Hyper Trust Ltd Trading as The Leopardstown Inn v FBD Insurance Plc

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 05 February 2021
• Neutral Citation: [2021] IEHC 78
• Date: 05 February 2021
• Court: High Court
• Docket Number: [No. 2020/3656 P.] [No. 2020/3402 P.] [No. 2020/3453 P.]

Between

Hyper Trust Limited Trading as The Leopardstown Inn

Plaintiff

and

FBD Insurance plc

Defendant

Between

Aberken Limited Trading as Sinnotts

Plaintiff

and

FBD Insurance plc

Defendant

Between

Inn on Hibernian Way Limited Trading as Lemon and Duke

Plaintiff

and

FBD Insurance plc

Defendant

Between

Leinster Overview Concepts Limited Trading as Seán's Bar

Plaintiff

and

FBD Insurance plc

Defendant

[2021] IEHC 78

[No. 2020/3656 P.]

[No. 2020/3658 P.]

[No. 2020/3402 P.]

[No. 2020/3453 P.]

THE HIGH COURT

COMMERCIAL

Insurance – Losses – Liability – Plaintiffs seeking pandemic coverage – Whether the defendant was obliged to cover any of the losses suffered by the plaintiffs

Facts: In each of these four cases, the principal question which arose was whether the defendant insurer, FBD, was obliged to cover any of the losses suffered by the plaintiffs following the imposed closure of public houses at the behest of the Government on 15th March, 2020 as the COVID-19 pandemic began to take hold in Ireland. Each of the plaintiffs held policies of insurance issued by FBD in advance of 15th March, 2020. If it was concluded that FBD had a liability to the plaintiffs under the respective policies of insurance, a further issue would arise as to the extent of the cover available under the policies. The dispute between the parties related to the proper interpretation of s. 3 of the policy. In each of these cases, FBD had declined cover in respect of the plaintiffs’ losses on the grounds that the imposed closure did not arise in consequence of an outbreak of COVID-19 on any of the plaintiffs’ premises or within a 25-mile radius of the premises. FBD maintained that the imposed closure arose not as a consequence of a local outbreak of the disease but as a consequence of the countrywide presence of the disease. FBD accepted that there was an imposed Government closure but it contended that the closure could not be said to have been causatively linked to an outbreak of COVID-19 which occurred within the 25-mile radius surrounding the plaintiffs’ respective premises. It was also argued initially by FBD that pandemic coverage was plainly not contemplated or intended by the FBD policy. Later, it was clarified that FBD did not go so far as to contend that the policy could never respond in a pandemic situation although counsel for FBD continued to argue that the fact that the closure of public houses arose against the backdrop of a pandemic was, nonetheless, relevant to the question as to whether the conditions of the FBD policy had been satisfied.

Held by the High Court (McDonald J) that it would hold against FBD in relation to the interpretation of extension (1) (d) of the policy; the relevant peril is the imposed closure following outbreaks of infectious or contagious disease on or within 25 miles of the premises. McDonald J was of the view that cover is not lost where the closure is prompted by nationwide outbreaks of disease provided that there is an outbreak within the 25 mile radius and that outbreak is one of the causes of the closure. It seemed to him that the outbreaks which occurred within 25 miles of each of the plaintiffs’ premises were a proximate cause of the imposed closure of public houses announced by the government on 15th March, 2020. He held that the fact that outbreaks outside that 25 mile radius were also proximate causes of the government decision did not alter that conclusion. In the case of each of the plaintiffs (other than the Lemon & Duke plaintiff) he had formed the view that the correct counterfactual is a world in which there is no imposed closure and no outbreaks within 25 miles of the plaintiffs’ premises; however, that counterfactual would also exclude any overlapping proximate cause of the plaintiffs’ losses. He held that the position of the Lemon & Duke plaintiff was different; it had the benefit of a policy subject to the specific representation made to it by FBD on 2nd March, 2020 that cover would be available if the premises were the subject of an imposed closure by reason of coronavirus and that representation made no reference to outbreaks being confined within a radial distance of 25 miles from its premises. In those circumstances, it appeared to him that the correct counterfactual in its case is a world in which there is no imposed closure and no outbreaks of COVID-19.

McDonald J held that he would list this matter remotely for mention on 17th February, 2021 at 10.30 a.m. with a view to giving the parties, in the meantime, an opportunity to consider this judgment and to agree the next steps.

Judgment approved.

JUDGMENT ofMr. Justice Denis McDonalddelivered on 5 ^th February, 2021

Contents

Introduction	4
The evidence before the court	12
The ruling in relation to the admissibility of documents	12
The second ruling	17
The witnesses who gave evidence at the hearing	33
The plaintiffs	34
The Lemon & Duke policy	38
The factors to be borne in mind in construing the FBD policy	52
The relevant factual background	54
The COVID-19 pandemic	63
The regulatory context	77
Relevant aspects of the IPID and the Features & Benefits document	82
The terms of the policy	83
What is the insured peril?	97
Is the cover available limited to closures arising solely from localised outbreaks?	111
The meaning of the word “following”	118
The meaning of the word “by”	138
The meaning of “outbreak”	139
The ambit of cover available under Extension (1) (d)	140
Causation	142
Were the outbreaks within a 25 mile radial distance of the plaintiffs premises a cause of the government imposed closure?	143
Would the result be any different if “following” is to be interpreted as requiring proximate cause?	147
Further causation issues	154
Was the composite peril the proximate cause of the plaintiffs' losses?	154
The additional causation issues argued by FBD	156
“But for” causation	159
The appropriate counterfactual	166
Disaggregation	175
Trends and circumstances	178
The evidence of Mr. O'Brien and Mr. Lewis	191
The indemnity period	196
The claim for aggravated damages by the Lemon & Duke plaintiff	202
The new claim advanced by the Lemon & Duke plaintiff in its January 2021 submissions	210
Conclusion	210

Introduction

1 . The principal question which arises in each of these four cases is whether the defendant insurer ( ‘FBD’) is obliged to cover any of the losses suffered by the plaintiffs following the imposed closure of public houses at the behest of the Government on 15th March, 2020 as the COVID-19 pandemic began to take hold in Ireland. Each of the plaintiffs hold policies of insurance issued by FBD in advance of 15th March, 2020. If it is concluded that FBD has a liability to the plaintiffs under the respective policies of insurance, a further issue arises as to the extent of the cover available under the policies.

2 . Because these issues arise in each of the four cases, they were heard together over a period of eleven days in October 2020. It is hoped that the ultimate outcome of these cases will assist in the resolution of a large number of similar claims which have been brought against FBD on foot of similarly worded policies of insurance issued by FBD. Each of the policies in question contain the same standard wording found in the FBD Public House Insurance policy which was designed specifically for the insurance needs of the public house trade.

3 . According to the evidence of the Chief Underwriting Officer of FBD, the policy in question has been sold to approximately 1,300 publicans throughout Ireland ranging from the owners of small rural pubs to larger urban pubs. She gave evidence that roughly 84% of policies were sold directly to publicans through FBD direct sales channels with the remaining 16% being sold through brokers. This should be seen against the backdrop that, as explained further below, FBD had a long standing relationship with the Vintners Federation of Ireland ( ‘VFI’). The VFI is one of two organisations representing publicans in Ireland and is traditionally associated with pubs outside the greater Dublin area. Within the greater Dublin area, the predominant organisation representing publicans is the Licensed Vintners Association ( ‘LVA’). FBD has, for some time, also been the sponsor of the LVA annual general meeting and the dinner which traditionally takes place after that meeting.

4 . The FBD policy (which will be examined in more detail below) provides cover in respect of a range of different risks as described in ss. 1–8 of the policy terms not all of which are relevant for present purposes. At this point, it is sufficient to note that s.1 provides cover in respect of accidental loss or damage to buildings, s.2 provides cover in respect of trade contents and s.3 provides a form of business interruption cover. In particular, s.3 covers consequential loss to the public house business arising from loss or damage to the buildings (covered under s. 1) or to the trade contents (covered under s. 2). Section 3 also provides cover in respect of losses arising from the imposed closure of the premises by order of a government or local authority following the occurrence of a number of specified circumstances including “outbreaks of contagious or infectious diseases on the premises or within 25 miles of same”. At its most basic level, the dispute between the parties relates to the proper interpretation of s.3 of the policy. In each of these cases, FBD has declined cover in respect of the plaintiffs' losses on the grounds that the imposed closure did not arise in consequence of an outbreak of COVID-19 on any of the plaintiffs' premises or within a 25-mile radius of the premises....