Clayton Utz partner Mark Waller battles insurance companies for COVID-19 compo
A Brisbane legal eagle is heading up a closely watched test case with enormous implications for business owners nationwide battling to get insurance payouts for their COVID-19 shutdowns.
City Beat
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HUGE TEST CASE
Like the tip of a spear, a Brisbane legal eagle is heading up a closely-watched test case with enormous implications for business owners nationwide battling to get insurance payouts for their COVID-19 shutdowns.
At stake are policy claims that some have estimated could top $1 billion and will literally determine whether some companies keep trading or fall in a heap.
Clayton Utz partner Mark Waller, a specialist in commercial litigation and insurance disputes, will rock up to the NSW Court of Appeal in just two weeks to argue the case for two out-of-state small business owners.
One is a caravan park in Tamworth, while the other is a health and nutrition store in Melbourne. Assisting Waller in the daylong hearing before three judges on October 2 will be highly-regarded legal ace John Sheahan QC and barrister Derek Wong.
These gents will argue that “business interruption” coverage in their clients’ policies mean they deserve compensation for huge losses brought on by the lockdowns.
But here’s where it gets tricky.
Insurance companies introduced general exclusions for losses related to infectious diseases or quarantine issues back in 2005 following the SARS drama.
But many of these insurers continue to rely on policy fine print that references the now-repealed Quarantine Act of 1908.
Those laws were scrapped and replaced in 2016, when the new Biosecurity Act 2015 came into effect.
No surprise then that this loophole has provided a huge opportunity for a vigorous legal challenge.
The court’s decision is expected to set a precedent that will head off a tidal wave of similar cases, which would clog up the legal system and take months or even years to resolve.
“It’s a very interesting case to be involved in and obviously I appreciate its significance,’’ Waller told City Beat on Thursday. “It won’t resolve all issues but it will make a significant difference.’’
COMING INTO FOCUS
As the scope of this enormous problem came into sharper focus earlier in the year, peak industry body The Insurance Council of Australia and non-government ombudsman the Australian Financial Complaint Authority agreed to oversee the test case.
“The primary purpose of the test case is to seek a decision from a superior court on whether references to a quarantinable disease under the Quarantine Act 1908 should be construed as a reference to a listed human disease under the Biosecurity Act 2015 in various policies issued to small businesses containing business interruption cover,’’ the agencies said in a joint statement.
“The outcomes of the test case will be used by AFCA in determining relevant complaints arising in respect of business interruption claims. The legal costs of the test case will be funded by the ICA.”
No prizes for guessing where the sympathies of ICA boss Rob Whelan lie.
“Insurers believe the intention of pandemic and communicable human disease exclusions are clear. However, a judicial determination will provide insureds and AFCA with greater legal certainty on this issue,’’ he said.
John Price, who heads AFCA’s insurance arm, stressed that the court decision will be vital for dispute resolution. “The outcome of the case will provide some clarity for all stakeholders in particular small business and insurers,’’ he said.
UK CASE
Interestingly, Australia is not the only country which has wrestled with this thorny issue.
Policyholders were widely seen to be the winners when the English High Court handed down a ruling this week following a test case heard in July.
While there are obviously differences with applicable laws in both countries, Australian business owners have nonetheless been buoyed by the result.
But Waller has counselled caution.
“Although the outcome of the UK test case will provide guidance on these other coverage issues, it will not be binding in Australia,’’ he said.’
“We will have to see how Australian insurers and courts apply the test case outcomes to claims under policies issued by those insurers.“