Stonegate Pub Company Ltd v Ms Amlin Corporate Member Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 17 October 2022 |
| Neutral Citation | [2022] EWHC 2548 (Comm) |
| Docket Number | Case No: CL-2021-000161 |
| Court | King's Bench Division (Commercial Court) |
[2022] EWHC 2548 (Comm)
THE HON Mr Justice Butcher
Case No: CL-2021-000161
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Ben Lynch KC, Adam Kramer KC, David Pliener, Louis Zvesper and William Day (instructed by Fenchurch Law) for the Claimant
Gavin Kealey KC, Adam Fenton KC, Sushma Ananda and Henry Moore (instructed by DAC Beachcroft LLP) for the Defendants
Hearing dates: 13–16, 21–23, 27–28 June 2022
Further written submissions: 25 July 2022
Approved Judgment
The Claimant (‘Stonegate’) is the owner and operator of some 760 pubs, bars, restaurants and other hospitality venues, mostly located in town centres in England, Scotland and Wales.
The Defendants (‘the Stonegate Insurers’) are insurers who insured Stonegate under a Policy with reference number UAR3793819JA (‘the Policy’), writing that insurance in the following shares: the First Defendant, 55%; the Second Defendant, 22.5%; and the Third Defendant, 22.5%.
In this action, Stonegate brings a claim against the Stonegate Insurers in respect of what it says are business interruption (or ‘BI’) losses associated with the COVID-19 pandemic which are covered under the Policy issued by the Stonegate Insurers. The Stonegate Insurers, while admitting that Stonegate will have suffered some interruption or interference and business interruption loss proximately caused by covered events insured under the Policy, contend that they have no further liability to Stonegate, as a result of payments which they have made, and that, in any event, if Stonegate has any further claim, the claim made is overstated.
The parties agreed, and the Court ordered, that this litigation should proceed by way of the determination, as Stage 1, of certain defined issues, which have been called ‘the Stage 1 Issues’. It is the Stage 1 Issues Trial which I have heard, and to which this Judgment relates. All other issues in the case have not been the subject of this trial and stand to be resolved, if and to the extent that they continue to be in issue, at a later stage.
The Policy was negotiated and arranged by Marsh Limited (‘Marsh’), and makes use of the Marsh Resilience MD/BI v1.1 Form (‘the Marsh Resilience Form’). During the course of the proceedings it became apparent to the parties and to the Court that there were various other claims made by other insureds on policies using the Marsh Resilience Form, which raised some of the same issues as are included in the list of the Stage 1 Issues. In particular it became apparent that such claims were made by Greggs Plc (‘Greggs’) in Action CL-2021-000622 (‘the Greggs Action’) and by Various Eateries Trading Ltd (‘VE’) in Action CL-2021-000396 (‘the VE Action’). With the cooperation of the parties to all three actions, the Court ordered that trials of certain common or overlapping issues in the three actions should be heard in sequence before me, with a view to my delivering judgments in the three actions at the same time, but only after the evidence and argument in the last of the three hearings had been concluded. Directions were also given for parties in the actions where the hearings took place earlier to have the opportunity of commenting, insofar as relevant, on the evidence and arguments made in the hearings which took place subsequently. The parties to the present action took up the opportunity of making written submissions on points which had arisen out of the trials in the Greggs and VE Actions.
Each trial was separate. The three actions were not consolidated. The parties in the different actions were represented by largely different teams. The evidence and assumed or agreed facts differed to some extent. I have to decide the issues which arose in each of the three trials on the basis of the evidence and arguments put forward in the particular trial concerned. Unsurprisingly, however, there was a considerable overlap in the evidence, facts agreed or assumed, and in the arguments adduced between the three trials.
The Placement of the Policy
The parties agree that on 26 April 2019 Marsh, the brokers appointed by Stonegate, made a presentation of risk to the Stonegate Insurers. That presentation included a Master Location Schedule.
On 14 May 2019, Marsh provided a bound summary to the Stonegate Insurers, and on the same date the Policy Schedule was issued and the Policy was concluded. On 10 March 2020 an Amended Policy Schedule (which I will call hereafter ‘the Schedule’) was issued.
The Policy
The Policy was on terms contained in the Schedule and a Material Damage and Business Interruption Policy wording. The Schedule included those terms set out in Annexe 1 to this Judgment, and the Policy wording those in Annexe 2.
Without rehearsing all the terms here, the following provisions are of particular note by way of introduction to the questions involved in the Stage 1 Issues Trial.
The Policy is one which was taken out by Stonegate, which was the sole Policyholder and Insured named. The Period of Insurance (also referred to as ‘the Policy Period’) was specified as 1 May 2019 to 30 April 2020. Under the Policy, Stonegate was insured in respect of a number of risks, including in respect of Business Interruption Loss (as defined) (or ‘BIL’) resulting from various perils.
Of significance for present purposes are two of the perils enumerated under Clause 2.3 of the Insuring Clauses, namely cover (under viii) for ‘Notifiable Diseases and Other Incidents’, and (under xii) for ‘Prevention of Access – Non Damage’.
By reason of the terms of the Insuring Clauses and of the definitions of relevant words or phrases, the cover for ‘Notifiable Diseases and Other Incidents’ included cover where one of the identified diseases, or another disease which comes to be classified as a notifiable disease under the Health Protection (Notification) Regulations 2010 is discovered at an Insured Location or occurs within the Vicinity of an Insured Location during the Period of Insurance. Cover under 2.3(viii) extends (by reason of Definition 69(v)) to BIL resulting from ‘enforced closure of an Insured Location by any governmental authority or agency or a competent local authority for health reasons or concerns.’
COVID-19 was made a notifiable disease in England on 5 March 2020 by amendment to the Health Protection (Notification) Regulations 2010, an equivalent step having been taken in Scotland on 22 February 2020, and was to be taken in Wales on 6 March 2020. It was common ground in these proceedings that COVID-19 was a disease falling within the terms of Definition 69(ii) of the Policy.
Cover for ‘Prevention of Access – Non Damage’ includes (by reason of Definition 87(ii)) BIL resulting from ‘the actions or advice of the police, other law enforcement agency, military authority, governmental authority or agency in the Vicinity of the Insured Locations’.
‘Vicinity’, which is a term relevant both to the cover under Insuring Clause 2.3(viii) (d) and to that under 2.3(xii), is defined (by Definition 120) as ‘an area surrounding or adjacent to an Insured Location in which events that occur within such area would be reasonably expected to have an impact on an Insured or the Insured's Business’.
Subject to immaterial exceptions, there is a Limit of Liability in respect of loss resulting from ‘Notifiable Diseases & Other Perils’ (ie from the perils set out in Insuring Clause 2.3(viii)) of £2,500,000 any one Single Business Interruption Loss (as defined) (‘SBIL’), and in respect of loss resulting from ‘Prevention of Access – Non Damage’ (ie from the perils set out in Insuring Clause 2.3(xii)) of £1 million any one SBIL (as defined). There is a Retention of £100,000 each SBIL, with a £400,000 annual Aggregate. There are also provisions, which were not the subject of detailed examination before me, for a ‘non-ranking’ deductible of £5000 per SBIL, and of £5000 per Single Property Loss and SBIL combined upon exhaustion of the annual aggregate’.
‘Single Business Interruption Loss’ is defined, insofar as relevant, as
‘all Business Interruption Loss and Business Interruption Costs & Expenses (excluding Additional Increased Cost of Working, Claims Preparation Costs, Public Relations Crisis Management Costs and Rewards Costs) and any amounts payable under Extensions that arise from, are attributable to or are in connection with a single occurrence …’
Under the Policy, the Stonegate Insurers agreed to pay Stonegate ‘Additional Increased Costs of Working’. ‘Additional Increased Cost of Working’ (‘AICW’) was defined as ‘expenditure (other than Increased Cost of Working) reasonably incurred by, or on behalf of, the Insured with the intention of maintaining essential administrative functions and/or avoiding or minimising any Reduction in Turnover which would have taken place during the Indemnity Period and/or avoiding or minimising the interruption or interference to the Insured's Business’. There was a sub-limit applicable to recovery of AICW of £15 million ‘in addition to the Limit of Liability’.
‘Business Interruption Loss’ was defined, insofar as relevant, as Reduction in Turnover and Increased Cost of Working. Reduction in Turnover was defined as the amount by which the Turnover during the Indemnity Period fell short of the Standard Turnover, less any costs normally payable out of the Turnover (excluding depreciation) as might cease or be reduced during the Indemnity Period as a consequence of the Covered Event. The Indemnity Period was defined as the period of time during which interruption or interference to the...
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