In Ace European Group Limited and Others v Chartis Insurance UK Limited (2013) the Court of Appeal has provided a useful reminder of the legal principles that will be applied to determine which of two possible causes of damage to property is the proximate cause. The court confirmed that where there are two competing theories, either of which is improbable, then having rejected one, it is logical to accept the other as being the cause of the damage on the balance of probabilities.
The developer of a new waste recycling plant and its contractors were insured for damage to plant and materials under two insurance policies. The first policy was provided by the Claimant, and covered damage to plant and materials on site (the “EAR Policy”). The second policy was provided by the Defendant, and covered damage to plant and materials while they were in transit (the “Marine Policy”). The waste recycling plant incorporated two boilers, which each housed an economiser, comprising 8 economiser blocks. These 16 economiser blocks were manufactured in Romania and transported by a combination of road and sea from Romania to Slough.
When it was discovered that damage had been caused to certain parts of the economiser blocks, it was necessary for the judge to determine when the damage occurred. Was it during road or sea transport and so falling under the Marine Policy, or whilst on-site at Lakeside and so covered by the EAR Policy?
The judge at first instance found in favour of the Claimants and held that, on the balance of probabilities, the damage was caused during the road transport as a result of inadequate packing, thereby falling within the scope of the Marine Policy (see our Law-Now here). The Defendant appealed.
Court of Appeal decision
Upholding the first instance decision and dismissing the appeal, the Court of Appeal held that the judge at first instance had correctly directed himself in accordance with the established case law on proximate cause. Referring to the Popi M (1985) and quoting Ide v ATB Sales Limited (2008), Longmore LJ said:
“where there are two competing theories before him, either of which is improbable, that having rejected one, it is logical to accept the other as being the cause on the balance of probabilities”
It was held that the judge had been entitled to conclude that it was more likely than not that the damage occurred during the transportation of the economisers after considering the evidence. In particular, it was held that:
- The judge had been entitled to find that the packing between the tubes of the economiser blocks was inadequate.
The Defendant submitted that there was photographic evidence which proved that the packing was sufficiently tight and workmanlike to avoid the risk of vibration. The judge rejected this submission and said that it was clear that “one could not identify which block was the subject matter of a particular photograph”. The Court of Appeal agreed that the Defendant was unable to prove which photograph was of which block, let alone that the relevant parts were adequately packed.
Significantly, the case on which the Defendant sought to rely, based on tying particular photographs to particular blocks, had never been put to the Claimants’ expert witness. The Court of Appeal held that it was not right for a case to be mounted on evidence which had not been placed before the Claimants’ expert with time given to him so that he could assess them in the context of the litigation as a whole. Furthermore, it was held that there was other evidence on which the judge had been entitled to rely in finding that the packing was inadequate.
- The judge had been entitled to make the findings he did on the roughness of the road and the journey times, which would have resulted in vibration if there had not been adequate packing.
- The judge’s rejection of the evidence of the Defendant’s expert was eminently justified. The Defendant’s expert submitted that for the damage to have occurred the frequency would have to have been a narrowband resonant response and it had not been shown how such a narrowband response could have been achieved. The expert did not go so far as to say that damage occurring during road transport was impossible but rather that it was, in his view, very unlikely.
The case confirms that where there are two competing theories before a judge, he is entitled to reject the least probable cause and instead, accept the alternative as being the cause on the balance of probabilities.
The case also provides a warning to any party who adduces last minute evidence. Moses LJ emphasised that judges have every right to invoke the overriding objective and exclude evidence which is disclosed too late, pursuant to CPR 32.1(2) which states that the court may use its power to exclude evidence that would otherwise be admissible.
In this case, the photographs that the Defendant sought to rely on were disclosed shortly before the trial by which time it was far too late for witnesses or the parties and still less the judge to assess their significance.
Moses LJ even queried whether permission to appeal should have been granted to the Defendant on the basis that Counsel for the Claimants was placed in a position which ought never have been allowed to occur.