Blackburn Rovers Football & Athletic Club Plc v Avon Insurance Plc & Ors

This is an appeal from a judgment delivered by Moore-Bick J on 15 November 2004, [2004] EWHC 2625 (Comm.). That judgment addressed, by way of preliminary issue, the construction of an exclusion (‘the Exclusion’) in a policy of insurance. The appellants are the insurers under that policy (‘the insurers’) and the respondent the insured (‘the Club’). The policy insured the Club against the risk of illness or injury to its players, disabling them from continuing to play football, according to a schedule setting out the sum insured in respect of each player.

In this action the Club claims in respect of an injury alleged to have been sustained by Martin Dahlin, a Swedish striker, on 16 October 1997. He was one of the most valuable players covered by the policy, being insured for £4 million. It is common ground that he has been disabled by a condition of the lower spine that has prevented him from continuing his career as a professional footballer. I shall describe this as ‘the back injury’. There is a dispute as to whether his disablement falls within the cover of the policy. That dispute turns on issues of fact and of expert evidence that remain to be resolved and on an issue as to the true construction of the Exclusion. At a case management conference Colman J. formed the view that, if the latter issue were to be resolved as a preliminary point of law this might enable the parties to resolve the dispute without the need for further litigation. This may be so, but we have reached the conclusion that the critical issue in this case is one of causation rather than one of construction of the Exclusion.

The material parts of the policy provide as follows:

“THE INSURERS hereby agree with the insured, to the extent and in the manner herein provided, that if an Insured Person shall sustain any Accidental Bodily Injury as herein defined or in the event of his Illness as herein defined, the Insurers will pay to the insured, or to the Insured’s Administrators, according to the Schedule of Compensation overleaf after the total claim shall be substantiated under this Certificate.”

“SCHEDULE OF COMPENSATION – Each Insured Person

This Insurance covers in respect only of such of the following benefits as have an amount (or a percentage of the Capital Sum Insured) inserted against them

A.

Compensation payable in respect of ACCIDENTAL BODILY INJURY

1.

Death - 100% of Capital Sum Insured

2.

Permanent Total Disablement – 100% of Capital Sum Insured

B.

Compensation payable in respect of ILLNESS

3.

Permanent Total Disablement – 100% of Capital Sum Insured.”

“1.

“ACCIDENTAL BODILY INJURY” means accidental bodily injury which

(a)

is sustained by the Insured Person during the period of the insurance,

(b)

solely and independently of any other cause, except Illness directly resulting from, or medical or surgical treatment rendered necessary by, such injury, occasions the death or disablement of the Insured Person within twenty four calendar months from the date of the accident.

2.

“ILLNESS” means illness of the Insured Person which declares itself during the period of this Insurance and occasions the total disablement of the Insured Person within twelve calendar months after declaring itself.

3.

“PERMANENT TOTAL DISABLEMENT” means disablement which entirely prevents the insured Person from engaging in his usual occupation as a football player for the Insured in The FA Premier League, The Football League or The Scottish Football League and which lasts twelve calendar months and at the expiry of that period the Insured Person is beyond hope of improvement.”

“4.

Permanent Total Disablement attributable either directly ot indirectly to arthritic or other degenerative conditions in joints, bones, muscles, tendons or ligaments; … ”

“EXCLUSIONS

This insurance does not cover death or disablement directly or indirectly resulting from or consequent upon …

…

4.

Permanent Total Disablement attributable either directly or indirectly to arthritic or other degenerative conditions in joints, bones, muscles, tendons or ligaments;

...”

The Exclusion is found in the last five lines of this extract. As a consequence of deficiency in drafting the Exclusion contains surplusage. This led to a dispute as to whether the Exclusion was capable of bearing any rational meaning. Moore-Bick J ruled that it was. He held at paragraph 19:

“I am satisfied that [the Exclusion] is to be construed as extending to death or disablement resulting directly or indirectly from arthritic or other degenerative conditions of the kind there described.”

There is no appeal against this finding.

Colman J ordered the parties to agree a Case Memorandum setting out agreed facts for the purposes of the trial of the preliminary issue. Unfortunately, they failed to do so and the preliminary issue proceeded on the basis of assumed facts. The facts in issue fall into two categories:

As to the latter, the medical reports appear to disclose a degree of common ground:

In the absence of agreed facts. Moore-Bick J discussed with counsel what assumptions of fact should be made for the purpose of determining the preliminary issue. The assumptions that he made were as follows:

“1.

that a large proportion of the male population of Mr Dahlin’s age (it was agreed for the purposes of the present trial that it should be taken to be as high as 75%) suffers from degenerative disease of the lower spine related to ageing;

2.

that top-class professional footballers typically exhibit more serious degeneration than ordinarily active people;

3.

that the nature and degree of the degeneration suffered by Mr Dahlin was no worse than normal for a top-class professional footballer of his age; and

4.

that the degeneration was a cause, direct or indirect, of the injury he received on 16^th October 1997.”

We have the following comments on these assumptions.

In their defence the insurers alleged that Mr Dahlin suffered from degenerative disc disease and that any injury that he sustained was caused directly or indirectly, in whole or in part, by that condition. In their reply the Club pleaded:

“Further, as a matter of construction, and in order to give business efficacy to the Contract, and so as not to produce an unanticipated result or an unwarranted reduction in cover, any references to Accidental Bodily Injury being solely and independently of any other cause, and Permanent Total Disablement being excluded if attributable either directly or indirectly to various matters (including degenerative conditions), is to be construed by reference to a normal range of conditions exhibited throughout the population and not in vacuo. In other words, when determining whether a degenerative condition has caused or contributed to Permanent Total Disablement or Accidental Bodily Injury, excluded from that exercise are degenerative conditions that are regarded as a “normal” function of ageing in the population. For the avoidance of doubt any degenerative disc disease exhibited by Mr Dahlin was within a normal range of the population of his age and gender.”

This issue on the pleadings led Moore-Bick J to re-define the relevant preliminary issue as follows:

“whether degenerative changes that are (a) typical of the male population of Mr Dahlin’s age in general and (b) typical of top-class professional footballers of Mr Dahlin’s age are to be disregarded for the purposes of the policy.”

The parties are agreed that the judge was right to adopt as the correct approach to the construction of the policy and the Exclusion the following principles derived from the judgment of Stuart-Smith LJ in Yorkshire Water Services Ltd v Sun Alliance and London Insurance PLC [1991] 2 Lloyds Rep 21 at p. 28.

“1.

The words of the policy must be given their ordinary meaning and reflect the intention of the parties and the commercial sense of the agreement. Thus they must be construed in their context or, as Lord Mustill put it in Charter Reinsurance Co. Ltd v Fagan and Others [1996] 2 Lloyd’s Rep. 113 at p. 117, col. 1; [1996] 3 All ER 46 at p.51e: “the words must be set in this landscape of the instrument as a whole.”

2.

A literal construction that leads to an absurd result or one otherwise manifestly contrary to the real intention of the parties would be rejected, if an alternative more reasonable construction can be adopted without doing violence to the language used.

3.

In the case of ambiguity the construction which is more favourable to the insured should be adopted; this is the contra proferentem rule. ”

We also agree that these are the appropriate principles to be applied in this case.

Moore-Bick J’s conclusions in relation to the construction of the Exclusion appear in the final two paragraphs of his judgment:

“29.

The policy in the present case provides cover against accidental bodily injury and illness without restricting the circumstances under which they may occur. So, for example, if a player were involved in a road accident and were to suffer a fracture of the leg of sufficient severity to prevent him continuing his playing career, there would be a claims under the policy. Similarly, if a player were to be infected by a virus which permanently affected his breathing or circulation in a way that prevented him from continuing his career, the policy would respond. If the insurers’ argument in this case is correct, however, it would mean that there would be no claim if, instead of a broken leg, a player injured in a road accident were to suffer an injury to his spine which was exacerbated to any degree by a pre-existing degenerative condition, even though that may be a function of age and one that is shared by the overwhelming majority of men of his age and profession. That is a surprising result, partly, perhaps, because the persons insured under this policy are all ordinarily (even unusually) fit and healthy young men. It is difficult in those circumstances to accept that the parties intended that conditions exhibited by the majority of ordinary healthy people of their age should operate to deprive the insured of cover unless the policy makes that quite clear. It is right to say that the construction which the insurers say should be put on the policy would not deprive it of all content whatsoever, as the examples mentioned earlier show. However, the fact that the persons insured are professional footballers means that they are particularly exposed to the risk of injury to the spine and lower limbs when training or competing. No attempt has been made, however, to exclude injuries suffered in those circumstances (except while players are under the control of their National Associations) and to exclude any claim in cases where a normal degree of degeneration has played any part, direct or indirect, in the injury would therefore involve a serious derogation from the cover.

30.

All this points to the conclusion that in order to give proper effect to the parties’ intentions the reference to arthritic or other degenerative conditions in joints, bones, muscles, tendons or ligaments must be construed as referring to conditions of sufficient severity to be regarded as an illness or an ailment and not to conditions that are merely a reflection of the normal ageing process, or what in another context might be described as “ordinary wear and tear”. I accept that the concept of “normality” is imprecise, that in the case of some types of degeneration the population at large will exhibit a range of conditions and that there will be cases falling near the margins in which it may be difficult to decide whether the degree of degeneration is or is not within what can properly be described as the normal range. However, this difficultly will not arise in all cases and does not provide a strong argument of construing the policy in a way which in my view would very significantly reduce the protection it is designed to provide. I have reached the conclusion that Exclusion 4 must be construed as referring to degenerative conditions that are abnormal in their degree and of sufficient severity to amount to an illness. For the same reason I do not think that a normal degree of degeneration is to be regarded as a “cause” of injury when considering the definition of Accidental Bodily Injury. ”

We draw attention to the last sentence that we have quoted. This conclusion seems to us to be at odds with the 4^th assumption made by the judge, which we have set out in paragraph 6 above. This conflict raises a question mark over the judge’s reasoning. That reasoning appears to have led the judge to conclude that, if the Exclusion were to be activated by ‘a normal degree of degeneration’, there would be a serious derogation from the cover and that this would be ‘absurd’ or ‘manifestly contrary to the intention of the parties’. It seems to us that this conclusion disregards the effect of the principles of causation that fall to be applied when construing a contract of insurance. We turn to consider how those principles should be applied in the present context.

MacGillivray on Insurance Law 10^th Ed deals at 25-37 with the question of causation where a personal accident policy contains an exception in respect of disease:

“Where a disease of the assured actually causes the accident, it is held that the injury or death is proximately caused by the accident, not the disease, so that the exceptions clause does not operate and the insurer is liable. Thus an assured who has an epileptic fit and is drowned by falling into a stream or hit by a train as a result of falling onto the railway line can recover in spite of an express exception for disease. ”

The authorities cited in support of this proposition are of venerable antiquity: Winspear v Accident Ins. Co. (1880) 6 QBD 42; Lawrence v Accident Ins. Co.(1881) 7 QBD 216. In the first the exception excluded “any injury caused by or arising from natural disease” and in the second the exception excluded “death arising from any disease whatsoever”. On the approach in those cases, it is arguable that the Exclusion would not apply if the immediate cause of the injury to Mr Dahlin’s disc was trauma resulting from an incident on the football field, even if the degenerate condition of the disc was a contributory cause of the injury.

In the present case, however, the phrase in the Exclusion ‘attributable either directly or indirectly’ opens the door to an argument that, if degeneration of Mr Dahlin’s disc was a proximate cause of his sustaining injury to it in the incident alleged to have occurred on 16 October 1997, then the Exclusion applies. The reasoning of Fisher J. in Jason v Batten [1996] Lloyd’s Rep 281 at 291 would support such an argument. There will still, however, be a live issue as to causation. The medical evidence suggests that there is a wide range of expert opinion as to whether and to what extent the pre-existing condition of Mr Dahlin’s disc contributed to the injury that it sustained.

Thus, Mr Hodgkinson expressed the view that the injury sustained during training in October 1997 merely accelerated by several years the onset of symptoms that would have resulted from Mr Dahlin’s ‘degenerative disc disease’, Professor Dickson expressed the view that Mr Dahlin’s symptoms were solely due to degenerative disc disease, Mr Williamson expressed the view that the ‘stretching incident’ was responsible for ‘premature precipitation’ of Mr Dahlin’s symptoms, but for which he would probably have played football up to normal retirement age. Mr Cox expressed a similar view. Dr Adams postulated that trauma will not cause a disc prolapse until the disc has experienced a degree of degenerative change and that in Mr Dahlin’s case ‘pre-existing moderate disc degeneration probably contributed to the prolapse by weakening the disc slightly’.

None of this evidence is agreed. We have seen no evidence of the frequency with which professional footballers suffer disabling back pain. Such evidence might have an important bearing on the causation issue. If it is commonplace for footballers to suffer disabling back pain as a result of disc prolapse, then this would support the thesis that the degenerative change in the disc that is common to most footballers causes disc prolapse. If disablement as a result of disc prolapse is a rarity, then this suggests that some factor other than ‘normal’ disc degeneration is likely to be the cause of such an injury.

Up to the last sentence of paragraph 30 of his judgment Moore-Bick J appears to have proceeded on the premise that, however remote the causal nexus between the condition of Mr Dahlin’s disc and the disablement that he sustained, this would render the disablement ‘attributable, either directly or indirectly’ to that condition, within the meaning of the Exclusion. Thus he assumed that, if ‘degenerative condition’ in the Exclusion embraced ‘normal’ degeneration, the Exclusion would apply to defeat a claim ‘where a normal degree of degeneration has played any part, direct or indirect, in the injury’. Only in the last sentence of paragraph 30 did he draw back from that conclusion.

The same approach to causative nexus appears in the following statement in paragraph 29:

“If the insurers’ argument in this case is correct, however, it would mean that there would be no claim if, instead of a broken leg, a player in a road accident were to suffer an injury to his spine which was exacerbated to any degree by a pre-existing degenerative condition, even though that may be a function of age and one that is shared by the overwhelming majority of men of his age and profession.”

Mr Stuart-Smith disavowed having advanced any such argument and, had he done so, it would have been manifestly unsound. Disablement cannot be said to be '‘attributable, either directly or indirectly”, to a pre-existing condition unless, at the least, the condition is a causa sine qua non of the disablement. In the situation postulated by the judge this was not the case. The accident would have disabled the player regardless of the pre-existing condition and, conversely, the player would not have been disabled had he not suffered the accident. While the pre-existing condition would have contributed to the extent of the player’s disability it would have had no causative effect at all on his being so affected by the accident as to have to cease playing football. The Exclusion would not apply in such a situation even if the pre-existing condition fell within the description of ‘degenerative condition’.

If a proper test of causation is applied when considering whether an injury to a disc caused by trauma on the playing field is attributable to the degenerative pre-condition of the disc, we can see nothing unreasonable in excluding from cover disability that is attributable to such degeneration, whether it is ‘normal’ or not. If ‘normal’ degeneration is liable to lead to injury to the disc resulting in disablement, then there would seem good reason for insurers to exclude liability for disablement so caused. If ‘normal’ degeneration does not usually lead to injury to the disc, then the law is unlikely to conclude that it has been a cause of injury induced by trauma on the sports field.

We can see that, on the medical evidence, it might be arguable that the degree of disc degeneration normally experienced by a footballer of Mr Dahlin’s age does not fall within the phrase ‘arthritic or other degenerative conditions’ as used in the Exclusion. Dr Adams commented that “disc degeneration is common, and is so closely linked to ageing that many scientists do not differentiate it from tissue ageing”. What we cannot accept is that, in order to give a sensible construction to the policy, the Exclusion must be construed as inapplicable to degeneration that is experienced by the majority of footballers.

For these reason we allow this appeal and declare that a negative answer must be given to the question “whether degenerative changes that are (a) typical of the male population of Mr Dahlin’s age in general and (b) typical of top-class professional footballers of Mr Dahlin’s age are to be disregarded for the purposes of the policy”.