Victory for the Publicans Pamela Fitzpatrick assesses the recent judgment of Mr. Justice McDonald in the FBD Business Interruption cases
T
he Commercial Court has delivered its judgment in four test cases taken by publicans against FBD Insurance plc (“FBD”). The judgment was originally due to be delivered on the 15th January 2021, however this was deferred to allow the parties make legal submissions following the UK Supreme Court’s judgment in a similar test case, which was also delivered on 15th January. The eagerly awaited decision is of great significance to insurance companies and businesses throughout the country.
Background The four test cases were taken by Hyper Trust Limited trading as the Leopardstown Inn; Aberken, trading as Sinnotts Bar; Inn on Hibernian Way Ltd trading as Lemon & Duke; and Leinster Overview Concepts Ltd trading as Sean’s Bar (the “Publicans”). Each of the Publicans hold policies of publican insurance with FBD (the “Policy”), which include business interruption insurance. They brought proceedings having been told by FBD that the losses the Publicans had experienced as a result of Covid-19 were not covered by the Policy. The principal question for the Court to consider in each of the four cases was whether FBD was obliged to cover any of the losses suffered by the Publicans following the closure of public houses in accordance 12 the Parchment
with Government guidelines on the 15th March 2020. The central dispute between the parties related to the interpretation of a clause in the Policy which stated that FBD would indemnify the Publicans for losses arising from the imposed closure of the premises by order of a government or local authority. In that regard, the Policy contained specific terms, which included, “as a result of the business being affected by imposed closure of the premises by order of the local or government authority following outbreaks of contagious or infectious diseases on the premises or within 25 miles”. FBD declined cover in respect of each of the Publican’s losses on the grounds that the imposed closure did not arise on foot of an outbreak of Covid-19 on any of the Publicans’ premises or within a 25-mile radius of the premises. FBD accepted that there was an imposed Government closure but that this closure could not be causatively linked to an outbreak of Covid-19 which occurred within a 25-mile radius of the Publicans’ premises.
What is the Insured Peril? The Court in its judgment advised that during the course of the proceedings, the parties used the word “peril” as shorthand for the nature of the risk covered by the insurance policy. The Court was asked to consider the nature and extent of the insured peril. FBD submitted that the relevant peril was simply
