Stonegate brought the case against MS Amlin earlier this year seeking recovery of more than £1bn in business interruption losses following the restrictions imposed on the hospitality sector in response to the pandemic.
While the court ruled in favour of the pub company on certain issues, such as for losses incurred during lockdown in March 2020, it sided in favour of the insurers with regards to claims for furlough.
Though Night-Time Industries Association (NTIA) CEO Michael Kill stated the outcome of the hearing “wrongly” allowed insurers to benefit and the decision was “unjust”.
Resonate in frustration
He said: “Today’s ruling sets a dangerous precedent, which will resonate in frustration and anger across the hospitality and night-time economy sectors.
“Many will be aggrieved to see insurers, who have placed so many in financial ruin over the Business Interruption challenge, wrongly being allowed to consider deducting the state support a paid policy holder has received when deciding what to pay the businesses.
“Confidence is at an all-time low between the sectors and feel strongly alongside the industry this decision is unjust but raises questions on whether these deductions should be returned to the state.”
However, a spokesperson for Stonegate stated while the company was pleased with parts of yesterday’s ruling, the outcome was “far from conclusive” and the business intended to appeal certain decisions.
The spokesperson said: “The outcome of this case is far from conclusive. We are pleased the judge found in our favour on a number of key issues and note he sided with our insurers on others.
“In this sense, the outcome is similar to the judgment of the Divisional Court in the Test Case brought by the FCA last year.
“However, we believe the court’s interpretation on a number of issues which are generally applicable to policyholders is out of step with the approach taken by the Supreme Court in the test case and with the approach of courts in other jurisdictions (such as on furlough). We intend to appeal those elements of the decision.
“Whilst our recovery from the pandemic has been strong, we cannot ignore the significant disruption caused during the last two years and, along with most businesses in the UK, we are now grappling with inflationary challenges and a cost-of-living crisis for the UK consumer.
“In the circumstances, we, and other businesses, are entitled to look to our insurers to provide the cover promised under our policy.”