Even among the string of legal battles that emerged between the UK’s hospitality and insurance industries in the wake of COVID-19, the case of Stonegate Group vs. MS Amlin, Liberty Mutual Insurance Europe and Zurich stands out as a landmark lawsuit.
Following an initial ruling in October of last, Stonegate Group recently received the result of its applications for permission to appeal – a result analysed by David Pryce (pictured), managing partner at Fenchurch Law in an interview with Insurance Business. Providing an overview of the case, Pryce noted that the claim is one of the largest ongoing COVID-19 disputes in the Commercial Court.
Stonegate issued its claim in March 2021, he said, and pleadings were served on the defendant insurers in June 2021. The matter proceeded quickly to a preliminary issues hearing in June 2022, at which the following key issues which were left unresolved by the FCA test case were considered, including in particular:
“Judgment was handed down on October 17, 2022,” he said. “In respect of the key issues, on most points the court came to a conclusion that fell roughly between the parties’ respective positions. For example, in respect of aggregation, the court rejected the insurers’ position that all losses aggregated to a single occurrence at some point in the origins of the pandemic, and identified March 16, March 20 and March 23, 2020, as key dates to which losses may aggregate. Both parties are appealing the court’s decision in this regard.”
Another milestone was recently achieved when Stonegate was granted permission by the High Court to appeal points in relation to aggregation and government support. Stonegate sought the Court of Appeal’s permission on three further issues, Pryce said – an additional point on aggregation; causation; and AICW.
“While the Court of Appeal refused permission in respect of causation, it granted permission for Stonegate to make submissions in respect of additional points on aggregation at a “rolled-up” hearing (which means the Court of Appeal will hear both the substantive appeal and points where permission is sought at the same time),” he said. “The Court of Appeal granted permission in respect of AICW.
“The result is that essentially three of the four key issues that were in dispute at the outset of this matter are still very much in play. Stonegate continues to seek the best result possible for both itself and a multitude of policyholders on the same or similar wording, and the Court of Appeal’s input on the issues in dispute will hopefully bring some much needed clarity to the market.”
Digging into what this means for Stonegate, Pryce noted that the High Court’s decision to grant permission to appeal on aggregation – in particular that losses aggregate on a per premises basis, and that there are separate occurrences in respect of each of the home nations – are very important to a business such as Stonegate’s where it has sought cover from its insurers for numerous premises throughout the UK.
He added: “The Court of Appeal’s decision to hear submissions on the full range of aggregation points is a clear indication from the Court that it considers this to be a complex area of law that requires further judicial insight, which Stonegate welcomes.”
Put simply, Pryce said, this latest news is a net positive outcome for Stonegate. The group already had permission to appeal on two important points relating to aggregation (which includes aggregation on a per premises basis), and also in respect of government support, which in particular remains of great importance to the wider insurance market.
“The Court of Appeal’s decision to hear from the parties on further points relating to aggregation, and also to consider AICW, is reflective of the importance of these matters to both Stonegate and policyholders more generally,” he said. “The Court of Appeal casting a fresh eye over the decision of the High Court is a welcome development in ensuring that the insurance market remains accountable to its policyholders, even where the cover offered results in significant claims arising from unprecedented events such as a global pandemic.”
As to the group’s next steps, Pryce stated that Stonegate is now preparing for the appeal hearing which is likely to take place at some point in late 2023.
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