Grimes v Liberty Mutual: High Court rules on meaning of "discovery" in Covid-19 business interruption claims

The Commercial Court has handed down a significant judgement clarifying the scope of business interruption cover under "discovery" wordings, finding in favour of a group of small business operators who brought claims against Liberty Mutual Insurance Europe SE arising from Covid-19 closures.

In Ann Grimes t/a The Cleveland Arms & Ors v Liberty Mutual Insurance Europe SE [2026] EWHC 1195 (Comm), Christopher Hancock KC, sitting as a judge of the High Court, determined preliminary issues relating to policy construction and notification across five consolidated claims brought by operators of public houses, hair salons, cafés, hotels and similar businesses.

The central construction question

The core dispute concerned Extension 2(a) of the ARO Retail Package policy, which provided cover for business interruption arising from compulsory closure "arising from discovery of a notifiable human infectious or contagious disease at the Premises." Liberty Mutual argued that "discovery" required the infection to be both apparent through contemporaneous diagnosis and known to the relevant public body before closure was imposed. The claimants contended that "discovery" was synonymous with "occurrence," or at least with "manifestation."

Hancock KC declined to adopt either extreme position. He held that a discovery of Covid-19 at the premises is required, but that it need not precede the closure. Provided a case of Covid-19 occurred at the premises during the relevant period (after the disease became notifiable but before the compulsory closure), and was subsequently discovered, that discovery could satisfy the policy trigger even if it came to light only after the closure had taken effect.

The judgement also confirmed, following the Court of Appeal's decision in London International Exhibition Centre v Allianz [2024], that the closing authority need not have known of the specific case at the insured premises, nor taken it into account when imposing restrictions. The government's response to the pandemic as a whole, which necessarily encompassed cases at each claimant's premises, was sufficient to establish the requisite causal link.

Notification and condition precedent

On the notification issues, the court held that General Condition 5, which required insureds to "immediately advise" the insurer upon the happening of any event which could result in a claim, was a condition precedent to liability. The express contractual label was treated as highly influential, consistent with the modern approach endorsed by leading insurance law texts.

However, the court rejected Liberty Mutual's argument that the compulsory closures of March 2020 were necessarily the relevant triggering event for notification purposes. Given that discovery of Covid-19 at the premises might postdate closure, the notification obligation would arise within the requisite period after the insured became aware that there had been a case of Covid-19 at the premises during the relevant window.

On estoppel, the court found that Liberty Mutual had made no unequivocal representation that it would not rely on the late notification defence. Denial of liability on substantive coverage grounds, without reference to General Condition 5, did not amount to such a representation, particularly where solicitors' letters included a general reservation of rights. The plea of estoppel accordingly failed.

Significance

The judgement marks a further development in the litigation arising from the pandemic, extending established principles on concurrent causation to "discovery" wordings and confirming that insurers cannot simply equate that term with a requirement for contemporaneous, pre-closure diagnosis. The precise scope of admissible evidence to prove discovery remains to be determined at a subsequent stage of proceedings.