Eichmanis et al. v. Wawanesa Mutual Insurance Co. et al. [Indexed as: Eichmanis v. Wawanesa Mutual Insurance Co.]
84 O.R. (3d) 668
Court of Appeal for Ontario,
Borins, Armstrong and Lang JJ.A.
February 13, 2007
Insurance -- Exclusion clauses -- "Criminal act" -- "Criminal act" exclusion in liability insurance policies applying regardless of whether insured person intended to cause injury or damage -- Insured person pleading guilty to criminal negligence causing bodily harm after firearm discharged accidentally and injured another person -- Criminal act exclusion in policy applying.
Insurance -- Interpretation and construction -- "Household" -- Youth in legal custody of his mother moving in with his father and cutting ties with his mother -- Youth going to live with aunt and uncle temporarily while his father underwent alcohol abuse treatment -- Aunt and uncle taking responsibility for youth and supervising him while he lived with them -- Youth "living in the same household" as aunt and uncle and not "living in the same household" as mother -- Youth an insured person under aunt and uncle's insurance policy.
RP lived with his mother from 1986 until December 1997, when he went to live with his father. In mid-1998, RP's father was compelled to enter a residential facility for treatment for alcohol abuse, and RP went to live with his aunt and uncle for the duration of treatment. RP's father locked his house and instructed RP not to go there. Contrary to his father's instructions, RP broke into the house with RE. While he was showing RE one of his father's shotguns, the gun accidentally discharged, injuring RE. RP subsequently pleaded guilty to criminal negligence causing bodily harm. When his civil judgment against RP was unsatisfied, RE brought proceedings pursuant to s. 132 of the Insurance Act, R.S.O. 1990, c. I.8 against Wawanesa and Commercial, the insurers of RP's aunt and uncle and his mother, respectively. RE moved for determination as to whether RP was insured under the Wawanesa or the Commercial policy. The motion judge found that he was insured under the Wawanesa policy and was not insured under the Commercial policy as he was "living in the same household" as his aunt and uncle at the time of RE's injuries, and was not a member of his mother's household at the relevant time. The motion judge found that the exclusion in the policy for bodily injury "caused by any intentional or [page669] criminal act or failure to act" by any person insured by the policy did not apply in the circumstances. The motion judge stated that s. 118 of the Insurance Act limits the scope of an exclusion where an insured has engaged in criminal behaviour. Section 118 states, "Unless the contract otherwise provides, a contravention of any criminal or other law in force in Ontario or elsewhere does not, by that fact alone, render unenforceable a claim for indemnity under a contract of insurance except where the contravention is committed by the insured, or by another person with the consent of the insured, with intent to bring about loss or damage." The motion judge concluded that an insurer must demonstrate an intentional act plus an intent to injure in order to trigger the exclusion clause, and that in this case, there was no intent to injure, so that the conviction for criminal negligence did not constitute a criminal act that was caught by the exclusion clause. Wawanesa appealed.
Held, the appeal should be allowed.
It was open to the motion judge to find that RP was covered by his aunt and uncle's insurance policy as he was "living in the same household" with them.
The "criminal act" exclusion in the policy is not ambiguous. It was undisputed that RE's injury was caused by RP's criminal act. RP acknowledged committing the criminal act by pleading guilty to, and being convicted of, criminal negligence causing bodily harm. Where the language of a contract is unambiguous, 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 language of the exclusion is disjunctive. An act of an insured that causes injury is excluded when it is either an intentional act, or a criminal act. The motion judge's interpretation of "criminal act" as applying only to criminal acts intended to cause injury renders the phrase "criminal act" superfluous. The phrase "criminal act" means any breach of the Criminal Code, R.S.C. 1985, c. C-46. The motion judge was incorrect in interpreting s. 118 of the Insurance Act as a limitation on the criminal act exclusion in the policy. She failed to consider the opening phrase of that section: "Unless the contract otherwise provides". Section 118 did not apply to Wawanesa's insurance contract because it "otherwise provided" that damages caused by a criminal act of the insured are excluded from coverage.
APPEAL from the judgment of Pierce J. (2006), 2006 6909 (ON SC), 80 O.R. (3d) 114, [2006] O.J. No. 904 (S.C.J.), on a motion for determination of a question of law.
Cases referred to Buttar v. Safeco Insurance Co. of America, 1986 1260 (BC SC), [1986] B.C.J. No. 1524, 30 D.L.R. (4th) 762 (S.C.), apld Co-operative Fire & Casualty Co. v. Saindon, 1975 180 (SCC), [1976] 1 S.C.R. 735; Non-Marine Underwriters, Lloyd's of London v. Scalera, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26, 75 B.C.L.R. (3d) 1, 185 D.L.R. (4th) 1, 253 N.R. 1, [2000] 5 W.W.R. 465, 50 C.C.L.T. (2d) 1, [2000] I.L.R. Â1-3810, 2000 SCC 24 (sub nom. Scalera v. Lloyd's of London, Sansalone v. Wawanesa Mutual Insurance Co., Nonmarine Underwriters v. Scalera), distd Other cases referred to Eichmanis (Litigation guardian of) v. Prystay, [2003] O.J. No. 450, [2003] O.T.C. 55, 119 A.C.W.S. (3d) 1049 (S.C.J.); Eichmanis (Litigation guardian of) v. Prystay (Children's Lawyer for), 2004 18378 (ON CA), [2004] O.J. No. 1382, 185 O.A.C. 97 (C.A.); Kolta v. State Farm Fire & Casualty Co. (1981), 1981 1810 (ON SC), 32 O.R. (2d) 515, [1981] O.J. No. 2972, 122 D.L.R. (3d) 126, [1981] I.L.R. Â1-1362 (H.C.J.); Oldfield v. Transamerica Life Insurance Co. of Canada, [2002] 1 S.C.R. 742, [2002] S.C.J. No. 23, 210 D.L.R. (4th) 1, 284 N.R. 104, [2002] I.L.R. Â7410, 2002 SCC 22; Rooney (Litigation Guardian of) v. Graham (2001), 2001 24064 (ON CA), 53 O.R. (3d) 685, [2001] O.J. No. 1055, 198 D.L.R. (4th) 1, 9 C.P.C. (5th) 50 (C.A.); Scott v. Wawanesa Mutual Insurance Co., 1989 105 (SCC), [1989] 1 S.C.R. 1445, [1989] S.C.J. No. 55, 37 B.C.L.R. (2d) 273, 59 D.L.R. (4th) 660, 94 N.R. 261, [1989] 4 W.W.R. 728, [1989] I.L.R. Â1-2462 [page670] Statutes referred to Criminal Code, R.S.C. 1985, c. C-46, ss. 9 [as am.], 221 Insurance Act, R.S.O. 1970, c. 224, s. 92 Insurance Act, R.S.O. 1990, c. I.8, ss. 118, 132 Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21.01(1) Authorities referred to Brown, C., Insurance Law in Canada, 4th ed., looseleaf (Toronto: Carswell, 2002)
C. Kirk Boggs, Kirk F. Stevens and Laird S.S. Scrimshaw, for appellant/respondent by way of cross-appeal. Kristopher H. Knutsen and Erik S. Knutsen, for respondent/ appellants by way of cross-appeal, Eichmanis. Eugene E. Prpic, for respondent/appellant by way of cross- appeal, Commercial Union of Canada.
The judgment of the court was delivered by
BORINS J.A.: --
I
[1] The respondent, Ryan Eichmanis ("Ryan E."), was seriously injured when he was shot by Ryan Prystay ("Ryan P."). In a trial before J. Wright J., Ryan E. was found to be 25 per cent contributarily negligent and was awarded damages of $800,000 against Ryan P. and his father. [See Note 1 below] As the judgment was unsatisfied, pursuant to s. 132 of the Insurance Act, R.S.O. 1990, c. I.8, Ryan E. commenced proceedings against The Wawanesa Mutual Insurance Company ("Wawanesa") and Commercial Union Canada ("CU"), the insurers of Ryan P.'s aunt and uncle and his mother, respectively. [page671]
[2] Pursuant to rule 21.01(1)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Ryan E. moved for the determination of whether Ryan P. was insured under his mother's home insurance policy with CU and/or under his aunt and uncle's home insurance policy with Wawanesa. The motion judge found that Ryan P. was insured under the Wawanesa insurance policy, but not under the CU policy. She further held that an exclusion clause in the Wawanesa policy did not apply. Wawanesa appeals on the ground that the motion judge erred in finding that Ryan P. was insured by his aunt and uncle's homeowner policy, and that she further erred in failing to apply the exclusion clause. Wawanesa seeks leave to appeal that part of the motion judge's costs order requiring that it pay the costs of its co- defendant CU, fixed in the amount of approximately $32,000 (the "Sanderson order"). Ryan E. appeals from the motion judge's finding that Ryan P. was not insured under his mother's CU policy. For the reasons that follow, I would allow Wawanesa's appeal and dismiss Ryan E.'s appeal.
II
[3] It is convenient to reproduce the relevant provisions of the Wawanesa Personal Insurance Policy of Ryan P.'s aunt and uncle, Catherine and John Prystay [at paras. 9-11]:
"Insured" means the person(s) named as Insured in the Declarations and, while living in the same household:
(1) his or her husband or wife;
(2) the relatives of either; and
(3) any person under the age of 21 years in their care.
Section II
Liability Coverage
Coverage E -- Legal Liability
We will pay all sums which you become legally liable to pay as compensatory damages because of bodily injury or property damage to which this insurance applies. We will defend any action against you alleging bodily injury or property damage and seeking those compensatory damages, even if it is groundless, false or fraudulent. We reserve the right to select legal counsel, investigate, negotiate and settle any claim or action if we decide this is appropriate. Our obligation to defend ends when we have used up the applicable amount of the insurance in the payment of judgments or settlements.
You are insured for claims made or actions brought against you for:
(1) Personal Liability: bodily injury or property damage arising out of your personal activities anywhere in the world. [page672]
Exclusions:
You are not insured for claims made or actions brought against you for:
(9) 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.
(Emphasis added)
[4] The Commercial Union policy of Ryan P.'s mother contains similar provisions.
[5] Subsequent to the shooting incident, Ryan P. pleaded guilty in Youth Court to a charge of criminal negligence causing bodily harm, contrary to s. 221 of the Criminal Code, R.S.C. 1985, c. C-46. The main issue presented by this appeal is a narrow one, whether criminal negligence causing bodily harm is a "criminal act" within the meaning of the exclusion clause. The motion judge found that it was not, and held that the exclusion clause did not preclude Ryan E. from recovering the damages awarded by J. Wright J. from Wawanesa.
III
[6] The background facts are not lengthy. They relate to the circumstances surrounding Ryan P.'s shooting of Ryan E. and to where Ryan P. was living when the shooting occurred.
[7] Ryan P.'s parents were divorced. He was three years old when his parents separated in 1986. He lived with his mother, who had custody of him, from 1986 until December 1997 when, as a result of conflicts with his step-father, he decided to live with his father. Since moving in with his father, Ryan P. did not live with his mother.
[8] Prior to the shooting incident that occurred on June 12, 1998, Ryan P. was living in his father's home. He was 15 years old, and he had behavioural problems. For example, he was frequently absent from school, grew marijuana plants in his room and played with his father's guns and ammunition. Around the beginning of June, Ryan P.'s father was compelled to enter a residential facility for treatment for substance abuse. As Ryan P. did not want to live with his mother during his father's absence, arrangements were made for him to live in the home of his aunt and uncle, John and Catherine Prystay. It was believed that he would live with his relatives for three weeks while his father underwent treatment. He had been living with them for ten days before the shooting. When he moved into the residential facility, Ryan P.'s father locked his house and instructed his son that he was not to go there. [page673]
[9] As for the shooting incident, contrary to his father's instructions that he was not to enter the house, Ryan P. broke into it with Ryan E. and another friend. In para. 25 of her reasons for judgment, the motion judge gave the following account of what occurred:
[I]nitially, the plaintiff [Ryan E.] pointed a rifle at Ryan P., then put it down. Ryan P. picked up a shotgun, showed the other boys that it was loaded, and pointed it at the plaintiff. He backed up against the wall, and the gun accidentally discharged at short range, striking the plaintiff in the abdomen with bird shot. The plaintiff received permanent and serious injuries.
After the shooting, Ryan P. went to live in his mother's home.
IV
[10] The motion judge first determined whether Ryan P. was insured under his aunt and uncle's policy with Wawanesa or his mother's policy with CU. His father was uninsured. This determination required a finding that at the relevant time Ryan P. was "living in the same household" as the named insured, that he was a relative of the named insured or that he was under the age of 21 and in the care of the named insured.
[11] After a lengthy review of authorities, the motion judge resolved the coverage issue by finding that Ryan P. was insured under his aunt and uncle's Wawanesa policy, and not under his mother's CU policy. The motion judge's finding in respect to coverage under the Wawanesa policy is found in paras. 46-49:
I find that Ryan P. was a member of the household of his aunt and uncle, Catherine Prystay and John Prystay, albeit on a temporary basis. He falls within the definition of a member of the household of the insured. He is also a person under the age of 21 in the care of the insured.
When he was with his aunt and uncle, he was not a part of any other functioning household. His aunt and uncle took him in because he was their nephew. He was connected to them by familial bonds. They felt an affinity with him by virtue of that bond. He was not merely a boarder.
Ryan P.'s aunt and uncle recognized that Ryan P. would not merely occupy space in their home, as a boarder, but that he would require care. He was a young person who required guidance, encouragement and supervision, which the Prystays provided. They insisted he go to school and even drove him. They did not let him smoke in the house. They imposed a curfew. They gave him direction and attempted to impose discipline. They tried to prevent him from going alone to his father's vacant home.
Ryan P.'s aunt and uncle took responsibility for him. "Responsibility" is the term Catherine Prystay used when she expressed her reluctance to care for Ryan P., given her other family obligations. It was clear to her that Ryan P. would not be a mere boarder. The Prystays cared about Ryan P. and tried to do what was best for him. Their assumption of responsibility was recognized by both the trial judge and the Court of Appeal who found that the aunt and [page674] uncle did all they could for Ryan P . . . They were accordingly absolved from liability for the plaintiff's injuries.
[12] The motion judge found that Ryan P. was not insured under his mother's CU policy because he was not a member of his mother's household at the time of Ryan E.'s injuries. Her primary reasons for this finding are found in paras. 52-53:
With respect, I do not accept this submission. The trial court and the Court of Appeal found that the mother delegated Ryan P.'s care to others. The evidence was that the boy was estranged from his mother at the time he elected to stay with his father, and that they had little contact. He cut ties with her 6 months prior to the shooting. He kept secrets from her, knowing she would intervene if she knew he was playing with guns.
When Ryan P.'s father undertook alcohol treatment, Ryan P. did not return to his mother's home. While it is true that Ryan P. returned to her residence after the shooting, there is no evidence he intended to return before this event, despite her wish that he do so. While at his father's home, and even when at the home of his aunt and uncle, a few doors away from his mother, Ryan P. did not visit his mother; he did not return for weekends. There is not even evidence of telephone contact. At no time in the 6 months prior to the shooting was he physically present in his mother's home.
V
[13] Having found that Ryan P. was covered by his aunt and uncle's insurance policy, the motion judge turned to whether coverage was excluded because Ryan E.'s bodily injury was "caused by any intentional or criminal act" on the part of Ryan P. She noted that the identical exclusion clause is found in both the Wawanesa and CU policies.
[14] After noting that Ryan P. had pleaded guilty to, and was convicted of, criminal negligence causing bodily harm as a result of the shooting, the motion judge stated that s. 118 of the Insurance Act limits the scope of an exclusion where an insured has engaged in criminal behaviour. Section 118 reads as follows:
- Unless the contract otherwise provides, a contravention of any criminal or other law in force in Ontario or elsewhere does not, by that fact alone, render unenforceable a claim for indemnity under a contract of insurance except where the contravention is committed by the insured or by another person with the consent of the insured, with intent to bring about loss or damage, but in the case of a contract of life insurance this section applies only to disability insurance undertaken as part of the contract. (Emphasis added)
[15] In paras. 70-84 the motion judge engaged in a lengthy discussion of two Supreme Court of Canada decisions, Non-Marine Underwriters, Lloyd's of London v. Scalera, 2000 SCC 24, [2000] 1 S.C.R. 551, [2000] S.C.J. No. 26 and Co-operative Fire & Casualty Co. v. Saindon, 1975 180 (SCC), [1976] 1 S.C.R. 735, [page675] together with a number of related cases. In Scalera, as in this case, the insurance policy excluded "bodily injury . . . caused by any intentional or criminal act". In Saindon, the exclusion applied to "bodily injury caused intentionally by . . . an insured". In neither case did the Supreme Court consider whether the act of the insured that caused the bodily injury was excluded from coverage because it was a criminal act. In each case, the Supreme Court only considered the intentional act exclusion. In Scalera, the court held that for the intentional act exclusion to apply it is required that the insured possess the intent not only to do the act, but also, in doing the act, the intent to injure.
[16] Following a consideration of the application of the criminal act exclusion, the motion judge returned to the intentional act exclusion in para. 102 where she reached the conclusion that it had no application in the circumstances of this case:
Applying the test in Scalera, the insurers must demonstrate an intentional act plus an intent to injure in order to trigger the exclusion clause. On the facts of the case at bar, they cannot do so. Pointing the firearm at the plaintiff was intentional, but the discharge of the gun was accidental.
[17] It is to be noted that Wawanesa's principal argument before the motion judge and this court was not that the intentional act exclusion applied. Rather, it was, on the facts of this case, that the criminal act exclusion clearly applied because Ryan P. had been convicted of criminal negligence causing bodily harm arising from his shooting of Ryan E. In para. 85, the motion judge rejected this submission:
Ryan P.'s conviction for criminal negligence is not a criminal act that is caught by the exclusion clause. Criminal negligence is a subset of negligence. It is included in the Criminal Code because Parliament has enlarged criminal responsibility beyond intentional conduct. The mens rea for criminal negligence is recklessness as defined in section 219 of the Criminal Code. This is qualitatively different than the mens rea for intention: Devlin v. Co-operative Fire and Casualty Co., 1978 1950 (AB SCAD), [1978] A.J. No. 682 (Alta S.C. A.D.). Ryan P.'s criminal negligence is the very type of conduct that is contemplated by s. 118 of the Insurance Act.
[18] At para. 90, the motion judge added:
Secondly, s. 118 of the Insurance Act has already codified the policy of the Legislature with respect to recovery on insurance contracts where criminal behaviour is involved. Recovery is not permitted where an intentional act leads to the harm for which indemnity is claimed.
(Emphasis in original)
[19] In my view, neither Scalera nor Saindon has any relevance to the circumstances of this case as both cases considered only the intentional act exclusion, and not the criminal [page676] act exclusion. Moreover, in neither case did the court consider the effects of legislation similar to s. 118 of the Insurance Act.
[20] Wawanesa contends that the motion judge erred in finding that Ryan P. was insured by its contract of insurance with his aunt and uncle and that coverage for Ryan P.'s wounding of Ryan E. was not excluded by the criminal act exclusion. I would not give effect to Wawanesa's first ground of appeal as in my view it was open to the motion judge on the evidence to find that Ryan P. was covered by his aunt and uncle's insurance policy. Ryan P. was more than a transient house guest. The motion judge concluded that he was "living in the same household" with his aunt and uncle. I see no reason to interfere with this finding. As well, I would not give effect to Ryan E.'s appeal that the motion judge erred in finding that Ryan P. was not covered by his mother's insurance policy with CU. On the evidence it was open to the motion judge to come to this finding. However, I would give effect to Wawanesa's second ground of appeal.
[21] The motion judge held that Ryan P.'s conviction for criminal negligence did not constitute a criminal act that was "caught by the exclusion clause". I am unable to agree with her conclusion. As I understand her reasons, I am also unable to agree with the motion judge's conclusion, on the basis of s. 118 of the Insurance Act, that Ryan E. was not precluded from recovering under Wawanesa's policy because Ryan P.'s contravention of the criminal law was not intended to cause loss or damage. In other words, the trial judge was incorrect in interpreting s. 118 as a limitation on the criminal act exclusion in Wawanesa's policy.
[22] The Wawanesa policy provided the insured with broad coverage for damages arising from any bodily injury or property damage arising out of his personal activities anywhere in the world, except where such damages are caused by an intentional act or by a criminal act. In Scott v. Wawanesa Mutual Insurance Co., 1989 105 (SCC), [1989] 1 S.C.R. 1445, [1989] S.C.J. No. 55, at p. 1465 S.C.R., on behalf of the majority of the court, L'Heureux-Dubé J. characterized a similar exclusion as "perfectly clear and unambiguous". Indeed, Canadian courts have not discerned any ambiguity in the "criminal act" exclusion in this policy, or in similar exclusions. In this case, the policy of insurance excludes liability of the insurer for damages caused by intentional or criminal acts of the insured. I do not see how the insurer could have worded its policy to exclude the risk of damage caused by a criminal act other than by the precise terms used in its policy. It is undisputed that Ryan E.'s injury was caused by Ryan P.'s criminal act. He acknowledged committing the criminal act by pleading guilty to, and being convicted of, criminal negligence causing bodily harm. I [page677] 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.
[23] The language of the exclusion is disjunctive. An act of an insured that causes injury is excluded when it is either an intentional act, or a criminal act. In Buttar v. Safeco Insurance Co. of America, 1986 1260 (BC SC), [1986] B.C.J. No. 1524, 30 D.L.R. (4th) 762 (S.C.), the insured, who had been convicted of arson, contended that the criminal act exclusion did not apply because, although he intended to set fire to clothing and blankets, he had no intention of causing a fire to his house. In rejecting this submission, MacKinnon J. stated at p. 765 D.L.R.:
In any event there is no authority for the proposition that the exclusionary clause in the policy is to be read as if "criminal act" applies only to criminal offences carried out with the intent of causing the loss. The exclusionary clause is not so worded. It does exclude criminal acts causing the loss. There is no ambiguity or uncertainty in the language used. Criminal acts causing the loss are excluded. In addition wilful acts causing the loss are excluded.
(Emphasis in original)
I would adopt the comments of MacKinnon J. and apply them to the circumstances of this case.
[24] The motion judge's interpretation of "criminal act" as applying only to criminal acts intended to cause injury renders the phrase "criminal act" superfluous. An insurer intending to exclude only criminal acts where the insured intends to cause injury could achieve the same result by merely excluding intentionally caused injuries. It is a well established principle that insurance contracts should not be interpreted to render their terms meaningless. Moreover, contrary to the view of the motion judge, the criminal act exclusion does not exempt certain categories of crime, or specific crimes. In my view, in Canada the phrase "criminal act" means any breach of the Criminal Code because s. 9 of the Criminal Code abolishes all common law crimes, with the exception of the common law power of judges to punish for contempt of court. Since the Wawanesa policy covers the activities of those insured by it anywhere in the world, the insurer could not have reasonably restricted the definition of "criminal act" to breaches of the Criminal Code.
[25] With respect, I do not agree with the motion judge that the language of s. 118 of the Insurance Act affects that interpretation of insurance policies. As explained in Oldfield v. Transamerica Life Insurance Co. of Canada, 2002 SCC 22, [2002] 1 S.C.R. 742, [2002] S.C.J. No. 23, at paras. 32-38, the predecessor to s. 118 was enacted in [page678] 1948 to modify the common law rule that indemnification for loss for damage caused by the contravention of the criminal law or other statute is contrary to public policy, even if the insurance contract provides for indemnification in such circumstances. Although the motion judge was correct in stating that Ryan P.'s criminal negligence was the type of conduct contemplated by s. 118, she failed to consider the opening phrase of that section: "Unless the contract otherwise provides." This language permits liability insurers, as Wawanesa has done in this case, to exclude indemnification for loss or damages caused by contravention of the criminal law, or other statute, regardless of the intent, or lack of intent, to cause loss or damage by the commission of an illegal act. In other words, s. 118 does not apply to Wawanesa's insurance contract because it "otherwise provides" that damages caused by a criminal act of the insured are excluded from coverage.
[26] In my view, Southey J. correctly explained the meaning of predecessor to s. 118 in Kolta v. State Farm Fire & Casualty Co. (1981), 1981 1810 (ON SC), 32 O.R. (2d) 515, [1981] O.J. No. 2972 (H.C.J.). In this case, the defendant's liability policy contained a criminal act exclusion. Damage caused to the insured's house was caused by his criminal act. In seeking to obtain indemnity for the damage that he caused to his house, the insured relied on s. 92 of the Insurance Act, R.S.O. 1970, c. 224, which contains language substantially the same as s. 118 of the present Act, to obtain indemnification. In rejecting this argument, at p. 520 O.R., Southey J. stated:
That section has no application to the present case, in my view, because of the introductory words: "Unless the contract otherwise provides". In this case the contract of insurance in exclusion (g) expressly provides that coverage will be excluded where loss or damage is caused by a criminal or wilful act of the insured.
[27] In my view, the law on the criminal act exclusion is correctly stated in the following passages in C. Brown, Insurance Law in Canada, 4th ed., looseleaf (Toronto: Carswell, 2002), at pp. 18-181 to 18-182:
Some policies exclude claims arising from injury or damage "caused by any intentional or criminal act or failure by any person insured by this policy". It is a necessary requirement under such policy wording that the criminal act caused the loss. If it did not, the exclusion will not apply.
The exclusion applies even without proof of intention to cause the injury or damage, so long as the act or omission that causes the harm is criminal in nature. This is especially important in certain criminal offences where mens rea or criminal intent is not an element of the offence, such as criminal negligence, and of certain criminal failures to act, such as failure to provide the necessaries of life and neglect to obtain assistance in child-birth. [page679]
A criminal conviction is not required by the exclusion. If there is a conviction, it is prima facie proof of the fact.
The exclusion applies to injury "caused by any intentional or criminal act". A number of courts have held that this exclusion is clear and unambiguous. Intention is not a required element of the criminal act for at least two reasons. First, the word "or" is disjunctive: the word "intentional" does not modify "criminal". The second reason is even more compelling. If the criminal act has to 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 rendered superfluous. An insurance contract is not to be interpreted so as to render terms meaningless.
(Emphasis added)
VII
[28] For the foregoing reasons, I would allow Wawanesa's appeal and set aside the judgment of the motion judge in conformity with these reasons. I would answer the questions raised by Ryan E's motion as follows:
-- Ryan P is an insured under the Wawanesa policy of his aunt and uncle, Catherine and John Prystay.
-- Ryan P. is not an insured under the CU policy of his mother.
-- based on the criminal act exclusion in both insurance polices, neither insurer is required to indemnify Ryan E. for his damages.
[29] I would grant Wawanesa leave to appeal from the Sanderson order that required it to pay the costs of its co- defendant, CU. In my view, where an unsuccessful defendant has done absolutely nothing to cause the joinder of the successful defendant, a Sanderson order is unfair and constitutes an error in principle. See Rooney (Litigation Guardian of) v. Graham (2001), 2001 24064 (ON CA), 53 O.R. (3d) 685, [2001] O.J. No. 1055 (C.A.). Although it may be unnecessary to do so given the result of the appeal on the merits, for the sake of completeness I would allow the appeal and set aside the Sanderson order.
[30] It follows that I would also dismiss Ryan E.'s appeal against CU from the motion judge's finding that Ryan P. was not insured under his mother's policy. Even if he were insured under her policy, the criminal act exclusion would preclude the insurer's obligation to indemnify Ryan E.
[31] As it was wholly successful on this appeal, Wawanesa is entitled to its costs of the motion on a partial indemnity basis to be assessed as well as the costs of the appeal, should it opt to [page680] pursue the recovery of costs. It is awarded its costs of the appeal on a partial indemnity basis fixed in the amount of $20,000, inclusive of disbursements and GST. CU is to have its costs of the appeal on a partial indemnity basis fixed in the amount of $7,500, inclusive of disbursements and GST, should it opt to pursue the recovery of costs.
Appeal allowed.
Notes ----------------
Note 1: Wright J. found Ryan P. to be 50 per cent at fault, his father to be 25 per cent at fault and Ryan E. to be 25 per cent at fault: Eichmanis (Litigation guardian of) v. Prystay, [2003] O.J. No. 450, [2003] O.T.C. 55 (S.C.J.) The Court of Appeal varied the apportionment of liability, finding Ryan P. to be 30 per cent fault and this father to be 45 per cent at fault: Eichmanis (Litigation guardian of) v. Prystay (Children's Lawyer for), 2004 18378 (ON CA), [2004] O.J. No. 1382, 185 O.A.C. 97 (C.A.).