Important judgment made for Covid-19 business interruption cases
A recent Court of Appeal judgment made in the landmark ‘Excel case’ which centres around Covid-19 related business interruption coverage, could have wider implications for other businesses affected by loss during the pandemic.
The decision in London International Exhibition Centre PLC v Allianz and ors [2024] EWCA Civ 1026, sees the policyholders win against several insurers with the Judgment clarifying the interpretation of ‘at the premises’ clauses in various insurance policies.
Now commercial and private client litigation lawyer Cathy Harris is urging businesses who have had their claims rejected or placed on hold, to reach out and have those claims reviewed.
Cathy, a partner with national law firm Clarke Willmott LLP, says: “I continue to act for businesses impacted by Covid-19 and this judgment is welcome news for ongoing insurance claims. It ought to provide sufficient clarity to enable insurers to process claims previously rejected or placed on hold pending further judicial treatment.
“The effect of the Court of Appeal decision is that the doors are further open to the prospect of settlement where there is evidence of disease at the premises at the relevant time.”
The Court of Appeal has clarified the position on what a policyholder with ‘at the premises’ cover (“ATP”) needs to prove in order to recover losses suffered as a result of the closure of business in response to COVID-19.
The Court of Appeal considered the earlier decision of Mr Justice Jacobs, which itself revisited the Supreme Court’s decision in ‘the FCA case’. It concluded that the logic and rationale of the Supreme Court in the FCA case, which focused on policies providing cover for disease occurring within a specified radius of the insured premises, did also apply to ATP policies.
In short, insurer’s appeal that a but-for test or equivalent should apply was dismissed. The Court of Appeal saw no reason to overturn Jacobs J decision, and in fact acknowledged the absurdity that would exist where a different test of causation was to apply in the two different policies.
As such, provided there is evidence of an occurrence of Covid-19 at the relevant time, it is not necessary for a business to prove that the specific occurrence was the cause of the closure.
There is now no scope for insurers to argue that a policyholder must prove that the specific occurrence of disease at its premises was the main or substantive cause of the government forced closure.
Insurers also unsuccessfully argued that policyholders needed to prove that the relevant authority had knowledge of the occurrence of disease at the specific policyholder’s premises. The Court of Appeal confirmed that the words ‘closure as a result of an occurrence at the premises’ in the ATP policies simply provided the connection between the notifiable disease and the closure or restriction; the clauses did not express that a state of knowledge was necessary and that it was ‘impossible to introduce a requirement of knowledge by implication’.
Unsurprisingly, the Court of Appeal dismissed policyholder’s appeal on the scope of ‘occurrence’. The Court of Appeal concluded that the requirement for an occurrence of a notifiable disease is “not fulfilled if a person is present at the premises with what is not then a notifiable disease”.
Cathy continued: “The appeal judgment addresses finite issues of causation only and should not be interpreted as a home run for policyholders, as further issues of causation and quantum will require addressing in these claims before final resolution can be achieved.
“However, it is certainly welcome news, particularly when read in conjunction with the original judgment and the findings regarding the evidential burden of proof in respect of proving ‘an occurrence’.”
Cathy Harris is keen to help more businesses dealing with Covid-19 related business interruption claims.
Clarke Willmott is a national law firm with offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton.
