On 21st of February 2025, the Court of Appeal handed down judgment in Bath Racecourse Company Limited v Liberty Mutual Insurance Europe SE. The decision, which was identified by The Lawyer as one of their top 10 appeals for 2025, provides important guidance to the insurance market and those policyholders with outstanding business interruption insurance claims arising from the pandemic.
The Court rejected the appeals of both the insurers and the policyholders, upholding the judgment of Mr Justice Jacobs at first instance.
In terms of the insurers’ appeals, the Court concluded that there were separate limits available for each policyholder. This was not because of any presumption arising from the composite nature of the policies; rather, it was how the policies were properly to be construed in the context of a composite policy comprising a series of contracts of insurance insuring each policyholder separately . The Court also considered that, on its proper construction, the relevant limit in the Bath Racecourse policy applied ‘any one loss’.
In terms of the policyholders’ appeals, the Court held that furlough payments reduced the losses capable of being claimed under the policies. It found that the payments engaged the savings clauses: the furlough payments did cause the insureds’ wage costs to ‘cease’ or ‘reduce’ and the payments were ‘in consequence of’ the insured peril. The Court also rejected the policyholders’ further argument that furlough payments were collateral or res inter alios acta.
The full judgment can be found here.
David Scorey KC, David Walsh and Edward Mordaunt appeared for Liberty Mutual Insurance Europe SE, Allianz Insurance plc and Aviva Insurance Limited, instructed by Ian Plumley and Tomas Amaral of DAC Beachcroft, and Rupert Warren and Rhys Durbin of HFW.
Jeffrey Gruder KC (leading Josephine Higgs KC of 7KBW) appeared for Gatwick Investment Limited and Starboard Hotels Limited, instructed by Roger Franklin of Edwin Coe LLP.
