The Court of Appeal recently handed down judgment in the case of Nulty v Milton Keynes Borough Council [2013] EWCA Civ 15. The case concerned an appeal from the 3 November 2011 decision of Mr Justice Edwards-Stuart in the Technology & Construction Court of the High Court. In upholding the first instance decision, the Court of Appeal reiterated the principle in cases where there are competing explanations for a particular loss that causation cannot be established only by a process of elimination such that the 'least unlikely' cause of a loss is identified. A claimant must demonstrate that the particular version of events that they rely upon is more likely to have happened than not, in order for the civil burden of proof to be satisfied.


On 2 April 2005 a fire broke out at a recycling centre owned by Milton Keynes Borough Council ("the Council"). After the attendance of the fire brigade a second fire broke out causing extensive damage to the centre. The Council brought proceedings against Mr Nulty, a self-employed electrical engineer who had been responsible for carrying out works at the centre on the day of the fire. The Council alleged that Mr Nulty had caused the first fire by discarding a cigarette, and that the first fire had caused the second fire. Mr Nulty died before the claim came to trial and his professional liability insurers, National Insurance & Guarantee Corporation Ltd ("NIG"), conducted the proceedings. NIG contended that the first fire had been caused by the arcing of an electrical cable or by arson, and that the first fire had not caused the second fire. NIG also sought a declaration that they were not liable to indemnify Mr Nulty under his policy on the grounds of late notification of the claim.

Decision of the High Court

In a detailed and lengthy judgment, Mr Justice Edwards-Stuart concluded that Mr Nulty's discarded cigarette was the cause of the first fire which in turn caused the second fire. He dismissed the alternative causes advanced by NIG and their expert witnesses. Notably the judge found that NIG were liable to indemnify Mr Nulty, but held that NIG's liability should be reduced by 15% owing to the prejudice NIG had suffered by the late notification of the claim in breach of the relevant policy condition. Further discussion and analysis of the first instance decision in Milton Keynes Borough Council v Nulty [2011] EWHC 2847 (TCC) can be found here. This aspect of the High Court decision was not appealed.

It was common ground between the parties that there were only three potential causes of the first fire: i) a discarded cigarette; ii) the arcing of a live electrical cable which lay unsecured; or iii) arson by an intruder. After analysing the facts the judge dismissed the possibility that the first fire had been caused by an intruder, or by a cigarette discarded by someone other than Mr Nulty.

The judge stated that none of the three suggested causes were, in their own right, "inherently likely" to have caused the fire. The judge concluded that whilst the arcing of the cable was "very unlikely" to be the cause, the discarding of a cigarette by Mr Nulty was a feasible scenario:

"I accept that it might be regarded as unlikely that an experienced electrical engineer, who had in the past been a part time fireman, would choose to smoke in a building to which he knew a no-smoking policy applied and then discard the cigarette end – albeit one that he thought he had stubbed out – into flammable waste lying on the floor. But if the only other possible causes of this fire are very much less likely, as I find they are, then in law the discarded cigarette becomes the probable cause of the first fire." (Emphasis added)

Decision of the Court of Appeal

NIG appealed on two bases. First that the judge had erred in law, in that his approach to the question of causation was contrary to the principles set out by the House of Lords in Rhesa Shipping (The Popi M) [1985] 1 WLR 948. Secondly, that the judge had erred in fact on his findings concerning the competing causes for the first fire. NIG did not appeal the judge's findings on the cause of the second fire or NIG's liability to indemnify Mr Nulty.

The Court of Appeal considered the leading House of Lords authority of Rhesa Shipping, which involved a ship, the Popi M, which sank in calm seas. The claimant ship owner contended that the cause of the loss was either a collision with a submarine or the negligence of the crew. The defendant insurer contended, on the basis of expert evidence, that the ship had been unseaworthy. As the ship sank in deep water it had not been possible to examine the wreck and test the competing theories of the parties.

The House of Lords held that the claimant had failed to prove its case, which failed. Lord Brandon rejected the 'Sherlock Holmes dictum', which runs to the effect that "when you have eliminated the impossible, whatever remains, however improbable must be the truth", as a proper approach to causation for the following reasons:

  1. it is open to the court to conclude that the party which bears the burden of proof has failed to discharge that burden;
  2. the Sherlock Holmes dictum can only operate when all relevant facts are known; and
  3. it is contrary to common sense for a judge to conclude that the occurrence of an event is extremely improbable but nevertheless find that the balance of probabilities test is satisfied (i.e. that the event was more likely to have occurred than not).

Delivering the judgment of the Court of Appeal in Nulty, Lord Justice Toulson stated that the balance of probabilities test requires "that the court must be satisfied on rational and objective grounds that the case for believing that the suggested means of causation occurred is stronger that the case for not so believing". He rejected as "intrinsically unsound" the approach submitted by the Council that when there exists a closed list of more than two possible causes, the court should allocate a probability factor to each individual cause and determine whether one has a probability factor greater than 50%. Whilst the chance of a future event happening may be expressed in percentage terms the same is not true of past events. It cannot be said that there is a particular percentage chance that a particular event happened. The event either happened or it did not.

In cases where causation is necessarily based on circumstantial evidence, the court must consider the whole picture, including the gaps in the evidence, whether factors which support an explanation are properly established and what factors detract from that explanation as well as what other explanations might fit the circumstances. Whilst eliminating all other possibilities might well lead to the conclusion that a particular explanation is more likely than not to be true, there is no rule of law that it must do so.

The Court of Appeal concluded that when Mr Justice Edwards-Stuart's judgment was read as a whole it was implicit from his reasoning that he considered that the case that Mr Nulty was responsible for the fire was stronger than the case that he was not. The judge's suggestion that it was a proposition of law that if the only other possible causes of the fire were very much less likely than the discarded cigarette theory, then the discarded cigarette theory became, in law, the probable cause of the fire, was, however, mistaken. The Court of Appeal made clear that there is no such rule of law.

The Court of Appeal declined to interfere with the judge's findings of fact on the competing causes of the fire, emphasising that it is only where there is a serious ground for doubting the judge's overall conclusion that an appellate court would re-examine factual conclusions.


This case is an interesting – albeit highly fact specific – example of the approach to analysing competing causes of a loss. In complex cases heavily reliant upon expert evidence a claimant must be cautious not to assume that, just because their expert's view seems more plausible than that of their opponent, a court will necessarily accept that the claimant has proved their case. Equally, defendants facing the position that the claimant's explanation is the best of an unlikely selection should still give careful consideration to whether the claimant has discharged the burden of proof.

Parties are of course able to address in their contracts the situation where causation cannot be proven on the balance of probabilities. In an insurance context the recent High Court case of European Group Ltd v Chartis Insurance UK Ltd [2012] EWHC 1245 (QB) discussed the application of '50/50' clauses in two policies of insurance which provided that in the event that it could not be demonstrated that damage was caused by a particular insured risk, the policies would each cover 50% of the adjusted claim.