THE CAUSE OF LOSS
Section 55(1) of the Marine Insurance Act 1906 encapsulates the general rule of causation to be applied for the purpose of resolving disputes regarding the cause of loss. It states:
Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against.
It declares the principle that the liability of the insurer hinges upon the loss or damage being ‘proximately’ caused by a peril insured against. The general rule of causa proxima, non remota, spectatur is well established in insurance law, and unless this is complied with, the insurer bears no liability. It is, therefore, important that the meaning of the word ‘proximate’ be fully understood as it applies to marine insurance.
Though causa proxima, non remota, spectatur is the general principle to be observed, nevertheless, the opening words of the section allow exceptions to the rule. The phrase ‘subject to the provisions of the Act’ warns that the Act itself may depart from the maxim. This is evident, for example, in ss 39(5) and 55(2)(a), where the term ‘attributable to’ is employed. With regard to s 39(5), any loss ‘attributable to’ such unseaworthiness to which the assured is privy is not recoverable. Similarly, any loss or damage ‘attributable to’ the wilful misconduct of the assured is not recoverable under s 55(2)(a).
Further, the expression ‘unless the policy otherwise provides’ clearly allows the parties to the contract, by the use of appropriate terminology, to stipulate their own rule of causation if they so desire. A study of some of the standard policies previously and currently in use will reveal that a variety of expressions have been employed. The current versions of the Institute Hulls Clauses, the Institute Cargo Clauses and the Institute Freight Clauses have adopted terms such as ‘caused by’, ‘attributable to’, ‘reasonably attributable to’, ‘in consequences thereof’, ‘consequent on’, and ‘arising from’. The crux of the question in each case is, are these terms clear enough to displace the general rule of causa proxima?
Webster’s Comprehensive Dictionary of the English Language defines the meaning of the word ‘proximate’ as ‘immediate’. It then defines ‘immediate’ as meaning ‘closeness in time’ or ‘having a direct bearing’. Thus, the rule of proximate cause may be interpreted in two distinct and different ways, and this dilemma was reflected by the courts until 1918, when Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd  AC 350, HL (henceforth referred to as the Leyland case) was decided.
One school of thought which advocated that ‘only the causa proxima or immediate cause of the loss must be regarded’ was endorsed by the court in Pink v Fleming (1890) 25 QBD 396. It was thought that, as the test of the last event in the chain was well known, ‘people must be taken to have contracted on that footing’. Another point of view was expressed by Lopes LJ, in Reischer v Borwick (1894) 2 QB 548, CA, and the relevant parts of his judgment are reproduced below. It is fair to say that the seeds of the current understanding of the rule of causa proxima were sown in this case.
The efficient or predominate cause
Reischer v Borwick (1894) 2 QB 548, CA
The plaintiffs insured the paddle tug Rosa with the defendants under a policy of marine insurance which included cover for collision damage, but not for loss or damage caused by the perils of the seas. Whilst proceeding along the River Danube, Rosa collided with a floating snag, which fouled the port paddle wheel, causing considerable damage to the tug’s machinery. This damage included a hole in the cover of the condenser, which allowed water to enter the tug. The captain anchored the tug and effected temporary repairs by plugging the condenser outlet pipes before calling for assistance. When another tug arrived and started towing Rosa towards the nearest dock, the plug in the condenser outlet on the port side fell out and the crew were unable to prevent the rush of water which then entered the tug through the hole in the condenser cover. In order to save lives, Rosa was beached and abandoned. The plaintiffs claimed damages for the total loss of the tug, but the defendants only agreed to indemnify the plaintiffs for the actual or immediate damage caused by the collision, and not for the subsequent loss.
The Court of Appeal upheld the decision of the trial judge and ruled in favour of the plaintiff owner of the tug. The collision remained the efficient and predominant cause of the loss of Rosa.
Lopes LJ: [p 552] …In cases of marine insurance, it is well settled law that it is only the proximate cause that is to be regarded and all others rejected, although the loss would not have happened without them. Damage received in collision must, therefore, in this case be the proximate cause of the loss to entitle the plaintiff to recover. The damage received in the collision was the breaking of the condenser, and it was the broken condenser which really caused the proximate loss. The tug was continuously in danger from the time the condenser was broken, and the broken condenser never ceased to be an imminent element of danger, though the danger was mitigated for a time by the insertion of the plug in the outside of the vessel. The cause of the damage to the condenser was the collision, and the consequences of the collision— that is, the broken condenser—never ceased to exist, but constantly remained the efficient and predominating peril to which the damage now sought to be recovered was attributable.
It was contended that the towing of the tug through the water after the collision was the proximate cause of the loss now sought to be recovered. It was, however, admitted that this was a reasonable and proper act in the circumstances. This may have been a concurrent cause, and one without which the loss would not have happened; but in my judgment it is not, but the broken condenser is, the proximate cause.
The locus classicus for the present rule of proximate cause is clearly the Leyland case, where the House of Lords approved the above decision in Reischer v Berwick, and Lord Shaw of Dunfermline affirmed [p 369] that ‘the cause which is truly proximate is that which is proximate in efficiency’.
Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society Ltd  AC 350 HL
The plaintiffs (appellants) were the owners of the steamship Ikaria, which was insured with the defendant (respondent) underwriters. The policy of insurance covered, inter alia, loss by perils of the seas but contained an f c and s clause which stated: ‘warranted free of capture, seizure and detention and the consequences thereof or any attempt thereat piracy excepted, and also from all consequences of hostilities or warlike operations whether before or after declaration of war’. After a voyage from South America, Ikaria was awaiting a pilot outside Le Havre, when she was struck forward by a torpedo and No 1 hatch filled with water. The crew brought the badly damaged vessel into Le Havre, and she would have been saved if she had been allowed to remain there. However, a gale sprang up, which caused Ikaria to range and bump against the quay to such an extent that the port authorities, fearing she would sink and block the quay, ordered her to be taken out and anchored in the outer harbour, near the breakwater. Whilst anchored there, because of the weather conditions and the fact that Ikaria was down by the head as a result of the torpedo damage, she grounded at each low tide and, eventually, foundered and was lost. The shipowners claimed that the loss was caused by perils of the seas, but the insurers refused payment.
The House of Lords, in upholding the decisions of both the lower courts, ruled that the loss was not due to perils of the seas; the constant grounding when she was anchored near the breakwater was not a novus actus interveniens. The proximate cause of the loss remained the damage caused by the torpedo and, therefore, the underwriters were protected by the warranty against all consequences of hostilities.
Lord Dunedin: [p 363] …The solution will always lie in settling as a question of fact which of the two causes was what I will venture to call (though I shrink from the multiplication of epithets) the dominant cause of the two. In other words, you seek for the causa proxima, if it is well understood that the question of which is proxima is not solved by the mere point of order in time.
Lord Shaw of Dunfermline: [p 368] …In my opinion, my Lords, too much is made of refinements upon this subject. The doctrine of cause has been, since the time of Aristotle and the famous category of material, formal, efficient, and final causes, one involving the subtlest of distinctions…
To speak of proxima causa as the cause which is nearest in time is out of the question. 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. The chain of causation is a handy expression, but the figure is inadequate. 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 infinitely. 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.
What does ‘proximate’ here mean? To treat proximate cause as if it was the cause which is proximate in time is, as I have said, out of the question. The cause which is truly proximate is that which is proximate in efficiency.
…In my opinion, accordingly, proximate cause is an expression referring to the efficiency as an operating factor upon the result. Where various factors or causes are concurrent, and one has to be selected, the matter is determined as one of fact, and the choice falls upon the one to which may be variously ascribed the qualities of reality, predominance, efficiency. Fortunately, this much would appear to be in accordance with the principles of plain business transaction, and is not at all foreign to the law.
…To apply this to the present case. In my opinion, the real efficient cause of the sinking of this vessel was that she was torpedoed. Where an injury is received by a vessel, it may be fatal or it may be cured: it has to be dealt with. In so dealing with it there may, it is true, be attendant circumstances which may aggravate or possibly precipitate the result, but which are incidents flowing from the injury, or receive from it an operative and disastrous power. The vessel, in short, is all the time in the grip of the casualty. The true efficient cause never loses its hold. The result is produced, a result attributable in common language to the casualty as a cause, and this result, proximate as well as continuous in its efficiency, properly meets, whether under contract or under the statute, the language of the expression ‘proximately caused’.
The principle laid down in the Leyland case, that the term ‘proximate cause’ should be construed to mean ‘predominant or efficient cause’, has been applied in a number of more recent cases, namely, Board of Trade v Hain SS Co Ltd  AC 534, HL; Yorkshire Dale SS Co Ltd v Minister of War Transport, The Coxwold (1942) 73 LlL Rep 1, HL; Ashworth v General Accident Fire and Life Assurance Corporation  IR 268; and Gray and Another v Barr  2 Lloyd’s Rep 1, CA.
Board of Trade v Hain SS Co Ltd  AC 534, HL
The steamship Trevanion was on requisition charter to the Admiralty and, under the terms of the charterparty, the Admiralty were liable for ‘all the consequences of hostilities or warlike operations whether before or after declaration of war’. In December 1918, whilst on a voyage from New York to Portland, Trevanion collided with the United States mine-layer Roanoke and was badly damaged. The collision was due to the joint negligence of both vessels, and both were equally to blame. Although the armistice for ending the First World War had been declared six weeks earlier, the war had only been suspended, and it was still possible that hostilities could have been revived. The question before the court was whether the damage to Trevanion was, or was not, a consequence of warlike operations.
The House of Lords upheld the decision of the Court of Appeal and ruled that, although the collision was due to the negligent navigation of both vessels, this did not displace the fact that Roanoke was performing a warlike operation and, therefore, the collision was a consequence of hostilities or warlike operations which remained the proximate cause of the loss. Therefore, the owners of Trevanion could recover from the Admiralty.
Lord Buckmaster: [p 538] …This House has decided that, if a vessel is engaged on warlike operations and none the less by its negligence collides with another vessel, the negligence does not prevent the collision being the result of warlike operations: see AG v Adelaide SS Co, ‘Warilda’. It is neither necessary nor fitting to discuss or examine the grounds of that judgment, for the law upon this point is authoritative and clear. It follows, therefore, that the negligence of The Roanoke does not prevent this collision from being the result of warlike operations. Does, then, the negligence of Trevanion produce that result? In my opinion it does not. I think the case of Reischer v Borwick, approved by this House in Leyland Shipping Co v Norwich Union Fire Insurance Society, shows that it is no answer to a claim under a policy that covers one cause of loss that the loss was also due to another cause that was not so covered. It follows from that that the claim made against Roanoke, which, if it stood alone, would have been covered by the policy, is not the less covered because Trevanion also contributed to the accident.
In the next case, Coxwold, Lord Wright, resorted to common sense when ascertaining the meaning of the phrase ‘the real or efficient’ cause of the loss.
Coxwold was a small motor vessel of 1,124 gross tons which was on a requisition charter to the Ministry of War Transport during the Norwegian campaign in 1940. On a voyage from Greenock to Narvik, Coxwold was sailing in a convoy, at night, which was zigzagging in poor visibility without displaying navigation lights. Due to the poor visibility, Coxwold lost contact with the ship ahead and ran aground on the Isle of Skye during a heavy rain squall. At the time of the stranding, the nearby lighthouse was operating on reduced power and was not visible; the ship nearest to Coxwold also ran aground. The shipowners laid claim to recover, under the terms of the requisition, for a partial loss. The charterers, the Ministry of War Transport, admitted that, at the time of the stranding, Coxwold was engaged on a warlike operation, but denied liability, on the grounds that the loss was not proximately caused by the warlike operation, but by the negligent navigation of the crew.
The House of Lords, in overturning the decision of the Court of Appeal, ruled that the effective and predominant cause of the stranding was the warlike operation on which the vessel was employed.
Viscount Simon LC: [p 6] …one has to ask oneself what was the effective and predominant cause of the accident that happened, whatever the nature of that accident may be. It is well settled that a marine risk does not become a war risk merely because the conditions of war may make it more probable that the marine risk will operate and a loss will be caused. It is for this reason that sailing without lights, or sailing in convoy, are regarded as circumstances which do not, in themselves, convert marine risks into war risks. But where the facts as found by the judge establish that the operation of a war peril is the ‘proximate’ cause of the loss in the above sense, then the conclusion that the loss is due to war risks follows.
Lord Wright: [p 10] …Once it is clear, as this House finally held in Leyland Shipping Company v Norwich Union Fire Insurance Society  AC 350, that ‘proximate’ here means, not latest in time, but predominant in efficiency, there is necessarily involved a process of selection from among the cooperating causes in order to find what is the proximate cause in the particular case. In the words of Phillips on Insurance, 5th edn, 1867, Cambridge (Mass), Vol II, p 678:
In the case of concurrence of different causes to one of which it is necessary [that is, because of the nature of the contract] to attribute the loss, it is to be attributed to the efficient predominating peril whether it is or is not in activity at the consummation of the disaster.
This choice of the real or efficient cause from out of the whole complex of the facts must be made by applying common sense standards. Causation is to be understood as the man in the street, and not as either the scientist or the metaphysician, would understand it. Cause, here, means what a business or seafaring man would take to be the cause without too microscopic analysis, but on a broad view.
Ashworth v General Accident Fire and Life Assurance Corporation  IR 268, Supreme Court of Ireland
The motor vessel Mountain Ash was a converted landing craft which was owned by Captain Ashworth and insured under a time policy of insurance. On a voyage along the Irish coast, calling at various ports, Mountain Ash suffered a series of mishaps, including engine failures and a stranding, which caused hull and rudder damage. After leaving Arklow, where the hold of the ship had been pumped out by the local fire brigade, Mountain Ash again suffered engine trouble and, because the hold could no longer be pumped out, it was decided to beach her until repairs could be completed. Whilst she was beached, a severe gale sprang up and Mountain Ash was so battered by heavy seas that she had to be abandoned as a constructive total loss. The owner claimed on his policy of insurance under the head of ‘perils of the seas’.
The Supreme Court of Ireland ruled that the vessel had put to sea in an unseaworthy state with the privity of the owner. In reaching their decision, the court was faced with the problem of having to decide which was the proximate or dominant cause of the loss.
Black J: [p 297] …Applying this reasoning [the theory of persistence of ‘grip’] to the present case, the first cause—the unseaworthiness—made it necessary to beach the ship, thereby placing her in a situation in which she was in continuous danger of being swung round by the waves and made a total constructive loss. The first cause never lost its grip, the operation of the second cause being unpreventable. Therefore, the first cause—the unseaworthiness—was the dominant cause within the meaning of the binding decision in the Leyland case.
Gray v Barr  2 Lloyd’s Rep 1, CA, though a non-marine case, was, nevertheless, involved with insurance law and brushed on the topic of proximate cause. Lord Denning MR summarised the current legal position as follows: [p 5] ‘…Ever since that case [the Leyland case] in 1918, it has been settled in insurance law that the “cause” is that which is the effective or dominant cause of the occurrence, or, as it is sometimes put, what is in substance the cause, even though it is more remote in point of time, such cause has to be determined by common sense…’
ONE PROXIMATE CAUSE OF LOSS
When there is only one proximate cause of loss, the task for the court is relatively straightforward: it has simply to determine whether that particular cause of loss is, or is not, an insured risk under the policy in question.
The plaintiff insured the steamship Progress with the defendant insurers under a time policy of insurance. Progress departed from Hamburg with an insufficient supply of coal, bound for Sunderland. When she was some 41 miles away from her port of destination, under sail and reduced steam power, her captain hailed a steam trawler and was towed into Sunderland. The owners of the steam trawler successfully brought an action in the Admiralty Court for salvage and the plaintiff owner of Progress then sought to recover that same amount, by way of an indemnity, from the defendant insurers.
The Court of Appeal upheld the decision of the trial judge and ruled that the loss did not arise from any peril insured against. There was no accident or casualty and any loss arose solely from the insufficiency of coal, which amounted to inherent vice.
AL Smith LJ: [p 460] …Upon this evidence how can this court find, as we were invited to do by the plaintiff, that the Lord Chief Justice [the trial judge] came to a wrong conclusion upon the question of fact as to the non-existence of a sea peril when the towage services were rendered to Progress? There was no weather, no sea on, no accident or casualty of any kind to the ship, no incursion of salt water into the ship, which could have completed the voyage under sail, and no reasonable apprehension of danger…As before stated, we agree with the Lord Chief Justice when he held upon the evidence before him that the loss sustained was not occasioned by a peril of the sea, for in our judgment the loss complained of arose solely by reason of the inherent vice of the subject matter insured: we mean the insufficiency of coal with which the ship started upon her voyage, the consequence of which was that what in fact did happen must have happened, namely, that the ship ran short of coal, no sea peril bringing this about in any shape or way, or placing the ship in a position of danger thereby.
TWO OR MORE PROXIMATE CAUSES OF LOSS
Proximate causes of equal efficiency
The following case, Heskell v Continental Express, although a carriage of goods by sea case, graphically illustrates that it is possible to have more than one proximate cause of loss of equal efficiency: in this case, one cause being the initial breach of contract and the other, an intervening act by another party.
Heskell v Continental Express and Another  1 All ER 1033
The plaintiff, an export and shipping merchant, sold three bales of poplin to a Persian buyer and instructed Continental Express, the company warehousing the goods at the time, to forward the bales of poplin to the vessel Mount Orford Park at No 9 dock in the port of Manchester. This, Continental Express negligently failed to do. Strick Line Ltd, which had chartered Mount Orford Park, allocated space for the bales of poplin and, by their admitted carelessness, issued a bill of lading for the goods that were never actually received. The ship duly arrived in the Persian Gulf without the goods and it was only after a prolonged search that it was discovered that the goods had never been dispatched from the warehouse. It had been assumed, because of the presence of a bill of lading, that the goods had been shipped and then been lost or misdelivered. The plaintiff, who had made recompense to the Persian buyer, mostly for the loss in profit he would have made on the resale of the goods, then laid claim against the two defendants, Continental Express and Strick Line Ltd.
The court ruled that the plaintiff could not recover from Strick Line Ltd as there was no contractual relationship and the issuing of a bill of lading only amounted to a misstatement. However, damages were awarded against Continental Express for a breach of contract, but this only amounted to the fall in the market value during the period the goods were detained. On proximate cause of loss, the court was faced with the problem that the intervening act of the issuing of the bill of lading, and the initial failure of Continental Express to forward the goods to the ship, were equally operative causes of the loss.
Devlin J: [p 1047] …There are many cases where a loss is foreseeable, but does not in fact occur, because some act intervenes, as a piece of good fortune for the wrongdoer, to prevent the natural and probable consequences of his wrong from operating. Likewise, the intervening act, while not destroying the wrong as a causative event, may contribute to the damage that occurs; the damage is then caused both by the wrong and by the intervening act. That is, I think, what happened here. The issue of the bill of lading could not extinguish the first defendant’s breach of duty as a causative event; the breach being continuing is a continuous source of damage. But the two were equally operative causes, in that if either had ceased, the damage would have ceased. If Continental Express had done their duty by informing the plaintiff that they had the goods and by releasing them, the falsity of the bill of lading would have been discovered. Similarly, if it had not been for the false bill of lading and its continuing power of misleading those in whose hands it was, the non-delivery by Continental Express would at once have been discovered.
…It may be that the term ‘a cause’ is, whether in tort or in contract, not rightly used as a term of legal significance unless it denotes a cause of equal efficacy with one or more other causes. Whatever the true rule of causation may be, I am satisfied that if a breach of contract is one of two causes, both co-operating and both equal efficacy, as I find in this case, it is sufficient to carry judgment for damages. Reischer v Berwick establishes that for the purposes of a contract of insurance it is sufficient if an insured event is, in this sense, a co-operating cause of the loss…I think, therefore, that Continental Express are responsible in law for the damage which the plaintiff sustained by the fall in value of the goods over the whole period from November 1946 to March 1948.
If more recent authority be required for the principle that it is possible to have more than one proximate cause of loss, reference may be made to the cases of Miss Jay Jay  1 Lloyd’s Rep 32, CA, and Wayne Tank and Pump Co Ltd v Employers Liability Insurance Corporation Ltd