In 2019, Mr. Butterfield attended a firearms store in Cambridge, when he experienced a psychotic episode related to his pre-existing schizophrenia. He fell under the deluded belief that the owner of the store had raped and murdered his female friend. He left the store and returned with a knife, attacking and stabbing the owner. The owner survived the attack and commenced an action against Mr. Butterfield for $600,000.00.
Intact provided insurance to Mr. Butterfield under a homeowner’s policy, which included coverage for third party liability. The policy contained exclusions for intentional and criminal acts as follows:
We do not insure claims arising from: …
6. bodily injury or property damage caused by any intentional or criminal act or failure to act by:
a) any person insured by this policy; …
Mr. Butterfield filed an Application seeking a declaration that Intact owed him a duty to defend the action.
When determining if an insurer owes a duty to defend, the Court must consider the allegations in the pleadings. Assuming the allegations are true, if there is a mere possibility that there could be indemnity under the policy, then a defence ought to be provided. However, the Court is not limited to the wording in the pleadings and shall consider whether it is an attempt to “dress up” a non-covered claim as one that falls within the confines of the policy.
In this case, the Statement of Claim alleged that Mr. Butterfield was negligent. It was alleged that he had schizophrenia prior to the incident, which was asymptomatic. While in that asymptomatic state, he applied for a gun licence and then attended the gun shop. These acts were alleged to be negligent, since he ought to have known that he could suffer a psychotic episode, causing harm to the plaintiff. The Statement of Claim did not allege assault, battery, or any other intentional tort. This was likely because plaintiff’s counsel understood that such torts would not be covered under the liability provisions of Mr. Butterfield’s homeowners insurance policy.
Mr. Butterfield was charged criminally with aggravated assault. He underwent psychiatric assessments and was found Not Criminally Responsible (“NCR”) due to his mental condition.
It is important to note that there are different tests for responsibility, depending on the allegations:
- Criminal: Under section 16 of the Criminal Code, a person can be found NCR where they are incapable of: (1) appreciating the nature and quality of their actions (i.e., the physical consequences of the wrongful act); or, (2) knowing their actions were “morally wrong”.
- Negligence: A defendant will not be liable if, as a result of their mental illness, they: (1) lacked capacity to understand or appreciate their duty of care owed, or (2) were unable to discharge their duty of care because they had no meaningful control over their actions. There is some discrepancy amongst provinces as to whether the person must have a “sudden onset” of the mental condition, but this is not required according to the leading authority in Ontario.
- Intentional torts: A defendant will not be liable if they cannot appreciate the “nature and quality” of their actions. It is irrelevant whether the person believed their actions to be morally wrong. If the extent of the person’s condition were “so extreme” or to the level of automatism, they may not be liable for an intentional tort.
In the initial Application decision, Justice Braid examined the Statement of Claim. Despite the pleadings being limited to negligence, the Court must consider the true nature of the allegations. Justice Braid held that the negligence claim was derivative of an intentional tort which was the true nature of the claim:
 … the alleged negligence claim is based on the same harm as an intentional tort of assault (if it had been pleaded). The elements of the negligence and intentional tort are not sufficiently disparate to make them unrelated. While Mr. Butterfield may have been negligent in applying for the firearms permit, there is no causal link between that negligence and the damages, without the intentional tort of assault.
 The damages suffered by [the plaintiff] clearly flow from the attack. A plaintiff cannot convert the intentional tort of assault into an action in negligence solely to ensure that the defendant’s insurer will provide the necessary ‘deep pocket’ to make a judgment recoverable.
Justice Braid found that the intentional act exclusion would apply, resulting in no indemnity for Mr. Butterfield. As such, Intact did not have a duty to defend.
The Court further considered the criminal act exclusion. Mr. Butterfield had been found NCR. Justice Braid held that this must have been because Mr. Butterfield did not know his actions were “morally wrong”. In such a case, the accused is essentially guilty of the crime, but is “excused” from legal culpability and diverted into a special stream. It is implied in the Criminal Code that the person who benefits from the “morally wrong” excuse still committed the underlying criminal act. The criminal court must be satisfied that the accused has met the actus reus and mens reabefore finding them to be NCR. Therefore, Justice Braid reasoned that Mr. Butterfield had in fact committed a criminal act, despite there not being a formal conviction.
The Ontario Court of Appeal issued a brief decision dismissing Mr. Butterfield’s appeal. The Court agreed with Justice Braid’s analysis of the intentional act exclusion and commented as follows:
Despite the fact that negligence has been pled in this case, that claim is clearly derivative to the intentional tort alleged, namely, that the appellant assaulted the plaintiff, causing injury.
In result, the Court of Appeal did not need to review the criminal act issue.
This case is important for multiple reasons. There is surprisingly very little case law concerning civil liability for mental health issues. Most of the leading authorities are dated, leaving many to wonder how a contemporary court will tackle this issue. Until now, there was perhaps some uncertainty as to whether the courts would treat the word “intentional” in the policy exclusion the same as in the world of intentional torts when mental health issues are involved. This decision makes clear that the two terms are equal. An insured will not be afforded coverage where they commit an intentional act, regardless of whether they had a psychiatric episode.
The decision further enforces that courts must read the pleadings with caution. A plaintiff cannot bring a claim within the defendant’s policy coverage simply by pleading negligence. Even where the negligence claim might appear to have some merit, such as this case, coverage will be denied where the damages ultimately resulted from an excluded cause.
See Butterfield v. Intact Insurance Company, 2022 ONSC 4060 (CanLII) and Butterfield v. Intact Insurance Company, 2023 ONCA 246 (CanLII)
 Buckley and The Toronto Transportation Commission v. Smith Transport Limited, 1946 CanLII 77 (ON CA).
 Lawson v. Wellesley Hospital, (1976), 9 OR (2d) 677.
Better known around the water cooler as “Amazon Prime”, Tim has a knack for knowing just what his insurance clients need and delivering it overnight (at a premium). Whether he’s flexing his subrogation muscles, “nerding out” over a new coverage issue or investigating fraud, Tim enjoys thinking outside the box.