This judgment dealt with the proper interpretation of the policy’s “murder, suicide or disease” extension.

Clause 8.2.6 was headed “Murder, suicide or disease” and provided as follows:

“We shall indemnify you in respect of interruption of or interference with the business caused by damage, as defined in clause 8.1, arising from:

 a) any human infectious or human contagious disease (excluding [AIDS] an outbreak of which the local authority has stipulated shall be notified to them manifested by any person whilst in the premises or within a [25] mile radius of it;

b) murder or suicide in the premises;

c) injury or illness sustained by any person arising from or traceable to foreign or injurious matter in food or drink provided in the premises;

d) vermin or pests in the premises;

e) the closing of the whole or part of the premises by order of a competent public authority consequent upon defect in the drains or other sanitary arrangements at the premises…

Damage was defined as “physical loss, physical damage and physical destruction”.

The question was whether the words “caused by damage” and “in consequence of the damage” meant what they say or whether they should be disregarded because they made nonsense of the insurance provided by the extension.

The insurer argued that the policy provided business interruption cover only where there was physical damage to property.  Cover for business interruption losses where there was no physical damage was available, but the insured did not take it.

On a review of the authorities and taking into account the policy in its entirety as well as all relevant elements of the wider context, both the lower and appeal court ultimately found that the policy, objectively viewed, did not provide non-damage business interruption cover.  There had not been a clear mistake in the language used in the extension. (The words as defined in clause 8.1 had a meaning in the policy)

The extension was automatically included as standard with no additional premium paid for it.  It was common cause that there was no physical loss or damage to the insured’s premises or property used by it at the premises.

The insured argued that the extension should be understood as if the words “caused by damage, as defined by clause 8.1” were deleted, and as if the words “in consequence of the damage” read “in consequence of the insured peril set out above…”. That, said the insured, was the only way to make sense of the policy and to avoid an absurdity because the insured argued the words “damage, as defined in clause 8.1” made no sense.

The appeal court found that nothing had gone wrong with the language of the clause, whether obviously or at all.  The policy was to be interpreted when it incepted in October 2019, when Covid 19 was unheard of.  The extension could not be interpreted through the telescope of Covid 19.

The court held that on a true construction of the extension, there was no cover in absence of damage as defined in the policy, namely physical damage.