25-1 INTRODUCTION

The insured is allowed to recover from the insurer only that loss which is caused by an event covered by the insurance contract. Subject to contrary terms in the contract, the cause, whether an event covered (peril) or an event excluded (exception), is the so-called proximate cause, “the dominant or effective or operative cause”. What does this mean? According to Hart and Honoré,2 the expression “proximate cause” is a remnant of the maxim “in jure non remota causa sed proxima spectatur”, which may be loosely translated as “in law the immediate, not the remote cause of any event, is to be regarded”.3 It is used to demonstrate that for legal purposes it is not enough to show that one event was a necessary condition (a cause in fact or sine qua non) of the other; a condition is distinct from a cause because the former but not the latter is usual or normal as a matter of generalisation for the particular factual context. The pragmatic Englishman in the form of Lord Blackburn expressed his preference to avoid the philosophical maze,4 to cut through to a practical solution. The proximate cause is found, said the equally pragmatic Lord Denning,5 by the application of common sense. But more recently, Lord Hoffmann referred to the “common sense” approach and said that, although he doubted “whether the use of abstract metaphysical theory has ever had much support” and that he agreed that “the notion of causation should not be overcomplicated”, neither “should it be oversimplified”.6 Most recently still there was a statement in the Supreme Court by Lord Saville that “the question is one of fact, to be decided on common sense principles”7 whereafter there was extensive analysis of precedent in the judgment of Lord Mance; this is not, surely, the common sense approach which Lord Denning had in mind in 1973. Nor, hopefully, was it what Lord Hoffmann was objecting to in a lecture in 1999,8 when he concluded that some questions “are questions of remedial justice and economic policy which cannot be submerged under an appeal to common sense … No-one is in favour of abstract metaphysical theory. Nor is anyone against common sense. I do think, however, that judges should be encouraged to give the real reasons for their decisions. References to common sense often mean that they have not really thought them through”. In Financial Services Authority v Arch Insurance (UK) Ltd Lords Hamblen and Leggatt referred to causation not being a matter of “unguided gut feeling”.9 To avoid resort to such gut feeling the court would need to make a judgement as to whether the event made the loss inevitable or at least that it would be the outcome in the ordinary course of events. In practice the proximate cause is judicially selected from and elevated to a position above the range of necessary conditions; that choice is not, or at least ought not to be, arbitrary but rather is highly context specific and depends in no little degree on the reason for the inquiry. Thus, for some, typically tort law, purposes it may be appropriate to say that a person who leaves unlocked the doors to a house, thereby providing opportunity to a thief who then steals, has caused the theft by his negligent omission;10 although that would not normally be the conclusion reached in the context of a typical insurance policy, and notwithstanding that the insured’s claim might be otherwise barred by breach of condition. That is because the “but for” causational linkage is usually necessary but is not sufficient for insurance purposes where the search is for the proximate, effective or efficient cause.11