On 18 November 2020, in the matter of HDI Global Specialty SE v Wonkana No. 3 Pty Limited [2020] NSWCA 296, the New South Wales Court of Appeal unanimously found for the insureds in a landmark test case concerning the breadth of exclusion clauses in business interruption insurance policies.
Since the COVID-19 pandemic, a number of insurers have refused to pay COVID-19 related business interruption claims on the basis that policies explicitly include wording to the effect that cover is excluded for interruptions caused by diseases “declared to be quarantinable diseases under the Quarantine Act 1908 and subsequent amendments”. An issue as to the proper construction of the policies arose because COVID-19 is a listed human disease under the Biosecurity Act 2015 (Cth) but is not a quarantinable disease under the Quarantine Act 1908 (Cth) (which was repealed in 2016). The Insurance Council of Australia and the Australian Financial Complaints Authority prepared a test case to determine the issue.
The Court of Appeal unanimously found that the exclusion did not apply to COVID-19 because: (a) the words “and subsequent amendments” do not extend to or include the Biosecurity Act; (b) applying principles of construction to ascertain the parties’ objective intention, the language of the clauses does not reflect any mistake in the expression of that intention; and (c) the natural and ordinary meaning of the words do not involve an absurdity sufficient to justify a conclusion that the language should not be given effect.
Derek Wong was led by John Sheahan QC and briefed by Mark Waller and Chris Erfurt of Clayton Utz for the successful insureds in the test case.
The judgment can be found here https://www.caselaw.nsw.gov.au/decision/175d83c4c19face7f3e6bc2c.
