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Corbin & King Ltd v Axa - Covid-19 and Business Interruption Insurance - Commercial Court Judgment

25th February 2022

Corbin & King Ltd v Axa - Covid-19 and Business Interruption Insurance - Commercial Court Judgment

The Commercial Court has handed down its judgment in the case of Corbin & King Ltd & Ors v Axa Insurance UK Plc (Corbin & King Ltd & Ors v AXA Insurance UK Plc (Rev1) [2022] EWHC 409 (Comm) (25 February 2022) (bailii.org)). The claim was made by policyholders, Corbin & King and its subsidiaries, who are the owners and operators of a number of well-known restaurants, cafes and other establishments in and around London. The claim related to the scope of cover provided by a Denial of Access (Non Damage) (“NDDA”) clause in a combined business insurance policy issued by Axa pursuant to a “Business Combined Insurance policy” which covered business interruption losses where: 

“access to your premises is restricted or hindered ... arising directly from: 

1 the actions taken by the police or any other statutory body in response to a danger or disturbance at your premises or within a 1 mile radius of your premises.

2 the unlawful occupation of your premises by third parties…”

The Court summarised the two key issues to be decided as:

“i) Whether the NDDA clause provided effective cover for loss resulting from restrictions on access to the Claimants’ premises under government regulations passed in response to the COVID-19 pandemic in the course of 2020 (“the Coverage Issue”).

ii) Whether, if the NDDA clause did provide cover, there was a single limit of £250,000 in respect of all premises for any one claim, or whether there was a limit of £250,000 for each set of premises (“the Quantum Issue”).” [at para. 3]

The policyholders argued that there was coverage under the NDDA clause on the basis that there were cases or the threat of cases of COVID-19 at or within a one-mile radius of each of the policyholders’ premises. By analogy with the reasoning of the Supreme Court in the FCA Test Case, it was argued there was coverage because such cases or threatened cases, combined with actual or threatened cases elsewhere in the UK, were an effective cause of the passing of the Covid-19 Regulations which led to the restriction of access to each of their premises.

In response, Axa argued that the NDDA clause only provided a narrow, localised form of cover in respect of “a danger or disturbance” specific to the locality of the policyholders’ premises. This was limited to the policyholders’ premises or within a one-mile radius of the premises, as opposed to a nationwide state of affairs. Axa contended that the policyholders had to demonstrate that it was the presence or the risk of Covid-19 at their premises or within a one-mile radius of the premises, as opposed to the country as a whole, which led to the Covid-19 Regulations.

In conclusion as to the Coverage Issue, adopting the Supreme Court’s approach to causation in the FCA Test Case, the Court held that: 

“COVID-19 is capable of being a danger within one mile of the insured premises, which, coupled with other uninsured but not excluded dangers outside, led to the regulations which caused the closure of the businesses and caused the business interruption loss.” [at para. 220]

In relation to the Quantum Issue, the Court held that the policy was “a composite policy in respect of which each insured is entitled to claim £250,000 in respect of each claim.” 

As a result, Axa was ordered to pay each of policyholders: 

“in respect of each of their premises up to a maximum amount of £250,000 in respect of each of the March 2020 closure, the September 2020 restriction, and the November 2020 closure” [at para. 244]

Comment

This decision of the Commercial Court is welcome news for policyholders who may have business interruption claims arising from NDDA clauses that are similar to those for which, in the FCA Test Case, the High Court considered there was no coverage – as these clauses were not subject to appeal to the Supreme Court. After the judgment of the Commercial Court, the broader causation analysis applied by the Supreme Court is now more likely to apply to similar NDDA clauses. It will be interesting to follow the future developments in any appeal in this case and the impact of this decision on other cases currently pending before the English Courts.


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