Chapter 12. Public Policy

• Pages: 214-225

CHAPTER 12

PUBLIC POLICY

12.1 INTRODUCTION

Public policy is an amorphous concept which has been described as an ‘unruly horse.’

1 It can

arise at any juncture in the insured/insurer relationship from inception to the claims stage. In

this chapter the focus is on the fundamental principle of insurance law, that the insured must not

voluntarily bring about the insured event. This principle is acknowledged in regional marine

legislation. For instance, Section 59(2)(a) of the Barbados Marine Insurance Act

2 provides:

the insurer is not liable for any loss attributable to the wilful misconduct of the assured ... but,

unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured

against, even though the loss would not have happened but, for the misconduct or negligence

of the master or crew.

Assisting principles as to the scope and application of public policy emerge from the common

law. The orthodox position at common law is the ‘public conscience test’ as postulated by Lord

Mansfi eld CJ in Holman v Johnson , 3 to the e ect that ‘no court will lend its aid to a man who

founds his cause of action upon an immoral or illegal act.’

4 Accordingly, where the loss is as a

result of the insured’s criminal conduct, the courts will not allow the legal process to be abused

by allowing the insured to enforce a claim: ‘the human mind revolts at the very idea that any

other doctrine could be possible in our system of jurisprudence.’

5 The equitable maxims ex turpi

causes non oritur action (‘no action can arise from a wrongful cause’) and ‘a man may not profi t

from his own crime or wrong’ pervade the common law.

6 The anomaly exists, however, that

wilful and deliberate acts of a third party are normally expressly covered by liability insurance.

This is suggested by the language of the Marine Insurance Act. Further, where loss is occa-

sioned by the insured’s negligence,

7 or if the insured adopts steps to reduce the loss but ends up

increasing the degree of loss,

8 once these acts do not break the chain of causation the insurer

will not necessarily be exempted from liability. The point here is that there is a fi ne line between

acceptable and unacceptable conduct and according to the rule in Garner v Moore , 9 the court

will consider the gravity of the illegal conduct; intentional illegality is considered worse than

negligent illegality.

The discussion on public policy is also relevant to fraudulent claims as the insured’s duty

of utmost good faith continues beyond the point when the contract of insurance is concluded

and renewed and operates when an insured seeks to claim against the insurer for loss. The

1 Per Burrough J in Richardson v Mellish (1824) 2 Bing 229, p. 252.

2 Ibid.

3 (1775) 1 Cowp. 341.

4 The relevance of the public conscience test may have to be re-evaluated in light of the House of Lords

decision of Tinsley v Milligan [1994] 1 AC 340.

5 In the Estate of Cunigunda (Otherwise Cora) Crippen, Deceased [1911] 108, per Evans LJ, p. 112.

6 M. Clarke, ‘Illegal Insurance’ [1987] LMCLQ 210; M. A. Clarke, ‘Insurance of Wilful Misconduct; the

Court as Keeper of the Public Conscience’ [1996] 7 Insurance L.J . 173.

7 Harris v Poland [1941] 1 KB 462; Amey Properties Ltd v Cornhill Insurance plc [1996] LRLR 259; Gunns v Par

Insurance Brokers [1997] 1 Lloyd’s Rep 173; see also Adams, ‘Reasonable Care Provisions, the Courts and the

Ombudsman’ [1998] JBL 85.

8 Canada Rice Mills Ltd v Union Marine and General Insurance Co . [1941] AC 55.

9 [1984] 1 All ER 1100.