On 24 January 2013, the Court of Appeal handed down its judgment in Nulty and Others v Milton Keynes Borough Council. The decision emphasises that the burden of proving that a loss has been caused by the defendant rests with the claimant. The civil ‘balance of probabilities’ test means that the court must be satisfied on rational and objective grounds that the case for believing that the suggested means of causation occurred must be stronger than the case for not so believing.
The case concerned a fire at a recycling centre. Proceedings were brought by Milton Keynes Borough Council against Mr Nulty, an electrical engineer working at the premises.
At first instance, the High Court found that:
• In respect of the underlying claim, the fire had been caused by Mr Nulty dropping a cigarette butt on to the floor. Mr Nulty’s insurers had argued that the fire had been caused by electrical arcing from electrical cabling (for which Mr Nulty had no responsibility) or by an unknown third party.
• In respect of insurance coverage, the insurers were not entitled to avoid liability as a consequence of a late notification because notification was a bare condition rather than a condition precedent. However, as insurers had suffered the loss of a chance to prove that their assured had not been negligent, the insurers were entitled to deduct 15% from the sum due under the policy.
The decision in respect of insurance cover was not appealed.
Mr Nulty’s insurers appealed arguing that the judge had erred in law on causation, and in fact in overstating the improbability of electrical arcing causing the fire.
Dismissing the appeal, the Court of Appeal found:
• The judge had been entitled to find that an otherwise unlikely event was the probable cause of the fire after assessing all the evidence in the round. However, the judge had misstated the law when he said that if the only other possible causes of the fire were very much less likely, the discarded cigarette became in law the probable cause of the fire. Toulson LJ rehearsed the law as set out in The Popi M; namely that it is wrong to say that once all impossible causes are eliminated, whatever remains, however improbable, must be the cause because it is always open to a judge to find that a claimant has not discharged the burden of proof and that the causation of a particular event is unknown.
• The judge had not erred in his analysis of fact. A party has a difficult task to persuade an appeal court to interfere with a first instance judge’s primary conclusions on complex factual matters.
Comment
This decision emphasises that it is the claimant’s obligation to prove (on the balance of probabilities) that its loss was caused by the defendant and if there is not enough evidence for a court to make a finding on causation, then the claim must fail. However, it is still sensible for defendants to make a positive case on causation as this case itself illustrates that only rarely will it be impossible for the court to make a finding on causation.
Further reading: Nulty and Others v Milton Keynes Borough Council [2013] EWCA Civ 15
Rhesa Shipping Co SA v Edmunds (The Popi M) [1983] 2 Lloyd’s Rep 235
