One of the issues for consideration by the Court of Appeal in London International Exhibition Centre PLC v Allianz Insurance PLC and Others previously discussed here [Business Interruption “Disease at the Premises” and Causation (UK) | Financial Institutions Legal Snapshot] was whether on a proper construction of the words “suffered by any visitor or employee” in the relevant policy disease clause, constituted an “occurrence” wordingor a “manifestation” wording.
The appeal court held that, while word “manifested” carries with it the obvious requirement that something is manifest, in the sense of apparent, the word “suffered” does not:
“…It would be accurate to describe someone as suffering from cancer if they had the disease even though they were entirely asymptomatic, and the same is true of Covid-19. We do not consider that the restriction to visitors or employees has any impact on the correct interpretation of ‘suffered’ in this context. The judge rightly identified that most of the people attending a nightclub would be likely to fall into one or other of those categories, including an owner or director who did not live on the premises. The question whether the policyholder can satisfy the requirements of the clause will turn on the evidence in due course, but any difficulties of proof which may arise do not impel the court to prefer the alternative interpretation to the one chosen by the judge. On the contrary, we agree with the judge for the reasons that he gave that his interpretation is the one which makes more commercial sense.”
On the question of causation in that regard the appeal court said:
“…on the assumption that there were occurrences of Covid-19 at each of the policyholders’ premises, each of those occurrences together with all other cases of Covid-19 in the country were a cause of the closure of those premises. In ordering the national lockdown, the government was responding to the fact of disease having occurred at each of these premises. That analysis is unimpaired by the specific requirement of the Mayfair clause that the person who sustained Covid-19 at the nightclub premises prior to the lockdown had to be a visitor or an employee. It only required one occurrence of Covid-19 in a single visitor or employee at the material time to trigger the clause. As Mr Fawcett pointed out, even if the clause had been much narrower and had specified a named employee, it would not affect the analysis. The contracting parties intended that cover would be provided for diseases that spread rapidly and widely and therefore contemplated that the response of the government would be generalised in nature. Accordingly, the national lockdown would be as much a response to the fact that Joe Bloggs, an employee at the nightclub, was suffering from Covid-19 at the relevant time as it was a response to any other incidence of Covid-19 in those or any other premises.”
Insurance parties should ensure material terms are clearly defined in the policy to avoid this types of dispute.