NEW WORLD HARBOURVIEW HOTEL CO LTD AND ORS V ACE INSURANCE LTD AND ORS

[2012] HKCFA 21, Hong Kong Court of Final Appeal, 9 February 2012

Insurance (business interruption) - Cover commencing when disease became notifiable - Whether voluntary notification sufficed

Four companies in the same group carrying on leisure and other activities were insured against business interruption losses under a composite policy running from 1 July 2002 to 1 July 2003. The insured perils included loss as the result of a notifiable disease occurring within 25 miles of the premises. Cover was for a loss period, defined as "the period during which the Revenue of the Insured Business has been affected in consequence of Damage from the date of loss to the resumption of the business and thence 180 days". Early in 2003 there was an outbreak of a pneumonia-like disease in Guangdong, which was reported in the Hong Kong media on 10 February 2003. On 13 February 2003 the Hong Kong Hospital Authority adopted a voluntary notification system. A visitor to Hong Kong was admitted to hospital in Kowloon on 21 February 2003 and he died on 4 March 2004, and it was subsequently shown that he had been suffering from a respiratory illness, SARS. On 27 March 2003 the Hong Kong government by ordinance declared SARS to be a notifiable disease. The epidemic was declared to be at an end on 23 June 2003. The assureds suffered losses in this period, although their businesses were not actually shut down, and five preliminary issues on the construction of the policy were referred to Reyes J. His judgment was approved by the Hong Kong Court of Appeal and by the Hong Kong Court of Final Appeal.