Hyper Trust trading as The Leopardstown Inn v FBD Insurances Plc; Inn on Hibernian way Ltd trading as Lemon & Duke v FBD Insurances Plc
| Jurisdiction | Ireland |
| Judge | Mr. Justice Denis McDonald |
| Judgment Date | 26 July 2023 |
| Neutral Citation | [2023] IEHC 455 |
| Court | High Court |
| Docket Number | [No. 2020/3656 P.] [No. 2020/3402 P.] [No. 2020/3453 P.] |
[2023] IEHC 455
[No. 2020/3656 P.]
[No. 2020/3558 P.]
[No. 2020/3402 P.]
[No. 2020/3453 P.]
THE HIGH COURT
COMMERCIAL
Insurance policy – Interpretation – Settlement – Parties seeking approval of agreed solution – Whether the mechanics agreed between the parties were consistent with the underlying rationale of the mechanism proposed by the High Court
Facts: Each of the plaintiffs, Hyper Trust Ltd, Aberken Ltd, Inn on Hibernian Way Ltd and Leinster Overview Concepts Ltd, pursued claims against the defendant, FBD Insurances (FBD), in respect of losses suffered by them following the imposed closure of public houses owned by them under Government measures introduced to address the COVID-19 pandemic. Each of the plaintiffs were insured by FBD under a standard form policy of insurance known as the FBD Public House Insurance policy (the FBD policy). A significant dispute arose between the parties as to the proper interpretation of the FBD policy. In the first judgment delivered by the High Court on 5th February 2021 ([2021] IEHC 78), McDonald J concluded that the relevant peril insured under extension (1)(d) of the policy constituted imposed closure of the premises following outbreaks of infectious or contagious disease on or within 25 miles of the insured premises (FBD No. 1). In a subsequent judgment delivered on 22nd April 2021 ([2021] IEHC 279), he concluded that the word “closure” as used in extension 1(d) should be interpreted as extending both to a closure of the entire premises and also to a closure of part of the premises (FBD No. 2). In his judgment delivered on 28th January 2022 ([2022] IEHC 39), he concluded that the closure of the bar counter should be regarded as the closure of a discrete part of the public house premises sufficient to trigger cover under extension 1(d), and that the requirement to close at 11.30 p.m. also fell within the ambit of extension 1(d) (FBD No. 3). On 4th November 2022, he was informed by the parties that, following intensive discussions, they had agreed terms of settlement which resolved the issues in dispute between them. They also agreed the terms of a draft order which they put before the court for his consideration.
Held by McDonald J that the mechanics agreed between the parties were consistent with the underlying rationale of the mechanism proposed by him in FBD No. 3. He found that they took into account the need to ensure that the calculation did not result in an artificially inflated payment being made to the plaintiffs. He was grateful to the parties and their advisors for the extensive work done in arriving at a formula that sought to give effect in a fair and balanced way to the calculation provisions in section 3 of the FBD policy. He approved their agreed approach.
McDonald J, given that an order had already been made on 19th June 2023 in terms which were consistent with the views expressed in the judgment, did not believe that it was necessary to list the matter before the court again. In his view, it was sufficient to direct that the proceedings should be struck out but, lest the parties had anything further that they wished to raise on foot of the judgment, he directed that the order would not take effect until 16th October 2023. He held that there was liberty to all parties to apply in the intervening period. He held that if no application was made prior to that date, the proceedings in all four cases would stand struck out as of 16th October 2023.
Proceedings struck out.
JUDGMENT of Mr. Justice Denis McDonald delivered on 26 th July 2023
| Introduction | 3 |
| The issues of principle that arise | 6 |
| Relevant terms of the FBD policy | 7 |
| The decisions in England & Wales and in Australia | 14 |
| FBD's reliance on the principle of indemnity | 22 |
| The approach to be taken in relation to the indemnity principle | 29 |
| Relevant context to the introduction of the Government Supports | 31 |
| The introduction of the Temporary Wage Support Scheme (“TWSS”) | 38 |
| The Employment Wage Support Scheme (“EWSS”) | 39 |
| The COVID Restrictions Support Scheme | 44 |
| The Restart Grant and Restart Grant Plus for small businesses | 46 |
| The Fáilte Ireland Grant Scheme | 48 |
| Waiver of Rates | 49 |
| Subrogation | 49 |
| The calculation of the loss | 53 |
| The agreed solution | 55 |
| The Order already made | 55 |
| Further steps | 92 |
. This is the fourth judgment which I have given in these proceedings in which each of the plaintiffs have pursued claims against the defendant insurer ( “FBD”) in respect of losses suffered by them following the imposed closure of public houses owned by them under Government measures introduced to address the COVID-19 pandemic. Each of the plaintiffs were insured by FBD under a standard form policy of insurance known as the FBD Public House Insurance policy ( “the FBD policy”) which was designed specifically for the insurance needs of the public house trade. Similar policies have been sold to approximately 1,300 publicans throughout Ireland. The FBD policy provided insurance in respect of interruption to the insured's business arising either as a consequence of property damage or as a consequence of a number of specific perils as defined in extensions (1) to (5). The relevant extension for present purposes is (1)(d).
. A significant dispute arose between the parties as to the proper interpretation of the FBD policy. The principal issues of interpretation which arose between them were addressed in the first judgment delivered by me on 5 th February 2021 (neutral citation [2021] IEHC 78) ( “FBD No. 1”). In that judgment, I concluded that the relevant peril insured under extension (1)(d) of the policy constituted imposed closure of the premises following outbreaks of infectious or contagious disease (in this case, COVID-19) on or within 25 miles of the insured premises. I took the view that cover was not lost where the closure was prompted by nationwide outbreaks of disease provided that there was an outbreak within the relevant 25-mile radius and that each such outbreak was one of the proximate causes of the closure. It was accepted by FBD that there had been outbreaks of COVID-19 within a 25 mile radius of each of the plaintiffs' public houses prior to the imposition of the first period of closure announced by the Government on 15 th March 2020. I concluded that each of these outbreaks was instrumental in the Government decision to close public houses and that this was sufficient to satisfy the requirement in extension 1(d) that the imposed closure of the premises arose “following … outbreaks of contagious diseases … within 25 miles…” of the insured premises.
. I further held, for the reasons explained in paras. 198 to 199 of FBD No. 1, that, even if the word “following”, as used in extension 1(d), connotes proximate cause, that test was satisfied in circumstances where each outbreak was an efficient cause of the Government imposed closure. In the same judgment, I also addressed the issue as to the correct counterfactual to deploy for the purposes of assessing the likely position of the plaintiffs' respective businesses on the hypothesis that the insured peril had never eventuated.
. Subsequent to the delivery of the judgment in FBD No. 1, a further issue arose between the parties as to whether the word “closure” in extension 1(d) of the FBD policy also extended to a partial closure of the premises. That issue arose in circumstances where, at certain times, public houses serving a substantial meal were permitted to re-open but their bar counters were required to remain closed. This issue (together with certain other questions which are not immediately relevant here) led to a subsequent judgment delivered on 22 nd April 2021 (neutral citation [2021] IEHC 279) ( “FBD No. 2”). In that judgment, I came to the conclusion that the word “closure” as used in extension 1(d) should be interpreted as extending both to a closure of the entire premises and also to a closure of part of the premises. However, I made it clear that, for “closure” to arise, there would have to be a shutting down of the premises or a part of the premises before cover under extension 1(d) could be triggered. Unlike some other policy wordings available on the market, extension 1(d) did not purport to provide cover where access to the premises was “hindered” or “restricted”. I took the view that, if a discrete area of a public house was closed to patrons as a consequence of the Government measures, such a part of the premises would be regarded as closed for the purposes of extension 1(d). I indicated that the position was less clearcut where a closure of a discrete part of the premises could not be identified and I deferred any ruling on that issue to the next phase of these proceedings which was scheduled for hearing in July 2021.
. In July 2021 I subsequently heard evidence from each of the individual plaintiffs and from their experts in relation to the impact of the closures on their business both in respect of complete closure of the premises and in respect of closure of the bar counter. In addition to the case made by them in respect of the closure of the bar counter, the plaintiffs also made the case at that hearing that cover was available under the FBD policy in respect of early closing of their premises (i.e. at those times when they were required by Government regulations to close their premises at 11.30 p.m....
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