Pubs Prevail Against Insurer In Irish Biz Interruption Case

By Martin Croucher
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Law360, London (February 5, 2021, 1:26 PM GMT) -- An Irish trial court ruled Friday that insurer FBD Group PLC should have to pay out to hundreds of pub owners, siding with policyholders in a test case over lockdown closures due to COVID-19.

The High Court of Ireland found in favor of four publicans which brought a legal challenge against the insurer for failing to pay business interruption insurance claims.

FBD had denied the claims on the basis that the business closure during lockdown was not the consequence of a local outbreak, but rather the countrywide presence of the disease.

In his 214-page judgment, Judge Denis McDonald disagreed with the insurer, saying claims should be paid provided there was evidence of the virus within the geographic radius in the policy.

"I am also of the view that cover is not lost where the closure is prompted by nationwide outbreaks of disease provided that there is an outbreak within the 25 mile radius and that outbreak is one of the causes of the closure," he wrote.

The judgment will likely have a wide impact, as FBD sold policies with similar wording to an estimated 1,300 pub owners. FBD said last year it had set aside €30 million to pay claims if the court's decision went against it.

The case is now expected to progress to a second hearing to determine how much FBD is required to pay out to policyholders. 

"FBD is committed to paying valid claims from public house insurance policyholders and will endeavor to process claims as quickly as possible and in line with the judgment handed down," the company said in a statement.  "FBD will arrange interim payments to affected policyholders while awaiting final clarity on quantum."

The company declined on comment on whether it had plans to appeal. A court hearing date has been set for Feb. 17 to discuss next steps.

Ireland has had three national lockdowns since March 2020. The first lockdown, on March 12, required lucrative St. Patrick's Day celebrations to be cancelled.

The action was brought by three Dublin pubs — Sinnotts, The Leopardstown Inn, and Lemon and Duke — as well as Sean's Bar in Athlone, in central Ireland.

All had business interruption policies with FBD, which offered coverage if the pubs were forced to close as a result of an infectious disease outbreak at the premises or within 25 miles.

The insurer's argument at an October hearing echoed those made by insurers during the U.K.'s Financial Conduct Authority's test case on business interruption insurance.

The High Court of Ireland was due to publish its decision on Jan. 15, the same day that the U.K.'s Supreme Court was scheduled to publish its own judgment in an appeal on the FCA test case.

But FBD petitioned the Ireland court to delay the ruling, and Judge McDonald allowed all parties in the case to file submissions by Jan. 29 on the implications of the U.K. Supreme Court judgment for their case.

Judge McDonald said while aspects of his decision had been influenced by the U.K. ruling, he had not "substantially altered" his judgment as a result.

The four publicans which brought the case did not immediately respond to a request for comment.

The Central Bank of Ireland welcomed the judgment.

"We will be closely examining the potential impact of this judgment for customers in the context of our sustained and ongoing engagement with relevant firms," it said in a statement.   

Full counsel details were not immediately available.

The cases are Hyper Trust Ltd. T/A The Leopardstown Inn v. FBD Insurance PLC, case number 2020/3656P; Aberken Ltd. T/A Sinnotts v. FBD Insurance PLC, case number 2020/3558P; Inn on Hibernian Way Ltd. T/A Lemon & Duke v. FBD Insurance PLC, case number 2020/3402P; and Leinster Overview Concepts Ltd. T/A Sean's Bar v. FBD Insurance PLC, case number 2020/3453P, all in the High Court of Ireland.

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