War exclusion upheld in relation to damage caused by controlled detonation of World War 2 bomb at Exeter University

On 22 March 2023, the High Court of Justice, Technology & Construction Court, handed down its judgment in the case of Allianz Insurance v The University of Exeter, in relation to an insurance claim submitted by the defendant, the University of Exeter (“the university”), following the controlled detonation of a World War II bomb on the university’s Devon campus.

The insurance claim, which related to damage caused by the explosion, was declined by Allianz Insurance (“Allianz”) on the basis that the claim was excluded under the War Exclusion clause in their policy.

The court had to consider whether the War Exclusion clause excluded the alleged damage and loss suffered by the university from the cover provided by the general insuring clause. In doing so, the court had to also decide what the proximate cause of the loss was, (i.e. the dropping of the bomb or the detonation of the same by the bomb disposal team).

The court upheld Allianz’s policy declinature on the basis that the claim was excluded under the War Exclusion clause and found that there was no proximate cause between the loss and the detonation of the bomb. Rather, the dropping of the bomb was the proximate cause of the loss.

Background

On 21 February 2021, a group of construction workers at the university discovered a high-explosive bomb that had been dropped during World War II. A bomb disposal team concluded that the bomb could not be removed safely, and the only realistic option was to detonate the bomb on site in a controlled explosion.

The explosion of the bomb damaged some of the university’s housing nearby and Allianz were requested to indemnify the university for the losses and damage it suffered.

Allianz declined to indemnify the university on the basis that the losses suffered fell within the scope of the War Exclusion clause of the policy, which stated that the policy did not cover:

 'loss, destruction, damage...or liability or any consequential loss occasioned by war… act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection or military or usurped power'.

Decision

Proximate Cause

The High Court applied the test set out in the Supreme Court’s decision of FCA v Arch [2021] UKSC 1, which is as follows:

(i) identify whether a peril covered by the policy had any causal involvement in the loss; and

(ii) if so, whether a peril excluded or excepted from the scope of the cover also had any such involvement.

In this case, in deciding whether the human interference, (i.e. the controlled detonation of the bomb), was the proximate cause of the loss, the High Court referred to the following statement in Arch:

‘…human actions are not generally regarded as negativing causal connection, provided that at least that the actions taken were not wholly unreasonable’

Considering the above, HHJ Bird concluded the following in relation to proximate cause of loss and damage in this case:

• The dropping of the bomb and the presence of it was the proximate cause of the loss. The reasonable and necessary human act of detonating the bomb did not change the court’s analysis. Ultimately, the presence of the bomb led to both the need for the detonation and the inevitable damage;
• Although the bomb was dropped in 1942 and the damage was caused 80 years later, the passage of time had no relevant or material impact on the danger posed by the bomb. This is because there was no evidence to suggest that the explosive load of the bomb was any less lethal or potent over time;
• Alternatively, HHJ Bird agreed with Allianz that if the dropping of the bomb is not “the” proximate cause, then it was “a” proximate cause. The combined effect of the detonation and the bomb made the damage inevitable and were “equal, or at least nearly equal”.

Comment

The judgment suggests that if there is a subsequent cause of loss by way of necessary and reasonable human interference, then the human action could effectively be ignored when considering the proximate cause.

In addition, in this instance, the period of 80 years was held to have had no bearing on the correct analysis of the proximity of the damage as: (i) there was no evidence to suggest that the bomb was any less potent or lethal when it was dropped in 1942; and (ii) the earlier cause (the dropping of the bomb), still remained the proximate cause, even though the loss would not have happened without necessary and reasonable human interference. To put it simply, the damage was inevitable the day the bomb was dropped.