Allianz Insurance Plc v University of Exeter

[2023] EWHC 630 (TCC)

In 1942, a bomb was dropped on Exeter. The bomb did not explode but lay undiscovered until 2021 when it was unearthed during building works. Bomb disposal experts were called in who determined that the bomb should be exploded as it could not be safely transported away. UoE submitted an insurance claim in relation to the damage caused by the controlled detonation.

The issue before HHJ Bird was whether the damage in respect of which the claim was made fell within the scope of the War Exclusion Clause being loss or damage “occasioned by war”? If it did, there would be no liability to indemnify. The “war” exclusion clause said this: 

“War … Loss, destruction, damage, death, injury, disablement or liability or any consequential loss occasioned by war, invasion, acts of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power.”

To answer whether, or not, the loss was occasioned by war, the Judge needed to consider what the “proximate cause” of the loss was. Allianz said that the proximate cause of the loss was the dropping of the bomb. That was an act of war. UoE said that the proximate cause was the deliberate act of the bomb disposal team in detonating the bomb, not the dropping of the bomb. Further, the parties cannot have intended that the policy exemptions would apply to historic wars. 

HHJ Bird said that the test of “proximate cause” was a matter of judgment based on common sense rather than over-analysis. If the Judge left out of the account the reasonable human act of detonating the bomb, then he would be driven to the conclusion that the dropping of the bomb was the proximate cause of the loss. If, the Judge looked at the “influences, forces and events” which converged at the point of loss, concentrating on the character of those events rather than the chronological order in which they occurred, then he would still conclude that the dropping of the bomb was the proximate (dominant or efficient) cause of the loss.

The common sense analysis was this: the loss was caused by an explosion. The explosion was triggered by the reasonable (and, indeed, obviously correct) decision to detonate the bomb. That decision was necessitated by the presence of the bomb. If there had been no bomb, there would have been no explosion. The bomb provided both the explosive payload and the absolute need for the detonation. Therefore, the dropping of the bomb was the obvious proximate cause of the damage.

Did the passage of time mean that this conclusion was wrong? The bomb was dropped in 1942. Almost 80 years passed before the damage was caused. The detonation occurred, to all intents and purposes, at the same time as the damage. It was natural that an “unguided gut feeling” would strongly lean towards the conclusion that the detonation was the relevant, dominant, or proximate cause. But such an approach would, in the view of the Judge, be wrong. The passage of time did not of itself provide an answer to the question of “proximity”.

Whilst the bomb as an object had degraded over time, there was no suggestion that the explosive load of the bomb had become any less lethal over time. The passage of time had no relevant or material impact on the danger posed by the bomb.

The Judge noted that, if he was wrong and the dropping of the bomb was not “the” proximate cause, then it was “a” proximate cause. He referred to the case of  JJ Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (the Miss Jay Jay) [1987] 1 Lloyds Rep 32 where a yacht sank as a result of a combination of causes which were “equal, or at least nearly equal, in their efficiency”, namely, adverse sea conditions and design defects.

Here, the combined effect of the detonation and the bomb made the damage inevitable.  The  alternative analysis must be that the damage was (as a matter of common sense) caused by the combined effect of the detonation and the presence of the bomb. The detonation and the presence of the bomb were “equal, or at least nearly equal” in their efficiency.

Finally, UoE said that the parties could not be taken to have contemplated excluding liability in respect of things that happened more than 75 years ago. The Judge simply said that the parties had agreed that damage occasioned by “war” was excluded and the proximate cause of the loss which was the subject of the claim was war. There was no right of recovery under the policy.

Note: Decision affirmed on appeal. 

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