Proximate Cause Flashcards
What is the issue of the “proximate cause”?
The principle of indemnity for loss involves consideration of what losses are covered by a policy. The policy will specify the risks covered and will usually also specify against what perils. The insurer will not be liable for the insured’s losses unless those losses were caused by the risks insured against.
Problems can arise where there are two possible causes, one of which is covered under the policy and the other is not. The court must thus identify the “proximate cause” [Marine Insurance Act 1906, s.55(1)]
Ionides v The Universal Marine Insurance Co 1863
“You are not to trouble yourself with distant causes, or to go into a metaphysical distinction between causes efficient and material and causes final; but you are to look exclusively to the proximate and immediate cause of the loss. “Immediate” means most closely connected, the “real” or “dominant” cause – not necessarily the closest in time.”
Rausher v Borthwick [1894]
Insured ship was damaged by an accidental collision which resulted in a hole in the ship. Repair was attempted to tow the ship to harbour. The hole reopened due to the stress of being towed etc and the ship sank. The insurers were held to be liable under the policy even though it did not cover perils of the sea but it did cover damage by collision. The court held that the sinking of the ship could be traced back to the collision - the collision was thus the proximate cause of the loss and therefore covered by the policy.
If there are two independent causes, neither of which can be determined to be the dominant cause of the loss, and one is covered and the other is not mentioned in the policy – then the insurers must pay.
J J Lloyd Instruments v Northern Star Insurance [1987]
The vessel was lost at sea due to a combination of unusual sea conditions and the design defects. The policy did insure against perils of the sea but did not mention design defects. The result was that the insurers had to pay out.
- The concurrent causes of the damage to the ship were found to be its unseaworthiness and adverse sea conditions, only the latter of which was a risk covered by the policy. The COA took the view that, where there is no express exclusion of liability, the insured is entitled to recover where there are concurrent causes, at least one of which is an insured risk.
“The Cendor Mopu” [2011]
Recent Supreme Court case which suggests there may be some narrowing of the scope of finding concurrent causes - suggesting that you should be able to find the proximate/dominant cause.
What happens if there are two dominant causes and one of them is excluded by the policy?
The insurer will not have to pay.
Wayne Tank & Pump v Employers Liability Assurance Corporation [1974]
Two possible causes for the destruction of a factory by fire. One of the causes was positively excluded by the policy so the insurers did not have to pay out.
- So it follows from the approach in J J Lloyd Instruments, however, that where liability for one of the concurrent causes is excluded, the insurer will not be liable.
Rhesa Shipping v Edmunds (the “Popi M”) [1985]
*It is for the insured to prove that the cause of loss was included as an insured peril.
Ship sank in good conditions. Not clear how this had happened. The insured offered various possible explanations eventually concluding that of these possibilities an undetected submarine seemed the most likely cause. The insurers refused to pay on the ground that the loss was down to the ship’s poor condition. Court held that the insured had to prove the loss was due to an insured peril - the insurers do not have to prove to the contrary (unless they want to avoid paying then they would have to prove that it was not an insured peril or fell within an exception).
