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Is a wave of small business claims coming?

A recent decision by the NSW Court of Appeal may have “opened the floodgates” for small business claims, particularly in Victoria, says one plaintiff firm.

user iconJerome Doraisamy 26 March 2021 SME Law
small business claims
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Christopher Blake, a Victorian-based Jetts gym owner who resides in the Bellarine Peninsula, is taking his insurer to the Federal Court after being denied compensation for lost revenue caused by the forced closure of businesses during the COVID-19 pandemic.

The gym would have generated, he says, “at least $235,000” if not for the Garden State’s two lockdowns in 2020.

Mr Blake had business interruption insurance – capped at $450,000 when events beyond human control affect operations – but his claim was denied by Hollard Insurance, Shine Lawyers says, with the provider arguing that coronavirus was excluded under its policy as it was not a quarantinable disease as defined by the Quarantine Act 1908.

 
 

The problem with this, the plaintiff firm posits, is that legislation had been replaced with the Biosecurity Act 2015, meaning Mr Blake’s policy “cited a redundant law”.

In December of last year, the NSW Court of Appeal ruled that it was wrong to deny business interruption payouts on this basis – a decision, Shine noted, that the Insurance Council of Australia intends to challenge in the High Court.

Speaking about that decision from late last year, Shine senior commercial disputes solicitor Joseph Crane said that NSWCA’s decision “opened the floodgates to claims from small businesses”, especially in Victoria.

“Victorian small businesses paying tens of thousands of dollars for interruption insurance each year rightly expect to be treated fairly when they claim financial assistance in accordance with their policies,” he outlined.

“Insurance companies instead tried to crab-walk away from the wording of their policies, but the NSW Court of Appeal saw right through those attempts and we’re confident the High Court will reach the same conclusion.”

Mr Crane added that while Victoria’s two lockdowns were necessary to address a public health emergency, the impact on thousands of small businesses was “devastating”.

“The financial and emotional strain on small business owners in Victoria can’t be underestimated and insurers need to pay up now rather than drag this through the courts any longer,” he espoused.

“We warned of impending claims following the NSW Court of Appeal decision and what we’re seeing now is Victorian small business owners like Christopher Blake fighting back.”