“If any of the charges or expenses of The Business payable cease or reduce in consequence of the Damage such savings during the Indemnity Period shall be deducted from the amount payable.”
“less any sum saved during the Indemnity Period in respect of such of the charges of the Business payable out of Gross Revenue as may cease or be reduced in consequence of the incident.”
“This Section extends to include any claim resulting from interruption of or interference with The Business carried on by The Insured at The Premises in consequence of … (b) action by the Police Authority and/or the Government or any local Government body or any other competent authority following danger or disturbance within a one mile radius of The Premises which shall prevent or hinder use of The Premises or access thereto …”
“Under Business Interruption loss following interference with the Business carried out by the Insured in consequence of action by the Police or other Statutory Authority following danger or disturbance within 1 mile of the Premises which shall prevent or hinder use of the Premises or access thereto or, interference with the Business carried out by the Insured.”
“This week, the Government has taken unprecedented steps to fight the coronavirus. We have closed schools. We have told people to stay at home to prevent the spread of infection. We are now closing restaurants and bars. Those steps are necessary to save lives. But we don’t do this lightly—we know those measures will have a significant economic impact. I have a responsibility to make sure we protect, as far as possible, people’s jobs and incomes. Today I can announce that, for the first time in our history, the government is going to step in and help to pay people’s wages. We’re setting up a new Coronavirus Job Retention Scheme.”
“(a) the employee has been instructed by the employer to cease all work in relation to their employment, (b) the period for which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more, and (c) the instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease.”
“(a) the gross amount of earnings paid or reasonably expected to be paid by the employer to an employee (b) any employer national insurance contributions liable to be paid by the employer arising from the payment of the gross amount (c) the amount allowable as a CJRS claimable pension contribution.”
“In my judgment, employment costs were at least ‘reduced’ pro tantoby reason of the payment of corresponding amounts under the CJRS. I consider that the natural meaning of [the savings clause] is that it is referring to costs to the business. Insofar as such costs were defrayed by the Government, I consider that they were ‘reduced’. That, in my view, reflects the net financial effect of payments under the CJRS and the commercial reality.”
“… one has to remember that this specification is a formula upon which the parties have agreed, and it is not for the Court to try to find out a better formula, or one which would give a more favourable result to the one party or to the other than that to which the parties have set their hands.”
“The core principle is that an insurance policy, like any other contract, must be interpreted objectively by asking what a reasonable person, with all the background knowledge which would reasonably have been available to the parties when they entered into the contract, would have understood the language of the contract to mean.”
“Although the defendants’ construction stretches the word ‘payable’ somewhat, it seems to me that it is to be preferred to [the insured]’s construction, which leaves the saving in respect of depreciation out of account. My principal reason for that conclusion is that it seems to me that, as a matter of principle, a policy should be interpreted as providing an indemnity for the loss suffered not for more than such an indemnity. Of course if the wording is incapable of any other construction, a court might be driven to the conclusion that something in excess of a full indemnity was intended, but given the unlikelihood and unreasonableness of such a conclusion, the court should not arrive at it unless no other conclusion is possible.”
“A reasonable businessperson seeking to understand these lengthy clauses would not begin by assuming that they mean nothing more than the expression “full indemnity for actual loss to gross profit”, and then proceed to enquire whether anything in the language required otherwise. His or her attention would remain fixed on the sense of the language describing the method for ascertaining the loss as coloured by its immediate and commercial context …”
“70. … I can readily accept that the indemnity principle is a factor to be taken into account in interpreting the terms of a policy. But, if it is clear from the language of the policy that the parties have agreed to accept either something less—or something more—than a perfect indemnity, the ordinary rules of contractual interpretation will require that effect be given to the solution expressly chosen by the parties. … 72. … I accordingly accept that the indemnity principle is relevant in construing the [insurance] policy in so far as it may colour the meaning of the language used. However, … the indemnity principle does not require that a strained or artificial meaning should be given to the words of a policy …”
“This would be more than an indemnity; it would in fact be making a profit out of the incident. Hence, the insertion of the savings clause to redress the position by stipulating that any sum saved in this way shall be deducted in the computation of the claim.”
“I can see that a lawyer might construct an argument that the effect of the Government supports is to make good outlays already expended by the insured rather than to save or reduce those outlays in advance. However, I do not believe that this is how the savings clause would be construed by a reasonable person in the position of the parties.”
“The Treasury Direction of15 April 2020 , by para 8.1 specified that CJRS payments might reimburse ‘the gross amount of earnings paid or reasonably expected to be paid by the employer to an employee’. There is similar wording in para 8.6; para 8.1(b) refers to national insurance contributions ‘liable to be paid’; and para 12 refers to ‘earnings paid or payable’ by employers to furloughed employees.” (Emphasis added by the judge.)
“it would undermine the commercial purpose of the cover to treat such potential effects as diminishing the scope of the indemnity. The underlying reason, as it seems to us, is that, although not themselves covered by the insurance, such effects are matters arising from the same original fortuity which the parties to the insurance would naturally expect to occur concurrently with the insured peril. They are not in that sense a separate and distinct risk.”
“where insurance is restricted to particular consequences of an adverse event … the parties do not generally intend other consequences of that event, which are inherently likely to arise, to restrict the scope of the indemnity.”
“indemnifies the policyholder against the risk (and only against the risk) of all the elements of the insured peril acting in causal combination to cause business interruption loss; but it does so regardless of whether the loss was concurrently caused by other (uninsured but non-excluded) consequences of the Covid-19 pandemic which was the underlying or originating cause of the insured peril.”
“As a matter of the application of the policy’s provisions, they were not. The criteria for eligibility for JobKeeper payments were financial ones; they did not depend on whether or not there had been an outbreak within 20 km of the premises of the business. Meridian was entitled to the JobKeeper payments regardless of whether or not there was an outbreak within 20 km of its premises. Conversely, had Meridian not met the financial tests for JobKeeper, it would not have been entitled to JobKeeper payments, even if the insured peril in [the disease clause] occurred.”
“the effect of the decision of the Supreme Court in the FCA test case is that, when considering the operation of the insured peril, a concurrent causation analysis is to be applied … It is therefore sufficient to show that the CJRS (and thus the payments made pursuant to that scheme) was brought into being in consequence of a combination of government restrictions affecting the business of each claimant policyholder in combination with restrictions affecting the business of other policyholders.”
“it was the general prevalence of Covid-19 (including cases within the relevant radius) which led to the restrictions imposed by the Government. The furlough scheme was announced at the same time that those restrictions were imposed and was intended to mitigate the effects of those restrictions, so that the incidence of Covid-19 and the restrictions imposed as a consequence were a sufficient effective cause of the furlough scheme.”
“The insureds’ arguments in effect depend upon a but for test of causation: it is said that the insureds would have been entitled to CJRS payments in circumstances in which the insured perils had not occurred and so would be entitled to such payments, without the occurrence of the insured perils, and so the savings were not caused by the insured perils. But these are the very but for causation arguments which were rejected by the Supreme Court in the FCA test case, both in relation to the operation of the insured perils, and the trends clauses. They are equally inapposite to the related causation question which applies to the savings clauses, in which the proximate cause test should be the same.”
“if it was found that the sole proximate cause of the loss of its walk-in customer business was the travel restrictions and not the inability of customers to enter the agency, then the loss would not be covered.”
“Here, the insured peril was the outbreak of a disease within 20 kilometres of the insured’s [premises]. It may well be expected that when such a circumstance arises, the authorities will require businesses to close their doors and restrict the free movement of residents. That being so, each of those events, if not otherwise part of the insured peril itself, can be ignored as competing causes of the insured loss. However, the imposition of nationwide international travel restrictions is not something which the parties would naturally expect to occur concurrently with the localised outbreak of a disease. That is consistent with the primary judge’s findings that those restrictions were motivated by factors other than the outbreak of the disease in Victoria. They, therefore, do not have the necessary characteristics to be causes arising from the same underlying fortuity such that their causative impacts cannot be set up against the insured peril. As the Commonwealth Government travel bans effectively curtailed or destroyed Meridian’s business … by detrimentally impacting that 90% of its business related to international travel, it could not be said that the insured peril was a proximate cause of those losses. Accordingly, there is no basis on which to upset the primary judge’s reasons in this respect.”
“The general rule is that loss which has been avoided is not recoverable as damages … To this there is an exception for collateral payments (res inter alios acta), which the law treats as not making good the claimant’s loss. It is difficult to identify a single principle underlying every case. In spite of what the Latin tag might lead one to expect, the critical factor is not the source of the benefit in a third party but its character. Broadly speaking, collateral benefits are those whose receipt arose independently of the circumstances giving rise to the loss. Thus a gift received by the claimant, even if occasioned by his loss, is regarded as independent of the loss because its gratuitous character means that there is no causal relationship between them.”
“Here it is admitted that there is in the Act of Congress everything said and done which a supreme legislature could possibly say or do for the purpose of excluding the present claim and attributing that fund which has been appropriated in this case to the sufferers by the capture, not to the valued part but to the unvalued part of the loss. That distinction, which in my opinion does exclude for this purpose the part covered by the valuation of the policy of insurance, is made by the Act of Congress. It was a true and bona fide valuation but it did not cover the actual loss. The fund awarded by the Act of Congress of the United States is only for that part of the actual loss which the valuation did not cover and which the insurers have not paid.”
“the question is not whether the money was voluntarily paid or not voluntarily paid, but whether de facto the money which was paid did reduce the loss.”
“It was, certainly, I think, a voluntary gift on the part of the Crown, and was for the benefit of the sufferers. But then I think that that gift being made, as it was made, for the benefit of those who had suffered from the captures, and the money being paid for that purpose, it did diminish the loss; and consequently the benefit of it enured to the persons who were bound to indemnify; and it was so decided in those two cases. It was not because the King was bound to pay the money—he was not: it was not because there was a moral obligation to pay it … it was because de facto there was a payment which prevented, or diminished pro tanto, the loss against which the insurers were bound to indemnify the assured.”
“It is insisted that only those payments are to be taken into consideration which have been made in respect of the loss. I ask why, and where is the authority? If the payment diminishes the loss, to my mind it falls within the application of the law of indemnity.”
“The answer is that when a gift is made afterwards in order to diminish the loss, it is bestowed in such terms as to shew an intention to benefit the assured, and to give the insurer the benefit of that would be to divert the gift from its intended object to a different person.”
“With regard to gifts, all that is to be considered is, has there been a loss, and what is the loss, and has that loss been in substance reduced by anything that has happened?”
“Suppose that a man who has insured his house has it damaged by fire, and suppose that his brother offers to give him a sum of money to assist him. The effect on the position of the underwriters will depend on the real character of the transaction. Did the brother mean to give the money for the benefit of the insurers as well as for the benefit of the assured? If he did, the insurers, it seems to me, are entitled to the benefit, but if he did not, but only gave it for the benefit of the assured, and not for the benefit of the underwriters, then the gift was not given to reduce the loss, and it falls within Burnand vRodocanachi. If it was given to reduce the loss, and for the benefit of the insurers as well as the assured, the case would fall on the other side of the line, and be within Randal vCockran, to which allusion has been made.”
“The question whether the Transvaal Government, in returning this money, were thinking of the insurers appears to me to be immaterial, if they imposed no condition or trust or obligation upon the money as between themselves and the defendants when it was returned. Probably the Transvaal Government were not thinking of the insurers at all. But on the facts I have stated, it appears to me that … in the absence of any circumstances negativing that view, the insurers would be able to say: ‘We are entitled to avail ourselves of that diminution of the loss which we insured against.’”
“In Burnand v Rodocanachi, as the judgments show, the critical factor was the clearly expressed intention of the US Congress to compensate the beneficiaries for their uninsured losses, together with the express exclusion of any claim by the insurers in their own right or that of the assured. … In Castellain v Preston, on the other hand, no such intention to exclude the insurers could be derived from the purchaser’s payment of the full purchase price without abatement on account of the fire damage. … It follows that the crucial question is whether, on the construction of the deeds, … it was the intention of Amoco to benefit ICI to the exclusion of the [insurers].”
“It is the Government’s firm expectation that grant funds intended to provide emergency support to businesses at this time of crisis are not to be deducted from business interruption insurance claims.”
“Entitlement to a payment under CJRS is without prejudice to any entitlement to a payment under any similar scheme arising from a direction undersection 76 of the Coronavirus Act 2020 .”
“The most satisfying of the reasons that have been given for refusing to diminish damages because of voluntary gifts is that they are given for the benefit of the sufferer and not for the benefit of the wrongdoer.”
“the decisive consideration is, not whether the benefit was received in consequence of, or as a result of the injury, but what was its character: and that is determined … [in the case of gratuitous payments] by the intent of the person conferring the benefit. The test is by purpose rather than by cause.”