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Burnett or Grant v International Insurance Co of Hanover Ltd

This Supreme Court decision rejected the attempts of an insurer to avoid a liability to provide an indemnity to the insured security company for a death resulting from a customer’s altercation with door staff at a bar in Aberdeen.

From some time before the emergence of sex abuse claims the courts have frequently grappled with the issue of employers’ vicarious liability for the acts of their violent employees. While this case also dealt with a violent employee, the issue here was one step removed by looking at an exclusion clause in the public liability insurance policy for the employer.

The door steward had applied a non-approved neck hold to the customer on the street outside the bar for up to three minutes, and the customer died at the scene from mechanical asphyxiation. The bar steward’s employer was in liquidation and his mother, Mrs Grant, brought a claim directly against its insurers under the Third Parties (Rights against Insurers) Act 2010.

By clause 14 of Hanover’s policy there was an exclusion for “liability arising out of deliberate acts wilful default or neglect” of an employee.

The door steward had been prosecuted for murder but was convicted only of assault. The sentencing judge accepted that his actions were “badly executed, not badly motivated”.  Nevertheless, Hanover argued that the deliberate acts exclusion applied to acts which were intended to injure, or acts which are carried out recklessly as to whether they will cause injury. On the facts, Hanover argued that the door steward must have intended some injury, or been reckless as to injury, in the circumstances of the neck hold.

The pursuer (the claimant, Mrs Grant) argued that the exclusion would apply only to acts which were intended to cause the specific injury which resulted, in this case death, or at least serious injury.

The Supreme rejected Hanover’s interpretation of clause 14 which extended the meaning of “wilful default” to include recklessness.  That would ignore the very risks which are inherent in a door security business and for which one would expect the public liability cover to be effective, leading to a commercially unlikely outcome.

However, the Court agreed with Hanover’s argument that it was enough for some injury to be intended.  Mrs Grant’s argument that it must mean the specific injury caused could not be right, since it was a matter of chance what injury a violent act might result in.  Nevertheless, on the facts of the case as decided at first instance (and bearing in mind the criminal court’s findings), there was no finding of intention to injure (or even recklessness).

The decision contains some useful analysis of the meaning of the terms “deliberate” and “wilful” in insurance policies, applying the well known guidance on interpretation from Wood v Capita Insurance Services Ltd [2017] UKSC 24.  It also stands a useful reminder of the need to look at the commercial context in which insurance policies are bought and sold.  If Hanover’s argument had succeeded then, as the Court held, then “the policy would be stripped of much of its content”, ie its value to a door security company buying public liability cover.

Case commentary by Ivor Collett.



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