Insurers drop appeal shortly before hearing against Phuket resort’s claim for Covid-19 insurance payout

Construction News
Le Meridien Phuket Beach Resort.

Insurers drop appeal shortly before hearing against Phuket resort’s claim for Covid-19 insurance payout

Two commercial insurers last Friday withdrew their appeal against a lower court ruling that a luxury resort in Phuket has a valid claim for losses arising from Covid-19-related lockdowns, ahead of a hearing on Monday before Singapore’s apex court.

This meant that after a 2½-year-long legal battle, the owner of Le Meridien Phuket can finally move to recover legal costs and potentially several million dollars’ worth of business interruption losses it sustained for about four months following an island wide closure order in April 2020 by the Thai authorities. Covid-19 cases had surged in Phuket at the time.

The resort, which is owned by Relax Beach, an entity owned by the family of Singapore businessman Peter Fu, sued its insurers QBE Insurance (Singapore) and MS First Capital Insurance in the High Court in March 2021 after its claim for business interruption losses was denied. Mr Fu is also head of investment holding firm Kuo International. The suit was filed in Singapore because the insurance policy was issued here and Singapore courts have jurisdiction.

In March 2022, Justice Pang Khang Chau found that QBE and MS First Capital are liable to indemnify Relax Beach for losses after the resort closed on April 7, 2020, on order of the Thai authorities.

Le Meridien Phuket also had a confirmed Covid-19 case involving an employee who lived on the hotel’s premises from March 24, 2020, until he was quarantined in a hospital on March 26 that year.

But the defendants appealed against the ruling, asking, among other things, if the judge was correct to conclude that the confirmed Covid-19 case at the resort “was a proximate cause” of the island wide closure order.

The matter was scheduled for a Court of Appeal hearing on Monday, but, last Friday, the defendants’ lawyer, Ms Rachel Low, told the court that her clients have decided to withdraw the appeal. When asked by The Straits Times on Monday why they withdrew the appeal, the defendants said they have no comment.

Senior Counsel Siraj Omar and Mr Allister Tan of Drew & Napier, who represent Relax Beach, told ST: “Our client is shocked by the insurers’ conduct in withdrawing their appeal literally on the eve of the hearing. They have finally accepted the merits of our client’s claim after having denied liability since May 2020.”

Mr Fu said: “I’m glad we have the resources to fight this case to the bitter end. They forced us to go to court, which agreed we have a valid claim. Instead of paying us, they filed an appeal, and then changed lawyers, which meant the appeal could be heard only in October this year. Now they have withdrawn the appeal on the last working day before the hearing. They forced us to waste 3½ years and hundreds of thousands in legal costs.”

Mr Siraj said: “The effect of the withdrawal means that the decision of the High Court is now final. What remains to be done is to determine the amount that the insurers have to pay our clients.”

According to Relax Beach, QBE and MS First Capital had agreed to provide insurance coverage for business interruption losses suffered by its properties, including Le Meridien Phuket, as a result of certain events set out in the policy. These included the resort’s closure as a result of the outbreak of an infectious disease.

On April 3, 2020, Relax Beach notified QBE’s Thai associate, KWG Insurance, that it intended to make a business interruption claim. It did so on May 26 that year, but was rejected by the defendants on May 29 on the basis that the business interruption cover required an outbreak of Covid-19 at the hotel.

Relax Beach then sued the insurers in Singapore in March 2021, saying that the requirements for making its claim had been satisfied as one of its hotel employees was a confirmed Covid-19 case. It said it had complied with all its obligations under the policy, which required the resort’s owner to notify the insurers of the closure.

But QBE and MS First Capital disagreed. In court documents, they claimed that there was no evidence that the Thai authorities had specifically considered the confirmed Covid-19 case at the resort when issuing the islandwide closure order. The insurers also claimed that Relax Beach had failed to notify them about its infected employee or provide details of its losses, and this amounted to a breach of its policy obligations.

But the High Court rejected some of the claims in a decision delivered to parties in the judge’s chambers in March 2022. There is no written judgment setting out detailed grounds for Justice Pang’s decision.

The court found that the confirmed case at the resort was likely one of the many factors contributing to the closure order, which in turn meant that liability under the policy was triggered, Mr Siraj said.

Weighing in on the case, lawyer Suresh Nair, co-managing director of PK Wong & Nair LLC, said: “The fact there is no written decision means there is no clear decided principle of law that other insured parties, in other unrelated cases, can rely on for recovery of their own Covid-19-related lockdown losses.

Source: https://www.straitstimes.com/business/insurers-drop-appeal-on-eve-of-hearing-against-phuket-resort-s-claim-for-covid-19-insurance-payout