DC Bars Ltd v QIC Europe Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Nigel Teare |
| Judgment Date | 09 February 2023 |
| Neutral Citation | [2023] EWHC 245 (Comm) |
| Docket Number | Case No: CL-2022-000227 |
| Court | Queen's Bench Division (Commercial Court) |
[2023] EWHC 245 (Comm)
Sir Nigel Teare
Sitting as a Judge of the High Court
Case No: CL-2022-000227
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Neil Hext KC (instructed by Edwin Coe LLP) for the Claimants
Daniel Shapiro KC and James Sharpe (instructed by DWF Law) for the Defendant
Hearing date: 18 January 2023
Approved Judgment
I direct that no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Sir Nigel Teare SITTING AS A JUDGE OF THE HIGH COURT
This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be Thursday 09 February 2023 at 10:00am.
This is an application to stay a claim arising under a Business Interruption (“BI”) Policy in connection with COVID upon the grounds that the parties have agreed that the claim shall be determined by arbitration.
The Claimants own and operate restaurants and bars, mainly in London but also in Manchester, Cardiff, Birmingham and Leeds.
The policy period was 31 December 2019 to 30 December 2020.
The scope of the BI cover provided by the Policy is set out in section 2 of the Policy Wording. In particular, the “ Infectious Diseases Extension”, with which the claim is concerned, provides:
“ vii. Infectious Diseases
We shall indemnify You in respect of interruption of or interference with the
Business during the Indemnity Period following:
a) Any:
……..
iii. occurrence of a Notifiable Disease within a radius of 25 miles of the Premises. …”
The extension further provides
“ 4. We shall only be liable for the loss arising at those Premises which are directly affected by the occurrence discovery or accident Maximum Indemnity Period shall mean 3 months.”
In March 2020 the Claimants notified a claim for BI losses suffered as a result of the occurrence of Covid and the first lockdown on 26 March 2020. The Claimants' claim in respect of Covid-BI Losses was initially submitted in the amount of £3,104,110 on the basis of a maximum 3-month indemnity period from the date of the first occurrence of Covid-19 within 25 miles of insured premises.
The Defendant deferred a final decision on coverage under the Policy until after judgment was handed down by the Supreme Court in a case concerning a number of issues relating to BI cover and Covid. However, the Defendant sought to avoid delaying the resolution of the claim and therefore agreed to adjust the claim on a without prejudice basis pending the decision of the Supreme Court.
Following the Judgment of the Supreme Court the Defendant accepted that it was liable to meet the claim, the quantum of the claim was agreed applying the 3-month Maximum Indemnity Period and the Defendant paid the sum of £2,168,870.
Then on 30 March 2021 the Claimants claimed an additional £4,030,250 under the Infectious Disease extension to the Policy in reliance on certain dicta of the Supreme Court. These further losses were related to losses caused by further government intervention, which imposed reduced opening hours and the second lockdown. The Claimants asserted that there is a fresh cause of action (i.e. claim) under the Policy for every separate occurrence of Covid-19 within 25 miles of each of their premises.
The further losses were made in three periods as follows:
10.1 A second claim under the Policy for losses suffered as a result of the Government's decision that all hospitality businesses must close their doors from 10pmon 24 September 2020 until further notice.
10.2 A third claim under the Policy for losses suffered as a result of the Government's decision to impose a national lockdown from 5 November 2020.
10.3 A fourth claim under the Policy for losses arising out of the Government's decision that all hospitality businesses must close their doors from 16 December 2020 until further notice.
The Defendant disputes that the Claimants are entitled to any further indemnity under the Policy, the Maximum Indemnity Period of 3 months applicable following the occurrence of Covid having expired (and that limit continuing to apply for the remainder of the Policy period).
The Policy contains the following arbitration clause (clause 10.4) which both parties agreed is of a type commonly found in property policies, providing for certain disputes under the policy, but not others, to be referred to a sole arbitrator:
“ If any difference shall arise as to the amounts to be paid under this Policy (liability being otherwise admitted) such difference shall be referred to an arbitrator who will be jointly appointed in accordance with statutory provisions”
The issue between the parties is whether the present dispute falls within the terms of clause 10.4. That depends upon whether the dispute between the parties is “as to the amounts to be paid under this Policy (liability being otherwise admitted).”
Although the Claimants have pleaded their claim there has been no defence because, of course, a stay of the proceedings has been sought. It was therefore unclear precisely what was “otherwise admitted” by the Defendant. Counsel endeavoured to explain orally during the hearing what was admitted. The discussion which ensued suggested that there might be an underlying dispute as to whether the factual circumstances giving rise to the further claims were admitted, in which case it would not be possible to say that liability was otherwise admitted. In order to ensure that there was no uncertainty as to what was “otherwise admitted” I asked the Defendant to make clear in writing what was admitted. Accordingly, shortly after the hearing, a document entitled Schedule of Admissions was provided.
The Schedule provided a summary of the Defendant's admissions and the dispute in these terms:
“[The Defendant] admits that from 17 March 2020 through to 31 December 2020 (the end of the Policy Period) there were on each and every day occurrences of Covid within a radius of 25 miles of each of the Premises and that such occurrences proximately caused interruption of or interference with [the Claimants'] business (in an amount to be determined).
It is admitted that under Extension vii.a)iii. of the Policy [the Claimants] are entitled to an indemnity from [the Defendant] in respect of such business interruption or interference, subject always to the quantification of the loss, including the application of the Maximum Indemnity Period.
[The Defendant] admits that [the Claimants] are entitled to indemnity under Extension vii.a)iii. for the Maximum Indemnity Period of 3 months from 17 March 2020, which indemnity has been agreed in the sum of £2,168,870 and which sum has been paid by [the Defendant] to [the Claimants].
The dispute is:
Whether there is, upon the occurrence of Covid causing business interruption or interference:
One three month Maximum Indemnity Period, as [the Defendant] contends; or
Multiple three month Maximum Indemnity Periods, commencing upon each occurrence of Covid, as [the Claimants] contended by paragraph 4.6 of the letter dated 30 March 2021 from Edwin Coe LLP; or
Four separate periods of up to three months as contended in the POC.
If contrary to [the Defendant's] case there is a or there are any further indemnity period(s) beyond the three month Maximum Indemnity Period, what is the amount of the loss?”
The Schedule of Admissions then went through the Particulars of Claim making clear what was and what was not admitted. It is unnecessary to set out...
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