Even for COVID-19 Challenged Couples: Crime Still Doesn’t Pay – Literally!Aviva Canada Inc. v. 1843538 Ontario Inc. et al, 2019 ONSC 3874 (CanLII)
The months and moths of COVID-19 “togetherness” ha been challenging for many couples. As we reported back at the beginning of the pandemic, there has been a reported upsurge in divorce applications in China , as well as an apparent increase in incidents of infidelity elsewhere.
In a lighthearted digression from the usual Family Law topics, this week we will cover a question that may have fleetingly (and only theoretically!) crossed people’s minds in these relationship-straining times: As a beneficiary under his or her life insurance policy, would you still get a payout if you caused your spouse’s death?
The answer under Canadian law – perhaps unsurprisingly – is a firm “No”.
Under what is known more colloquially as the “slayer rule”, the legal concept called ex turpi causa non oritur actio (which is the Latin phrase for “no action arises from a base cause”) precludes a person who causes the death of another person, and who is also a beneficiary under that person’s life insurance policy, from profiting from that crime by receiving the insurance proceeds. This principle was confirmed long ago in a Supreme Court of Canada in a case called Hall v. Hebert and has been considered by the courts many times since, in various contexts.
One of them is seen in the recent insurance claim case called Aviva Canada Inc. v. 1843538 Ontario Inc. et al. The insurer Aviva had set up an investigation of the auto collision industry, prompted by its suspicions of fraudulent activity. Aviva bought and intentionally damaged two vehicles, had an independent appraiser assess the damage, then took them to a randomly-chosen body shop which happened to be owned by a man named Warda. The cars were equipped with hidden video recording devices, and Warda and his employees were unaware that a prior appraisal had been done.
Through this “test”, Aviva confirmed that Warda’s employees had added unneeded parts and unnecessary repairs to the written appraisals submitted back to Aviva and other insurers. Aviva also sued Warda directly for various fraud-based claims, including making repairs that were not necessary, deliberately and fraudulently damaging vehicles so that they would need repairs, and staging motor vehicle accidents. Among other things Aviva sought punitive damages from Warda to the tune of $100,000, as well as investigative costs of $200,000.
Warda responded by claiming that, in light of Aviva’s own alleged criminal mischief in setting up its test, it had no right to sue him. In other words, he raised the ex turpi causa concept, stemming from Aviva’s surreptition and deceit in orchestrating the investigation against Warda and other body shop owners in the first place. Against this background the court explained the concept this way:
Ex Turpi Causa
The primary issue raised by … Warda Defendants … is the doctrine of ex turpi causa. Under this tort doctrine, a party cannot rely on its own wrongdoing to ground a claim.
Justice McLachlin (as she then was) describes the origin of ex turpi causa in the Supreme Court’s leading case on the topic: Hall v. Hebert, 1993 CanLII 141 (SCC),  2 S.C.R. 159 (“Hall”) (at pp.170-71):
The power expressed in the maxim ex turpi causa non oritur actio finds its roots in the insistence of the courts that the judicial process not be used for abusive, illegal purposes. Thus Professor Gibson, in “Comment: Illegality of Plaintiff’s Conduct as a Defence” (1969), 47 Can. Bar Rev. 89, at p. 89, writes:
Few would quarrel with the proposition that a man who murders his wealthy aunt should not be allowed to receive the proceeds of her life insurance as beneficiary, or that two robbers who disagree over the division of the spoils would not be allowed to settle their dispute in a court of law. It was to deal with flagrant abuses like these that English courts developed the principle expressed in the maxim: ex turpi causa non oritur actio ‑‑ no right of action arises from a base cause.
The use of the doctrine of ex turpi causa to prevent abuse and misuse of the judicial process is well established in contract law and insurance law, where it provokes little controversy.
With that said, there are nuances in terms of how ex turpi causa operates, and at least one important distinction to be drawn: The doctrine prevents a person from profiting on the basis of illegal or immoral conduct, but does not prevent a person from being compensated for loss in circumstances where he or she would otherwise be entitled to it.
This was seen in the Hall case, where the Supreme Court of Canada considered a scenario where a man had a car accident while in the midst of committing a criminal offence, and suffered head injuries. The Court concluded that the ex turpi causa doctrine did not operate to preclude him, as the injured party, from going after compensatory damages relating to his injuries – even though he sustained them while engaged in a crime.
For the full text of the decisions, see:
Aviva Canada Inc. v. 1843538 Ontario Inc. et al, 2019 ONSC 3874
Hall v. Hebert, 1993 CanLII 141 (SCC),  2 SCR 159