Courtroom of Attraction applies Wayne Tank precept: if there are two concurrent causes of loss and one is excluded, then no cowl

The Courtroom of Attraction has dismissed an enchantment by the College of Exeter (the insured) towards a Excessive Courtroom ruling in March 2023 relating to a denied insurance coverage declare for injury attributable to the detonation of a WW2 bomb: The College of Exeter v Allianz Insurance coverage PLC [2023] EWCA Civ 1484.

The Courtroom of Attraction agreed with the Excessive Courtroom’s findings at first occasion that the proximate trigger of harm to the insured’s buildings was the dropping of the bomb itself somewhat than the managed detonation in 2021. The ensuing loss was due to this fact excluded by the struggle exclusion clause (the Exclusion) within the Coverage because it stemmed from an motion dedicated as a part of WW2.

Lord Justice Coulson referred to this as a basic case of there being two concurrent causes of the lack of roughly equal efficacy and one is excluded from cowl, leading to a related coverage exclusion making use of – as per Wayne Tank & Pump Co. Ltd v Employers Legal responsibility Incorporation Ltd [1974] QB 57 (Wayne Tank). On this case the act of struggle in 1942 and the managed detonation of the bomb in 2021 have been the concurrent causes and the previous was excluded below the Exclusion.

BACKGROUND

In 2021, an unexploded German WW2 bomb was found throughout development works on the insured’s campus. A managed detonation of the bomb precipitated injury to buildings owned by the insured and it made a declare below its insurance coverage coverage in respect of bodily injury to the buildings and enterprise interruption.

The insurer, Allianz, asserted that the Exclusion, which excluded loss and injury “occasioned by struggle”, utilized. It was agreed by the events that “occasioned by” gave rise to the proximate trigger check.

At first occasion, the Excessive Courtroom present in favour of the insurer, concluding that the proximate reason for the injury was the dropping of the bomb throughout WW2, such that the Exclusion utilized. The Excessive Courtroom made another discovering that, even when the dropping of the bomb was not “the” proximate trigger, it was “a” concurrent proximate reason for the loss such that the Exclusion utilized. For a full evaluation of this primary occasion resolution see our insurance coverage weblog put up: When is a trigger a proximate trigger?

The insured appealed on 4 grounds:

• Coverage interpretation: the choose didn’t have regard to “the possible intent of the events” in decoding the Exclusion,
• Inevitability: though the choose appropriately recognized the necessity to contemplate whether or not the loss was made inevitable within the strange course of occasions by the dropping of the bomb, he failed to use that check, appropriately or in any respect, in deciding the proximate reason for the loss,
• Company of change: the choice to try a managed detonation and never the dropping of the bomb, was the “agent of change” (as per Monetary Conduct Authority v Arch Insurance coverage (UK) Ltd [2021] UKSC 1 (Arch)), and
• No affordable choose may have reached the concurrency conclusion: the choose reached a conclusion on proximate trigger which no affordable choose may have reached.

COURT OF APPEAL DECISION

Lord Justice Coulson gave the main judgment with whom Lord Justice Snowden and Lord Justice Lewison agreed.

Coulson LJ reconfirmed the overall ideas in relation to establishing the proximate reason for a loss together with that the place to begin is the right interpretation of the phrases of the insurance coverage coverage and the coverage is to be interpreted objectively, as it will moderately be understood by an strange policyholder. Additionally, the proximate trigger doesn’t imply the final in time however is the dominant, efficient or environment friendly reason for the loss.

He then summarised the overall ideas in relation to concurrent causes:

• An insured peril, together with uninsured occasions, may be the proximate reason for a loss, if it has introduced in regards to the loss with a adequate diploma of inevitability. That is so even when the incidence of the insured peril is neither vital nor adequate to convey in regards to the loss by itself (Arch).
• The place there are concurrent causes of roughly equal effectivity and one is an insured peril and the opposite is excluded by the coverage, the exclusion will normally prevail (Wayne Tank).

Coulson LJ additionally referred to Reischer v Borwick [1984] 2QB 548 and Leyland Delivery Co v Norwich Union Hearth and Insurance coverage Society [1918] AC 350 during which the proximate trigger was discovered to be the primary occasion in time, even when the later occasion may need been mentioned to set off the injury complained of. Each loomed massive in Arch and the Excessive Courtroom’s judgment. Nevertheless, Coulson LJ acknowledged that these instances weren’t straight comparable as a result of in these instances the related occasion had already precipitated important injury (right here the insured’s buildings weren’t broken when the bomb was dropped) and the time hole between the occasions was very brief.

Coverage interpretation

Coulson LJ first thought-about the right interpretation of the coverage and the way the phrases “occasioned by struggle” within the Exclusion must be interpreted.

The insured argued two factors:

1. first that the Exclusion didn’t search to exclude losses “straight or not directly precipitated” not like different elements of the Coverage. Due to this fact, the events’ intention when coming into into the Coverage, was to restrict the Exclusion to “direct” causes regarding struggle solely. The insured argued that the one direct trigger for the injury was the managed detonation which might not set off the Exclusion; and
2. secondly it was not believable that the events meant that the Exclusion utilized to “lengthy ended historic wars”.

Coulson LJ discovered that though these factors had some superficial power, the events in the end didn’t differ as to the right interpretation of the Exclusion. To the insured’s two factors, Coulson LJ reasoned:

1. the phrases “occasioned by” within the Exclusion give rise to the proximate trigger check, and that check is what should be utilized. Due to this fact, it in the end didn’t matter whether or not the Exclusion clause used the phrases “straight or not directly”;
2. it was agreed that the dropping of the bomb was an act of struggle so the Exclusion would apply except the insured may present that it was not the proximate trigger or a concurrent proximate trigger of roughly equal effectivity of the loss and injury; and
3. simply because the detonation of the bomb occurred after the top of WW2 didn’t mechanically rule out the operation of the Exclusion.

Coulson LJ due to this fact concluded that this floor of the enchantment should fail and that the difficulty got here again to a consideration of the proximate reason for the loss.

Concurrent causes of loss and injury

The insurer argued that even when the bomb was not the proximate trigger it was a proximate reason for the loss and injury and due to this fact in accordance with the precept in Wayne Tank, as reiterated in Arch, the loss was excluded.

In response, the insured contended that if the Courtroom was persuaded that the injury was attributable to the managed detonation, there was no different trigger of roughly equal efficacy. The insured raised two arguments to assist its case that the managed detonation was a stronger reason for the injury than the dropping of the bomb:

1. the effluxion of time between the 2 occasions; and
2. the small print surrounding the choice to detonate, corresponding to the truth that the managed detonation was meant to not trigger any injury in any respect. These emphasised the significance of the occasions in 2021 somewhat than the sooner dropping of the bomb.

On level (i) Coulson LJ said that the authorities present the proximate trigger just isn’t essentially the final occasion in time and quite the opposite can truly be the primary occasion in time. The truth that a concurrent trigger was a lot earlier in time than a later trigger was not of itself instructive as to what was the proximate trigger.

To level (ii) Coulson LJ concluded that it didn’t advance the insured’s case:

“Inevitably, the invention of a big, unexploded bomb goes to contain numerous particular person choices as to the easiest way during which to neutralise it. From a causation perspective, that community of particular person choices can’t have any relevance to causation except one thing was carried out which broke the chain of causation (corresponding to an act of negligence). That’s not the Appellant’s case.”

Coulson LJ concluded that this was a “basic case” of two concurrent causes of loss – the act of struggle and the detonation of the bomb – which have been of roughly equal efficacy. As one was excluded, the precept from Wayne Tank is that the Exclusion prevails. For that cause, the enchantment was dismissed.

Different grounds of enchantment

Coulson LJ did contemplate the opposite grounds of enchantment briefly which have been involved with points of the causation check taken from the language utilized in Arch:

1. Inevitability: the dropping of the bomb was not the proximate reason for the loss for the reason that injury didn’t movement inexorably and within the strange course of occasions so was not inevitably attributable to the drop.
2. Agent of change: the managed detonation was the “agent of change”

These didn’t, in Coulson LJ’s view, have an effect on the evaluation of the concurrent causes and, certainly, confirmed it. Neither floor took under consideration the Excessive Courtroom choose’s appropriate conclusion that there have been two concurrent causes of the loss (the dropping of the bomb and the managed detonation in 2021). Neither would have precipitated the loss with out the opposite and it was the mixture that made the injury inevitable, or not less than within the strange course of occasions.

Finally Coulson LJ concluded that each grounds sought to exclude or minimise the causative impact of a vital occasion which in the end led to the explosion – the dropping of the bomb in 1942.

The ultimate floor of enchantment – that no affordable choose may have reached the concurrency conclusion – was thought-about a catch-all with which Coulson LJ didn’t agree.

COMMENT

The case offers readability for policyholders and insurers alike on the ideas associated to establishing proximate causes and concurrent causes of loss. The judgment demonstrates that Wayne Tank and Arch are nonetheless key authorities on proximate trigger and concurrent losses and usefully reaffirms key ideas together with:

• the place there are two causes of loss and one is insured and the opposite is excluded, the exclusion will usually prevail; and
• the proximate reason for a loss just isn’t all the time the latest occasion.

It could nonetheless be that the Courtroom of Attraction judgment leaves some observers with residual unease over the last word end result which appears harsh on the insured given the passage of time since WW2. The Courtroom recognised as a lot acknowledging that “unguided intestine feeling” may result in such a view however noticed that in the end the strategy to authorized causation is extra nuanced and topic to particular guidelines which have been utilized right here to yield the last word end result.