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,  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:
- 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;
- 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;
- Hybrid clauses: Clauses which combine main elements of the disease and prevention of access clauses; and
- 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.
By Kimberly Bungay On April 1, 2023, the Nova Scotia government will proclaim into force Bill 226, which amends the Companies Act (the “Act”) to require companies formed under the Act to create and maintain…Read More
Abuse of sick leave / failure of employee to participate in accommodation process: Vail v. Oromocto (Town), 2022 CanLII 129486
By Chad Sullivan and Kathleen Starke Background A recent decision, Vail v. Oromocto (Town), 2022 CanLII 129486, involved several grievances including an unjust dismissal claim by a firefighter as well as a grievance filed by…Read More
By Stuart Wallace and Kim Walsh On January 1, 2022, the Underused Housing Tax Act (the Act) took effect. The Underused Housing Tax (the UHT) is an annual 1% tax on the value of vacant or…Read More
Parlez-Vous Francais? Recent amendments to Quebec’s Charter of the French Language may impact Atlantic Canadian businesses
By: David F. Slipp and Levi Parsche In May 2022, Bill 96 was adopted by Quebec’s National Assembly, significantly amending the Charter of the French Language (the “Charter“). The amendments create new requirements for using…Read More
The Winds of Change (Part 7): Paying the Piper: New Newfoundland and Labrador Fiscal Framework expects billions in revenues from wind to hydrogen projects
By Dave Randell, G. John Samms, and Stuart Wallace With the deadline for bids on crown lands available for wind energy projects extended to noon on March 23rd, the latest development in our Winds of…Read More
By Kevin Landry and Colton Smith The Retail Payment Activities Regulations have been released in the Canada Gazette Part 1 for comment. Interested persons may make representations concerning the proposed regulations for a period of 45…Read More
By Andrew Burke, Colleen Keyes, Gavin Stuttard and David Slipp With proxy season once again approaching, many public companies are in the midst of preparing their annual disclosure documents and shareholder materials for their annual…Read More
By Brittany Trafford and Sean Corscadden In response to the nationwide labour shortage, the Federal government is allowing select family members of foreign workers to apply for open work permits. This temporary policy came into…Read More
Mark Tector and Ben Currie Effective January 1, 2023, amendments to Ontario’s Employment Standards Act, 2000 (“ESA”) took effect, excluding “business consultants” and “information technology consultants” from the application of the ESA. This is a…Read More
By Perlene Morrison, K.C. and Curtis Doyle Once again, the time has come to review the year that was and to chart the course for the year ahead. For municipalities and planning professionals in Prince…Read More