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

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 23 April 2021
• Neutral Citation: [2021] IEHC 279
• Date: 23 April 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 279

[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: The plaintiffs, Hyper Trust Ltd, Aberken Ltd, Inn On Hibernian Way Ltd and Leinster Overview Concepts Ltd, each held policies of insurance issued by the defendant insurer, FBD Insurance plc, in advance of 15th March, 2020. In each of these four cases, the principal question which arose was whether 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. On 5th February, 2021, the High Court (McDonald J) gave a written judgment (the principal judgment) in relation to issues of liability which arose in each of the four actions. This judgment addressed three additional questions which arose, namely: (a) the interpretation of the word “closure” in extension 1 of s. 3 of the FBD Public House Policy; (b) the territorial dimensions of the relevant counterfactual applicable for the purposes of determining the extent of cover available under extension 1; and (c) whether the plaintiffs should be entitled to an award of costs on the normal party and party basis or, as claimed by them, on a legal practitioner and client basis.

Held by McDonald J that the words used in extension 1(d) must be read in the context of the policy as a whole (in particular, in the context of s. 3 of the policy dealing with business interruption) and in the wider factual and legal context. He concluded that, when read in that way, a reasonable person would understand that the word “closure” is not confined to a total shutdown of the insured’s premises but also extends to a closure of part of the premises. There must, in his view, be a shutting down of the premises or of a part of the premises before cover under extension 1(d) is triggered. He held that when the policy refers to the “premises”, it is the premises described in the schedule which is relevant. He held that it would not be appropriate to make an order in similar terms to that made by the Divisional Court in the FCA case confining the counterfactual world to the State. In his view, no sufficient basis had been identified to justify the court in making such a determination. He held that the precise parameters of the counterfactual would have to be worked out in the context of the evidence to be given at the next hearing.

McDonald J held that in circumstances where, in ordinary course, the test case nature of these proceedings can be factored into the assessment of costs on a party and party adjudication, he could see no proper basis on which to exercise the discretion of the court under O. 99, r. 10 (3) to order that they should be assessed on a legal practitioner and client basis.

Judgment approved.

JUDGMENT (No. 2) of Mr. Justice Denis McDonald delivered on 23 ^rd April, 2021

Table of Contents

Introduction	4
The parties' submissions as to the meaning of the word “closure”	4
Discussion and decision in relation to the meaning of the word “closure”	29
The issue that arises in relation to the territorial extent of the counterfactual	44
Discussion and decision on the territorial extent of the counterfactual	55
The plaintiffs' application for legal practitioner and client costs	72
Discussion and decision in relation to costs	97

Introduction

1 . On 5th February, 2021, I gave a written judgment (“ the principal judgment”) in relation to issues of liability which arise in each of the four actions named above. This judgment should be read with the principal judgment. I will use the same abbreviations here as I did in that judgment.

2 . This judgment addresses three additional questions which have arisen, namely:-

• (a) the interpretation of the word “closure” in extension 1 of s. 3 of the FBD Public House Policy;

• (b) the territorial dimensions of the relevant counterfactual applicable for the purposes of determining the extent of cover available under extension 1; and

• (c) whether the plaintiffs should be entitled to an award of costs on the normal party and party basis or, as claimed by them, on a legal practitioner and client basis.

3 . I now deal, in turn, with each of these issues.

The parties' submissions as to the meaning of the word “closure”

4 . In the course of the original hearing of these proceedings in October, 2020, no issue was raised by any party as to the meaning of the word “closure” as used in the FBD policy. The first time that any issue was raised as to meaning of the word “closure” was in written submissions delivered on behalf of the Lemon & Duke plaintiff in January, 2021 following the judgment of the UK Supreme Court in the FCA case. In para. 274 of the principal judgment, I indicated that, if the issue as to the meaning of the word “closure” were to be debated, it should be the subject of an appropriate application on notice to all of the other parties. I was subsequently informed on 17th February, 2021 that all parties were agreed that the issue should be debated and it was, therefore, the subject of further submissions (both oral and written) in the course of the additional hearing which took place on 26th February, 2021.

5 . The principles applicable to the interpretation of contracts have already been described in the principal judgment and it is unnecessary to repeat that exercise here. The relevant factual and legal context against which the policies were put in place has also been described in that judgment and should be kept in mind in considering the meaning of the language used in the policy and, in particular, in assessing the meaning of the word “closure”. The meaning of that word must also be considered in the light of the terms of the FBD policy as a whole.

6 . The relevant terms of the extensions to the business interruption cover available under the FDB policy are set out in para. 125 of the principal judgment. It may, nonetheless, be helpful to repeat the terms of the extension 1 here:-

“The Company will also indemnify the Insured in respect of (A), (B) or (C) as a result of the business being affected by:

(1) Imposed closure of the premises by order of the Local or Government Authority following:

• (a) Murder or suicide on the premises

• (b) Food or drink poisoning on the premises

• (c) Defective sanitary arrangements, vermin or pests on the premises

• (d) Outbreaks of contagious or infectious diseases on the premises or within 25 miles of same.”

7 . At the time these proceedings were commenced in May, 2020, the relevant “closure” in issue arose on foot of the announcement by the Department of the Taoiseach on 15th March, 2020 that all public houses should close. The announcement on 15th March, 2020 required the complete closure of public houses. The case made by the plaintiffs focused on the business interruption caused by that closure. However, in the period which has intervened since the proceedings were commenced, there have been a number of variations to that position which are helpfully summarised in the written submissions delivered on behalf of FBD. Public houses were unable to carry on any form of trade in the period between 15th March, 2020 and 26th March, 2020. However, with effect from 27th March, 2020, public houses were permitted to undertake a takeaway service. Subsequently, on 29th June, 2020, public houses which were in a position to serve a “substantial meal” were permitted to reopen. Thereafter, there were periods during which outdoor service only was permitted subject to a maximum number of fifteen customers at any one time. More recently, all public houses have been required to close with effect from 3.00pm on 24th December, 2020 with only takeaway service permitted (but not encouraged) thereafter.

8 . In the case of public houses which were not in a position to serve a “substantial meal” (“ wet pubs”), all such public houses within the Dublin area have been the subject of the imposed closure since 15th March, 2020. Their only ability to carry on any form of business was by way of a takeaway service from 27th March, 2020. In the case of wet pubs outside Dublin, they were the subject of an imposed closure from 15th March, 2020 to 21st September, 2020. They were briefly permitted to reopen in the period between 21st September, 2020 and 21st October, 2020.

9 . FBD accepts, for the purposes of these proceedings, that, where customers were not permitted to enter on the premises and where the level of business was de minimis by comparison with the level of trade prior to closure, public houses which were in a position to provide a takeaway service only should be regarded as having been the subject of an imposed closure since 15th March, 2020. However, FBD does not accept that any of the other restrictions on the public house trade (as summarised in paras. 7 and 8 above) can be said to constitute an “imposed closure” within the meaning of extension 1 of the policy.

10 . The argument now made by the plaintiffs is that, properly construed, the reasonable reader of extension 1 would understand the parties to have agreed that business interruption cover under the policy is triggered where the insured's business is affected by any “imposed closure” of...