BI class actions restart after pause for High Court decision

Class actions launched over business interruption claim denials during the pandemic are set to restart after the process was put on hold while High Court leave to appeal applications on the industry test case were decided.

The Federal Court has scheduled a case management hearing for the four class actions on December 6 before Chief Justice James Allsop.

Gordon Legal, which has filed two of the class action on behalf of policyholders, says the test case outcome provides some further certainty but several important legal issues remain unanswered and may be resolved through the class actions.

Commercial Law Partner James Naughton says issues include how claims will be determined for some businesses affected by local or site-specific lockdown orders, such as in metropolitan Melbourne in July 2020.

“There may still be thousands of businesses in that undetermined category, that may well have valid and arguable claims, and whose claims will be progressed through the class actions that have been already issued,” he told insuranceNEWS.com.au.

“In addition, there are still several live questions about how those businesses with viable claims will be permitted to quantify their losses, which may be resolved through the class actions.”

Gordon Legal has filed on behalf of policyholders in Cody Gemtec Retail t/as the National Opal Collection v the underwriting members of Syndicate 2003 at Lloyd’s, and Strand Fitness & ors v QBE.

Cases filed by Slater & Gordon scheduled for the case management hearing on the same date are CMC Hospitality v Insurance Australia; and Vicki Field Swim School v Hollard.

Slater & Gordon says the Insurance Council of Australia (ICA) second test case involved only a limited sample and it considers cover is available under both infectious disease clauses and hybrid clauses in certain circumstances.

“We believe that the class actions have a role in enabling the efficient resolution of the claims of thousands of businesses who have suffered significant losses as a result of Covid-19 lockdowns,” Class Actions Associate Ruby Haynes told insuranceNEWS.com.au.

The ICA business interruption test case process largely concluded with the High Court on October 14 declining to hear appeals arising from a judgment in the Full Federal Court.

The test case went mostly in favour of insurers but lawyers have pointed to some outcomes that have assisted policyholders, including the determination for a Melbourne suburban travel agent.

“The test case outcomes were not outright victories for insurers,” Ms Haynes said. “There were favourable findings for insureds, including that JobKeeper payments do not have to be offset against insureds’ losses, and the findings in relation to Meridian Travel under its infectious disease clause.”