25th March, 2021

Covid19 – Business Interruption Claims Update

At the end of last year we wrote about the NSW Court of Appeal decision for the first test case tested through the courts relating to Insurance and covid-19. Since then there has been some movement, however there is still nothing conclusive at present, and there may be a lingering feeling of more questions than answers. Despite this though there is hope that things will become clearer by the end of the year. We have provided below some bullet points about the the major legal cases to date:

AFCA – NSW Court of Appeal – Test Case 1

  • Going through an appeal process which could take months to receive a judgement on
  • The High Court of Australia agreed to hear oral arguments appealing the result for Test Case 1

ICA – Federal Court of Australia – Test Case 2

  • Federal Court expediting the case, proposing trial take place in first half of September with any appeal to be detail with in November
  • Consists of nine separate small business claims and is expected to address:
    • The definition of “disease”
    • Proximity of an outbreak of covid19 to a business
    • Prevention of access to premises due to Government directive

Vanilla Lounge / Melbourne Café

  • Judgement delivered 18 December 2020
  • Limited to one question about the application of an exclusion – too narrow to have wide impact

Star Casino Case

  • Civil Authority Clause in a bespoke ISR policy wording (not applicable to the SME business sector)
  • Does damage have to be physical
  • Whether BioSecurity Act exclusion in a separate extension affects cover
  • Is covid19 a “catastrophe” within the meaning of the extension

Victorian Gym Case

  • Commencement of legal proceedings against Hollard Insurance in the Federal Court
  • Lawyers for the gym are referring to the decision made by NSW Court of Appeal for Test Case 1 , despite the appeal process
  • No further comment from Insurer
  • The insurance industry is still awaiting a final resolution of the test case issues

Insurance Council of Australia  (ICA) says the proposed dates for the test cases and appeals means insurers and policyholders “will have certainty on most substantial issues” this year. “Once final rulings have been obtained from the courts, insurers are committed to applying the relevant principles in an efficient, transparent and consistent way when assessing claims”.

We will endeavour to keep you informed as more information is received.

Author: Murray Bruce