Where cargo is lost or damaged the cause of loss is often clear. It is also common for there to be several different causes that could have caused the loss. This often leaves the court with the difficult task of determining causation. The English Court of Appeal has grappled with this issue recently and has emphasised that a claimant cannot establish its own preferred theory of causation merely by ruling out the other causes.

First instance

In Ace1 the dispute concerned whether damage suffered by economisers intended for use in a waste facility was the result of vibrations caused during transit by road, or by wind following delivery, where the economisers had been left outside for some time.

The High Court held that the correct approach was to examine the theories of damage and determine whether it was more likely than not that one was the cause. The judge found that there was sufficient evidence to establish that the road’s roughness caused the damage and held this to be the cause. The decision was appealed.

A different tack was taken in Nulty,2 which concerned a fire in a recycling centre owned by a Council (the Council). The Council sued the estate of Mr Nulty, a deceased engineer working at the centre on the day of the fire, arguing that the fire had been caused by Mr Nulty discarding a cigarette. Mr Nulty’s insurers countered that the fire had been caused by either (1) an intruder or by (2) arcing from an electric cable.

The Court concluded that it was highly improbable that the fire had been caused by an intruder or by arcing, but that there was nothing physically or scientifically implausible about the discarded cigarette explanation. Since none of the suggested causes were “inherently likely” to have caused the fire and the two causes put forward by Mr Nulty’s insurers were very unlikely, the probable cause of the fire was Mr Nulty’s discarded cigarette. This decision was also appealed.

Appeal decisions

In both appeals the Court was guided by the House of Lords decision in The Popi M3. Here the House of Lords specifically rejected the “Sherlock Holmes dictum” approach to causation (“when you have eliminated the impossible, whatever remains, however improbable, must be the truth”).

Ace

The Court of Appeal agreed with the first instance judge and held that there was enough evidence to conclude that the damage was caused by the road. The first instance judge had been correct in directing that where there are two competing theories, and one had been eliminated, the other could be the proximate cause if there is sufficient evidence to establish this on the balance of probabilities.

Nulty

The Court of Appeal concluded 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 than the case for not so believing”. Although eliminating all other potential causes may lead to the conclusion that a particular explanation is more likely than not to be true, there is no rule of law as a matter of English law that it must do so.

Conclusion

To succeed with its claim, the claimant must demonstrate that the particular version of events being relied upon is more likely than not to have occurred. It is not sufficient to show that by process of elimination, the claimant’s version of events is the cause. Obtaining early expert evidence on causation will therefore be critical.