The recent Irish High Court supplemental judgment to its judgment in Marlin Apartments Limited t/a Marlin Hotel Dublin v Allianz PLC [2024] IEHC, doesn’t affect the court’s September 2024 judgment on the meaning to be given to the words “at the Premises” in the relevant notifiable disease extension.
The court said the words “at the Premises” are straightforward every day, self-explanatory language that should not require detailed analysis. The terms of the relevant extension read:
“Notifiable Disease
The insurance by this Policy shall subject to all the Exclusions and Conditions of the Policy (except insofar as they may be hereby expressly varied) and the special conditions set out below extend to include loss resulting from interruption or interference with the Business carried on by the insured at the premises in consequence of:
1(a) any occurrence of a Notifiable Disease (as defined below) at the Premises”
The extension therefore required that there should be an occurrence of a notifiable disease at the hotel premises.
The court in referencing the FCA Test Case judgment of the UK Supreme Court said that, while there was clearly support for the case that an “at the Premises” clause is to be treated in the same way as a radius clause, that did not alleviate the requirement to prove an occurrence on the site of the insured premises.
The insurer argued that the extension was concerned with localised cover, and not intended to apply unless the closure or restriction was imposed to deal specifically with an occurrence at the insured premises and not where the relevant closure or restriction was imposed as a consequence of a nationwide outbreak.
The court said that on the plain and simple words of “at the Premises”, the plaintiffs must prove on the balance of probabilities there was a case of COVID-19 within the perimeter of the hotel during the relevant periods in issue. The case did not get off the ground without that evidence.
If such an occurrence was proved, it was then necessary to consider whether the occurrence of the disease at the premises caused the relevant restrictions imposed on the plaintiff’s business by a competent authority. Dealing with causation and the localised “cover” argument the court said there was nothing in the terms of the clause that made it clear that it was intended to apply solely in cases where the outbreak of disease occurred within the specified local area. It would have been a very simple matter for the insurer to expressly so provide if that had been the intention of the clause.
The court said:
“A highly infectious disease is well capable of occurring in multiple locations. That is particularly so in the case of premises such as hotels or public houses where guests tend to congregate in bars and other public areas. It would not be surprising to find that an occurrence of a highly contagious disease in one bar or hotel would also be replicated in other similar premises. This must be taken to form part of the relevant factual backdrop against which Extension 6 falls to be interpreted. In my opinion, a reasonable person in the position of the parties would readily appreciate that, unlike a murder or a suicide, a highly infectious disease (as many notifiable diseases are) is well capable of occurring simultaneously both at the insured premises and at many points outside that premises. Against that important element of the factual background, I do not believe that such a person would form the view that cover was confined to cases where the restrictions were imposed solely in response to a case of such a disease at the insured premises itself. … it would have been a very simple matter for the defendant, had this been the intention of the Extension, to expressly state in the wording of Extension 6 that cover is confined to circumstances where the Government order causing the interruption of business results solely from cases of disease at the insured premises or applies solely to the premises. No such language appears in Extension 6,”
Mindful of the lessons arising from the COVID coverage judgments in many jurisdictions, insurers wishing to limit or restrict cover and/or causation, whether under the primary operative clause, or extensions should consider qualifications along the lines of “directly and solely” or “directly and only” or variations thereof, but conscious of the gymnastics courts around the world have been prepared to engage in to find for cover.
[Marlin Apartments Limited t/a Marlin Hotel Dublin v Allianz PLC [2024] IEHC]