Federal Court judgement on second COVID-19 BI test case

The Federal Court of Australia's has handed down the judgment in the second COVID-19 business interruption (BI) test case

Written on 12 October, 2021
Tanaya Das

The Federal Court of Australia has handed down the judgment in the second COVID-19 business interruption (BI) test case.

The ruling by Justice Jayne Jagot upheld the arguments advanced by insurers in eight of the nine matters in the test case. In one matter the court found that the cover had been triggered, but held that there were substantial issues as to whether the policyholder could prove any relevant business interruption.

The CEO of Insurance Council of Australia (ICA), Andrew Hall welcomed the Federal Court judgment and said it provides an important step towards finalising these matters, “Insurers, including those not directly involved in the court proceedings, are committed to applying the principles of the courts’ final ruling consistently and efficiently to all business interruption claims.”

In a separate case, the Federal Court also ruled that insurers could not rely on a section of Victorian property legislation to exclude liability. The Federal Court has anticipated and planned for this decision to be appealed given the complex nature of the matter and the need to provide clarity to both insurers and policyholders as quickly as possible.

Justice Jagot said, “To facilitate the expeditious hearing of an appeal in all matters, I have granted all of the parties leave to appeal.”

The Federal Court has already set aside time in the second week of November 2021 for the Full Court to hear any appeal that may be filed by insurers or policyholders. The ICA has added that the insurance industry will meet the costs of policyholders in any appeal process.

You can access the ruling in its entirety here. Frequently asked questions about the BI test case are available on the ICA website. Insurance brokers can find more information required to submit a BI claim here.