Further Court of Appeal guidance on COVID-19 business interruption claims
Adam Kramer KC and William Day acted for the lead policyholders in the Bath Racecourse Company Ltd group in appeals deciding further test issues on COVID-19 claims under business interruption insurance policies, all on appeal from the judgment of Jacobs J of January 2024. This was one of the Lawyer’s Top 10 Appeals of 2025.
Bath Racecourse comprise twenty companies which own and operate greyhound tracks, golf courses, hotels and other leisure venues. Other policyholders represented in the appeals were the Gatwick Investment Ltd and Starboard Hotels Ltd hotel groups. The insurer in all cases was Liberty Mutual Insurance Europe SE, and the cover clauses were all DOA (denial of access) or POAND (prevention of access non-damage) clauses (as opposed to pure disease clauses).
On the first issue of general importance, the composite policy issue—i.e. whether limits were distinct per policyholder (e.g. per race course or hotel) in a composite policy, Adam and Will successfully resisted the insurer’s appeal. The ‘any one loss’ limits, which were not stated to be in the aggregate across all policyholders or separate for each policyholder, were held to apply separately to each policyholder. A composite policy was a series of insurance contracts with each policyholder insured separately ([161]). As the policyholders had distinct premises, and the danger insured would be distinct for each, the limits were intended to be applicable to each insured separately, and the reasonably policyholder would not expect its limit to be eroded by someone else’s claim, absent express wording to the contrary ([164]-[166]).
On the second issue of general importance, the furlough issue—i.e. whether the substantial payments received from the Government to fund furloughing staff should be deducted from the amount of indemnity payable by insurers, the insurers succeeded in resisting Adam and Will’s appeal. The furlough payments which funded the wage bills of the policyholders meant that those wage bills did ‘reduce’ as a matter of commercial and economic reality and so there was as saving in wages within the meaning of the relevant savings clause ([174]). This also accords with the basic principle that the contracts are contracts of indemnity and no more than actual loss should be recoverable without wording so requiring ([178]-[179]). Further, the furlough payments were ‘in consequence of’ the insured peril within the wording of the savings clause, as the pandemic and Government restrictions were a sufficient effective cause of the furlough scheme ([185]) and the prevention or hindrance of use led to the claims under the furlough scheme ([186]). It followed that the payments were not collateral and to be disregarded as in the case of benevolent gifts ([187]), and such payments will not be collateral unless the insured can establish that that the third party intended to benefit only the insured to the exclusion of the insurer ([190]).
There was a third issue of general importance, the causation issue—i.e. whether the FCA Test Case causation approach (millions of concurrent causes leading to Government action etc) applied to DOA and POAND clauses. Insurers abandoned their appeal on this issue after the Supreme Court refused permission to appeal in the ‘at the premises’ disease clause case of London International Exhibition Centre (in which Adam and Will also acted—see here for a summary).
There was a further issue of interest only to these policyholders, as to whether an amendment had led to the applicable DOA limit being £2.5m in the aggregate, rather than £2.5m any one loss. Adam and Will succeeded in resisting the appeal on that issue and maintaining the latter construction ([169]).
The case is Liberty Mutual Insurance Europe SE v Bath Racecourse Company Ltd [2025] EWCA Civ 153 and the judgment can be found here. A further trial in Bath Racecourse will take place in May and decide issues on application of the ‘any one loss’ aggregation wording to the facts of COVID-19 Government actions.
Adam and Will were instructed by Aaron Le Marquer, James Breese, Arjun Dhar and Claudia Seeger of Stewarts.
