Various Eateries Trading Limited v Allianz Insurance PLC

Business interruption cover for disease, enforced closure and prevention of access responds to Covered Events identified by their substance. A disease occurs each time an individual contracts it within the relevant vicinity or enters that vicinity with it; the pandemic as a whole is not one occurrence. The indemnity period begins when the resulting interruption or interference starts, subject to the Covered Event having occurred. Loss after the policy period is covered only where proximately caused by an in-period Covered Event. A closure or prevention of access beginning during the policy period may support recovery for its continuing effects, provided it remains substantially the same restriction. Per-Single-Business-Interruption-Loss limits apply regardless of aggregation, while Total Value operates as an overall cap.

The claimant operated restaurants and claimed indemnity for Covid-19-related business interruption under a Marsh Resilience policy. The action concerned preliminary issues about the Disease, Enforced Closure and Prevention of Access Clauses, including the number of Covered Events, the commencement of the Indemnity Period, losses after the policy period, liability limits and aggregation into a Single Business Interruption Loss. The issues were heard in sequence with the separate actions Stonegate Pub Co Ltd v MS Amlin Corporate Member and others and Greggs Plc v Zurich Insurance Plc. The central questions concerned the proper construction of the policy and the application of proximate causation and aggregation principles.

The court determined the preliminary issues and directed that further submissions be made on the precise form of the resulting orders.

1. Covered Events. Under the Disease Clause, a Covered Event occurred each time Covid-19 was contracted within the Vicinity and each time a person carrying the disease entered it. The pandemic or epidemic was not one state-of-affairs event. The reasoning of the Divisional Court in the FCA Test Case, [2020] EWHC 2448 (Comm), was undermined by the majority reasoning of the Supreme Court in [2021] UKSC 1. There were two Enforced Closure Covered Events per venue, giving 20 in total. Prevention of Access Covered Events were to be identified by substance, with groups of regulations, guidance or rules producing one prevention treated as one event.
2. Trigger and indemnity period. The Covered Event was the relevant matter specified in the Disease or Prevention of Access Clause, rather than the resulting interruption or interference. The Indemnity Period began when that interruption or interference commenced, not merely when the Covered Event occurred.
3. Post-period losses. Loss after the Period of Insurance was recoverable only if proximately caused by an in-period Covered Event. Earlier cases causing later cases did not establish proximate causation, and the death blow or grip of the peril principle did not apply. In-period cases were equally effective causes of the 12 October announcement and 14 October tier regulations, but not of later measures announced on 29 October or the second lockdown.
4. Continuing restrictions. Where an Enforced Closure or Prevention of Access event began during the Period of Insurance, its resulting effects could remain covered while the restriction continued, subject to the Maximum Indemnity Period, if it remained substantially the same. Relevant factors included the terms and purpose of the restrictions, the legal origin of the powers, the reasons for them, and the identity of the authority. The December 2020 early-closure rule was not substantially the same as the September rule.
5. Limits and aggregation. The specified limits per Single Business Interruption Loss applied to claims under the relevant Insuring Clauses whether or not losses were aggregated. The Schedule’s Total Value wording operated as an overall limit. The Wuhan, virology, initial introduction and pandemic-spread candidates were too remote or lacked the unity required for a single occurrence. Government actions constituted separate occurrences, including the 16 March instructions, 20 March closure, 24 September restrictions, 14 October tier system and 5 November lockdown. Immaterial renewals, changes or relaxations were not separate occurrences. Aggregation was not confined to losses at individual venues.