Today, the High Court has ruled that four pub owners are entitled to be compensated by their Insurer, FBD, for the disruption their businesses suffered due to the Covid-19 pandemic.
Mr. Justice Denis McDonald found that a policy sold by FDB covered losses that the pubs sustained by having to close due to the global health crisis. The actions were taken by three Dublin bars, namely; Sinnotts, The Leopardstown Inn and Lemon & Duke, as well as Sean’s Bar in Athlone.
The Publicans claimed that they were entitled to have their losses, which were caused by Covid-19, covered under their insurance policies. However, the argument FBD put forward these bar closures were not caused as a result of the outbreak of a disease at the premises or within 25 miles of them. FBD submitted that the closure was caused by nationwide outbreaks of the disease and such was not covered under the policy.
Although Judgment was due to be delivered in January, the decision of Mr. Justice McDonald was deferred to allow the parties make submissions to the court arising out of the recent Supreme Court of England and Wales Judgment where similar issues were raised.
Under the terms of the pub owners’ policies of insurance, each claimed the following :-
- Under the terms of their insurance policies taken out with FBD, they were entitled to have their consequential losses covered by what they claimed is an insurable risk.
- By failing to pay out on the policy, the Insurer was in breach of contract.
- The policies taken out with FBD contain a clause which states the pubs will be indemnified if their premises were closed by order of the government or local authorities if there are “outbreaks of contagious and infectious diseases on the premises or within 25 miles of same.”
Lawyers for FBD advised the Court that it has never provided cover for a pandemic and no one in Ireland had asked for it.
However, Mr. Justice McDonald was of the view that it was essential to keep in mind that the FBD policies were designed specifically for the pub trade and the nature of that trade is therefore a key aspect of the context against which the policy is to be construed. Furthermore, Mr. Justice McDonald stated “In the years since section 3 of the FBD policy was devised, a number of significant outbreaks of infectious diseases have occurred. For example, there was a Swine Flu pandemic in 2009. We have also witnessed the emergence of SARS in 2003, albeit that it was largely confined, at that time, to the Far East”.
Mr. Justice McDonald disagreed with FDB’s interpretation of its policy. He held that cover was not lost where the closure was caused by nationwide outbreaks of disease, provided there is an outbreak within 25-mile radius and that outbreak was one of the causes of the closure. He stated such outbreaks were a cause of the closure of the pubs announced by the Government on the 15th March last year.
The Judge ruled that while the issue of quantifying the losses suffered by the publicans will be dealt with at a later date, he would not be awarding aggravated damages to the Plaintiff.
The case will be back before the Court on the 17th February and it is clear that this decision will cause FBD considerable difficulty as it would appear that they had issued a large number of similar policies. It is noted that FBD has made a substantial reserve in its account to cover this risk.
This decision has been welcomed by publicans all across the country given the disastrous impact of the pandemic on the pub trade, however, it has yet to be seen whether an appeal will be lodged by FBD Insurance.
A copy of the full Judgment can be viewed by clicking on the following link: https://www.courts.ie/acc/alfresco/8bfaa5dd-3ea3-4580-979f-0dfb2d8243be/2021_IEHC_78.pdf/pdf#view=fitH
If your business has been adversely affected by the Covid-19 Pandemic and you would like further information in relation to any of the above please contact Ciara Lehane, Associate Solicitor by email to clehane@jwod.ie or call 021-7300200.
This article will be updated further once issues on quantum have been decided.