Skip to content

Business interruption and COVID-19: A UK perspective

Daniel MacKenzie and James Galsworthy

On January 15, 2021, the United Kingdom’s Supreme Court (“Court”) issued a decision which is likely to be viewed as good news for policy holders who have endured business interruption losses arising from the COVID-19 pandemic.

In response to the widening denial of business interruption claims under the standard wording of insurance policies, the Financial Conduct Authority, the regulator of various UK insurers, advanced a test case with the aim of providing interpretive guidance from the courts to the insurance market for the interpretation of certain standard clauses in insurance contracts.

While not binding in Canada, the analysis undertaken by the UK Supreme Court in Financial Conduct Authority v Arch Insurance (UK) Ltd and Others, [2021] UKSC 1 will be informative to Canadian decision makers where litigation ensues following the denial of coverage in relation to the following types of clauses:

  1. Disease clauses: Clauses which, in general, provide for cover for business interruption losses resulting from the occurrence of a notifiable disease, such as COVID-19, at or within a specified distance of the business premises;
  2. Prevention of access clauses: Clauses which, in general, provide for cover of business interruption losses resulting from public authority intervention preventing or hindering access to, or use of, the business premises;
  3. Hybrid clauses: Clauses which combine main elements of the disease and prevention of access clauses; and
  4. Trends clauses: Clauses which, in general, provide for business interruption loss to be quantified by reference to what the performance of the business would have been had the insured peril not occurred.

Further widening the decision of the High Court, the Court expanded the notion that “restrictions imposed” to prevent access must be undertaken by “force of law.” Additionally, the interpretation of an “inability to use” one’s premises as a result of the restrictions imposed was also widened, such that it is not required that the whole of the premises be unusable for any business purpose. For example, a restaurant may only be able to offer takeout service, while still being covered for losses stemming from its inability to use its premises for the dine-in aspect of its business as a result of COVID-19.

The analysis undertaken by the UK Supreme Court will be informative though non-binding to judicial decision makers in Canada where litigation ensues with regard to these types of clauses, which are also frequently found in the Canadian insurance market.

SHARE

Archive

Search Archive


 
 

Anticipating changes to the Competition Act: what businesses need to know

November 1, 2023

By Deanne MacLeod, K.C., Burtley Francis & David Slipp On September 21, 2023, the Federal Government introduced Bill C-56: An Act to amend the Excise Tax Act and the Competition Act (“Bill C-56”), with the…

Read More

Powering the future: Green choice program regulations

September 22, 2023

By Nancy Rubin, K.C. and Lauren Agnew The long-awaited Green Choice Program Regulations (N.S. Reg. 155/2023) were released by the provincial government on September 8, 2023, offering some clarity into the practical implementation of Nova…

Read More

Privilege protected: Court of Appeal rules NL’s Information and Privacy Commissioner barred from reviewing solicitor-client privileged information

September 20, 2023

By Koren Thomson, John Samms, and Matthew Raske The Newfoundland and Labrador Court of Appeal has held that the Information and Privacy Commissioner for this province (the “Commissioner”) does not have the authority to order…

Read More

Amendments required for Prince Edward Island code of conduct bylaws

September 18, 2023

By Perlene Morrison, K.C. Municipalities are required to pass code of conduct bylaws in accordance with section 107 of the Municipal Government Act (the “MGA”). Subsection 107(1) of the MGA specifically states that a municipality’s…

Read More

Professionally speaking: Ontario Superior Court upholds professional regulators’ right to moderate speech

September 14, 2023

By Sheila Mecking and Kathleen Starke On August 23, 2023, the Ontario Superior Court (“ONSC”) upheld a complaints decision which ordered a psychologist to complete a continuing education or remedial program regarding professionalism in public…

Read More

One-year reminder for federal employers: Pay equity plans due September 3, 2024

September 5, 2023

By Dante Manna As we advised in a previous podcast, all federal employers with at least ten employees[1] have been subject to the Pay Equity Act [2] (“PEA”) and Pay Equity Regulations [3] (“Regulations”) since…

Read More

Charging to net-zero: Government releases draft Clean Electricity Regulations

August 23, 2023

By Nancy Rubin, K.C. Environment and Climate Change Canada (ECCC) recently published a draft of the Clean Electricity Regulations (CER). The proposed Regulations work toward achieving a net-zero electricity-generating sector, helping Canada become a net-zero…

Read More

Supreme Court of Newfoundland and Labrador rejects developer’s constructive expropriation claim

August 18, 2023

By Stephen Penney & Matthew Raske In the recent decision Index Investment Inc. v. Paradise (Town), 2023 NLSC 112, the Supreme Court of Newfoundland and Labrador validated the Town of Paradise’s decision to rezone lands…

Read More

IRCC expands authorization for foreign workers to study without a study permit: Four things you need to know

July 13, 2023

By Sara Espinal Henao Immigration, Refugees and Citizenship Canada (“IRCC”) has announced a promising new temporary measure that allows foreign workers to study for a longer duration without a study permit, opening the door for…

Read More

Canada’s first-ever Tech Talent Strategy announced

July 12, 2023

By Brendan Sheridan The Government of Canada recently announced a number of aggressive immigration measures to help attract top talent to Canada in high-growth industries in an effort to fuel innovation and drive emerging technologies.…

Read More

Search Archive


Scroll To Top