Supreme Court backs policyholders in FCA test case judgment

Today the Supreme Court has handed down its judgment in the FCA test case. Mishcon de Reya represented the Hiscox Action Group at all stages of the test case, funded by leading litigation funder, Harbour. Access the Court's press summary here and judgment here.

Richard Leedham, Partner at Mishcon de Reya who represents the Hiscox Action Group said:

"We are glad that the Supreme Court has found that the vast majority of policyholders of non-property damage Business Interruption (BI) cover will have cover for their business interruption losses caused by the national response of the Government to COVID-19. This includes most of the members of the Hiscox Action Group, whom we represented in the case, and RSA and now all QBE policyholders whom we represented at first instance through my partner Sonia Campbell and Hospitality Insurance Group Action. The Supreme Court has recognised that, just when this cover was needed most by thousands of UK businesses, insurers were wrong to argue that coverage was applicable only if there were narrow local restrictions, that they could deny claims because the cover had not been intended to be provided and/ or because the interruption and therefore losses would have happened in any event.

The judgment should be a massive boost to all businesses reeling from a third lockdown who can now demand their claims are paid. In a detailed analysis of insurance law on proximate cause and causation, the Supreme Court has clearly and efficiently torpedoed the academic and convoluted arguments of insurers and laid down clear guidance as to how these claims should be paid. In commenting that it is no surprise that the Court has come to this view, in an even more comprehensive way than the Commercial Court did, the Supreme Court has also paved the way for additional claims for delayed payment. It is a resounding but long overdue success for business, although tragically not to be enjoyed by those that have already gone. Whilst the FCA deserve credit for running the process so expeditiously, and the Court for delivering a speedy judgment, the decision by insurers to appeal what was widely seen as a defeat at first instance has delayed the claim process by a further 4 months, albeit in a more comprehensive way. One has to hope that in the claim adjustment process that must now happen immediately, insurers will not continue to drag their heels and cause further distress."

Ralph Fearnhead, Legal Director at Mishcon de Reya who also represents the Hiscox Action Group added:

"Whilst the speed with which the FCA and Courts have reacted is unprecedented, these proceedings should never have been necessary. The HAG have argued consistently (for the best part of a year now) based on the clear wording of their policies that Hiscox were always wrong to deny their claims as they did. The High Court found that to be the case back in September and it has now been re-affirmed unanimously by the Supreme Court after insurers refused to accept the High Court's findings. During what has been a very dark time for thousands of small business, their owners and staff (many of whom depend on those businesses to pay their mortgages and bills), the scandal here is that almost 10 months to the day after the first lockdown was announced by the Prime Minister, none of these businesses have yet to receive a penny from Hiscox under the insurance policies which they have paid for and so desperately need.

In a cruel twist of fate, the fact that the actions of insurers meant that the FCA considered it necessary to bring the Test Case proceedings to support policyholders generally has actually delayed the approximately 400 Hiscox policyholders we represent from having their claims resolved. Those policyholders, with backing from leading litigation funder, Harbour, had already grouped together and commenced arbitration proceedings against Hiscox (the conclusion of which has been delayed by insurers continued defence of the FCA proceedings). Whilst the Supreme Court ruling is of course welcome, to the extent they have not already gone into liquidation whilst waiting for the outcome (and a number have) the businesses we represent still desperately need the money they are due from Hiscox in order to stay afloat through this crisis. We will continue to represent them in their fight against Hiscox through ongoing arbitration proceedings and any other means of legal recourse necessary until they have received the compensation to which they are entitled."

Read our detailed legal commentary on the judgment here.