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British Waterways v Royal & Sun Alliance Insurance PLC

In British Waterways v Royal & Sun Alliance Insurance PLC [2012] EWHC 460 the court considered whether or not an insurance policy exclusion clause applied. It read:

“The Insurers shall not be liable (i) for liability arising out of … (i) the operation as a tool of the Insured Vehicle or attached plant.”

A father and son were trimming hedges alongside a canal towpath. They were self employed contractors hired by the claimant using a tractor and hedge-cutter belonging to claimant. Nobody witnessed the accident but the judge concluded the bank of the canal collapsed as the deceased were reversing the tractor and hedge cutter along the towpath. The tractor fell into the canal killing both men.

Claims brought against the claimant for the deaths settled for £185,204. The defendants denied cover under their policy on a number of grounds, the main one being the exclusion clause.

The defendant argued that the tractor was still engaged hedge cutting and so was being operated as a tool. The claimant countered that could not be established, and the court should be satisfied that the deceased had stopped hedge-cutting and were reversing the tractor to get back to a bridge to exit the towpath. The judge concluded hedge cutting was not continuing at the time of the accident.

Burton J considered the legal question, did the deaths “arise out of the operation of the Tractor as a tool”? This, he said depends upon the meaning of the words “arising out of”. He reviewed a number of authorities (see para 43) and concluded:

I conclude that the operation of the insured vehicle with attached plant as a tool was not the proximate cause of its collapse into the canal which, upon the basis of Scrutton J, Donaldson J and the Scottish cases (and the assertion in Clarke Chapter 19), is required. In any event, whether or not there was a relatively strong degree of causal connection (per Christopher Clarke J at 130) and whether or not the use of the Tractor was “causally concomitant but not causally connected with the accident” (per Pill LJ at 563), I am not satisfied that the deaths, and the liability for the deaths, arose out of the operation of the Tractor as a hedge-cutting tool, but it rather arose out of the collapse of the bank when, after completing that phase of the operation, the Tractor was being reversed. The Defendant accordingly does not establish the Tool Exclusion.