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Criminal Act Exclusion May Not Apply Where Perpetrator is Mentally Disordered
Published in the June 2008 issue of Litigation Notes - View Article
Synopsis: The Ontario Superior Court considers whether a delusional man who burned his own home committed a criminal act which resulted in loss of insurance coverage under his homeowner’s policy
The Ontario Superior Court considered whether a delusional man who burned his own home committed a criminal act which resulted in loss of insurance coverage under his homeowner’s policy. The judge refused the insurer’s motion for summary judgment, concluding that a full trial was necessary to decide the issue.
Mihal Cipkar was killed by a serious fire that he set at the home of his wife, Anna Cipkar. Mr. Cipkar had recently been charged with assaulting his wife and was ordered not have any contact with her or go near their home. The fire investigation by both the fire department and the police concluded that the fire was intentionally set by using gasoline. Mr. Cipkar died before any criminal charges were commenced against him.
Mrs. Cipkar subsequently made a fire loss claim under her homeowner's insurance policy issued by RBC General Insurance (“RBC”). RBC denied coverage on the basis that the policy specifically excluded the loss from coverage because Mr. Cipkar was a named insured under the Policy and had set the fire. Mrs. Cipkar brought an action against RBC for breach of the Policy. She admitted in the proceeding that her husband started the fire. RBC brought a motion for summary judgment arguing that, given the undisputed facts surrounding the fire and the clear, unambiguous wording of the exclusion in the Policy, there was no serious issue for trial.
The exclusion clause in issue in the Policy provides as follows:
“We do not insure loss or damage to your property that is caused by:
(j) your intentional acts, your criminal acts, your failure to act, or the intentional acts or failure to act by any other person under your direction.
This exclusion applies to all persons insured under this policy, even though the intentional/criminal act is by only one or more of the other persons insured under this policy.”
Both parties filed expert affidavits with opinions on Mr. Cipkar's mental state at the time of the fire, based on the review of Mr. Cipkar's hospital records before and after the fire.
Mrs. Cipkar's experts (a psychologist and a psychiatrist) deposed that, had Mr. Cipkar been charged criminally for the fire, it was more likely than not that he would have been found not criminally responsible by reason of a mental disorder. Their opinion was that, at the time of the fire, it was "highly probable" that Mr. Cipkar's behaviour was a reflection of paranoid delusions and he therefore lacked the requisite intent to commit the act of arson.
RBC's expert (a forensic psychiatrist) on the other hand was of the opinion, based on a review of the same material, that there was no evidence to suggest that Mr. Cipkar did not appreciate the nature and quality of his act at the material time. In the expert's opinion, Mr. Cipkar took a rational series of actions and was clearly able to and did intend the injuries that resulted from his actions.
On the motion, RBC relied only on that part of the exclusion that refers to "your criminal acts". It conceded that it could not obtain summary judgment on the basis of the exclusion for "your intentional acts" because the expert evidence was divided. Summary judgment is not available where oral evidence is needed to decide disputed facts. RBC argued that the words "criminal acts" do not require proof of intent.
A number of courts have held that intention is not a required element of the criminal act under such an exclusion for at least two reasons. First, the word “or” is disjunctive: the word "intentional" does not modify “criminal”. Second, if the criminal act must be intentional, there would be no need to include the "criminal act" wording. The intentional act portion of the exclusion would apply, and the “criminal act” wording would be superfluous. An insurance contract is not to be interpreted so as to render terms meaningless.
For the judge in this case, the issue was this: “If Mr. Cipkar was suffering from a mental disorder at the time of the fire to the extent that he would not have been held criminally responsible under the Criminal Code, would such a finding mean that he did not commit a "criminal act" within the meaning of the exclusion in the Policy?”
The judge noted that a verdict of not criminally responsible is neither a verdict of guilt nor of acquittal. Rather it is an acknowledgement that people who commit criminal acts under the influence of a mental disorder should not be criminally responsible for their acts in the same way as sane people are. Notwithstanding that conclusion, the judge held that a question remains whether such an act would constitute a criminal act within the meaning of the exclusion in the Policy.
The judge dismissed RBC’s motion, stating that this question should only be decided on the basis of a full evidentiary record at trial.
Cipkar v. RBC General Insurance Co., [2008] O.J. No. 1974