In the case of Allianz Insurance plc v University of Exeter, the Technology and Construction Court (TCC) held that damage caused by the controlled detonation of a World War II bomb fell within the scope of a War Exclusion clause. As a result, the Court granted the declaration sought by Allianz that it was entitled to decline the University's insurance claim.
- In February 2021, contractors working on a site adjacent to the University of Exeter's campus unearthed an unexploded bomb. A safety cordon was immediately imposed around the site, initially at a 100-metre radius and then expanded to 400 metres, and various halls of residence were evacuated.
- The Army's explosive ordnance disposal team were called in to identify the bomb, which was confirmed to be a 1000kg / 2,200lb high explosive bomb dropped by German forces in 1942.
- Due to the bomb's degraded condition, it was decided that the only realistic course of action was to detonate the bomb on site – which despite the mitigation measures adopted by the disposal team, nevertheless caused some damage to surrounding halls of residence.
- The University of Exeter submitted an insurance claim in respect of both the physical damage and business interruption due to the temporary re-housing of students.
- Allianz declined the University's claim on the basis that the loss and damage suffered fell within the scope of the War Exclusion clause, being loss and damage "occasioned by war".
Was the damage "occasioned by war"?
The general insuring clause of the policy was structured such that no liability to indemnify in respect of loss excluded in the policy ever arose. The War Exclusion clause excluded all loss or damage "occasioned by war". The Court noted that the only issue that therefore arose for determination was whether the damage was "occasioned by war":
- if it was, then the claim and damage suffered by the University was excluded by the policy; and
- if it was not "occasioned by war", then the claim and damage would fall within the terms of the insurance cover and the claim must be met.
What was the 'proximate cause' of the loss and damage?
It was common ground between the parties that in order to determine whether the damage was "occasioned by war" the Court would need to apply the proximate cause test.
Counsel for Allianz submitted that the proximate cause of the loss was the dropping of the bomb, which was accepted to be an act of war. In the alternative, it argued that even if the dropping of the bomb was not the proximate cause, it was a proximate cause. In that case, it submitted that by operation of the concurrent causes rule, where there are concurrent proximate causes, one of which is insured but the other excluded, then the exclusion would apply.
Counsel for the University, on the other hand, contended that the proximate cause of the loss was the deliberate act of detonating the bomb. The parties could not, it submitted, have intended that the policy exclusions would apply to historic wars. Further, it disagreed that this was a concurrent cause case (although it did not dispute the existence of the concurrent causes rule itself).
The TCC's decision
Applying the guidance set out by the Supreme Court in The Financial Conduct Authority (FCA) v Arch, the TCC held that the proximate cause test was a "matter of judgment based on common sense rather than over-analysis". In considering whether the occurrence of an event was the proximate cause of loss, a judgment must be made as to "whether it made the loss inevitable".
The Court concluded that the:
"common sense analysis is 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. In my view, the dropping of the bomb was the obvious proximate cause of the damage."
In considering whether the human act of detonating the bomb could be considered a proximate cause, the Court noted that:
- Arch does not set down a "firm and fixed rule that human intervention is to be ignored" – however, it does confirm that human actions are "not generally" regarded as new causes, provided that the actions taken were not "wholly unreasonable or erratic";
- the human act of detonating the bomb was "reasonable and necessary" and did not therefore change the Court's analysis set out above; and
- contrary to the University's submission, the passage of time between the dropping of the bomb in 1942 and the explosion almost 80 years later in 2021 had "no relevant or material impact on the danger posed by the bomb".
In the alternative, the Court held that even if it was wrong and the dropping of the bomb was not "the" proximate cause, it was satisfied that it was "a" proximate cause. The concurrent proximate causes rule was not ousted by the wording of the policy and would therefore operate to exclude the claim and damage.
The TCC decision in this case confirms – reiterating the principles set out by the Supreme Court in FCA v Arch – that human intervention, provided it is reasonable and necessary, will not be "generally regarded" by the courts as a proximate cause of loss where there is an earlier cause which made the loss inevitable. In this case, had the bomb not been dropped in 1942, there would have been no loss.
Had the policy or the War Exclusion clause been worded differently, of course, it may have resulted in a different outcome.
If you have any questions about this article, please get in touch with Ashley Pigott, Sam Holland or Jatinder Sahota.
 As set out in Wayne Tank and Pump v Employers Liability Assurance Corp.  QB 57 and applied in FCA v Arch Insurance UK Ltd. and Others  UKSC 1.