QBE Insurance v Relax Beach: COVID-19, Business Interruption, & Insurance Claim Notification
In QBE Insurance (Singapore) Pte Ltd and MS First Capital Insurance Limited v Relax Beach Co Ltd, the Singapore Court of Appeal addressed an appeal concerning the interpretation of an insurance contract's business interruption clauses in the context of the COVID-19 pandemic. The appeal was withdrawn on the eve of the hearing, leaving the issue of costs to be determined. The court provided preliminary views on the merits of the appeal, particularly regarding the notification of claims and the interpretation of the 'infectious disease extension' clause. The court ordered the appellants to pay the respondent costs of S$40,000 for CA 3 and OA 18, and disbursements amounting to S$4,629.30.
1. Case Overview
1.1 Court
Court of Appeal of the republic of singapore1.2 Outcome
Appeal withdrawn; Appellants to pay respondent costs of S$40,000 for CA 3 and OA 18, and disbursements amounting to S$4,629.30.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal addresses COVID-19 business interruption insurance claim, focusing on policy interpretation and claim notification.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| QBE Insurance (Singapore) Pte Ltd | Appellant | Corporation | Costs awarded to Respondent | Lost | |
| MS First Capital Insurance Limited | Appellant | Corporation | Costs awarded to Respondent | Lost | |
| Relax Beach Co Ltd | Respondent | Corporation | Costs Awarded | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Tay Yong Kwang | Justice of the Court of Appeal | No |
| Andrew Phang Boon Leong | Senior Judge | No |
4. Counsels
4. Facts
- Relax Beach Co Ltd owns and operates Le Meridien Phuket Beach Resort.
- QBE Insurance and MS First Capital Insurance are co-insurers under the Policy.
- The Policy covers business interruption losses between 1 January 2020 and 1 January 2021.
- The Policy includes an Infectious Disease Extension (IDE) covering closure due to outbreaks.
- COVID-19 was declared a dangerous communicable disease in Thailand on 26 February 2020.
- The Governor of Phuket ordered the closure of all hotels on 2 April 2020.
- Relax Beach Co Ltd submitted a claim for business interruption losses on 26 May 2020.
- A hotel employee, Mr. K, tested positive for COVID-19 around 26 March 2020.
- The insurers withdrew their appeal on the eve of the scheduled hearing.
5. Formal Citations
- QBE Insurance (Singapore) Pte Ltd and another v Relax Beach Co Ltd, , [2023] SGCA 45
- QBE Insurance (Singapore) Pte Ltd and another v Relax Beach Co Ltd, 3 of 2023, Civil Appeal No 3 of 2023
6. Timeline
| Date | Event |
|---|---|
| Insurance coverage period begins | |
| Insurance coverage period ends | |
| COVID-19 declared a dangerous communicable disease by Thailand Government | |
| Thailand Government and Governor of Phuket Province implemented measures to control COVID-19 | |
| Hotel employee Mr. K tested positive for COVID-19 | |
| Governor of Phuket ordered closure of all hotels | |
| Insured Premises completely closed | |
| Respondent submitted a claim notification to the first appellant | |
| Respondent replied to the first appellant | |
| First appellant sent letter requesting further information | |
| Respondent's lawyers requested retraction of claim rejection | |
| First appellant confirmed it would not retract rejection of claim | |
| Respondent commenced HC/OS 299/2021 | |
| Judge delivered decision in OS 299 | |
| Appellants filed withdrawal of appeal in CA 3 | |
| Scheduled hearing for the appeal in CA 3 | |
| Judgment reserved | |
| Judgment delivered |
7. Legal Issues
- Interpretation of Insurance Contract
- Outcome: The court provided preliminary views on the interpretation of the 'Infectious Disease Extension' clause and the 'Notification Clause'.
- Category: Substantive
- Sub-Issues:
- Interpretation of 'Infectious Disease Extension' clause
- Interpretation of 'Notification Clause'
- Compliance with Condition Precedent
- Outcome: The court provided preliminary views on whether the respondent had complied with the Notification Clause by providing proper notification of the Claim.
- Category: Substantive
- Sub-Issues:
- Proper notification of claim
- Provision of particulars of loss
- Causation in Business Interruption Claims
- Outcome: The court provided preliminary views on whether Mr. K’s case was a proximate cause of the Closure Order resulting in the closure of the Insured Premises.
- Category: Substantive
- Sub-Issues:
- Proximate cause of closure order
- Definition of 'outbreak'
- Appropriateness of Indemnity Costs
- Outcome: The court held that the appeal in CA 3 was not an unmeritorious ploy intended to delay and frustrate a valid insurance claim and that it was not unreasonable to pursue the appeal such that the granting of indemnity costs would be appropriate.
- Category: Procedural
- Sub-Issues:
- Unreasonable conduct
- Merits of the case
- Assessment of Costs
- Outcome: The court ordered the appellants to pay the respondent costs of S$40,000 for CA 3 and OA 18, and disbursements amounting to S$4,629.30.
- Category: Procedural
- Sub-Issues:
- Reasonableness of costs claimed
- Disbursements
8. Remedies Sought
- Declaration of valid claim
- Indemnification for business interruption losses
9. Cause of Actions
- Breach of Contract
- Insurance Claim
10. Practice Areas
- Insurance Litigation
- Commercial Litigation
11. Industries
- Hospitality
- Insurance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Financial Conduct Authority v Arch Insurance (UK) Ltd and others (Hiscox Action Group intervening) | United Kingdom Supreme Court | Yes | [2021] 2 WLR 123 | United Kingdom | Cited regarding causation in business interruption claims involving incidents of disease. |
| BIT Baltic Investment & Trading Pte Ltd (in compulsory liquidation) v Wee See Boon | Singapore Court of Appeal | Yes | [2023] 1 SLR 1648 | Singapore | Cited for the principle that indemnity costs are only granted in exceptional circumstances and need to be specifically justified. |
| Lim Oon Kuin and others v Ocean Tankers (Pte) Ltd (interim judicial managers appointed) | Singapore Court of Appeal | Yes | [2022] 1 SLR 434 | Singapore | Cited for the principle that a court will have regard to all the circumstances of the case, with the touchstone being that of unreasonable conduct as opposed to conduct that attracts moral condemnation when deciding whether to make an order for indemnity costs. |
| Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte Ltd | Singapore Court of Appeal | Yes | [2016] 5 SLR 103 | Singapore | Cited for the principle that it may be appropriate for the court to consider the merits of the case when deciding whether to grant indemnity costs against a party. |
| Tecnomar & Associates Pte Ltd v SBM Offshore NV | Singapore Court of Appeal | Yes | [2021] SGCA 36 | Singapore | Cited for the principle that indemnity costs should be granted to the respondent which had to bear the expense of resisting an “unmeritorious appeal”. |
| Tjong Very Sumito and others v Antig Investments Pte Ltd | Singapore Court of Appeal | Yes | [2009] 4 SLR(R) 732 | Singapore | Cited for the principle that the appellants should not have pursued this entirely unmeritorious appeal, causing the respondent to incur additional costs, and hence dismissed the appeal with an order for indemnity costs. |
| Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak dan Gas Bumi Negara | Singapore High Court | Yes | [2006] SGHC 195 | Singapore | Summarized the key principles for deciding costs in the context of a withdrawn application for enforcement of an arbitration award. |
| Ong Chai Hong (executrix of the estate of Chiang Chia Liang, deceased) v Chiang Shirley and others | Singapore High Court | Yes | [2016] 3 SLR 1006 | Singapore | Considered and applied the principles in Karaha Bodas when exercising the discretion to order costs. |
| Ng Eng Ghee and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appeal | Singapore Court of Appeal | Yes | [2009] 4 SLR(R) 155 | Singapore | Illustrates how the court’s discretion to award costs may be influenced by a consideration of the merits of the case, even if the party with the meritorious case has chosen not to appeal. |
| Bumi Armada Offshore Holdings Ltd and another v Tozzi Srl (formerly known as Tozzi Industries SpA) | Singapore Court of Appeal | Yes | [2019] 1 SLR 10 | Singapore | The court may issue its judgment commenting on the merits of a discontinued case where it would be in the public interest to ventilate legal points of general interest and significance. |
| Tan Ng Kuang Nicky (the duly appointed joint and several liquidator of Sembawang Engineers and Constructors Pte Ltd (in compulsory liquidation)) and others v Metax Eco Solutions Pte Ltd | Singapore Court of Appeal | Yes | [2021] 1 SLR 1135 | Singapore | The court may issue its judgment commenting on the merits of a discontinued case where it would be in the public interest to ventilate legal points of general interest and significance. |
| Management Corporation Strata Title Plan No 4701 v MCL Land (Vantage) Pte Ltd (in members’ voluntary liquidation) | Singapore High Court | Yes | [2023] 4 SLR 1529 | Singapore | The General Division of the High Court was scheduled to hear the parties on an expedited basis concerning the dissolution of a company, but before the hearing took place, the parties agreed to record a consent order thus ending the matter. |
| BSD-360, LLC d/b/a the Goddard School v Philadelphia Indemnity Insurance Company | United States District Court for the Eastern District of Pennsylvania | Yes | BSD-360, LLC d/b/a the Goddard School v Philadelphia Indemnity Insurance Company 580 F Supp 3d 92 (ED Pa, 2022) | United States | Cited for the principle that an increase from zero to one infected person might not readily be understood as an “outbreak”. |
| Great Western Railway Co. v Swindon and Cheltenham Extension Railway Co | House of Lords | Yes | Great Western Railway Co. v Swindon and Cheltenham Extension Railway Co (1884) 9 App Cas 787 | United Kingdom | Cited for the principle that where several words are followed by a clause which is applicable as much to the first and other words as to the last, the natural construction of the language would suggest that the clause be read as applicable to all. |
| United States v Standard Brewery, Inc | United States Supreme Court | Yes | United States v Standard Brewery, Inc (1920) 251 US 210 | United States | Cited for the principle that where several words are followed by a clause which is applicable as much to the first and other words as to the last, the natural construction of the language would suggest that the clause be read as applicable to all. |
| Wates Construction Ltd v HGP Greentree Allchurch Evans Ltd | Unknown | Yes | [2005] All ER(D) 170 | England and Wales | Cited for the principle that the fact that a case is withdrawn shortly before the hearing itself does not, as a matter of course, justify imposing indemnity costs. |
| PT Adidaya Energy Mandiri v MS First Capital Insurance Ltd | Singapore Court of Appeal | Yes | [2022] 4 SLR 371 | Singapore | Cited for the principle that if the obligation under the Notification Clause is not fulfilled, then this provides a complete defence to liability under the Policy such that an insurer is not liable to indemnify the insured. |
| George Hunt Cranes Ltd v Scottish Boiler & General Insurance Co Ltd | Unknown | Yes | [2002] 1 All ER (Comm) 366 | England and Wales | Cited for the principle that if the obligation under the Notification Clause is not fulfilled, then this provides a complete defence to liability under the Policy such that an insurer is not liable to indemnify the insured. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Communicable Diseases Act 2015 | Thailand |
| Rules of Court 2021 | Singapore |
| Insolvency, Restructuring and Dissolution Act 2018 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Business interruption
- Infectious Disease Extension
- Notification Clause
- Condition precedent
- Outbreak
- Proximate cause
- Closure Order
- COVID-19
- Insurance policy
- Indemnity costs
15.2 Keywords
- Insurance
- COVID-19
- Business Interruption
- Singapore
- Contract Law
- Claim
- Notification
- Costs
- Appeal
- Infectious Disease
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Costs | 90 |
| Insurance | 85 |
| Civil Procedure | 75 |
| Business interruption policies | 75 |
| Contractual terms | 70 |
| Contract Law | 65 |
| Jurisdiction | 40 |
16. Subjects
- Insurance
- Contract Law
- Civil Procedure
- COVID-19
- Business Interruption