Corbin & King Ltd & Ors v AXA Insurance UK Plc [2022] EWHC 409 (Comm): Covid BI becomes 3D Chess

Go Back 28.2.22 INSIGHTS

What happens if an appellate court ruling undermines the foundations of part of the lower court’s decision that was not appealed? It would seem from the decision of Mrs Justice Cockerill in Corbin & King v AXA that it might be necessary to revisit any conclusions drawn from the lower court ruling.

In light of the decision of the Divisional Court in the FCA Covid test case, policyholders with non-damage denial of access cover triggered by official action in the immediate environs of their premises may have given up hope of cover. They may need to think again.

What seemed to be insurers’ trump card was the language restricting the cover to happenings in the “vicinity” or within a “1 mile radius” of their properties. The Divisional Court had appeared to conclude that this would confine cover to being triggered only by highly localised incidents such as bomb scares, gas leaks and traffic accidents.

Mrs Justice Cockerill has concluded that there was another key component of the Divisional Court conclusion in this regard: i.e. its refusal to treat each and every case of Covid 19 as a proximate cause of the restrictions the national government introduced. The Supreme Court in the test case reached the opposite conclusion.

With this causation-based impediment removed, Mrs Justice Cockerill rejected the notion that a word such as “vicinity” or the specification of a narrow radius from the premises should, in and of themselves, determine the issue of the nature of the incidents that could trigger cover, or even predispose the court to start from the presumption that they would be highly localised in nature.

All of the language associated with the cover should be scrutinised to see what it indicated about the coverage being offered. For instance, if the action of the authorities was in response to a “danger”, should cover necessarily be denied if that danger operated both within and without the specified locality? If the authorities whose actions potentially triggered cover were not merely local, but also national, why should it be assumed that only a highly localised event was being envisaged by the policy? What justification could there be for a fairly lengthy indemnity period if cover was only supposed to apply to gas leaks and traffic accidents?

These are all good questions to be borne in mind should anyone care to revisit policy language which seemed to provide no cover in the light of the unappealed aspects of the Divisional Court’s test case ruling. Indeed, what other aspects of that decision may have been rendered unstable by passages of the Supreme Court decision focussed on other policies?

In “Star Trek” the game of 3D chess involved several boards on different levels. A move on a higher board could not be ignored for the purposes of the game on the lower boards. Is it time to go boldly back to some issues that appeared to have been resolved?

Stuart Hill is the Managing Partner of Wynterhill LLP.

This post is intended to provide guidance of a practical nature but does not contain legal advice or advice as to what action you should or should not take specific to your insurance needs or those of your business, or with regard to any particular situation.