In The University of Exeter v Allianz Insurance Plc, the Court of Appeal dismissed the University's appeal, finding that damage caused to the University's buildings in 2021 following a controlled detonation of an unexploded WWII bomb was excluded under its insurance policy, owing to the operation of a war exclusion clause.
Background
On 26 February 2021, contractors discovered an unexploded bomb within 200 metres of the University of Exeter's halls of residence. The bomb had been dropped during a series of bombing raids on Exeter in 1942.
The bomb disposal squad formed the view that the only option available to it was to try to blow open the casing of the bomb to expose the internal high explosive, without setting off that explosive. But, it was always highly likely that detonation of the internal high explosive would occur, which is exactly what happened. There was no criticism of the bomb disposal squad's decision making or the way in which it carried out the controlled explosion.
The force of the explosion damaged the University's halls of residence, which led to it making a claim under its all risks policy for the ensuing loss. A dispute arose as to whether the damage was covered at all, since the policy excluded damage 'occasioned by war'.
Judgment
The Court of Appeal dismissed the University's appeal against the first instance judgment which ruled that the loss was not covered. It found that there were two, concurrent, proximate causes of the damage: the controlled detonation by the bomb disposal squad and the war. Since war was an excluded cause, the loss was not covered.
The Court recognised that where there are two or more concurrent causes of a loss, the proximate cause will not necessarily be the last in time, but can often be the first. It acknowledged that there was a lifetime between the dropping of the bomb and its detonation. But, since it was conceded that the exclusion could be triggered by a war which had ended prior to the damage occurring, that made it difficult to draw any sort of line as to how historic a war would have to be before it lost its causative potency.
As it happened, the bomb had not lost any of its potency over time. The Court of Appeal said that the question which needed to be asked was whether the initial event (here the war) led inexorably to the loss through an ordinary series of events, or whether there was a 'subsequent abnormal event' which negated the causal connection between the original event and the loss. The discovery of an unexploded bomb was always going to involve a number of decisions as to the best way to neutralise it and those decisions could not be relevant to causation, unless something (like an act of negligence) occurred which broke the chain of causation. On the facts of this case, the bomb squad was plainly not negligent.
The Court acknowledged that the damage to the University's buildings did not flow inexorably and in the ordinary course of events from the dropping of the bomb alone. The bomb could simply have exploded when it was dropped, such that there would have been no damage to the University's buildings, as they had not been built at that time. It might also never have exploded, if the bomb squad had successfully rendered it safe. So, the actions of the bomb squad were a concurrent, proximate cause of the loss, alongside the war. But, the Wayne Tank principle (that an excluded concurrent cause will trump one which is not excluded) meant that the loss was not covered.
The Court pointed out that potential issues, such as whether a war exclusion should be interpreted as not being concerned with wars which had ended at the time that the buildings were constructed or at the time the policy incepted, or with damage which arose from attempts to render safe a bomb rather than a war-like desire to destroy property, did not arise because there was no dispute between the parties on appeal about the proper interpretation of the exclusion.
Takeaway
The Court of Appeal's decision marks a welcome return to conventional causation principles in the light of the more expansive approach which had been adopted by the Supreme Court in the COVID-19 business interruption test case. The Court here applied a principled approach to causation, rather than being influenced by what it described as 'unguided gut feeling' that the damage to the University's halls might not have been occasioned by war.
DAC Beachcroft LLP successfully acted for Allianz Insurance Plc.
