Proximate cause

In determining rights of the parties what is relevant is the proximate & not the
remote cause. A fundamental principle in insurance law.
In Ionides v Universal Marine to determine the rights of the parties, one must
look exclusively at the immediate & proximate cause of the loss.
In Mea V Vella the court held that legally what must be taken is the proximate
& effective cause
Pawsey v Scottish Union & National insurance defined the proximate cause as
the active & efficient cause that sets into motion a train of events which brings
about a result, without the intervention of any force started and working actively
from a new & independent source.
The cause must be active & efficient There must be a direct link between the
cause & the result. The cause must be strong enough that at each stage in the
train of events, one can logically predict what the next occurrence in the chain
shall be, until the result under consideration will take place.
The intervention of a new act, working actively from a new &
independent source is clearly outside the scope of the proxima
doctrine.
This is because a supervening cause breaks the chain of causation, thus
destroying the relation of the cause and effect between the original cause and
the end result.
There are what are called last straw cases where there is a chain of events in
which the final link is merely the closest in time to the outcome, but is not the
recent efficiency, & thus is not the proximate cause.
Halsbury explains that the proximate cause is not the first, or the last or the sole
cause of the event. It is rather the dominant, effective or operative agent that
occasioned the loss. In Yorshire Dale SS, Lord Denning held that the proximate
cause was not necessarily the latest in time but is the one predominant in
efficiency.
The court also held that in order to determine the proximate cause, one must
take into account the common sense of an ordinary diligent man.
Resicher v Borwick, The House of Lords held that the proximate cause must be
determined by common sense. The intention of the parties have to be identified
& verified & thus all factors must be considered.

How it applies to insurance

In an insurance contract, the insurer undertakes to pay the insured some benefit
upon the happening of an uncertain event, in return for consideration (premium).
The contract sets out the terms & the insured may only recover the loss incurred
if the proximate cause of the loss is an insured peril (fire, earthquakes,
explosions etc)

The proximate cause doctrine is fundamental in insurance for a number of

reasons.
1. It sets out the circumstance where the insurer is liable to indemnify the
insured
2. Establishes the actual intention of the parties
3. Allows for the calculation of an adequate premium
The insurer determines the proximate cause by working backwards. AT times this
is easy but at times it is unclear to establish the proximate cause

There are 3 types of causes that bring about a loss

1. Single Cause

Where the cause is a single one, the problems encountered are minimal, since
the loss is brought by a solitary peril. An example would be a loss occasioned by
fire, the fire would be the proximate cause. IF the fire is cause by the insurance
contract, the insured would be entitled to an indemnification.
2. Successive cause
Here the loss arises following or during a chain of events. The task is slightly
more difficult & complicated since there Is a chain of perils. Eg loss by
earthquake followed by an explosion followed by a fire.
The earthquake is the proximate cause, even if it did not technically cause the
damage itself. If all three perils are covered, then there would be no problems for
indemnification, but if one of them such as explosions is not covered by the
policy then the insured would be entitled to indemnification.
Leyland Shipping Co Ltd v Norwich

The ship was insured against the perils of the sea by a policy containing a warranty against all
consequences of hostilities. While voyaging to Le Havre, she was torpedoed by a German
submarine 25 miles from port. She began to settle by the head, but helped by tugs got to Le Havre
and was taken alongside a quay in the outer harbour. A gale caused her to bump against a quay
and the harbour authorities, fearing that she would block the quay, ordered her to moor at a
berth inside the outer breakwater. She was there for two days, taking the ground at each ebb tide,
but floating with the flood. At last her bulkheads gave way and she sank, becoming a total loss. In
an action brought by the shipowners on the policy claiming to recover as for loss by perils of the
sea, the House of Lords held that the grounding of the vessel was not a novus casus interveniens
and that the torpedoing was the proximate cause of the loss and that consequently the
underwriters were protected by the warranty against all consequences of hostilities. The
proximate cause under article 55 of the 1906 Act need not always be the event closest in time to

the incident. The proximate cause is that which is proximate in efficiency. Lord shaw held
that that efficiency must have been preserved although other causes may have
sprung up

In successive cases to determine whether the insured is entitled to

indemnification is as follows
1. Unbroken sequence this is where each event is caused by & follows from
the previous one. If there is no excepted peril, all losses caused and
following the insured peril are recoverable.
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If there is an excepted peril, this will depend on whether the excepted

peril occurred before or after the insured peril
a. If the excepted peril comes before the insured peril, any natural
consequences are outside the scope of the policy
b. If the excepted peril follows the insured peril, the insurer is liable for
the insured peril but only up to the happening of the excepted peril.
Difficulties may arise as to distinguish the damage caused before and after
the insured peril. In practice a compromise is reached
2. Broken sequence this is where a new & independent cause intervenes
(novus actus interveniens) during the chain of events, in such a way that
the result is not the inevitable consequence of the first event. Thus the
events did not follow or depend on each other.
a. If the excepted peril comes before the insured peril as a new and
independent cause, the insurer is liable
Example: a plate glass policy covering any risk except fire. A fire occurred in the
neighbouring house and a mob took advantage by breaking the plate glass to
steal. It is the mobs action that s the proximate cause and thus the insurer was
liable
b. If the excepted peril comes after the insured peril, then the insurer
is not liable

Concurrent cause
This is where causes occur simultaneously there is no sequence or chain of
events where one event causes another event. There is thus more than one
proximate cause.
Wallach v Rosenberg the court held that
1. If one peril is covered & the other is excepted, the insured wont be
entitled to indemnification
2. If one peril is covered & the other is neither included or excluded then the
insured would be entitled to indemnification

Where the concurrent or the independent cause is excepted, but the effects of
the insured peril and the one of the excepted peril can be separated, the insured
would be entitled by the insured peril only.
If separation not possible, then the loss will be deemed to be casued by the
excepted peril and won be liable.
In absence of an excepted peril, the insured would be entitled to indemnification