The Latin phrase ‘Causa Proxima’ means proximate cause. The cause that is caused at the initial stage which results in a loss or damage. All the causes that caused previous to the immediate cause which is remote were rejected in this case. Lord Bacon in dealing with causa proxima states:
“It was infinite for the law to consider the causes of causes and their impulsions one of another therefore it contended itself with the immediate cause.”
According to the principle of proximate cause, an Insurance policy is bound to provide compensation only for such loss as are caused by the peril covered by the policy. When the loss is the result of two or more causes, the proximate cause means the direct, most dominant and most effective of which the loss is a natural consequence(1).
Therefore, the proximate cause is defined as an action that leads to an unbroken chain of events ending in someone suffering loss.
Tests for determination
The rules for the determination of causa proxima are formulated by the judiciary.
● When the perils happen as a chain of events, the perils and the consequences are to be treated concurrently and follow one another.
1. when the peril insured succeeds the peril excepted, then the insurer is not liable. The loss was caused immediately by the expected peril. The insured premises was burnt due to an earthquake fire and hence no causa proxima(2).
2. In Lawrence v. Accident Insurance Company(3), the insured peril precedes the expected peril here. The insured died after falling on the train track but the death was caused by the hit of a train and not by falling.
● When the perils are not a chain of sequence but a broken one. Then, the perils are independent of one another.
1. the insurer is not liable for any loss that is caused by the excepted peril but liable for the insured peril.
2. If an expected peril precedes the insured peril then the insurer is liable for the loss caused by the insured peril. Taking advantage of the fire that broke out in the insured premises, the mob entered and committed theft causing to break off the plate glass which was the insured peril. The court held that the insurer is liable as the damage that occurred was by the mob and not by fire as covered in the clauses of the policy(4).
● The perils found are acted simultaneously. In such cases where the parties cannot invoke the legal provisions, they have to compromise with the help of insurers based on the facts interpreted.
1. If excepted peril is distinguished from the insured peril, in such case the insurer is liable only to the insured peril.
2. In case of undistinguishable losses, the insurer is not liable.
APPLICATION OF THE DOCTRINE
In 1828(5) The insured premise was damaged by fire during the process of demolition. It was held by the court that the fire was the causa proxima because even though it was a wall which created the damage but the injury caused to the insured was due to fire. The insurer should pay for the loss caused.
To determine the liability of insurers for loss caused by the immediate cause, there are terms in the policy as exclusions and their wordings such as, “directly or indirectly caused by, resulting from or in connection with” or “unless damage by a cause not excluded in the policy ensues and then the Company shall be liable only for such ensuing damage” which all reflects the application of the doctrine.
The applicability of proximate cause in fire insurance as observed in the case of Stanley v. Western Insurance Co.(6) is stated that:
“Any loss resulting from the fire and resulting from the necessary and bonafide efforts to put out the fire whether by the spoiling of goods by water or throwing the articles out the window or pulling down a house for the purpose of preventing the spreading of the flames are within the policy of fire insurance.”
The application of the legal maxim “causa proxima, non remota, spectatur” is allowed(7). A warehouse consisting of cotton was covered in a fire insurance policy. The exception to this case is
“by means of any invasion, insurrection, riot, or civil commotion, or any military or usurped power, explosion, earthquake, or hurricane.”
In this case, the fire did not directly catch in the place where the cotton was stored but in a warehouse across the street. Because of that, there was a major explosion which resulted in a fire of cotton in an insured’s warehouse. The fire spread which destroyed the whole cotton was a continuous action and immediate cause of the explosion of an actual fire.
WAIVER OF CAUSA PRÓXIMA
The policy wordings or the terms and conditions in the policies help the insurers to waive the causa proxima doctrine. The expected perils included.
Everett v. London Assurance Company (1865):
A third person’s property was damaged which is half-mile away. The loss resulted from an explosion. Caused by fire. The question was whether the immediate cause was fire or explosion. It is said by Wiles J., that the damage should be immediate/proximate but not remote. There is no chain of events by fire, but because of the air spread from the explosion triggered by the fire in some other place and it cannot be the proximate cause. Hence, no application of causa proxima.
The insured was involved in moving the goods of his shop to a safe house when the fire broke out in the adjacent building which resulted from a chance for the looters to loot the property by breaking down the insured’s shop windows and shutters causing damage. The claim made by the insured was held not liable. The damage and loss caused were completely because of the mob’s action and not fire(8).
Excepted peril
A case(9), where the court held in favor of the insurer and allowed the same to repudiate the claim. where the insured entered into a policy that covers fire. After some period of entering into a policy, the building of the insured caught fire which resulted in weak walls. Again, a few days later, there was a storm which caused the falling of walls. The insured claims for a fire to pay for loss from the insurer. This claim was rejected on the ground that the loss caused was by storm. No proximate cause.
The damage to the warehouse was caused by fire emanated from a bomb explosion thrown by the enemy. It was a war. And the fire was nothing but a remote cause but not an immediate cause. The policy does not cover such damages as it is a war operation and not a proximate cause caused by any action(10). The insurer repudiated the claim based on excepted peril and it was accepted by the court of law.
In Kamal Prakash Mittal vs. Oriental Insurance Co. Ltd & Anr(11), the court dismissed the plea of a complaint and also set aside the impugned order passed in favor of the insured. There are some exclusion clauses mentioned in the conditions of the policy which include the damage and destruction of the property caused by the forest fire. Here, in this case, the property or premises of the insured was destroyed in a summer month due to a forest fire. The appeal was allowed since the policy does not cover the loss caused by a forest fire.
Insured peril
In Harris v. Poland(12), even the act of negligence on the part of the insured, the insurer is liable to pay for the losses that occurred by fire to the insured’s jewelry. The material of the insured caught fire because she forgot she kept the jewelry at the fireplace and lit a fire for warmth. However, the damage caused was due to fire. Hence, the insurer is liable.
A National Commission of India, in a case(13), held the insurer liable. The facts of the case were that insured obtained an insurance policy which covers the risk of fire as well as other risks that cause damage or loss to the property of the insured covered in a policy. Here, the ammonia gas leaked and the plant stopped and had shut down. The insured peril was the loss of the stocked potatoes that are stored in cold storage.The commission held whatever the cause of the deterioration of the insured was but the loss was caused to the potatoes stored and hence the insurance company is liable to pay for the losses to the insured.
Rejection of claims
Misrepresentation
The case was awarded in the year 2014 at Chandigarh Ombudsman Centre(14). The insured filed a complaint before the Ombudsman for the non-settlement of the applied claim from the insurer. The claim was made under a policy of Fire and Allied Perils where the building of residence of the insured which was located in a hilly area collapsed in a landslide. The landslide damage was partial but the other portion was demolished for safety reasons by the District Administration.
The insured alleged that his neighbor had recovered losses from the same company for the same cause and during the process, the insured failed to disclose the facts on the insurance obtained date. The insurer rejected a claim on the ground of loss of pre-existence and misrepresentation. The court allowed the insurance company to repudiate the claim and dismiss the complaint made by the insured. There is no causa proxima in this case.
REFERENCES:
1. C. Sivadasan v. The New India Assurance Co., Kerala High Court, India, A.S. no. 647 of 1994, decided on 25 March 2011
2. Tootal Broadhurst Lee & Co. v. London and Lancashire Fire Ins Co. (1908) Welford. Fire (3rd ed.) 498
3. 7 QBD 216 (1881)
4. Marsden v. City and County Assurance Co. Ltd. LR 1 CP 232 (1865)
5. Johnstone v. West of Scotland
6. (1868) KR 3 Eych 71
7. 74 U.S 7 Wall. 44 (1868)
8. Morsden v. City and County Assurance Company, LR 1 CP 232 (1850)
9. Gaskarth v. Law Union (1876)
10. Rogers v. Whittaker (1917)
11. Revision Petition no. 2512 of 2016
12. (1941) 1 All ER 204.
13. New India Assurance Co. Ltd. v. Vivek Cold Storage CPJ 26 NC (1999)
14. Alkesh Saini vs. SBI General Insurance Company Ltd. MANU/CF/0494/2015
Authors:
1. Ms. Roohi Babu, B.SC., B.L., (Hons), Advocate practicing at Madras High Court, with 5 years of experience in IPR and Family matters.
2. Angujanani. G, 4th Year student of BBA, LLB (Hons) at Saveetha School of Law, SIMATS, Chennai.