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

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 28 January 2022
• Neutral Citation: [2022] IEHC 39
• 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

[2022] IEHC 39

[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 High Court (McDonald J), on 4th February 2021, held that business interruption cover was available under the FBD Public House Policy in respect of the closure of public houses in March 2020 ordered by the Government in response to the COVID-19 pandemic (the principal judgment). A number of points of principle were in dispute between the parties: (a) in the case of each of the three Dublin pubs, an issue arose as to whether the bar counter area of their premises was subject to an imposed closure during the periods 29th June, 2020 to 18th September, 2020 and 4th December, 2020 to 24th December, 2020; (b) in the case of Sinnotts and the Leopardstown Inn, a similar issue arose in relation to their carvery insofar as they suggested that they were unable to operate the self-service element of the carvery as a consequence of the restrictions; (c) an issue arose as to whether each of the three Dublin pubs were subject to an imposed closure within the meaning of extension 1(d) during periods where there was a requirement to close early; (d) in the case of all four public houses (including Sean’s Bar), an issue arose in relation to staff costs and, in particular, in relation to whether the plaintiffs were entitled to be indemnified by FBD in respect of staff wages during the periods of closure; (e) in the case of all four public houses, an issue arose as what constitutes “the trend” or an “other circumstance” for the purposes of calculating the indemnity payable to the plaintiffs; (f) in the case of all four public houses, an issue arose as to whether the plaintiffs were entitled to damages from FBD arising out of any additional losses which they may have suffered because of the alleged failure of FBD to indemnify them within a reasonable time; (g) an issue arose as to whether FBD was entitled to pursue any issue in relation to alleged underinsurance; (h)(i) whether Sean’s Bar was entitled to be indemnified in relation to capital expenditure even where such expenditure continued to have a value for the bar after the end of the indemnity period; (h)(ii) if FBD was not liable to indemnify Sean’s Bar for such proportion of the capital expenditure that benefits the business of the bar after the end of the indemnity period, how was that proportion to be measured? (h)(iii) whether, in circumstances where Sean’s Bar was closed in the period between 15th March, 2020 and June, 2021, the expenditure could be said to meet the test set out in the policy, namely that it was “necessarily and reasonably incurred for the sole purpose of avoiding or diminishing the reduction of gross profit during the indemnity period”. A further issue which required resolution was whether FBD was entitled to raise a question in relation to the applicable indemnity periods for Sean’s Bar notwithstanding that, in the issue paper, FBD expressly accepted that Sean’s Bar was the subject of two indemnity periods, the first commencing on 15th March, 2020 and ending on 21st September, 2020 and a second commencing on 7th October, 2020 which continued until the end of the maximum indemnity period available under the policy.

Held by McDonald J that the Dublin pubs were subject to an early closing requirement in the period from 10th August 2020 and that this constituted a government-imposed closure as a consequence of outbreaks of COVID-19; it therefore fell within the ambit of extension 1(d) of the policy in a similar way to the original closure on 15th March 2020. He held that, subject to the respective indemnity periods applicable to them, the Dublin pubs were therefore entitled to be indemnified in respect of the losses suffered by them during the relevant periods as a consequence of the early closing requirements in place from time to time since 10th August 2020.

McDonald J held that, with regard to the staff wages and salaries claims, each of the claims made by Sean’s Bar, Sinnotts and Lemon & Duke had been successful in part. In the case of the Leopardstown Inn, he had been unable, in light of the evidence put before the court, to make a finding that any part of its claim should succeed. He concluded that FBD was not entitled to pursue any issue in relation to underinsurance. He formed the view that it should not be entitled, as against Sean’s Bar, to reverse the admission made by it that Sean’s Bar was subject to two indemnity periods.

Judgment approved.

JUDGMENT (No. 3) of Mr. Justice Denis McDonald delivered on 28 ^th January 2022

Table of Contents

Introduction	4
The restrictions on the use of the bar counter	9
The issue to be resolved in relation to the bar counter	16
The general layout of the three Dublin pubs	18
The case made by FBD in relation to the bar counter	22
The argument made on behalf of the three Dublin bars	24
Discussion and analysis of the issue as to bar counter closure	27
Does the fact that there is, at minimum, considerable difficulty in estimating the losses stemming from the closure of the bar counter affect the issue?	30
The incidents highlighted by FBD as suggesting use of the bar counter by patrons in both Sinnotts and the Leopardstown Inn during the relevant periods	31
The claim of Sinnotts and the Leopardstown Inn in respect of their carveries	33
Early closing	35
The quantification of loss arising from partial closure	42
The approaches suggested by the experts to assess the bar counter losses	49
Approach No. 1 of Mr. Roulston	49
Approach No. 2 of Mr. Roulston	52
Approach No. 3 of Mr. Roulston	54
The approach put forward by Mr. O'Brien	56
The problem facing the court in assessing the bar counter losses	60
Relevant case law in relation to estimating loss	62
The positions taken by the parties in their closing submissions as to the approach to be adopted	63
Conclusions in relation to assessing losses stemming from the bar counter closure	65
Staff wages	72
The relevant principles applicable to the staff wages claims	76
The staff wages claim made by Sean's Bar	78
The staff wages claim made by Lemon & Duke	83
The staff wages claim of Sinnotts	87
The staff wages claim of the Leopardstown Inn	97
The trend and other circumstances	101
Underinsurance	110
The applicable indemnity periods in respect of Sean's Bar	112
The late payment claim	117
Summary of main conclusions	117
Next steps	119
SCHEDULE	119

Introduction

1 . This is the third judgment I have given in these proceedings relating to the interpretation of the business interruption provisions of the FBD Public House Policy. In my first judgment delivered on 4 ^th February 2021 (“ the principal judgment”), I held that business interruption cover was available under the policy in respect of the closure of public houses in March 2020 ordered by the Government in response to the COVID-19 pandemic. This judgment should be read with the principal judgment. I will use the same abbreviations here as I did in that judgment.

2 . The principal judgment addressed a significant number of issues relevant to the question as to whether FBD was liable to indemnify the plaintiffs under the policy. As part of that exercise, the court was required to reach a conclusion as to the proper interpretation of the business interruption section of the policy. The court was also required to consider the meaning of a number of specific words used in the policy. The interpretation of the policy and the interpretation of specific words within the policy had all been the subject of extensive debate in the course of the liability hearing which took place in October 2020. However, there was nothing to indicate that there was any dispute between the parties at that time in relation to the meaning of the word “closure”. For that reason, its meaning was not the subject of debate or submissions at the liability hearing and, likewise, was not addressed in the principal judgment.

3 . The relevant insuring clause of the policy is extension 1(d), This provides that FBD will indemnify the insured where the insured's business is ( inter alia) “affected by:-

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

…

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

4 . The issue as to the meaning of the word “closure” was raised for the first time in written submissions delivered on behalf of Lemon & Duke in January 2021 following the judgment of the UK Supreme Court in the FCA case. I should explain that I had been due to give my decision on the liability issues on the same day as the U.K. Supreme Court announced that it proposed to give judgment in the FCA case. In light of the imminent publication of that judgment, I agreed, at the request of the parties, to postpone the delivery of the principal judgment until after the FCA decision and to give the parties an opportunity to deliver further written submissions in relation to the potential impact of that decision. Subsequently, in the course of the Lemon & Duke...