Report No. 21
General-"Included and "Excluded losses."-This deals with the topic of "included" and "excluded" losses.
Analysis of the section.-The section enacts two propositions-one positive, defining the liability of the insurer, and the other negative, excluding the liability of the insurer. Its provisions are "subject to" other provisions. Further, the positive proposition about liability operates "unless the policy otherwise provides".
Sub-section (1) states the general proposition, while sub-section (2) deals particularly with certain kinds of losses. In sub-section (2), clause (a) again contains both a negative and a positive proposition, while clauses (b) and (c) contain negative propositions only, that is to say, "non-liability".
Principle of the section.-The main principle behind the section is, that if the loss is caused by a peril insured against and the peril is the proximate cause of the loss, the insurer is liable, but not otherwise. As to "proximate cause", it has been said that "the terminology of causation in English law is by no means ideal. It would be better for a little plain English.
"Direct cause" would be better expression than causa proxima. Logically, the antithesis of proximate cause is not "real cause", but "remote cause".1
The object behind the rule is to draw a line of demarcation at some stage. The rule is based on the maxim: causa proximo non remota spectator (regard the proximate and not the remote cause).
Analysis of causes.-The connection between a cause and the resulting loss can be analysed as follows:-
Situation No. (1) above-single cause-does not call for the application of the section. If the loss is caused by a peril insured against, the insurer is liable.
Situation at (2) above-a number of causes acting together-sometimes calls for the application of the section.
Situations at (3) and (4) are the main situations where the doctrine of proximate cause has always got to be applied.
It is not always possible to put a cause under situation No. (2), (3) or (4) exclusively. As has been observed by Lord Shaw,2 "Causes are spoken of as if they were as distinct from one another as beads in a row or links in a chain but-if this metaphysical topic has to be referred to-it is not wholly so Causation is not a chain but a net. At each point influences, forces, events-precedent and simultaneous-meet; and the radiation from each point extends indefinitely. At the point where these various influences meet it is for the judgment as upon a matter of fact to declare which of the causes thus joined at the point of effect was the proximate and which was the remote cause".
Meaning of "proximate cause".-"To treat proximate cause as if it was the cause which is proximate in time is out of the question. The cause which is truly proximate is that which is proximate in efficiency. The efficiency may have been preserved although other causes meantime have sprung up which have not yet destroyed it or truly impaired it, and it may culminate in a result of which it still remains the real efficient cause to which the event can be ascribed."2
The fact in that case were that a ship insured against perils of the sea was torpedoed by enemy submarine 25 miles from Havre. (There was a warranty against all consequences of hostilities). The torpedo struck her well forward, and she began to settle down by the head but with the aid of tugs she reached Havre and was taken alongside a quay in the outer harbour. A gale sprung up: after 2 days her bulkhead gave way and she sank and" became a total loss. It was held, that the torpedoing was the proximate cause of the loss, and the grounding was not a novus actus interveniens. The underwriters were therefore not liable because the loss was a consequence of hostilities.
Doctrine based on intention of parties.-The doctrine of proximate cause merely gives effect to intention of the parties. "Cause and effect are the same for underwriters as for other people. Proximate cause is not a device to avoid the trouble of discovering the real cause or the common sense. Indemnity involves it apart from decisions."2
1. Becher Gray & Co. Ltd. v. London Assurance Corporation, 1918 AC 101 (114): 117 LT 609, per, Lord Justice Sumner. The judgment of Lord Sumner makes some candid observation on "proximate cause".
2. Leyland Shipping Co. v. Norwich Union Fire Insurance Society, 1918 AC 350 (369), per Lord Shaw of Durtfermlane.
3. Becher Gray & Co. Ltd. v. London Assurance Corporation, 1918 AC 101 (113), per Lord Sumner.