“77. … In any event, the overriding question is how the words of the contract would be understood by a reasonable person. In the case of an insurance policy of the present kind, sold principally to SMEs, the person to whom the document should be taken to be addressed is not a pedantic lawyer who will subject the entire policy wording to a minute textual analysis (cf. Jumbo King Ltd v Faithful Properties Ltd(1999) 2 HKCFAR 279 , para 59). It is an ordinary policyholder who, on entering into the contract, is taken to have read through the policy conscientiously in order to understand what cover they were getting.”
“165. In the context of business interruption insurance, the ease with which an insured may establish matters relevant to its claim for indemnity may influence questions of construction. The purpose of business interruption insurance is to inject additional funds into a going concern to maintain it as a going concern and, in that respect, to return it to an operational state as soon as possible: Arbory Group Ltd v West Craven Insurance Services (A Firm) [2007] Lloyd’s Rep IR 491 [48]- [50]; Adelaide (SA) Pools and Spa Manufacturing and Installation Pty Ltd v Westcourt General Insurance Brokers Pty Ltd (No. 2) [2021] SASC 123 [990]. That being so, a construction which advances the purpose of the cover is to be preferred to one that hinders it. Here, that approach supports an interpretation that the relevant integer of the insured peril is satisfied when it is shown that the authority has acted upon its belief as to the existence of an outbreak. That can be established relatively quickly by reference to the authority’s statements and surrounding existing facts. Not only would an insured encounter substantive difficulties if it were required to establish those matters as actual facts, the extended period of time which it would take may well deprive it of the benefit of the cover.”
“Operating a chain of Italian Restaurants providing eat in and limited takeaway of food and beverages across UK sites branded as Strada, Coppa Club and Above & Below Bars.”
“2.3 BUSINESS INTERRUPTION – SPECIFIED CAUSES In the event of interruption or interference to the Insured’s Business as a result of: … viii. Notifiable Diseases & Other Incidents: a. discovered at an Insured Location; b. attributable to food or beverages supplied at or from the Insured Locations; c. which are reasonably likely to result from an organism discovered at an Insured Location; and or d. occurring within the Vicinity of an Insured Location, during the Period of Insurance; … xii. Prevention of Access – Non-Damage during the Period of Insurance where such interruption or interference is for more than eight (8) consecutive hours; … within the Territorial Limits, the Insurer agrees to pay the Insured the resulting Business Interruption Loss.”
“Business Interruption Loss means: i. the Reduction in Turnover; ii. Increased Cost of Working; and/or iii. Research and Development Expenditure. …”
“Business Interruption – Specified Causes: … Notifiable Diseases & other Incidents GBP 2,500,000 any one Single Business Interruption Loss … Prevention of Access – Non-Damage GBP 500,000 any one Single Business Interruption Loss”
“Single Business Interruption Loss means: i. all Business Interruption Loss and Business Interruption Costs & Expenses (excluding Additional Increased Cost of Working, Claims Preparation Costs, Public Relations Crisis Management Costs and Rewards Costs) and any amounts payable under Extensions that arise from, are attributable to or are in connection with a single occurrence, except in respect of Cyber Events, Earthquakes, Floods, Storms, and riots, civil commotion and acts of malicious persons …”
“Where a Single Business Interruption Loss is covered under more than one Insuring Clause only one Limit of Liability, being the largest applicable, will apply to such Single Business Interruption Loss.”
“78. What determines this issue is the proper construction of the relevant clauses of the Policy itself. There is, however, a considerable amount of authority relating to aggregating provisions, and to how they should in general be approached, and it is helpful to begin by considering such guidance. 79. The function of aggregation clauses, as was said by Rix LJ in Scott v Copenhagen Reinsurance Co (UK) Ltd[2003] EWCA Civ 688 , [2003] Lloyd’s Rep IR 696 at [12] is 'to police the imposition of a limit by treating a plurality of linked losses as if they were one loss'. 80. The application of an aggregation provision can, depending on the nature of the perils and losses which occur, benefit either the insured or the insurer. They are therefore to be construed in a balanced fashion without a predisposition towards a narrow or a broad interpretation: Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd[2003] UKHL 48 ,[2003] 4 All ER 43 at [30] per Lord Hobhouse; AIG Europe Ltd v OC320201 LLP sub nom AIG Europe Ltd v Woodman[2017] UKSC 18 ,[2017] 1 WLR 1168 at [14] per Lord Toulson JSC; Spire Healthcare Ltd v Royal & Sun Alliance Insurance Ltd[2022] EWCA Civ 17 , [2022] Bus LR at [19] per Andrews LJ. 81. '[T]he choice of language by which the parties designate the unifying factor in an aggregation clause is … of critical importance': Lloyds TSB loc. cit. at [17] per Lord Hoffmann. 82. There are a number of well-known and frequently-encountered types of unifying factors which are used in aggregation clauses. In particular, parties often choose either a 'cause' or 'originating cause' unifying factor, or an 'occurrence' or 'event' unifying factor. In Axa Reinsurance (UK) plc v Field[1996] 2 Lloyd's Rep 233 , Lord Mustill said (at 239), in relation to a provision which aggregated matters 'arising out of one event': 'The contrast is between "originating" coupled with "cause" in Cox v Bankside Members Agency Ltd[1995] 2 Lloyd's Rep 437 , and "event" in the present case. In my opinion, these expressions are not at all the same, for two reasons. In ordinary speech, an event is something which happens at a particular time, at a particular place, in a particular way. … A cause is to my mind something altogether less constricted. It can be a continuing state of affairs; it can be the absence of something happening. Equally, the word "originating" was in my view consciously chosen to open up the widest possible search for a unifying factor in the history of the losses which it is sought to aggregate. To my mind the one expression has a much wider connotation than the other.' 83. The courts have considered that the term 'occurrence' is virtually or entirely synonymous with 'event'. In an aggregating provision where the unifying factor is an 'occurrence', the Court will need to determine whether there was a relevant 'occurrence' to which matters can relate. The meaning of the word 'occurrence' 'must take its meaning finally from the surrounding terms of the policy including the object sought to be achieved': Mann v Lexington Insurance Co[2001] 1 Lloyd’s Rep 1 at [36] per Waller LJ. 84. In considering whether there has been a relevant 'occurrence' 'the matter is to be scrutinised from the perspective of an informed observer in the position of the insured'. In making that assessment, an important aspect will be 'the degree of unity in relation to cause, locality, time, and, if initiated by human action, the circumstances and purposes of the persons responsible' (as it was put by Michael Kerr QC in the Dawson's Field Award, which is quoted in Kuwait Airways Corp v Kuwait Insurance Co. SAK ('KAC v KIC')[1996] 1 Lloyd's Rep 664 at 685-6). 85. In KAC v KIC Rix J further said at 686, correctly in my judgment: 'In assessing the degree of unity regard may be had to such factors as cause, locality and time and the intentions of the human agents. An occurrence is not the same thing as a peril, but in considering the viewpoint or focus of the scrutineer one may properly have regard to the context of the perils insured against.' 86. The so-called 'unities' are not to be applied mechanistically: they are 'merely an aid in determining whether the circumstances of the losses involve such a degree of unity as to justify their being described as ‘arising out of one occurrence’, Simmonds v Gammell[2016] EWHC 2515 (Comm) ,[2016] 2 Lloyd's Rep 631 at [29] per Sir Jeremy Cooke. 87. Whether any and if so what causal link is required between the unifying factor and the losses must depend on the linking words used. Typically aggregation clauses require a significant causal link. In Scott v Copenhagen Re the relevant clause was 'arising from one event'. It was accepted, in line with Caudle v Sharp [1995] 4 Lloyd’s Re LR 389, that 'arising from one event' did not necessarily import a requirement of proximate causation. It nevertheless required a significant causal connection. Rix LJ said this, at [68]: '… Nevertheless, it seems to me ultimately to be inherent in the concept of aggregation ("arising out of one event") that a significant causal link is required. … A plurality of losses is to be regarded as a single aggregated loss if they can be sufficiently linked to a single unifying event by being causally connected with it. The aggregating function of such a clause is antagonistic to a weak or loose causal relationship between losses and the required unifying single event. This is the more easily seen by acknowledging that, once a merely weak causal connection is required, there is in principle no limit to the theoretical possibility of tracing back to the causes of causes. The question therefore in my judgment becomes: Is there one event which should be regarded as the cause of these losses so as to make it appropriate to regard these losses as constituting for the purposes of aggregation under this policy one loss?' 88. There is also usually a distinct requirement of lack of remoteness between the aggregating event and the losses. Thus in Caudle v Sharp at 394, Evans LJ, with whom Rose and Nourse LJJ agreed, said: 'In my judgment, the three requirements of a relevant event are that there was a common factor which can be properly described as an event, which satisfied the test of causation and which was not too remote for the purposes of the clause.' 89. In Scott v Copenhagen Re, Rix LJ referred to the requirement of a lack of remoteness recognised in Caudle v Sharp, and referred to it as a 'tool to limit the otherwise infinite reach of the workings of causation', and 'a legal tool to separate out relevant from irrelevant causes' (at 713). As a result of its use, the court will look for a 'nearer and more relevant cause than for a more distant one' (ibid). 90. The issue of whether losses can properly be aggregated and if so around what event or cause is to be answered by an exercise of judgment based on all the relevant facts and the purpose of the clause. Rix LJ in Scott v Copenhagen Re said, at [81]: '… Are the losses to be aggregated as all arising from one event? That question can only be answered by finding and considering all the relevant facts carefully, and then conducting an exercise of judgment. That exercise can be assisted by considering those facts not only globally and intuitively and by reference to the purpose of the clause, but also more analytically, or rather by reference to the various constituent elements of what makes up one single unifying event. It remains an exercise of judgment, not a reformulation of the clause to be construed and applied’.”
“154. Here, that which I have accepted was an occurrence was remote from the losses in a significant number of respects. It was geographically remote. While it can of course be said that, modern communications being what they are, there is the possibility of rapid spread of a disease internationally, nevertheless the occurrence was very distant from the Territorial Limits of the Policy. It was temporally remote. The relevant losses only started to be incurred some months after the occurrence. It was also causally remote. It depended on a very large number of intermediate events and occurrences, involving first the establishment of the disease in the human population in China, secondly the spread of the virus to the UK, and thirdly the governmental and public response to the virus, to have an effect on Stonegate's business. The 'nearer and more relevant causes', to use Rix LJ's language in Scott v Copenhagen Re were those which more directly occasioned the losses, in particular the governmental response to the arrival and threat of spread of the virus in the UK.”
“101. This case was put as a fallback by both parties. I nevertheless consider that there clearly were occurrences consisting of governmental action with which the alleged losses were connected. These were more extensively canvassed in the Stonegate v MS Amlin and Greggs v Zurich actions than in this. The facts of this case are simpler than those relevant to those cases because it is only the actions of the UK Government applicable to England which are relevant. For reasons more fully expressed in the Judgments in those cases, I reject the idea that there was a single government response, which amounted to one occurrence, covering everything done in response to SARS-CoV-2. I do, however, accept that there was a single occurrence consisting of the Government's decision made on16 March 2020 to instruct people to avoid social venues and the instructions given on that date to that effect. I would also accept that there was an occurrence on20 March 2020 , when restaurants were instructed to close. Equally, I would accept there to be an occurrence constituted by the announcement and implementation from24 September 2020 of early closing and other restrictions on restaurants. Further, should they be relevant, I would consider that the bringing into force of the three-tiered system on14 October 2020 , and the imposition of the second lockdown from5 November 2020 , were capable of being relevant single occurrences. I do not accept that there were separate occurrences when measures were renewed, immaterially changed, or relaxed.”
“The losses or series of losses envisaged by the clause must have ‘arisen out of’ one event, which in this context straightaway implies some causative element and some degree of remoteness, or lack of remoteness, which must be established in the circumstances of the particular case. In my judgment, the three requirements of a relevant event are that there was a common factor which can properly be described as an event, which satisfied the test of causation and which was not too remote for the purposes of the clause.”
“61. … (i) something that can be called an ‘event’; (ii) the function of that event as being prior to the aggregated losses; (iii) a causative link between losses and event, undefined other than being looser than proximate cause; and (iv) the absence of remoteness. To which of course can be added the underlying concept of aggregation itself, that of a single unifying event.”
“63. As for causation and remoteness, it seems plain that the latter concept was used by this court as a tool to limit the otherwise infinite reach of the workings of causation. That is the function of the concept of remoteness in the law generally. It is in other words a legal tool used to separate out relevant from irrelevant causes. As often happens, however, the use of this tool is somewhat opaque. What the decision in Caudle v Sharp does seem to me to suggest, however, is that, even though the causative link is looser than that of proximate cause, the courts will look for a nearer and more relevant cause than for a more distant one. Another way of saying this is that the causative link has to be a significant rather than a weak one.”
“68. … Nevertheless, it seems to me ultimately to be inherent in the concept of aggregation (‘arising out of one event’) that a significant causal link is required. In this connection I would refer to Lord Hoffmann’s substantial contribution in recent years to an understanding of what lies behind the courts’ intuitive judgments on issues of causation: see, for instance, Empress Car Co (Abertillery) Ltd v National River Authority[1999] 2 AC 22 at 29/35. Lord Hoffmann emphasises that it is not possible to give an informed answer to a question of causation when attributing responsibility under some rule without knowing the purpose and scope of the rule. In the present context, the purpose and scope of the rule has to be found in the concept of aggregation inherent in wording such as ‘arising out of one event’. A plurality of losses is to be regarded as a single aggregated loss if they can be sufficiently linked to a single unifying event by being causally connected with it. The aggregating function of such a clause is antagonistic to a weak or loose causal relationship between losses and the required unifying single event. This is the more easily seen by acknowledging that, once a merely weak causal connection is required, there is in principle no limit to the theoretical possibility of tracing back to the causes of causes. The question therefore in my judgement becomes: Is there one event which should be regarded as the cause of these losses so as to make it appropriate to regard these losses as constituting for the purposes of aggregation under this policy one loss?”
“81. … Are the losses to be aggregated as all arising from one event? That question can only be answered by finding and considering all the relevant facts carefully, and then conducting an exercise of judgement. That exercise can be assisted by considering those facts not only globally and intuitively and by reference to the purpose of the clause, but also more analytically, or rather by reference to the various constituent elements of what makes up one single unifying event. It remains an exercise of judgement, not a reformulation of the clause to be construed and applied.”
“36. The majority arbitrators were therefore involved in an exercise of judgment as to whether or not there was a sufficiently significant causal connection and they found the causal link between the respiratory claims and the attacks to be clear and obvious. Whether that is seen as a finding of fact or a mixed conclusion of law and fact matters not since this is well within the ambit of an exercise of judgement with which this court will not interfere. …”
“24. ‘Original cause’ in this context does not mean ‘proximate cause’, but instead connotes what Christopher Clarke J described as a ‘considerably looser causal connection’: Beazley Underwriting Ltd v Travelers Companies Inc[2011] EWHC 1520 (Comm) , [2012] 1 All ER (Comm) 1241 at [27]. It follows that the ‘original cause’ need not be the sole cause of the insured’s liability. However, as Moore-Bick J observed in American Centennial Insurance Co v INSCO Ltd [1996] LRLR 407, 414, it is still necessary for there to be some causative link between the originating cause and the loss, and there must also be some limit to the degree of remoteness that is acceptable. As Mr Shapiro QC, for Spire, put it, not every ‘but for’ cause is sufficient to amount to an ‘original cause’. In searching for the unifying factor, one must not go back so far in the causal chain that one enters the realm of remote or coincidental causes which provide no meaningful explanation for what has happened.”
“16. Some conclusions of fact are, however, not conclusions of primary fact of the kind to which I have just referred. They involve an assessment of a number of different factors which have to be weighed against each other. This is sometimes called an evaluation of the facts and is often a matter of degree upon which different judges can legitimately differ. Such cases may be closely analogous to the exercise of a discretion and, in my opinion, appellate courts should approach them in a similar way.”
“86. An evaluation of the facts is often a matter of degree upon which different judges can legitimately differ. Such cases may be closely analogous to the exercise of a discretion and appellate courts should approach them in a similar way. The appeal court does not carry out a balancing task afresh but must ask whether the decision of the judge was wrong by reason of some identifiable flaw in the trial judge's treatment of the question to be decided, such as a gap in logic, a lack of consistency, or a failure to take account of some material factor, which undermines the cogency of the conclusion. 87. The degree to which appellate restraint should be exercised in an individual case may be influenced by the nature of the conclusion and the extent to which it depended upon an advantage possessed by the trial judge, whether from a thorough immersion in all angles of the case, or from first-hand experience of the testing of the evidence, or because of particular relevant specialist expertise.”
“103. VE made the case that, if there was any aggregation, it should be on a per Insured Location basis. I do not accept that that is the case. There is no justification for it in the wording of the definition of SBIL. Instead, the Limit of Liability per SBIL for Business Interruption – Property Damage, and for Insuring Clauses 2.3 (i), (ii), (iii), (iv) and (vi) are consistent only with the possibility that there can be a SBIL in respect of losses deriving from different Insured Locations; and that is also implicit in the terms of the second paragraph (beginning 'Where the Insured…') in Item 5 – Retention of the Schedule.”
“Turnover means: i. The money paid or payable to the Insured for goods sold and/or services rendered in the course of the Insured’s Business at the Insured Locations; and ii. Rent Receivable; and iii. interest income on the Insured’s capital deposits and monetary balances.”
“Where the Insured has made a claim for a Single Property Loss and/or a Single Business Interruption Loss affecting one or more Insured Locations that arise from, are attributable to or are in connection with the same single occurrence, only one Retention being the largest applicable will apply to all Single Property Losses and Single Business Interruption Losses combined. …”
“86. Fourthly, I do not consider that an informed observer would have regarded announcements or measures which simply continued existing restrictions or made trivial changes as being separate ‘single occurrences’ for the purposes of the SBIL definition. I do not believe that it conforms to the parties’ intentions to have aggregation by reference to such matters, which effectively continued a status quo rather than marking any significant change to it. Nor would I consider that an informed observer would have regarded changes which simply reduced restrictions as being separate ‘single occurrences’ for the purposes of the definition. They were such as would of their nature be expected to reduce losses not to lead to them and thus would not constitute the type of matter which would sensibly be regarded as a factor unifying different losses.”
“67. I do not consider that Allianz’s argument is correct. In my view the correct construction of the Policy is that there is a Covered Event when, in the case of Enforced Closure, there is an enforced closure of an Insured Location within the Period of Insurance, ie, if the closure takes place within the Period of Insurance. There could then be recovery for the resulting interruption and interference with the business, and the extent of that interruption or interference would depend on how long the closure lasted, irrespective of whether the whole period of such closure was within or after the Period of Insurance. Similarly in relation to Prevention of Access, if there are actions or advice which have, within the Period of Insurance, the effect of preventing or hindering the use of or access to Insured Locations, then there is cover for any resulting interruption or interference, and the extent of that interruption or interference would depend on how long the prevention or hindrance lasted, and the Clause does not require any period of such prevention or hindrance after the Period of Insurance to be disregarded.”
“69. I consider that the construction for which Allianz contends would produce uncommercial and unintended consequences. It would mean, for example, that if an Insured Location were the subject of enforced closure on the last day of the Period of Insurance, and remained closed for a week, the only cover under the Policy would be for the consequence of the first day of closure. While on Allianz’s contention, the remainder of the period of closure would fall within the next policy year, it would be quite possible, indeed probable, that insurers for the next year would exclude cover for an already subsisting closure / prevention or hindrance. It is also difficult to reconcile with the terms of Insuring Clause 2.3(xii), given that that clause requires, for there to be a covered Prevention of Access – Non Damage, an interruption or interference for more than 8 consecutive hours. If the whole of that period had to be within the Period of Insurance, and any period after the Period of Insurance did not count as relevant interruption or interference, then if an insured experienced a prevention or hindrance of use/access within the 8 hours before the expiry of the Period of Insurance, there could be no cover under the Policy, and almost certainly there would be no possibility of a recovery under an insurance for the next year. More generally, Allianz’s construction would mean that these two Insuring Clauses provided cover in a markedly different manner from how other Insuring Clauses would cover similar situations. For example, if there were a fire at an Insured Location during the Period of Insurance, and it led to the closure of an Insured Location for a significant period beyond the end of the Period of Insurance, then the entirety of that closure, up to the end of the MIP, would be relevant interruption or interference. But on Allianz’s case, if there was an enforced closure for health reasons before the end of the Period of Insurance, no part of the closure after the end of the Period of Insurance would be relevant interruption or interference. I consider that to be paradoxical, and reinforces me in my view as to how the two Insuring Clauses would reasonably be understood.”
“Indemnity Period means the period of time during which interruption or interference to the Insured’s Business occurs as a consequence of the Covered Event beginning with the occurrence of the Covered Event and ending not later than the end of the Maximum Indemnity Period thereafter.” “Reduction in Turnover means: i. the amount by which the Turnover during the Indemnity Period falls short of the Standard Turnover; LESS ii. any costs normally payable out of Turnover (excluding depreciation) as may cease or be reduced during the Indemnity Period as a consequence of the Covered Event. …”