Federal Court action filed by the Vanilla Lounge restaurant against Suncorp over business interruption cover during the pandemic has settled in favour of the insurer, as both sides draw positives from a judgment last year on a separately decided question considered as part of the case.

The settlement outcome released last week says “the court orders by consent that judgment be entered for the respondent”. The document makes no order on costs.

Suncorp says while there is no indemnity payment it will contribute to the other side’s legal costs “given the industry wide significance” of the issue considered.

“In light of this outcome, Suncorp continues to believe that its overall reserving is appropriate and will be reviewed again as part of finalising the 31 December half year financial position,” it said.

The Federal Court on December 20 delivered a separate question judgment on an exclusion clause, as part of the wider case.

Suncorp said last week the court accepted its argument that the biosecurity act exclusion applied broadly for losses connected with COVID-19.

Legal firm LGM Advisors, acting for Rockment, trading as Vanilla Lounge, says on its website that the firm is pleased to announce the matter has settled.

It also notes the December decision “rejected Vero’s argument” and is a binding authority that may be relied upon by policyholders as they look at their specific situations.

“Policyholders will need to consider the terms of their policy, the judgement and how it applies to their particular circumstances in deciding whether to make a claim for business interruption,” LGM says.

Justices Anthony Besanko, Roger Derrington and Craig Colvin in December said it is not sufficient to exclude cover under the exclusion if the claim is “somehow causally” connected to a human disease specified in a human biosecurity emergency declaration, and the causation question is a “matter of fact” to be answered in each case.

“It should be emphasised that the negative answer to the question is in direct response to the question posed and the circumstances in which the court is asked to answer it,” they said. “Whilst it is the answer for which Rockment contended, the court has not accepted its construction.”

The December decision is available here.