KR & Ors v Royal & Sun Alliance Plc

KR & Ors v Royal & Sun Alliance Plc

Deliberate acts of sexual and physical abuse by John Allen (the company's chief executive and majority shareholder) from 1976, and similar acts by principals of the homes from June 1981, are attributable to the company and fall within the insurance policy exclusion for deliberate acts of the insured, directors, or managerial employees. The insurer is not liable for these acts. However, the insurer remains liable for damages arising from systemic negligence and for abuse by employees who were not directors or managerial employees. The appeal is allowed to the extent that damages for abuse by John Allen and managerial employees are excluded from cover.

Parties
Claimants/respondents: KR & Others; Defendant/appellant: Royal & Sun Alliance PLC
Jurisdiction
England and Wales
Judgment Date
03 November 2006
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal allowed in part
Legal Topics
Attribution of Acts to Companies, Insurance Policy Exclusions, Vicarious Liability, Systemic Negligence, Sexual and Physical Abuse in Care Homes
Insurance Law Tort Law Company Law Attribution of Acts to Companies Insurance Policy Exclusions Vicarious Liability Systemic Negligence Sexual and Physical Abuse in Care Homes

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Parties

KR & Others

Claimants/respondents

Royal & Sun Alliance PLC

Defendant/appellant

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether deliberate acts of abuse by directors or managerial employees are attributable to the company for the purpose of an insurance policy exclusion clause
  2. 2 Whether the insurer is liable to indemnify the company for damages arising from systemic negligence resulting in abuse
  3. 3 Interpretation of insurance policy exclusion for deliberate acts or omissions of the insured

Ratio Decidendi

Deliberate acts of sexual and physical abuse by John Allen (the company's chief executive and majority shareholder) from 1976, and similar acts by principals of the homes from June 1981, are attributable to the company and fall within the insurance policy exclusion for deliberate acts of the insured, directors, or managerial employees. The insurer is not liable for these acts. However, the insurer remains liable for damages arising from systemic negligence and for abuse by employees who were not directors or managerial employees. The appeal is allowed to the extent that damages for abuse by John Allen and managerial employees are excluded from cover.

Court Disposition

Appeal allowed in part

Orders

  • Insurer not liable for damages arising from deliberate acts of John Allen and managerial employees as defined; liability for other acts of abuse and systemic negligence remains; parties to agree financial consequences; costs to be reconsidered following written submissions.