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Fighting on many fronts: BI test case battles widen

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An increasing number of business interruption legal issues are before the courts as insurers and policyholders continue to wrangle over exclusion wordings and whether cover has been provided for the COVID-19 pandemic.

QBE last week become the latest to enter the local legal fray, filing documents in the Federal Court related to an Educational World Travel claim. The case adds to matters pursued through the Insurance Council of Australia (ICA) test case process and other separate actions.

Below is a summary of high-profile matters before the courts.

ICA first test case

ICA and the Australian Financial Complaints Authority (AFCA) agreed last year on a case to determine whether exclusions that reference the repealed Quarantine Act 1908 and subsequent amendments apply also to diseases under the replacement Biosecurity Act.

The NSW Court of Appeal ruled the two policies in the case did not exclude the claims, with the ICA then seeking special leave to appeal through the High Court of Australia. Arguments on the application will be heard on a date to be determined, with the advice noting it would be next month or June at the earliest.

ICA second test case

The second ICA test case launched in the Federal Court involves nine separate small business claims from a range of sectors and locations. The claims were also initially lodged with AFCA as part of its dispute resolution process.

The second test case looks at the definition of disease, proximity of an outbreak to a business, and prevention of access due to government mandates, as well as wording hybrids.

Chief Justice James Allsop has scheduled a case management hearing at a date to be decided after June, with various documents to be filed in the meantime.

ICA has said a trial is proposed for the first-half of September, with any Full Court appeal to be dealt with in the first week of November.

QBE v Educational World Travel

QBE last week filed its own test case in the Federal Court, which it anticipates could run alongside the ICA second test case, although it falls outside the AFCA jurisdiction.

The case involves Educational World Travel, which entered voluntary administration last year, and aims to test Victorian Property Law legislation that insurers argue has the effect of making exclusions citing the repealed Quarantine Act valid.

QBE will pay the costs for EWT liquidators BRI Ferrier, represented by KHQ Lawyers. The insurer will be represented by Dentons.

Gym business v Hollard

Shine Lawyers has filed a lawsuit in the Federal Court on behalf of a Victorian gym owner against Hollard Insurance.

The action, taken in the wake of the ICA first test case decision in the NSW Court of Appeal, argues Hollard used a “redundant law” in rejecting the claim.

Shine has said there’s no reason to delay seeking compensation through the courts following the initial judgment, with the gym owner estimating his business would have generated at least $235,000 in revenue if not for the lockdowns.

Vanilla Lounge v Vero

Rockment, which owns the Vanilla Lounge restaurant in the Melbourne suburb of Oakleigh, is taking Federal Court action related to a claim triggered by the Victorian Government’s lockdown.

The cafe’s legal action requires Vero to show a causal connection between the federal emergency declaration and the state orders affecting Rockment’s premises.

A side question related to the case was heard by the Full Court last year, with both sides taking positives out of the judgment, and the matter now moving ahead.

The Melbourne business has filed submissions to the court and Vero is asked to provide a response by next Tuesday under a timeline set down by Chief Justice Allsop.

The Star Entertainment v Chubb and other insurers

The Federal Court has set aside two days of hearings this month for the business interruption lawsuit that The Star Entertainment Group launched last year against Chubb and other insurers.

A hearing on April 28 and part hearing on April 29 will take place before Chief Justice Allsop in Sydney.

Star is suing Chubb as the lead insurer of the industrial special risks policy and other insurance partners for breach of contract after they refused to accept its BI claim.

The other respondents in the lawsuit are AIG Australia, XL Insurance, Zurich Australian Insurance, Allianz Australia, Swiss Re International, Assicurazioni Generali, Liberty Mutual, HDI Global, Allied World Assurance and PICC Property and Casualty.