Favourable Rulings for COVID-19 Insurance Claimants

Recently Mr Justice MacDonald has issued a supplementary judgment in the action of Marlin Hotel Dublin v Allianz which seeks to clarify for policyholders what they must prove when they are making a claim for losses caused by business interruption. This test case was run by Kent Carty Solicitors, acting for Marlin Hotel, with the assistance of Martin Hayden SC and Martin Canny BL.

MacDonald J issued his primary judgment in the case in September 2024.  The plaintiff was found to have been successful in his claim, despite an initial declinature by the defendant insurer Allianz.  The issue turned on two areas where the policyholder was obliged to prove that his circumstances were enough to “trigger a claim” under the policy.

Firstly, under the terms of the Allianz policy a claimant must show that at least one case of COVID-19 had occurred at the insured premises at a relevant date and secondly, that this case had caused, or at least contributed to, the Government decision to impose a closure order on the premises which thereby led to financial losses to the plaintiff.

The Plaintiff initially attempted to advance three claims for business interruption.  One for each of the three period of closure during 2020 and 2021.  Due to deficiencies in the available epidemiological data, the Court rejected the claims in respect of the first two periods of closure.  However, it held that the claim in respect of the third period of closure had been proven and that the plaintiffs claim for indemnity should succeed.

The action had originally been brought as a test case.  Thus, not only the individual plaintiff but all claimants with similar circumstances would benefit from any favourable rulings.  In particular, under the terms of the Central Bank of Ireland’s Insurance Supervisory Framework published on 5th August 2020 in respect of COVID-19 claims, insurers must give the benefit of favourable legal rulings to all affected policyholders.  They are required to review all claims and ensure that the revised rulings are applied wherever relevant.  They must reopen any closed claims whenever the circumstances demand it.

In this case the defendant insurer Allianz sought clarification on two points of the primary judgment to assist them in this claims review.

1. For what period prior to a closure order being promulgated might a case of COVID-19 at the premises be causative of the Government order to close?
2. An individual who tested positive for COVID-19 after the closure order could still have been infected with the disease for a period prior to the testing – what should the relevant infection period be?

MacDonald J began his response by emphasising his findings on causation.  Referring back to paragraph 224 of his earlier judgment, he said that it was clear that in making his decision on closure of premises the Minister had regard not only to reported cases of COVID-19 but to the sizeable number of unknown unreported cases.  Consequently, an undiagnosed case at the date of the closure could still be a contributory cause of a closure.

Indeed he held that in respect of Marlin, there were at least two cases at the hotel in the relevant period prior to the closure – the hotel manager who had remained at the hotel for a fourteen day period in December 2020 and was tested positive on December 26rd and also one or more unknown individuals who must have attended the hotel and had infected the manager with the disease at some time on or before December 21st.  (The closure order was made on December 23rd.)

He went on to answer the two specific questions that had been raised:

1. Having reviewed the NPHET reports available to the Minister, he concluded that the published 14-day statistics were the principal driver of his decisions – both to enforce and to relax restrictions.  In respect of the restrictions announced on December 24th 2020, any infected person at the premises on or after 9th December 2020 might be regard as a cause of the restrictions.
2. As regards the incubation period of the disease, it was held that a person who tested positive for the disease should be regarded as having been infected for the five preceding days.  Thus, any person who tested positive up to and including 28th December 2020, could be regarded as a potential cause of the restrictions.

The judgments of MacDonald J in the two cases of Marlin Hotel Dublin v Allianz plc have provided welcome additional clarity on how possible claimants should proceed to formulate a claim for business interruption losses.  Under the terms of Central Bank Supervisory Framework, not only Allianz plc but all other insurers with similar policy wordings are required to review all of their claims, both open and closed, to ensure that claimants receive the benefit of these new clarifications.