The highly controversial decision of HDI Global Specialty SE v Wonkana No. 3 Pty Ltd  NSWCA 296 is now expected to be appealed to the High Court of Australia, following an application seeking leave to appeal the decision being filed by the Insurers.
In November, we wrote about the Court of Appeal proceedings. The Court held that exclusion clauses in business interruption insurance policies did not apply to business interruption caused by COVID-19. You can read our article about this decision here.
The Application to Appeal
As a result of this decision, on 16 December 2020, the insurers filed an Application for Special Leave to Appeal on the grounds that the Court erred in its decision in holding that the clause “diseases declared to be quarantinable diseases under the Australian Quarantine Act 1908 and subsequent amendment” does not extend to its replacement Act, the Biosecurity Act 2015 (Cth).
As stated in the application, the purpose of the appeal is for the Court to declare that COVID-19 is an “infectious disease” for the purpose of business interruption insurance.
In their application, the insurers’ arguments to have the decision appealed included:
- The Biosecurity Act 2015 (Cth), in its Explanatory Memorandum, replaces the Quarantine Act 1908. The two Acts are sufficiently similar, and the Biosecurity Act declared COVID-19 as a quarantinable disease;
- As a matter of statutory interpretation, the words “and subsequent amendments” includes repeal and replacement by a different Act;
- The commercial purpose of the exclusion clause is to exclude business interruption caused by diseases so serious that special quarantine restrictions have been imposed; therefore, COVID-19 ought to come under this clause; and
- The Court should interpret contract terms based on the intention of the contracting parties. The insurers were not aware of the repeal and replacement of the Quarantine Act, so their intention was not to exclude a new replacement Act.
So What’s Next?
If the appeal is allowed, it will be a huge win for the insurance industry, whom the COVID-19 pandemic and this decision have significantly impacted. On the other hand, it could have devastating results for those who hold insurance policies containing a similar exclusion clause. A similar issue has been said to affect 250,000 insurance policies and $10 billion worth of claims.
Suppose you or your business has suffered any losses due to the COVID-19 pandemic and hold an insurance policy such as those in issue, or you have been denied an insurance claim due to the COVID-19 pandemic. In that case, you should seek legal advice immediately.
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***Assisted by; Madeline Furchtmann***