Insurance Australia's submissions
529 Insurance Australia's submissions on this point traversed a number of overlapping issues. The first appeared to be that the threat or risk to persons in the area of a radius of 50 kilometres around Taphouse's premises could not be said to be the "proximate cause" of the making of the directions by the Queensland Chief Health Officer. The second seemed to be that the evidence did not support the conclusion that the directions were relevantly caused by the threat to people, but rather by the determinations of the National Cabinet. The third was that it was wrong to extrapolate from a conclusion that the directions were made as a result of the risk to all persons in Queensland that they were relevantly made as a result of a threat to persons within the specified area.
530 In its written submissions, Insurance Australia focused on the first of the above and submitted that the primary judge erred in concluding that the directions made by the Chief Health Officer were made "as a result" of a threat of damage to persons within the 50 kilometre radius of the insured's premises. It submitted that the causal nexus must be considered as if requiring a "proximate cause" between the threat and the making of the directions, and that there was insufficient material to establish that the threat was the "real", "effective", "dominant" or "most efficient" cause of their making. From this, it was submitted that as the cause of the making of the directions was the threat posed by COVID-19 across the whole of Queensland, which was part of the national lockdown policy, it could not be said that threat to persons within 50 kilometres of the insured's premises was the proximate cause of the making of the directions.
531 Insurance Australia's submissions in the above respect are founded upon a misunderstanding of the nature and purpose of "proximate cause". As is discussed in the early part of these reasons, it is a concept used in ascertaining whether an insured peril has caused the loss which is the subject of the insurer's liability to indemnify or whether that loss has been caused by a relevant exclusion. See generally The Law of Insurance Contracts [25-2]; Lowry J and Rawlings P, Insurance Law: Doctrines and Principles (2nd ed, Hart, 2005) at 225 - 228. Here, the causation issue is not as to the cause of the insured loss, but as to whether, as a link in the existence of the composite insured peril, the directions were "a result of" the identified threat.
532 By framing the question as one of "proximate cause", Insurance Australia created a higher standard for the insured to satisfy than was required by the policy. In the construction of the meaning of the causal links in the elements of the insured peril, no a priori standards of causation are imposed and the degree to which the two elements are causally linked is a matter of ordinary construction. Here the expression "as a result of" is used and should be accorded its usual meaning. As the authorities demonstrate, in an appropriate context it can be a particularly broad expression, although not open ended. In F & D Normoyle Pty Ltd v Transfield Pty Ltd (2005) 63 NSWLR 502, Ipp JA (with whom McColl JA and Bryson JA agreed) observed (at 515 [90]):
Further, in my view, while the phrase "arising as a result of", in cl 12, is a particularly broad expression of the notion of causation, it is not open ended. The clause plainly does not connote "proximate cause" or "direct cause", but it could not be construed so as to import an unlimited concept of causation. The clause does involve some causal or consequential relationship (cf Dickinson v Motor Vehicle Insurance Trust (1987) 163 CLR 500 at 505). Remoteness must form an element of the meaning of "arising as a result of"; more is required than the mere existence of connecting links between an act, neglect or default of the sub-contractor and the liability incurred by the Joint Venture.
533 In Hu v Kim [2019] NSWSC 448, Kunc J, immediately prior to citing the above passage with approval, said of the expression "as a result of" (at [74]):
[74] The phrase "as a result" connotes more than a remote causal link. The online Oxford English Dictionary defines "result" as "to arise as a consequence, effect or outcome of some action, process or design." Similarly, the online Macquarie Dictionary defines "result" as "to spring, arise or proceed as a consequence of actions, circumstances, premises etc" These definitions suggest a clear nexus is required between the liability which may arise, and the First Contract.
534 Nevertheless, it must be kept in mind that the expression has a chameleon-like quality and its meaning will regularly and significantly be influenced by the context in which it is used: R v Khazaal (2012) 246 CLR 601, 613 [31]; Secretary, Department of Family and Community Services v Hayward (a pseudonym) (2018) 98 NSWLR 599, 618 - 619 [67]; cf Horsell International Pty Ltd v Divetwo Pty Ltd [2013] NSWCA 368 [170] - [171]. Here, where the expression appears in a composite insured peril, any narrow construction would substantially reduce the scope of cover with no apparent justification. It is used to specify the required connection between a threat of damage to, inter alia, persons and the authority preventing or restricting access to the insured's premises. There is nothing which suggests that the threat must be the sole or predominate cause of the authority's actions or even that it must be the proximately efficient cause. There is no logical rationale for restricting it in that manner and none was suggested by Insurance Australia. This is particularly so where the issue as between the insured and the insurer is that which motivated the actions of a third party authority. As it is not generally within the power of either to specifically weigh the factors which motivate the authority, a reasonable commercial construction would construe the expression "as a result of" as requiring no more than something more than a remote causal link.
535 As the learned primary judge concluded, it was apparent that the cause of the making of the directions was the threat to each and every person in Queensland from COVID-19 which included the threat to those persons within the required radial area. Her Honour further reasoned in accordance with the principles in FCA v Arch, that the threat to each person in Queensland was equally efficacious in the circumstances. For the reasons given, there was no need for her Honour to make that determination. All that needed to be decided was whether the Queensland Government's directions, which had the effect of imposing the restrictions in the 50 kilometre radial area, were made "as a result" of the threat to persons in that locality. Prima facie, the question answers itself. Logically, if there were no threat to the people in that area, being some 7,854 km², the restrictions would not have been imposed there. It follows that the threat was more than a remote cause of the restrictions and cl 7 is satisfied in that respect.
536 In these circumstances, it is not strictly necessary to consider the correctness of the primary judge's conclusion that the threat to people in the radial area was an equally efficient cause of the imposition of the restrictions nor it is necessary to ascertain whether it is possible to accept that the threat to each person in the State might be regarded as an effective cause of the restrictions. Nevertheless, it is appropriate to make the following observations on the parties' submissions in relation to this topic.
537 Insurance Australia submitted that, even if the Chief Health Officer had turned her mind to the situation in Townsville and the circumstances then existing within 50 kilometres of Taphouse's premises, they could hardly have been "an equally effective cause" of the directions. Whilst this submission proceeds upon a mistaken appreciation of what was required by the words, "as a result of", it also raises the question of what was, in fact, the cause of the making of the several directions on which Taphouse relied. Those matters were considered in detail by the primary judge who reached the conclusion that they were made as a result of the threat to the health of all Queenslanders from COVID-19. Her Honour set out at length the actions on which Taphouse relied as satisfying the requirements of cll 7 and 8 (PJ [546]). Each was a statutory instrument made by the Queensland Chief Health Officer under s 362B of the Public Health Act (Qld) and, on each occasion on which that power was exercised, reference was made to the extant declaration by the Queensland Minister for Health pursuant to s 319 of the Public Health Act (Qld). That declaration indicated the Minister was satisfied that there existed a "public health emergency" due to the outbreak of COVID-19 in China and its pandemic potential and, that, in order to "control the threat and prevent or minimise serious adverse effects on human health in Queensland", emergency powers will be required such that it was appropriate that a declaration of the emergency should be made.
538 The Chief Health Officer's directions were made pursuant to Part 7A of the Public Health Act (Qld), entitled "Particular powers for COVID-19 emergency", which was inserted on 19 March 2020 by the Public Health and Other Legislation (Public Health Emergency) Amendment Act 2020 (Qld). The main import of those amendments is found in the new s 362B which granted the Chief Health Officer the power to make public health directions if that person "reasonably believes it is necessary to give a direction under this section (a public health direction) to assist in containing, or to respond to, the spread of COVID-19 within the community". The scope of the directions which might be made is relatively untrammelled and includes restricting the movement of people, requiring people to stay at or in a stated place, requiring persons not to enter or stay at or in a stated place, and restricting contact between persons. As the primary judge noted the Explanatory Note accompanying the amending Act stated that, "COVID-19 represents a significant risk to the health and wellbeing of many Queenslanders", and that the Bill ensured there was, "clear legal authority to make the interventions necessary to mitigate the spread of COVID-19 in the community". The Statement of Compatibility made for the purposes of s 38 of the Human Rights Act 2019 (Qld) also stated that granting the new powers to the Chief Health Officer was necessary to permit the government to "proactively pursue more prescriptive approaches to respond effectively to this unprecedented public health emergency".
539 The above matters reveal that the directions on which Taphouse relies as preventing or restricting access to its premises, had their origin in the object of minimising the spread of COVID-19 in Queensland and, therefore, in response to the risk or threat of harm to all persons in the State. Although that seems to have been accepted by Insurance Australia, it submitted that it could not be extrapolated that the threat of harm to persons in the radial area around the Taphouse premises was the sole proximate cause of the making of the directions. Whilst the error of that approach has been discussed above, it is appropriate to consider the evidence of the threat posed by COVID-19 to people in the relevant area and its possible impact on the making of the directions.
540 As Taphouse submitted, there was evidence before the primary judge of the presence of COVID-19 in Townsville prior to the making of the Chief Health Officer's first relevant direction on 23 March 2020. The presence of the disease carried with it the concomitant threat of its spread. It was submitted that it should be easily inferred that the Chief Health Officer was aware of these cases prior to the making of the directions and would have treated each and every case of COVID-19 within Queensland, and the threat of its spread, as of approximately equal significance.
541 The statement of agreed facts on which the trial before the primary judge was conducted shows that, as at 23 March 2020, there had been four recorded cases of COVID-19 in the Townsville Hospital and Health Services (Townsville HHS) area, none of which were locally acquired, out of a total of 319 cases in the whole of Queensland, most of which were located in south-eastern Queensland. This was relied upon by Insurance Australia in support of the submission that it could not conceivably be the case that the threat within 50 kilometres of Townsville was an "equally effective cause of the relevant direction as the threat that existed was in Southeast Queensland". It was submitted that the intensity of the threat resulting from the four cases in Townsville, when compared to the greater number in other parts of Queensland, could not support the conclusion that the threat of the spread of the virus there was "equally efficacious" to the making of the direction and, at most, could only be peripherally relevant. In essence, it was submitted that the threat posed by the COVID-19 cases in southeast Queensland was the effective cause of the making of the directions.
542 The initial difficulty with those submissions is that they are couched in terms of the "proximate cause" of the making of the directions. For that reason, Insurance Australia sought to demonstrate that, whilst the risk to people in Townsville was "a cause" of the order, it was not the effective cause and it sought to undertake a notional apportionment of the influences on the Chief Health Officer when making the decision to make the directions. In this context, Insurance Australia's acknowledgement that the risk to the people of Townsville within 50 kms of the Taphouse premises was "a cause" of the directions effectively determines this issue against it. That is all that is required by cl 7.
543 On the other hand, it should be acknowledged that Taphouse did not cavil with the primary judge's approach of considering whether the words, "as a result of", imported considerations of "proximate cause", and it sought to uphold the primary judge's conclusion that the threat to all persons in Queensland, including those within 50 kilometres of its premises, was an equal proximate causes of the making of the directions.
544 In dealing with Insurance Australia's submissions that proximate cause had not been established, Mr Finch SC first submitted that a direction by the Chief Health Officer as a result of an "undifferentiated" threat to all persons in Queensland satisfied the requirement of cl 7 because it was equally caused by the threat to persons within 50 kilometres of Taphouse's premises. This was founded upon the trial judge's reasoning (PJ [569]) and her partial acceptance of the approach adopted in FCA v Arch. So, the reasoning went, where action, such as the making of the directions, results from a widespread threat of harm from a disease, it is likely to result from the threat to all persons within each and every part of that geographical area. That is particularly so in relation to a disease such as COVID-19 which is highly infectious and potentially fatal. Her Honour also considered that it would be fictitious to attempt to notionally dissect the Chief Health Officer's motivation for the making of the direction by assuming that her concern for the health of persons in the southeast of Queensland was not as great for those in Townsville. Whilst it was accepted that the risk of the disease spreading in areas where there are existing outbreaks or occurrences of the disease is greater, that was not the issue. Here, all parties agreed that the direction was made as a result of the threat to all persons in Queensland by the presence of COVID-19, and the necessary inference from the source of the Chief Health Officer's powers and the directions made was that the threat to each person in Queensland was an equally effective cause. It followed, so her Honour held, that the threat to persons within 50 kilometres of Taphouse's premises was an equally effective cause of the making of the directions.
545 As mentioned, this part of the primary judge's reasoning adopted the approach of the UK Supreme Court in FCA v Arch (at 721 [176]) to the effect that because the relevant government measures were "taken in response to information about all of the cases of COVID-19 in the country as a whole" then "all the cases were equal causes of the imposition of national measures". It was submitted by Insurance Australia that her Honour appears to have adopted this reasoning despite her misgivings about its applicability to Australian conditions. However, that is not a correct analysis of the primary judge's conclusions. Her Honour concluded (PJ [68]) that when the issue was one of whether actual outbreaks, occurrences or instances of COVID-19 caused relevant government measures, similar findings to those made in FCA v Arch could not be made in the context of the geography of Australia and the limited number of occurrences of COVID-19 here at the relevant times. As the disease did not become widespread throughout the country or a large proportion of the population, it could not be said that each and every known case of COVID-19 in any location in a State was an equally effective cause of the State Government's actions. However, her Honour later identified (PJ [78]) the Supreme Court's approach was apposite to situations where the relevant issue concerned the "threat" or "risk" to each and every person in a State presented by known and unknown cases of COVID-19, given its highly contagious nature.
546 In its submissions, Insurance Australia asserted that the reasoning in FCA v Arch was not applicable to the circumstances of the operation of cl 7 because it "cannot be inferred that each and every known case of COVID-19 in any location in a State is an equally effective cause of the State government actions". However, it did not appear to contest the correctness of the reasoning in FCA v Arch or its applicability to "a threat or a risk" to each person in a State, but only that it could not apply to an undifferentiated risk to each such person. This submission proceeded on the basis that an action can be in response to a generalised risk across a wide area, without being equally proximately caused by the existence of the threat or risk within the defined radius. It further submitted that, unlike in FCA v Arch where it was accepted that the government's actions were taken in response to each and every case of COVID-19, a similar inference could not be drawn in this case in relation to the threat to each person in Queensland.
547 If it is assumed that the approach to the identification of proximate cause in FCA v Arch is correct, as Insurance Australia does, at least on this point, and it is also assumed that the required causal nexus is one of proximate cause, again as Insurance Australia does, there was no error in the primary judge's reasons. By its acceptance of the principles in FCA v Arch, Insurance Australia endorsed the fragmentation of the causes of governmental action as well as the attribution of each fragmented part the characteristic of an efficient cause of that action. Once it is accepted that each case of COVID-19 in the United Kingdom can be "treated" as a proximate cause of equal efficiency of governmental action, it must also be accepted that the same process can be applied to the threat of harm from COVID-19 to all people in Queensland. On this basis, no error has been demonstrated in the primary judge's application of that principle.
548 It follows that where a state-wide direction preventing business owners from using their premises is made as a result of the threat to all persons within the State, on the approach in FCA v Arch, it must be assumed, in the absence of evidence to the contrary, that the threat or risk to each and every person is a concurrent and equal cause of the direction. In this case, where a radius of 50 kilometres around the centre of Townville would take in the whole of a major regional city and its surrounds, the number of persons who are subject to the threat would be not insignificant. Therefore, to the extent to which it is necessary to decide, the primary judge was correct to conclude that the threat to people within 50 kilometres of the Taphouse premises was an "equally efficacious" or "proximate" cause of the making of the directions by the Chief Health Officer.
549 It must be reiterated that this discussion is founded upon a number of assumptions, including the applicability of the causation principles applied in FCA v Arch. The engagement with the parties' submissions should not be taken as an acceptance or adoption of those principles.
550 It was also submitted by Insurance Australia that the statements in the directions to the effect that their purpose was to "assist in containing, or to respond to, the spread of COVID-19 within the community" discloses that they were responses to identified outbreaks of the virus. However, that is inconsistent with the fact that the directions were applied across the State regardless of whether an outbreak existed in the local communities. Further, the purpose of containing the outbreaks was obviously to prevent the virus spreading and causing harm, being the type of threat which, on the assumptions made, are included in cl 7.
551 Insurance Australia next submitted that it ought to be inferred that the Chief Health Officer made the directions as a result of a resolution made by the National Cabinet on 22 March 2020. This submissions was founded upon a statement by the Prime Minister that day in which he advised that the National Cabinet had agreed, for the purposes of slowing the spread of the virus, to move to more widespread restrictions on social gatherings and the making of the first relevant restriction on the following day. However, that rather bold submission was bereft of support in the material. Importantly, the Prime Ministerial statement indicated that the agreement was to implement measures "through state and territory laws". There was nothing in the statement to suggest that the Chief Health Officer would not faithfully apply the requirements of the Public Health Act (Qld) and act in accordance with the power conferred. Again, an attempt to slow the spread of the virus underscores that the action taken was as a result of the threat to the health of persons including those within the 50 kilometre radius of Taphouse's premises.
552 To the above it can be added that the first direction was made on 23 March 2020, three days after the report of a community case in Townsville was sent to the "notifiable conditions register" (NOCS), which was established under Chapter 3 of the Public Health Act (Qld), on 19 March 2020. That fact carries with it an assumption that the deliberations of the National Cabinet and of the Chief Health Officer occurred with knowledge of the risk of a threat to persons in the Townsville area.