When deliberate isn’t deliberate

Insurer's appeal dismissed as exclusion clause does not cover deliberate act in assault case.

Mrs Fiona Elsie Burnett or Grant v International Insurance Company of Hanover Ltd [2019] CSIH 9 PD4/16

Executive summary

The Court of Session found, on appeal, that an exclusion clause in the defenders’ policy of public liability insurance did not apply in a case where an individual was killed by an insured’s employee. The clause did not operate as the killing was not “a deliberate act”.

Background

Craig Grant died as the result of an assault by a pub bouncer, during which he was put in a neck restraint that proved fatal. The bouncer was later convicted of assault rather than murder. The view of the criminal court was that, whilst the bouncer had not intended to kill Mr Grant, his restraint methods were badly executed. His widow pursued a claim against Hanover, as the public liability insurers of the bouncer’s employers, direct for damages and obtained a finding in her favour at first instance.

Hanover appealed the decision on the basis that the policy of insurance, while providing cover for accidental injuries, also contained an exclusion clause that absolved them of liability. The clause stated that the following would not be covered: “deliberate acts wilful default or neglect by the insured any director partner or employee of the insured” (lack of punctuation in the original). Hanover argued that the assault by the bouncer was a “deliberate act” and therefore triggered the exclusion.

Mrs Grant asserted that the insurer must prove that the exclusion applied (was the act deliberate?) and argued further that the exclusion itself was ambiguous as to what was considered “deliberate”. For example, one reading of the exclusion would indicate that all assaults were excluded from the policy. If this was correct, the policy would have little value in terms of providing cover to a security company where claims arising from assaults were likely to be a clear risk.

The appeal court’s decision

The court understood that the question before them was whether “as a matter of proper construction of the insurance contract, the death of [Mr Grant], which was admittedly as a result of the [bouncer’s] assault on him, was caused by the “deliberate acts wilful default or neglect” of the [bouncer].”

All parties agreed that the proper basis on which to approach construction of the wording in the policy was set out in Yorkshire Water v Sun Alliance & London Insurance [1997] CLC 213. The words of the policy must be given their ordinary meaning and reflect the context in which the agreement was made in terms of the intention of the parties and the commercial background. Furthermore the court understood that a literal interpretation of the clause that led to an absurd result should be rejected and any ambiguity must be resolved in favour of Mrs Grant.

On the basis of the above the court looked at the commercial context of the policy. In particular it was noted that the policy covered a security company and that it would be inevitable that the employees of that company would, on occasion, commit assaults in the course of their duties. The court rejected as absurd an interpretation of the exclusion clause that would allow the insurer generally to escape liability for all assaults.

The court also examined, in detail, what constituted a “deliberate act”. The court accepted that “deliberate” must be construed from the point of view of the security company as well as their employee. It was noted that it was found at the criminal trial that the employee had not intended to cause the death of Mr Grant but simply to restrain him. The lack of intention to kill or injure Mr Grant precluded the assault from being seen as a “deliberate act”.

Hanover argued that the exclusion clause must have some function (even if was not as all- encompassing as they first hoped) and argued that a construction should be inserted that required the “deliberate act” to be also “unlawful” or at least “blameworthy.” This would have extended the operation of the exclusion clause to allow it to apply in respect of the assault in question. The court rejected this argument, seeing no link between the words “deliberate” and “unlawful” and no need to construct further meaning to the wording. The appeal was refused.

Conclusions and implications

Cases of this type tend to be very fact-specific and previous factually similar cases will have a limited influence on the court. The court will seek to give the disputed words their ordinary meaning in their specific context.

This decision, which should be taken as a salutary warning, highlight the view the courts will take, especially in insurance cases, where the insurer seeks to restrict its cover to the insured. If context is not taken into account, the policy wording may be vulnerable if an ambiguity within the policy subsequently arises. The insurer will also be at risk of the ambiguity being resolved in favour of those seeking to claim on the policy.

If you have any questions or would like to know more about our legal update, please contact Doug Keir (Partner) or Pamela Stevenson (Partner).

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