The operators of Dublin's Clarence Hotel have lost a High Court action against Axa claiming they were entitled to cover under business interruption insurance as a result of the Covid-19 pandemic.
Brushfield Ltd, trading as the Clarence Hotel, claimed it was entitled to be compensated for losses due to the lockdowns under its Enterprise insurance policy with Axa.
Mr Justice Denis McDonald said he had not been persuaded that cover was available under the specific terms of the Axa policy for losses as a result of the closure of the hotel and its Octagon bar in the wake of Government advice on Covid on March 15th last year.
Despite the best efforts of Brushfield’s legal team, the facts could not be brought within any of the relevant clauses of the Axa policy so as to secure cover, he said.
Brushfield, part of the Press Up Entertainment Group, sued Axa Insurance and the broker, Arachas Corporate Brokers Ltd.
The defendants denied the claims.
Mr Justice McDonald said the policy covered non-damage business interruption under a “murder, suicide or disease” clause and a “denial of access” to the premises clause.
The diseases the clause refers to includes acute encephalitis (inflammation of the brain), though not Covid. When Brushfield submitted a claim, it was refused by Axa.
As part of its argument, Brushfield sought to rely on the reference in the disease clause to acute encephalitis on the basis that it was the cause of a possible incident of Covid and thus could be said to trigger cover under the clause.
Brushfield claimed the cover for loss was triggered where access to the Clarence was restricted or hindered for more than 24 hours by the actions of the gardaí or a statutory body.
It also claimed a provision that such actions by the authorities must be in response to a disturbance or danger within a one-mile radius of the premises and in this case the danger was the spread of an infectious disease all over the country.
25-mile radius
Mr Justice McDonald found that cover under the murder or suicide disturbance clause was limited to business interruption caused by the outbreak of specific diseases or conditions at the hotel or with a 25-mile radius, and Covid was not listed in those.
Insofar as Brushfield argued about acute encephalitis, he found that in the absence of any reported case of that kind prior to the lockdown, it had not been demonstrated that the closure of the hotel was proximately caused by at least one such case in any person at the hotel or within a 25-mile radius. In the circumstances, this clause was of no assistance to Brushfield.
The claim that it was covered under a clause about closure by authorities due to sanitary arrangements – because of the hotel’s inability to facilitate effective social distancing on the premises – also failed, he said.
Brushfield had not established any defect existed in the sanitary arrangements at the hotel that caused its closure, he said.
Regarding the “denial of access” clause, the judge concluded that, while a notifiable disease occurrence was in principle capable of constituting a danger as referred to in the clause, it did not apply here in circumstances where Brushfield was not in a position to demonstrate that all of the other requirements of the clause had been satisfied.
The denial-of-access clause also only applies where a restriction on access is shown to be attributable to actions taken by the police or by a statutory body in response to a danger or disturbance at the premises or within a one-mile radius. The measures taken in March last year cannot be said to constitute actions by the police, he said.
The judge said he was prepared to hear further argument on that issue under denial of access if the parties so wish.
However, he wanted to make clear, even if Brushfield succeeded on that issue, it would not be sufficient to alter the result and the claim would still flounder.
