Burnett or Grant (Respondent) vs. International Insurance Company of Hanover Ltd (Appellant) (Scotland) - (23 Apr 2021)

“Deliberate acts” in Clause 14 of the policy includes acts which are intended to cause injury

Insurance

On 9 August 2013, Craig Grant was killed as a result of an assault on him by Jonas Marcius, a door steward employed by the Prospect Security Ltd ("Prospect") to work at the Tonik Bar in Aberdeen. The assault occurred during an altercation which occurred following Mr. Grant’s ejection from the bar, during which Mr. Marcius applied a neck hold to Mr. Grant, who was later pronounced dead at the scene. The cause of death was mechanical asphyxia, caused by the application of the neck hold.

In March 2016, Mrs. Grant, the Respondent in this appeal, brought a claim for damages in her capacity as Mr Grant’s widow against a number of parties including Mr. Marcius, Prospect and the Insurer. The claim was ultimately discontinued against all defendants save for the Insurer. Mrs. Grant claims that the Insurer would be liable to indemnify Prospect, who is in liquidation, in respect of its vicarious liability for the wrongful acts of their employee, Mr. Marcius, and that the right to be indemnified was transferred to and vested in her under the Third Party (Rights and Insurers) Act, 2010. The Insurer sought to have the claim dismissed on the basis that it was not liable to indemnify Prospect under the policy as Mr. Marcius’ actions fell within the exclusion of "deliberate acts" in clause 14 of the policy. It was further argued that any liability to indemnify arose under Extension 3 of the policy, which provided coverage for public liability for wrongful arrest limited to £100,000. Mrs Grant’s claim succeeded and the Insurer’s appeal was dismissed by the Court of Session.

On appeal to the Supreme Court, the issues are: (1) is the Insurer entitled to rely on an exclusion under the policy of "liability arising out of deliberate acts" of an employee; and (2) was the death of Mr. Grant brought about by M.r Marcius’ wrongful arrest of him under the terms of Extension 3 of the policy, with the effect that the insurer’s liability to indemnify Mrs. Grant is limited to £100,000?

The terms of the policy do not provide any support for an interpretation which draws distinctions between different kinds of injury, or between serious and less serious injuries. The insured peril is liability arising out of accidental “injury” and this means all kinds of “bodily injury” without differentiation. The policy, like any other contract, is to be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean. This involves a consideration of the words used in their documentary, factual and commercial context.

"Deliberate acts" in clause 14 of the policy means acts which are intended to cause injury, but rejects the contention that the clause extends to recklessness. It is not the act which gives rise to the injury that has to be deliberate, but the act of causing injury itself. This is the most natural interpretation of the clause. The terms of the policy do not provide any support for an interpretation which draws distinctions between an intention to cause different kinds of injury, or serious and less serious injuries. Such distinctions would lead to unsatisfactory and arbitrary results, such that it is most unlikely to reflect the parties’ intentions.

Therefore, the application of the exclusion does not depend on the particular type or extent of injury involved. It is sufficient if the causing of the injury was deliberate. Clause 14 does not, however, extend to reckless acts. The natural meaning of "deliberate" acts is the conscious performance of an act intending its consequences. This involves a different state of mind to recklessness. The Insurer has not been able to produce any case in which "deliberate" has been held to include recklessness. If, exceptionally, "deliberate" was intended to include recklessness, one would expect it to be made clear what that means in this context. Further, an exemption of reckless acts would seriously circumscribe the cover provided, as it would lead to a very wide and commercially unlikely exclusion, given the nature of Prospect’s business.

The Insurer is unable to establish that the Clause 14 exclusion applies on the facts as found. There was no finding by the courts below of intention to injure, or even recklessness. The conviction for assault does not establish any intention beyond an intention to perform the act of assault, namely the neck hold. The sentencing judge concluded that what was done was "badly executed, not badly motivated," which is inconsistent with such an intention. Clause 14 does not apply, the Insurer has no defence to the claim made under the main insuring clause and the appeal must be dismissed.

Tags : INSURER LIABILITY DAMAGES