In many cases, a loss arises from a singular identifiable cause. However, where a loss results from a chain of events, or concurrent events, the task of assessing coverage can become more difficult.
In Green Rise Foods Inc. v N.V. Hagelunie1, the Court of Appeal for Ontario considered causation in the context of applying an exclusion.
The loss in Green Rise Foods was the crop failure of greenhouse grown tomatoes. Under normal conditions, boilers in the greenhouse vented carbon dioxide to stimulate plant growth. This process generates carbon monoxide, and a monitor gauge was used to trigger alarm and ventilation responses if safe thresholds were exceeded. The crop was destroyed by exposure to excessive carbon monoxide, which went undetected by a faulty monitor.
The insurer was successful on summary judgment, which decision was set aside by the Court of Appeal who remitted the matter back for a trial on the merits.
Although the Court of Appeal identified various errors made by the motions judge, the broader significance of Green Rise Foods lies less in those errors and more in the analytical framework as restated by Roberts JA:
(1) Clarification of the use of “proximate cause”;
(2) Distinguishing between “a chain of causation” and “concurrent causes”; and
(3) The interplay between policy language and concurrent causes.
Clarification of the use of “Proximate Cause”
The Court of Appeal addressed the colloquial use of “proximate cause” in insurance coverage disputes, where the term is used to refer to the most immediate cause of a loss. Roberts JA cited both historical and recent appellate decisions to clarify that “proximate cause” refers to the substantive cause. This consideration of proximity necessitated the Court of Appeal’s distinction between cases with a singular cause and cases with multiple causes.
Distinguishing “Chain of Causation” and “Concurrent Causes”
The Court of Appeal emphasized that in coverage disputes, the determination of causation is a foundational prerequisite to analyzing and applying the policy language. The Court of Appeal disagreed with the motion judge’s characterization of the cause of loss as a singular cause. Although Roberts JA declined to rule on which applied to the case at bar, she held that losses with multiple causes can involve a chain of causation or concurrent causes. That
is, a chain of causation arises from a single proximate cause leading to a series of events versus concurrent causes that involve independent causes conjunctively operating to produce an indivisible loss.
Interplay between Policy Language and Concurrent Causes
Completing her analysis, Roberts JA turned to the potential application of policy provisions. The Court reinforced that an exclusion will not automatically prevail where a loss has concurrent causes, where some causes are covered while others are not.
Instead, where the insurer intends for a given exclusion to be comprehensive, the policy language must clearly set out that the exclusion applies notwithstanding the presence of a covered cause. In the absence of express and clear language, courts will not infer this intention or broadly apply a given exclusion.
Conclusion
Green Rise Foods highlights the importance and complexity of the causation analysis in coverage disputes while reiterating the necessity to ensure that policy language clearly and accurately reflects insurers’ intentions in underwriting risks.