25 Sept 2022

Court clarifies issues in dispute between pubs and insurers over Covid-19

Court clarifies issues in dispute between pubs and insurers over Covid-19

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The High Court has clarified certain issues raised in four publicans' on going-test actions over FBD's failure to pay out on business disruption claims caused by the Covid-19 pandemic.

The issues relate to the quantum of losses sought in actions brought by Dublin bars Aberken, trading as Sinnott's Bar; Hyper Trust Ltd, trading as ‘The Leopardstown Inn' and ‘Inn on Hibernian Way’ Ltd trading as Lemon & Duke in Dublin.

Leinster Overview Concepts Ltd the owner of Sean's Bar, which is based in Athlone, Co Westmeath, is the fourth plaintiff.

The level or quantum of damages to be awarded will be determined at a later date.

In his decision earlier last year, the outcome of which affects claims made by some 1,000 Irish pubs and restaurants, Mr Justice Denis McDonald found that a policy sold by FBD covered losses pubs sustained by having to close due to the pandemic.

In a subsequent judgement, the judge ruled on what interpretation should be applied to the term 'closure' within FBD's Public House Policy of insurance, which is relevant to quantifying the losses.

He found that the word closure is not confined to a total shutdown of the insured properties premises but extends to a closure of part of the premises.

The actions then moved to the next stage of the process, namely a hearing to determine the quantum of the publican's losses.

The level or quantum of damages to be awarded will be determined by the court. at a later date.

Before that important aspect of dispute can be determined several issues regarding quantum arose between the parties which Mr Justice McDonald said required to be clarified by the court.

The court considered evidence and submissions from the parties on the partial closure of the public houses at certain periods during the pandemic, staff costs, late payments, trends and circumstances, underinsurance, and the costs of capital expenses. 

Other factors including the effects of government and local authority guidelines, on matters including social distancing, on bar areas in his client's premises. 

The payment of wages to staff when the premises were closed, partially re-opened and the bars' costs of retaining staff were further considered.

The relevance of the evidence varied from pub to pub, the court noted.

One example was that the issue of partial closure was not relevant to Seans Bar as it had remained closed from March 2020 to June 2021.

In a lengthy and detailed judgement regarding these matters of dispute Mr Justice McDonald noted the extensive efforts made by the parties to address the issues regarding the quantum of the losses. 

In relation to those issues that remain outstanding the judge encouraged the parties "to make every effort to seek to resolve the outstanding issues between them"

If the parties engaged constructively, he added, then many of the outstanding issues "can be resolved without the need for further court hearings."

The Judge welcomed that progress had been made between FBD and certain pubs in relation to certain issues.

Among his findings the judge said that the Dublin pubs were subject to an early closing requirement in the period from 10th August 2020.

That constituted a government-imposed closure because of outbreaks of Covid-19, he said.

Under the policy of insurance, the judge said that Dublin pubs are therefore entitled to be indemnified in respect of the losses suffered by them during the relevant periods because of the early closing requirements in place from time to time since 10th August 2020.

He also concluded that, for the duration of the relevant periods, the bar counters of the three Dublin pubs were subject to a government-imposed closure in response to outbreaks of Covid-19.

The Dublin bars, he added, were entitled to be indemnified in respect of their losses during the relevant periods between June and September 2020 and in December 2020.

The losses under that specific heading are to be calculated in accordance with a methodology reflecting their individual circumstances outlined by the court.

The judge added that he was prepared to consider any workable amendments to that methodology agreed by the parties.

With regard to the staff wages and salaries claims, each of the claims made by Sean’s Bar, Sinnotts and Lemon & Duke have been successful in part, the judge said.

In the case of the Leopardstown Inn, the court was unable, considering the evidence put before the court, to make a finding that any part of its claim on that issue should succeed.

He said that all the court could do in its case was ask the parties to liaise to see if any agreement can be reached in relation to any staff who were retained on its payroll when it was necessary to do so.
The judge also concluded that FBD is not entitled to pursue any issue in relation to underinsurance.

The case will return before the court next month.

In his previous rulings Mr Justice McDonald disagreed with FBD's interpretation of its business disruption policy regarding Covid-19.

He said that cover is not lost where the closure is prompted by nationwide outbreaks of disease if there is an outbreak within the 25-mile radius and that outbreak is one of the causes of the closure.

The publicans challenged FBDs refusal to indemnify them, as well as the insurer’s claim its policies did not cover the disruption caused by Covid-19.

They claimed that under their policies of insurance they were entitled to have their consequential losses covered by the insurer.

FBD claimed the policies contained a clause that states the pubs will be indemnified if their premises were closed by order of the local or Government Authority if there are "Outbreaks of contagious or infectious diseases on the premises or within 25 miles of same."

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