario Court of Appeal found that the language of the exclusion is disjunctive, therefore an act of an insured that causes injury is excluded when it is either an intentional act or a criminal act. Further, the Court held that the motion judge’s interpretation of “criminal act” as applying only to criminal acts intended to cause injury rendered the phrase “criminal act” superfluous – if the insurer intended to exclude only criminal acts where the insured intends to cause injury then this could be achieved by merely excluding intentionally caused injuries. The phrase “criminal act” was held to include any breach of the Criminal Code including criminal negligence. Finally, the Ontario Court of Appeal held that the motions judge wrongly interpreted s. 118 of the Insurance Act, by failing to consider the phrase “unless the contract otherwise provides” which permits the existence of the exclusion clause in the Wawanesa policy.
This appeal decision is a good example of the court refusing to be swayed by the harsh impact of an exclusion clause on an injured person. The insistence that an insurance contract is not to be interpreted so as to render its terms meaningless is welcome.
Ryan Eichmanis v. Wawanesa Mutual Insurance Company, et al., 2007 ONCA 92; leave to appeal by Eichmanis denied with costs to Wawanesa, SCC Docket 31977