Page 29 - Insurance Times February 2024

The hearing before the Supreme Court turned on the inter- the insured in leaving said equipment turned-on and
relationship between perils identified in clauses 1.2, 1.5 and unattended overnight prior to proper testing of the
1.6 of the policy and the exclusion identified in clause 4.1.5. installation; (iii) or both as concurrent causes.
Where multiple causes are said to give rise to an incident,
the general rule in insurance law is that the Court will Therefore, the Supreme Court’s comments on this subject
identify the true proximate cause, finding the other posited are of great interest to the wider insurance industry. The
cause(s) to be too remote or not actually causative. The issue of concurrent causation was not argued at first
identification of the proximate cause is an exercise in instance or the Court of Appeal but was argued in the
common sense, it is not necessarily the last event prior to Supreme Court. The owners sought to avoid the loss being
the loss. excluded by arguing that it was the malicious act, not the
detainment/seizure for the infringement of customs
An example of the general rule being followed is In re regulations (which was excluded), which fell to be regarded
Etherington and the Lancashire and Yorkshire Accident Co as the proximate cause of the loss. Therefore, the Supreme
(1909) where the assured fell from his horse, suffered shock Court had to choose from the following posited causes: (i)
and wetting and later died from pneumonia. While the the malicious acts of third parties; (ii) the seizure/
policy in question covered death caused by and occurring detainment by reason of infringement of customs
within three months of an accident, it had an exception in regulations; or (iii) both (acting as concurrent rather than
respect of death caused by “disease or other intervening independent causes). In rejecting the owners’ argument, the
cause”. However, the accident was held to be the proximate Supreme Court made the following comments:
cause of the death as pneumonia was considered to be 1. The Court was more likely to find concurrent causes
something usually attendant upon the particular accident when the policy has a potentially applicable exceptions
and caused by it rather than an independent disease. clause.
2. The likelihood of concurrent causes being found was
The general rule is, of course, subject to exceptions and increased by the fact that the owners had effectively
sometimes the correct analysis is that there are in fact two
used a clever construction of the policy to avoid relying
(or more) concurrent causes. The issue of concurrent
on the most obviously applicable peril, which was itself
causation usually arises in cases where there are potentially
obviously covered by the applicable exceptions clause,
applicable exception clauses, likely because of the increased
in order to side-step that otherwise wise applicable
commercial advantage in insurers running such arguments
exception.
in those cases and because the very existence of an
exception clause affects the analysis of what is regarded as 3. The owners needed to rely upon the detainment/seizure
proximate. The question of whether there is concurrent of the vessel for 6 months in order to establish it as a
causation is in no way restricted to marine insurance constructive total loss under Clause 3. However, in
order to avoid the effect of the exception clause at
disputes, a well-known example being Wayne Tank and
Pump Co Ltd v Employers Liability Corporation Ltd where the 4.1.5, they sought to argue that the detainment and
Court of Appeal had to consider whether the cause of a fire its continuation were not causatively relevant as they
which burned down a factory was: (i) the defective nature were simply incidents of or sequel to the original
of equipment; (ii) the negligence of one of the servants of malicious act. The Supreme Court rejected that the
submission as “unreal in practical terms” as they were
“by no means bound to occur”. This appears to be very
high standard indeed.

Therefore the Supreme Court held that it was the
combination of the “malicious act” and the seizure/
detainment which led to the loss, with the latter arising
from the excluded peril of infringement of customs
regulations and therefore that the owners’ claim failed. The
case demonstrates the very real difficulties that an insured
will encounter in attempting to recover in respect of a loss
where the insurers are arguing that the loss was caused (in
whole or concurrently) by an excluded peril.

The Insurance Times February 2024 27