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Law360, London (June 28, 2021, 4:55 PM BST) -- A U.K. holiday park owner has expanded its £71 million ($98 million) COVID-19 loss lawsuit in the High Court against a Lloyd's of London syndicate, claiming a further £8 million in fees and interest incurred while the insurer withheld a partial payout.
Parkdean Resorts UK Group says in an amended complaint filed June 18 that Axis Managing Agency's interpretation of the business interruption coverage it provided to the park and subsequent refusal to make an interim payment in May 2020 was "obviously flawed."
In addition to business interruption losses totaling £71 million, the park now says it is entitled to a further £8.7 million because Axis waited too long to pay out, even after the Supreme Court ruled in a test case that insurers were liable to most policyholders with business interruption policies.
Parkdean Resorts said that without the interim payment it had to pursue a refinancing process dubbed "Project Richmond" in the court filings, which involved renegotiating existing loans with its bank and obtaining a £25 million cash injection from its owners.
Axis didn't end up paying out any money to the park until March 4, 2021, by which time Parkdean Resorts claims it had accumulated several bills because of the refinancing. The interest on the cash injection, for example, had added up to £2.5 million, and the park also needs to pay £3.75 million in bank fees and £2.53 million to its lawyers, it says.
"The defendants should have made the interim payment in May 2020, or shortly thereafter," the complaint says. "Had they done so, or confirmed that they would do so, the claimants would not have been compelled to undertake Project Richmond at all, or in the same form and therefore would have avoided all or substantially all of the fees."
Parkdean Resorts sued in July after it was forced to close 67 caravan, camping and chalet sites due to lockdown restrictions. The suit also claims "tail losses" after the legal lockdown ended and the public adjusted to England's reopening.
Axis said in its defense that most of the losses claimed by the group don't fall under the policy terms.
The additional claim comes after the holiday park owner ramped up the business interruption damages it is seeking from the insurer last month from £59 million to £71 million, arguing it should be covered for lost earnings until July 24 rather than earlier in July as previously pled.
In the latest court filings, Parkdean Resorts says the Financial Conduct Authority urged insurers from April 2020 to adopt a "positive approach" by making interim or partial payments wherever possible. That guidance was reiterated when the High Court handed down its decision in the test case in September.
If Axis had made a partial payment in September, Parkdean says, it could have saved £394,184 in interest on the £90 million in revolving credit facilities it had taken out, which needed to be rolled over by the end that month.
The Supreme Court upheld the High Court's ruling in January in the test case, which went largely in favor of policyholders. The Supreme Court found that insurers should pay out if the "occurrence" of COVID-19 within the vicinity was a cause of business interruption losses.
In Parkdean Resorts' lawsuit, the two sides are fighting over the wording of the business interruption disease clause and whether disruption caused by government reaction to the coronavirus outbreak including quarantine restrictions and social distancing counts as an "insured peril."
Axis argues that the policy does not provide cover for financial loss caused by a contagious and infectious disease. It also does not extend to things that "merely hinder access to the insurer premises," or prevent customers from going to the parks' restaurants and bars, the defense said.
Parkdean Resorts is represented by David Bailey QC and Jessica Sutherland of 7KBW, instructed by Taylor Wessing LLP.
Axis is represented by Rachel Ansell QC and Martyn Naylor of 4 Pump Court, instructed by Clyde & Co LLP.
The case is Parkdean Resorts UK Ltd. and others v. Axis Managing Agency Ltd., case number CL-2020-000469, in the High Court of Justice of England and Wales.
--Additional reporting by Lucia Osborne-Crowley and Joanne Faulkner. Editing by Joe Millis.
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