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 Qs 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 dont 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 Eschers 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 didnt 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 USMalaysia 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 didnt 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 couldnt 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 doesnt 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 wasnt 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 hadnt 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 dont 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 Cant recover if disablement, even a small bit, attributable to pre-condition, doesnt matter if its normal or not o Dobbs J: degenerative condition caused the injury couldnt 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 wouldnt have occurred, but for the hurricane and wider damage (dont get money for wider area damage) o Held: arbitrator didnt 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 shouldnt 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 didnt matter that there was another PC design fault on its own, wouldnt 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 Ws 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 PCs 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 insureds 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 shouldnt 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 cant 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 didnt 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 isnt 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 didnt 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 didnt 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 wasnt 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 Firemens 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 cant be liable for loss they didnt contract for insured for fire not for captains 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 dont 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 didnt 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 insureds 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 wont 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) couldnt 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 didnt 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 couldnt 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 didnt incorporate left unattended authorities only q did he leave keys? didnt matter only reason thief could take was due to device rejected narrow interpretation of left (tried to say car-jackings couldnt 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, doesnt matter if it is close to home = left Claim dependent on illegal act of the insured PP exclude claim dependent on criminal act doesnt 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 havent 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 insureds 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 hed been insane proof on the balance of probabilities under MNaghten Rules at time of fire didnt know the nature and quality of the act he was doing, or if he did know, didnt 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 isnt 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 shouldnt 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 wont support enforcing a claim based on a criminal act excludes criminal and all those claiming under them, but wont 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 cant enforse in law or equity where PP is being used to avoid when full consideration has been paid rule should be narrow shouldnt 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 wont refute claim merely because theres been an illegal act o Two issues with illegality 1) court shouldnt enforce or help a contract which is against the law, but 2) shouldnt 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) couldnt claim on policy because it was criminal didnt matter that he didnt 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 hadnt but would have been based on facts, limited connection to claim or a lot of mitigating circumstances Australia havent 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 wouldnt 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, didnt matter that he didnt 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 couldnt 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 dont 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] wont 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 didnt benefit insured no bearing on loss didnt 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 wont 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 wont allow claimant recover compensation for own illegal act wont query transfer of property rights if claimant doesnt 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 cant 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 doesnt except against it will be declared unenforceable on PP grounds theres 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 cant 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 cant profit from crime if claiming through his estate = no

claim, but has a claim as beneficiary not tainted with husbands illegality shouldnt penalize innocent victim o PP doesnt 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 hasnt provided for provision in policy Insurance Law in Canada (Brown) denying recovery to an innocent beneficiary would be to penalise them for the insureds 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 doesnt 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 LHeureux Dub 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 shouldnt 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 wont 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 couldnt benefit her claim ignored policy terms reverted to estate of H o Fry LJ: courts wont support enforcing a claim based on a criminal act excludes criminal and all those claiming under them, but wont 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 cant enforse in law or equity where PP is being used to avoid when full consideration has been paid rule should be narrow shouldnt go any further than PP requires Brown v American Internation Lif Co (1991) o if beneficiary didnt 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 shouldnt benefit shouldnt 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 isnt 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 doesnt 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 doesnt 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 Gs wife sued Bs liability insurance o CoA: policy designed to cover Bs negligence o Denning MR: two possibilities Articles to be read on this case 1) shooting deliberate = no cover a lot of discussion in book - J.A. Jolowicz, Liability InsuranceManslaughter Public Policy [1970] CLJ 194 -J.G. Fleming, Insurance for the Criminal (1971) 34 MLR 176 -R.A. Hasson, The Supreme Court of Canada and the Law of Insurance 1975 (1976) 14 Osgoode Hall Law Journal 769 at 7768 contrasted hunting accident accidently shot person not animal = no intention = even if

gross negligence reduced it to manslaughter covered by accident insurance as intended by policy no separation here entered home with intention to shoot, even if result from second unintended shot = linked deliberate act so closely linked cant be seperated

2) civil court not bound by criminal court Denning

thought he should have been convicted o Philimore LJ: two shots cant be separated second shot not unexpected given circumstances reasonable objective person would expect it and wouldnt believe Bs 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 insureds 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 didnt 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 didnt Jones v Roberts [1995] Kolbert J o Re H not sited by CoA Royse v Royse [1984] same facts - shouldnt be allowed to benefit from crime higher court would need to rule before it would be allowable battering with hammer, even if diminished shouldnt 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 Gs 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 couldnt recover indemnity from insurers insurer only liable in driver cant 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, cant recover o approved Diplock LJ statement in Hardy look at social harm of enforcement v not enforcing o Denning MR in Hardy: motorist cant recover sums paid but the law by requiring motorist to be indemnified policy must be read so wide that a third party wont 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 whats 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 didnt intend to injure private land RTA 1988 didnt apply insurer not liable due to deliberate criminal act o shows leg is only thing differentiating motor from other liability insurance