A €1m Covid insurance business interruption test case taken by a Cork hotel and restaurant in the High Court against a Slovenian insurance company and a Limerick insurance underwriting company has been delayed because of a significant judgement in a similar case in the English High Court.
Youghal-based Coachhouse Catering Ltd, trading as the Old Imperial Hotel, is a test case for the Restaurants Association of Ireland (RAI) against Zavarovalnica Sava Insurance Company of Maribor, Slovenia, and Frost Insurance Ltd of Limerick before Judge Denis McDonald in the Commercial Court.
RAI instructed Georgina Robinson (pictured) of Robinson Solicitors to take the case and she in turn drafted in senior counsel Richard Kean and Darren Lehane, and junior counsel Gareth Robinson and Béibhinn Murphy. For the other side Matheson instructed Paul Gardiner SC and junior counsel Barbara O'Neill.
Over three days in October 2021, lawyers contested whether or not the Sava insurance policy covered business interruption caused by the Covid-19 lockdown and restrictions. Judge McDonald reserved judgement and recently requested lawyers for Coachhouse and Sava to consider further submissions after a decision in the England and Wales High Court in which restaurants won a significant indemnity case against Axa Insurance.
The English case focused on whether restaurants and pubs should be compensated in a "non-damage, denial of access" situation caused by Covid, where there was no actual damage to businesses preventing them from operating. The Sava case also focuses on the proper interpretation of "damage" in the relevant policies.
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If the Coachhouse Catering case succeeds, it could lead to substantial payouts to between 50 and 60 other RAI members, with insurance industry sources suggesting the total compensation could eventually be in the region of €90m.
This RAI test case was made possible through a provision of the Central Bank's Supervisory Framework brought in to cope with business interruption insurance disputes arising from the Covid crisis. So-called test cases have no statutory basis in Ireland, but the CBI's Framework allows for that to occur for the determination of issues in relation to business interruption policies for wider groups of companies.
Significantly, the framework protects plaintiffs in a designated test case by requiring they receive "reasonable costs" irrespective of the outcome. If the plaintiff wins a designated test case, other businesses with the same insurance cover will then have their compensation payouts decided by arbitration.
The Commercial Court has already seen a number of other business interruption test cases including, notably, one in which FBD Insurance was held to be liable to compensate pubs which were forced to shut over Covid. It is estimated that the insurer will eventually end up paying out c.€180m.
