A meat quality research company has lost a dispute over covid-related business interruption cover, while a cafe’s claim has been rejected after it argued a limited lockdown order was not general in nature.

The research business, which provided services to industry and the CSIRO, mainly operated from a warehouse about 25 kilometres southeast of central Melbourne, but it also used a “mobile tasting unit” that travelled across the metropolitan area.

It said its business involved face-to-face and in-person services and it was forced to close for several periods starting April 1 2020 because of restrictions imposed by the Victorian government. 

Although technically open at times, the requirement for masks prohibited use of the scientific protocol required for consumer taste-testing sessions, it said.

“The only way to continue to fulfil urgent and time-critical scientific taste testing of Australian beef and lamb was to move to a covid-free city (Brisbane) and set up duplicate operations using Brisbane facilities and staff at significant extra cost,” it said.

The Australian Financial Complaints Authority has ruled in favour of insurer AAI in finding that March 2020 and July 2020 orders only imposed certain conditions on the business, and a general stay-at-home order was not the same as a specific order to close.

“A voluntary decision to close a business (albeit because of financial duress imposed by the pandemic), as opposed to a compulsory order to cease or curtail a business does not satisfy the terms of the insuring provision,” the authority says. 

AFCA says closure orders were not “as a result of” an outbreak within a 20-kilometre radius of the insured premises, as required by the policy, but were about preventing virus spread statewide.

“They were imposed as a result of the increasing spread of the outbreak across the broader metropolitan area,” the ruling says.

The radius issue has also been considered in another dispute decided in favour of AAI, which declined a claim lodged by a licensed restaurant and cafe in central Melbourne.

The complainant said a test case and appeal in the courts had not addressed geographically targeted public health orders such as those affecting Melbourne in July 2020, and the motivation for those directions was not general concern for the whole state.

The premier had made it clear the lockdowns were because of the unacceptably high number of new covid cases arising in specific geographical areas, it said.

AFCA noted Justice Jayne Jagot, in the test case, commented on the “difference between assessing whether government actions were taken in response to the actual outbreak or occurrence of Covid-19 within a specified area and assessing whether government actions were taken in response to the threat or risk of the spread of Covid-19 across a wide area such as a state”.

The authority says the July 8 health orders preamble says they must be read together with other area and stay-at-home directions, and preambles for those “reference their purpose” as “to address the public health risk posed to Victoria”.

In addition, the July 8 directions were applied to a geographical area far greater than the 20-kilometre radius around the insured premises, it says.

“The July 2020 directions were not imposed ‘as a result of’ any specific outbreak of disease which occurred within a 20-kilometre radius of the complainant’s premises. Rather, they were imposed as a result of the increasing spread of the outbreak across the broader metropolitan area,” it says.

“The purpose of the directions was to address the serious public health risk posed to Victoria by Covid-19, having identified areas within Victoria which had a higher prevalence of, or risk of, exposure.”

The decisions are available here and here.