The Law of Intended Consequences

• Where a policy covers liability arising from injury, the application of a “deliberate acts” exclusion does not require an intention to cause a particular type of injury. The exclusion simply requires that the relevant act was intended to cause “injury”.
• Although this decision concerns personal injury (the likes of which will not arise in New Zealand) it may be interpreted by our courts as persuasive authority for a broad interpretation of “deliberate acts” exclusion clauses.

In August 2013 Craig Grant, heavily intoxicated, became involved in an altercation with the doormen outside a bar in Aberdeen, Scotland.  The doormen were employees of a company contracted to provide door security for the bar (security company).  One of the doormen, Jonas Marcius, applied a neck hold to Mr Grant, putting a large amount of pressure to his windpipe.  Mr Grant became unconscious and died shortly afterwards.

Mr Marcius stood trial in the criminal courts.  He was found not guilty of murder but was convicted of assault.  In reaching a verdict the trial judge accepted that the actions were “badly executed, not badly motivated”.

Mr Grant’s widow commenced civil proceedings against the security company, claiming damages.  The security company was in liquidation but held an insurance policy with International Insurance Company of Hanover Ltd (insurer).  Mrs Grant joined the insurer under the equivalent legislative provision to s9 of New Zealand’s Law Reform Act 1936.

The policy covered the security company’s liability for compensatory damages arising out of injury to any person.  It excluded liability arising from “deliberate acts, willful default or neglect by the insured” (including any employee).

The main issue for determination in the case was whether the death of Mr Grant was brought about by a deliberate act of Mr Marcius and so falling within the terms of the exclusion.

The court at first instance found that the exclusion would only apply where the outcome giving rise to liability (in this case, death) was the intended objective.  Because the parties all agreed that Mr Marcius had not intended to kill Mr Grant, it said the exclusion did not apply.

This decision was upheld on first appeal, where the court found that application of the exclusion clause should be confined to cases where the employee makes a deliberate decision to use excessive force to cause injury.  Unless the harm suffered was of the general nature intended by the employee, it could not be said that liability for that harm arose out of the ‘deliberate act’ of the employee.

The insurer appealed to the Supreme Court, where Mrs Grant sought to have the decisions of the lower courts upheld.  At the very least, her lawyers argued, where death resulted, the exclusion should only be triggered where there was an intention to cause serious injury.  They argued that a broad interpretation of the clause (as advocated by the insurer) would mean that the policy would lack meaning.  It is in the nature of the role of a doorman that they will occasionally find themselves in physical altercations with injury resulting.

The Supreme Court disagreed with the lower courts and rejected Mrs Grant’s arguments.

It found that “deliberate acts” clauses are designed to exclude cover where an act is carried out with the deliberate intention of bringing about a particular objective, and that objective gives rise to liability for losses covered by the policy.  Therefore, the most natural reading of the exclusion clause was that it is the act of causing injury – liability for which was covered by the security company’s policy – which must be deliberate.

There was nothing in the policy to support an interpretation which draws distinctions between different kinds of injury, or between serious and minor injuries.  For the exclusion to be triggered it is sufficient that the causing of injury was deliberate.

Having adopted the interpretation of the clause advanced by the insurer, however, the Supreme Court ultimately found that cover was not excluded, as there had been no finding of fact in the lower court that Mr Marcius had intended to cause injury (of any sort) at all.

This case dealt with the interpretation of a liability policy in a personal injury claim, so we would not see an equivalent case in New Zealand.  However, the decision is relevant to the construction of “deliberate acts” exclusion clauses generally.

In this regard, it provides support for a broad interpretation of such clauses, where the requisite intention is assessed according to the type of liability covered by the policy in general, rather than to a specific outcome of the act giving rise to liability.

The decision also provides a cautionary reminder that appellate courts are not finders of fact.  Success in advocating for a particular legal position on appeal will be of no use unless the relevant facts necessary for its application have already been established in the courts of first instance.

1. Burnett or Grant v International Insurance Company of Hanover Ltd (Scotland) [2021] UKSC 12

This publication is intended as a general overview and discussion of the content dealt with. It should not be used in any specific situation, in which case you should seek specific legal advice.