SAMUEL L LEVY Vs. ASSICURAZIONI GENERALI

JUDGEMENT

(1.) On 13 November 1936, the appellant entered into a contract of insurance against loss or damage by fire with the respondent company in respect of a stock of merchandise deposited in a warehouse situate in the commercial centre, Jaffa. The terms of the contract are embodied in a policy of insurance issued by the respondent company to the appellant. The only condition material to be considered in this appeal is condition 6. It is in the following terms: This insurance does not cover any loss or damage which either in origin or extent is directly or indirectly, proximately or remotely occasioned by or contributed to by any of the following occurrences or which either in origin or extent directly or indirectly, proximately or remotely arises out of or in connection with any of such occurrences, namely:- (1) Earthquake, volcanic eruption, typhoon, hurricane, tornado, cyclone or other convulsion of nature or atmospheric disturbance. (2) War, invasion, act of foreign enemy, hostilities or warlike operations (whether war be declared or not) mutiny, riot, civil commotion, insurrection, rebellion, revolution, conspiracy, military, naval, or usurped power, martial law or state of siege or any of the events or causes which determine the proclamation or maintenance of martial law or state of siege. Any loss or damage happening during the existence of abnormal conditions, whether physical or otherwise directly or indirectly, proximately or remotely occasioned by or contributed to by or arising out of or in connection with any of the said occurrences shall be deemed to be loss or damage which is not covered by this insurance except to the extent that the insured shall prove that such loss or damage happened independently of the existence of such abnormal conditions.

(2.) In any action, suit or other proceeding where the company alleges that by reason of the provisions of this condition any loss or damage is not covered by this insurance the burden of proving that such loss or damage is covered shall be upon the insured. On 14 December 1936 a fire occurred in the warehouse containing the insured stock and damage was caused thereto to an extent which was subsequently fixed by agreement between the parties at ?P. 1900. The appellant claimed payment of this sum from the respondent company but the latter refused to pay alleging that the appellant's claim was not covered by the policy because one or other of the occurrences specified in sub-cl. 2 of condition 6 existed at the time when the fire occurred. On 30 March 1937 the appellant instituted proceedings against the respondent company in the District Court of Jaffa claiming payment by the respondent company of the sum of ?P. 1900 with interest and costs. In the course of these proceedings, a preliminary question was raised for the determination of the District Court, viz., whether the onus of proving the existence of one or other of the occurrences specified in sub-cl. 2 of condition 6 of the policy lay on the appellant or on the respondent company. On 27 January 1938, the District Court held that the onus of proof was on the respondent company. As the result of this ruling when the action subsequently came on for hearing on 1 June 1938, counsel for the respondent company called as a witness on behalf of that company the Assistant District Superintendent of Police at Telaviv. No other witness was called either on behalf of the respondent company or of the appellant and after hearing argument by counsel on behalf of both parties the District Court reserved judgment. On 16 June 1938, the District Court ordered the respondent company to pay to the appellant the sum of ?P. 1900, interest and costs. The basis of this decision, as appears from the written judgment of the District Court is that the respondent company had not discharged the onus of proving that abnormal conditions existed at the date of the fire in the area where the warehouse was situate, the Court holding that the question whether the conditions were abnormal must be decided by comparing the conditions existing at the date when the policy was issued with those existing before 19 April 1936, when certain Emergency Regulations under the Palestine (Defence) Order in Council, 1931, were made by the High Commissioner for Palestine. On 12 July 1938, the respondent company appealed to the Supreme Court of Palestine from the order of the District Court of Jaffa. The Supreme Court, on 8 December 1938, allowed the appeal and set aside the judgment of the District Court, entering judgment for the respondent company with costs in the Supreme Court and in the District Court. The appellant has appealed to His Majesty in Council from the judgment of the Supreme Court with the leave of that Court. The Supreme Court held that upon the true construction of condition 6 of the policy if abnormal conditions were alleged by the Respondent company to have existed at the date of the fire the onus of proving that the loss was covered and was not excluded by condition 6 was on the insured and not on the respondent company. The Supreme Court dealt with this question in the following passage: In para. 3 of the clause (i. e. of condition 6) the parties have expressly agreed as to the onus of proof and I know no reason why they should not do so. It is true that the primary object of a fire policy is to insure against fire that it is often difficult to prove how a fire emanates, and that the company draws up the policy and in consequence, where there is an ambiguity Courts are inclined to construe it in favour of the insured: but there seems to me to be no ambiguity in the paragraph. 'Allege' does not mean 'prove' and I would point out with all respect to the Court below that if its interpretation is applied this paragraph would appear to be surplusage. In the result when the company relies upon para. 3 it is upon the insured to prove either the absence of the exception or that if the exception existed it did not occasion or contribute to the loss and that the loss did not arise out of it or that the loss or damage in cases where abnormal conditions existed happened independently of the existence of such abnormal conditions.

(3.) Their Lordships think this criticism of the ruling of the District Court with regard to onus of proof is well- founded and that the District Court was in error in holding that the onus of proving that one or other of the occurrences specified in sub-cl. (2) of condition 6 existed at the time of the fire was on the respondent company. It was placed upon the appellant by the express terms of the contract. There can be no doubt that as a matter of agreement between parties, the onus of proof of any particular fact or of its non-existence may be placed on either party in accordance with the agreement made between them: see (1920) 1 KB 257,1per Scrutton, L.J. at p. 273. The Supreme Court having thus disposed of the question of onus proceeded to consider what the insured must prove if the Court is satisfied that abnormal conditions existed at the date of the fire and pointed out, no doubt rightly, that in that case the insured must prove positively what was the cause of the fire or that the abnormal conditions could not in any reasonable probability have caused the fire. The position is summed up by the Supreme Court in these words: Bearing in mind as I have said that the object of a fire insurance is to insure against fire and that it is common knowledge that in many cases it is difficult, if not impossible, to prove the cause of a fire and that the condition does not provide that the insured shall prove the cause of the fire I am of opinion that the insured can discharge the onus of showing that the abnormal conditions could not reasonably have caused or contributed to the fire. In the result subject to the shifting to and from of the onus of proof in order that the plaintiff (i.e. the appellant) may recover it is necessary for the Court to be satisfied either that there was no abnormal condition joined by a chain of causation to one of the events set out in the earlier part of the condition or that if there was that condition of affairs it did not affect the fire.