Court of Appeal confirms damage following controlled detonation of WWII bomb was "occasioned by war"

In March 2023, we reported on the High Court decision in Allianz Insurance plc v University of Exeter, in which the court:

• held that damage caused in 2021 by the controlled detonation of a World War II (WWII) bomb was "occasioned by war" and thus fell within the scope of a War Exclusion clause; and
• granted the declaration sought by Allianz that it was entitled to decline the university's insurance claim.

The Court of Appeal has now dismissed the university's appeal in University of Exeter v Allianz Insurance PLC and confirmed that the damage was excluded from the applicable insurance policy.

Notably, Lord Justice Coulson commented that while "unguided gut feeling" may suggest that damage caused by the controlled detonation of a bomb in 2021 – 76 years after the end of WWII – was not "occasioned by war", the approach to legal causation is however "more nuanced" and is subject to "specific rules and principles".

We examine the Court of Appeal's decision, as well as some of the specific rules and principles applied, in more detail below.

Background summary: Allianz Insurance plc v University of Exeter

Our earlier article summarises the background facts in full. In brief:

• the University of Exeter had submitted a claim on its insurance policy in respect of physical damage to halls of residence and business interruption, following the controlled detonation of a WWII bomb which had been dropped by German forces in 1942.
• the intended "Low Order Technique" (LOT) methodology of detonation, which attempts to limit the explosion, did not succeed and instead resulted in the full detonation of the bomb and the consequent damage.
• Allianz declined the university's claim on the basis that the loss and damage suffered fell within the scope of the War Exclusion clause in the policy, being loss and damage "occasioned by war".
• 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.
• at first instance, the court had held that:
  1.  the dropping of the bomb was the "obvious proximate cause" of the damage;
  2.  in the alternative, if this was wrong and the dropping of the bomb was not "the" proximate cause, it was satisfied that it was "a" proximate cause;
  3.  by operation of the "concurrent causes" rule (described below in more detail), it was sufficient for the dropping of the bomb to be "a" proximate cause in order for the exclusion to apply.

The key issue on appeal: 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 "occasioned by war" ever arose.

The issue on appeal was whether the loss and damage caused in 2021 by the controlled detonation of the bomb was "occasioned by war" and therefore excluded from the scope of the university's cover.

Lord Justice Coulson set out the general principles of the "proximate cause" rule, confirming that:

• proximate cause does not mean "the last in time" but rather the "dominant, effective or efficient cause of the loss" – as the Supreme Court explained in FCA v Arch, the cause which is "truly proximate" is "that which is proximate in efficiency";
• where there are "concurrent causes of approximately equal efficiency", one being an insured peril and the other being excluded by the policy, the concurrent causes rule will apply^[1] and the exclusion will prevail.

Court of Appeal decision in University of Exeter v Allianz Insurance PLC

The Court of Appeal held that in this case, there were two concurrent causes of the loss and damage, which were of "approximately equal efficacy":

1. The act of war in 1942; and
2. The detonation of the bomb in 2021.

The loss was made inevitable by the "combination of these two causes", and neither would have caused the loss without the other.

The court dismissed the argument advanced by counsel for the university that the detonation was a much more potent cause of the damage than the dropping of the bomb, due to the failure of the intended LOT detonation and the consequent release of the bomb's full explosive load.

The court explained that the key question was whether the dropping of the bomb "led inexorably" to the damage through an ordinary series of events or whether there was a "subsequent abnormal event" – such as an act of negligence – that broke the chain of causation. In this case, there was no suggestion of any negligence: the intervening acts of the detonation squad were normal and reasonable responses and did not negatively affect the causal connection.

Further, counsel for the university had not advanced any argument on appeal that the rule in Wayne Tank did not apply, and there was no wording in the policy to oust the rule.

Applying that rule, the court, therefore, found that since one of the concurrent causes of the damage – being the act of war in 1942 – was expressly excluded from cover under the policy, the exclusion must prevail.

Commentary

The Court of Appeal decision confirms that the insurers were entitled to reject the university's claim. The dropping of the bomb in 1942 was one of two concurrent causes of "approximately equal efficacy" (although the court did not go so far as to conclude, as the court of first instance did, that it was the sole cause of the damage).

Had the policy or the War Exclusion clause been worded differently, for example, to exclude the operation of the concurrent causes rule, this may have resulted in a different outcome.

If you have any questions about this article, please contact Ashley Pigott, Sam Holland or Jatinder Sahota.

Footnote

[1] As set out in Wayne Tank and Pump v Employers Liability Assurance Corp. [1974] QB 57 and applied in FCA v Arch Insurance UK Ltd. and Others [2021] UKSC 1.