Buchanan v. GAN Canada Insurance Co. et al. [Indexed as: Buchanan v. GAN Canada Insurance Co.]

50 O.R. (3d) 89

[2000] O.J. No. 2616

Docket No. C31562

Court of Appeal for Ontario

Catzman, Feldman and MacPherson JJ.A.

July 13, 2000

Insurance -- Exclusion clauses -- Exclusion clause in homeowner's policy provided that policy not applying to bodily injury caused intentionally by or at direction of insured -- Insured got into fight with plaintiff -- Fact that plaintiff suffered more serious injuries than insured had anticipated was immaterial -- Insurer entitled to rely on exclusion clause.

Two schoolboys, B and W, got into a fight. W suffered a broken nose, a chipped tooth, facial cuts, a closed head injury, post-traumatic stress disorder and reactive depression. W sued B and obtained judgment in the amount of $246,435.69. B's mother held a policy of homeowner's insurance. The policy contained an exclusion clause which provided that the policy did not apply to "bodily injury or property damage caused intentionally by or at the direction of" an insured. B brought an action against the insurer for indemnification for the amount of the judgment against him and for the costs of defending the W action. The parties agreed to proceed in the form of a special case. The motions judge determined that the insurer could rely on the exclusion clause in the policy. B appealed, conceding that he was liable for the broken nose, chipped tooth and facial cuts suffered by W because they were reasonably foreseeable consequences of B's assault, but that the closed head injury, post-traumatic stress disorder and r eactive depression were outside the ambit of the exclusion clause because they were not the natural and probable consequences of the assault.

Held, the appeal should be dismissed.

B intended to make physical contact with W during the fight. It was irrelevant that the magnitude of W's injuries exceeded B's expectations, subjective or objective. If a tort was intended, it does not matter that the result was more harmful than the actor should, or even could have foreseen. The insurer could rely on the exclusion clause and did not have to indemnify B for the damages awarded to W.

APPEAL from a judgment of Cavarzan J. determining that an insurer could rely on an exclusion clause in an insurance policy.

Co-operative Fire & Casualty Co. v. Saindon, 1975 CanLII 180 (SCC), [1976] 1 S.C.R. 735, 10 N.B.R. (2d) 329, 56 D.L.R. (3d) 556, 4 N.R. 343, [1975] I.L.R. 1-669; Godonoaga (Litigation guardian of) v. Khatambakhsh (2000), 2000 CanLII 5737 (ON CA), 49 O.R. (3d) 22, [2000] O.J. No. 2172 (C.A.); Non-Marine Underwriters, Lloyd's of London v. Scalera (2000), 2000 SCC 24, 185 D.L.R. (4th) 1 (S.C.C.); Sansalone v. Wawanesa Mutual Insurance Co. (2000), 2000 SCC 25, 74 B.C.L.R. (3d) 21, 185 D.L.R. (4th) 57, [2000] 5 W.W.R. 21 (S.C.C.), consd Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 22

Andrew J. Spurgeon, for appellant. Ralph D'Angelo, for respondents.

The judgment of the court was delivered by

MACPHERSON J.A.: --

Introduction

[1] Two schoolboys, Mark Buchanan and Gerald Walsh, both 19 years of age, engaged in a fight at Sir Winston Churchill Secondary School in Hamilton. Walsh lost the fight and was seriously injured. He sued Buchanan and the Board of Education for the City of Hamilton.

[2] The action proceeded to trial. Stayshyn J. held that Walsh and Buchanan were equally liable for the fight. He set damages at $492,871.69. Accordingly, judgment was entered against Buchanan for $246,435.85. The action against the Board of Education for the City of Hamilton was dismissed.

[3] After Stayshyn J. rendered judgment, Buchanan initiated a separate action against the respondent insurance companies. There was, and is, no issue that Buchanan was an insured person pursuant to the terms of a policy of homeowner's insurance issued by the respondents.

[4] In his action against the insurance companies, Buchanan sought indemnification for the amount of the judgment against him and for the costs of defending the Walsh action. The parties agreed to proceed, pursuant to Rule 22 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, in the form of a special case. They filed an agreed statement of facts and posed a series of questions. Cavarzan J. heard the matter and determined that the respondent insurance companies could rely on an exclusion clause in the insurance policy. Accordingly, they did not have to indemnify Buchanan for the damages he was required to pay Walsh; nor did they have to reimburse Buchanan for the costs of defending the Walsh action.

[5] Buchanan appealed Cavarzan J.'s judgment to this court. The appeal was heard on September 10, 1999. Shortly after the argument, the court became aware that the Supreme Court of Canada would be hearing two appeals in October that potentially raised the same or similar issues. With the consent of counsel, the court decided to reserve its decision until the Supreme Court of Canada had rendered its decisions.

[6] On May 3, 2000, the Supreme Court of Canada released its decisions in Non-Marine Underwriters, Lloyd's of London v. Scalera (2000), 2000 SCC 24, 185 D.L.R. (4th) 1 (S.C.C.) and Sansalone v. Wawanesa Mutual Insurance Co. (2000), 2000 SCC 25, 185 D.L.R. (4th) 57, 74 B.C.L.R. (3d) 21 (S.C.C.). At the invitation of the court, counsel filed additional written submissions on May 31, 2000.

A. Factual Background

[7] At the trial of the initial action, Stayshyn J. found that Walsh had initiated the fight, but that Buchanan had willingly accepted the challenge. During the fight, Buchanan gained the upper hand. He immobilized Walsh and punched him several times in the head and face. A teacher called on him to stop but Buchanan delivered several more punishing blows. Stayshyn J. said:

Even if the fight was consensual in the first instance, the severe retaliation was excessive and unwarranted. Buchanan's continuation of the assault after Mr. Massey's shouts caught his attention and his continued punching of Walsh, whom he was able to physically control with his superior weight and strength, was inexcusable. It is clear from Buchanan's evidence that he was able to physically hold and control Walsh at some point and had no reason, except his own anger and aggression, to continue punching Walsh.

[8] Stayshyn J. found that Walsh suffered six injuries from the beating administered by Buchanan: a broken nose, a chipped tooth, facial cuts, a closed head injury, post-traumatic stress disorder and reactive depression.

[9] The policy of homeowner's insurance held by Buchanan's mother contained an exclusion clause. Apparently, the actual policy documents were lost or destroyed. Fortunately, the parties agreed that one of two exclusion clauses was in effect and that the slight difference in wording between the two clauses had no legal significance. The clauses provided:

This policy does not apply:

(5) to bodily injury or property damage caused intentionally by or at the direction of any Insured person.

or

This policy does not apply:

(6) to bodily injury or property damage caused intentionally by or at the direction of an Insured.

[10] When the special case came before Cavarzan J., he held that the exclusion clause applied. The essence of his reasoning was that Buchanan (and Walsh) consented to fight each other. During the fight, Buchanan intended to hit Walsh. Thus the bodily injuries suffered by Walsh were, in the words of the exclusion clause, "caused intentionally" by Buchanan. It followed that the respondent insurance companies did not have to indemnify Buchanan for the damages award made against him in the original action or his costs of defending the action.

[11] Buchanan appeals from Cavarazan J.'s judgment.

B. Issue

[12] The issue on this appeal is whether Cavarazan J. erred in concluding that the exclusion clause in the Buchanan homeowner's insurance policy supported the respondent insurance companies' decision not to indemnify Buchanan for the damages award made against him and for his costs of defending the action.

C. Analysis

[13] In his reasons, Cavarazan J. correctly identified the "governing authority" as Co-operative Fire & Casualty Co. v. Saindon, 1975 CanLII 180 (SCC), [1976] 1 S.C.R. 735, 56 D.L.R. (3d) 556, because the exclusion clause in that case was virtually identical to the one in the Buchanan homeowner's insurance policy. In Saindon the insured held a running power lawnmower up to his neighbour's face to "scare" him. When the neighbour, Armand Sirois, raised his arms to protect himself, the lawnmower severed the fingers on his left hand. The insurance company refused coverage. The insured argued that the exclusion clause did not apply because he did not intend to injure the neighbour. The Supreme Court of Canada rejected this argument. Ritchie J. said, at pp. 746-47:

The respondent's action did indeed have the result of "scaring" Sirois to such extent that he raised his hands in an automatic gesture to shield his face. The fact that the lawn mower tipped when put to such an unnatural use was an eminently foreseeable development and one which the respondent ought to have known to be a part of the danger to which he was exposing his neighbour. The immediate cause of Sirois' injury was a combination of his gesture of self protection and the tipping of the lawnmower but, in my opinion, these two circumstances flowed directly from the respondent's deliberate act in raising the lawnmower as he did, which was the dominant cause of the occurrence. I agree with the learned trial judge that this constituted criminal conduct which caused damage and the fact that the "scare" intended by the respondent had more serious consequences than he may have anticipated does not alter the fact that it was his threatening gesture which caused the damage.

(Emphasis added)

[14] In my view, Saindon stands for two propositions. First, the exclusion clause applies where the insured committed a deliberate act which was the dominant cause of the plaintiff's injuries where injury was foreseeable. Second, the fact that the deliberate act had more serious consequences than the insured may have anticipated is immaterial.

[15] This second proposition is important because it responds to the central argument made by the appellant during the appeal hearing. The appellant conceded that he was liable for three of Walsh's injuries -- the broken nose, chipped tooth and facial cuts -- because they were reasonably foreseeable consequences of Buchanan's assault. However, the appellant contended that the other three injuries -- closed head injury, post-traumatic stress disorder and reactive depression -- were outside the ambit of the exclusion clause because they were not the natural and probable consequences of the assault. In my view, it is clear from the second emphasized passage in the above excerpt from Ritchie J.'s reasons in Saindon that this distinction is untenable.

[16] In Saindon, Laskin C.J.C. dissented on the basis of the very distinction for which the appellant contends in this court. In his view, the fact that the insured did not intend to sever the fingers of his neighbour, but only to scare him, meant that, in the words of the exclusion clause, he did not intend to cause the injury that occurred. However, in Saindon, that view was expressly rejected by the majority of the court.

[17] The remaining question is whether the two recent decisions of the Supreme Court of Canada in Scalera, supra, and Sansalone, supra, change the law as enunciated in Saindon, and in particular, whether they adopt the dissenting analysis of Laskin C.J.C. In my view, it is clear that Scalera and Sansalone affirm Saindon.

[18] In Scalera and Sansalone, the plaintiff, a minor, sued two bus drivers, Vincent Scalera and Nicodema Sansalone, for damages for repeated sexual assaults which allegedly took place on their buses. The defendant bus drivers brought third party claims against their insurers pursuant to their home insurance policies. They sought declarations that the insurers were required to defend them. The insurance companies argued that the claims were excluded because of exclusion clauses in the policies. The exclusion clause in Sansalone, known as an "intentional injury" exclusion, was identical to the one in the present appeal, and excluded "bodily injury . . . caused intentionally by you." The clause in Scalera was an "intentional act" as opposed to an "intentional injury" exclusion. It excluded claims for bodily injury "caused by any intentional act . . . of an insured."

[19] The Supreme Court of Canada applied the exclusion clause in both cases. Although most of the judgments of McLachlin J. and Iacobucci J. dealt with the question of consent in the context of sexual assault (on which they differed in important respects), the court also dealt explicitly and unanimously with the issue raised in this appeal.

[20] In Scalera, Iacobucci J. dealt first with whether there is any effective distinction between an exclusion clause which covers "intentional acts" and one which covers "intentional injuries", and concluded that there was not. He held that the relevant distinction to be made is between injuries caused by an intentional tort and those which arise from negligence. He discussed the relationship between an intentional tort and the injuries flowing from it and stated, at p. 41:

Moreover, if a tort is intended, it will not matter that the result was more harmful than the actor should, or even could have foreseen. Linden [Canadian Tort Law, 6th ed. (Toronto: Butterworths, 1997)], at p. 45, quotes Borins Co. Ct. J. (as he then was) in Bettel v. Yim (1978), 20 O.R. (2d) 617, at p. 628:

If physical contact was intended, the fact that its magnitude exceeded all reasonable or intended expectations should make no difference. To hold otherwise . . . would unduly narrow recovery where one deliberately invades the bodily interests of another with the result that the totally innocent plaintiff would be deprived of full recovery for the totality of the injuries suffered as a result of the deliberate invasion of his bodily interests.

(Emphasis in original)

[21] Applying this passage to the present appeal, Buchanan intended to make physical contact with Walsh during the fight. Indeed, the appellant concedes that Walsh's broken nose, chipped tooth and facial cuts were all natural consequences of his actions. It may well be that the magnitude of Walsh's injuries exceeded Buchanan's expectations, subjective or objective. However, that makes "no difference".

[22] The appellant attempts to distinguish this passage from Scalera by relying on a different passage from Iacobucci J.'s judgment where he discussed a series of cases that "involved unforeseen physical consequences of the insureds' actions, and asked whether the result was 'substantially certain' given the defendant's actions" (at p. 51) (emphasis in original). The appellant contends that although some of Walsh's injuries were a substantially certain result of Buchanan's blows, others were not.

[23] I disagree with this submission. The distinction is relevant in cases where there was no intention to cause any physical injuries. In the present appeal, Buchanan intended to strike Walsh. In that circumstance, the relevant legal principle is, as Iacobucci J. stated in the passage set out above, that "if a tort is intended, it will not matter that the result was more harmful than the actor should, or even could have foreseen."

[24] Finally, I note this court has also recently dealt with the exclusion clause in issue in this appeal, and in the context of a schoolyard fight. In Godonoaga (Litigation guardian of) v. Khatambakhsh (2000), 2000 CanLII 5737 (ON CA), 49 O.R. (3d) 22, [2000] O.J. No. 2172 (C.A.), a nine-year-old boy and his parents sued two brothers and their parents for injuries sustained by the boy in a schoolyard beating. The defendants made a third party claim against their insurer under a home insurance policy. The insurer refused to defend, relying on the same exclusion clause as the one in issue in this appeal.

[25] This court held that the insurer had a duty to defend the claim, framed in negligence, brought against the parents of the perpetrators. However, the minor defendants, the actual perpetrators of the beating, conceded that the exclusion clause applied to their conduct. As explained by Finlayson J.A., at paras. 14 and 20 [at pp. 26-27 O.R.]:

The appellants concede that the policy of insurance . . . does not cover the plaintiffs' claims against their two sons, Houman and Maher, for bodily injury caused to Igor. They also concede that, if the claim against Fatima was limited to her participation in the assault by directing or inciting Houman to take part in it, she is a party to the assault and is excluded from coverage as well.

In my view, a proper interpretation of the policy is that the parents and the two children are each separately insured to the face value of the policy. The insurer does not have to respond to the claims against the two sons because their separate policies exclude claims arising from bodily injury caused intentionally by them.

(Emphasis added)

[26] In my view, the appellant is in the same position as the two boys in Godonoaga v. Khatambakhsh. He committed an intentional assault on Walsh. The respondent insurance companies can, therefore, rely on the exclusion clause. They do not have to indemnify the appellant for the damages awarded to Walsh. Nor do they have a duty to defend the appellant.

Disposition

[27] I would dismiss the appeal with costs.

Appeal dismissed.