A June 2021 UK Supreme Court judgment has highlighted the difficulties insurers may face when relying on a intentional or deliberate acts exclusion.
A bouncer at a pub in Aberdeen, Scotland had applied a non-approved neck hold on a rowdy customer resulting in the customer’s death due to mechanical asphyxiation. In a subsequent criminal trial, the jury convicted the bouncer of assault, with the trial judge accepting that the bouncer’s actions were badly executed, and not badly motivated.
The customer’s widow commenced civil proceedings claiming damages against the bouncer, the security company that employed him, the operator of the pub where the incident occurred, and security company’s insurer. The widow eventually abandoned her claims against the first three parties, leaving only her claim against the insurer in issue.
The pub for whom the bouncer worked had a policy of insurance containing a public liability clause whereby the insurer agreed to indemnify the insured against claims for compensatory damages arising out of accidental injury to any person, including death.
The policy contained a “deliberate acts” exclusion, which excluded the insurer’s “liability arising out of deliberate acts wilful default or neglect” of an employee of the insured.
The insurer argued that the term “deliberate acts” included acts carried out recklessly, but was unable to point the court to any authority where recklessness had been accepted to amount to deliberate conduct. In lieu of this authority, the insurer referred to precedent that extended “wilful default” to include recklessness. The widow on the other hand argued that the exclusion would apply only to acts that were intended to cause the specific injury that was in fact caused.
The court rejected the insurer’s argument that wilful default would include recklessness, as this would unduly circumscribe the cover provided, especially given the nature of the insured’s business.
However, the court ultimately agreed with the insurer that it was enough for some injury to be intended for the exclusion to be triggered, as, so the court reasoned, it is not the act that causes the injury that must be deliberate, but the act of causing injury itself.
The insurer was ultimately unable to persuade the court that the deliberate acts exclusion applied to the facts of the matter. The lower courts had found no evidence of an intention to injure. The court was moved by the trial judge’s view in the criminal proceedings that the neck hold was carried out badly, but that it was not intended to kill or seriously injure the deceased.
The policy also included an indemnity in respect of losses caused by the wrongful arrest of any person (or “unlawful physical restraint by one person on the liberty of another”), including assault and battery committed at the time of making the arrest. In light of the court’s finding that the deliberate acts exception did not apply, the court held that the insurer had no defence to the widow’s claim under the wrongful arrest clause, and accordingly dismissed the appeal.
The judgment contains a useful summary of the UK case law regarding deliberate acts in insurance. “Recklessness” has a well-known meaning distinct from “deliberate”. If an insurer intends “deliberate” to include “recklessness” the clear language of the policy should provide for that.
The UK Supreme Court was not willing to interpret the exclusion in a way that would unduly limit the cover provided to the security company, as doing so would have “stripped [the policy] of much of its content”.
*This blog was co-authored by: Lisa Kriegler