The United Kingdom Government imposed a series of measures to combat the transmission of Covid-19, which included requiring businesses to close and making Covid-19 a notifiable disease. Many businesses that suffered loss as a result sought to make claims under their business interruption policies. A test case was brought on behalf of policyholders for declarations as to the proper interpretation of policies that provided cover for losses resulting from the occurrence of a notifiable disease within a specified distance of named business premises, typically 25 miles, one mile, or within the vicinity of the premises (“radius clauses”). The insurers contended that none of the claims satisfied the “but for” test of causation, since the policyholders’ losses would have been suffered even if there had been no occurrence within the radius, because the mandatory closure of businesses would have happened anyway. The Supreme Court held that it was inappropriate to ask whether “but for” the cases of disease within the radius, the loss would have been suffered. Instead, on the proper interpretation of the disease clauses, in order to show that loss from interruption of the insured business was proximately caused by one or more occurrences of illness resulting from Covid-19, it was sufficient to prove that the interruption was a result of government action taken in response to cases of disease which included at least one case of Covid-19 within the geographical area covered by the clause. Subsequently, different proceedings were brought in relation to policies that covered business interruption resulting from an outbreak or occurrence of a notifiable disease “at the premises” (“at the premises clauses”). The court was required to determine as a preliminary issue whether at the premises clauses entailed the same approach to proximate causation as radius clauses.
On the preliminary issue—
Held, there did not come a point where, under a radius clause, the causation test switched from the concurrent effective cause test to become something else, for example the “but for” test. The causation analysis applied whatever the size of the radius, ie whether the radius was 25 miles, one mile or within the vicinity of the premises, and there was no reason why the radius could not be scale down to the premises themselves. The diseases covered by the two clauses shared the same potential to become widespread and to call for action not solely responsive to cases within the radius or the premises. It could therefore be expected by insurers that individual cases of diseases of those types may combine to cause loss that would not have resulted from any individual case alone. The fundamental objection to the “but for” approach to causation in relation to radius clauses was that it set up cases of diseases occurring outside the territorial scope of the cover in competition with occurrences of diseases within the scope, an objection that applied equally to at the premises clauses. There was, therefore, no principled basis for distinguishing between radius and at the premises clauses. Accordingly, a concurrent cause approach to causation, which was clear and simple to apply, was also applicable to at the premises clauses (paras 194, 202–203, 207–208, 210, 211, 228, 248, 363).
Adam Kramer KC and William Day (instructed by Stewarts Law) for the claimant in the first case.
Neil Hext KC (instructed by Keoghs LLP) for the first defendant in the first case.
Gavin Kealey KC and Keir Howie (instructed by Clyde & Co) for the second to sixth defendants in the first case.
Jeffrey Gruder KC and Mubarak Waseem (instructed by Barings Law, Manchester) for the first claimants in the second and fourth case.
Aidan Christie KC and Anna Hoffmann (instructed by Keoghs) for the defendant in the second case.
Neil Fawcett (instructed by Gunnercooke LLP) for the claimant in the third case.
Michael Davie KC and Martyn Naylor (instructed by DAC Beachcroft) for the defendant in the third case.
Keir Howie (instructed by Clyde & Co) for the defendant in the fourth case.
Richard Chapman KC and David Hoffman (instructed by Hugh James) for the claimant in the fifth case.
Aidan Christie KC and Sushma Ananda (instructed by DWF Law) for the defendants in the fifth case.
Tom Weitzman KC and Peter Ratcliffe (instructed by Dechert LLP) for the claimants in the sixth case.
David Scorey KC and Sushma Ananda (instructed by DAC Beachcroft) for the defendants in the sixth case.