Adam Kramer KC and William Day establish coverage and multiple limits in business interruption insurance test cases

Adam Kramer KC and William Day appeared for the Liberty of London retail group and the Arena racecourse company (known in the proceedings as Liberty Retail and Bath Racecourse, after the First Claimant in each action) to determine issues of principle on coverage, policy limits and the deductibility of furlough against a group of insurers led by Liberty Mutual Insurance Europe. Liberty Retail and Arena were two of seven test cases, where common or similar preliminary issues were tried together.

In a judgment handed down on Friday ([2024] EWHC 124 (Comm)), Mr Justice Jacobs found substantially in the Claimants’ favour, holding that:

• There was coverage in Liberty Retail on the basis that the words ‘statutory authority’ in the prevention of access clause could be construed as including the Secretary of State for Health (coverage was not disputed in Bath Racecourse).

• Each limit was available per claimant because each policy was composite, as well as ‘per occurrence’ (in Liberty Retail) and ‘any one loss’ (in Bath Racecourse) and not to be construed as an annual aggregate limit as argued by insurers.

• Policyholders lost on the question of furlough. Jacobs J was not persuaded that Butcher J was wrong in finding for insurers on the same issue in Stonegate Pub Co v MS Amlin & Ors (in which Adam and Will also appeared for insureds).

Stonegate settled shortly before its appeal, but Jacobs J gave permission to appeal on furlough, so Liberty Retail and Bath Racecourse will now be the lead case in which the furlough issue (which affects the majority of outstanding COVID-19 business interruption claims) is determined an appellate level.

Proximate causation was not argued at first instance, with insurers recognising that their case could not realistically succeed in light of existing Commercial Court decisions, but will also be argued in the Court of Appeal.

Adam and Will are instructed by Aaron Le Marquer and James Breese of Stewarts Law in both actions.

Read the judgment.