Supreme Court considers meaning of 'deliberate act' in public liability insurance policy

The Supreme Court has considered the meaning of the phrase ‘deliberate acts’ in an exclusion clause in a public liability insurance policy in the case of Burnett or Grant v International Insurance Company of Hanover Limited [2021] UKSC 12. The claim related to the death of a man who, in the course of being ejected from licensed premises by door stewards, was restrained by one of them using a neck hold and subsequently died from mechanical asphyxia.

The Supreme Court has provided useful guidance on the approach to be taken to interpreting exclusion clauses in such policies in relation to both deliberate and wilful conduct.

Background

Mr Craig Grant died on 9 August 2013 as a result of being improperly restrained by a door steward on a security team while being removed from a bar in Aberdeen. The door steward in question was later convicted of assault but found not guilty in relation to a charge of murder. At sentencing, the trial judge commented that the door steward’s actions to restrain Mr Grant were “badly executed, not badly motivated” and imposed a non-custodial sentence.

Mr Grant’s widow initially brought claims against a variety of parties, however, the final claim only progressed against the door steward’s employer, Prospect Security Services Limited (Prospect) and, as Prospect was in liquidation, their public liability insurers under the Third Parties (Rights against Insurers) Act 2010.

The policy

The policy, which was governed by English law, described the insured’s business as “Manned Guarding and Door Security Contractors”. It provided cover under eight separate sections, each of which had its own excess and limit of liability. The limit of liability in respect of public liability was £5m while the limit for wrongful arrest was £100,000. The policy provided insurance cover for all sums Prospect were liable to pay as “compensatory damages … arising out of accidental ... injury to any person.” There was an exclusion clause for “deliberate acts wilful default or neglect by the Insured any Director Partner or Employee of the Insured”.

Court of Session and Inner House decisions

The main issue for the courts was whether the insurer could rely on the deliberate acts exclusion in the policy.

At first instance, Lord Uist in the Court of Session held that the ‘deliberate acts’ exclusion only applied when the outcome giving rise to liability (in this case, Mr Grant’s death) was the intended objective. In this case, there was no such intention, nor had the insurer pleaded there was such an intention.

Lord Uist’s decision was appealed to the Inner House (the Scottish appeal court) which upheld his decision. The insurer appealed to the UK Supreme Court.

Supreme Court’s judgment

The Supreme Court’s judgment, dismissing the appeal, was issued on 23 April 2021.

Construction and context

The court’s analysis began by referring to the principles of construction set out by Lord Hodge in Wood v Capita Insurance Services Ltd [2017] UKSC 24, noting that the process of construction will involve considering the words used in their “documentary, factual and commercial context”.

The court noted that the correct perspective from which to view whether an injury was ‘accidental’ was the perspective of the insured employer rather than the perspective of the door steward employee.

With reference to context, the court referred to the fact that the policy was provided in respect of “Manned Guarding and Door Security Contractors”. There was a clear risk with such a business that door stewards would use a degree of force in carrying out their duties and that vicarious liability for their tortious acts might result. That type of liability was “inherently likely” to arise as the services would often involve “deliberate physical acts of one kind or another”.

Did recklessness amount to a ‘deliberate act’?

The critical issue between the parties was what the scope of the term ‘deliberate acts’ was. This focused on the question of whether recklessness could amount to a ‘deliberate’ act under the policy.

The court began its discussion of this issue by considering what it was that required to be ‘deliberate’. The court noted that it was common ground that it was not the act which ultimately gave rise to the injury that had to be ‘deliberate’. The most natural interpretation of the clause was that it was the act of causing the injury that had to be ‘deliberate’. In relation to the specific injury caused, the court further noted that the terms of the policy did not support an interpretation that sought to draw distinctions between different kinds of injury or degrees of seriousness of injury intended. In any event, an interpretation that focused on the specific type or degree of injury intended would lead to unsatisfactory and arbitrary results and would be unlikely to reflect the parties’ intentions. In conclusion, the court was of the view that the relevant intention therefore was intention to injure.

Mrs Grant argued that only acts that were intended to cause the outcome that in fact resulted (here, death, or at least serious injury) should fall within the scope of the term ‘deliberate acts’. That did not include reckless acts. To find otherwise would deprive the policy of any meaningful and effective content.

The insurer argued that both (a) acts which were intended to cause injury and (b) those which were carried out recklessly as to whether they would cause injury, should fall within the term ‘deliberate acts’. The insurer was unable to point the court to any previous authority where recklessness had been accepted as amounting to ‘deliberate’ conduct. However, it was argued that the relevant clause of the policy, which referred to both ‘deliberate’ and ‘wilful’ conduct, should be interpreted so as to treat the words ‘deliberate’ and ‘wilful’ as synonymous. Reference was made to case law in which recklessness had been accepted as amounting to ‘wilful’ conduct.

The court rejected the insurer’s argument. The natural meaning of ‘deliberate’ suggested the conscious performance of an act intending its consequences. It involved a different state of mind to recklessness. By contrast, while the natural meaning of ‘wilful’ could include ‘deliberate’ conduct, it was capable of a wider meaning, particularly in relation to, e.g. breach of duty. If the parties had intended ‘deliberate’ to include recklessness, one would expect that to have been made clear in the policy.

The court was also of the view, as the lower courts had been, that the insurer’s interpretation would seriously circumscribe the cover provided. This would amount to a “commercially unlikely” exclusion given the nature of the business of the insured.

Was there nevertheless evidence of intention to injure?

The insurer also sought to argue that, aside from recklessness, there was clear evidence of intention to injure on the part of the door steward. In this regard, they pointed to the nature of the assault of which the door steward had been convicted. He had used a dangerous neck hold which had not been taught to him as an acceptable method of restraint during his training. That hold had been applied for a considerable period and with considerable force. The court also rejected this argument. There was no finding of intent to injure in the lower courts and the conviction for assault had only established an intent to perform the act of assault (the neck hold). Further, the sentencing judge’s remark that the door steward’s actions were “badly executed, not badly motivated” was inconsistent with there being any such intention.

Comment

While each case will turn on its facts, the Supreme Court’s judgment highlights the difficulties that insurers can face when seeking to rely on intentional/deliberate act exclusions. Interpreting the clause narrowly, the court was clear that deliberate does not include recklessness and the door steward’s lack of intention to cause Mr Grant’s death meant that his actions had not been ‘deliberate’ within the meaning of the exclusion clause. The judgment also suggests that the Supreme Court were influenced by public policy considerations, being unwilling to interpret the clause in a way that would “seriously” limit the cover provided given the nature of the insured business.