Authors: Mark Pring, Katherine Varney and Lauren Wylie
In this case, the claimant sought insurance cover for physical damage and related business interruption losses following the detonation of a World War II bomb in 2021.
The key issue in dispute between the parties was whether the damage suffered was “occasioned by war”, in which case the claim fell within the scope of the war exclusion in the relevant policy: was the (or “a”) “proximate” cause of the losses suffered the dropping of the bomb in 1942 or the detonation of the bomb in 2021? The Court decided on the former and therefore confirmed that the losses were excluded from cover under the policy.
Leaving aside the colourful facts, the judgment offers a timely reminder of the approach that the English Courts are likely to take when determining the proximate cause(s) of loss in the insurance context.
In 2021, an unexploded World War II bomb, dropped by German forces in 1942, was unearthed on a construction site adjacent to the University of Exeter (the “University”). A controlled detonation of the bomb took place, but this resulted in damage to the student halls of residence in the immediate vicinity.
The University made a claim under their insurance policy for physical damage as well as business interruption losses in connection with temporarily re-housing the students. Allianz Insurance Plc (the “Insurer”) declined the claim on the basis that any loss or damage was “occasioned by war” and, therefore, fell within the scope of the policy’s war exclusion.
The central issue before the Court was whether the loss was “occasioned by war”. In order to determine this, the parties agreed that the Court must determine (on agreed facts) the “proximate cause” of the loss.
In summary, the University argued that the proximate cause of the loss was the deliberate act of the bomb disposal team in detonating the bomb; whereas the Insurer argued that the original dropping of the bomb was the proximate cause or, in the alternative, a proximate cause of loss, by operation of the concurrent causes rule.
Determining the proximate cause
The Judge stated that the test of what constitutes the “proximate cause” is a matter of judgment based on “common sense” rather than over-analysis. A loss may have more than one cause and the proximate cause should not be treated as the cause nearest in time to the loss. Determining whether a cause was the proximate cause of the loss involves making a judgment as to whether that cause made the loss inevitable. Generally, human actions (such as the deliberate detonation of the bomb) are not necessarily regarded as new causes, provided at least that the action was not wholly unreasonable.
Based on those propositions, the Judge held that the common sense analysis (noting the “occasioned by war” language) was that:
- an explosion caused the loss;
- the explosion was triggered by the reasonable decision to detonate the bomb;
- that decision was necessitated by the presence of the bomb and
- if there had been no bomb, there would have been no explosion.
The Judge therefore found that, as a matter of common sense, the dropping of the bomb and its presence at the site was the proximate cause of the loss. The dropping of the bomb was an act of war (which the parties did not dispute) and the loss suffered by the University fell within the scope of the war exclusion in the policy.
It is well-understood that, if there was a combination of possible causes of the loss and it cannot be said that a single cause made the loss inevitable, there can be concurrent proximate causes. Equally, in the event that just one of the concurrent proximate causes is excluded from cover, the general rule is that the exclusion will prevail.
The Judge held that, if the dropping of the bomb was not the proximate cause, the combined effect of the detonation and the bomb made the damage inevitable and these causes were “equal, or at least nearly equal” in their efficiency. The Judge therefore found that (had other proximate causes been proposed) the dropping of the bomb was at least a proximate cause and, by operation of the concurrent proximate causes rule, the war exclusion in the policy still applied.
Finally, in response to a further argument raised by the University, the Judge confirmed that a “reasonable” person would not conclude that the absence of any express reference to the concurrent causes rule in the war exclusion in the policy meant that the rule should be disapplied.