On 25 February 2022, Mrs Justice Cockerill in the Commercial Court handed down an important and hugely significant judgment in the case of Corbin & King Ltd & Ors v AXA Insurance UK Plc  EWHC 409 (Comm). This judgment offers renewed hope to many policyholders who have still not been paid by their insurers in response to claims that their premises were closed in response to the outbreak of Covid-19.
The claim concerned the scope of cover provided under a denial of access (non-damage) clause (referred to as an NDDA clause) within a combined business insurance policy issued by AXA to Corbin & King and its subsidiaries, the owners and operators of a number of well-known restaurants, cafés and other establishments in and around London.
NDDA clauses are typically clauses which provide cover in the event that access to premises is limited or restricted by a public authority as a result of some kind of emergency or other event, as described in the policy. In this case, the NDDA clause provided as follows:
‘We will cover you for any loss insured by this section resulting from interruption or interference with the business where access to your premises is restricted or hindered … arising directly from … the actions taken by the police or any other statutory body in response to a danger or disturbance at your premises or within a 1-mile radius of your premises…’
Mrs Justice Cockerill carried out a very thorough and detailed analysis of the authorities to date in regard to Covid-19 business interruption claims. This included the FCA test case decisions in the divisional court (FCA v Arch  EWHC 2448) and Supreme Court (FCA v Arch  UKSC 1); an Irish High Court decision in Brushfield Limited (t/a the Clarence Hotel) v AXA Insurance Designated Activity Company  IEHC 263; and Lord Mance’s arbitration decision in regard to a China Taiping policy.
The court identified two key issues to be decided:
A central issue in the case was the extent to which the court was bound by the first instance decision of the divisional court in the FCA test case, which had found that NDDA clauses of this type did not provide an indemnity for policyholders.
AXA argued that the court was bound by the findings of the divisional court that NDDA clauses were only intended to cover a danger or disturbance specific to the locality of the premises, rather than a danger or disturbance which also had nationwide effect.
The claimants argued that there should be cover on the basis that there were cases of Covid-19 at or within a one-mile radius of each of the policyholders’ premises and that such cases, combined with actual or threatened cases elsewhere in the UK, were an effective cause of the Covid-19 regulations which restricted access to their premises.
The claimants’ case aligned with the approach that had been taken by the Supreme Court in regard to those clauses which were appealed to it from the divisional court decision. However, those clauses typically referred specifically to the outbreak or occurrence of a disease within a certain radius of the premises, rather than purely NDDA type clauses.
The divisional court’s findings in regard to pure NDDA-type clauses that did not refer specifically to disease were not appealed to the Supreme Court and were thus not specifically considered within the Supreme Court’s judgment. Many commentators have, however, argued that it is difficult to see how the divisional court’s findings on NDDA clauses could continue to stand in light of the Supreme Court’s overall analysis which seemed to contradict the divisional court’s approach and findings.
Notwithstanding that, AXA and many other insurers have continued to decline claims relying on the unappealed parts of the divisional court’s decision.
Having carefully analysed the earlier decisions, Mrs Justice Cockerill concluded that she was not bound by the decision of the divisional court for the following two reasons:
The Supreme Court’s approach to causation had changed the relevant question now being asked in proceedings. What the court was now determining was whether a single case (or cases) of Covid-19 within the specified radius was a danger within the vicinity of the premises. This was not the issue determined by the divisional court.
Having freed herself of the shackles of the divisional court’s inconsistent findings, , adopting the Supreme Court’s approach to causation, Mrs Justice Cockerill found, in favour of the policyholders, that the NDDA clause did in fact respond:
‘[T]he better argument is that in this context the Supreme Court’s approach to causation should be adopted. I conclude that Covid-19 is capable of being a danger within one mile of the insured premises, which, coupled with other uninsured but not excluded dangers outside, led to the regulations which caused the closure of the businesses and caused the business interruption loss.’
In regard to the quantum issue, the court also found in favour of the policyholders. The court held that this was a composite policy, and the intention was, therefore, that each policyholder is entitled to claim £250,000 for each claim. Consequently, AXA was ordered to pay each of the policyholders: ‘…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’.
Following the FCA test case, this judgment goes a long way to resolving the outstanding question as to the extent to which the approach of the Supreme Court should apply to pure NDDA clauses, which were not specifically appealed to the Supreme Court.
Many insurers have been treating NDDA clauses as a substantively different form of cover from clauses which provide more specific cover for the occurrence of disease. The position of those insurers who hold that NDDA clauses similar to the type considered in this claim essentially provide a cover which is only very local in scope has now been very clearly rejected.
It is now apparent that, where a proper reading of an NDDA clause responds to a case or cases of Covid-19 within a specified radius of the insured premises, the court will and should now adopt the same approach as that applied by the Supreme Court.
Subject to any appeal, it remains to be seen whether AXA and other insurers who have adopted a similar approach will now revisit the claims of those customers whose claims they have historically declined in reliance on the divisional court’s findings, given that this decision ought to result in a widening of the pool of policies that provide cover.
Our specialist insurance law and group actions team already acts for a large number of claimants and prospective claimants in actions against insurers for unpaid Covid-19 losses and can advise you on the most cost-effective route to ensuring that insurers are dealing properly and fairly with your claim, including the impact of this decision on your claim.