Law Times

Law Times • may 1, 2017 Page 3 www.lawtimesnews.com Judge slams exclusion clauses as unfair BY ALEX ROBINSON Law Times I n a rare decision, an Ontario judge declined to award costs to an insurance company after dismissing a claim against it. In Soczek v. Allstate, Allstate Insurance Company of Canada successfully argued that dam- age to a plaintiff 's house after her husband burned it down in an attempt to kill her did not fall under her insurance policy be- cause of an exclusion clause. In his decision, Ontario Su- perior Court Justice Edward Morgan dismissed the plaintiff 's claim, but he slammed Allstate, saying its "corporate conduct is less than admirable." Morgan refused to award costs to the insurance company, and he criticized the exclusion clause as unfair to innocent co-insureds, even though it is technically legal. "H.L.A. Hart once observed that formally legal rules can be 'unfortunately compatible with very great iniquity'. . . This case may prove his point," Morgan wrote in the decision. The case turned on whether an exclusion clause in the plain- tiff 's insurance policy applied to her despite the fact she was an innocent party. The clause said that the in- surer would not cover damage or loss resulting from a crimin- al act conducted by anyone in- sured under the policy or dam- age caused by vandalism or a malicious act by a resident of the household. The plaintiff, Wieslawa Soczek, was not seeking pay- ment for bodily injuries from Allstate but for damages to the house. Soczek's husband, Jan, had doused her in gasoline before he set her on fire inside their home, giving her serious burns and causing significant damage to the home. He pleaded guilty to attempted murder and was sen- tenced to 12 years in prison. In his decision, Morgan said the case highlights the prov- ince's lack of legislation to pro- tect innocent co-insureds who are victims of crimes. "Several provinces have inter- vened to protect innocent co- insureds and have legislated this type of exclusionary clause out of existence," he said. "And yet, Allstate continues to capitalize on it in those juris- dictions that have not seen fit to extend legislative protection to an innocent consumer such as the Plaintiff. This case graphic- ally illustrates the compound- ing of injuries which Allstate's policy imposes on victims of do- mestic violence." Other provinces, such as Al- berta, B.C. and Quebec, have enacted legislation banning exclusion clauses that prevent innocent insured parties from collecting, but Ontario has not followed suit. "Our law results in justice and fairness on the vast major- ity of occasions, but sometimes it doesn't, and this is clearly an example of one of those unfortu- nate situations where the law re- sults in unfairness," says Troy Lehman, a lawyer with Oatley Vigmond Personal Injury Law- yers LLP, who was not involved in the case. The plaintiff 's lawyer, Al- fred Kwinter, says he thinks the strength of the insurance lob- by in Ontario has deterred the provincial government from im- plementing its own ban on such clauses. Sheldon Gilbert, the lawyer representing Allstate, said that while the decision upholds a standard exclusion clause, "a reading of the judgment creates the extremely unfair impression that this exclusion to coverage is somehow unique to Allstate or that they have been the only in- surer relying on it." "In fact, as Mrs. Soczek's counsel is well aware, the same exclusion has be[en] relied upon by many other insurers for many years," he said in a statement. In the proceedings, Allstate maintained that the exclusion clause unambiguously applied to both co-insureds — Soczek and her husband. Kwinter argued that applying the exclusionary clause would be completely unfair, as the pur- pose of such clauses is to prevent insured persons from benefiting from intentional wrongdoing. His client, however, was an in- nocent victim, he said. "Why should an innocent party suffer?" he says. "It shouldn't apply because the person that is hurt is the in- nocent party that has nothing to do with the crime." Kwinter submitted a psychol- ogist's report, which argued that the husband may not have had the mental capacity to act inten- tionally when he lit the fire. Morgan dismissed the re- port, as the psychologist had not examined the husband and noted that the husband's guilty plea can be read as an admission that he intended to light the fire. Allstate also argued that the plaintiff had taken opposing positions in her claim against the insurer and a successful claim she brought against her husband for $75,000 in punitive damages. Allstate said the plaintiff had taken the position that her husband had intentionally and wilfully set the fire in her claim against him. The judge said that the con- f licting arguments ref lected the impossible situation that the ex- clusion clause forced the plain- tiff to take. Kwinter says the claim against the husband was com- pletely independent of the claim against Allstate. Kwinter adds that he does not know yet whether his client will look to appeal the decision. Gilbert said that despite the judge's decision to dismiss the claim, his client has instructed him to speak with Kwinter "with a view to attempting to arrive at a mutually acceptable resolution." LT NEWS Alfred Kwinter says applying the exclusion- ary clause in a recent Ontario Superior Court case would be completely unfair to his client. Untitled-2 1 2017-04-03 2:47 PM

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