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Maillard v State Assurance Corporation (SCA 5 of 2005)  SCCA 17 (29 November 2006);
IN THE COURT OF APPEAL OF SEYCHELLES
COURT OF CIVIL APPEAL
SCA No: 5 of 2005
OLIVIA MAILLARD Appellant
STATE ASSURANCE CORPORATION Respondent
Before: Bwana, Hodoul, Domah, JJA
Counsel: Mr. Derjacques for the Appellant
Mr. D. Lucas for the Respondent
Date of Hearing: 21 November 2006
Date of Judgment: 29 November 2006
JUDGMENT OF THE COURT
 This an appeal from the decision of the Supreme Court which found that the respondent was not liable under the policy of insurance for the payment of an indemnity under an Insurance policy.
 The facts are as follows:
 The appellant has raised six grounds of appeal as follows:
the Learned Judge erred when he concluded that the proximate cause of then damage to the building
was differential settlement attributed to inadequate foundation structure;
the Learned Judge erred when he remarked that the two civil engineers report are not in sharp
the Learned Judge failed to address the issue of burden and standard of proof in this matter at
all which was a crucial issue in the case;
the Learned Judge’s conclusion and final determination that “In the end result, I find that the proximate cause of then damage to the building was differential settlement attributed to inadequate foundation structure” is flawed and based entirely on a mere presumption and opinion and of one witness not substantiated by concrete evidence;
the Learned Judge erred when he concluded only “light to moderate” rain had fallen during the first two weeks of February 2001 in the St Louis area;
the Learned Judge failed to evaluate, analyse and consider the entire evidence properly adequately or at all and had he done so he would have come to a different conclusion;
the Learned Judge erred when he concluded that “settlement” was an excepted peril under the policy. The word was not expressly used in the policy nor was it intended to be used and the Learned Judge was wrong to imply and import it in the policy in order to find in favour of the respondent.
 Grounds (a), (b), (d), (e) and (f) may be taken together inasmuch as it has to do with the facts of the case as they relate to the crucial issue of what caused the damage to the house. Each of grounds (c) and (g) will be addressed on its own having to do with a question of law.
 With respect to grounds (a), (b), (d), (e) and (f), the crucial issue is deceptively simple. It is whether there was storm, heavy rain and flooding; whether the house had an inadequate structure and whether the cause of the damage was storm or the inadequate structure. All this was before the trial judge.
 There is ample evidence that there was storm. (Add from evidence)
 There is very little evidence that the house had inadequate structure. (Add from evidence).
 This leads us to the crucial question. Was the learned Judge correct in his conclusion that it is the inadequate structure of the house that led to the damage? The answer is obviously in the negative. There was proof of storm, rain and flood. The proof for weak foundation was tenuous. The fact that other houses in the vicinity – and there is no evidence as to that – did not collapse was an attempt to give evidence from the bar. In any case, the weather and other conditions with respect to the other houses in the vicinity have not been given in evidence.
 From the above, the cause of the damage to the house is also fairly obvious: it was the storm. How could the Learned Judge reach a different conclusion? He was correct in his proposition of the law.
However, he misapplied it on the facts. He did so by asking the wrong question and by putting the factor of differential settlement into his equation and giving it a determining weight. Differential settlement is the behaviour of a building over time owing to geological phenomena underneath it. There was a preponderance of evidence that the geological phenomena in this case was movement of soil underneath the foundation caused by the storm, the flood and the rain at the material time. There is very little evidence that the building would have collapsed anyway, storm or no storm.
 Unfortunately, the learned Judge misunderstood the term differential settlement and took inadequate foundation structure as the cause of the damage to the building. As has been submitted by learned counsel for the appellant, all buildings everywhere settle differentially over the years. The reason for it is that not all grounds are of the same strength. To succeed in proving that the house was damaged by a differential settlement, the respondent had to show that it would have collapsed on the material day even if there would have been no flooding. On that there was little evidence except speculation. The experts were agreed that very little examination had been done as regards the foundation and that it was only a matter of inference from the previous cracks that the house showed.
 On such evidence with respect to the foundation, all the more when the fact that there was a storm and flooding due to accumulation of rain water, it could not be said that the house collapsed owing to weak
foundation. It is more than reasonable to assume that it is the excess of water from the storm which drained the soil underneath and causing a stress on the structure causing it to suffer serious cracks.
 What the learned Judge stated was as follows:
“I find that the proximate cause of the damages to the building to be differential settlement attributed to inadequate foundation structure.”
 As we read this operative part of his finding, it is the inadequate structure which caused the differential settlement. Even on his own definition of differential settlement which he took from the case cited to him by learned counsel for the respondent, that is a phenomenon difficult to countenance on the facts. The building itself did not move laterally or settle differentially. Nor did it collapse vertically or subside. It stood its ground. What happened was that it suffered serious cracks which is equally consistent with an adequate foundation reacting to underground movement provoked by excess of water and soil activity underneath the foundation. That excess water came from the storm and not from the inadequate foundation structure. In that sense, the learned Judge erred in the very logic of his determination.
 The learned Judge relied on the cases of Becker, Gray and Company v. London Assurance Corporation 1918 AC 101 and Leyland Shipping Company Ltd v. Norwich Union Fire Insurance Society Ltd 1918 AC 350.
 In Becker Gray, shipped goods were insured against the usual perils, including men-of-war, enemies, and restraint of princes. War broke out in course of the voyage by sea and the master sailed to a port of safety. There was no evidence that the ship had been chased. There was evidence that she would have been in peril of capture had it proceeded. It was held that the frustration was caused by the voluntary act of the captain. The case is relevant for demonstrating how treacherous it is to be trapped in technical terminologies such as proximate cause, substantial cause, cause a proxima etc. Lord Sumner stated:
“It must be admitted that the terminology of causation in English law is by no means ideal. It would be the better for a little plain English. I think “direct cause” would be a better expression than causa proxima.
 He also referred to that expression used by Lord Loreburn in British and Foreign Insurance Co. v. Sanday and Co.  1 A.C. 650.
 In Leyland Shipping Company Ltd, the facts were as follows. Twenty miles from Le Havres, a ship on a voyage from South America, was torpedoed at her well. She began to take water but with the aid of tugs, they were able to take her to the quay where on account of the risk that she presented she was ordered to a berth inside the outer breakwater where she stayed for 2 days before finally sinking. The issue was the cause of the sinking: was it the factors which intervened between the torpedo and the sinking. The causa proxima was found to be the torpedo. Lord Dunedin was against prolonged and ingenuous arguments in such cases and in favour of the application of commonsense principles. Accordingly, he set the question at its most common place:
“The case turns on a pure question of fact to be determined by common sense principles: What was the cause of the loss of the ship? I do not think the ordinary man would have any difficulty in answering she was lost because she was torpedoed.”
 Likewise, in the present case, common sense principles show what caused the damage to the building. Was it the supposed inadequate structure or the storm and flood. We do not think the ordinary man would have any difficulty in answering that the building was damaged because of the storm and the flood.
 The learned Judge also referred to the case of David Allen & Sons Bill Posting Ltd. V. Drysdale 1939 4 All E.R. 113. The facts of the case may be distinguished from the present one in that it did not have to do with competing causes of storm or flood and structural weakness of a building. In the case of David Allen, as a result of a dangerous structure, notice was served on the owners to demolish a building. The insurance policy covered the assured against “loss or damage caused by subsidence and/or collapse” of the building. The question was whether the assured could recover on the facts. It was in that context that Lewis J. interpreted the words “subsidence” and “collapse.” In his view,
“‘Subsidence’ means sinking, that is to say, movement in a vertical direction as opposed to ‘settlement’ which means movement in a lateral direction, but I am of the opinion that the word ‘subsidence’ in this policy covers both ‘subsidence’ in the sense in which I have described it, and also settlement.”
 In the case, inasmuch as there was evidence neither of ‘subsidence’ in the above sense nor of ‘collapse’ in the sense of “falling or shrinking together or breaking down or giving way through external pressure or loss of rigidity or support” the assured could not recover. It was a case of intentional demolition. The case of Davis Allen on which the Respondent relied and the learned judge decided is only of limited interest in our case.
 The but-for test should have been:
“Even on the assumption that the building may have had an inadequate structure, would it have been
so damaged but for the storm and flood?”
The answer is obviously it would not.
 With respect to ground (c) above, from the moment the appellant had adduced evidence of the fact that there was flooding at the premises at the material time and that his building had suffered herdamage; he had discharged the legal burden resting upon to show that he had made out her case. The evidential burden, thereupon, shifted to the insurance company to show that the cause of the damage was not the storm, flooding or heavy rain. For example, it could have shown that it was due to a burst pipe etc. The respondent chose to plead the inadequate structure of the house. This the insurance company did not discharge in such a way as to upset the overwhelming evidence of the appellants. The respondent embarked on a difficult task to demonstrate that the house which had a foundation had one which was inadequate for the purpose of its structure. All that it had been able to show is that it had cracks before. But cracks can be caused by differential settlement over the years even in buildings with adequate structures.
 In relation to ground (g) above, the other point taken relates to the interpretation of the exclusion clause. The policy states as follows.
“This insurance does not cover “subsidence or landslip howsoever caused.”
 If by the rider howsoever caused the policy excludes also damages caused by subsidence and landslip caused by storm or flood, then the policy is taking away by one hand what it is giving by the other.
Such an interpretation is not permissible in an insurance cover which should be interpreted “contra proferentem,” that is against those who have drawn it up. In fact, the learned Judge in fact enunciated the correct principles but misapplied it to the fact. He did cite that principle of law with reference to Parkinson,
Insurance Law, 8th Ed. 1088, para. 1071.
 As has been also stated in Yvonne Lambert-Faivre, Dalloz, Droit Des Assurances, 2eme ed. para 135,
“L’exclusion doit ệtre formelle; elle doit etre claire, précise et non equivoque, qu’elle soit insérée
dans les conditions générales ou les conditions particulières du contrat. Comme c’est l’assureur
qui rédige la police, une clause d’exclusion ambigue sera interprété par les juges du fond en faveur de
l’assuré.” (Pau, 15 mars 1972, D. 1972.2.529, note C. Berre et H. Groutel.
 The appeal is allowed and the case is, therefore, remitted to the learned Judge for him to assess the indemnity payable to the appellant in the circumstances.
 We allow the appeal. With costs.
J. M. HDOUL
JUSTICE OF APPEAL
I concur: …………………………………….
S. J. BWANA
I concur: …………………………………….
S. B. DOMAH
JUSTICE OF APPEAL
Dated this 29 November 2006, Victoria, Seychelles