Federal Court opens access to COVID-19 BI documents

Federal Court opens access to COVID-19 BI documents | Insurance Business Australia

Federal Court opens access to COVID-19 BI documents

The Federal Court of Australia has just made it much easier for anyone, from insurance industry insiders to members of the public, to access court documents for the second COVID-19 business interruption (BI) insurance test case. With a judgement imminent, the Court has now established an online file with unrestricted and free access.

In a response to questions from Insurance Business, a court spokesman said the decision to open the file came from the presiding judge.

“Online files have been set up in high profile matters over the last ten years. Other examples include Porter v the ABC, Rush v Nationwide News and the Ben Robert’s-Smith matters,” said the court spokesman.

The degree of public interest in the case and the amount of file material involved were two key considerations in the decision.

The file is accessible through a link on the court’s website. Clicking on the link brings up the 10 related claims in the test case. Until last week, only parties involved in the case could directly access these documents.

Previously, others interested in these documents needed to lodge a formal request with the court and pay a fee - although some documents, like orders and judgements, could be freely accessed using the Commonwealth Courts Portal.

This new and freely accessible online file reveals the disputed insurance policies that are key to this test case.

In a cross-claim document, Swiss Re International v LCA Marrickville, the extent of the business interruption cover is detailed.  The coverage includes closure or evacuation of the premises, “as a result of an outbreak of a notifiable human infectious or contagious disease or bacterial infection.”

Another document filed in Guild Insurance v Gym Franchises is a list of unresolved issues. One of these issues is determining what constitutes an ‘outbreak’ of COVID-19:

“Does a single person infected with COVID-19 entering the situation constitute an ‘outbreak’?” states the document.

The hearing for this landmark COVID-19 legal case ended last week. The case was filed by the Insurance Council of Australia (ICA), the Australian Financial Complaints Authority (AFCA) and participating insurers. The case consists of a number of COVID-19 related claims lodged by small businesses. The insurers represented in the case are Allianz, IAG, Chubb, Guild, and Swiss Re International SE.

According to the ICA, this second test case will decide matters including the meaning of policy wordings around disease definition, COVID outbreak proximity and the impact of government mandates.

“The commencement of the second business interruption test case hearing is an important step towards finalising this issue and providing an efficient, transparent, and consistent framework to process business interruption claims,” said ICA CEO Andrew Hall when the hearing started earlier this month.

Read more: Hearing for second business interruption test case commences

MinterEllison, the Australia based international law firm has put what’s at stake in plain English.

In an article on its website, the firm explained how the ruling in the first test case determined that insurers could not deny claims that referenced the now obsolete Quarantine Act of 1908.

The second test case, according to MinterEllison is about whether coverage is actually triggered.

“In particular that set of second test cases is intended to address the question at the front of everyone’s mind: will I be covered for COVID-19 losses?” reads the article.

Last year, the first business interruption case was lost by the insurance industry.

That case was a result of many insurers trying to exclude cover for pandemics in business interruption policies through an outdated reference in these policies to the Quarantine Act. However, the Quarantine Act of 1908 was repealed in 2015 and replaced by the Biosecurity Act. While COVID-19 is a listed human disease under the Biosecurity Act from January 2020, it wasn’t in the Quarantine Act.

An appeal against that ruling failed earlier this year.

Read more: Business interruption insurance and pandemics – policy coverage issues

The ICA has said that any appeal following a judgement in this second test case is expected to be heard in the first week of November. That means it’s likely a judgement in this second case will be announced in the coming weeks.

Some legal experts expect the decision to be similar to a comparable COVID-19 court case in the United Kingdom.

The UK’s High Court and Supreme Court both ruled that policyholders were entitled to compensation for business disruptions due to the COVID-19 pandemic, despite the exclusion clauses.

“Applying this reasoning, it appears likely the Australian courts will arrive at similar conclusions,” reads an article on the website of the Australian commercial law firm Mills Oakley.

Some insurance industry insiders have said that there is unlikely to be any final outcome until at least 2022.