Although the Defendant succeeded on its summary judgment motion to dismiss a property loss action, Morgan J. comments on the inequity of the exclusion clause and awarded no costs.
Released April 13, 2017 | Full Decision [CanLII]
In this tragic case, the Plaintiff’s husband burned down their home when he poured gasoline on her and lit her on fire in an attempt to kill her. The Plaintiff suffered serious injuries and burns over a large percentage of her body. Her husband was convicted of attempted murder and sentenced to prison. The Plaintiff, as a co-owner of the home, was a co-insured under Allstate’s homeowners’ policy. The Plaintiff sued Allstate for the value of the damages to the home. Allstate brought this summary judgment motion in reliance on an exclusion clause in the policy which precluded coverage on property damage caused by any “intentional or criminal act” done by a person insured under the policy.
Morgan J. noted that the inequities of this exclusion clause was emphasized by La Forest J. in his dissent in Scott v. Wawanesa Mutual Insurance Co. (1989). The issue for the majority of the Supreme Court of Canada in Scott was that there was no ambiguity in the clause. Due to the unfairness to an innocent party, various provinces have since enacted a bar to this type of exclusionary clause. Unfortunately for the Plaintiff, Ontario has not followed the lead taken by those other provinces in remedying this fundamental inequity that exists in many insurance policies. Morgan J. noted that the standard form of the exclusionary clause at issue is virtually the same clause as was at issue three decades ago in Scott. The Plaintiff argued that the husband’s intention to murder his spouse did not necessarily infer that he intended to burn down their home. Morgan J. found that from a legal perspective, it is a distinction without a difference: the husband intended to set fire to a person inside his house and the inevitable and foreseeable consequence was that the house itself would burn.
Morgan J. concluded that the exclusionary clause at issue had been interpreted by the majority of the Supreme Court of Canada in Scott as excluding from coverage the claim of an innocent co-insured in the position of the Plaintiff, and therefore he had no choice but to apply the clause in Allstate’s favour. Morgan J. noted that although Allstate would typically be entitled to costs, its corporate conduct is less than admirable. Allstate has been aware that its exclusionary clause, while technically legal, is unfair to its innocent customers but continues to capitalize on it. Additionally, the Plaintiff has suffered enormously through no fault of her own. Morgan J. exercised his discretion and dispensed with costs.