A New Zealand couple owned a farm in which they carried out farming activities and a landscaping business. They built and burned a fire heap on the property. Strong winds spread the embers and the fire spread rapidly onto nearby properties causing extensive damage. Their insurance policy excluded ‘legal liability arising out of or in connection with your farming operation, for accident damage to other people’s property’.

The phrase ‘in connection with’ implies a causal relationship requiring a real and substantial connection between the legal liability and the insured activity. There were two effective and interdependent causes, namely the deliberate burning of the heap of rubbish and the reigniting and spreading of the fire by strong winds.

Because the loss had two effective and interdependent causes, one within the policy and one excluded by it, the exclusion prevailed. The insuring clause and the exclusion were found together in the policy so the exclusion had to be subtracted from the insuring clause. If neither of the two causes could be isolated as the cause of the fire, the exclusion clause excluded liability under the policy.

This is a very casuistic judgment. The phrase ‘arising out of and in connection with’ is correctly interpreted in South African judgments as wide-ranging and the exclusion would on these facts be applied in South Africa without trying to look for two causes.

[The case is AMI Insurance Ltd v Legg]