The High Court approved an agreed method for calculating four public houses’ business interruption insurance claims against FBD Insurance, and held that specified government supports and rates waivers must be deducted from the sums payable under the policy.
Mr Justice Denis McDonald’s judgment, delivered on 26 July 2023, followed earlier rulings on cover for closures during the COVID-19 pandemic. The remaining issues had been listed for a hearing in November 2022, but the parties told the court they had reached a settlement and proposed a draft order. The judge considered whether its terms were appropriate before approving them.
The central dispute was whether government support received by the businesses counted as savings under the policy. The judge held that the policy’s savings clause required a support payment to be proximately caused by the insured peril and to relate to business expenses payable out of gross profit. He said the policy’s indemnity principle did not justify giving the clause a strained meaning that displaced its wording.
On that basis, he ruled that Temporary Wage Support Scheme and Employment Wage Support Scheme payments, COVID Restrictions Support Scheme payments and commercial rates waivers met the clause’s requirements and were deductible. Restart Grant and Restart Grant Plus payments, and Fáilte Ireland grants, were deductible to the extent they were used to defray business expenses payable out of gross profit. The parties had agreed that amounts from those grants not used for such expenses would not be deducted. For periods when part of a premises remained open, rates savings were to be apportioned according to the agreed formula.
The judge also approved the parties’ agreed loss calculation method. It provides separate calculations for full closure, closure of a bar counter and early closing, while allowing for additional costs, savings and a cap intended to prevent overcompensation. For partial closures, the method apportions savings and applies a comparison against the calculation for the business as a whole.
The court had already made an order in the agreed terms on 19 June 2023. It directed that the four proceedings be struck out with effect from 16 October 2023, allowing any party to apply before then. The judge did not decide FBD’s alternative argument based on subrogation, saying it was unnecessary after his conclusions on the policy wording.