Justice Jayne Jagot has announced a much anticipated judgement in the second COVID-19 Business Interruption (BI) test case.
The Judge read a summary of the judgement via a live stream.
“Other than in one case, NSD 133/2021 Insurance Australia and Meridian Travel, I have concluded that the insuring clauses do not apply in the circumstances of each case,” said the Judge.
Judge Jagot cited several principal reasons for this conclusion, one of them the nature of the ‘hybrid clause.’
“Although the actions of the authorities applied to the premises/situation, it is not possible to conclude that the orders were made as a result of any circumstance at the premises/situation or within the specified radius,” she said.
The judge said, in this case, the insurer is not liable to indemnify the insured in respect of the insured’s claim.
“On the evidence, the principal and perhaps sole cause of the interruption and interference to Meridian Travel’s business was action of the Commonwealth Government in banning cruise ships from Australia and banning/restricting international travel to and from Australia,” she said.
Judge Jagot also said that a certain section of the Property Law Act 1958 (Vic) does not apply to Commonwealth Acts.
“Accordingly, the insurers cannot rely on s 61A to operate to replace references to the Quarantine Act 1908 with references to the Biosecurity Act 2015. Exclusions in the policies based on the Quarantine Act 1908 therefore do not apply as COVID-19 was not a quarantinable disease under the Quarantine Act 1908,” said the Judge.
The judge granted all of the parties leave to appeal.
As Judge Jagot made the announcement, legal professionals involved in the case, wearing white ties and black gowns, could be seen in the quadrangles of the video livestream. Some appeared to be working from home, others in the offices at the Federal Court.
The hearing for this landmark COVID-19 legal case ended in September. 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 Business Interruption (BI) insurance 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 decides matters including the meaning of policy wordings around disease definition, COVID outbreak proximity and the impact of government mandates.
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.
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.
Some insurance industry insiders have said that there is unlikely to be any final outcome until at least 2022.