Professional Liability Guide

CHAPTER 9 – EXCLUSIONS

Accordingly, although it was probably the intention of the insurer to exclude such a claim, that was not the effect of the exclusion, having regard to its plain and natural meaning. The Court held that the insurer could have expressly excluded a claim made by a trustee concerning a trust of which the insured or members of the insured’s family were beneficiaries. 525 Conduct Another often contentious exclusion clause is that pertaining to criminal, unlawful, dishonest, reckless, fraudulent or intentional conduct. For a conduct exclusion to be triggered, the performance of the acts or omissions prohibited by the conduct exclusion must usually be determined by a judicial finding or by formal admission of the insured. Criminal/unlawful conduct In the case of criminal or unlawful conduct, the doctrine of ex turpi causa provides that an insured cannot claim under an insurance contract if they have to rely on their own illegality or seek to profit from that illegality. The leading UK decision on this point suggests that an insurer’s exclusion of cover (in that particular case) for ‘ the insured person’s own criminal act ’ should not be limited by ‘ a subjective test of conscious wrongdoing ’ and will operate to exclude all criminal acts other than those of ‘ inadvertence or negligence ’. 526 On the other hand, at least one academic view suggests that equivalent expressions concerning criminal acts have ‘ no single or fixed meaning ’, and that ‘ where other grounds of exclusion contained in the same clause [refer to activities requiring some element of intention], criminality may be confined to intentional acts ’. 527 The collective expression of ‘ criminal, dishonest or fraudulent acts or omissions ’ could be said, on that reasoning, 528 to require some intentional act. However, the question often arises whether a breach of certain legislation (e.g. occupational/ workplace health and safety legislation) constitutes criminal or unlawful conduct where it satisfies some of the key indicia of being criminal or unlawful (such as involving a prosecution of an offence under summons with the potential for imprisonment ), whilst not falling under the criminal code or being specifically identified as criminal.

A distinction can be drawn between:

ƒ intentional or fault-based crimes involving at least an element of reckless behaviour or wilful blindness or indifference to the consequences of one’s actions; and ƒ unintentional or inadvertent offences, such as those involving strict liability offences or arising from vicarious liability that have no mens rea (the necessary element of intent) or moral turpitude.

The second category would not seem to offend public policy and would not fall foul of the requirements for wilful or intentional conduct exclusions.

525 Ibid 225. 526 Marcel Beller Ltd v Haydon [1978] QB 694, 707. 527 Hon. Desmond Derrington, Ronald Ashton, The Law of Liability Insurance (LexisNexis Butterworths 3rd Ed, 2013) 2178. 528 Which applies the ejusdem generis tool of interpretation, being that any ambiguity in the meaning of one of a group of terms is resolved by considering the contextual meaning of the other words in the group.

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