Appeal Applications filed on second business Interruption test case

Appeal Applications filed on second business Interruption test case on claims for COVID-19 pandemic 

Appeal applications have now been filed to the High Court in the latest on the second business interruption (BI) test case regarding claims activated by the COVID-19 pandemic 

The second business interruption (BI) test case appeal decision was delivered by the Full Court 21 February 2022. The summary released by the Federal Court of Australia states the Full Court has, in most part, upheld the Federal Court decision handed down in October 2021. 

However, parties had 28 days to decide if they will appeal to the High Court and as of 21 March 2022 appeal applications have now been filed, which could mean not having a final decision for several months.   

According to insurance news, there have been four appeal applications lodged so far ‘related to the Insurance Council of Australia (ICA) second test case are for LCA Marrickville v Swiss Re International, Insurance Australia v Meridian Travel (Vic) and The Taphouse Townsville v Insurance Australia.’ The other application was for The Star Entertainment Group v Chubb, which isn’t part of the test case but was ‘heard by Full Court at the same time.’ 

The long wait for small businesses 

The very first test case was heard back in November 2020, where the NSW Court of Appeal ruled that where pandemic exclusion wording references the Quarantine Act 1908 in a business interruption insurance policy, it cannot be used to exclude from cover. However, policies where an exclusion references the Biosecurity Act 2015, this ruling has no affect.  

In December 2020, the Insurance Council of Australia (ICA) fought to overturn this judgment by lodging an application to appeal to the High Court of Australia. Following a briefing on Friday 25 June 2021, the High Court announced it ‘will not grant leave to appeal’ meaning the NSW Court of Appeal ruling would remain. 

In October 2021, the Federal Court ruling for the second business interruption test case was handed down with Justice Jayne Jagot announcing, “Other than in one case [IAG/Meridian Travel] I have concluded that the insuring clauses do not apply in the circumstances of each case.” The Court ruled in favour of insurers, meaning many insurance policies were unlikely to provide cover for business interruption as a result of the COVID-19 pandemic. However, an appeal was lodged, and the Full Court delivered their decision on Monday (21 February 2022) which largely upheld the Federal Court ruling. 

Parties had 28 days to decide if they will appeal to the High Court, which have now been filed as of 21 March 2022. 

Pharmacy insurance specialist, Carollo Horton CEO, Giuseppe Carollo, acknowledged the frustration in how long these decisions are taking, “There have been many issues concerning the interpretation of business interruption policies that had to be decided. This was the reason for the second business interruption test case.” 

“It has been a long wait for businesses who were seeking an insurance payout for business interruption from COVID-19 pandemic and it still looks like we are many months still from a final decision” said Carollo.  

Carollo added, that with Pharmacies being able to trade throughout most of the pandemic with some restrictions, the claim will need to be assessed not only against the policy but also around certain circumstances and how the pharmacy traded during the period. 

Pharmacies should speak with their insurance broker if they are seeking clarity over these latest appeal decisions and how it affects their insurance policies in relation to business interruption from the pandemic. 

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For a summary of the appeal applications read the insurance news article here