One loss or more? Another welcome judgment for businesses impacted by the COVID19 pandemic

Yesterday the Court of Appeal handed down judgment in the case of Various Eateries Trading Limited v Allianz Insurance Pls [2024] EWCA Civ10.

The judgment will be welcome news to Marsh Resilience policyholders. It provides a clear endorsement of the analysis applied to the application of aggregation clauses by Butcher J at first instance and so will also assist other policyholders to resolve disputes over quantum.

Insurer, Allianz Plc, unsuccessfully argued that losses suffered during the COVID-19 pandemic should be subject to one sub-limit of indemnity on the basis that the losses were caused by a single occurrence, namely the initial animal to human infections in Wuhan.

The Court of Appeal saw no reason to depart from the first instance decision of Butcher J namely that there were, in the case of Various Eateries’ (“VE”) case, 3 separate single occurrences obliging the insurer to indemnify 3 claims, each attracting a separate sub-limit of £2.5m and not as Allianz contended one claim of up to £2.5m.

Butcher J went on to say that to the extent they were relevant to VE’s case, “the bringing into force of the three-tiered system on 14 October 2020, and the imposition of the second lockdown from 5 November 2020, were capable of being relevant single occurrences”. Thus potentially two more claims of £2.5m

Mr Justice Butcher’s decisions on causation and remoteness were endorsed. Further attempts by Allianz to link losses to other ‘single occurrences’ also failed. For example, in responding to the contention that the initial outbreak to the UK amounted to a single occurrence Lord Justice Males concluded that “the judge was entitled (and if necessary, right) to conclude that the introduction of Covid-19 into the UK was too remote. As he said, although geographically more proximate, the first introduction of the disease into the UK was still temporally remote from the losses.” He went on to say that it was “by no means certain” that the disease would have spread to the extent that the Government intervened as it did. In short the losses were too remote to be linked to the initial outbreak.

Not all positive news

The Court of Appeal’s decision was not however all good news for VE.

Its appeal against the decision that there was a separate sub-limit of liability per insured location was dismissed. The effect being that the sub-limit of £2.5m would not apply separately to each of its restaurants.

Again, the Court of Appeal saw no reason to depart from Butcher J’s decision. VE did not have a composite insurance policy as was the case in Corbin & King Ltd & Others v AXA Insurance UK plc [2022] EWHC 409 (Comms) and wording elsewhere in the limitation sections of VE’s policy made it clear that the sub-limit applying to a Single Business Interruption Loss included the losses of all of the trading companies owned by VE and operating at different locations.

Take away points

Certain policyholders now have a solid foundation upon which to overcome disputes over quantum. Subject to the wording of each policy, insurers at large will find it difficult to maintain that all loss suffered during the COVID19 pandemic will amount to a single business interruption loss for which only one limit of indemnity applies.

Claim values will therefore hopefully increase for certain policyholders.

There can also be no room for insurers to limit liability on the grounds that the loss extended beyond the expiry of the period of insurance. Allianz’ appeal on this point was also dismissed and the court made clear that if there was a relevant occurrence within the period of insurance, any loss continuing beyond the expiry of the period of insurance was to be indemnified in accordance with the relevant sub-limits.

Whilst VE could not apply a separate sub-limit to each restaurant, that is not a hard and fast rule. The Court of Appeal did not overturn the decision in Corbin & King so whilst VE cannot claim per location, policyholders of composite insurance policies might be able to.

The Court of Appeal’s judgment will need to be applied to the facts of each case, and that means whilst one policy might allow for a number of claims to be made, that may not be the case with other policies.

Contact a specialist lawyer

Cathy Harris has carefully followed judicial developments in COVID-19 business interruption claims and has advised a number of policyholders on the merits of their claims. She also represents a large sport and hospitality business in its claim to recover business losses. If you are a policyholder and need assistance with your claim, please do not hesitate to contact Cathy.