The High Court has dismissed Hiscox S.A.’s appeal against a Financial Services and Pensions Ombudsman decision concerning a Covid-19 business interruption claim by NMME Zone Limited, which operated the children’s activity centre The Zone.
The judgment, delivered by Mr Justice Paul Burns on 6 October 2022, means the FSPO’s directions remain in place: Hiscox must make an advance payment of €25,000 towards policy benefits and pay €5,000 compensation. The FSPO also directed interest at the rate referred to in section 22 of the Courts Act 1981 if the amounts were not paid within 35 days after the company nominated an account. The High Court dismissed the appeal; it did not calculate the final insurance benefit.
The company temporarily closed on 15 March 2020 after its industry group recommended that centres close, citing public health advice. Hiscox initially declined the business interruption claim and maintained that decision after an internal review. Its reasons included that the policy required restrictions specific to the insured premises, that the disease had to occur there, and that the closure had not followed an instruction from the HSE.
After the UK Supreme Court’s decision in FCA v Arch Insurance, Hiscox reversed its declinature and confirmed cover, subject to the policy terms and assessment of the amount payable. The FSPO’s May 2021 decision nevertheless upheld the complaint on the grounds that the insurer’s conduct was unreasonable, unjust and otherwise improper, and ordered the payments.
Hiscox argued that its original position reflected a genuine interpretation of complex policy wording and that the FSPO’s findings and remedies involved serious and significant errors. During the High Court appeal, its counsel conceded that the original declinature was wrong and breached the insurance contract. The High Court reviewed the adjudicative process as a whole and found no serious or significant error that warranted overturning the FSPO’s findings or directions.
The judge said the FSPO had considered the insurer’s approach in the context of government advice, Central Bank guidance to insurers and the impact on the company, including hardship and borrowing. He found the FSPO was entitled to make the advance payment direction, despite the possibility that it could later exceed the amount ultimately due, and considered the €5,000 compensation proportionate to the inconvenience and hardship described.
The judgment also observed that the FSPO had not expressly upheld the complaint on the statutory ground that the conduct was contrary to law, despite language in its decision indicating a breach of contract. The judge did not regard that omission as a serious and significant error. He said clearer structure and links between findings, statutory grounds and remedies would have helped. On costs, he said the final order would award costs to the FSPO against Hiscox unless either party sought to make submissions within ten days of receiving the judgment.