Brushfield Ltd (T/A The Clarence Hotel) v Arachas Corporate Brokers Ltd and AXA Insurance Designated Activity Company

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 19 April 2021
• Neutral Citation: [2021] IEHC 263
• Docket Number: [2020 No. 4034 P.]
• Court: High Court
• Date: 19 April 2021

Between

Brushfield Limited (T/A The Clarence Hotel)

Plaintiff

and

Arachas Corporate Brokers Limited and AXA Insurance Designated Activity Company

Defendants

[2021] IEHC 263

[2020 No. 4034 P.]

THE HIGH COURT

COMMERCIAL

Insurance – Business interruption – Cover – Plaintiff making a claim under a policy of insurance issued by the defendant – Whether the plaintiff was entitled to be indemnified by the defendant

Facts: The plaintiff, Brushfield Ltd, made a claim under a policy of insurance issued by the second defendant, AXA Insurance DAC, in respect of the Clarence Hotel on Wellington Quay in Dublin 2 together with the Octagon Bar operated within the hotel, on 3rd April, 2020 for loss of business income under the denial of access-non damage cover. Cover was declined by AXA for the claim on 8th April, 2020. The parties agreed that specific issues relating to the interpretation of certain clauses in the business interruption section of the policy should be addressed and that any further issues that arose between either the plaintiff and the first defendant, Arachas Corporate Brokers Ltd, or as between the plaintiff and AXA should be deferred until a later stage in the proceedings.

Held by McDonald J that the facts could not be brought within any of the relevant clauses of the AXA policy so as to secure cover. In so far as the plaintiff sought to rely on para. 1 of the murder, suicide or disease (MSDE) clause, he found that cover under that clause was limited to business interruption caused by an occurrence of one of the specific diseases or conditions listed in that paragraph either at the premises of the hotel or within a 25-mile radius. COVID-19 was not listed in that paragraph and, accordingly, he held that there was no cover under para. 1 in respect of business interruption losses caused by cases of COVID-19 per se. In so far as the plaintiff sought to rely on the reference to acute encephalitis in that paragraph, he found, on the evidence, that there was no reported case of acute encephalitis associated with COVID-19 in Ireland; in the absence of any reported case of that kind prior to the events in issue, the plaintiff was unable to demonstrate that the closure of the hotel and Octagon bar was proximately caused by at least one case of acute encephalitis manifested by any person at the hotel or within a 25-mile radius. In the circumstances, he held that para. 1 of the MSDE clause was of no assistance to the plaintiff. With regard to the alternative case made by the plaintiff based on para. 5 of the MSDE clause, cover was available only where the plaintiff could prove that the whole or part of its premises was closed by a public authority as a result of a defect in the insured’s sanitary arrangements and he found that the plaintiff had not established that any defect existed in the sanitary arrangements at the hotel which caused its closure; it followed that para. 5 did not cover the losses claimed by the plaintiff in respect of the closure of the hotel and bar following the Government advice of 15th March, 2020 and the enactment of the Infectious Diseases (Amendment) Regulations 2020. As for the remaining case based on the denial of access clause, he concluded that, while the occurrence of a notifiable disease (other than a disease listed in para. 1 of the MSDE clause) was, in principle, capable of constituting a “danger” within the meaning of the clause, this did not avail the plaintiff in circumstances where it was not in a position to demonstrate that all of the other requirements of the clause had been satisfied; in particular, the plaintiff had not established that any of the measures taken by the Government in March 2020 or subsequently were prompted by concerns about any danger or disturbance within the one-mile radius of the hotel prescribed by that clause.

McDonald J held that in order to give the parties an opportunity to consider the terms of this judgment and any further steps which they believed may need to be taken, he would list the matter electronically for mention on 30th April, 2021 at 10.30 a.m.

Judgment approved.

JUDGMENT of Mr. Justice Denis McDonald delivered on 19 ^th April, 2021

Table of Contents

Introduction	3
The parties	3
Contractual relationship between parties	4
The public health emergency	5
The plaintiff's claim	8
The issues which I am asked to address	9
Questions which arise in relation to the MSDE clause	9
Questions in relation to the denial of access cover	9
Questions in relation to the limits of the indemnity and in relation to the indemnity period	11
Relevant terms of the policy	11
The relevant denial of access cover	14
The MSDE Clause	17
The evidence before the court	22
The evidence in relation to the AXA policy	23
The evidence in relation to acute encephalitis	25
The evidence in relation to “sanitary arrangements”	31
Findings of fact based on the evidence	33
The principles applicable to the interpretation of the AXA policy	35
Consideration of the questions posed in paras. 45 to 60 above	41
Does the MSDE clause provide cover in principle for business interruption losses caused by the occurrence of COVID-19?	42
Does the MSDE clause provide business interruption cover for losses caused as a result of the occurrence of acute encephalitis?	45
The relevant records	48
The subsequent Regulations	53
The arguments of the parties in relation to the records, the Government measures and the Regulations	56
My conclusions in relation to the case based on acute encephalitis	58
The judgment of Cockerill J. in Rockliffe Hall Limited	66
Does COVID-19 constitute a “ defect in the drains or sanitary arrangement at the premises” within the meaning of the MSDE clause?	69
Is para. 5 of the MSDE clause triggered solely by a premises specific order of a public authority?	80
For the purposes of the denial of access clause, what constitutes an interruption of or interference with the business?	81
Does COVID-19 constitute a “danger or disturbance” within the meaning of the denial of access clause?	82
On the assumption that COVID-19 is capable of constituting a “danger or disturbance”, does the outbreak of COVID-19 have to be specific to the premises or an area within a one-mile radius of the premises?	97
On the assumption that COVID-19 is capable of constituting a “danger or disturbance”, do the actions taken by the police or other statutory body have to take place at the premises or within a one-mile radius of the premises?	98
Can any of the Government measures and restrictions (which are of a national or general application) amount to an action taken by the police or statutory body in response to an outbreak of COVID-19 at or within one mile of the hotel?	99
Does the closure of the hotel following the Government advice of 12th March, 2020 or thereafter meet the requirements of the denial of access clause?	108
Is the policyholder required to demonstrate that a specific occurrence of COVID-19 within a one-mile radius of the premises led to the relevant “action of the police or statutory body”?	109
What constitutes a prevention or hindrance of access to the premises within the meaning of the denial of access clause?	109
Prior notice	111
The limits of indemnity applicable to the MSDE and denial of access clauses	113
What is the indemnity period applicable to claims under the MSDE and denial of access clauses?	113
Conclusions	114

Introduction

1 . This judgment addresses a number of specific issues relating to the interpretation of certain clauses in the business interruption section of a policy of insurance issued by the second named defendant (“AXA”) in respect of the Clarence Hotel on Wellington Quay in Dublin 2 together with the Octagon Bar operated within the hotel. The parties have agreed that these issues of interpretation should be addressed first and that any further issues that arise between either the plaintiff and the first named defendant (which acted as insurance broker on behalf of the plaintiff) or as between the plaintiff and AXA should be deferred until a later stage in these proceedings. The issues of interpretation arise solely as between the plaintiff and AXA and, for that reason, they were the only parties who participated in the hearing which took place before me in January, 2021.

2 . Although additional evidence was given in relation to insurance practice and in relation to certain medical issues, the hearing in January, 2021 proceeded largely on the basis of agreed facts. These agreed facts are set out in paras. 3 to 43 below. With the exception of para. 12 below, the language used in these paragraphs is substantially that agreed between the parties themselves.

The parties

3 . The plaintiff is a private limited company incorporated in Ireland under Company Registration Number 181338 and with a registered address at 41A Pleasant Street, Dublin 8. It operates from premises at The Clarence Hotel, 6–8 Wellington Quay, 2/8 East Essex Street Dublin 2 and 10 East Essex Street, Temple Bar, Dublin 2. It trades under the style and title of “ The Clarence Hotel”.

4 . The plaintiff is a part of the Press Up Entertainment Group of companies (the “ Group”). The Group centrally arranged insurance for all companies in the Group including the plaintiff.

5 . The first named defendant is a private limited company incorporated in Ireland under Companies Registration Number 379157 and with a registered office at The Courtyard, Carmanhall Road, Sandyford Business Park, Sandyford, Dublin. It is licensed and regulated as an insurance broker by the Central Bank of Ireland.

6 . AXA is a designated activity company incorporated in Ireland under Companies Registration Number 136155 and with a...