PizzaExpress Group Limited & Ors. v Liberty Mutual Insurance Europe SE & Anor.

Contractual insurance limits must be construed objectively, by considering the wording in its immediate and wider contractual context. Commercial common sense may assist, but cannot be used retrospectively to rewrite an unwise bargain.

Where a policy states that all Limits of Liability apply on an “any one Occurrence” basis unless otherwise stated, that wording ordinarily includes sub-limits. A sub-limit is a limit on the insurer’s liability. A different aggregation basis must be stated clearly. Minor inconsistencies in terminology or capitalisation do not displace the ordinary meaning of comprehensive wording such as “all”.

PizzaExpress companies claimed indemnities from two insurers for COVID-19-related business interruption losses under an Aon Trio Property and Business Interruption policy.

The parties agreed to determine a preliminary issue concerning whether sub-limits applicable to notifiable disease cover, prevention of access cover and claims preparation expenses applied on an “any one Occurrence” basis, an “any one Incident” basis, or another basis.

The issue concerned the construction of the Schedule, including its provisions stating that sub-limits formed part of the Limit of Liability and that all Limits of Liability applied on an “any one Occurrence” basis unless otherwise stated.

1. Disposition. The preliminary issue was answered in favour of the Insurers. The relevant sub-limits applied on an “any one Occurrence” basis unless otherwise stated.
2. The Policy was to be construed objectively by asking what a reasonable policyholder, possessing the relevant background knowledge, would have understood the language to mean. The court had to construe the wording in the context of the relevant clause and the Policy as a whole. The unitary exercise could include consideration of commercial common sense, but not retrospectively to improve an unwise bargain or rewrite the Policy. These principles were addressed by reference to Wood v Capita Insurance Services Ltd [2017] AC 1173 and Arnold v Britton [2015] AC 1619.
3. The critical wording was that “all Limits of Liability apply any one Occurrence … unless otherwise stated”. In ordinary language, “Limits of Liability” included the sub-limits. A sub-limit restricted the insurer’s liability and was therefore a limit of liability.
4. The structure of the Schedule confirmed that interpretation. The bullet points on the sub-limits page stated default rules applying unless the table stated otherwise. The table expressly provided different bases for certain items, including per-person and per-premises limits, but contained no different provision for the notifiable disease, prevention of access or claims preparation expenses sub-limits.
5. The contrary construction depended on fine distinctions between “Limit of Liability”, “Limits of Liability” and “limits”, despite inconsistent capitalisation and usage elsewhere in the Schedule. It would also leave the aggregation basis for sub-limits unstated. A reasonable reader would instead understand the Schedule to specify a consistent “any one Occurrence” default rule.