In March next year it will be four years since the first lockdowns were brought in as a result of the COVID-19 pandemic, and this period has seen a huge amount of legal action, discussion, disagreement and confusion over how the insurance world should respond to losses experienced by their customer base. Whilst some of the more high-profile cases, such as those brought by the Financial Conduct Authority, are now ‘old news’, the legal system continues to handle a lot of proceedings brought by policyholders who want to test the parameters of their cover in an effort to achieve some kind of financial restitution for the losses they suffered in 2020 and beyond.
As 2023 draws to a close, we thought it would be worthwhile taking stock of those cases that are currently in the courts, and to look ahead to what 2024 might bring in terms of COVID-19 legal action.
Stonegate/Various Eateries/Greggs (‘Stonegate’)
The above cases saw initial rulings passed down in October 2022, although much of what has been articulated in these rulings has been subject to appeal ever since.
These cases were different from the ‘original’ FCA case in a number of ways. Firstly, whilst they were strictly separate legal actions, they were nonetheless grouped together for both the hearings and the publication of their respective judgements, ostensibly because a great many of the points that were being contested overlapped with the particular policies being considered. Secondly, the questions on which these cases hinged were more subtle and complex than those that were considered in the FCA case. That latter action was designed to indicate whether a policy provided cover or not – with some small qualifications aside, the rulings either said ‘Yes’ or ‘No’ on this point. However the ‘Stonegate’ cases focused on a much more nuanced series of questions, which sought to address whether COVID-19 was a ‘single occurrence’, or whether each individual location under a policy could ‘trigger’ its own separate claim. This latter point was approached in an especially forensic manner given earlier rulings in Corbin & King v AXA that seemed to suggest limited scenarios wherein a claim could be considered per location.
As it happened, the Court ruled against Stonegate on the question of whether each location that they insured was a separate ‘trigger’ for a ‘Covered Event’. The difference between the ruling in Stonegate and Corbin & King v AXA is a subtle one, but in principle it revolves around the names insured under the policy and their relation to the premises that are insured. If the policyholder’s name is “The Dog and Duck & Marleys Nightclub”, and these are two separate premises insured under the policy, then Corbin & King v AXA suggests that a claim can be brought for each individual insured. However, if the policyholder is simply given as “Nightlife Enterprises” with a list of premises then the Stonegate case states that a separate claim (and applicable policy sub-limit) can not be invoked for each of these separate premises.
The Stonegate case also addressed issues of what events caused what sort of losses – indeed, the question was investigated as to what actually constituted an ‘event’ or ‘occurrence’. This is an area of the case which was particularly complex, but as an overview the Court agreed that the decision made by the UK Government on 16 March 2020 on the introduction of certain restrictive measures, and then the instruction given on 20 March 2020 for pubs, bars etc. to be closed, constituted two “occurrences”. The judge also felt that it was at least possible that the announcement of the ‘National Lockdown’ on 23 March 2020 could be a further occurrence. This area of the ruling obviously opened up questions as to whether each lockdown could be considered to be an ‘occurrence’, or whether the whole pandemic, once established, was a single undivided cause of losses for a policyholder. However the ultimate conclusion of the ‘Stonegate’ case has yet to be reached, as an appeal is continuing that is expected to be resolved in early 2024. As will be seen from the above, the case revolves around issues that are sometime difficult to understand, and it is hoped that the ruling in the appeal will enable clarity to be brought on these complex questions.
“At the premises” wordings
Earlier this year the case of London International Exhibition Centre Plc v Royal & Sun Alliance Insurance Plc & Ors was heard in the High Court, which sought to test policies that restricted coverage to the presence of COVID-19 on a business’s premises alone. This test was conducted in light of the principles that were passed down in the original FCA case which seemed to establish a chain of causation that would allow these so-called “at the premises” policies to respond to losses suffered by a policyholder.
The ruling in June 2023 was extremely positive for policyholders in that it concluded that claims could be paid under this type of cover, although the insurers in question chose to appeal the judgement. This appeal is waiting to be resolved, and it will obviously be of interest to all businesses who were originally told that their claim would not be considered under policies with this type of construction.
Gatwick Investment and Others
This is one of the most recent of the cases being brought and is due to be heard during October 2023. In effect, this approach follows on from the rulings in Corbin & King v AXA which related to the potential policy response of ‘Non-Damage Denial of Access’ clauses as a result of the COVID-19 pandemic. The judgement in the FCA case had been fairly robust in suggesting that these types of policy extension were, in almost all cases, not designed to respond to the nationwide effects of a government-imposed lockdown, in the most part because they tended to contain a stipulation requiring an ‘incident’ or ‘event’ to have occurred close to the premises itself. The conclusion of the judges in the FCA case was that most of these types of policy were primarily designed to deal with a ‘local’ matter, such as unexploded munitions requiring the closure of a road – they were not, in turn, triggered by a national catastrophe that led to national measures being imposed.
However Corbin & King v AXA sought to challenge this position, and, within the parameters of the AXA policy in question the case was successful for the claimant policyholders. However, the AXA policy itself featured a somewhat idiosyncratic construction, which resulted in a judgement that itself was very specific to said policy. Consequently the consequences of Corbin & King v AXA were not as wide-ranging for policyholders of other insurers, despite it superficially appearing to open up areas of coverage for other claimants.
Nonetheless a consolidated action being led by Gatwick Investments, but also featuring Hollywood Bowl Group and Pizza Express Group (amongst others) is now looking to test the applicability of Corbin & King in relation to their policies with Liberty Mutual, which may further prise open the door for other policyholders to revisit their own claims under the ‘Non-Damage Denial of Access’ coverage.
As can be seen, 2024 shows no sign of being a quieter year for COVID litigation. Indeed, other cases are also anticipated in relation to much more granular analysis of certain policy wordings, such as the so-called ‘Burger and Lobster’ action, wherein a court will rule on the meaning of the phrase ‘policing authority’, ostensibly on the basis of whether this term is synonymous with ‘the UK Government’ from the perspective of circumstances in which the policy in question was required to respond to an enforced closure by an external authority.