Success for Greggs’ business interruption cover claim: the pandemic’s legal legacy continues

The cases heard by the High Court were (1) Stonegate Pub Company Ltd v MS Amlin, Liberty Mutual Insurance Europe and Zurich, (2) Various Eateries v Allianz Insurance Plc and (3) Greggs Plc v Zurich.  The decision in the Greggs’ claim could have implications for other businesses in the process of claiming for business interruption cover.

Issues for determination in the Greggs’ case

1. Whether the various orders from government to close and restrict trade during the Covid-19 pandemic triggered business interruption cover on multiple occasions?
2. How long each period of business interruptions would last for?

Zurich argued that Greggs could only claim for a single occurrence of business interruption under its policy.  This would have limited Greggs’ claim for losses to £2.5m, being the claim limit under the policy.

Greggs argued that there were multiple instances of business interruption during the course of the Covid-19 restrictions imposed by the government which affected its business, and that they were entitled to payment of up to £2.5m for each instance of business interruption which occurred.

Decision

Mr Justice Butcher agreed with Greggs for the most part. The judge decided that there was an occurrence of business interruption which triggered a payment of up to £2.5m to Greggs during the first lockdown (March – May 2020), and further occurrences of business interruption as the level of restrictions changed over subsequent months (including local lockdowns), meaning that Greggs could claim up to £2.5m from Zurich for each separate instance of business interruption which had occurred.

However, the judge also clarified that any Covid-19 regulations which merely continued existing regulations or made trivial changes did not constitute a new occurrence of business interruption.

It is not yet known whether Zurich will appeal the Greggs’ decision as there are clearly significant potential sums at stake.   In any event, this is not the end of the matter as the court will now have to decide the precise quantum of Greggs’ claim (if the parties are not able to reach an amicable resolution).  Greggs recently increased the value of its claim from £100m to £150m, to include losses for the increased costs of operating under Covid-19 restrictions and crisis management costs.

The Stonegate Pubs case

Stonegate Pubs, on the other hand, was less happy with the court’s decision in its case and, in particular, the court’s decision that it’s insurers were entitled to deduct furlough support from any pay-outs it was obliged to make under the policy.  This is arguably a different approach to that taken by the Supreme Court in the FCA’s test case (which we wrote about here) We understand Stonegate Pubs will appeal the decision.

Comment

Whilst the Covid-19 restrictions are some way behind us, the courts and businesses are still dealing with their legal legacy. We will keep you updated on further developments with these cases.