Causation is Not Elementary, My Dear

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Sherlock Holmes famously said, “when you have eliminated the impossible, whatever remains, however improbable must be the truth.”  This reasoning has been adopted by trial judges seeking to resolve questions of causation.  In Nulty & Others v Milton Keynes Borough Council [2013] EWCA Civ 15 [Here*] the English Court of Appeal found that a judge was wrong to do so.  It concluded that, where there are multiple causation scenarios, each of which is unlikely, the court is not entitled to favor the scenario that is the least unlikely.

Mr. Nulty carried out repair work at a recycling plant.  While on a break, a fire broke out in the area where he was working, causing extensive damage.  The owner blamed Mr. Nulty for the fire and sued him. His liability insurers defended the action.

The trial judge indentified three possible causes of the fire: (1) a carelessly discarded cigarette, (2) arcing from a live cable, and (3) arson.  He concluded that, although it might be unlikely that an experienced electrical engineer would discard a cigarette in a dangerous manner, the two other scenarios were even more unlikely.  Having eliminated the two most unlikely scenarios, he concluded the remaining one was the true cause of the fire.

The insurers appealed.  The Court of Appeal found that the judge’s reasoning was flawed.  The claimant must prove on the balance of probabilities the cause of its loss; and it is for the judge to examine the evidence produced by the claimant to determine if causation has been proved.  If the judge is unable to reach a decision on the evidence, he is required conclude that the claimant has not proved its case.  Where the evidence suggests a scenario is improbable, a finding by the court that it was nevertheless more likely to have occurred than another does not accord with common sense.

Trial judges have been cautioned against reaching conclusions on causation by merely seeking to eliminate implausible scenarios.  Doing so runs the risk of the judge settling on the least unlikely cause, without having regard to whether there is sufficient evidence establishing that it is, in fact, the true legal cause.

The decision is a helpful reminder to insurers engaged in defending their insureds of the evidentiary burden that must be satisfied when establishing causation.  This is particularly so where, as in Nulty, the claimant relies on circumstantial evidence alone to do so.