Liberty Group, the owner of luxury retail outlets including the Liberty London department store and Christys hat brand, has joined the growing list of companies bringing Business Interruption claims relating to the Government imposed pandemic lockdowns.
The £115m turnover group filed a claim against its insurers Liberty Mutual and Swiss Re relating to losses suffered by six subsidiary companies including its flagship London store and fabric business Liberty Fabric Limited. The claim alleges that the insurers have wrongly declined to pay out under its business interruption policy for losses suffered by the group during the pandemic. The claim form states: “The Defendants have confirmed by letter dated 24 November 2022 their position that the PoA [Prevention of Access] Extension has not been triggered and the Policy does not respond to the claim.”
The policy under which Liberty is known as LMCP18v2 wordings drawn up by Liberty Mutual. The policy documents defined Prevention of Access in the following terms: “Under Business Interruption loss following interference with the Business carried out by the Insured in consequence of action by the Police or other Statutory Authority following danger or disturbance within 1 mile of the Premises which shall prevent or hinder use of the Premises or access thereto or, interference with the Business carried out by the Insured.”
Although based on a slightly different variant of this wording, the recent policyholder win in Corbin & King Ltd v AXA Insurance plc has put the proverbial cat among the pigeons in respect of such ‘vicinity’ based ‘Action of Authority’ wordings providing Covid BI cover, beyond the scope of the earlier FCA Test Case. This makes the Liberty Group dispute one many other policyholders should watch closely.
As with other Covid BI claims, another of the key areas of dispute is whether the Prevention of Access extension should apply once only or per business unit and/or per lockdown. The claim document states: “It is the Claimants’ case that, on the proper construction of the Policy, and given its composite nature, the limit for the PoA Extension applied (i) per Business Unit (where applicable), alternatively (or where not applicable) per relevant Claimant, and in any event (ii) per (materially different) action taken by the Police or other Statutory Authority.”
Full details of the loss suffered by Liberty Group have not been detailed in the claim form, however the company does state that its “best estimate” for its reduction in turnover was “in excess of £40 million” and the Liberty London department store made a gross profit of £3.7m in 2020 rather than forecast profit of £40.4m.
Liberty alleges in its claim form that legal precedents set by the courts with respect to Covid Business Interruption claims support its case, and are also seeking additional damages for late payment of the claim by insurers based on new law entering into force in 2017. The claim form states: It is the Claimants’ case that the Defendants should have admitted liability in principle for the Claimants’ claims within two weeks of the handing down of the judgment in Corbin and King Ltd v Axa Insurance plc… i.e. by 11 March 2022, or such other period of time as the Court thinks reasonable. Instead, the Defendants have denied coverage.”
The defendants have yet to file their defence to the Liberty claims.
The Liberty claim joins a small but growing number of Covid BI claims waiting to be heard by the High Court. As the courts haven’t published the number of claims on the Covid BI List for some months, it is hard to gauge precisely how many claims are waiting to be tried. While the number of actual claims filed may not be large, they are almost certainly little more than the tip of the dispute iceberg. A number of claims, such as Cabello v Ageas Insurance, filed in December 2022, have been stayed by mutual consent while the parties wait on judgements in parallel claims, International Exhibition Centre Plc v Royal & Sun Alliance Plc, in the Cabello case. A huge number of others remain under negotiation or have not yet been filed.
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