International Entertainment Holdings Limited & Ors v Allianz Insurance Plc [2024] EWCA Civ 1281
In the latest Covid-19 business interruption decision, the Court of Appeal has handed down judgment in International Entertainment Holdings Limited & Ors v Allianz Insurance Plc [2024] EWCA Civ 1281. The main issue in the appeal concerned whether access to the Claimants’ theatre venues was prevented or hindered by a “policing authority.”
In concluding that “policing authority” could not be construed as meaning the Secretary of State, the Court of Appeal held that: “It is sufficient to say that the term does not extend to the Secretary of State. To adapt Lord Justice Scrutton’s famous remark about the elephant (Merchants Marine Insurance Co Ltd v North of England Protection & Indemnity Association (1926) 26 Ll LR 201, 203), the reasonable policyholder might not be able to define a “policing authority”, but he would know that the Secretary of State was not one.”
Policy Wording
The Claimant, International Entertainment Holdings and its subsidiary companies operated theatres and other hospitality venues across the United Kingdom. The dispute related to the extent of coverage, and in particular, whether under its insurance policy issued by Allianz, there was cover for Covid-19 business interruption losses under the following non-damage denial of access (“NDDA”) clause:
“Denial of Access Endanger Life or Property
Any claim resulting from interruption of or interference with the Business as a direct result of an incident likely to endanger human life or property within 1 mile radius of the premises in consequence of which access to or use of the premises is prevented or hindered by any policing authority, but excluding any occurrence where the duration of such prevention or hindrance of us [sic.] is less than 4 hours, shall be understood to be loss resulting from damage to property used by the Insured at the premises provided that
i) The Maximum Indemnity Period is limited to 3 months, and
ii) The liability of the Insurer for any one claim in the aggregate during any one Period of Insurance shall not exceed £500,000.”
Policing Authority
Whilst the Court of Appeal accepted that the term “any policing authority” is not limited solely to decisions of the police, and could in fact refer to other bodies carrying out policing functions, the Court was not persuaded that a reasonable policyholder would consider that central government or a government minister was a body similar to a police force.
In the arguments advanced by International Entertainment Holdings, the Claimant submitted that the natural meaning of the term “policing authority” could be expanded to refer to any body with authority to prevent or restrict access to premises. The Court, whilst acknowledging that these submissions were made moderately and attractively, was not convinced. To do so would risk deviating too much away from the principle 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.
Possible Policyholder Arguments in Similar Cases in the Future
The logic of the Court of Appeal ruling leaves open several arguments for policyholders in future cases in the Covid-19 context or similar settings. First, the Court noted that the policy at issue was a “pick and mix” policy, which included “a selection of different clauses adopted from other contracts, with no attempt to ensure that language is used consistently throughout the policy.” The Court found that this approach meant that “the inference of consistent usage has little or no force, and that reference to the same or similar language in other clauses of the policy may shed little light on the meaning of the term in question.” A policyholder with a more coherent, unified policy – in contrast to the policy at issue in International Entertainment Holdings -- may be able to point to other terms of their policy that give broader meaning to “policing authority” and thereby secure coverage for their loss.
Second, here the Court found that the Secretary of State, as part of the central government, was not a “policing authority.” However, in other Covid-19 cases (or other “closure order” cases) a policyholder may have been subject to closure orders (or may in the future be subject to such orders) issued by local or regional law enforcement entities. Even if such entities are not strictly part of the police, they may qualify the policyholder for coverage because those entities are closer to the Court’s understanding of the meaning of “policing authority.” In other words, while the governmental entity here did not qualify as a “policing authority,” other cases in the future may involve different governmental entities that could qualify.
Other Issues
In concluding that the Secretary of State was not a “policing authority” within the meaning of the insuring clause, the Court of Appeal agreed with the decision of the lower court and dismissed the claim.
There were three further issues on appeal which are of relevance to policyholders and which were considered in the Court’s Judgment. First, whether Covid-19 could be regarded as an “incident”. Second, whether the sub-limit in the policy applied separately to each insured premises. Third, whether there was a mistake in the policy wording which referred to “any one claim in the aggregate”, and whether this should this be corrected.
The Judgment provides useful guidance on the point that “policing authority” is not limited solely to the police. Whether or not this provides other policyholders with a basis on which to pursue claims will be fact and wording specific.
Looking ahead, other appeals arising from the Gatwick Investment Ltd v Mutual Insurance Europe SE Judgment are due to be heard by the Court of Appeal in early 2025. We will be following these closely.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Insurance Practice Group.
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