Porter v Zurich Insurance Company
| Jurisdiction | England & Wales |
| Judgment Date | 05 March 2009 |
| Neutral Citation | [2009] EWHC 376 (QB) |
| Date | 05 March 2009 |
| Court | Queen's Bench Division |
| Docket Number | Case No: 7LV90047 |
[2009] EWHC 376 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LIVERPOOL DISTRICT REGISTRY
Manchester Civil Justice Centre
Crown Square, Manchester
Before: Mr Justice Coulson
Case No: 7LV90047
Mr Robert Sterling (instructed by E.Rex Makin & Co) for the Claimant
Mr Daniel Crowley (instructed by Beachcroft LLP) for the Defendant
Hearing Dates: 24th, 25th and 26th February 2009
The Honourable Mr Justice Coulson:
A. INTRODUCTION
By a policy of insurance effective for twelve months from 12 September 2000, the defendant (“the Zurich”) agreed to indemnify the claimant (“Mr Porter”) against loss of or damage to his property known as 'Claremond', Landican Lane, Bebington, Wirral, Merseyside L63 6HW (“the property”) and the contents and personal possessions within.
General Exclusion Clause 1 of the policy excluded “any wilful or malicious act by a member of the family or by a person lawfully at or in the home”. In addition, Condition 3 of the policy required Mr Porter to co-operate with the Zurich in various ways, and Condition 6 required him “and members of the family [to] take all reasonable steps to safeguard against loss, damage, accident or injury”.
On the evening of 27 March 2001, following a series of disastrous events in his business and personal life, Mr Porter, who had been drinking heavily and was suffering from a persistent delusional disorder, decided to kill himself by setting fire to the property. He set a fire but, once a large part of the living area was ablaze, he changed his mind and escaped from the property. The property was severely damaged in the fire and was rendered uninhabitable. Fortunately, no-one was injured, although the family dog died a few days later due to the effects of smoke inhalation.
The principal claim in these proceedings comprises Mr Porter's claim against the Zurich, pursuant to the terms of the insurance policy, for the damage caused by the fire. The Zurich defend that claim on the grounds that, because Mr Porter started the fire intentionally, he cannot recover under the policy, because that would be contrary to public policy and/or the general law of insurance and/or because the fire arose from his wilful or malicious act, and was therefore excluded by General Exclusion Clause 1. In response, it is alleged that, so grave was Mr Porter's mental illness at the time of the fire, his “thoughts and judgement were grossly impaired and he was not acting as a free agent” 1. Accordingly, it is said that neither the public policy nor the contractual exclusion clause were triggered, because, although it is admitted that he set fire to the property, Mr Porter “did not do so deliberately, wilfully or maliciously” 2.
After the fire, once the property had been boarded up, there were a succession of three thefts from the property. Although claims were made by or on behalf of Mr Porter to the Zurich in respect of these three thefts, the loss adjusters appointed, McLaren Toplis, were unable to make any progress at all in their investigations of the circumstances. Despite their efforts, no meetings took place with Mr and Mrs Porter, no inspections of the property could be arranged, and no statements were taken. Accordingly, the Zurich defend the theft claims on the grounds that Mr Porter (and/or those acting on his behalf) were in breach of Condition 3 of the policy (co-operation), and that the consequences of those breaches equate to or cancel out any claim under the policy that Mr Porter would otherwise have.
The trial on liability only took place on 24 th, 25 th and 26 th February 2009. At the conclusion of the hearing I told the parties that I would hand down a written judgment on Thursday, 5 th March. This is that Judgment and I should, at its outset, acknowledge the considerable assistance that I received from both counsel during this trial.
I propose to deal with the fire claim in this way. At Section B below, I deal with the principles of law, in particular insurance law, applicable to circumstances such as these. At Section C below I set out the background to the fire and, at Section D below, I deal in greater detail with the relevant events of the 26th and 27th March 2001. At Section E below, I summarise the medical evidence, including the contemporaneous medical records and the written and oral evidence of the two expert psychiatrists. At Section F below, I set out my analysis and conclusions in respect of the fire claim.
In respect of the theft claims, I deal in Section G below with the relevant facts surrounding the three theft claims. At Section H, I identify the issues arising out of the alleged breaches by Mr Porter of his duty to co-operate, pursuant to Condition 3 of the policy. Thereafter, at Section I, I set out my analysis and conclusions in respect of the allegations of breach and causation. There is a short summary of my conclusions at Section J below.
B. THE PRINCIPLES OF LAW APPLICABLE TO THE FIRE CLAIM
B1. Public Policy
It is trite law that the assured may not recover under a policy of insurance in respect of a loss intentionally caused by his own criminal act: see Beresford v Royal Insurance Co [1938] A.C. 586, and Hardy v Motor Insurers' Bureau [1964] 2 QB 745. This rule is founded on the principle of public policy applicable to all contracts, that a court will not assist a criminal who seeks to recover any kind of benefit or indemnity for his crime, for to do so would remove a restraint upon the commission of crimes: see Gray v Barr [1971] 2 QB 554. In the present case, it is not disputed that, in setting fire to a property that was both mortgaged and the subject of two other charges in favour of third parties, Mr Porter's actions on the night of 27 March 2007 amounted to the crime of arson.
In Beresford, the claim made by the personal representative of a man who committed suicide, to recover under his life assurance policy succeeded at first instance, but was dismissed by the Court of Appeal and subsequently by the House of Lords. At the time, suicide was a crime. The jury had been asked, and answered in the negative, the question whether the deceased at the time of his death was “labouring under such a defective reason from disease of the mind as not to know the nature and quality of the act he was doing or, if he did know it, that he did not know that he was doing what was wrong?” That question, taken from Daniel M'Naghten's Case [1843] 10 Cl & Fin 200 is dealt with in greater detail in Section B4 below.
Having considered the facts of the case in Beresford, Lord Atkin said that there were two issues: the true construction of the contract of insurance and its enforceability. He concluded that, on the true construction of that contract of insurance, the insurers had indeed agreed with the assured to pay to his executors or assigns on his death the sum assured if he died by his own hand, whether sane or insane, after the expiration of one year from the commencement of the insurance. However, he went on to conclude that the contract was not enforceable in a court of law because, as a matter of public policy, courts will not assist anyone to profit from his own crime.
B2. Insurance Law Generally
It is a general rule of insurance law that an assured cannot normally recover the policy monies when he has intentionally brought about the event upon which the policy specifies the monies to be payable: see Britton v Royal Insurance Co (1866) 4 F & F 905 at 908. It has been said that this is a prima facie rule of construction of the contract of insurance, by which it is presumed that the insurers have not agreed to pay on that happening. Lord Atkin in Beresford summarised that general principle in this way;
“On ordinary principles of insurance law an assured cannot by his own deliberate act cause the event upon which the insurance money is payable. The insurers have not agreed to pay on that happening. The fire assured cannot recover if he intentionally burns down his house, nor the marine assured if he scuttles his ship, nor the life assured if he deliberately ends his own life. This is not the result of public policy, but of the correct construction of the contract.”
Of course, a particular contract may be capable of being construed in a way that is not in accordance with this general rule of construction; indeed, Beresford is an example of such a contract.
B3. 'Wilful And Malicious'
In the present case, General Exclusion Clause 1 excluded claims arising out of 'any wilful or malicious act' by Mr Porter or a member of his family. Unsurprisingly, the Zurich seek to rely on that clause as an alternative defence to this claim.
In Re Young and Harston's Contract [1885] Ch Div Vol XXXI p168, the contract in question was a contract for the sale of land which provided for interest to be paid if there was a delay from any cause “other than wilful default on the part of the vendor”. The Court of Appeal therefore had to consider what 'wilful' meant. Bowen LJ said that 'wilful':
“…is a word of familiar use in every branch of law, and although in some branches of the law it may have a special meaning, it generally, as used in courts of law, implies nothing blameable, but merely that the person of whose action or default the expression is used, is a free agent, and that what has been done arises from the spontaneous action of his will. It amounts to nothing more than this, that he knows what he is doing, and intends to do what he is doing, and is a free agent.”
Of considerably greater relevance, in my judgement, is the decision of the Court of Appeal in Patrick v Royal London Mutual Insurance Society Ltd [2007] Lloyd's LR 85. In that case the fire in question was started by the assured's son, a boy of 11, and his friend. The...
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