Smyth v St Andrew's Insurance Plc

Where insurers rely on a policy exception, they bear the burden of proving the excepted cause on the balance of probabilities. The seriousness of an allegation does not create a heightened standard of proof. The court may take account of inherent probabilities as a matter of common sense, but must determine whether the alleged event was more probable than not.

Only in an exceptional case may the court decide an unresolved factual issue by resorting to the burden of proof. That requires genuine and reasoned efforts to reach a finding. The court must not select the least improbable explanation merely because competing explanations are unattractive.

The claimant sought indemnity under a home insurance policy for fire damage to his property. The insurers relied on an exception for damage caused by a member of the claimant’s family, alleging that the claimant’s partner deliberately started the fire.

The claimant accepted that the partner fell within the policy definition of family, but disputed deliberate ignition. The central issues were whether the insurers had proved that the partner started the fire and how the court should evaluate competing deliberate and accidental causes where the expert evidence did not identify a conclusive cause.

1. Burden and standard of proof. The insurers bore the burden of proving the policy exception because fire was an insured peril and the exception was relied upon to avoid liability. The applicable standard remained the balance of probabilities. The seriousness of the allegation did not impose a different or criminal standard. In accordance with Re B (Children) (Care Proceedings: Standard of Proof) [2008] UKHL 35, inherent probabilities were relevant as a matter of common sense, not as an additional rule of law.
2. Resort to the burden. Resort to the burden of proof without making a positive finding was permissible only in an exceptional situation. The court had to strive reasonably to resolve the factual issue and explain that endeavour and the reasons for any inability to do so, following Stephens v Cannon [2005] EWCA Civ 222. This case was not exceptional. The evidence permitted a reasoned assessment of the competing causes.
3. Assessment of the causes. The court rejected the approach of choosing the least improbable cause. It considered the totality of the evidence, including witness credibility, timing, the condition of the bedroom, and the expert evidence concerning smouldering ignition. Consistently with Datec Electronic Holdings Ltd v United Parcels Service Ltd [2005] EWCA Civ 1418 and National Justice Compania Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) (No 1) [1995] 1 Lloyd’s Rep 455, the absence of a conclusive expert opinion did not prevent the court from reaching a reasoned conclusion.
4. A carelessly discarded or accidentally dislodged cigarette in the bedroom was a real and plausible explanation, supported by the evidence and consistent with the timing. The evidence did not establish that the claimant’s partner deliberately started the fire.
5. Judgment was therefore entered for the claimant on liability.