[2025] EWHC 1430 (Comm)

Fecha: 11-Jun-2025

Legal Issues as to Causation

Legal Issues as to Causation

Principles of Causation

591.

Most of the principles as to causation which the court should apply were not in dispute. Many were the subject of consideration, in the context of non-marine insurance, in the recent Supreme Court decision of FCA v Arch Insurance (UK) Ltd [2021] AC 649, esp. at [162]-[191] per Lords Hamblen and Leggatt JJSC.

592.

The following principles of relevance to the present case can be identified:

(1)

First, that the question of whether loss has been caused by an insured peril is a matter of contractual interpretation, but is not a question which depends to any great extent on matters of linguistic meaning of particular words used. (FCA v Arch at [162]).

(2)

Second, that, unless otherwise agreed, an insurer is only liable for loss proximately caused by an insured peril. (FCA v Arch at [163]).

(3)

Third, what is intended by ‘proximate’ is, to summarise, ‘proximate in efficiency’. While English courts have historically deployed a range of adjectives to describe what is meant by ‘proximate’, the term ‘efficient cause’ captures the relevant test (and was, for example, used in [168] of FCA v Arch to do so).

(4)

Fourth, a proximate cause is not necessarily the first or the last in time: it could occur at any time before the loss. The position is summarised in MacGillivray on Insurance Law (15^th ed) at [19-001], that ‘A proximate cause is not the first, the last or the sole cause of the loss; it is the dominant effective or operative cause.’ However, once a loss has crystallised, a peril which operates subsequently cannot be a proximate cause of the (earlier) loss. (See for example Hahn v Corbett (1824) 2 Bing. 206). This also follows from the fact that a cause of action under an indemnity insurance policy arises at the point that the covered loss occurs.

(5)

In identifying the proximate cause of a loss, the court should approach the exercise from the perspective of an ordinary businessperson possessed of common sense, and not as a scientist or metaphysician. (See FCA v Arch at [167] citing Yorkshire Dale SS Co. Ltd v Minister of War Transport [1942] AC 691 at 706 per Lord Wright). But the principles or standards to be applied in the exercise are capable of some analysis. As the majority of the Supreme Court said in FCA v Arch at [168]:

It is not a matter of choosing a cause as proximate on the basis of an unguided gut feeling. The starting point of the inquiry is to identify, by interpreting the policy and considering the evidence, whether a peril covered by the policy had any causal involvement in the loss and, if so, whether a peril excluded or excepted from the scope of the cover also had any such involvement. The question whether the occurrence of such a peril was in either case the proximate (or “efficient”) cause of the loss involves making a judgment as to whether it made the loss inevitable – if not, which could seldom if ever be said, in all conceivable circumstances – then in the ordinary course of events.

(6)

In seeking to identify the proximate cause, the ‘first task of the Court is to look to see whether one of the causes is plainly the proximate cause of the loss’ (Handelsbanken Norwegian Branch of Svenska Handelsbanken AB v Dandridge (The ‘Aliza Glacial’) [2002] 2 Lloyd’s Rep 421 at 431 per Potter LJ).

593.

In the present case, there is no issue as to what the proper test for causation is, as a matter of interpretation of the policies. The language of all policies is consistent with the usual position, i.e. with the test being of proximate causation.

594.

There is also no dispute that where an AR Cover is made subject to an exception of war risks, a loss proximately caused by the operation of a WR Peril will fall for cover under the WR and not under the AR Cover. There was also no issue that the burden of establishing that the exception applies, and thus of establishing that a WR Peril was the proximate cause of the loss, lies on the party/ies asserting the application of the exception.

Concurrent Causes

595.

What was the subject of more submissions, and some limited areas of contention, was the position in relation to concurrent causes. Some points relating to this subject were not in contention. Thus:

(1)

The fact that there are concurrent causes does not mean that there is more than one proximate cause. It is only in ‘rare exceptions’ that there will be dual effective causes (see International Energy Group Ltd v Zurich Insurance Plc [2015] UKSC 33 at [73] per Lord Mance).

(2)

When there are two concurrent proximate causes, neither of which is excluded but only one of which is insured, the insurers are generally liable (FCA v Arch at [173]).

(3)

In a case in which there are two proximate causes of loss, one of which is covered and one of which is within an exclusion, then the exclusion generally applies. (FCA v Arch at [174] by reference to Wayne Tank and Pump Co Ltd v Employers Liability Assurance Corpn Ltd [1974] QB 571).

(4)

The position in the cases referred to in (2) and (3) is always subject to the terms of the policy indicating a different result. Further, the position as stated applies at least in cases in which the two proximate causes operate in combination, and where neither would have caused the loss without the other. (FCA v Arch at [175]).

596.

There was debate about the position in a case in which there are two proximate causes, each of which operates separately, and each cause would have produced the same loss by itself without any need for the other. These have been described in argument as ‘independent causes’. Cases of independent operative causes are likely to be very rare. In WR Insurers’ submission, in such a case, if one cause is covered and the other is excluded, then, subject to a contrary indication in the policy, the insured can recover all the loss caused by the covered proximate cause. Where there are arrangements such as the present, that would mean that if there were two independent proximate causes, one an AR Peril and one a WR Peril (which is excepted from the AR Cover), the loss would be recoverable under the AR Cover.

597.

WR Insurers contend that this approach is correct as a matter of construction (both of typical policies and of the policies in issue here). As AR Cover is typically unlimited, whereas WR Cover is typically subject to lower limits, a reasonable policyholder would not expect to recover less than their full loss, because of the operation of an exclusion, where the relevant loss was, ex hypothesi, independently caused by a peril covered under the AR Cover. Further, the underwriters of the AR Cover have agreed to cover a loss caused by the unexcluded peril, and there is no basis for them to free themselves from the independent operation of that insured peril. WR Insurers also contend that their approach is supported by persuasive obiter dicta to the effect that the Wayne Tank approach is applicable only to cases of interdependent concurrent causes.

598.

The AR Camp contend that the Wayne Tank approach applies in this situation. The intention of the parties was that AR Insurers should not be liable for losses proximately caused by WR Perils; but is instead that losses proximately caused by such perils should be insured only under the WR Cover. No authority suggests the contrary.

599.

While, as will appear, the answer to this question is not decisive in the present case, my conclusion is that the AR Camp is correct on this point. My reasons are:

(1)

The relevant reasoning in Wayne Tank was not confined to cases of interdependent concurrent causes. The members of the Court of Appeal spoke of ‘two causes which were equal or nearly equal in their efficiency in bringing about the damage’ (as it was put by Lord Denning MR at 67C); ‘two causes both of which can properly be described as effective causes of the loss’ (Cairns LJ at 68H); or ‘two causes effectively operating at the same time’ (Roskill LJ at 75D). They did not suggest that the position would differ if the two causes acted independently.

(2)

The rationale for the conclusions on the relevant point in Wayne Tank is that, insurers having stipulated that they will not be answerable for loss proximately caused by the excepted peril, they should not be liable for a loss which is indeed proximately caused by such a peril. That rationale applies to a case of independent as well as to a case of interdependent proximate causes.

(3)

The statements in Wayne Tank of what would be the position had there been two proximate causes ultimately depended on the construction of the policy there in issue, including of its exclusion clause, but these were, as far as relevant, in a common form. I consider that there are no particular features of the policies or of the relevant exclusion clauses in the AR Covers in the present case which dictate a result different from that indicated in Wayne Tank.

(4)

The typical exclusionary language in the present cases is (as in the AVN 48B Exclusion Clause):

This Insurance does not cover claims caused by…

In my view, if the AR Insurers were to be liable for a claim which is proximately caused by the operation of a WR Peril, then this clause would not have been given full effect: the insurance would instead have covered a claim ‘caused by’ an excluded peril. The fact that the claim was, ex hypothesi, also proximately caused by the independent operation of an AR Peril does not alter this.

(5)

The decision of the Federal Court of Australia in McCarthy v St Paul International Insurance Co Ltd [2007] FCAFC 28 is not an authority to contrary effect. In that case Allsop J did recognise that there was a potential distinction between cases of independent and interdependent proximate causes. He identified that all the cases considered in Wayne Tank had fallen into the latter category. As to the former category, he said, at [104]:

More difficulty may be encountered in circumstances where a policy excludes one cause, includes another and the loss is occasioned by the two causes operating concurrently, but independently, in the sense that each would have caused the loss without the other. At the outset, it may be doubted that the solution in any given case is to be found in the application of any principle of insurance law, other than one which states that the rights of the parties to the policy are to be determined by reference to the terms of the contract as found. This was the principle applied by all three Lords Justices in Wayne Tank….

At [114] Allsop J said:

Once one concludes that, as a matter of construction of the contract, the insurer and insured have agreed that the cover does not extend to any loss caused by a particular cause, and that the loss was caused by that cause, the policy’s lack of response can be seen as evident. It is only if one concludes that the parties have agreed that the policy will not respond if the excluded cause must be the sole cause, for the existence of a concurrent and not excluded cause to be relevant. Again this is a question of construction of the policy.

I would respectfully agree with those statements. As I have said, to my mind, the terms of the policies here do indicate that the AR Insurers should not be liable for losses proximately caused by the operation of WR Perils; and the nature of the exclusions is not such that they operate only if the excluded cause is the sole cause.

The ‘Ann Stathatos’

600.

A further area of debate was as to what was described as the Ann Stathatos line of authority.

601.

AR Insurers referred to what was said by Devlin J in Royal Greek Government v Minister of Transport (The ‘Ann Stathatos’) (1950) Ll. LR 228, at 237, as follows:

When questions of causation arise in contracts, points of construction are often involved. The contract defines the event which sets in motion the train of consequences. If in this respect the contract is misconstrued and the angle of view is, as it were, incorrectly plotted, the view will be wrong…
The terms of the contract may restrict or expand the field of causation which has to be examined. … Sometimes one of the clauses is to be construed as dominant, as in the case of an exceptions clause; then the whole of what one might call the area naturally appurtenant to the excepted event must be granted to it, and the other event is what is left over…
In nearly every case, if ordinary marine risks alone had to be considered, the proximate cause could properly be said to be a peril of the seas; but what had also to be considered was the power of the war risks clause to attract the result into its own field...

602.

Devlin J’s dicta in The Ann Stathatos were referred to by Lord Mance, with whom the other members of the Supreme Court agreed, in an obiter passage of his judgment in Atlasnavios-Navegação, LDA v Navigators Insurance Co Ltd (The ‘B Atlantic’) [2019] AC 136 at [41]. He there said:

In Royal Greek Government v Minister of Transport (The Ann Stathatos) … (as I noted in ENE Kos I Ltd v Petroleo Brasileiro SA (No. 2) (The Kos) [2012] 2 AC 164, para. 43) Devlin J pointed out that the existence of an exceptions clause is itself likely to affect what falls to be regarded as dominant, proximate or relevant; and this is because “the whole of what one might call the area naturally appurtenant to the excepted event must be granted to it.”…

603.

The AR Camp contends that the approach indicated in these statements is that when the court is faced with multiple candidate causes, one of which is an excluded WR Peril, the excluded peril is likely to merit being characterised as the sole proximate cause, even when it may be possible to identify a non-excluded peril that had some degree of causal impact, in the interests of respecting the overall contractual scheme.

604.

The WR Insurers say that what Devlin J was saying is somewhat obscure, and that insofar as Lord Mance’s dicta are intended to set out a principle of law or construction that attributes a ‘gravitational pull’ to exclusion clauses for the purposes of identifying the proximate cause of loss, they are wrong and should not be followed.

605.

I think it unnecessary, and it would be unwise, to try to define the scope of the principle involved in Devlin J’s and Lord Mance’s dicta. I understand them to involve the helpful insight that the nature of the contractual candidates for the cause of the loss may influence which is regarded as the proximate cause. Thus if, for example, there was a broadly expressed cover, and a very precisely defined excepted peril, and in the occurrence of a loss the excepted peril played, at least, a significant causative role, it might well be natural to regard it as the proximate cause. The reason is that the parties clearly regard the specific, and narrow, excepted peril as having a particular significance. I do not regard this as heterodox. It would simply be, in my view, a reflection of the businesslike and common-sense approach to the identification of the proximate cause, which is the approach supported by the authorities.