Second Business Interruption test case has reached a conclusion

The second Business Interruption test case has reached a conclusion, with the High Court of Australia denying special leave to appeal the earlier Federal Court judgment after hearing oral arguments last Friday.

The High Court’s decision puts an end to the landmark case concerning the interpretation of policy wordings in business interruption policies in the context of COVID-19.

Earlier in February 2022, the Full Court of the Federal Court delivered its judgment upholding the arguments of insurers in four out of five matters, finding that in those four matters, the insurers were not liable to indemnify the policyholders.

Special leave to appeal was subsequently filed by two policyholders in response to these four matters, who sought to have their matters heard in the High Court.

In the fifth matter, the Full Court upheld the earlier decision that found cover had been triggered, but flagged issues around whether the policyholder could prove any relevant business interruption. Provided the policyholder can identify any loss covered by the policy, they are entitled to bring the matter back before the Federal Court for determination.

Notwithstanding the fifth matter, the High Court’s decision to deny special leave to appeal all four matters contested has provided finality and guidance to insurers around the interpretation of business interruption policies.

For more information on the second Business Interruption test case, visit the Insurance Council of Australia website here.