The University of Exeter v Allianz Insurance PLC

In insurance law, proximate cause means the cause proximate in efficiency, not necessarily the last event in time. The inquiry is guided by policy construction, evidence and common sense, but requires a principled judgment about whether a peril made the loss inevitable, or inevitable in the ordinary course of events. Multiple causes may be concurrent proximate causes where they act together to produce the loss, even if neither alone was sufficient. Where approximately equally efficient concurrent causes include an insured peril and an expressly excluded peril, the exclusion generally prevails. A long interval and reasonable intervening human actions do not by themselves break causation. The agency of change is not a freestanding test. An act of war which created a continuing danger and a later reasonable detonation were concurrent proximate causes.

The University of Exeter claimed under a policy issued by Allianz Insurance PLC for physical damage to student accommodation and business interruption following the controlled detonation of an unexploded Second World War bomb discovered near the buildings in 2021. Allianz relied on a war exclusion for loss occasioned by war.

On a Part 8 claim, HHJ Bird held that the dropping of the bomb was the sole proximate cause, alternatively a concurrent proximate cause, of the loss, and that the exclusion applied: [2023] EWHC 630 (TCC). The University appealed, challenging the construction of the exclusion and the judge’s treatment of proximity, concurrency, the passage of time and the agency of change. The central issue was whether the dropping of the bomb remained a proximate or concurrent proximate cause of the 2021 loss.

1. Appeal dismissed. The loss and damage resulted from two concurrent causes of approximately equal efficacy: the dropping of the bomb in 1942 and its controlled detonation in 2021. The war-related cause was expressly excluded, so the exclusion prevailed under Wayne Tank & Pump Co. Ltd v Employers Liability Incorporation Ltd [1974] QB 57.
2. Proximate cause. The policy was to be interpreted objectively. The agreed meaning of occasioned by required application of the proximate-cause test. Proximate cause means the cause proximate in efficiency, namely the dominant, effective or efficient cause, rather than the last event in time. Under Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UK SC 1, the court must identify the causal involvement of covered and excluded perils and assess whether the relevant peril made the loss inevitable, or inevitable in the ordinary course of events. Human action will not generally break the causal connection unless it is wholly unreasonable or erratic.
3. Concurrent causes. Causes may operate concurrently where their combined effect makes the loss inevitable in the ordinary course, even though neither cause alone was necessary or sufficient. Where causes are approximately equally efficient and one is insured while the other is excluded, the exclusion generally applies. That was the effect of Arch and Wayne Tank.
4. Application. The bomb supplied both the explosive payload and the reason for the later detonation. The passage of almost 80 years did not reduce its potency and did not, without more, prevent the earlier event from remaining causally effective. The authorities’ reasonable response to the discovery, including the attempted low-order technique, did not break the chain of causation. The combination of the original dropping and the later detonation made the damage inevitable, or at least the ordinary course of events.
5. The inevitability ground failed because the principle applies to causes acting in combination. The agency-of-change expression is not a separate causation test, and the status quo must be identified correctly; several events may be described as changes to it. The policy-construction ground failed on the parties’ agreed interpretation. The court did not need to determine in detail whether the judge’s separate sole-cause analysis was correct, although it expressed reservations about beginning by hypothetically removing human intervention.

• Court of Appeal (Civil Division): The appeal was dismissed. The court upheld the alternative conclusion that the dropping of the bomb and its later detonation were concurrent proximate causes, with the war exclusion prevailing: [2023] EWCA Civ 1484.
• High Court of Justice, Technology and Construction Court: HHJ Bird held that the dropping of the bomb was the sole proximate cause, alternatively a concurrent proximate cause, of the loss and damage, so that the war exclusion applied: [2023] EWHC 630 (TCC).