SWISS RE INTERNATIONAL SE V LCA MARRICKVILLE PTY LTD

[2021] FCA 1206, Federal Court of Australia, Justice Jagot, 8 October 2021

Insurance (business interruption) – Test case – Meaning of disease clauses, closure clauses and hybrid clauses – Meaning of “damage” to property – Effect of governmental payments on recovery under policy

This was the hearing of the second test case brought in Australia on the coverage of business interruption policies for losses caused by the COVID-19 pandemic. The court considered fifteen different wordings and scenarios. The issues were somewhat different from those arising in the English test case, Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1, [2021] Lloyd’s Rep IR 63, in that: the measures taken were a combination of Federal and State intervention; there were large areas of Australia where there had been no COVID-19 cases but lockdowns were instituted by way of precaution; and that there was a complete ban on international travel. As in the UK, the trigger for business interruption cover was material damage, but there were non-damage extensions for: (i) loss caused by an outbreak of disease; (ii) loss caused by closure by the authorities; and (iii) loss caused by closure by the authorities by reason of disease.