PROGRESS IN BUSINESS INTERUPTION INSURANCE TEST CASES

By Mark Skermer, Principal and Shreya Dutt, Lawyer

In our recent article ‘Test Cases to Decide Insurance Liability in Backdrop of Covid-19’, we discussed the test cases initiated before the Australian Courts regarding the liability of Business Interruption (BI) insurance providers in light of COVID.

We can now report some further developments.

In our last article, we commented in detail regarding the matter of HDI Global Speciality SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 (Wonkana No. 3).

In this case, the NSW Court of Appeal refused to construe ‘and subsequent amendments’ broadly so as to allow the inclusion of the Biosecurity Act 2015 (Cth) for the Exclusion Clause to operate. Put simply, the Court did not permit the insurer to refuse indemnity.

The Insurance Council of Australia (ICA) then applied for special leave of the High Court against the decision of the NSW Court of Appeal in Wonkana No 3, which was funded by ICA for the Plaintiffs.

On 25 June 2021, we can report that the High Court dismissed the special leave application.

After the decision, ICA issued a statement that it was disappointed with the result, but it would now focus on the other test cases currently on foot before the Courts.

The High Court’s decision is certainly a win for the insured and policy holders, especially those BI insurance holders whose BI cover refers to the now repealed Quarantine Act. Furthermore, it is a yet another reminder that even though the BI insurance contracts are part of commercial contracts, the Courts are unwilling to go beyond the true interpretation of the exclusion clauses even if it means uncommercial results for the BI insurance providers.

We note that QBE’s own test case is due to be heard before the Federal Court in July 2021. We will provide an update once more is known.

MST can help

Mark Skermer, Principal in MST’s Litigation and Dispute Resolution Team along with and Shreya Dutt would be pleased to assist you with any insurance related queries in terms of scope of coverage or exclusions. Please get in touch  on (03) 8540 0200 or at mark.skermer@mst.com.au or shreya.dutt@mst.com.au