P (A Child) v Royal London Mutual Insurance Society Ltd

LORD JUSTICE TUCKEY: What does the word “wilful” mean in an insurance policy which excludes cover for “claims and liabilities arising from any wilful, malicious or criminal acts”? This question arises on an appeal from HHJ Seymour QC sitting as a judge of the High Court who held that it meant damage deliberately caused and consciously intended and therefore did not exclude cover for a claim for damage caused by a fire started by an 11 year old boy.

In 1997 Waterside Mill, Hadfield in Derbyshire was partly derelict and partly used for commercial purposes including a re-packaging unit. The claimant, Ronson, alleges that it had nearly £850,000 worth of its stock in this unit when it was destroyed by fire on 27 May 1997. A fire was started that day in a derelict part of the mill by the then 11 year old Part 20 claimant, C P, and his friend J. The trial of the insurance question raised in the Part 20 proceedings took place before HHJ Seymour. C was not required to give evidence, but the judge answered the question (as I do) on the basis of a statement made by C which said:

Ronson claimed that it was this fire which destroyed their stock. There is an issue about this because the police attending the scene found traces of other fires at the mill. For present purposes however we are only concerned with whether the policy covers Ronson’s claim.

The policy is a standard householders contents policy with extensions (as such policies usually have) for among other things “household and personal liabilities”. This extension as relevant provides that:

The policy was issued to C’s mother by United Friendly, whose liabilities have been transferred to the Part 20 defendant, Royal London Mutual Insurance Society Limited. She and her immediate family which included her children were “persons insured” under this policy.

Ronson’s claim has been subrogated to its insurers. Very properly they have made it clear that they do not seek to recover any money from C (or his mother) but only Royal London if he is insured. Royal London have very properly undertaken to meet his costs of defending the proceedings whatever their outcome. So the point at issue is being contested by insurers on either side and is said to be of importance to Royal London and possibly others in the industry.

Relying on what Bowen LJ said about the meaning of the word “wilful” in In re Young and Harston’s Contract [1885] 80 Ch D 168 at 174, 175 the judge said that a person acted wilfully if he intended to produce the consequences in fact produced by his conscious act. This reflected one of the primary meanings of the word, namely, “determined to have one’s own way, notwithstanding advice or common sense”. Simply to construe the word as “deliberate” would deprive the liability extension of this policy of much, if not all, of its value.

The judge continued:

The judge then went on to consider and reject Royal London’s second defence of late notification against which there is no appeal.

I can summarise the written submissions of the parties shortly. Dr Digby Jess for the insurers said that the judge was wrong to conclude that an intention to cause the damage giving rise to the claim was required before the act could be characterised as wilful. This, he said, focused on the consequences of the act and not the state of mind of the actor which is what the words require. Wilful in this context simply means deliberate. Mr Irvin for the insured supported the judge’s construction: a degree of conscious intention to cause the sort of loss or damage giving rise to the claim is required.

There is no authority in which the words in question have been considered. The 19^th Century case referred to by the judge was concerned with the meaning of “wilful default” in a contract for the sale of land. Bowen LJ equated default with negligence and then said:

I do not think that this passage says anything more than wilful means deliberate. It says that the actor must intend to do what he does but nothing about whether he should intend the consequences of his doing so.

The legal dictionaries show that wilful is used in many contexts. One can safely say that it always means deliberate and that it will take any further meaning from the word or words which it qualifies and its context but beyond that one cannot go.

So, unaided by authority or dictionary definitions, what is the proper construction of the liability extension in this policy? It provides indemnity to the insured against legal liability arising from incidents resulting in accidental damage to property. This wide cover is excluded if the incident giving rise to the liability involves any wilful, malicious or criminal act. The adjectives qualify or characterise the excluded acts and look to the quality of the act and the state of mind of the actor.

It is tolerably clear what malicious or criminal acts are and I think these words lend colour to what is meant by a wilful act. In this context it must be some act which is blameworthy. If so, something more than a deliberate or intentional act is contemplated. If that is all the word meant, the wide cover apparently provided by the extension would largely be taken away by the exclusion. Most acts, including negligent acts, are deliberate and intentional.

Obviously if the act is deliberate and intended to cause damage of the kind in question it will be within the exclusion. It will be wilful, as the judge held, and might also be malicious or criminal. But for an act to be wilful I do not think it is necessary to go as far as this. It will be enough to show that the insured was reckless as to the consequences of his act. Recklessness has been variously defined but if someone does something knowing that it is risky or not caring whether it is risky or not he is acting recklessly. Put more precisely for present purposes if the insured is aware that what he is about to do risks damage of the kind which gives rise to the claim or does not care whether there is such a risk or not, he will act recklessly if he goes ahead and does it. I think such conduct was intended to be included in the exclusion and I would equate a reckless act with a wilful act for this purpose. This approach focuses upon the state of the insured’s mind when he does the act rather than its intended consequences. Defined in this way the exclusion does not require the insured to intend to cause damage of the kind in question.

Equating wilfulness with recklessness is consistent with the dictionary definition of wilful which includes obstinate and headstrong conduct. That is the essence of recklessness as well. In the course of his submissions this morning Dr Jess maintained his primary submission which was that wilful simply meant deliberate, but conceded that if it meant something more, it might mean recklessness in the way I have explained. Mr Irvin was willing to accept this construction as well. It falls somewhere between that contended for by the insurers and that found by the judge. It deals satisfactorily with the example which troubled me most. If I light a bonfire in my garden which gets out of control and burns down my neighbour’s house would I be covered by this policy? On the insurer’s construction I would not because I had started the fire deliberately; on the judge’s construction I would be covered because I had not intended to burn down my neighbour’s house. But if I was reckless in the sense that I have explained, cover would be excluded and rightly so. My act could properly be characterised as wilful.

My conclusion about the proper construction of the policy does not however affect the result of this case. Having regard to his age and his statement, I do not think C’s conduct could be described as reckless. It could be described as stupid but that is not enough. There could have been another result if his statement had been different, but taking it as it stands (as I must) he was unaware of the risk that his fire might burn down the mill and there is nothing to show that he did not care whether it might have done so or not.

For these reasons, I would dismiss this appeal.

LORD JUSTICE THOMAS: I agree

LADY JUSTICE HALLETT: I too agree.