Establishing Occurrence of Notifiable Disease at Insured Premises: Marlin Apartments Limited Trading as Marlin Hotel Dublin v Allianz PLC Sets New Precedent in COVID-19 Business Interruption Claims

Introduction

The case of Marlin Apartments Limited Trading as Marlin Hotel Dublin v Allianz PLC ([2024] IEHC 550) adjudicated by Mr. Justice Denis McDonald on September 19, 2024, represents a critical examination of business interruption insurance claims amidst the COVID-19 pandemic. The plaintiff, Marlin Apartments Limited Trading as Marlin Hotel, sought indemnification from the defendant insurer, Allianz PLC, for losses incurred due to government-imposed restrictions following occurrences of COVID-19 at their hotel premises.

Central to this case were two extensions of the insurance policy:

• Extension 6 - Covering business interruption resulting from the occurrence of a notifiable disease at the premises that leads to restrictions imposed by a competent authority.
• Extension 7 - Covering business interruption caused by damage to properties within a 1.5-kilometre radius of the hotel.

The pivotal issue revolved around interpreting the term "occurrence" of a notifiable disease "at the premises" and determining whether the evidence provided, primarily statistical models estimating unreported COVID-19 cases, sufficiently established such occurrences to trigger indemnification under Extension 6.

Summary of the Judgment

Justice McDonald delivered a comprehensive judgment addressing both Extensions 6 and 7 of the insurer's policy. The court concluded that:

• Extension 7 - The plaintiff failed to provide sufficient evidence of property damage within the specified radius that would trigger this extension. Consequently, the claim under Extension 7 was dismissed.
• Extension 6 -
  • The claims related to business interruptions in periods leading up to March and September 2020 were dismissed due to inadequate proof of COVID-19 occurrences at the premises during those times.
  • The claim related to restrictions imposed on December 23, 2020, was upheld. The court accepted the existence of at least two occurrences of COVID-19 at the hotel during this period, even though one case was undiagnosed and asymptomatic.

The judgment underscores the necessity for tangible evidence of disease occurrences at insured premises to validate claims under business interruption policies.

Analysis

Precedents Cited

The judgment extensively referenced previous case law, notably:

• Financial Conduct Authority v. Arch Insurance [2021] A.C. 649 (the FCA case) - Addressing the interpretation of "occurrence" and the burden of proof in COVID-19 claims.
• Premier Dale Ltd. v. Arachas Corporate Brokers Ltd. [2022] IEHC 178 (Premier Dale) - Highlighting limitations in establishing manifest disease occurrences at insured premises.
• Hyper Trust Ltd. v. FBD Insurance plc [2021] IEHC 78 (Hyper Trust No. 1) - Discussing the application of proximate cause in widespread disease scenarios.
• Stonegate Pub Company v. MS Amlin [2022] EWHC 2548 (Comm.) - Examining the specificity required in proving occurrences within insured premises.

These cases collectively emphasize the judiciary's approach towards interpreting insurance clauses in the context of pandemics, particularly regarding the necessity of specific and tangible evidence to prove occurrences.

Legal Reasoning

Justice McDonald employed a methodical approach in interpreting the policy terms, grounded in established legal principles:

• Objective Construction of Contracts - Adhering to the principle that policies are to be construed with their natural and ordinary meanings in context, without considering the subjective intentions of the parties.
• Meaning of "Occurrence" - Affirming that an "occurrence" refers to any instance of a notifiable disease present at the premises, regardless of whether it was diagnosed or symptomatic.
• Causation and "But For" Test - Recognizing that the occurrences of COVID-19 at the premises were proximate causes of the restrictions, even if they were part of a broader nationwide outbreak, thus satisfying the "but for" causation requirement.
• Reliance on Expert Evidence - Evaluating the sufficiency and reliability of statistical models estimating unreported cases, ultimately finding them inadequate without corroborative evidence.

The court critically assessed the plaintiff's reliance on experts who used population-level data to estimate disease occurrences at a specific hotel, deeming the methodology insufficiently robust and unsupported by scientific literature or analogous case law.

Impact

This judgment sets a significant precedent in the realm of business interruption insurance, particularly concerning pandemics:

• Clarification on "Occurrence" - Reinforces that occurrences of notifiable diseases must be proven through specific evidence, not merely inferred from statistical models.
• Causation in Insurance Claims - Affirms that multiple disease occurrences can collectively satisfy causation requirements, preventing insurers from bypassing coverage due to the widespread nature of a pandemic.
• Reliance on Expert Statistical Evidence - Highlights the court's skepticism towards statistical models lacking empirical validation and peer-reviewed support in insurance litigation.
• Interpretation of Policy Terms - Stresses the importance of precise language in insurance policies and the judiciary's role in interpreting those terms objectively.

Future claims will likely reference this case when arguing the necessity of concrete evidence over probabilistic estimations in proving policy trigger events.

Complex Concepts Simplified

Occurrence: In insurance terms, an "occurrence" refers to an instance of a covered event happening at the insured location. For diseases, it means the disease was present at the premises, regardless of diagnosis or symptoms.

Proximate Cause: This legal concept determines whether an event can be considered the primary reason for a loss. If an occurrence is deemed a proximate cause, it directly leads to the loss without significant intervening factors.

"But For" Test: A causation test where the plaintiff must show that the loss would not have occurred "but for" the occurrence of the event covered by the insurance policy.

Confidence Interval: A statistical range that estimates where the true value lies with a certain level of confidence, often 95%. A wide interval indicates high uncertainty in the estimate.

Final Judgment: The court’s decision which resolves the main issues of the case. Here, it upheld the plaintiff’s claim under Extension 6 for the third restriction period while dismissing other claims.

Conclusion

The Marlin Apartments Limited Trading as Marlin Hotel Dublin v Allianz PLC judgment is a landmark decision that underscores the necessity for concrete evidence in business interruption insurance claims related to pandemics. It clarifies that statistical models estimating unreported disease cases are insufficient without tangible evidence of disease occurrences at insured premises. Furthermore, it affirms that multiple disease occurrences can collectively satisfy causation requirements, thereby ensuring that insurers cannot evade coverage due to the widespread nature of a pandemic. This case will undoubtedly influence future litigations, emphasizing precise policy language and the critical evaluation of expert evidence in insurance disputes.