The Members of the Probitas Syndicate 1942 at Lloyd's for the 2022 Underwriting Year of Account v Pro 2 Care Limited

An insurance policy must be read objectively as a whole. A schedule describing property damage and business interruption as insured does not necessarily provide both forms of cover where the schedule specifies only property sums insured and contains no business interruption limit or indemnity period.

Business interruption cover ordinarily protects an existing business against loss of income caused by insured damage. It does not, without appropriate wording, insure the loss of an opportunity to commence a future business. A waiver by estoppel requires an unequivocal representation, reliance, and circumstances making withdrawal inequitable.

Probitas sought summary judgment on a declaration that Pro 2 Care’s policy did not provide business interruption cover and that Pro 2 Care had no claim for alleged losses following burst water pipes at premises being renovated as a children’s care home.

Pro 2 Care argued that the policy covered delayed opening and that Probitas had waived reliance on the absence of cover. It also counterclaimed for damages under section 13A of the Insurance Act 2015 for alleged delay in paying the property damage claim.

The court determined the policy construction, the alleged insurable interest and waiver issues summarily, but held that the section 13A counterclaim required trial.

1. Disposition. Summary judgment was granted to Probitas on its declaration that the policy did not provide business interruption cover. Pro 2 Care’s counterclaim for a declaration to the contrary was dismissed. The section 13A counterclaim was allowed to proceed to trial.
2. Summary judgment. Under CPR r24.3, the court may decide a short point of law or construction summarily where the opposing party has no realistic prospect of success, the evidence necessary for determination is available, and there is no compelling reason for trial. The court applied the principles collected in The LCD Appeals, including the guidance from Easyair Ltd v Opal Telecom Ltd, Swain v Hillman, ED & F Man Liquid Products v Patel, Royal Brompton Hospital NHS Trust v Hammond (No 5), Doncaster Pharmaceuticals Group Limited v Bolton Pharmaceutical Co 100 Limited and ICI Chemicals & Polymers Ltd v PTE Training Limited.
3. Construction. Applying objective contractual interpretation, the policy schedule’s reference to Section A as “Property Damage & Business Interruption” being insured did not establish that both components were operative. The schedule identified sums insured and deductibles only for buildings, contents and computers. It contained no business interruption sum insured, maximum indemnity period or other necessary limit. Read as a whole, the policy provided property damage cover only. The 2022 quotation, which stated that business interruption cover and the indemnity period were not applicable, reinforced that conclusion.
4. Insurable interest and loss. Even if business interruption cover had existed, it required an existing business at the premises capable of generating gross revenue and being interrupted. Pro 2 Care was developing premises for a future care home, but no care home business was operating and no revenue was being generated when the damage occurred. The claimed loss was therefore the loss of a hoped-for future business, not business interruption within the policy.
5. Waiver. Probitas and Lloyd’s had agreed only that the claim would be reconsidered. Subsequent correspondence expressly reserved liability and did not amount to an unequivocal representation that the claim was covered. The waiver defence therefore had no real prospect of success.
6. Section 13A. Whether payment of the property damage claim was unreasonably delayed, and what loss resulted, depended on disputed factual evidence. Those issues could not fairly be resolved summarily.