Burnett or Grant v International Insurance Company of Hanover Ltd

CourtSupreme Court (Scotland)
JudgeLord Hamblen,Lord Reed,Lord Briggs,Lord Leggatt,Lord Burrows
Judgment Date23 Apr 2021
Neutral Citation[2021] UKSC 12

[2021] UKSC 12

Supreme Court

Easter Term

On appeal from: [2019] CSIH 9


Lord Reed, President

Lord Briggs

Lord Hamblen

Lord Leggatt

Lord Burrows

Burnett or Grant
International Insurance Company of Hanover Ltd
(Appellant) (Scotland)


Kenneth McBrearty QC

Robin Cleland

(Instructed by Clyde & Co (Scotland) LLP (Edinburgh))


Robert Milligan QC

Robert Weir QC

James Hastie

(Instructed by Lefevres (Edinburgh))

Heard on 8 February 2021

Lord Hamblen

( with whom Lord Reed, Lord Briggs, Lord Leggatt and Lord Burrows agree)


In the early hours of 9 August 2013, Craig Grant was killed as a result of an assault on him by Jonas Marcius (the first defender), a door steward employed by Prospect Security Ltd (the second defender) to work at the Tonik Bar in Aberdeen, operated by its tenant, Blu Inns Ltd (the third defender).


The respondent (“Mrs Grant”) is Mr Grant's widow. In March 2016 she commenced proceedings claiming damages against the defenders as his widow and in respect of their son, as qualifying relatives under the Damages (Scotland) Act 2011.


The appellant (the fourth defender) (“the insurer”) insured the second defender under a policy covering, among other risks, public liability. The second defender is in liquidation. Mrs Grant claims that the insurer would be liable to indemnify the second defender in respect of its vicarious liability for the wrongful acts of their employee, Mr Marcius, and that the right to be indemnified was transferred to and vested in her under the Third Party (Rights against Insurers) Act 2010 (“the 2010 Act”).


The second defender did not enter appearance and Mrs Grant abandoned the action against the first and third defenders, leaving in issue only her claim against the insurer. That claim succeeded before the Lord Ordinary and the insurer's reclaiming motion (appeal) was refused by the First Division of the Inner House of the Court of Session. The insurer now appeals to this court.


The central issue on the appeal is whether the insurer is entitled to rely on an exclusion under the policy of “liability arising out of deliberate acts” of an employee.

The background facts

The facts are taken from the Joint Minute of Admissions agreed for the purpose of the proceedings below and the Statement of Facts agreed for this appeal.


On the evening of 8 August 2013, Mr Grant went to the Tonik Bar in the Galleria Shopping Mall in Aberdeen. He was intoxicated as the result of both alcohol and cocaine and, having purchased a drink and taken it to a table, he fell asleep.


Mr Marcius woke Mr Grant up and, together with two other door stewards, Mr Hauley and Mr Morley, ejected him from the premises. Once outside, Mr Grant became involved in an altercation with the door stewards and hit out at Mr Hauley, who responded by punching or attempting to punch him. Mr Morley telephoned the police requesting their assistance. Mr Marcius took hold of Mr Grant around his shoulder or neck and he was wrestled to the ground. He applied a neck hold on Mr Grant and the other door stewards assisted in restraining him. The neck hold was applied for up to three minutes, and Mr Marcius was seen to lean on Mr Grant with all of his weight and put as much pressure on his windpipe as possible. Mr Grant continued to resist by kicking out for a short period of time, but he was then seen to turn blue and began to choke and cough. On the arrival of the police at the scene, Mr Grant was motionless and was pronounced dead shortly afterwards. The cause of death was mechanical asphyxia, caused by the application of the neck hold by Mr Marcius.


Mr Marcius stood trial at the High Court in Aberdeen for the murder of Mr Grant. Evidence was led at trial to the effect that Mr Marcius had undergone training in minimising conflict, avoiding violence and on acceptable methods of restraint; that the neck hold applied to Mr Grant was not taught as an acceptable method of restraint; that such a neck hold is considered so dangerous that it is not demonstrated in a classroom setting; and that in applying the neck hold, Mr Marcius ignored his training. The jury did not accept that Mr Marcius had asphyxiated Mr Grant or caused his death and he was only convicted of assaulting Mr Grant, by seizing him on the neck, forcing him to the ground, placing him in a neck hold and restricting his breathing. The trial judge, Lady Wolffe, accepted that Mr Marcius' actions were badly executed, not badly motivated. A non-custodial sentence was imposed consisting of a Community Payback Order with an unpaid work requirement of 250 hours.


It is agreed that Mr Marcius did not intend to kill Mr Grant.

The policy

The second defender was insured by the insurer under a one-year policy which commenced on 27 November 2012 (“the policy”). Cover was provided under eight different sections: Public/Products Liability; Inefficacy and Contractual Liability; Products Inefficacy; Wrongful Arrest; Loss of Keys; Financial Loss; Employers Liability, and Fidelity Guarantee. Each section had its own excess and limit of liability.


The policy describes the second defender's business as being “Manned Guarding and Door Security Contractors”. The annual premium is £2,875.55. The number of “door supervisor” employees is recorded as 57, with annual wages totalling £287,438.


In respect of public liability, the policy coverage is stated in the following terms:

“The INSURERS will indemnify the INSURED against all sums which the INSURED shall become legally liable to pay as compensatory damages and claimant's costs and expenses arising out of accidental

(a) INJURY to any person

(b) physical loss of or physical damage to material property

(c) obstruction trespass nuisance or interference with any right of way light air or water …”


“INJURY” is defined as “bodily injury death illness disease or shock causing bodily injury”.


There are a number of policy exclusions. Clause 14, so far as relevant, provides:


Liability arising out of deliberate acts wilful default or neglect by the INSURED any DIRECTOR PARTNER or EMPLOYEE of the INSURED other than as set out in Extension 1 (if such Extension is operative) and Extension 2 (if such Extension is operative).”


Extension 1 relates to Efficacy and Contractual Liability and Extension 2 to Products Efficacy.


Liability arising from or out of wrongful arrest is excluded by clause 20, but is then included by extension 3 which, so far as relevant, provides:

“All the Extensions are subject to all other terms conditions and Exclusions of the Policy


The INSURERS will indemnify the INSURED in respect of all sums which the INSURED shall become legally liable to pay as compensatory damages arising from or out of WRONGFUL ARREST committed or alleged to have been committed by the INSURED any DIRECTOR PARTNER or EMPLOYEE of the INSURED …”


Wrongful arrest is defined as:

“any unlawful physical restraint by one person on the liberty of another and includes:

(1) assault and battery committed or alleged to have been committed at the time of making or attempting to make an arrest or in resisting an overt attempt to escape by a person under arrest before such person has been or could be placed in the custody of the police or an officer of the court …”


The Schedule to the policy provides that the limit of liability in respect of public liability is £5m, while that for wrongful arrest is £100,000.


The policy is governed by English law. It has not been suggested that there is any difference between Scottish law and English law in relation to the issues on the appeal.

The proceedings below

The proceedings will be described using Scottish law terminology with the English law equivalent in brackets.


The insurer sought absolvitor (dismissal) on the basis that it was not liable to indemnify the second defender under the policy as Mr Marcius' actions fell within the clause 14 exception of “deliberate acts”. In the alternative, it was argued that, if it was obliged to indemnify, its liability was limited to £100,000 as Mr Marcius' actions fell within the definition of “Wrongful Arrest”.


The action proceeded to a Proof before Answer (trial with questions of law reserved for determination) before the Lord Ordinary (Lord Uist). The parties produced a Joint Minute of Admissions setting out the relevant evidence which was agreed. On 5 April 2018, the Lord Ordinary issued an opinion (judgment) in which he concluded that the insurer was obliged to indemnify the second defender in respect of their liability to the pursuer (claimant) arising out of the death of Mr Grant and that the second defenders' right to indemnity had been transferred to and vested in the pursuer (the claimant — Mrs Grant) under sections 1 and 3 of the 2010 Act. Decree of declarator (a declaration) was granted to that effect in terms of the pursuer's first conclusion (remedy sought in the pleadings).


The Lord Ordinary held that the clause 14 exclusion “applies only when the outcome giving rise to liability, namely death, was the intended objective”. There was no such intention, nor was it pleaded and so the exclusion did not apply. He also held that the wrongful arrest extension was irrelevant as no such action had been brought.


The appellant reclaimed (appealed) the interlocutor (order) of the Lord Ordinary. The reclaiming motion (appeal) was heard by the First Division of the Inner House (The Lord President (Lord Carloway), Lord Brodie and Lord Drummond Young) on 31 October 2018. On 22 February 2019, the First Division refused (dismissed) the reclaiming motion. All three of their lordships gave opinions (judgments).


In relation to the proper construction of the clause 14 exclusion, The Lord President, Lord Carloway, held as follows at para 23:


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