The High Court has ruled against Premier Dale Limited, which trades as the Devlin Hotel, in a test case over whether its business interruption policy covered COVID-19 closures under a disease clause.
Mr Justice Denis McDonald held that the clause required a notifiable disease to become evident at the premises. That could be shown by a symptomatic or diagnosed case there, or by detection of the disease’s causative pathogen. The court said the policy also covered a case or pathogen detected immediately outside the hotel, such as at its coffee hatch or outdoor dining area. A case elsewhere in the vicinity would not suffice.
The agreed facts were that no diagnosed, confirmed or identified COVID-19 case had been found on or at the hotel before its closure, and the company had not alleged a manifestation of disease there. The hotel closed on 16 March 2020, apart from a coffee hatch that remained open. Government restrictions also affected the business in September 2020.
The company relied on expert evidence estimating that infected people may have visited the premises in September. The judge said that estimate could support the possibility of an occurrence of COVID-19 there, but occurrence was different from manifestation. There was no evidence that the virus had been detected at the hotel or that a symptomatic or diagnosed case had become evident there.
The judge rejected the argument that community prevalence, the risk of transmission, masks, distancing or public health warning signs amounted to manifestation at this particular premises. He described the closure measures as pre-emptive measures to reduce transmission, rather than responses to disease or its pathogen detected at the hotel.
The ruling addressed interpretation of the policy clause and related questions agreed for the test case. The judge did not decide whether restrictions had to cause a total cessation of business, saying that issue did not need determination. He also did not decide the separate causation question because no qualifying manifestation at the premises had been established. Other pleaded bases for indemnity, including separate policy extensions, were not determined in this judgment.
The judge directed that the matter be listed remotely on 8 April 2022 to consider whether further issues remained and to address costs. He also directed the parties to file written submissions within 28 days of electronic delivery of the judgment.