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- LORDS
- LORD FRASER OF TULLYBELTONLORD DIPLOCKLORD ROSKILLLORD BRANDON OF OAKBROOKLORD TEMPLEMAN
- LORD FRASER OF TULLYBELTON
- LORDS,
- LORD BRANDON OF OAKBROOK. I AGREE WITH IT, AND FOR THE REASONS GIVEN BY HIM I WOULD ALLOW THIS APPEAL.
- LORD DIPLOCK
- LORDS,
- LORD BRANDON OF OAKBROOK. I AGREE WITH IT AND FOR THE REASONS WHICH HE GIVES I WOULD ALLOW THE APPEAL.
- LORD ROSKILL
- LORDS,
- LORD BRANDON OF OAKBROOK. FOR THE REASONS WHICH HE GIVES IN HIS SPEECH I TOO WOULD ALLOW THIS APPEAL.
- LORD BRANDON OF OAKBROOK
- LORDS,
- LORDSHIPS' HOUSE.
- LORDS, THE APPEAL DOES NOT RAISE ANY QUESTION OF LAW, EXCEPT POSSIBLY THE QUESTION WHAT IS MEANT BY PROOF OF A CASE "ON A BALANCE OF PROBABILITIES." NOR DO UNDERWRITERS CHALLENGE BEFORE YOUR LORDSHIPS ANY OF THE PRIMARY FINDINGS OF FACT MADE BY BINGHAM J. THE QUESTION, AND THE SOLE QUESTION, WHICH YOUR LORDSHIPS HAVE TO DECIDE IS WHETHER, ON THE BASIS OF THOSE PRIMARY FINDINGS OF FACT, BINGHAM J. AND THE COURT OF APPEAL WERE JUSTIFIED IN DRAWING THE INFERENCE THAT THE SHIP WAS, ON A BALANCE OF PROBABILITIES, LOST BY PERILS OF THE SEA.
- LORDS, THE RELEVANT FINDINGS OF FACT, MADE BY BINGHAM J. AFTER A HEARING WHICH OCCUPIED 12 DAYS, WERE AS FOLLOWS:
- LORDS, WITH REGARD TO THE CAUSE OF THE SHIP'S LOSS, THE SHIPOWNERS RELIED AT ONE TIME ON NEGLIGENCE OF THE CREW (WHICH WAS ALSO COVERED BY THE RELEVANT POLICIES) AS AN ALTERNATIVE TO PERILS OF THE SEA. SUBSEQUENTLY, HOWEVER, THE SHIPOWNERS ACCEPTED THAT, EVEN IF THE LOSS HAD BEEN CONTRIBUTED TO IN SOME WAY BY NEGLIGENCE OF THE CREW, SUCH NEGLIGENCE COULD NOT, IN ALL THE CIRCUMSTANCES OF THE CASE, BE REGARDED AS THE PROXIMATE CAUSE OF THE LOSS. THE SHIPOWNERS' CASE ACCORDINGLY RESTED, AND RESTED ONLY, ON LOSS BY PERILS OF THE SEA.
- LORDS, COUNSEL FOR THE SHIPOWNERS CONTENDED BEFORE YOUR LORDSHIPS THAT HIS CASE HAD NEVER BEEN TIED IRREVOCABLY TO A LOSS BY ANY SPECIFIED PERIL OF THE SEA: IN PARTICULAR IT HAD NEVER BEEN TIED TO LOSS BY COLLISION WITH A SUBMARINE. IT SEEMS TO ME, HOWEVER, THAT ONCE IT WAS SHOWN THAT THE WATER WHICH SANK THE SHIP HAD ENTERED THROUGH AN APERTURE IN HER SHELL PLATING, THE BURDEN OF PROOF WAS ON THE SHIPOWNERS TO SHOW WHAT PERIL OF THE SEA, IF ANY, COULD BE SHOWN, ON A BALANCE OF PROBABILITIES, TO HAVE CREATED THAT APERTURE. THE SHIPOWNERS COULD NOT, IN MY VIEW, RELY ON A RITUAL INCANTATION OF THE GENERIC EXPRESSION "PERILS OF THE SEA", BUT WERE BOUND, IF THEY WERE TO DISCHARGE SUCCESSFULLY THE BURDEN OF PROOF TO WHICH I HAVE REFERRED, TO CONDESCEND TO PARTICULARITY IN THE MATTER.
- LORDS, THE RESULT OF UNDERWRITERS PUTTING FORWARD THIS ALTERNATIVE CAUSE OF THE SHIP'S LOSS WAS TO LEAD BINGHAM J. INTO APPROACHING THE DECISION WHICH HE HAD TO MAKE AS BEING A SIMPLE CHOICE BETWEEN THE CAUSE OF LOSS RELIED ON BY THE SHIPOWNERS AND THE ALTERNATIVE CAUSE OF LOSS PUT FORWARD BY UNDERWRITERS. ALTHOUGH HE HAD IN AN EARLIER PART OF HIS JUDGMENT REFERRED EXPRESSLY TO THE OBSERVATIONS WITH REGARD TO BURDEN OF PROOF MADE BY SCRUTTON L.J. IN LA COMPANIA MARTIARTU V. THE CORPORATION OF THE ROYAL EXCHANGE ASSURANCE [1923] K.B. 650, 657, WHICH F QUOTED EARLIER, HE DOES NOT SEEM, WHEN HE CAME LATER IN HIS JUDGMENT TO THE POINT OF ACTUAL DECISION, TO HAVE GIVEN ANY CONSIDERATION AT ALL TO THE THIRD POSSIBLE SOLUTION TO THE CASE CONTEMPLATED IN THOSE OBSERVATIONS. THAT THIRD POSSIBLE SOLUTION WOULD HAVE BEEN TO SAY THAT HE WAS LEFT IN DOUBT AS TO THE PROXIMATE CAUSE OF THE SHIP'S LOSS, AND THAT, IN THOSE CIRCUMSTANCES, THE SHIPOWNERS' ACTIONS SHOULD BE DISMISSED ON THE SIMPLE GROUND THAT THEY HAD NOT DISCHARGED THE BURDEN OF PROOF WHICH LAY UPON THEM.
- LORDSHIPS WILL QUARREL. AS REGARDS UNDERWRITERS' WEAR AND TEAR THEORY, IT WAS CONTENDED BY COUNSEL FOR THE SHIPOWNERS THAT BINGHAM 3. HAD RULED IT OUT AS IMPOSSIBLE. THE LANGUAGE USED BY HIM IN DIFFERENT PLACES IS, HOWEVER, AMBIVALENT, AND I THINK THAT IT WOULD BE MORE ACCURATE TO SAY THAT HE REGARDED THE WEAR AND TEAR THEORY NOT AS IMPOSSIBLE, BUT AS ONE IN RESPECT OF WHICH ANY MECHANISM BY WHICH IT COULD HAVE OPERATED WAS IN DOUBT.
- LORDS, THE LATE SIR ARTHUR CONAN DOYLE IN HIS BOOK "THE SIGN OF FOUR", DESCRIBES HIS HERO, MR. SHERLOCK HOLMES, AS SAYING TO THE LATTER'S FRIEND, DR. WATSON: "HOW OFTEN HAVE I SAID TO YOU THAT, WHEN YOU HAVE ELIMINATED THE IMPOSSIBLE, WHATEVER REMAINS, HOWEVER IMPROBABLE, MUST BE THE TRUTH?" IT IS, NO DOUBT, ON THE BASIS OF THIS WELL-KNOWN BUT UNJUDICIAL DICTUM THAT BINGHAM J. DECIDED TO ACCEPT THE SHIPOWNERS' SUBMARINE THEORY, EVEN THOUGH HE REGARDED IT, FOR SEVEN COGENT REASONS, AS EXTREMELY IMPROBABLE.
- LORDS, I TURN NOW TO THE JUDGMENTS IN THE COURT OF APPEAL [1984] 2 LLOYD'S REP. 555. HAVING REGARD TO THE SINGLE BUT FUNDAMENTAL GROUND ON WHICH I CONSIDER THAT THE JUDGMENT OF BINGHAM J. IS VITIATED, IT SEEMS TO ME, WITH ALL RESPECT TO THE THREE JUDGES IN THE COURT OF APPEAL, THAT THE ONLY PARTS OF THEIR JUDGMENTS WHICH IT IS NECESSARY FOR ME TO EXAMINE ARE THOSE PARTS WHICH DEAL WITH THAT ASPECT OF THE CASE.
- LORDS, IT IS NO DOUBT MORE LIKELY THAN NOT THAT A JUDGE WHO DIRECTS HIMSELF CORRECTLY ON A CERTAIN ASPECT OF THE LAW IN THE EARLIER PART OF HIS JUDGMENT WILL APPLY THE RELEVANT PRINCIPLE PROPERLY LATER IN HIS JUDGMENT WHEN THE OCCASION FOR ITS APPLICATION ARISES. FAILURE BY A JUDGE TO ACT IN THIS WAY IS, HOWEVER, NOT UNKNOWN, AND IN A LONG AND COMPLICATED CASE LIKE THE PRESENT ONE IT CAN EASILY HAPPEN.
- LORDSHIPS' HOUSE AND IN THE TWO COURTS BELOW.
- LORD TEMPLEMAN
- LORDS,
- LORD BRANDON OF OAKBROOK. FOR THE REASONS GIVEN BY HIM I WOULD ALLOW THIS APPEAL.
- LORDS SPIRITUAL AND TEMPORAL IN THE COURT OF PARLIAMENT OF HER MAJESTY THE QUEEN ASSEMBLED, THAT THE SAID ORDER OF HER MAJESTY'S COURT OF APPEAL OF THE 20TH DAY OF JULY 1984 COMPLAINED OF IN THE SAID APPEAL, TOGETHER WITH THE ORDER OF MR. JUSTICE BINGHAM OF THE 30TH DAY OF MARCH 1983, BE, AND THE SAME ARE HEREBY, SET ASIDE: AND IT IS FURTHER ORDERED, THAT THE RESPONDENTS DO PAY OR CAUSE TO BE PAID TO THE SAID APPELLANTS THE COSTS INCURRED BY THEM IN THE COURTS BELOW AND ALSO THE COSTS INCURRED BY THEM IN RESPECT OF THE SAID APPEAL TO THIS HOUSE, THE AMOUNT OF SUCH LAST-MENTIONED COSTS TO BE CERTIFIED BY THE CLERK OF THE PARLIAMENTS IF NOT AGREED BETWEEN THE PARTIES: AND IT IS ALSO FURTHER ORDERED, THAT THE CAUSE BE, AND THE SAME IS HEREBY, REMITTED BACK TO THE QUEEN'S BENCH DIVISION OF THE HIGH COURT OF JUSTICE TO DO THEREIN AS SHALL BE JUST AND CONSISTENT WITH THIS JUDGMENT.
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Rhesa Shipping CO SA v. Edmunds
Smart Summary
Factual and Procedural Background
Company A (“the shipowners”) owned the vessel Popi M, an elderly ship built in 1952 and, by 1978, in a generally deteriorated condition. While carrying a cargo of sugar from The City of Rouen to The City of Hodeidah, the vessel experienced limited bad weather in the Bay of Biscay but otherwise sailed in calm seas.
On 5 August 1978, while in the Mediterranean, a large aperture appeared in the port-side shell plating adjacent to the engine room. Sea water flooded the engine room and, due to a partially open watertight door and missing non-return valves on bilge lines, also reached the two after holds. The crew abandoned ship and the vessel ultimately sank stern first the same evening.
The shipowners claimed a total loss under their hull policies, asserting that the vessel was lost by “perils of the sea.” Company B (the hull underwriters) resisted payment, alleging that the loss was the result of un-insured wear and tear. At first instance, Judge [Bingham] accepted the shipowners’ contention that the aperture had probably been caused by a collision with a submerged submarine and entered judgment for the shipowners. The Court of Appeal (Judges [Donaldson], [O’Connor] and [May]) affirmed. Company B appealed to the House of Lords.
Legal Issues Presented
- Whether the shipowners discharged the burden of proving, on the balance of probabilities, that the vessel was lost by an insured peril (perils of the sea).
- Whether a trial judge faced with competing improbable explanations is entitled, or obliged, to choose the “least improbable” explanation instead of holding that the true cause remains in doubt and that the claimant has therefore failed to prove the case.
Arguments of the Parties
Appellants’ (Company B’s) Arguments
- The shipowners bore the burden of proving an insured peril; they failed to show that a collision with a submarine or any other peril of the sea probably occurred.
- The more likely explanation was progressive wear and tear in the wasted hull plating, a cause excluded from cover.
- Judge [Bingham] erred by feeling compelled to choose between two improbable theories rather than concluding that causation was unproven.
Respondents’ (Company A’s) Arguments
- The proximity and characteristics of the damage indicated an external blow; collision with a submerged object (most plausibly a submarine) was therefore the most probable cause.
- Underwriters’ “wear and tear” theory was unsupported by expert evidence concerning a plausible mechanism for sudden shell-plating failure.
- The court was not confined to identifying a specific peril; proof that the loss arose from perils of the sea in general sufficed.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|
| La Compania Martiartu v. The Corporation of the Royal Exchange Assurance [1923] K.B. 650 |
If, after hearing all the evidence, the court remains in doubt as to the proximate cause of loss, the assured fails because the burden of proof rests on them. |
The House of Lords relied on Judge [Scrutton]’s dictum to hold that the trial judge should have concluded that causation remained in doubt and that the shipowners therefore failed to discharge the burden of proof. |
Court's Reasoning and Analysis
Judge [Bingham] treated the case as a binary choice between (a) collision with a submarine and (b) wear and tear. He considered the submarine theory “extremely improbable” for seven identified reasons, yet felt driven to adopt it because he regarded the wear-and-tear theory as effectively ruled out.
The House of Lords held that this approach was erroneous for three principal reasons:
- The trial judge overlooked the third permissible result identified in La Compania Martiartu: a finding that the true cause was doubtful, leaving the burden of proof unmet.
- Holistic fact-finding requires recognition that all relevant facts were not known; in particular, the wreck lay too deep for examination, so some potential explanations could not be tested or excluded.
- The balance-of-probabilities test must be applied with common sense; it is illogical to pronounce an event “more likely than not” when one has already found it “extremely improbable.”
The Court of Appeal had assumed that Judge [Bingham] must have considered the third option because he cited the correct legal principle earlier in his judgment. The House rejected that inference: the judge’s reasoning at the decisive stage showed no engagement with the “don’t know” alternative.
Holding and Implications
APPEAL ALLOWED. The orders of Judge [Bingham] and the Court of Appeal were set aside, and judgment was entered for Company B (the underwriters) with costs in all courts. The matter was remitted to the High Court for any consequential steps.
Implications: The decision re-emphasises that, in marine insurance and more broadly, a claimant must prove causation on the balance of probabilities. Where competing hypotheses are all improbable or unproven, a court is not obliged to select the least improbable; it may, and sometimes must, find that the claimant has failed to discharge the burden of proof. The judgment clarifies the proper use of the burden-of-proof doctrine and rejects the “Sherlock Holmes” approach of accepting any remaining hypothesis once others are excluded.
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