A violent knife attack in a firearms store leads to a civil action by the victim against the attacker. A criminal proceeding found the attacker not criminally responsible for his conduct due to mental illness.
In the civil action, does the attacker’s home insurer have a duty to defend him against allegations framed as negligence?
In the recent case of Butterfield v. Intact Insurance Company, 2022 ONSC 4060 [Butterfield], Ontario Superior Court Justice D. Braid concluded the insurer was under no duty to defend the insured against criminal and intentional acts masquerading as negligence claims because those claims were excluded under the policy.
In 2019, Mr. Butterfield entered a firearms store and applied for a firearm license when he suddenly suffered a psychotic episode. He then left the store and returned with a hunting knife and proceeded to stab the store owner (the “Store Owner”) in the honest but deluded belief he was defending himself and his family (the “Attack”).
The Attack led to Mr. Butterfield being criminally charged with aggravated assault. After his arrest, two forensic psychiatric assessments diagnosed him with schizophrenia and concluded that due to his mental disorder, Mr. Butterfield did not know that stabbing the Store Owner was morally wrong. In his criminal proceeding, Mr. Butterfield admitted to stabbing the Store Owner, but took the position he did not appreciate that stabbing the Store Owner was wrong. The criminal court determined that Mr. Butterfield had committed aggravated assault, but found him “not criminally responsible” (“NCR”) because of his mental illness.
The Civil Action
The Store Owner brought a civil action against Mr. Butterfield for physical and psychological injuries caused by the Attack (the “Action”). The Store Owner’s Statement of Claim (the “Claim”) alleged that Mr. Butterfield was negligent for attending the store and applying for a firearms license when he was lucid because it was reasonably foreseeable he would injure or kill someone during the course of purchasing or possessing a firearm. The Claim did not allege any other torts besides negligence.
Mr. Butterfield held a Condominium Unit Owners Policy (the “Policy”) underwritten by Intact Insurance Company (“Intact”), which included third-party liability insurance. It was not disputed that the Claim fell within the Policy’s insuring agreements. However, the Policy specifically did not insure claims arising from bodily injury caused by any criminal or intentional act by an insured. Intact denied Mr. Butterfield coverage because it took the position that the Attack was both a criminal and intentional act.
Mr. Butterfield sought a declaration that Intact owed him a defence against the Claim under the Policy.
The Duty to Defend
Intact, as the insurer seeking to rely on an exclusion to avoid defending its insured, had the onus to prove, on a balance of probabilities, that the exclusion clause applied to the Claim. The Court followed the following four-part framework of analysis in assessing whether Intact had a duty to defend Mr. Butterfield:
- What is the true nature of the Claim?
- Were Mr. Butterfield’s actions criminal?
- Were Mr. Butterfield’s actions intentional?
- Does Intact have a duty to defend Mr. Butterfield in the Action?
A. What is the true nature of the Claim?
The Claim pleaded negligence as the only cause of action against Mr. Butterfield. Rather than limiting itself to the style of pleading adopted by the plaintiff, the Court looked behind the plaintiff’s labelling of the Claim to determine the Claim’s true nature. The Court found the negligence claim was based on the same harm as the intentional tort of assault (if it had been pleaded). While Mr. Butterfield may have been negligent in applying for a firearms permit, the Court held there was no causal link between that negligence and the Shop Owner’s alleged damages, without the intentional tort of assault.
The true nature of the Claim was the tort of assault and the Store Owner could not convert an intentional act into negligence by its own choice of words or labels (adopted, no doubt, to avoid Mr. Butterfield’s insurer from denying coverage).
B. Were Mr. Butterfield’s actions criminal?
In assessing the criminal act exclusion’s language, the Court interpreted “criminal act” to mean any breach of the Criminal Code. This language permits the insurer to exclude indemnification for damages caused by any contravention of the Criminal Code, regardless of intent or lack of intent to cause damage. A criminal conviction was not required for the exclusion to have effect.
In addressing the NCR finding in the criminal proceeding, the Court noted that an NCR finding is only available once an offence’s elements are established. The Court held that the judge in the criminal proceeding must have been satisfied that the actus reus and mens rea of aggravated assault were proven beyond a reasonable doubt because, without that being the case, there would have been no need to consider whether Mr. Butterfield was NCR for his conduct.
C. Were Mr. Butterfield’s actions intentional?
The issue of intentionality in this case posed an interesting question – in light of the NCR finding in the criminal proceeding, was Mr. Butterfield’s conduct intentional for the purposes of the Policy’s intentional act exclusion?
Relying on previously decided cases, the Court held that a defendant in a civil action will be found to have acted intentionally if the defendant understood the nature and quality of their actions but simply did not realize that those actions were wrong. In a civil action, the threshold for determining whether an individual suffering from a mental disorder is responsible for their tortious conduct is whether the defendant was able to appreciate the nature and consequences of their act.
While psychiatric assessments determined Mr. Butterfield could not appreciate that stabbing the Store Owner was morally wrong, he did intend to stab the Store Owner. This intention was evidenced by the fact that the criminal court found Mr. Battlefield committed the act, and Mr. Butterfield took several steps to effect his intention including retrieving the hunting knife and yelling at the Store Owner that he needed to be murdered.
Mr. Butterfield’s words and conduct demonstrated a clear intention to injure or kill the Store Owner with a knife, even if it was based on a delusional belief.
D. Does Intact have a duty to defend Mr. Butterfield in the Action?
An insurer’s duty to defend is triggered where there is a mere possibility that, based on the pleaded facts, the claims are covered under the policy. In this case, the Court decided the Attack was both a criminal and intentional act and was excluded from coverage under the Policy. As a result, Intact did not owe Mr. Butterfield a defence in the Action under the Policy.
The threshold for triggering an insurer’s duty to defend is low. However, not every set of facts, no matter how artful a plaintiff may be in crafting its pleadings, will result in an insurer having to defend their insured in a civil action. Butterfield presents one example of a set of facts that permitted the Court to conclude there was not even a mere possibility of coverage under the Policy. The criminal and intentional act exclusion removed all of the allegations contained in the Claim from coverage.
Where an insurer relies on an exclusion in defending an insured’s application for a defence under a policy, the insurer has the onus of proving the exclusion clause applies. In assessing whether to deny an insured a defence against a claim, an insurer should consider its ability to discharge its legal burden of proof to establish the that the exclusion clause will remove the allegations from coverage. Butterfield’s unique set of facts provide some guidance on how a court will interpret criminal and intentional act exclusions where the duty to defend is at issue.