Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2010] CSOH 59
CA 96/09	OPINION OF LORD HODGE in the cause WALTER MITCHELL and ALAN ALEXANDER SLESSOR WILSON, executors nominate of the late Walter James Duncan McCann Pursuer; against GREAT LAKES REINSURANCE (UK) PLC Defender: ­­­­­­­­­­­­­­­­­________________

Act: A. Stewart QC, Beynon; Lefevre Litigation

Alt: Duthie; Burness LLP

5 May 2010

[1] Walter McCann suffered a road traffic accident on 26 June 2006 in which he sustained serious injuries, including a fracture of the sternum, multiple rib fractures and pulmonary contusions. Mr McCann's condition deteriorated gradually as a result of those injuries. He suffered worsening respiratory function and defective gas exchange. He developed pneumonia. Despite careful treatment in the intensive care unit at Aberdeen Royal Infirmary, he died on 3 July 2006. He was seventy seven years old. A post mortem examination found that Mr McCann had died from pneumonia, which led to respiratory failure and cardiac failure.

[2] At the time of the accident he had chronic obstructive pulmonary disease, ischaemic heart disease and left ventricular dysfunction. He had a life expectancy of between two and three years. As a result of his serious medical condition he was vulnerable to developing pneumonia from chest injuries, which otherwise would not have been life-threatening. A normal individual who suffered similar rib fractures and a fractured sternum would not have developed pneumonia and died.

[3] The pursuers aver and the defenders admit that it was most unlikely that the pursuer would have died on 3 July 2006 if he had not sustained the injuries which he suffered in the accident.

[4] Mr McCann since 1988 had a personal accident insurance policy which remained in effect at the date of the accident. The defenders were the underwriters of the policy at the dates of the accident and of Mr McCann's death. The relevant provision of the policy was as follows:

"We will pay you the appropriate benefit if, during the period of insurance for which you have paid and we have agreed to accept the premium, an insured person sustains bodily injury which, within 52 weeks, is the sole cause of permanent disability, death or hospitalisation.

Bodily injury means bodily injury resulting solely and directly from accidental outward violent and visible means and does not include sickness or disease or any natural occurring condition or degenerative process."

The policy also contained a clause which provided that, where an insured person was aged sixty five years or over at the time he sustained bodily injury, permanent disability benefit (which was designed to compensate for loss of employment) would not be payable and all other benefits would be halved. The policy was thus one which envisaged that people insured under its terms could include senior citizens.

[5] The pursuers as executors nominate of the late Mr McCann have raised this action claiming payment of £66,732.75, which the parties have agreed is the sum due under the policy if an insured event has occurred.

[6] The parties have also agreed the terms of a joint medical opinion by Dr Stephen J D Brecker, a consultant cardiologist, and Mr Hussain El-Shafei, a consultant cardio-thoracic surgeon, that (a) the road traffic accident was directly related to Mr McCann's death, (b) although he had several co-morbidities, it was most unlikely that he would have died when he did, but for the accident, and thus (c) the accident was the direct cause of his death. In their joint minute the parties agreed that this joint opinion should be read in the light of the specified medical reports which those doctors produced. There was no agreement however on all of the terms of the medical reports. But the facts which I have set out in paragraphs [1] and [2] above are not disputed.

[7] The parties, having agreed the relevant facts, seek the court's determination of their dispute by debate. The issue in short is whether, on the agreed facts, the bodily injuries which Mr McCann sustained in the road traffic accident were "the sole cause of ...death" in terms of the insurance policy.

The parties' submissions

[8] Mr Beynon for the executors, whose submission Mr Stewart QC adopted, argued that the bodily injury, to which I have referred in paragraph [1] above, which Mr McCann sustained in the accident, was the only proximate cause of the death. The pre-existing morbidities (set out in paragraph [2] above) were not a separate proximate cause; they were merely part of the chain of causation. But for the injuries sustained in the accident, Mr McCann would not have died when he did. The task of the court was to identify the proximate, effective or dominant cause; those terms were interchangeable. Contrary to the defenders' construction, the insurance policy had no exclusion clause. Absent an exclusion clause, a "sole cause" clause did not prevent an insured from claiming indemnity where there was more than one contributing cause. In short, a sole cause was simply a proximate cause. He referred to MacGillivray on Insurance Law (11^th edition) paras 25.041 and 25.046, and Clarke, "The Law of Insurance Contracts" (5^th edition) p.806 and two United States' cases to which that author referred, namely Continental Casualty Co v Jackson 400 F 2d 285 (8 Cir, 1968-PA) and Henry v Home Insurance Co 907 F Supp 1392 (CD Cal, 1995-PA). He also referred to Fidelity and Casualty Company of New York v Mitchell [1917] AC 592, Jason v Batten (1930) Ltd [1969] 1 Lloyd's Rep 281, J.J. Lloyd Instruments Ltd v Northern Star Insurance Co Ltd (The "Miss Jay Jay") [1987] 1 Lloyd's Rep 32, and Blackburn Rovers Football & Athletic Club plc v Avon Insurance plc [2005] Lloyd's Rep IR 447.

[9] Mr Duthie for the defenders submitted that the pneumonia which caused Mr McCann's death had two proximate causes, namely the bodily injuries suffered in the accident and the pre-existing cardiopulmonary disease. Neither cause in isolation would have led to pneumonia and death when those occurred. He deduced three legal principles from the case law. First, he submitted that, where there were two proximate causes of loss, an insured would generally be allowed to recover where only one of the two was the peril insured against. Secondly, where there were two proximate causes of loss and one was expressly excluded from the policy, the excepted cause prevailed and the insured was not entitled to recover. Thirdly, where two or more causes operated concurrently, they did not have to be exactly co-extensive in time and a later cause might join with a pre-existing cause so as to become concurrent. He submitted that, on a proper construction of the policy, the pre-existing morbidity was expressly excluded from the cover and so the pursuers were not entitled to indemnity. He referred me to Wayne Tank & Pump Co Ltd v Employers' Liability Assurance Corp Ltd [1974] QB 57, The "Miss Jay Jay" (above), and Handelsbanken Norwegian Branch of Svenska Handelsbanken AB v Dandridge (the "Aliza Glacial") [2002] 2 Lloyd's Rep 421. He also referred to MacGillivray on Insurance Law (11^th edition) at paragraphs 19.005 and 25.041 and Clarke, "The Law of Insurance Contracts" (5^th edition) at pp.789 and 796-797.

Discussion

[10] In this case the first task is to construe the insurance policy. The Court of Appeal in England has set out the principles which govern the court's approach to that task in Blackburn Rovers in paragraph 9 of the judgment of the Master of the Rolls (Lord Phillips) in the following terms:

"1. The words of the policy must be given their ordinary meaning and reflect the intention of the parties and the commercial sense of the agreement. Thus they must be construed in their context or, as Lord Mustill put it in Charter Reinsurance Co Ltd v Fagan [1996] 2 Lloyd's Rep 113 at page 117 col 1: 'the words must be set in the landscape of the instrument as a whole.'

2. A literal construction that leads to an absurd result or one otherwise manifestly contrary to the real intention of the parties would be rejected, if an alternative more reasonable construction can be adopted without doing violence to the language used.

3. In the case of ambiguity the construction which is more favourable to the insured should be adopted; this is the contra proferentem rule."

[11] The injuries which Mr McCann sustained in the accident were "bodily injury" within the policy's definition set out in paragraph [4] above. His pre-existing morbidities was not as it did not fall within the definition of "bodily injury," which to my mind is not ambiguous.

[12] It is well established that an insurer is liable only for losses proximately caused by the peril covered by the policy: MacGillivray, para 19.001. The proximate cause is the effective or dominant cause or, in other words, is that which in substance is the cause. It appears to me that in using the concept of proximate cause the court in most circumstances applies not only a "but for" test to establish a causal connection between two or more events on the particular occasion but also further tests such as directness of effect and the degree of causal contribution of an event to identify an operative cause.

[13] When one asks questions about causation it is important to have regard to the context in which the questions are asked. Suppose that a farmer leaves bales of hay in a field in dry, sunny weather; some young men set fire to one of them using lighter fuel and a match; a light breeze spreads the fire to the other bales; and the bales are destroyed. A scientist in considering causation might have regard primarily to the dry weather, the combustible nature of the bales, the source of ignition, the presence of oxygen in the air, and the breeze which spreads the fire as necessary conditions which in combination were sufficient to explain the destruction of the bales on this occasion. A court, in analysing a claim by the farmer in delict or tort, would select as the relevant cause, out of the necessary conditions which in combination were sufficient to bring about the result, the human actions which disturbed the otherwise peaceful scene. Context determines the nature of causal investigation. The rule in delict, that a wrongdoer takes his victim as he finds him, is a policy rule in that context and is not, as such, relevant to the consideration of causes in the context of the interpretation of the insurance contract. In this case the pursuers referred to that rule in their written pleadings but, correctly, accepted its inapplicability in their submissions. Analogous considerations may, nonetheless, arise in insurance law for, as Cardozo CJ stated in Silverstein v Metropolitan Life Insurance Company (1930) 171 N.E. 914, at p.915, "A policy of insurance is not accepted with the thought that its coverage is to be restricted to an Apollo or a Hercules." But the court recognises different boundaries between causes and background conditions in insurance cases, which are determined in part by the terms of the parties' contract. The relevant context in this case is the construction of the particular insurance contract. Thus it is to cases involving insurance contracts that the court must look for guidance.

[14] In some cases, as in Wayne Tank and Pump Co Ltd, it may be possible for the court to identify one cause as the proximate cause where one cause is seen as dominant and the other as a mere trigger of the loss or precipitating event. But it is also well established that there can be more than one proximate cause of loss. See The "Miss Jay Jay" and also Midland Mainline Ltd v Eagle Star Insurance Co Ltd [2004] 2 Lloyd's Rep 604, Sir Martin Nourse at paragraph 8. This may occur where, in addition to the background conditions, there are two or more causes of the occurrence, each of which is necessary to bring about the result but each of which is not sufficient by itself to do so. The difficulty is in distinguishing a cause from a background condition.

[15] Turning to the parties' submissions, I accept the first of Mr Duthie's principles. If there are several proximate causes of a loss, the insured will be entitled to recover if one of the causes is insured against under the policy and none of the others is expressly excluded from the policy. See The "Miss Jay Jay", Slade LJ at p.40. I consider that the same result will follow if the policy does not have a provision that the insured peril must be the sole cause of the loss.

[16] The second and third of Mr Duthie's principles are also vouched by authority. See Wayne Tank and Pump Co. Ltd, Lord Denning MR at pp.66-67; The "Aliza Glacial", Potter LJ at paras 47 and 48; and The "Miss Jay Jay". But there is no exclusion clause as such in this insurance policy. Rather the insurer has sought to restrict its liability by giving only limited cover through the definition of "bodily injury" and by the sole cause clause. The relevant peril insured against was death which was caused solely by "bodily injury' which was defined in the policy. That definition did not include Mr McCann's pre-existing morbidities. The issue in this case is whether his death was caused solely by "bodily injury" as so defined.

[17] As MacGillivray states (in paragraph 25.041), a sole cause provision may add nothing to the general law of insurance where there is only one proximate cause. But the proper construction of the phrase, "the sole cause", in the context of the insurance contract as a whole becomes of central importance when there are two or more proximate causes.

[18] I was not referred to any case which interpreted the expression "the sole cause" when used as a limitation on the cover of an insurance contract. But several cases concern insurance contracts with similarly restrictive wording and provide useful guidance.

[19] In The "Miss Jay Jay", the Court of Appeal in England held that an exclusion clause, which did not allow a claim for loss or expenditure "incurred solely in remedying a fault in design", did not apply where the loss resulted from a combination of faulty design and adverse sea conditions. While the words which the court interpreted in that case were found in an exclusion clause, that does not prevent the case from giving guidance to the construction of similar words which restrict the cover of an insurance policy.

[20] In Jason v Batten (1930) Ltd the insurance company in the main operative provision of an insurance contract undertook to pay if the insured should "sustain in any accident bodily injury resulting in and being - independently of all other causes - the exclusive direct and immediate cause of the ...injury or disablement of the insured person." The plaintiff suffered a road traffic accident in which his only physical injury was minor bruising. But the stress of the accident precipitated a coronary thrombosis. The plaintiff suffered from arterial disease before the accident and it was established that he would have had a coronary thrombosis within three years if the accident had not occurred. Fisher J held that, if one assumed that anxiety or a change in the plaintiff's blood or the clot was a bodily injury sustained in the accident, the claim failed because

"[t]he bodily injury was not 'independently of all other causes the exclusive ... cause of the disablement'. There were two concurrent causes, the pre-existing arterial disease and the formation of the clot. The two causes were independent of each other, and the thrombosis would not have occurred on June 21, 1965 unless both had operated."

While in that case there was also an exclusion clause which provided that no benefit would be payable in respect of disablement directly or indirectly caused by a pre-existing physical defect or infirmity, Fisher J did not rely only on that clause. He saw it as confirming the view which he had reached on the main operative provision of the policy. This case is clearly in point.

[21] By contrast, the United States' cases, which the pursuers cited, are to be distinguished on their facts. In Continental Casualty Company the insured died of a heart attack when helping to carry his father in law from the bathroom in his house. The insurance contract insured against "bodily injury caused by an accident ...and resulting directly and independently of all other causes in loss covered by this policy." The medical evidence suggested that excessive strain, which made a greater demand on the heart muscle than it was normally expected to produce, could cause a myocardial infarction and there was no evidence of pre-existing arteriosclerosis. The deceased's estate recovered under the policy. The outcome of the case is unsurprising. While in its decision the United States Court of Appeals Eighth Circuit referred to case law on proximate cause which might suggest that the insurer takes its insured's health as it is, the dicta were applied in a context where there was either no pre-existing condition or a pre-existing disease played only a contributing and remote role in the insured's death. The court therefore treated the suspected disease as only a background condition and not a proximate cause.

[22] In Henry v The Home Insurance Company, a Federal District Court in California interpreted a phrase in an accident policy which defined "injury" as "an accidental bodily injury which is a direct result, independent of all other causes, of the hazard... ." The insured suffered a detached retina of the left eye after a fall. Medical evidence was divided on the cause of the retinal detachment. Two medical advisers suggested that pre-disposing anatomical conditions caused the problem and one, while accepting the existence of pre-disposing factors, advised that the fall was a precipitating cause. The court, in instructing a reconsideration of the insured's claim, applied a reasonable expectations doctrine. As people who bought accident insurance did not contemplate that a latent, minor or dormant pre-existing condition would defeat the protection of such insurance, the words of the phrase could not be given a literal interpretation. Again the case may be distinguished as in the present case Mr McCann's condition was neither latent nor minor.

[23] It is helpful also to consider the court's approach in two Canadian cases. In the first, Robbins v Travellers' Insurance Co (1978) 84 DLR (3d.) 727, a fifty four year old man died of a heart attack immediately after a road traffic accident. His insurance policy covered death "resulting from accidental bodily injuries which are the direct and independent cause of the loss." The policy excluded loss caused or contributed to by disease. Keith J in the Ontario High Court of Justice upheld the claim of his estate. In that case the medical evidence was (i) that the deceased's pre-existing heart condition was not a factor in his death because in the absence of trauma his heart might have continued to function for many years and (ii) a healthy heart, while better equipped to resist trauma, would still have been susceptible to cardiac arrest in such an accident. The facts were thus very different from those in the present case.

[24] The second, Fidelity and Casualty Company of New York v Mitchell, also falls to be distinguished on its facts. In that case the Privy Council upheld a decision of the Supreme Court of Ontario that the insured was entitled to recover under a policy which insured against "bodily injury sustained ... through accidental means ... and resulting directly, independently and exclusively of all other causes" in total disablement from performing the duties of his occupation. The insured had suffered a severe wrist sprain in an accident. He had had a tubercular lesion in a small part of his lung several years before the injury and had recovered from it. Thereafter his tuberculosis was latent and would have remained harmless but for the accident; he had, in Lord Dunedin's words, "only a potestative tuberculous tendency". The Privy Council held that the accident caused the injury to the wrist and also induced the tuberculous condition which prevented the recovery of his wrist and thereby prolonged his disability. It is clear that each case depends on its circumstances and the medical evidence adduced; in that case the tuberculosis would not have revived but for the accident. Again the facts were very different from those of the present case.

[25] I do not accept the pursuers' proposition that, in the absence of a relevant exclusion clause, a sole cause clause by itself does not prevent the insured from claiming indemnity where there are two contributing proximate causes and only one is covered by the insurance policy. The cases cited to support that proposition, namely Fidelity and The "Miss Jay Jay", do not vouch it. Jason v Batten (1930) Ltd contradicts it. The proposition is in any event contrary to the ordinary meaning of the words of the sole cause clause. In this case bodily injury had to be the sole cause of the death and bodily injury was defined to exclude, among other things, disease and degenerative processes. See paragraph [4] above.

[26] As the Fidelity case illustrates, the courts will not treat every pre-existing medical condition as a concurrent cause of the loss together with the insured peril. It is a question of degree whether the medical condition is viewed simply as a background condition or as a co-operative cause. Where the court draws the line in each case depends on the wording of the insurance contract and on the severity of the medical condition. I had initially been attracted by the idea that an insurer which offered policies to elderly people might be expected to accept the risk that age-related degeneration might exacerbate bodily injury. But I am satisfied that again it is a question of degree. In Blackburn Rovers the Court of Appeal considered an insurance policy in relation to a professional footballer which contained a clause excluding liability for disablement attributable either directly or indirectly to degenerative changes. The Court rejected the argument that in construing the exclusion clause one should disregard degenerative changes which were typical of the male population of the footballer's age and typical of top-class footballers of his age. At paragraph 19 of the Court's judgment Lord Phillips MR stated:

"If a proper test of causation is applied when considering whether an injury to a disc caused by trauma on the playing field is attributable to the degenerative pre-condition of the disc, we can see nothing unreasonable in excluding from cover disability that is attributable to such degeneration, whether it is 'normal' or not. If 'normal' degeneration is liable to lead to injury to the disc resulting in disablement, then there would seem good reason for insurer to exclude liability for disablement so caused. If 'normal' degeneration does not usually lead to injury to the disc, then the law is unlikely to conclude that it has been a cause of injury induced by trauma on the sports field."

While this dictum was made in the context of an exclusion clause which covered both direct and indirect causation and thus extended causation beyond the proximate cause, it is nonetheless an indication of the approach of the courts which, in my opinion, can be applied to sole cause clauses.

[27] The task is identifying where to draw the line. In doing so, I find helpful as a starting point the analysis of the Supreme Court of Carolina in Penn v Standard Life Insurance Co (1912) 76 SE 262, to which MacGillivray refers at para 25.046, in which it is stated (at p.263):

"(1) When an accident caused a diseased condition, which together with the accident resulted in the injury or death complained of, the accident alone is to be considered the cause of the injury or death.

(2) When at the time of the accident the insured was suffering from some disease, but the disease had no causal connection with the injury or death resulting from the accident, the accident is to be considered as the sole cause.

(3) When at the time of the accident there was an existing disease, which, co-operating with the accident, resulted in the injury or death, the accident cannot be considered as the sole cause or as the cause independent of all other causes"

That analysis only takes the court so far as it does not clarify where the line is to be drawn between propositions (2) and (3) above. To do so one must consider whether a medical condition is of such significance as to be treated as a cause rather than a background condition. In my opinion a distinction can be drawn between (i) an active disease or infirmity which is likely in its natural development to lead to harm and to contribute to death, disability or injury and (ii) an underlying medical condition which the ordinary man would not characterise as a sickness or disease and which merely predisposes the insured to such outcomes on the occurrence of a traumatic event. See Cardozo CJ in Silverstein v Metropolitan Life Insurance Company at p.915. The cases to which I was referred appear to be broadly consistent with this distinction. The court will fix the precise boundary having regard to the facts of each case and its construction of the relevant insurance policy.

[28] In this case Mr McCann had a serious pre-existing medical condition for which he had been receiving medical assistance for several years. It amounted to a disease or degenerative process. That condition made him very vulnerable to an accident involving moderate chest injuries which would not have threatened the life of a more robust person. But it was no mere predisposition. His severe chronic obstructive pulmonary disease was a significant disease which was combined with ischaemic heart disease and left ventricular dysfunction. His diseases materially limited his life expectancy. The bodily injury sustained in the accident was not the sole cause of his death; his diseases were a co-operative cause.

Conclusion

[29] The pursuers' claim fails. I therefore sustain the defenders' first plea in law and dismiss the action.