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1940 Supreme(SC) 28
Privy Council At Palestine
Sir Philip Macdonelll, Lord Justice Luxmoore , Justice Lord Thankerton, JJ.
Samuel L. Levy -Appellant
Versus
Assicurazioni Generali -Resopndent
Privy Council Appeal No. 34 of 1939
Decided On : 03-06-1940
Dawes and Sons, Stanley and Co., A.W.B. Welford, T. Beresford, Valentine Holmes
Contractual agreements may validly shift the burden of proof to the insured in insurance claims. However, an exclusion for "civil commotion" requires evidence of turbulence or tumult; general abnormal conditions or emergency regulations alone are insufficient to establish such a condition.
Headnote:(A) Insurance Law - Burden of Proof - Exclusion Clauses - Where a policy of insurance expressly provides that the burden of proving that a loss is covered shall be upon the insured in any proceeding where the company alleges that the loss is not covered by reason of specific exclusion clauses, such a contractual agreement is valid and enforceable. (Paras 6, 7)
(B) Insurance Law - Interpretation of "Civil Commotion" - The phrase "civil commotion" denotes a stage between a riot and civil war, characterized by an insurrection of the people for general purposes, though not amounting to rebellion. An essential element is the presence of turbulence or tumult; an organized conspiracy to commit criminal acts without such disturbance does not constitute civil commotion. (Para 11)
Facts of the case:
An insurance policy for fire loss of merchandise contained a condition excluding coverage for losses caused by occurrences such as war, riot, or civil commotion. The policy further stipulated that if the insurer alleged that such occurrences existed, the burden of proving that the loss was covered rested with the insured. Following a fire, the insurer refused payment, alleging that excluded occurrences were in effect. The lower courts disagreed on whether the onus of proving the existence of these abnormal conditions lay with the insurer or the insured.
Findings of Court:
The court found that the contractual terms correctly placed the burden of proof on the insured. However, upon reviewing the evidence—which included the implementation of emergency regulations, ethnic enmity, boycotts, and police patrols—the court determined that these facts did not meet the legal threshold for "civil commotion" as they lacked the necessary element of turbulence or tumult.
Issues: Whether the onus of proving the existence of excluded occurrences lay with the insurer or the insured, and whether the prevailing conditions at the time of the fire constituted "civil commotion" under the policy's exclusion clause.
Ratio Decidendi: The court held that while parties may contractually shift the burden of proof to the insured, the insurer must still establish that an excluded occurrence actually existed. General abnormal conditions or the existence of emergency regulations do not, by themselves, constitute "civil commotion" unless accompanied by actual turbulence or tumult.
Result: Appeal allowed.
Legal Category Hierarchy
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insurance law
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fire insurance
- exclusion clauses
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fire insurance
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contract law
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evidence and proof
- burden of proof
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evidence and proof
Lord Justice Luxmoore:-
On 13th 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.
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 14th 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 30th 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 27th 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 1st 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 16th 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 t
