Chapter 9 Topic 11 - Causation

IC = Insurance Contact, PP = Public Policy, HoL = House of Lords,

CoA = Court of Appeal, SC = Supreme Court, PC = Proximate Cause

Proximate Cause Rule

 Insured must show that it is more probable than not that the loss
was caused by a peril covered by IC (Clowrange v CGU
Insurance Plc (2001) – Colman J)
 Only causes which are proximate – not remote – are covered
 Two Q’s to ask:
1. What peril have insurers agreed to cover? – contract
2. Was loss caused by that peril?
 Marsden v City and County Insurance Co (1865)
o mob damaged window due to fire in a nearby building
o riot = cause, not fire  not covered
o same principle:
 security reduced due to fire – thieves able to enter
and steal goods or goods placed outside to save
them and stolen – theft, not fire = proximate cause
 Winicofsky v Army and Navy General Assurance Assocn Ltd
(1919)
o theft policy excluded loss ‘occasioned by hostilities’ – air
raid burgled – claim upheld  cause = theft, air raid just
made job easier
 Identify cause of loss:
 Lawrence v The Accidental Insurance Co Ltd (1881) – Watkin
Williams J
o impracticable to go back cause upon cause – would lead
back to birth
 Dudgeon v Pembrok (1874) – Blackburn J
o loss typically occurs as a result of a series of events
 o ship left London in bad condition  took on water in rolling
seas  unmanageable = distress  thick weather +
distress = going ashore

Parties can agree the test for causation in contract – if they don’t
there are judicial principles
 *Iondides v The universal Marine Ins Co Ltd (1863)–Willes J
o look exclusively at the proximate and immediate cause of
the loss
 MIA s 55(1) – incorporates proximate cause – unless otherwise
agreed by parties
o liable for loss proximately caused by a peril insured against
– not liable for loss not proximately caused by a peril
insured against
 Lawrence v The Accidental Insurance Co Ltd (1881)
o L had an epileptic seizure – fell on platform at waterloo =
death by train  accident covered by personal accident
policy
 Winspear v The Accident Insurance Co Ltd (1880)
o insurer was liable when W had seizsure and drowned in
river Rea
 Some US jurisdiction – last cause in time – not proximate cause
o Continental Insurance Co v Arkwright Mutual Insurance Co
(1996)
 building damaged by 1992 NYC storms – flood
damaged – caused electrical arcing – led to explosion
which damaged circuit boards
 looked at spatial and temporal remoteness – drew on
Bird (1918) – flood to electrical damage – negligible
distance
 insurer tried to avoid – flood covered, electrical
damage
 Court approved trial judge ruling – flood was the
cause, not the electrical arcing – looking at last in
time – flood viewed as being within timeframe as it
was rapid – not a drawn out timeframe  had it been
months between flood and explosion conclusion may
have been different
  reasonable business person test
 Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society
Ltd [1918] – Lord Shaw
o wrong to treat proximate cause as proximate cause in time
 look at proximate in efficiency
o HoL: rejected Escher’s distinction and approved Reischer
o Pink v Fleming (1890) – Lord Escher MR
 distinguished marine (look at last cause) v non-
marine (prepared to look back further)
o Reischer v Borwick (1894) – Lindley LJ
 agreed with Escher in Pink but didn’t apply distinction
in practice
o Syarikat Takaful Malaysia Berhad v Global Process Systems
Inc (The Cendor Mopu) [2011]
 recent approval of Leyland
 Athel Line Ltd v Liverpool & London War Risks Insurance
Association Ltd [1946] – Lord Greene MR
o matter for the common sense and intelligence of the
ordinary man
 Gray v Barr [1971] – Lord Denning
o effective or dominant cause of the occurrence is to be
determined by common sense – even if it is more remote
in time
o Yorkshire Dale SS Co Ltd v Minister of War Transport
[1942] – Lord Wright
 must look at what the common man, not a scientist,
would understand it to be
o Tate Gallery (Trustees) v Duffy Construction Ltd [2007] –
Jackson J
 causation tends to coincide with common sense
 The Cendor Mopu [2011] – Lord Mance
o Facts: offshore oil-drilling platform – tow from US–Malaysia
– policy covered all risks except loss caused by inherent
vice or nature of the subject matter insured
o mid way through journey hit by wave – one leg broke –
next day two others too – perils or inherent vice?
o insurers knew of stress cracks in legs – required rig to be
checked mid-voyage – weather = normal for voyage
 o SC: s55(1) – enquiry based on fact and common sense
principles  reaffirmed proximate cause = proximate in
efficiency
o Insurer liable – proximate cause perils of sea – wave broke
first leg, caused others to break  could only have avoided
if it was caused solely by defect in insured object without
any ‘fortuitous external accident or casualty’
o last cause in time could explain strict approach taken to
warranties in Victorian times – previous breaches would
have been irrelevant ∴ warranties needed to be strict
 Reischer v Borwick (1894)
o Facts:marine policy – covered collision – didn’t cover perils
of the sea – collision – hole – repaired – towed – motion of
sea through towing caused hole to reopen  sank
o CoA: proximate cause = collision, even though sea was
last in time
 *Leyland Shipping Co Ltd v Norwich Union Fire Insurance Society
Ltd [1918]
o Facts: The Ikaria – insured against loss of perils from sea
not war
o hit by torpedo – blew hole in side – damaged bulkheads –
toed to safe harbour – while anchored – gale blew up –
bumped against harbour wall – harbour autborities ordered
it into open sea (fear of sinking and blocking)
o after two days of buffeting, being grounded at low tide –
bulkheads failed – it sank  probs safe in harbour
o HoL: proximate cause of loss = torpedo – damage meant it
was reasonably certain that sea-water would flow into ship
– extent of damage may not have been expected
 Clarke (1981 article)
o if peril covered = proximate cause of damage – liable for
all consequences that flow naturally from it – even if these
couldn’t have been expected at the time of the loss
 Reischer (collision) and Leyland (torpedo) – influx of seawater =
reasonably certain consequence – effect of events continued 
not overshadowed by subsequent events
 o if Ikaria (Leyland) had sunk after hitting harbour wall while
being towed out – torpedo overshadowed – negligence =
proximate cause  doesn’t matter that torpedo was reason
she was in the harbour
Burden of Proof
 insured must establish on the balance of probabilities – loss
proximately caused by an insured peril (Foreign Marine
Insurance Co Ltd v Gaunt [1921], The Popi M [1985])
 burden switches to insurer – show another explanation more
probable
o Slattery v Mance [1962]
 ship insured against fire – insured shows loss from
fire – insurer must show on balance of probabilities
fire not proximate cause or from excepted peril
 If insurer alleges loss deliberate – burden of proof commensurate
with gravity of allegation – must prove that there is a substantial
probability that the loss wasn’t accidental

Agreements to alter the rule of Causation

 proximate cause rule is a term implied into the contract – parties
can alter it, but must be displaced using clear words (Coxe v
Employers’ Liability Assurance Corpn Ltd [1916]) – words must
give a clear indication of test to apply (attributable to, arising
from – not clear)

Attempts to exclude liability where injury linked to another cause –

not just accident
 Lawrence v The Accidental Insurance Co Ltd (1881)
o ‘direct and sole cause’ – deemed restatement of PC test –
even though policy excluded fits
 Fitton v Accidental Death Insurance Co [1864] – Williams J
o injury must be direct and sole cause of death – excluded
hernia or other disease within system before/ after
accident which caused death
o accidental fall  strangulated hernia
o Held: insurer liable  policy exempted hernia within the
system – not one caused by accident
 *Isitt v Railway Passengers Assurance Co (1889) – Willes J
 o Facts: policy covered effects from an accidental injury –
accidental injury – confined to bed – so painful – no bed
sheets – pneumonia – died
o Q: were circumstances leading up to death reasonable and
natural consequences of the injury and condition which
insured had to live under as a result?
 if what was reasonably to be expected under
circumstances occurred = within policy
 Insurers reworded policies: direct or proximate cause – not
covered if disease or other intervening cause, even if accident
aggravated it = cause of death
 *Ethrington Arbitration [1909]
o Facts: E fell during hunt – soaked – pneumonia – died
o CoA: insurers hadn’t avoided Isitt – would be difficult to
establish a claim unless insured died at time of accident 
limited utility
o Vaughan Williams LJ: company must express intention
plainly – where disease or other cause dependent on
accident – covered by direct an PC  results of accident
 two reasons for decision it was PC:
 a) clause ambiguous, or
 b) construction principle – avoid literal meaning of
clause rendering cover illusory
 Smith v Accident Insurance Co (1870)
o policy excluded death arising form erysipelas – before/
during/ after accident – S cut foot – erysipelas set in – died
o Cleasby B: clause put in – don’t have to determine if it
arose due to injury or independent – Fitton distinguished
by majority – diff wording
o Kelly CB: dissenting – only exempted if it was independent
 preferable – dissent appears to have been adopted – not
referred to since
 *Coxe v Employers’ Liability Assurance Corpn Ltd [1916]
o Facts: excluded death ‘indirectly caused, arising from or
traceable to war’ – Captain Ewing – inspect sentries on
railway line – poorly lit (air raids) – access forbidden to
civilians – hit and killed by train
 o Scrutton J: train proximate cause – “indirectly” –
determine if loss indirectly caused by excluded peril – war
– reason on train track = excluded peril was indirect cause
 claim refused
o limit to this – cause may be indirect but must be cause
 on platform waiting for troop train – died like
Lawrence = diff decision – war part of background
only – not part of danger
 *Jason v Batten [1969] (read)
o Facts: policy covered where injury resulted from accident –
exclusive direct and immediate cause
o motorist – narrowed coronary artery – severy coronary
thrombosis – car accident – blood clotted – blocked artery
o Held: narrowed artery led to thrombosis (pre-existing
condition) – would have an attack within three years –
accident advanced it – caused blood clot – not independent
of all other causes the exclusive cause – not liable
 If the accident had activated condition – but for
accident would have remained latent = liable
 *Blackburn Rovers Football & Athletic Club plc v Avon Insurance
plc [2005]
o footballer – spinal injury
o CoA: exclusion for injury caused by degeneration – applied
regardless of if the degeneration was part of normal aging
process  if normal – good to exclude it
o if not normal unlikely to conclude it was cause of injury
induced by sports trauma
o Can’t recover if disablement, even a small bit, attributable
to pre-condition, doesn’t matter if its normal or not
o Dobbs J: degenerative condition caused the injury –
couldn’t recover
 Orient-Express Hotels Ltd v Assicurazioni General SA [2010] –
Hamblen J
o terms of policy replace PC with ‘but for’ test
o Facts: OEH – hotel in New Orleans – hurricane Katrina –
physical damage = closed – state of emergency =
mandatory evacuation
 o policy covered business interruption from physical damage
– could OEH recover for loss – claim arose due to physical
damage and wider area disruption
o clause – reduce amount payable which wouldn’t have
occurred, but for the hurricane and wider damage (don’t
get money for wider area damage)
o Held: arbitrator didn’t err in law in applying test – rule
harsh, but no other test fairer or more reasonable – what
parties had agreed

Multiple causes
 more than one PC = new concept – insurers are looking to find
causation to include indirect coses of loss – court becoming more
likely to find more than one cause
 Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance
Corpn Ltd [1974] – Cairns LJ
o judges shouldn’t strain to find a dominant cause
 *Kuwait Airways Corporation v Kuwait Insurance Co [1999]
o number of perils covered – only show PC one
o two separate PC – independent of each other – both would
produce part of loss – no contribution other – only liable
part covered
 *Ford Motor Co of Canada Ltd v Prudential Assurance Co Ltd
(1959) – SC Canada
o Facts: loss due to riot covered – cessation of work and
change in temp not – riot  factory closed – damage from
freezing
o Held: only liable for part from riot
 *JJ Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The
‘Miss Jay Jay’) [1987] – Slade LJ
o Facts: ship lost – 1) adverse condition of sea – 2) defects
in boats design – insured unaware  1) covered, 2) not
mentioned
o CoA: insurers liable – no relevant exclusions or warranties
– proof of peril which was within the policy was enough to
entitle the plaintiffs to judgement – didn’t matter that
there was another PC – design fault on its own, wouldn’t
be liable
 *Wayne Tank and Pump Co Ltd v Employers’ Liability Assurance
Corpn Ltd [1974]
o Facts: W installed equipment – store and convey liquid wax
in a factory – factory burnt down  two negligent actions
 1) supplied plastic pipe to convey hot wax +
ineffective thermostat
 2) switched on equipment and left unattended
o Q: did public liability policy cover W’s negligence?
 covered damage as a result of accidents – exception
– equipment sold or supplied by W
o CoA: goods included pipe and Thermostat
o Lord Denning MR, Roskill LJ:
1. PC = defective pipe and thermostat – exclusion
applied
2. even if two PC’s  insurers not liable – only way to
give effect to exception is to exempt altogether
o Cairns LJ: preferred 2.
 California Courts – diff approach
 *State Farm Mutual Auto Ins Co v Partridge 10 Cal3d 102 (1973)
o Facts: insured accidently shot and injured friend – two acts
negligence: 1) filed down trigger  ‘hair trigger’ 2) drove
with gun in hand – friend passenger seat
o both actions required for injury – liable for negligence ‘hair
trigger’ not negligent driving
o Held: two PC – one covered = liable, regardless if other
excluded
 Keeton and Widiss (1988 Book)
o where there are several factors – courts apply causation
theory to allow cover to prevail – construe policies in light
of reasonable insured’s expectation  construe ambiguous
policy provisions against insurer
 Not gained wide acceptance – reasonable expectation of insured
only where ambiguity in contract (Montrose Chemical Cor v
Admiral Ins Co (1995))
 exclusionary clauses – narrow interpretation, clauses identifying
coverage – broad interpretation  relatively easy to persuade
ambiguity in exception clauses (Garvey v State Farm Fire and
Casualty Co (1989))
 Pro-Wayne
o exclusion clauses determine premium – insurer shouldn’t
be liable where PC is excluded
 Pro-Partridge
o application of exception unclear – construe against insurer
 Both Wayne and Partridge involved third party – what if first
party? eg. Property insurance
o indemnify insured if property covered suffers loss – defined
by causation (loss caused by X peril) or loss caused by any
risk (less exceptions)  pays irrespective of fault
o Liability – agrees to pay indemnify if insured liable to third
party  only pay if degree of fault = liable to third party
 Argue for differentiation
o Liability: liable if one PC covered, other expressly excluded
o Property: not liable if one PC covered, other excluded
 The Cendor Mopu [2011] – SC (oil-rig case)
o overruled The Miss Jay Jay – can’t be loss by both perils of
the sea and inherent vice of subject-matter
o Lord Clarke: loss PC, at least partly by perils of the seas =
no inherent vice  avoid causation issue
 inherent vice = not excepted peril – illustration of
type of peril not = PC of loss
o Lord Mance: distinguished where two risks combine to
cause loss, one excepted v one risk specifically excepted 
needs to hear more arguement
 Result: narrows circumstances court can find concurrent causes
– little discussion one insured, one excepted
 *Midland Mainline v Eagle Star Insurance Co Ltd [2004]
o Lowry and Rawlings article is basically this section of the
book with the Midland case added, short and easy to read
if you want to get a better overview
o Facts: Hatfield Rail disaster 2000 – four people killed –
derailed – broken track – Emergency Speed Restrictions
(ESR) across large parts of network similar to accident –
disruption – rail businesses suffered losses
o sought to recover from policies – excluded “inherent vice,
latent defect, gradual deterioration, wear and tear…”
o denied policy for “wear and tear”
 o FI – Steel J: cause of loss = ESR – liable – cracks were
part of normal features, usually maintined on a gradual
basis – scale was more than usual – but not the event that
triggered the action
o CoA – Nourse LJ: FI was wrong – just because wear and
tear didn’t trigger the cover – the extent of it was so
defective that ESR were triggered – created loss
 similar to Leyland – track damage was same as
torpedo, even though it may not have been
immediate cause it was underlying
 criticised Steel J for only talking about one cause –
previous cases talked about multiple causes
 Lowry and Rawlings – think criticism harsh
 Probably multiple causes, but like in Wayne Tanks
when one excluded – insurer not liable
 Lowry and Rawlings Article
o distinction Miss Jay Jay and Wayne Tanks/ Midland
Mainline (one cause exempted)
o in light of s55(1) MIA Miss Jay Jay can be deemed to be
incorrectly read – but it is sensible, as long as one
proximate cause of the loss is an insured peril – insurer =
liable
o Wayne Tank – once one cause is excepted – not liable,
courts will try take a narrow reading so that the insurer
isn’t excepted from the principal purpose of the insurance
o US (California) – exclusionary clauses interpreted narrowly
– clauses identifying coverage are broadly interpreted
(Garvey [1989]) – contra preferendum rules apply
o English – same contract principles for insurance and
normal contracts
o Reason for difference –
 English same rules for contract
 US treat contracts for insurance different treatment –
industry of public interest – held to a broader legal
responsibility than private contracts (Continental Life
& Accident Co v Songer (Ariz 1979)
 attempt to address imbalance of power
between insurers (who generally write
contract) and insured
 contrast English – uphold freedom of contract
 Lowry and Rawlings – suggest welfare state in UK
means less incentive for judges to protect individual
insured – greater protection v US where welfare
provision based more on private insurance
o Reform
 see Wayve v Partridge debate above

Deliberate Actions by insured

Actions to reduce Loss
 insureds sometimes take actions to reduce a loss, but actually
cause more damage in the process – Q: did insurer contract for
the event the caused the loss?
 *Canada Rice Mills Ltd v Union Marine and General Insurance Co
[1941] (The Segundo)
o Facts: rough weather – captain closed ventilators to stop
seawater entering – rice cargo damaged
o PC: loss covered – perils of the sea – even though water
didn’t touch cargo
o Lord Wright: action by captain – “such a mere matter of
routine seamanship necessitated by the peril that the
damage can be regarded as the direct result of the peril”
o perils of sea effect not broken by action – same as torpedo
in Leyland
 *Symington & Co v Union Insurance Society of Canton Ltd
(1928) – Scrutton LJ
o Facts: fire near insured goods – port authorities threw
some into sea, doused others in water – prevent spread of
fire
o Held: fire insurers liable – test when action is taken by
insured to protect insured property from peril covered – Is
it fear that something will happen in the future, or has the
peril already happened or is it so imminent that I is
immediately necessary to avert the danger by action?
 * The Knight of St. Michael [1898] – Gorrell Barnes J
 o fire didn’t break out – reasonably certain it would have –
actual existing state of peril of fire, not merely a fear of fire
 Becker, Gray and Co v London Assurance Corpn [1918]
o voyage abandoned for fear of capthure
o HoL: threat wasn’t imminent – loss = captains voluntary
decision
o Lord Sumner: apprehension not good enough – mus be an
actual or imminent threat
 *Joseph Watson and Son Ltd v Firemen’s Fund Insurance Co of
San Fransico [1922] – Rowlatt J
o Facts: captain thought he saw smoke from cargo hold –
was steam – water sprayed – goods damaged
o Held: not liable – can’t be liable for loss they didn’t
contract for – insured for fire – not for captain’s error in
judgement
 MIA – s78(4) – obligation to take actions to avert or minimise
loss from an insured peril as an uninsured person would – no
requirement for non-marine
 British Westinghouse Electric Co Ltd v Underground Electric Rys
Co of London [1912]
o unreasonable conduct is taken into consideration in
mitigation – unable to claim addition damages if they wer
PC caused by insureds failure  break chain of causation
 *Yorkshire Water Services Ltd v Sun Alliance & London
Insurance plc [1997]
o Facts: sewage leak – YWS carried out work £4m – aim: to
reduce costs of claims likely to be brought by neighbouring
properties – public liability policy – legal liability for
damages and all other costs and expenses which may be
subject of the claim
o CoA: rejected YWS claim that insurer was liable for
reasonable expenditure on work undertaken to alleviate
loss – only had to indemnify for sums due as compensation
to third parties – not work costs carried out on prpoerty –
difficult to assess what is reasonable – £4m work for likely
£300k claim  hard to assess, harder if not quantified
o Q: What had insurer agreed to cover?
Australian line of cases:
 *Guardian Assurance Co Ltd v Underwood Constructions Pty Ltd
(1974)
o HC: colud recover costs of repairing uninsured items
outside and excavation – had been damaged – repair of
items necessary to restore insured excavation to
undamaged condition – viewed as loss or damage to
excavation – not repairing office block would cause more
damage to excavation
 *Re Mining Technologies Australia Pty Ltd [1999] – majority
decision
o Facts: mine collapse – insured equipment trapped
underground – rescued – less than half value of equipment
o Davies JA: policy clause – excluded liability for loss to
property which could have been avoided by the insured
exercising reasonable care – implied term allowing
recovery of expenditure incurred exercising such care
o McPherson JA: retrieving equipment amounted to repair –
recover under that clause – don’t need to imply in term
 *PMB Australia Ltd v MMI General Insurance Ltd [2001] –
affirmed 2002
o Facts: policy – losses incurred through business
interruption – outbreak of salmonella – stopped
manufacture of peanut butter – didn’t cover expenditure
incurred to alter factory, prevent future outbreaks ∴ losses
o FI: Davies JA in Re Mining Technologies Australia was
minority view – related to property insurance – expense
was incurred while loss was taking place – not the case in
this case

Negligent and Wilful Conduct of the Insured

Negligence of insured
 MIA s55(2)(a) – loss covers insured’s negligence unless
expressly excluded (AG v Adelaide Steamship Co Ltd [1923])
 *Harris v Poland [1941]
o Facts: lit fire – forgot hidden jewellery there – loss or
damage by fire policy
 o Held: insurers liable – actions probs negligent – not
intentional
 *JE Adams (1998 Article) – requirement to take reasonable care
to avoid loss won’t necessarily relieve insurer of loss, even if
insured acts negligently
 Tinline v White Cross Insurance Asssociation Ltd [1921] –
Bailhache J
o attempt to exclude negligence in liability insurance =
nonsensical – liability to third party  requires negligence
 *Fraser v BN Furman (Production Ltd), Miller Smith & Partners
(A Firm) Third Party [1967] – Diplock LJ
o Held: insurer liable under employers’ liability policy –
negligence clause – unless conduct was reckless  acted
with actual recognition that a danger exists – not caring if
its averted or not – reckless clause there to ensure
employer take precautions – prevent moral hazard – take
risks just because they are covered
 * Paine v Catlins [2004]
o Held: requirement that part of an extraction hood be
cleaned at least monthly and ducting at least annually –
fire – grease from hood/ ducting dripped onto fire – severe
damage to hotel
o Held: disputed section of equipment deemed to have been
cleaned monthly in compliance with policy – as clean as it
could be – would be dirtier at diff stages of cleaning regime
– no negligence by insured

Property Insurance
 *Sofi v Prudential Assurance Co Ltd [1993]
o Facts: Theft policy – take all reasonable steps to safeguard
insured property – locked jewellery worth £42k in glove
box in car – 15 mins – stolen
o CoA: liable – insured not reckless – thought safer in car
 Pre Sofi IOB had taken a view that was more favourable to
insurers (Digest of Annual Reports and Bulletins (London, IOB,
1999) –IOB website)  couldn’t find online…
 *Cooke v Routledge [1998]
o drove very drunk – car wrote off
 o Held: liable – required to take reasonable care to
safeguard from loss – not a deliberate act – not inevitable
or probable consequence of action – construed protect
from external theft – not his driving
 *Gunns v Par Insurance Brokers [1997]
o Facts: jeweller left valuables in a safe – previously declared
unsatisfactory – went away for weekend – didn’t turn on
alarm – shortly before theft reported that he thought he
was being followed
o Held: not liable – conduct = reckless
 * Hayward v Norwich Union Insurance Ltd [2001]
o Facts: Porsche – petrol station – left keys to pay –
electronic locking device and immobiliser – prevent being
driven, even with keys – thief targeted him – device to
deactivate safety features – policy couldn’t leave keys in or
on car
o FI: not left in or on if not unattended – not case –
relatively close – had to be close enough so as to be likely
able to prevent theft (left unattended)
 Starfire Diamond Rings Ltd v Angel (1962) – Lod
Denning  physical proximity to keep car under
observation
o CoA: reversed decision – policy didn’t incorporate “left
unattended” authorities – only q did he leave keys? –
didn’t matter only reason thief could take was due to
device – rejected narrow interpretation of left – (tried to
say car-jackings couldn’t recover with broader one – held:
they are involuntary – not left)
o Ombudsman (March 2004): was insured in a position to
intervene – not if they were successful in preventing theft
 packing car – demisting – ran back inside  if on
public highway, doesn’t matter if it is close to home
= left

Claim dependent on illegal act of the insured

 PP exclude claim dependent on criminal act – doesn’t preclude
claim by innocent person – insurer liable if act by third part not a
party to insurance contract
 Beresford v Royal Insurance Co Ltd [1938] – Lord Atkin
o not liable for intentional criminal or tortious act – insurers
haven’t agreed to this – not part of contract
o insane committing suicide – once not excluded – might
recover
o Lord Wright MR: no distinction between criminal and estate
as estate claiming is equivalent to criminal claiming – but
innocent beneficiary not claiming through the estate can
benefit – not tainted by criminality
 MIA s55(2) – not responsible for losses from insured’s wilful
misconduct – proximate from (1) replaced with attributable 
even if misconduct not PC claim can be denied – against PP to
indemnify man against crime he knowingly commits
 Porter v Zurich Insurance Co [2009]
o Facts: P had delusional disorder – set fire to home –
suicide attempt – changed mind – escaped – house and
contents damaged
o Coulson J: well know PP prevents recovery from criminal
act knowingly committed by insured
o could recover if he’d been insane – proof on the balance of
probabilities under M’Naghten Rules at time of fire  didn’t
know the nature and quality of the act he was doing, or if
he did know, didn’t know it was wrong – not insane – knew
what he was doing and that it was wrong
 allowing a person to profit from crime would remove restrains in
minds against committing crimes (Stone & Rolls Ltd (In
Liquidation v Moore Stephens (A Firm) [2009], Bolland, Hare and
Koops Knight (1830))
 *Hardy v Motor Insurers’ Bureau [1964] – Diplock LJ
o claim being denied unlikely to deter someone who isn’t
deterred by criminal sanctions – criminal law most
appropriate for dealing with deterrent
o must weigh up anti-social act v right being asserted
(gravity of the two) – will enforcing it encourage the act?
o legal fiction that criminal shouldn’t benefit preventing valid
recovery of claims by beneficiaries
 JG Shand (1972 Article)
 o contract never supposed to regulate conduct of community
– admitted deterrent now used in application of PP
 *Cleaver v Mutual Reserve Fund Life Association [1892]
o Fry LJ: courts won’t support enforcing a claim based on a
criminal act – excludes criminal and all those claiming
under them, but won’t exclude alternative or independent
rights – protect an innocent beneficiary
o Lord Escher MR: has to be a causal connection between
crime and loss – contract is made contrary to PP can’t
enforse in law or equity – where PP is being used to avoid
when full consideration has been paid – rule should be
narrow – shouldn’t go any further than PP requires
 *Estate of Cunigunda Crippen, Deceased [1911] – Evans P
o human mind revolts at thought of law being used to
enforce a claim based on a criminal act
 *Saudners v Edwards [1987] – Bingham LJ
o court won’t refute claim merely because there’s been an
illegal act
o Two issues with illegality
 1) court shouldn’t enforce or help a contract which is
against the law, but
 2) shouldn’t refuse it automatically to enforce
contract due to any little illegality regardless of how
disproportionate it is to the loss
 *Hardy v Motor Insurers’ Bureau [1964] – Diplock LJ
o courts refusal to assert a right in favour of someone who
has committed an anti-social act depends on nature of act
and right
 court must draw a boundary between enforceable and
unenforceable claim
 *Haseldine v Hosken [1933]
o solicitor suffered loss entering champertous contract (no
longer illegal – one side to litigation has costs paid by an
outsider – gets share of profits) – couldn’t claim on policy
because it was criminal – didn’t matter that he didn’t know
it was
 Forfeiture Act 1982 c34 s2(2) – courts can alter the PP rule
based on offenders conduct and that of the deceased – based on
circumstances of the case and those deemed necessary to do
justice in the case
 Dunbar v Plant [1997] – Phillips LJ
o judges would have modified rule, if legislature hadn’t – but
would have been based on facts, limited connection to
claim or a lot of mitigating circumstances
 Australia haven’t modified the PP rule

Suicide Cases:
 Beresford v Royal Insurance Co [1938]
o HoL: died by suicide – clause excluded paying if suicide
committed in first year – death outside period – not liable
 suicide = crime – PP wouldn’t allow recovery - whole
contract not void ab initio – clause could be severed
 US SC diff direction – Northwestern Mutual Life Insurance CO v
Johnson (1920) – imply term re: suicide only if mentioned (eg.
pay after one year) no general prohibition – each state could
legislate
 *Bolland, Hare and Koops Knight (1830)
o henry Fauntleroy hanged 1824 – forged Bank of England
note – estate unable to claim on life policy – crime led to
death, didn’t matter that he didn’t intend it to

 Charlton v Fischer [2001]

o insurer can apply same defence against claims from a third
party as the can against the insured where the claim is a
derivative claim – accident not on a public road – it was a
derivative claim
o Rix J: distinction should be drawn loss caused by a
deliberate criminal act – could recover V loss intentionally
caused couldn’t recover
o Other judges: accident – included all acts  motor
insurance peculiarities

 *Bird v Appleton (1800) – Lord Kenyon CJ

 o insured can claim under theft policy even if goods bought
with proceeds of sale from an illegal cargo – would have to
examine all previous transactions to establish if insured
had acquired funds illegally
 *Geismar v Sun Alliance and London Insurance Ltd [1978]
o Facts: jewellery smuggled into UK – liable to confiscation,
but authorities no claim to insurance money – jewellery
stole – theft policy
o Talbot J: Insurance covers property law forbids them from
having = contract connected to illegal act ∴ contract is
unenforceable
 *Euro-Diam Ltd v Bathurst [1987]
o Facts: wholesaler of diamonds – exported diamonds to
West Germany – misrepresented value to German customs
– help importer avoid tax – no misrepresentation to insurer
– jewels stolen after arrival
o CoA: claim allowed – transaction illegal in W. Germany –
right to possess goods will be enforced even if owner
acquires by illegal contract once they don’t have to relyon
that illegal contract to enforce claim ( Tinsley v Morgan
[1994] Lord Browne-Wilkinson)
o Kerr LJ: defined degree of connection by adopting and
expanding *Thackwell v Barclays Bank plc [1986]
 won’t automatically deny a claim based on an illegal
act – look at quality of act – consider if it would
offend public conscience to allow remedy sought – is
it encouraging criminal in act [or encouraging others
to do the same *Saunders v Edwards [1987] Nicholls
LJ]
o issuing false invoice bad – didn’t benefit insured – no
bearing on loss – didn’t deceive insurers  no direct
connection between illegal act and contract V Geismar
 insured better off with money – jewels could be
confiscated – direct connection to illegal act
 *Tinsley v Milligan [1994]
o Facts: house acquired by two people – name of one –
fraudulent social security claims
 o HoL: house acquired – trust – owner of legal title = trustee
for other – who could claim under trust without having to
rely on illegal contract – only claim against this by first
person based on illegal contract – won’t be considered
o majority: disapproved of pubic conscience test – more
flexibility than minority – not as much as public conscience
test
 Cohen (1994 article) majority opinion inspired by
Public conscience test
o Lord Goff: minority – wanted to go back to rigid rule –
property rights created by an illegal contract should be left
as they were
 Stone & Rolls Ltd [2009]
o HoL: affirmed Tinsley – won’t allow claimant recover
compensation for own illegal act – won’t query transfer of
property rights if claimant doesn’t rely on contract

(Article to read: N. Cohen, “The Quiet Revolution in the

Enforcement of Illegal Contracts” 1994 LMCLQ 163)

*American Cases
 Millen v John Hancock Mutual Life Insurance Co (1938)
o can’t find online…
 Weeks v New York Life Insurance Co (1924)
o SC South Carolina
o just because a contract to insure against death by legal
execution would be against PP, does not mean that an
ordinary life policy that doesn’t except against it will be
declared unenforceable on PP grounds – there’s no reason
to presume insured intended to accelerate maturing of
policy by committing a crime
 John Hancock Mutual Life Insurance Co v Tarrence (1957)
o dismissed notion that allowing beneficiaries to collect
insurance if criminal killed in the commission of a crime will
increase crimes – remote, speculative and theoretical. 
 o Both the public and the insurer have “a guaranty against
increasing the risk insured, by that love of life which nature
has implanted in every creature.”
 Oldfield v Transamerica Life Insurance Co of Canada (2002)
o Canadian SC – McLaghlin CJ
o P separated from wife – agreed he would maintain life
insurance coverage in lieu of child and spousal support –
wife would be beneficiary until kids 18 – P died – 30
cocaine filled condoms – on burst – heart attack
o Wife wanted money – insurer refused – claim barred by PP
– can’t insure against own criminal act
o FI and CoA: no PP or contract rule barred claim
o SC: not against PP to allow innocent beneficiary to claim
when insured dies through criminal act – criminal can’t
profit from crime – if claiming through his estate = no
claim, but has a claim as beneficiary  not tainted with
husbands illegality – shouldn’t penalize innocent victim
o PP doesn’t make policy void – makes it unenforceable by
the criminal – contract lawful on face but carried out
unlawfully not void
 contract to insure death by cocaine bursting
unenforceable, but one to insure against death and
death occurring through illegal act enforceable by
innocent beneficiary
o Major J: delivered majority decision
 main reason to use PP is because the insurer hasn’t
provided for provision in policy
 Insurance Law in Canada (Brown) – denying
recovery to an innocent beneficiary would be to
penalise them for the insured’s anti social behaviour
 parties intention is important – of criminal act
is incidental to the contract, may even be
enforceable by criminal insured
 differentiation between (backed up by MacGilivray
and Chitty)
 1) insured indemnified against type of loss
suffered (death) but that loss arises through an
unlawful act in that case  enforceable
  2) contract of insurance is itself illegal  not
 PP rule change:
 arbitrary to have distinction between refusing
claim on PP grounds to criminal and
beneficiaries through will v beneficiaries named
on policy
 looks at Diplock LJ in Hardy – doesn’t modify
rule, leaves it to legislature or another court
based on facts to modify it  clear dislike of
the rule as it stands (strict PP test) and
attempting to assert pressure to bring about
change of the rule
o L’Heureux-Dubé J :
 “While a crime may prevent a person from benefiting
from that crime, it cannot affect the rights of
innocent third persons”
 forfeiture rule based on PP is there to manage the
transfer of risk – criminal shouldn’t benefit, but
neither should insurance co get benefit of premium
without risk
 alteration of PP rule should be done by legislature –
must carefully balance competing rights
 if rule is bringing about harsh results should look at
the rule itself and change it – rather than on a case
by case basis
 should not relax PP rule to allow a criminal to benefit
from his action, but should relax the forfeiture rule to
balance competing interests, particularly where the
beneficiary is innocent.
 Courts won’t enforce an illegal contract
 will enforce property rights acquired through illegal contract –
once claim made without relying on contract or can only be
defeated relying on contract

Deliberate Killing and the forfeiture Rule

 Forfeiture Act 1982, s 1(1) – PP rule – prevents a person who
has killed another from benefiting from it
o even if domestic abuse or suicide pact
 s5 – unless convicted of murder the courts can modify rule if
they see fit based on facts (s2(2))

 *In the Estate of Cunigunda (otherwise Cora) Crippen, Deceased
[1911] – Evans P
o it is against what the public would want for the law to
enforce a contract based on a criminal act
o Dr Crippen hanged for murdering wife – estate not allowed
to claim of policy on her life
o valid contract – unenforceable by C or estate
o legal fiction allowing insurer to keep premiums and not pay
out – W not benefitting
 The Prince of Wales & Association v Palmer (1855)
o policy void as Palmer could benefit by killing insured
Innocent beneficiaries:
 *Cleaver v Mutual Reserve Fund Life Association [1892]
o Facts: W (Florence Maybrick) killed H – she couldn’t benefit
– her claim ignored– policy terms – reverted to estate of H
o Fry LJ: courts won’t support enforcing a claim based on a
criminal act – excludes criminal and all those claiming
under them, but won’t exclude alternative or independent
rights – protect an innocent beneficiary
o Lord Escher MR: has to be a causal connection between
crime and loss – contract is made contrary to PP can’t
enforse in law or equity – where PP is being used to avoid
when full consideration has been paid – rule should be
narrow – shouldn’t go any further than PP requires
 Brown v American Internation Lif Co (1991)
o if beneficiary didn’t commit or scheme to commit criminal
act leading to death  can recover
o wife died setting fire to house – husband could collect
 Mackender v Feldia AG [1967] – Denning MR
o an innocent beneficiary can collect even where another
beneficiary is responsible for the death
o approved by Oldfield – SC Canada
 Beresford [1938] – Lord Atkin
 o would have been decided differently if suicides will not
claiming – no decision on third parties claiming – diff
attitude to suicide – if parties agreed exclusion time then it
would likely be followed
o offender shouldn’t benefit – shouldn’t be able to dictate
who will
 Davis v Boston Mutual Life Insurance Company 351 NE 2d 207

Rule applies in a lot of cases

 *Re S decd [1996] – convicted of murder, diminished
responsibility or provocation pleaded successfully – forfeiture still
applies
o court can consider provocation in deciding whether to alter
rule or not if it isn’t a murder conviction
 Re K decd [1985]
o court consider moral culpability and financial position of
offender
 *Re Giles [1972] – confined under mental health act – not
punished  rule still applies
 doubt if criminally insane
 *Dunbar v Plant [1998] – Mummery LJ – CoA
o Elderly couple – incurable diseases – irrational desperation
or depression – criminally complicit in suicide pact
o crime must be deliberate and intentional resulting in death
of insured – nature of crime will determine that forfeiture
rule will apply
o violence doesn’t need to be used to kill the person – gas or
poison, if intention to kill – are sufficient to prevent claim
o Philips LJ: forfeiture should apply – where DPP declined to
prosecute due to suicide pact – court should follow lead
o no benefit in applying forfeiture – should be leniency – if
lead by one then would be diff
 *R v Chief National Insurance Commissioner [1981] – Lane CJ
o doesn’t need to be a criminal conviction – not label on
crime = nature
 *Gray v Barr [1971]
 o Facts: B thought W had affair with G – went to G house
with gun – fired into ceiling – approached G – fight – shot
fired – G killed – B cleared of manslaughter – G’s wife sued
B’s liability insurance
o CoA: policy designed to cover B’s negligence
o Denning MR: two possibilities
 Articles  1) shooting deliberate = no cover
to be  contrasted hunting accident – accidently shot
read
person not animal = no intention = even if
on this
case – gross negligence reduced it to manslaughter –
a lot of covered by accident insurance as intended by
discus
policy
sion in
book  no separation here – entered home with
 - J.A. intention to shoot, even if result from second
Jolowic unintended shot = linked
z,
“Liabilit  deliberate act so closely linked  can’t be
y seperated
Insura  2) civil court not bound by criminal court – Denning
nce—
Mansla thought he should have been convicted
o Philimore LJ: two shots can’t be separated – second shot
not unexpected given circumstances – reasonable objective
person would expect it and wouldn’t believe B’s version of
events
o Salmon LJ: separated shots – but implied in term
preventing recovery where accident happened while
threatening with a loaded gun  would have denied on PP
basis either – should discourage public using guns
o Lane J: did person seeking indemnity use “deliberate,
intentional and unlawful violence or threats of violence”?
 yes = no indemnity, even if death unintended
 Academics dislike G v B but judges like it and follow it
o followed and cited by Canadian SC
 No clear ratio from G v B – supports view court will look at
insured’s act – decide if there was a deliberate criminal intent
towards victim – even if no criminal conviction
 what happens if third party is killed – Lane J test suggests
violence must be towards person killed, third party could claim,
but not definitively defined
Modification
 Re H (Deceased) [1990] – Peter Gibson J
o suggested act could modify rule if the manslaughter didn’t
involve intentional deliberate threats or violence
 *Dalton v Latham [2003] – Patten J
o sceptical of Re H – parliament could have excluded rule for
diminished responsibility but didn’t
 Jones v Roberts [1995] – Kolbert J
o Re H not sited by CoA Royse v Royse [1984] – same facts -
shouldn’t be allowed to benefit from crime  higher court
would need to rule before it would be allowable – battering
with hammer, even if diminished – shouldn’t be able to
benefit

Motor Manslaughter
 *Tinline v White Cross Insurance Association Ltd [1921]
o speeding – Shaftesbury avenue – killed one, injured two
pedestrians – convicted manslaughter  gross or reckless
negligence
o Ballihavhe J: generally negligence negates cover – motor
policy must include cover, even if negligence  liable
o G v B: similar, but B entered G’s house = intention
o manslaughter requirement higher for motorist
 *Hardy v Motor Insurers’ Bureau [1964]
o CoA: act deliberate and criminal – insured driver already
paid victims, driver couldn’t recover indemnity from
insurers – insurer only liable in driver can’t pay, if no
insurance Motor Insurers’ Bureau liable (Road Traffic Act
1988)
 *Gardner v Moore [1984]
o HoL: convicted of inflicting grevious bodily harm
o deliberate nature – already paid, can’t recover
o approved Diplock LJ statement in Hardy look at social
harm of enforcement v not enforcing
 o Denning MR in Hardy: motorist can’t recover sums paid –
but the law by requiring motorist to be indemnified – policy
must be read so wide that a third party won’t be tainted by
a motorists intent  can recover from insurer
 difficult to distinguish motor cases from G v B on PP grounds –
both dangerous to a third party – victim suffers by not holding
them liable
 Perpetrator not deterred by criminal sanction – lack of insurance
not likely to work
o not wanting to indemnify criminal v compensating
malicious acts of motorist  motorists – compensation won
o what’s the diff between someone with a shogun and driving
licence when both act recklessly?
 Criminal courts should decide criminal matters – civil should
focus on parties and compensation – like with motor insurance
only looking at injuries
 no PP reason for indemnifying insured where not provided for in
contract – leg is only thing helping motorists
o must have certain level of liability – limits ability for
insurers to restrict this
o Charlton v Fisher [2002]
CoA: driver deliberately steered into another car –
didn’t intend to injure  private land – RTA 1988
didn’t apply – insurer not liable due to deliberate
criminal act
o shows leg is only thing differentiating motor from other
liability insurance