Inference of Knowledge and Intent in the act of gross Negligence, a critical junction of personal credence, and its implications on Insurance

By | June 4, 2021

In this article, Vishal Tinani talks about the inference of knowledge and intent in the act of gross negligence, a critical junction of personal credence, and its implications on Insurance. This article significantly analyzes the Importance of terminologies in light of the recent mass tort incident of Yashashi Rasayan and its legal point of contention.


Several industrial incidents took place in India post-lock-down, where some of the matters were regarded as wilful misconduct and others as gross negligence. Insurance did play the role of knight in shining armour. Still, economic downfall did engulf the insurers to inordinately employ the intention of the insured affected by the unviable economy, triggering the claim section of the policy, hence elongating claim compliances, which is reasonable, surrounding the intent of the insured.

Employing the legal terminologies in defence has been a dime a dozen for the parties in the absence of parameters, and particularly when the definition is not exhaustive, and concerning relativity, there is no takeaway that it hasn’t taken long to jump on the bandwagon while analysing the questionable act capable of qualifying either gross negligence or willful misconduct.

Making and submitting the correct contention, specification, reasonable interpretation, and contretemps is vital for any insurance claim. Similarly, several terminologies need to be correctly interpreted with the cause of loss; it becomes vastly important to differentiate between the types of acts with marginally analogous terminologies, peculiarly terminologies like negligence, wilful misconduct, and gross negligence.

Ironing out wrongly or closely interpreted terms and causes during the claim settlement is of paramount consideration. Without satisfying a causative link between circumstantial intention and knowledge with breach of duty, proving the intention is not within the subjective unilateral ascendancy.

It is also necessary that both the parties, i.e., an insurer (surveyor) and Insured addressing the claim as gross negligence or wilful misconduct, to consider and establish (1) whether the action or inaction amounts to gross negligence or wilful misconduct (2) having done that, consider whether it is possible to establish a definition of wilful misconduct or gross negligence (3) circumstances of the cause of loss (4) how defaulter acted in the series of event-triggered out of wilful misconduct or gross negligence.

Several industrial accidents occurred in India during the lockdown, notable occurrences involving Lg Polymers, HPCL refinery, and Yashashvi Rasayan. However, the issues of these below-stated legal terminologies in an insurance claim have been examined in light of a recent blast in a chemical factory that belongs to Yashashvi Rasayan Private Limited in Dahej, taking into account the issues that the parties must address in the given circumstances, as the matter is intimately tied to wilful misconduct and gross negligence.

An act of negligence and gross negligence (where the intent is to commit the act but not to harm others), the act which leads to an unexpected or unintentional event or something more than what the accused had thought of, affecting the third party or public at large constitutes an “accident”. Concerning insurance, the loss arising out of an “accident” is protected by a third party liability policy (Commercial general liability).

If the act is defined as an accident, the same is covered under the “occurrence” clause in commercial general liability affecting the third party in terms of bodily injury or property damage. In respect of Fire/IAR policy, the same is not prohibited unless it is contemplated as the wilful act or wilful misconduct; here, loss and damages are restricted to first-party i.e., insured itself. Hence, the insured’s argument will always be towards averting the act being characterized as deliberate wrongdoing or willful misconduct.

What is Negligence?

Negligence is the simple carelessness, failure or omission to do something which a reasonable man, guided upon requisite considerations which ordinarily regulates the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do1.

What is Gross Negligence?

It is an act or omission respecting the legal duty of an aggravated character as distinguished from a mere failure to exercise ordinary care and the absence of slight diligence and the want of even scant care which amounts to indifference to present legal duty, and utter forgetfulness of legal obligations as far as other persons are affected. It is a heedless and palpable violation of legal duty respecting the rights of others.2

Gross negligence is described as behaviour that is significantly more divergent than ordinary negligence. It is an extreme ignorance of the consequences and a strong disregard for human life or property and is beyond an act of simple carelessness.

Furthermore, claiming or proving gross negligence is more challenging; it involves:

  • Conduct that deviates significantly from the norms that a competent and reasonable individual must follow.
  • High degree of negligence or serious disregard to an obvious risk – that is, it arises without intent to cause (serious) injury.
  • Typical care is not taken or involves a failure to exercise even a slight degree of care or any kind of diligence.
  • It is not necessary that conduct be extremely reckless or taken in extreme disregard of anyone’s rights, provided it is sufficiently thoughtless or unprofessional.

The English courts have recognised that gross negligence can be understood as a norm requiring a party to behave in a way that is more reckless than ordinary negligence; the term can include ” not only extreme disregard for or indifference to an obvious risk but also conduct done with real knowledge of the risks involved”. 3

Gross negligence means an incident that it is something less than wilful recklessness.4 Gross negligence is substantially and appreciably higher in magnitude than ordinary negligence.5

It is materially more want of care than simple diligence. It is an act of error & omission respecting the legal duty of an aggravated character as distinguished from a mere failure to exercise ordinary care. For an act to be qualified as gross negligence there has to have been an actus reus. An act is a “bodily movement whether voluntary or involuntary. Actus reus may consist of conduct, result, state of affairs, or omission. However, mens rea (intention) must be absent in the act of gross negligence.

What is willful misconduct?

Any act or failure to act which is a deliberate and wrongful act or omission and involves intentional disregard or wanton indifference to the likely consequences, including an intentional breach.

It is an Intentional performance of an act with knowledge that the performance of that act will undoubtedly result in injury or damage, or it is an intentional performance of an act in such a manner as to imply a reckless disregard of the known consequences. Thus for the definition to apply, the wrongdoer has to deliberately engage in what he knows to be the culpable act or omission; i.e., there must be an advertent decision to proceed in a wrongful way continuously and intentionally knowing the consequences. All crimes to be listed under the heading of wilful negligence must require some degree of mens rea.

Proximate cause of the Yashashvi Rasayan blast

One such incident took place at the chemical manufacturer plant in Dahej on the morning of 3rd June 2020, where a Dimethyl sulfate (DMS) tanker and Nitric acid tanker reached the affected company’s premises within an hour of each other. The DMS tanker reached the tank farm after following the gate entry process.  As per procedure, tankers reached the security gate.

After checking documents, tankers are sent to the stores’ department, where documents are checked, and loaded weight is recorded. Then the Quality Control department draws samples and tests them. When all clearances are in place, the tanker goes to the respective tank, and it is connected to the tank for unloading. However, the operator emptied the DMS tanker in the nitric acid storage tank, assuming that the tanker was of nitric acid.

Approximately 24,980 kg of DMS was unloaded to the nitric acid storage tank. Thereafter, the nitric acid tanker reached the tank farm after following due process of gate entry, quality check, unloading permit, etc. When approximately 2000 kg of nitric acid remained in the tanker, the assigned operator realized that both the materials were unloaded wrongly.

The operator stopped unloading the balance of 2000 kg of nitric acid and informed the manager of his gross mistake. Approximately 16,880 kg of Nitric Acid was unloaded to the DMS storage tank. Thus, Dimethyl sulphate was unloaded in the nitric acid Storage tank, and nitric acid was unloaded in the Dimethyl sulphate tank.

When the intent is disputed, what are the aspects an insured must contend with?

In the instant case, the tank farm operator (original operator), while leaving for HR office, orally assigned the whole task to another operator (assigned operator) to connect the pipes with the two tanks i.e. one of Nitric Acid and the other of DMS to unload DMS. Prior to the tank being directed to farm area, the original operator checked and assured the availability of space in the tank to accommodate the quantity in the tanker and checked its hose connection and on finding it in order, he directed the pump number for unloading and moved in between for other work.

The assigned operator who worked as SO2 operator connected both the tankers through hosepipes with the storage tanks, and after that, he switched on the pumps to unload the chemicals where the tank was parked; however, the driver parked the tanker near the incorrect tank for unloading, and the assigned operator unloaded the chemical in the tank where the vehicle was mistakenly parked, causing the assigned operator to empty the chemicals incorrectly, he was not just required to unload but to unload the chemical procedurally as directed (In accordance to SOP). As a matter of fact, the due diligence while unloading the chemicals as indicated in the required checklists is not fully complied by the concerned employees of the insured.

—Shift in charge, who sits in the D.C.S. Room was not notified about the arrangement between the employees or the absence of the original tank farm operator; initially, the quality, quantity, and safety-related inspection by the shift in charge takes place separately before the tanks are directed to be connected, and he also imparted the simple dialogue to the original farm operator for unloading, as the farm operator is experienced for these daily workings for years, and as per routine, after the procedural activities and inspection of the shift in charge, the shift in charge signs off as usual to the D.C.S. room and the tank farm operator proceeds accordingly.

Thereafter original operator returned from the HR office on completion of his work to the tank farm area; the assigned operator already unloaded 60% to 70 % of chemicals. At that time, the original farm operator realized the mistake; the hosepipe of a tanker containing DMS has been connected to the tank of Nitric Acid, and the hosepipe of Nitric Acid tanker is connected with the tank of DMS. The shift in charge was conveyed immediately in person in DCS office. He and other senior officials came to the tank farm, and the pumps were turned off in between.

In the context of the tanker driver, if the driver would know the language and where to park the tanker for unloading the chemical, he would not have parked his tanker in front of the different tank, which contains the different chemical. (For transporting hazardous chemicals, sub-rule 9 of the Motor Vehicle Rules imposes mandatory conditions on an individual driving a transport vehicle carrying hazardous chemicals.

He must have the ability to read and write at least one of the languages specified in VIII Schedule of the Constitution. If read, the syllabus becomes clear that drivers to carry hazardous chemicals must be trained in any of the Institute recognized by the State Government for the period indicated.)

The original farm operator designating the other operator to connect the pipes for which he was originally not employed for the stated purpose by the management and the assigned operator who connected the pipes to the tanker; ought not to have accepted the work in the first place, also the assigned operator and the original tank farm operator appears to have not observed or followed the management’s procedure and guidelines while unloading the chemicals (even looking at the pictogram, name of the hazardous chemical on the tankers and corresponding tanks, it would not have been difficult for the assigned operator to identify the material in the tank as well as a tanker), which emphasis the touchstone of gross negligence i.e.

an act or omission respecting the legal duty of an aggravated character as distinguished from a mere failure to exercise ordinary care and the absence of slight diligence, and the want of even scant care which amounts to indifference to present legal duty and to utter forgetfulness of legal obligations so far as other persons are affected. It is a heedless and palpable violation of legal duty respecting the rights of others”. 

This element of culpability which characterizes negligence in gross negligence magnified to such a high (gross) degree in certain circumstances that it looks like a willful or intentional act; the line between deliberate misconduct and gross negligence is wafer-thin.

Before delving into the issue of knowledge, it’s worth noting that the unloading hose pipes were not tagged with the names of chemicals; further, the assigned operator joined his duties before about four months as SO2 operator near the tank farm area. Where persons are required to deal with hazardous chemicals, a person must have at least an ITI certificate for his efficiency in dealing with the subject. But the assigned operator is neither ITI AOCP (Attendant Operator Chemical Plant) or Diploma holder or graduate with Chemistry.

Non-availability of the workforce may bring the possibility of unpractised worker by the insured company at the farm. In either situation, the person would not be competent to deal with hazardous chemicals in the absence of which the original farm operator deviates significantly from the norms that a competent and reasonable individual must follow, which leads to the lack of care and duty owed by the company to its employee and the public at large, and the Government Guidelines warrant this possibility; Industries were permitted to operate with 50% workforce during COVID-19 lockdown generally across the country. Many migrant labourers have gone back to their Native State during the lockdown.

Recklessness, even when extreme, is usually gross negligence rather than wilful misconduct (e.g., a crane operator who gets drunk and drives the crane around the city smashing into parked vehicles might be extremely reckless, but unless he intended to destroy the vehicles, his actions are more likely to be considered gross negligence), the person who connected the tankers with the tanks was not an authorized person to work as a tank farm operator which is significant negligence of the original tank farm operator who acted negligently in the absence of important diligence and the want of minimal severe care.

The insured company liability concerning the risk it owed is gross in nature, and it is a considerably more serious lack of care than ordinary inadvertence by the company. 

Similarly, one can argue that the act of the shift in charge, farm operator, assigned operator, tank driver or concerned employees, and the management under the given circumstances befits the nucleus of gross negligence, which states:-

  • Conduct that deviates significantly from the norms that a competent and reasonable individual must follow.
  • High degree of negligence or serious disregard to an obvious risk – that is, it arises without intent to cause (serious) injury.
  • Typical care is not taken or involves a failure to exercise even a slight degree of care or diligence or any kind of diligence.
  • It is not always necessary that the conduct must be reckless or taken in extreme disregard of anyone’s rights, provided it is sufficiently thoughtless or unprofessional.

Awareness or knowledge of the management is important under the circumstances…one cannot analyse the matter subjectively to qualify the act as gross or wilful; in the absence of requisite knowledge pertaining to employees’ arrangement insured didn’t have foreseen the act. 

The actor’s awareness is an important factor only if he had actual awareness of the risk, but if he did not appreciate the risk, the analysis then focuses on the degree of unreasonableness that the conduct represents. In this sense, although judge Cotton LJ said that gross negligence and willful misconduct were ‘entirely different,’ it seems they may, on appropriate facts, shade into one another; i.e., there can be negligence so gross that it leads to a finding of willful misconduct.

The management failure of duty to care or diligence, and the decision of the employees in disregard and omission to the management guidelines under the instant circumstances also holds with Mance J’s reasoning in the Hellespont Ardent, in which an act is described as something more fundamental than a failure to exercise proper ability and/or care, which is what constitutes gross negligence. The principle of gross negligence seems to be capable of encompassing not only actions done with the actual appreciation of the risks involved but also extreme disregard for or indifference to an obvious risk. 

The harm caused by improper chemical mixing demonstrates extreme disregard and indifference to an obvious risk by the wrongdoer’s during the circumstances that contributed to the breach of duty and is distinguished from a mere failure to exercise ordinary care, which also satisfies Ingredients of the offense of gross negligence specified in R v. Adomako [1995] 1 A.C. 171: 

  1. The accused company owes the deceased a duty of care;
  2. That there was a breach of that duty by the accused;
  3. That the act or breach resulted in death (causation);
  4. The act or omission should be classified as gross negligence and therefore a crime.

For the above acts, the difficulty is not so much in ascertaining the meaning of the adjective “wilful,” as in ascertaining precisely the noun to which the adjective is to be applied. An act or an omission to perform an action represents wilful disobedience when the individual we are addressing is aware of both what he is doing and what he intends to do. However, if the act or omission constitutes a breach of his duty and thus negligence, is the individual guilty of wilful negligence?

The response to this question must be “negative” unless he is fully conscious that he is acting in breach of his duty and intends to do so, or is acting recklessly, not caring whether his act, conduct or omission is or is not a breach of duty.6

  • Steps taken to avoid the first incident

The Dimethyl sulfate tank construction material is Carbon Steel, making it unprecedented to store nitric acid as it corrodes with carbon steel. Hence, to avoid the cause, the experts decided to transfer the mixture of DMS tank, i.e., nitric acid mixed with Dimethyl sulfate stored in the DMS tank to the second glass-lined tank meant for nitric acid to prevent leakage and release of toxic gases. Hence, this action was taken immediately. Thus, both nitric acid storage tanks now contained the mixture of DMS and nitric acid.

Then management decided a plan to either separate or destroy the mixture in a safe manner. Where following trials were conducted in the R&D laboratory where no reaction was observed:

  • Mixed Nitric Acid into DMS
  • Mixed DMS into nitric acid
  • Added water in the above mixture to check whether layer separation was taking place or not. Where management successfully found the layer separation of diluted Nitric Acid and DMS.
  • Added Xylene in a mixture of Nitric Acid and DMS to try to separate the organic and aqueous mass by extraction. It was found that Xylene reacted with the mixture; hence it was concluded that extraction with Xylene was not a viable option.

Other than that internal team of experts, insured contacted experienced external IIT experts, two Ph.D. Chemists to find out if this mixture could react or result in any consequences. None of the experts expected any adverse impact underlying several observations and experiments. The extensive literature search also did not lead to any information on DMS and Nitric Acid’s reactivity (analyzed and recorded), and experts could not offer an immediate solution to separate or destroy the mixture.

After this detailed exercise, the company did not find any adverse reaction and therefore decided to search for further remedies to dispose of the mixture safely like immediate arrangement of hydrogen for neutralization; and other options were evaluated, such as:

  1. To drain the material. The question remained of how to drain such a large quantity of mixed chemicals without causing safety and environmental hazard.
  1. Considered transferring the mixture to ETP for neutralization, but the idea was dropped due to the limitation on a complete understanding of disposal of such a mixture without causing safety and environmental hazard.

The Company continued to constantly work towards a solution internally as well as by consulting experts to ensure no safety hazard. Hence, there was no warranted information or data on the likelihood of such reaction or occurrence of the accident as warranted by the experts after the bonafide step to transfer the chemical in a glass-lined tank; however, it does not automatically eliminate the risk of dealing with hazardous substances. Hence, after continued cogitation and trials, by around 7 pm on 02.06.2020, a team of experts decided to analyze the laboratory outcome and find a solution.

The next day, on 3rd June 2020, while experts were still working on finding a solution, suddenly, at around 12:15 pm, the blast/explosion occurred, leading to deaths, bodily injury, displacement, and property damage at large.

  • Steps Taken to avoid related second incident arose out of proximate cause:

The second incident was avoided after the previous event’s reaction was known. The second tank started reacting after a week of the first incident. The Experts and officials decided that the material must be removed. They discussed the safe mode for removing residual chemicals and decided to make a lime-sand bed on hard flooring in the open area. For spreading the residual chemical from the tank, an Air-Operated Diaphragm Teflon Pump (AOD Pump) with a modest capacity was arranged.

The chemical was spread out on the lime and sand bed for stability using an AOD Pump while sprinkling water from a fire hydrant to prevent toxic release. The temperature measured outside the tank of the mixture was 84 degree Celsius, and vapor fumes were already found inside this tank. Experts did not take the sample of this mixture for analysis purposes considering the risk of explosion and toxic effect.

The officials of the GPCB (Gujarat Pollution Control Board) monitored ambient air quality; the VOC meter indicated 0 ppm in the surrounding area. As per GPCB permission, they directed the occupier to carefully lift and dispose of all waste generated during the aforementioned action.

The act prevented the major incident, which is an integral part of gross negligence that satisfies the party’s good intention in the sequence of events following proximate cause. Howbeit, for the entire incident to be classified as gross negligence or negligence, firstly proximate cause and, secondly, the action or inaction concerning the knowledge that triggered the act in a series of events must not fall within the jurisdiction of wilful misconduct.

Mance J’s reasoning in the Hellespont Ardent in which his Lordship said the principle of gross negligence, as mentioned above, seems to be capable of encompassing not only actions done with the actual appreciation of the risks involved but also extreme disregard for or indifference to an obvious risk. In the act of gross negligence, the appreciation of the risk defines the presence of knowledge for a particular risk but the absence of guilty intention (mens rea).

(E.g., If a conductor for its economic benefit allows a passenger to ride on the bus roof with other passengers, or if a parent allows his or her under-aged stubborn child to drive the vehicle in an over-crowded area, they are aware of the risk (accompanying knowledge), in these circumstances, their conduct cannot be intentional or malicious.

In the case in question, after tankers have been emptied in the wrong tanks, the information was passed on to respective site heads. A meeting was convened of all the technical personnel as to what consequences can follow and what remedial steps to be initiated. Nitric Acid is corrosive and can cause damage to the Dimethyl sulphate tank in which it was unloaded. Therefore the mixture of Nitric Acid and DMS lying in the DMS tank was transferred to another tank of nitric that is glass-lined. This was done to avoid any leakage which may occur due to corrosion in the walls of the tank. DMS emptied in glass line tank was not transferred as it did not pose such threat.

Experts who have designed the plant and know-how experts of the company and the external team of experts from renowned institutes of India were contacted for their inputs, and all vindicated any possibilities of any serious reaction.

All experts carried out an in-house experiment in the laboratory by mixing two materials in different proportions to determine whether any temperature rise is observed or a chemical reaction occurs. However, at the given instance, it was advised and noticed that both the liquids in the tanks (involving the glass-lined tank) were not reacting with each other and no temperature rise, fuming, bubbling, or any abnormality was evident with the chemicals in the tanks. This was kept in mixed condition for 20 hours to formulate a strategy to bail out the chemicals safely.

The knowledge that was perceived here was understood to be limited to the findings of R&D and experts, which states that: a) Both chemicals are heterogeneous. b) There cannot be any reaction between them. c) Temperature of the mixture is not going up when mixed in the laboratory. d) There is no exothermic reaction. e) Even though there is a difference in densities of both the chemicals, they are not segregating in two zones but remain in mixed conditions without any reaction.

A conscious intent to cause injury or the inference of such intention goes beyond ordinary negligence and gross negligence and is usually described as wilful misconduct. It’s worth noting that the Shawcross-Beaumont definition defines intentional misconduct to be an intentional “breach of duty in the circumstances.” On the contrary, such a breach of duty must be accompanied by knowledge of the likely consequences which will probably ensue.

When it comes to knowledge or intention, it cannot exclusively be tested subjectively; for the insured in this particular case, the knowledge was evident beyond a doubt, backed by experts, that the mixture would not trigger any reaction, as shown by tests and experiments. Briefly though vaguely, it has been said that “. . .

“Wilful misconduct” refers to a purposeful failure to not perform or discharge some duty necessary to safety.”

Without actual realization of the occurrence of a possible incident, knowledge cannot be said to be perceived; neither the intention to harm nor a disregard for the result of the act or its omission could be inferred, nor could the breach of duty not then be classified as willful misconduct. Also, there was another incident that resulted from a proximate cause which was successfully avoided. The first occurrence i.e. proximate cause catalyzed their knowledge of possible consequences; initially, the incident (proximate cause) was not avoided because the experience perceived for the chemical mixture was restricted to the findings of experts.

In Order to characterize an act as willful misconduct, there must be on the part of the person or persons sought to be charged for a conscious intent to do or to omit to do the act from which harm or damage results to another. There must be a definite realization of the implications of such conduct7. It is not advisable when trying to classify human behaviour to stress the subjective elements (recklessness, wantonness) and thus to neglect the objective element (violation); this might lead to numerous but not always exact interpretations.

Aspects that an insurer must contend in given circumstances

All the elements must be found in order to establish willful misconduct. Particular attention is given to the uninterrupted sequence between the legal (proximate) cause of the event and the event itself to affirm that the former caused the latter.

Willful misconduct is the intentional performance of an act with the knowledge (mens rea) that the performance of that act will undoubtedly result in injury or damage, or it may be an intentional performance of an act in such a manner as to imply a reckless disregard of the known consequences of the enactment of that act.

If, however, you find that the defendant or any of its employees, committed one or more acts of willful misconduct, then you must go on to consider whether or not such wilful misconduct as you have found was the proximate or legal cause.8 Now, in order for wilful misconduct to be the legal cause of this result . . . the wilful misconduct must be a substantial contributing factor in generating such an outcome.

Additionally, there must be an actual and continuous connection between the act of wilful misconduct and the causation. It does not mean that it must be the sole substantial factor contributing to the causation. In other words, if you establish that the defendant’s or any of its employees’ intentional misconduct was a substantial contributing factor to the cause of loss, it is sufficient to sustain the plaintiff’s claim, even if you also find other substantial contributing factors.

Conduct motivated by malicious intent is considered willful, and it is the conscious performance of an act, along with the awareness that this action would surely result in injury or damage. Alternatively, one could say that it is a conduct that indicates a reckless and intentional disdain for the consequences of the act being performed; nonetheless, here one more point can be engulfed, which states that:

The situation where an individual has the knowledge that he or she can successfully work upon and can diffuse the possible happening still knows the potential consequences in case of failure, decided to ignore, which the actor in question knows he ought to follow, and still ignores it and proceeds in a one of the way resulting in harm which could have been avoided, will be regarded as willful misconduct”.9

When analyzing the outcomes of the first incident (proximate cause), accused company knowledge seems to be restricted to experimental reports and related outcomes. Nevertheless, the result did not go in the desired direction in the first incident, but the second incident was avoided after the previous event’s (proximate cause) reaction was known, while the incident was the outcome of the same cause.

However, Concerning the nature of the chemicals and brief experience of the accused company in the manufacturing of hazardous chemicals, if the managements’ knowledge in the first incident is that it can successfully work upon and can diffuse the possible happening; still knows the consequences of handling an unprecedented mixture of hazardous chemicals, which is a deemed knowledge for experienced management to be cautious who is regularly dealing with these chemicals; even though experiments warranted no serious reaction, as they were still searching to discharge the toxic chemicals safely;

despite that the chemical engineers of the unit did not think it fit to shut down the plant and allowed the employees to carry out routine work near the tanks without any precautions is questionable conduct and is embedded into an act of wilful misconduct i.e., to engage in what they know to be the culpable act and shall be regarded as an advertent decision to proceed in a wrongful way because the company had knowledge of the small-scale experiments claiming and indicating no immediate reactions, leaving out no option but to swiftly rescue the chemical because it was not possible for the experts to test the mixture’s reaction in the long run involving toxic chemical.

Hence the momentary experiments will not obviate the possibility of probabilities of consequences or occurrence in the long run (though the insured is aware of the potential consequences, which is why hydrogen cylinders were arranged for neutralization of non-reacting mixture, it must also have knowledge of possible occurrence).

Experience is always debatable, and it becomes deemed knowledge when we combine fundamental risk with basic experience. Experience is what demonstrates to others what you have accomplished, what you have learnt, and how you did it.

However, true experience is gained by trial and error in the long run; your mistakes are what make you a person of great intelligence and knowledge. One can say that company had not experienced analogous incidence in the past from which the company may be alleged to have experience for the same, and in second incident the company surely had the knowledge and experience of the first incident out of which the second incident was avoided.

On the other hand, the act of extreme disregard pertaining life of employees and extreme ignorance and failure of even a scant diligence by locating the hydrogen in the hazardous region also embraces the notion of gross negligence, i.e., extreme disregard for or indifference to an obvious risk or not being cautious about the safety of others and acting in extreme ignorance of the repercussions as if no occurrence would take place. Gross negligence requires materially more want of care than simple diligence. It is an act of error & omission respecting the legal duty of an aggravated character as distinguished from a mere failure to exercise ordinary care.

The argument that the insured didn’t have the license of hydrogen storage, this contention would not stay strong if the hydrogen is arranged for the bonafide contention for which no license is required. Also, no incident occurred or magnified due to hydrogen cylinders. Moreover, an act does not make a man blameworthy or guilty of a crime unless his mind is also guilty. Thus, it is not the ‘actus’ which is ‘reus’ but the man and his mind, respectively…it is well to record this act as it has frequently led to confusion10.

It’s interesting to note that reckless behaviour varies from wilful misconduct in one way. When an actor acts recklessly, he or she aims to perform the act but does not intend to hurt others. Instead, he will wish that no harm occurs, but he has a good reason to assume that it will, which is determined by employing the test of wilful misconduct.11

In order to qualify the act as wilful misconduct or to prove the mens rea the insurer can take this position outlined in TNT Global SpA v. Denfleet International that the insured had antecedent knowledge of probable consequences to be arising from the incompatible chemicals mixed in storage tanks even though the unit did not stop the factory process and allowed the workers to work, notwithstanding the fact that the knowledge or the information they had which experts and findings warranted and ruled out the question of reactions or possible consequences;

while Insurer inferring that the insured appreciated the risk and deliberately chose not to vacate the premises under given circumstances, if proved on the face of the evidence, the same will be considered willful misconduct; otherwise, before leaping into a decision of wilful misconduct, the insurer must address the following issues to test wilful misconduct:

  1. Whether Accused was knowingly reckless and continuously acted intentionally in all the events or instances?
  2. An emphasis on the fact that what is required is ‘wilful misconduct,’ not simply ‘wilful conduct. i.e., there must be an advertent decision to proceed in a wrongful way12
  3. Previous experience or compliances of the management or the wrongdoer, or any object of hostility between them.
  4. The availability of alternatives and the circumstances under which the accused acted.
  5. Whether the accused had something to gain out of the whole affair or the Motive behind the crime.

The list mentioned above is by no means exhaustive since the subject of knowledge is strenuous. Wilful misconduct standard is similar to the gross negligence standard; however, it focuses more on the harm that a party’s action or inaction caused. Establishing the above does manifest the circumstantial knowledge or intention of the insured. It is in these circumstances that the principle of ‘Res Ipsa Loquitor‘can be invoked, the meaning of which is ‘things speak for themselves. 

The existence of fraud, management or employee’s malice, and/or gross negligence or wilful misconduct must be proven by “clear and convincing” evidence. “Clear and convincing” evidence is defined as “evidence that would persuade a reasonable person to believe that a proposition is more likely true than false. It is a higher standard of proof than “preponderance of the evidence.”. This standard has been described as falling “between the preponderance standard of civil proceedings and the reasonable doubt standard of criminal proceedings”.


Criminal is hazarding a dangerous or wanton act with the knowledge that it is dangerous or wanton and that it may cause injury, but not with the intent to cause injury or knowledge that it will almost certainly cause injury. An act or omission that a reasonable or rational person would do or doing something that a prudent or reasonable person would not is commonly regarded as negligence, i.e., ordinary negligence, but under the circumstances, while dealing with the hazardous risk and concerning the hazardous nature and gravity of loss and causation affecting the public at large, the act or omission would always be something more than ordinary negligence.13

In this matter where there is an escape of toxic gas, then the wrongdoer company is strictly and absolutely liable to compensate all those affected by accident. No exception applies to this liability that operates vis-A-vis the tortious principle of strict liability under the rule in Rylands v. Fletcher. There is no takeaway that the decision to permit workers to enter a perilous place would circumscribe to the conformity of a conscious decision, given the nature of chemicals rendering it unprecedented, which also questions related actions of the insured.

In order for the whole cause to stay a case of gross negligence, the sequence of events must not be altered by the act of wilful misconduct or vis-a-vis; otherwise, it would hogwash the whole contended parlance. The contention that most of the aftermath events suggest the party behaving reasonably under the circumstances may undermine the possibility of wilful wrongdoing: this contention is not within the insured unilateral ascendancy to determine or insurer vis-à-vis.

The elements of “extreme risk” and “actual awareness” should be supported by the evidence.14 Under these type of cases, extrapolation of the court or tribunal is the only option to conclude the inferences or to conclude that the accused must have foreseen the risk of harm from it and acted advertently in a wrongful way. Intent which cannot be proved as wilful under the circumstances than any act just below the par of wilful misconduct shall be regarded as gross negligence, concerning the severity and relatability of (action) actus reus without (ill intent) mens rea.

The circumstances under which the accused finds himself must be weighed when deciding liability, and this would include factors like the accused’s experience and the circumstances he faced when he did the questionable act or omission about which the complaint is made. Unlike states of mind such as knowledge and intention, other than willful acts, negligence, whether gross or not, it does not imply any specific state of mind on the part of the accused. It’s a standard that represents the faults.

The key aspect that distinguishes negligence, gross negligence, or types of negligence from intentional recklessness and wilful misconduct (as they are generally understood) is that it is not a requisite for the accused to anticipate the risk that the actus reus might occur.  The word Negligence entails an objective assessment of a risk that is objectively recognizable. Evidence of the accused’s mental state (Subjectivity) is not sufficient for a conviction as evidence may not suggest the correct parlance of an individual’s act under unknown circumstances or situations.15

Vital Suggestions

Tank farm operators must be qualified, trained, and experienced operators. It is absolutely necessary to carry out a study on the incompatibility of chemicals so as to convey to the officer as well industry for the emergency outcomes. Also, the storage of compatible and incompatible material should be at different places or must be separated marginally.

Unloading of takers should be equipped with auto control equipment that can analyse the density of the input material the density of material inside the storage tank, only it shall allow inflow into the tank. For chemicals with similar densities, sound velocity instruments should be utilized, allowing inflow after due verification. Management control for all input materials must be strengthened, and a double-check system shall be introduced.

End Notes:

  1. Blyth v. Birmingham Water Works Co. England and Wales High Court. 11 Ex Ch 781. 1856.
  2. John E. Parsons Third personal representative v.  Darius Ameri & others. Massachusetts Appeals Court. No. 18-P-1373.  October 8, 2019.
  3. Camatra Property Inc v. Credit Suisse Securities (Europe). England and Wales High Court. EWHC 479. January 2011.
  4. Haymore v. Brizendine. Supreme court of Virginia. 210 Va. 578, 172 S.E.2d 774. March 9, 1970.
  5. Babanrao Budhajirao Nanekar v. Adinath Sahakari Bank Ltd. Bombay High 15 September, 1994
  6. City Equitable Fire Insurance, note
  7. Goepp v. American Overseas Airlines. Appellate Division of the Supreme Court of New York. 281 AD 105. Dec 16, 1952
  8. In Pekelis v. Transcontinental and Western Air. US Court of Appeals for the Second Circuit. 187 F.2d 122. February 15, 1951.
  9. TNT Global SpA v. Denfleet International. England & Wales court of appeal. Ewca civ 405. May 2nd, 2007. In the given case, the driver fell asleep at the wheel and crashed. The goods were destroyed. The consignor sued, and the carrier relied on the CMR terms. The trial judge held that falling asleep at the wheel was ‘wilful misconduct’; the driver must have appreciated that he was sleepy and deliberately chose not to pull over. The Court of Appeal disagreed. It agreed with the trial judge that the driver must have felt sleepy and decided to carry on regardless; but it thought the driver was merely grossly negligent to believe he could ‘beat the sleep’. Gross negligence was not enough to support a finding of wilful misconduct. The court said it would have been different if the driver had decided to carry on after it had been demonstrated to him that he could not ‘beat the sleep’, such as hitting the side of the road. Deciding to carry on in the face of that evidence would have been sufficient to support a finding of wilful misconduct.
  10. Sweet v. Parsley, where Lord Diplock. U.K. House of Lords. [1970] AC 132. January 23, 1969.
  11. Empress v. Idu Beg. Allahabad high court. ILR 3 All 776. August 2, 1881.
  12. Lewis v. Great Western Railway Co. Kings court. J 55/8/156. 1877.
  13. Prabhakaran v. State of Kerala. Kerala High Court. Insc 715. 21 June 2007
  14. Clayton v. Wisener. Court of Appeals of Texas, Tyler. 12-03-00251-CV. June 15, 2005
  15. Attorney General’s Reference (No. 2 Of 1999) [2000])

  1. Law Library: Notes and Study Material for LLB, LLM, Judiciary and Entrance Exams
  2. Legal Bites Academy – Ultimate Test Prep Destination
Author: Vishal Tinani

Vishal is specialized in Liability lines and Arbitration. He is enrolled with Bar Council and PLUS (USA).

2 thoughts on “Inference of Knowledge and Intent in the act of gross Negligence, a critical junction of personal credence, and its implications on Insurance

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