About this case:

• Citation:
  [2024] IEHC 550
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Denis McDonald

Delivering judgment for the High Court, Mr Justice Denis McDonald stated: “Each case of the disease (whether confirmed or undiagnosed or not yet reported) was capable of spreading the disease and therefore must be taken to have been instrumental in the decision to impose the restrictions stipulated in the Amendment Regulations.”

Background

The plaintiff, the operator of the Marlin Hotel at St Stephen’s Green, sought to be indemnified by its insurer in respect of losses sustained due to government restrictions imposed during the Covid-19 pandemic. 

The plaintiff relied upon two extensions in its policy: extension 6 covering business interruption resulting from an occurrence of a notifiable disease at the hotel premises which causes a “competent authority” to impose restrictions on its use, and extension 7 covering business interruption arising from damage caused by an insured peril to other premises within a 1.5km radius of the hotel.

Three periods of hotel closure were at issue: 29 March 2020–29 June 2020, 19 September 2020–3 December 2020, and 24 December 2020 into 2021. The insurer ultimately declined the plaintiff’s claim.

The High Court was asked to decide inter alia whether the perils in extensions 6 and 7 had been triggered and whether any occurrence of Covid-19 at the hotel caused restrictions on the use of the hotel on the order of the government.

The High Court

Extension 7

Having regard to, inter alia, Coach House Catering Limited v. Frost Insurance Limited [2022] IEHC 306, Mr Justice McDonald considered that in the absence of evidence that the closure of the hotel was required in response to contamination of any premises in its vicinity, there was no basis to suggest that extension 7 had been triggered.

Extension 6

Noting that the plaintiff needed to prove on the balance of probabilities that the use of its premises was restricted on the order or advice of a competent authority, and that the order or advice in question was proximately caused by a case of Covid-19 at the hotel premises, the judge highlighted that there was no direct evidence of any Covid-19 on the premises leading up to any periods of closure other than that of the hotel manager on 23 December 2020.

The court pointed out that whilst other staff members had tested positive, they had done so after the level 5 restrictions were imposed on 24 December 2020 (the “Amendment Regulations”) were enacted and so it would be difficult to suggest that they could have caused the government to enact those regulations.

Mr Justice McDonald considered the meaning of “occurrence” in extension 6 of the plaintiff’s policy, having regard to the body of jurisprudence on the interpretation of written contracts. The judge noted that “occurrence” was a word without special or technical meaning and should be given its ordinary and natural meaning in the absence of any indication to the contrary.

The court had regard to Financial Conduct Authority v. Arch Insurance [2021] A.C. 649 which took the view that there was an “occurrence” of Covid-19 within an area when at least one person who was infected with the disease was present in that area, whether or not the disease had been diagnosed and whether or not the infected person was showing any symptoms of the disease.

The court reached a similar conclusion in respect of the words “at the premises” in the policy, finding them “self-explanatory”. Accordingly, Mr Justice McDonald determined that the plaintiff needed to prove that there was a case of Covid-19 within the perimeter of the hotel during any of the three periods at issue.

Period 3

Considering the evidence before him, Mr Justice McDonald determined that the evidence established that the hotel manager must have been infected with Covid-19 prior to 21 December 2020, having regard to the incubation period of the virus. The judge inferred that as a matter of probability, the manager was infected by someone within the hotel during the preceding fortnight as he had not left the premises within that period. 

Accordingly, the court concluded that at least one person infected with Covid-19 was at the hotel in period 3, and so an occurrence of a notifiable disease within the meaning of extension 6 had arisen. 

Periods 1 and 2

Noting that no evidence had been tendered that any staff member of guest had been diagnosed with Covid-19 during period 2 or that any staff member or guest had exhibited any symptoms of the disease during that period, the court could not conclude based on the model tendered by the plaintiff’s expert that there was a case of Covid-19 during period 2.

The court similarly determined that the plaintiff had failed to prove on the balance of probabilities that there was any case of Covid-19 at the hotel during period 1.

Further issues

Mr Justice McDonald considered that there was no evidence that any of the cases of Covid-19 which occurred at the hotel during period 3 were known to the government or to the Minister of Health prior to the enactment of the Amendment Regulations on 23 December 2020. 

The court examined whether extension 6 was limited to measures taken upon “premises-specific” cases of Covid-19 as contended by the insurer. 

Finding this to be an attempt on behalf of the insurer “to re-write the clause”, Mr Justice McDonald opined:

Causation

Turning to the causation issue, the court found having regard to the facts, the Minister “must have taken into account all the facts known about the extent of the risk to human life and public health including the fact that, in addition to all of the confirmed cases of Covid-19, there were also a significant number of other occurrences of the disease which had been undiagnosed or not yet reported…” 

Mr Justice McDonald concluded that each occurrence of Covid-19, reported or not, was instrumental in the decision to enact the Amendment Regulations of 23 December 2020. Considering the “proximate cause” principle, the judge decided that it could not be said that one occurrence of Covid-19 was any more effective in the enactment of the Regulations than any other.

Interpretation

The court then considered whether a reasonable person in the position of the parties would have understood at the time the policy was agreed, that cover would be available in respect of a restriction imposed by a competent authority in response to an unreported or undiagnosed or asymptomatic case of Covid-19 at the hotel premises.

Noting that the nature of the business insured, being a hotel, bar and restaurant, was one where people would meet and mix and where highly contagious diseases were likely to spread, the court opined that “a reasonable person in the position of the parties could well envisage that it might be necessary for a competent authority to impose restrictions on the operation of premises where people mix (such as bars or hotels) in response to all occurrences of a highly contagious disease whether or not those occurrences had been reported”.

The court further determined inter alia that such a person would also understand that, if there was a need to impose restrictions in response to a highly contagious disease, such restrictions were likely to be applied to similar premises where people meet and mix, rather than a single premises.

Conclusion

Accordingly, the High Court dismissed the plaintiff’s claim under extension 7 and its claims in respect of periods 1 and 2 under extension 6, but found that cover had been triggered under extension 6 in respect of period 3.

Marlin Apartments Limited t/a Marlin Hotel Dublin v Allianz PLC [2024] IEHC 550