Case Comment – University of Exeter v Allianz
The Court of Appeal has recently handed down its eagerly awaited judgment in University of Exeter v Allianz 2023 EWCA Civ 1484. In unanimously dismissing the University's appeal, the Court held that this was a “classic case” of there being two concurrent causes of the loss and damage of approximately equal efficacy. Where one of those concurrent causes was excluded, the principle in Wayne Tank applied, such that the University's claim must fail.
Recap
Followers of the case will recall that it concerned the discovery and subsequent controlled detonation of a WWII bomb on land adjacent to the University’s campus in 2021, resulting in damage to the University’s buildings. Allianz declined cover for the damage on the basis that the University’s policy excluded liability for loss “occasioned by war … .”
The question was, therefore, whether the loss and damage arising was proximately caused by war, as the excluded peril. The University argued that the proximate cause was the deliberate act of the bomb disposal team in detonating the bomb, which itself was not an act of war, and therefore not excluded under the policy. Insurers argued that the proximate cause, or at least a concurrent proximate cause, of the loss was the initial dropping of the bomb by enemy forces in or around 1942, and thus the damage now arising triggered the exclusion.
At first instance (2023 EWHC 630 (TCC)), the Court recognised that an “unguided gut feeling” may strongly lean towards the conclusion that the detonation was the relevant, dominant or proximate cause. Ultimately, however, the Court agreed with Insurers finding that the “the dropping of the bomb was the obvious proximate cause of the damage” or, alternatively, “that the detonation and the presence of the bomb were “equal, or at least nearly equal" in their efficiency” such that the war exclusion applied.
Appeal Findings
Substantively, Lord Justice Coulson’s leading judgment, with which Lord Justices Snowden and Lewison agreed, concurred with the trial judge's alternative analysis that both the dropping of the bomb in 1942 and the controlled detonation almost 80 years later were concurrent causes of the loss and damage to the University's buildings. The Court of Appeal concluded “It was the combination of these two events which made the loss inevitable, or at least in the ordinary course of events. Neither would have caused the loss without the other.”
The Court of Appeal also considered what rendered the loss inevitable in the ordinary course of events, and whether the specific circumstances in which the bomb was detonated acted as an “agent of change”, on the basis that there was a settled status quo ante for almost 80 years prior to the detonation. LJ Coulson nonetheless remarked, “as a matter of generality” that the concept of an “agent of change” “should not be elevated into principle or slavishly followed as some sort of freestanding causation test” but rather be considered as a useful way of looking at causation, provided that the status quo ante has been determined correctly. In line with the Supreme Court decision in FCA v Arch Insurance (UK) Limited 2021 UK SC 1, the Court of Appeal concluded that the trial judge was right to reach his alternative conclusion that there were two concurrent proximate causes of the loss, which made the damage inevitable.
Comment
Despite its simple premise, and ample examination by the Courts, proximate causation is, and will continue to be, an issue requiring close scrutiny in the insurance market as each application will heavily rely on the unique circumstances of each case.
The above case serves as a reminder that legal causation is more nuanced than an “unguided gut feeling” and that proximate cause does not mean the last event in time, but that which is proximate in efficiency.
Insurance professionals must continue to be mindful of concurrent causes, of which this case offers a “classic” example.
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