The High Court of England and Wales recently considered the doctrine of proximate cause in Allianz Insurance PLC v The University of Exeter [2023] EWHC 630 (TCC). This case is an interesting follow-on to the Brian Leighton (Garages) case that we discussed in Issue 27.
The case raises similar but different issues of damage caused by an earlier in time action. In this case, the question was whether the controlled detonation of an unexploded WWII bomb fell within the scope of a war exclusion in a MDBI policy. Allianz successfully obtained a declaration that damage caused by the controlled detonation was not covered by the policy as it fell within the scope of the war exclusion clause.
The facts
Building works next to the University’s campus unearthed an unexploded bomb. Investigations revealed that the bomb had been dropped by hostile German forces in Exeter in 1942, during WWII. The bomb was a highly explosive, 1000kg bomb nicknamed ‘the Hermann’. Bomb disposal experts considered that the bomb’s condition meant that it could not safely be removed from the site. The only realistic course available was to detonate the bomb on site in a controlled manner. Emergency services established a safety cordon within a 400-metre radius of the bomb, protecting residents of halls of residence owned by the University that had to be evacuated. The detonation caused damage to buildings in the immediate vicinity of the site, including those owned by the University. The University made a claim under its MDBI policy with Allianz for the physical damage to buildings and business interruption in connection with the temporary re-housing of students. Allianz declined the claim on the basis that the loss or damage fell within the scope of the policy’s War Exclusion, being loss and damage “occasioned by war”. The main question for the Court was whether the damage was “occasioned by war”. If so, the loss was excluded from cover. If not, damage fell within the terms of the insurance cover.
The policy
The policy’s insuring clause clearly covered the relevant damage unless it fell within the War Exclusion. The War Exclusion stated that there was no cover for:
Loss, destruction, damage, death, injury, disablement or liability or any consequential loss occasioned by war, invasion, acts of foreign enemy, …
Both parties agreed that the dropping of the bomb was an act of war and that the ‘proximate cause test’ was required to determine whether the damage was ‘occasioned by war’. This required the Court to determine the ‘immediate’, ‘real’, and ‘efficient’ cause of the loss. See here for our note on the Brian Leighton (Garages) case which addressed these issues in more detail.
The main question for the Court was whether the damage was “occasioned by war.
The arguments
Allianz argued that:
- the dropping of the bomb was the proximate cause of the loss; or, in the alternative
- even if the dropping of the bomb was not the proximate cause, it was a proximate cause of the loss, requiring the judge to find for Allianz in reliance on the Wayne Tank rule.
The University argued that the proximate cause of the loss was the deliberate act of the bomb disposal team detonating the bomb, not the original dropping of the bomb. Damage only occurred once the bomb was discovered and detonated. The University further argued that this was not a case of concurrent cause, and even if it was, the concurrent cause rule did not apply because it was ousted by the policy’s express terms.
The decision
The Court found that the dropping of the bomb was the obvious proximate (dominant or efficient) cause of the loss, noting that a determination of proximate cause is a matter of common-sense judgement rather than over-analysis.
The Judge held that, although the explosion was triggered by the decision to detonate the bomb, and that it was natural that an unguided gut feeling strongly leant towards the conclusion that the detonation was the proximate cause, the loss was necessitated by the presence of the bomb. Without the bomb there would be no need for detonation and thus there would be no explosion. The passage of almost 80 years between the bomb being dropped and the detonation did not prevent this from being the proximate cause. Further, the human intervention of detonation did not change the fact that without the bomb having been dropped, the loss (and the detonation itself) could not have occurred. Accordingly, as a matter of common-sense the Court found that the dropping of the bomb and its consequent presence at the site was the proximate cause of the damage.
The alternative
In the alternative, the Court also found that, even if the dropping of the bomb was found not to be the proximate cause, it was a proximate cause. The damage would be caused by the combined effect of the detonation and presence of the bomb, both being equal, or at least nearly equal, in their efficiency.
The Court also rejected the University’s attempt to rely upon the contra proferentum rule, given that there was no relevant ambiguity in the policy to be resolved.
The Court therefore concluded that the dropping of the bomb was the proximate cause of the loss and that any loss suffered by the University was rightly excluded from cover.
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