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Limebite 06/21

Update in the Australian business interruption insurance/COVID-19 test cases

Alex Haslam

After the (first instance) decision in the New South Wales Court of Appeal that some business interruption policy wordings citing the repealed Quarantine Act 1908 and its subsequent amendments did not exclude claims relating to the pandemic, the Insurance Council of Australia (ICA) applied to the High Court of Australia for Special Leave to appeal the decision.

That application is to be heard on 25 June 2021.

This is, of course, just the first step in the appeal process. If the ICA does not get leave, that is the end of road. Even if leave is granted (which it probably will be given the public importance of the decision), the ICA must still persuade the High Court at a full hearing that the NSWCA was in error in determining that the references to the Quarantine Act do not exclude COVID-19-related claims.

The ICA is also pressing a second test case in the Federal Court of Australia. That case will determine the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business, prevention of access to premises due to a government mandate, as well as hybrid policy wordings. This in line with the UK test case, which was determined by the Supreme Court, generally in favour of policyholders, in January 2021.

This second test case is to be heard in early September 2021, with any appeal to be dealt with by the Full Court of the Federal Court (the Federal Court of Appeal) in November 2021.

This publication constitutes a summary of the information of the subject matter covered. This information is not intended to be nor should it be relied upon as legal or any other type of professional advice. For further information in relation to this subject matter please contact the author.