Matt Mullins’ Melbourne pub empire launches Covid-19 insurance claim

The pub empire behind some of Melbourne’s best known venues, including the ‘Espy’ in St Kilda, has launched a $26m claim on its insurers.

Matt Mullins is the owner of The Espy hotel in St Kilda. Picture: Aaron Francis

The pub empire behind some of Melbourne’s most well known venues, including the iconic “Espy“ in St Kilda, has launched a $26m claim on its insurers after being forced to shut down during Covid outbreaks.

The group of nine pubs lobbed their landmark case against a group of four insurers seeking they pay for the massive downturn in trade that hit the hospitality group as the Covid-19 pandemic washed over Melbourne.

Matt Mullins, proprietor of The Espy, best known for its pride of place in Melbourne’s live music scene and leading location on the Esplanade in St Kilda, has been grappling with waves of lockdowns that have shuttered his pub empire for months.

In May Mr Mullins revealed in The Australian his workforce was down by two-thirds on its pre-pandemic level, with much of the damage inflicted by the lack of support for the business. Mr Mullins declined to comment on the legal action..

The case, filed by law firm Gadens, filed the action against the group’s insurers Arch Underwriting at Lloyds, AXA XL, Chubb Insurance, and Berkshire Hathaway Specialty Insurance, seeks to recover losses from the first lockdown but does not cover losses from the latest pandemic pain. The legal claim is likely to be closely watched by businesses who have been refused claims for business interruption insurance.

The pub group alleges between 4pm 30 June 2019 and 4pm 30 June 2020 the insurer provided a policy which provided for coverage in the event of an ”order of a competent public authority consequent upon the outbreak of a notifiable human infectious or contagious disease occurring within 40 kilometres of the Premises”.

The court challenge for the pub group behind the Espy is the largest claim yet from Gadens, which in recent weeks filed more than 20 separate cases for other Melbourne businesses.

Gadens lawyer Simon Theodore said the group had settled on its $26m claim based on the shortfall in profit in the pre pandemic period, minus any costs saved from being shut.

The Espy alone is believed to have suffered an $8.7m hit to its gross profits in the period.

“In accordance with orders of a competent public authority, it was prohibited from operating or permitting patrons to attend The Espy,” the statement of claim notes.

The business behind Melbourne’s iconic Espy has launched a legal challenge seeking millions to cover the Covid-19 shortfall. Photo: Daniel Pockett / The Australian

The insurance industry has been locked in a series of ongoing skirmishes across several layers of courts in bids to block claims for business disruption arising from Covid-19.

The outcome of a test case launched last year that was ultimately decided in favour of insureds is now set for an appeal attempt before the High Court on Friday.

The move comes as the Australian Financial Complaints Authority revealed in correspondence it had 120 Covid-19 business interruption insurance disputes sitting on its books.

In its response to parliamentary joint committee on corporations and financial services chair Deb O’Neil AFCA chief David Locke revealed complaints at the regulator related to Covid have grown over 2020 from 42 in the 2019-2020 period to 120 by last week.

Over this period AFCA has closed 21 Covid-19 related business interruption insurance claims.

Mr Locke in his letter said complaints that were not affected by the outcome of the current test case dispute were progressing “in the usual way”.

“AFCA has communicated directly with relevant complainants and firms who have complaints with us, and which may be affected by the outcomes of the test cases,” he said.

“We have also developed a fact sheet to assist small businesses prepare relevant documents to support a claim for business interruption and the calculation of loss.”

“Discussions have commenced with the ICA and the National Insurance Brokers Association to streamline claims once the courts’ final decisions have been delivered.”