FBD must cover losses of pubs due to early closing rules

A High Court decision concerning the scope of insurer FBD's Covid-19 business interruption policy is expected to significantly increase the sums FBD must pay to pubs and restaurants.

Mr Justice Denis McDonald previously found the FBD policy in question extended to closures and partial closures, resulting from government regulations and restrictions, of four bars, who took test cases over the scope of the policy.

In a further judgment on Friday, with potential implications for up to 1,000 bars and restaurants, the judge ruled that “partial” closure included the closure of bar service counters and earlier closing hours for the purposes of the policy.

He also found FBD has a liability for some payments made by the bars concerning staff wages.

Claims

In its half-year results last August, FBD said it expected claims arising from the case to cost some €183 million.

In his 200-page judgment, the judge noted the plaintiffs had argued the bar counter is central to the Irish pub, with counsel for one describing it as the “Holy Grail of the public house”.

FBD maintained the bar counters could not be regarded as closed when they could be used for preparing and dispensing by servers of drinks.

The judge ruled on core points of principle disputed between the sides and set out guidelines for the parties to help them calculate the compensation to be paid arising from his findings. He urged the sides to try and reach agreement and returned the matter to February 17th.

The test cases are by three Dublin bars – Aberken, trading as Sinnott's Bar; Hyper Trust Ltd, trading as The Leopardstown Inn and Inn on Hibernian Way Ltd, trading as Lemon & Duke – and by Leinster Overview Concepts Ltd, trading as Seán's Bar in Athlone.

Closures

The judge found Sean’s Bar, a wet pub, meaning it does not serve food, is entitled to be indemnified by FBD for closures for the periods between March 15th, 2020 and September 21st, 2020, and from October 7th, 2020, to June 2021. FBD was not entitled to reverse admissions made by it in a legal issue paper that Sean’s Bar was subject to two indemnity periods, he held.

That finding was relevant only to Sean’s Bar and not to wet pubs generally, he said.

He held the three Dublin pubs are entitled to be indemnified for losses suffered from August 10th, 2020, as a consequence of early closing requirements put in place from time to time from that date.

He held they are also entitled to be indemnified for some losses suffered by the closure of bar counters during those periods.

He concluded the government guidelines had from June 2020 restricted customer use of bar counters to provision of a takeaway service or for taking orders from a smoking area outside. He agreed the counter is an “intrinsic part” of an Irish pub.

Evidence

While “deeply troubled” by evidence indicating some people were seated at Sinnott’s bar counter for a Leeds v Liverpool match on September 12th, 2020, he noted Sinnott’s had described that as an “anomaly”. He concluded there was insufficient evidence to demonstrate this occurred on other days.

He partly upheld claims by Sinnotts and Seán's Bar with regard to claims for staff wages and salaries. There is no longer a dispute between FBD and Lemon & Duke over that bar's narrow claim concerning wages and salaries paid to retained staff, he noted.

He was unable to find, on the evidence, that any part of the Leopardstown Inn’s claim arising from promises to keep staff on the payroll should succeed but said the bar and FBD should liaise to see if any agreement could be reached regarding any staff who were retained on the payroll “when it was necessary to do so”.