Posted by Ben Robertson | 30 June 2021 | Civil Contractors and Construction
On 25 June 2021, the High Court denied the insurers’ special leave application to appeal the Court of Appeal’s judgement and dismissed the application with costs.
The test case that came before the Court of Appeal concerned a number of business interruption policies which contained exclusion clauses which stated that the policies would not cover diseases which were declare to be quarantinable diseases under the Quarantine Act 1908 (Cth).
The central problem with those clauses was that the Quarantine Act 1908 was repealed in 2016 and in its place the Biosecurity Act 2015 (Cth) was enacted. The Quarantine Act 1908 had a mechanism for declaring certain diseases to be quarantinable diseases, and the impact of such diseases on business was not insured under the Business Interruption Insurance Policies.
The Biosecurity Act 2015 had a different procedure and contained a mechanism for certain diseases to be determined as listed human diseases under the Biosecurity Act 2015.
The primary issues for the Court of Appeal to decide were:
b) That the references to the Quarantine Act were obvious mistakes which should be construed as if they were or included references to the Biosecurity Act.Given that the Court of Appeal answered the first primary issues with an emphatic – no, the secondary issue did not need to be determined by the Court of Appeal. That secondary issue was:
In relation to the primary issues for determination the Court of Appeal found:
This was a significant blow to the insurers, particularly now that the High Court has determined that there are no reasons why special leave should be afforded for the High Court to hear an appeal.
As a result, there are a large number of insurance policies where insurers will be unable to decline claims based upon exclusion clauses that refer to the Quarantine Act, instead of the Biosecurity Act.
There is a second test case by insurers that was filed in the Federal Court on 24 February 2021. The insurers represented in that case are Allianz, IAG, Chubb, Guild and SwissRe Corporate Solutions. The Insurance Council of Australia have indicated that the issues for the court to determine in that case concern the meaning of policy wordings in relation to the definition of a disease, proximity of an outbreak to a business and prevention of access to premises due to a government mandate.
It is expected that the hearing of the second test case will occur in late August 2021.
Should you have any queries in relation to business interruption policies, please contact us on email@example.com
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On 17 July 2021, the NSW Government issued a public health order directing that work not be carried out on construction sites in Greater Sydney. "Following construction sites being shut down over 17 – 18 July 2021, builders and subcontractors should review their contracts closely and attend to issuing contract notices for extensions of time and suspension of work as applicable," said Nexus National Practice Director Ben Robertson.
"With NSW Design & Building Practitioners Act 2020 coming into force on 1 July 2021, there will be a 12 month transition period to allow industry to adapt to the new provisions," said National Practice Director Ben Robertson.
"A revision of the National Construction Code is planned for 2022 and the scope and impact of the proposed changes highlighted in this first draft will be significant," said Nexus National Practice Director Construction & Infrastructure Ben Robertson.