Summary
The Court of Appeal has upheld a decision ([2023] EWHC 630 (TCC)) that damage following the controlled explosion of a WWII bomb fell within a war exclusion. The dropping of the bomb during WWII, rather than human intervention in the form of the detonation, was the proximate cause of the loss. As this had been an act of war, the loss suffered is excluded from cover. (University of Exeter v Allianz Insurance PLC (Rev1))
Background
During construction works next to a university campus, an unexploded bomb was discovered. Student halls were evacuated, and it was determined that the only course was to carry out a controlled explosion on site. The resulting blast caused physical damage to surrounding buildings, and the insured university notified a claim under its insurance policy in respect of both physical damage to student halls of residence and business interruption in connection with the temporary re-housing of students.
The general insuring clause of the university's policy provided cover against "loss, destruction, damage, injury or liability..", but the policy excluded:
"War... Loss, destruction, damage, death, injury, disablement or liability or any consequential loss occasioned by war, invasion, acts of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power." (Emphasis added)
Insurers declined the claim, relying on the war exclusion. At first instance, the judge took the view that the war exclusions formed part of the definition of the scope of the cover, and that the damage in question was not covered as it had been "occasioned by war". Despite the length of time that had passed since the bomb had been dropped, that act had been the proximate cause of the damage.
Proximate cause
It was accepted at first instance and on appeal that the proper interpretation of the policy (and the use of the words "occasioned by" in the exclusion) required identification of the proximate (meaning dominant, or "efficient") cause of the loss. (See our article considering the approach to proximate cause in the January 2023 decision of Brian Leighton (Garages) Ltd v Allianz Insurance Plc). At first instance, it was held that the dropping of the bomb in 1942, not its detonation on its discovery in 2021, was the proximate cause of the explosion which caused damage to the insured's buildings. That event was caught by the war exclusion, so the losses were excluded.
The university's appeal against the decision below was rejected on all grounds. The judge's conclusion that there were two concurrent proximate causes of the loss of approximately equal efficacy (the dropping of the bomb in 1942 and the detonation in 2021) had been right; neither event would have caused the loss without the other, and the combination made the damage inevitable, or at least in the ordinary course of events.
Although both courts recognised that, at first blush, it may seem to be common-sense that the detonation, as the immediate cause of the explosion which caused the damage, was the proximate cause of the loss. The analysis of causation in law is, however, "more nuanced" than that. Each of the arguments which sought to exclude the dropping of the bomb as a concurrent cause of the loss and damage was artificial: "each sought to exclude or minimise the causative effect of a critical event which ultimately led to the explosion, namely the dropping of the large high explosive bomb in 1942."
Comment
Although the facts of this particular dispute are unusual, the application of well-established principles governing this area of law may mean that the proximate cause of a loss is not the event which initially appears to be the cause.
Those principles, drawn from the authorities, can be summarised thus:
As established by the Supreme Court in the FCA test case (FCA v Arch [2021] UKSC 1), using the "but for" test to identify the cause of a loss is "not always helpful", as that test can produce "a countless number of false positives".
It is clear that a loss might have more than one cause. The proximate cause will not necessarily be the closest in time to the loss: here, the effluxion of 80 years in time had had no effect on the potency of the bomb.
The question in establishing whether an event was the proximate (or efficient) cause of a loss is whether the initial event "led inexorably to the loss through an ordinary series of events, or whether there was a subsequent abnormal event that negatived the causal connection between the original event and the loss".
Human actions are not generally regarded as negativing a causal connection, provided that they are not wholly unreasonable or erratic. Here, the detonation was entirely reasonable.
Where there are multiple causes of a loss, each with a sufficient degree of inevitability, some insured and others not, there is nothing to prevent regarding the insured loss as a proximate cause of the loss (e.g. JJ Lloyd Instruments ltd v Northern Star Insurance Co. Ltd (The Miss Jay Jay) [1987] 1 Lloyd's Rep 32.).
By contrast though, "where there are concurrent causes of approximately equal efficiency, and one is an insured peril and the other is excluded by the policy, the exclusion will usually prevail" (e.g. Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 57).
