LCA Marrickville Pty Limited v Swiss Re International SE [2022] FCAFC 17

FEDERAL COURT OF AUSTRALIA LCA Marrickville Pty Limited v Swiss Re International SE [2022] FCAFC 17 Appeal from: Swiss Re International Se v LCA Marrickville Pty Limited (Second COVID‑19 insurance test cases) [2021] FCA 1206

File numbers: NSD 1076 of 2021 NSD 1079 of 2021 NSD 1080 of 2021 NSD 1081 of 2021 NSD 1082 of 2021

Judgment of: MOSHINSKY, DERRINGTON AND COLVIN JJ

Date of judgment: 21 February 2022

Catchwords: INSURANCE – construction of policies – principles of construction – requirement to read policy "as a whole" – requirement to read policy provisions in context – giving effect to specific or important clauses which might otherwise be rendered redundant by a broad reading of other clauses – whether incongruence or incoherence as opposed to mere overlap INSURANCE – construction of policies – principles of construction – requirement to read policy from the position of an objective third party taking into account the circumstances of the contracting parties – whether different to the position of the reasonable policyholder INSURANCE – business interruption insurance – COVID-19 – cause of loss – causes of loss from government imposed restrictions – whether restrictions imposed as a result of risk of disease, outbreak or threat of disease from overseas INSURANCE – business interruption insurance – COVID-19 – hybrid clauses – composite insured perils with consecutive sequential elements – causal nexus between elements – proximate cause not necessarily required – ordinary construction of connecting words INSURANCE – business interruption insurance – COVID-19 – test cases – concurrent causes of loss – application of the "underlying fortuity principle" – whether general effects of COVID-19 arose from the same underlying fortuity as insured perils – whether concurrent cause of loss a matter which the parties would naturally expect to occur concurrently with the insured peril INSURANCE – business interruption insurance – scope of indemnity – "trends clauses" – whether insured required to bring into account amounts received from third parties – government assistance payments provided without reference to loss incurred INSURANCE – business interruption insurance – hybrid clauses – authority acting in response to outbreak of disease – insured obliged to establish authority acted in response to outbreak but not the actual outbreak INSURANCE – business interruption insurance – construction of particular insuring clauses – disease clause – hybrid clause – prevention of access clause INSURANCE – interest on claims – s 57 of the Insurance Contracts Act 1984 (Cth) – from when is it unreasonable for insurer to withhold payment of an amount – significance as to bona fide dispute as to reasonableness – whether present appeals are exceptional cases permitting insurers to withhold payment without obligation to pay interest CONTRACTS – construction – the contra proferentem rule – rule of last resort – application of rule to policies of insurance – application of ejusdem generis and nocitur a sociis rule CONTRACTS – meaning of words – "outbreak" – "occurrence" – "conflagration" – "catastrophe" – "premises" – "closure" – "evacuation" – "hindrance" – "physical damage" STATUTORY INTERPRETATION – s 61A Property Law Act 1958 (Vic) – application to Acts of the Commonwealth – whether Biosecurity Act 2015 (Cth) a re-enactment with modifications of Quarantine Act 1908 (Cth) – s 61A applies to Victorian Acts only – Biosecurity Act 2015 (Cth) not a re-enactment with modifications of Quarantine Act 1908 (Cth) STATUTORY INTERPRETATION – s 57 of the Insurance Contracts Act 1984 (Cth) – when unreasonable for insurer to withhold payment of the amount – significance as to bona fide dispute as to reasonableness