Causation

1. The proximate cause

In order to be indemnified for a loss under a marine insurance policy, it must be established that the loss:

• was proximately caused by an insured peril
• was not proximately caused by an excepted or excluded peril.

The requirement that the loss has been proximately caused by an insured peril is laid down in section 55(1) MIA. (The Kamilla and Global Process Systems Inc v Syarikat Takaful Malaysia Berhad).

A ‘proximate cause’ does not have to be the cause last in time; it must be the dominant or effective cause. Where a later cause is itself theinevitable or likely consequence of an earlier cause, then the earlier cause is likely to be the proximate cause. Causation is a concept applied in a common sense fashion. There is no philosophical or scientific test which is applied rigidly to determine whether or not there is a causal link between the loss and the peril. The causal link is determined by applying common sense. The application of a ‘common sense’ approach to questions of causation was reaffirmed in Venetico Marine SA v International General Insurance Company Ltd.

Most insurance contracts will be interpreted as requiring the insured peril to be the proximate cause of the insured loss. The following formulations in insurance contracts have been construed as requiring the insured peril to be a ‘proximate cause’:

• ‘caused by’ (Seashore Marine SA v Phoenix Assurance plc (The Vergina))
• ‘results from’ (Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd)
• ‘attributable to’ (The Salem, compare P Samuel & Co Ltd v Dumas)

• ‘the consequences of’ (Ionides v Universal Marine Insurance Co)
• ‘arising from’ (Coxe v Employers Liability Assurance Corp Ltd, compare Nacional Hispanica Aseguradora SA (The Playa de las Nieves), Bedfordshire Police Authority v Constable
• ‘due to’ (The Kamilla).

However, if the policy provides that the indemnity will extend to losses ‘directly or indirectly caused by’ or ‘caused or contributed to by’ or a ‘consequence of’ an insured peril, the insured peril may not need to be the proximate cause (AXN v Worboys; Crowden v QBE Insurance (Europe) Ltd; Metlife Insurance Ltd v RGA Reinsurance Company of Australia Ltd. In most cases, there will be numerous causes which result in the loss. It is only the proximate cause or causes which are relevant to the inquiry. In such cases, it is important to consider the causal relationship between each of the causes and the loss.

2. Multiple Causes

A loss may be produced by more than one ‘proximate cause’. The causes may be concurrent (i.e. the causes operate at the same time). Alternatively, the causes may be successive (i.e. one cause follows the other cause in time).

i)Concurrent Causes

If there are two or more concurrent proximate causes of the loss, it must be asked whether the policy will indemnify the loss.

• If at least one of the proximate causes is an insured peril, and none of the other causes are an excepted peril, then the loss will be covered by the policy.
• Where one of the proximate causes is an insured peril and one of the proximate causes is an excepted peril, the policy will not cover the loss.
• Where one of the proximate causes of loss is the negligence of the master or crew, provided that that negligence is an insured peril or one of the other causes is an insured peril, the loss will be covered by the policy (section 55(2)(a) MIA), unless of course negligence or one of the other causes is an excepted peril.

The principle that if at least one of the proximate causes is an insured peril, and none of the other causes are an excepted peril, the loss will be covered by the policy, was reaffirmed in Atlasnavios-Navegacao Lda v Navigators Insurance Co Ltd; Zurich Insurance plc v International Energy Group Ltd; Global Process Systems Inc v Syarikat Takaful Malaysia Berhad.

ii)Successive Causes

Where there is a succession of proximate causes, there are no hard and fast rules which will determine whether or not the loss is covered. 

However, the following observations may be made (although the cases may not always be consistent with them):

• Where the first cause is an insured peril, which leads inevitably to an excluded (or a non-covered) peril, which in turn leads to a loss, the loss is likely to be covered by the policy (P Samuel & Co Ltd v Dumas).
• Where the first cause is an excepted peril, which leads inevitably to an insured peril, which in turn leads to a loss, the loss is likely not to be covered by the policy (Cory v Burr).
• In such cases, it will be important to determine whether or not the second cause followed inevitably from the first cause or whether it was in reality a new intervening cause.
• In Atlasnavios-Navegação Lda v Navigators Insurance Co Ltd, the Court suggested that the approach referred to may be too mechanised.

1. The Burden Of Proof

As to the burden of proof of a loss caused by an insured peril and the burden of proof of a loss caused by an excluded or a non-covered peril:

• The assured will have to prove that his or her loss was caused by an insured peril. Where the insurance is against all risks, the assured need only prove that the subject-matter insured was lost or damaged by reason of fortuity; there is no need for the assured to prove the exact nature of the casualty.
• Normally, the insurer will have to demonstrate that the loss was caused by an excepted peril, particularly if the exception is specific (compare Seashore Marine SA v Phoenix Assurance plc (The Vergina) (No. 2)).
• However, complications may arise where the assured and the insurer put forward competing explanations or are unable to provide convincing explanations of what actually caused the loss. 
• As to the burden of proof where the assured and the insurer put forward competing explanations or are unable to provide convincing explanations of what actually caused the loss, the authorities are European Group Ltd v Chartis Insurance UK Ltd; Venetico Marine SA v International General Insurance Company Ltd.
• For further enquiries or clarification, kindly contact us.