Stonegate Pub Company Limited v Amlin Corporate Member Limited & Ors.

A business interruption policy aggregating losses connected with a single occurrence requires an identifiable, unitary occurrence which meaningfully explains the losses. A relatively weak causal connection may suffice, but remoteness remains a distinct limitation. Whether there is one occurrence is judged from the perspective of an informed observer in the insured’s position, using reasonably available knowledge shortly after loss begins.

Government decisions and coordinated instructions may constitute occurrences. Pandemic losses may therefore aggregate across multiple insured premises. Later losses remain recoverable only where proximately caused by covered events during the policy period. Government support which reduces insured costs is generally brought into account when calculating the indemnity, absent an intention to benefit the insured to the exclusion of insurers.

The claimant operated about 760 hospitality venues and claimed substantial business interruption losses arising from the Covid-19 pandemic under a policy written by the defendants. The policy covered notifiable disease, enforced closure and non-damage prevention of access. It aggregated loss arising from, attributable to or connected with a single occurrence into a Single Business Interruption Loss, subject to specified limits.

At the first-stage trial, the court determined issues concerning covered-event triggers, aggregation, post-policy-period causation, Additional Increased Cost of Working and the treatment of furlough payments and business rates relief. Questions of adjustment, proof of loss and the precise quantum of recoverable loss remained for later determination.

1. The defined first-stage issues were determined. Under the disease cover, each qualifying case of Covid-19 during the policy period was a covered event. Under the enforced-closure cover, each actual closure of an insured location was a covered event, although continuation or renewal of materially identical restrictions did not create further events. Under the prevention-of-access cover, each materially different governmental action or advice was a covered event; the number was not multiplied by the number of affected premises.

2. The aggregation inquiry required an identifiable, unitary occurrence which meaningfully explained the losses. The words “in connection with” required a causal relationship, although it could be relatively weak, indirect and less than proximate causation. Remoteness remained a separate limitation. The inquiry was made from the perspective of an informed observer in the insured’s position, at the earliest reasonable time after business interruption loss began, using knowledge then reasonably available.

3. No individual Covid-19 case could aggregate all losses. Although the initial zoonotic transfer to humans was an occurrence, it was too remote. Virological antecedents and epidemiological tipping points were also unavailable as aggregating occurrences. By contrast, the coordinated governmental decisions of 16 March 2020 advising the public to avoid hospitality venues and of 20 March 2020 requiring those venues to close were single occurrences capable of aggregating losses across the claimant’s business. The governmental response from 16 to 26 March was not one continuous occurrence.

4. Covered cases during the policy period remained equal proximate causes of closure losses until hospitality venues were permitted to reopen in England, Scotland and Wales in July 2020. Later restrictions were principally caused by later cases and contemporary threats. Earlier cases were not proximate causes merely because cases generate later cases. Particular continuing losses, including those associated with death, long Covid, cancelled events, lost momentum and reopening costs, remained matters for proof.

5. The £15 million Additional Increased Cost of Working sub-limit applied per Single Business Interruption Loss. That cover ordinarily excluded economic Increased Cost of Working and could not operate as a top-up merely because the applicable limit for economic expenditure had been exhausted.

6. Coronavirus Job Retention Scheme payments reduced employment costs and had to be brought into account under the policy’s savings clause. Business rates relief likewise fell within that clause where the rates would normally have been payable from turnover. The position where rates were not so payable remained unresolved.

not stated in the judgment.