Judge rules in favour of Wolseley-owner Corbin & King in BI case with Axa

Mrs Justice Cockerill has ruled that restaurant group Corbin & King’s business combined Axa Insurance policy does cover non-damage denial of access business interruption claims and should provide multiple payouts.

The restaurant group had been seeking payouts under a non-damage denial of access clause and for each location rather than one policy limit.

The case, which is expected to have wide ramifications for other insurers, had been heard at the High Court of Justice on 25 and 26 January.

The decision could see insurers on the hook for an increased number of and higher value BI claims.

NDDA

Corbin & King claimed the NDDA clause covered losses resulting from closures and restrictions under government regulations on three occasions in 2020 during the Covid-19 pandemic.

The restaurant group also sought to get a declaration through which, if the NDDA clause did provide cover for BI losses, it would receive £250,000 limit of cover for each set of premises, as opposed to just one limit across all properties.

The legal dispute followed on from the Financial Conduct Authority’s BI test case.

The High Court had ruled that in the main NDDA clauses did not provide cover and this was not appealed by the FCA in the Supreme Court.

Mrs Justice Cockerill issued her ruling today (25 February) stating that Corbin & King are “entitled to each declaration which they seek”.

In the judgment she stated that the Supreme Court’s approach on causation could be read across to this situation.

The case had been originally included 11 parties, however a position was agreed whereby the declarations would only cover six of them.

Persuaded

The judge stated that overall picture which emerged from a consideration of the wording and of the nature of the policy “persuades me without difficulty that the correct answer is that this is a composite policy in respect of which each insured is entitled to claim £250,000 in respect of each claim”.

Continuing: “They are entitled to the declarations which they seek, namely:

“That Axa is bound to indemnify each of those claimants 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;

“Alternatively, that Axa is bound to pay damages in respect of its wrongful failure to indemnify each such claimant in respect of each of those claimants’ 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.”

According to the document the insurance claim appeared to have been initiated in the middle of 2020 and Axa denied it on 20 November that year.

Significant

Commenting on the decision of the Court, Lydia Savill, counsel at Hogan Lovells, said: “Today’s judgment is significant as it determines in policyholders’ favour two issues which have been hotly debated since the conclusion of the FCA test case.

“The gateway to establishing coverage under non-damage denial of access wordings been thrown open more widely as a result of the court’s decision to follow the Supreme Court’s ruling on causation.

“The decision that insureds with composite policies may recover policy limits per claim and per premises increases very significantly the sums that insurers will be liable to pay for covered claims.”

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