Developments in Business Interruption claims - Premier Dale v RSA Insurance Ireland DAC

Published 15 marzo 2023

In our Year In Review 2021, we reported on various decisions of the Irish Courts regarding business interruption claims throughout the course of the year.

In April 2022, Mr Justice MacDonald delivered judgment in Premier Dale Ltd (T/a The Devlin Hotel) V RSA Insurance Ireland DAC. The proceedings were brought in the Commercial Court. Defendant brokers Arachas had already been released from the proceedings.

The Court found that the Policy issued by RSA, the defendant insurer in relation to the Devlin Hotel in Dublin, did not cover the Plaintiff for business interruption losses arising from the closure of the Plaintiff’s premises following the introduction of restrictions in order to address the Covid 19 pandemic.

Background
The background to business interruption claims in Ireland is a well-trodden path and the case was decided based on an agreed set of facts. Following the designation of Covid 19 as a notifiable disease under the Infectious Disease Regulations in February 2020, and the outbreak of cases across Ireland, on 15 March 2020, the Taoiseach called on all pubs to close that evening until 29 March.

On 27 March, the Minister for Finance and the Central Bank issued a communication that the Taoiseach’s statement should be regarded as a direction. Regulations were subsequently introduced resulting in the closure of all pubs and once reopened, the restricted opening of pubs in Ireland for a number of months.

In this instance, there was a coffee hatch still in service at the hotel premises. There was no diagnosed or confirmed case of Covid 19 at the premises prior to closure.

The issues
The Court was asked in particular to interpret a Closure/Disease clause contained within the Policy (Extension 6A to the Policy) which read as follows:

“Closure or restrictions placed on the Premises on the advice or with the approval of the Medical Officer of Health of the Public Authority as a result of a notifiable human disease manifesting itself at the Premises’”.

The parties agreed that the peril identified in the Extension was a composite one and that all three elements must be established for there to be cover. The Court had to consider what was meant by a notifiable disease “manifesting itself at the Premises”? In this regard, the Court had to determine:

(a) did there have to be a medically confirmed case of Covid 19 within the body of the Premises or was there a lesser requirement?

(b) if a medically confirmed or medically diagnosed case in the vicinity of the Premises had occurred, was this sufficient?

(c) If the disease was “manifesting itself at the Premises”, were the covered losses limited to those caused by the human notifiable disease manifesting itself at the Premises or did it include loss caused by a wider manifestation of a human notifiable disease beyond the Premises.

(d) If these points were determined in the Plaintiff’s favour, were the requirements satisfied on the evidence.

In relation to (a) the Court found that wording of the Extension and “manifesting” had to be considered in context having regard to all of the language in the Extension and that a medical meaning should not be attributed to them. The Court sought to give the Extension the meaning intended by the parties when cover was placed in 2019.

The Court found that the presence of Covid 19 in the community was not sufficient to indicate that it was manifesting at the premises. While the Court accepted that people infected with the virus may have attended the premises, undiagnosed or asymptomatic people could not be said to be manifesting the disease. Furthermore, there was no evidence of the virus manifesting at the premises.

The Court considered that in order for there to be a “notifiable human disease manifesting itself at the Premises” there had to be either a symptomatic case of a notifiable disease at the premises, a diagnosed case of a notifiable disease at the premises or the detection of the causative pathogen at the Premises.

In considering what was meant by “at the premises”, this extended to the presence of the disease at the coffee hatch or the outside dining area. Except however where the case arose immediately outside the premises, a symptomatic or diagnosed case of the virus or the detection of its causative pathogen in the vicinity of the Premises was not sufficient to trigger the Extension.

The Court found that a total cessation of the business was not required but given its findings in relation to manifestation of the disease, it was not required to determine precisely what level of restrictions were required to trigger cover under the Extension.

The Court was further asked to consider causation, in particular whether, if the insured peril had occurred, whether the insured losses extended to include caused by a wider manifestation of a human notifiable disease beyond the premises. This guidance would have been welcomed by insurers dealing with business interruption claims. As the Court found that the insured peril had not occurred, the Court however did not reach a conclusion on causation. Notwithstanding this, the decision does provide some
guidance as to the approach taken by the Irish courts and the need for insureds to demonstrate in full that the insured peril has in fact occurred.