High Court to hear arguments for appeal on second Business Interruption test case

Last week, the High Court of Australia requested to hear oral arguments on granting special leave to appeal the earlier Full Court judgment made by the Federal Court of Australia on the interpretation of policy wordings in business interruption policies in the context of COVID-19.  

The request responds to applications for special leave to appeal filed by two policyholders seeking to overturn the Federal Court’s decision, which found that their losses were not covered by their policy clauses.  

Earlier in February 2022, the Full Court of the Federal Court of Australia had upheld arguments made by insurers in four out of five matters raised, finding that in those four matters, insurers were not liable to indemnify policyholders.  

Of the policyholders seeking appeal, one party will argue that cover is available under a ‘prevention of access’ clause or the ‘hybrid clause’ in their policy, and the other party will argue that cover is available under the ‘prevention of access clause’ or the ‘catastrophe clause’ in their policy.  

The insurer IAG has also filed an application, specifically seeking to appeal the Full Court’s decision that JobKeeper payments should not be taken into account when calculating insurance payments.  

The Insurance Council of Australia has acknowledged the High Court’s request for oral arguments and has maintained that the insurance industry will meet the costs of policyholders in the appeal process.  

The High Court has indicated that a hearing would be listed in October 2022 at the very earliest.  

This case serves as the insurance industry’s second Business Interruption test case, with the first test case arising last year in relation to policies with exclusions made in reference to an expired Act of Parliament. 

For more information on business interruption test cases, visit the Insurance Council of Australia website here.