International Entertainment Holdings Limited & Ors v Allianz Insurance PLC

A non-damage denial-of-access clause referring to prevention or hindrance by a policing authority applies to the police and similar bodies performing policing functions. It does not extend to a Secretary of State making secondary legislation, even where that legislation protects public safety.

Policy wording must be interpreted objectively from the standpoint of a reasonable ordinary policyholder. A policy assembled from disparate clauses does not justify an inference that similar expressions were used consistently. Where a policy limit contains defective language, construction may correct it only if both the mistake and the required correction are clear. A court cannot select between competing corrections.

The claimants operated entertainment venues insured under a composite commercial policy. They sought business-interruption cover for Covid-19 closures under an NDDA clause triggered by an incident likely to endanger life or property within one mile, where access or use was prevented or hindered by a policing authority.

Mr Justice Jacobs decided preliminary issues in the Commercial Court, reported as [2024] EWHC 124 (Comm). He held that the Secretary of State for Health and Social Care was not a policing authority, which defeated the claims. He also determined issues concerning whether a Covid-19 case was an incident, the one-mile requirement, and the £500,000 limit.

The policyholders appealed the conclusions on cover. The insurer cross-appealed the rulings on the limit and aggregation. The central issue was whether the Secretary of State’s making of the closure Regulations fell within the expression “any policing authority”.

1. Appeal dismissed and cross-appeal dismissed. The court substituted a declaration that the Secretary of State for Health and Social Care was not a policing authority within clause S/30/1. That conclusion required dismissal of the policyholders’ claims.

2. The clause had to be construed objectively from the viewpoint of a reasonable ordinary policyholder. The policy’s separate disease cover, which did not specify Covid-19, did not justify stretching the language of the NDDA clause. Further, the policy displayed a pick and mix form of drafting. Similar language elsewhere in it therefore afforded little assistance in construing the clause in issue.

3. “Policing” qualified and narrowed “authority”. The expression covered the police and potentially similar bodies exercising policing functions, including operational responses to local circumstances and public-safety risks. It did not include central government or a minister making secondary legislation. The fact that both police bodies and the Secretary of State might act to protect public safety did not make them equivalent for this purpose.

4. Although unnecessary to the dismissal, a Covid-19 case within the one-mile radius could, on the assumed premise that the Secretary of State were a policing authority, be an incident likely to endanger human life. In this wording, “incident” and “occurrence” were used interchangeably. The court also agreed that the incident itself, rather than merely the endangerment it caused, had to occur within the fixed radius.

5. The £500,000 limit applied separately to each insured premises. Prevention or restriction of access to each premises gave rise to a separate claim. The court also rejected an aggregate limit. Although the language contained an error, construction could not correct it because more than one correction was reasonably possible. The requirements for correction identified in [2009] UKHL 38 were therefore not met.

• Court of Appeal (Civil Division): The policyholders’ appeal and the insurer’s cross-appeal were dismissed. The court substituted a declaration that the Secretary of State was not a policing authority for clause S/30/1 purposes: [2024] EWCA Civ 1281.

• High Court, Commercial Court: Mr Justice Jacobs determined preliminary issues and dismissed the policyholders’ claims because the Secretary of State was not a policing authority. He also ruled on the incident, radius and policy-limit issues: [2024] EWHC 124 (Comm).