Case Note: Princess Theatre Pty Ltd & Ors v Ansvar Insurance Limited [2024] VSC 363

In Princess Theatre Pty Ltd & Ors v Ansvar Insurance Limited [2024] VSC 363, entities within the Marriner Group sought indemnity from Ansvar Insurance Limited for business interruption losses arising from closures of the Princess Theatre, Regent Theatre, Comedy Theatre, Forum Theatre and Plaza Ballroom during the COVID-19 pandemic.

His Honour Justice Osborne found that:

1. The Ansvar policy applied for two policy periods. The insureds had closed the venues following government advice of the Prime Minister of Australia on 13 March 2020 and subsequently following orders of the Victorian government.
2.  An infectious disease sublimit of $500,000 applied, with the sublimit applying to each of the four venues separately.
3. The total indemnifiable loss was $816,005 for the period of insurance for the first policy period and $2,000,000 for the second policy period (less excess and interest and costs to be determined)

Significance

The case may have significance for other policy holders and insurers bringing business interruption claims and more broadly. Notably:

1. The specific wording of the policy is critical. The Court considered other recent decisions relating to business interruption in the context of Covid-19 which have been largely favourable to insurers, including LCA Marrickville and Star Entertainment Ltd v Chubb Insurance Australia Ltd [2022] FCAFC 16. While these cases were relevant for some general principles, the proceeding largely turned on the specific wording of the policy in question. In this regard, the Ansvar policy had certain unique features, including that cover was available for closure ‘upon advice’ of government, as well as from government orders. This was significant to his Honour’s finding of indemnity. His Honour accepted that when the policy holders closed the venues on 16 March 2020 it was required by the 16 March 2020 Direction but not caused by it. However, the closure was based on the advice by the Prime Minister on 13 March 2020 and 15 March 2020.
2. No rectification for Quarantine Act exclusion. In HDI Global Specialty SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296 the NSW Court of Appeal rejected an argument that a reference in insurance policies to diseases declared to be quarantinable diseases under the Quarantine Act and subsequent amendments should be considered a reference to listed diseases under the Biosecurity Act. In this proceeding Ansvar asserted that the policy ought to be rectified to produce that result, on the basis that the parties had a common intention that this is how the policy should be understood. Noting the high threshold required before the Court will grant equitable relief of rectification, this argument was rejected. This will have significant precedential value for other insurers seeking to circumvent the decision in Wonkana.
3. Quantification of loss. The Court’s approach to quantification again stresses the importance of considering policy wording carefully, as the Court preferred an approach which was more closely aligned with the basis of settlement in the policy. When considering JobKeeper and other third party payments, the Court refused to adjust the insured’s loss after it took a strict interpretation of the policy terms. It noted that the Marriner Group was not entitled to JobKeeper because of the business interruptions but rather because it met the financial criteria. The Court’s approach was supportive of the general approach in LCA Marrickville appeal on the reduction of loss for JobKeeper and other third party payments.
4. Importance of clear policy wording. At paragraph 244 of the reasons, His Honor states: “The documentary record in evidence for the periods of insurance preceding the period of the First Policy and Second Policy is incomplete. It is fair and perhaps generous to describe it as a mess although no doubt this is in part due to the time period involved. The documents often contain errors of one kind or another some of which are typographical. Other errors may have been problematic had it been necessary to determine the actual policy wording in particular years.” Ambiguity in the policies gave rise to dispute on various issues and led the insurer to bring two different rectification claims. It also meant, because of ambiguity, the contra proferentem rule was relevant. This shows (a) insurers should obtain advice when amending policies; and (b) policy holders should get careful advice as to the meaning of policies, especially where there is ambiguity.

At Elit Lawyers, we fight for fair treatment and maximum recovery in insurance-related matters.

If you have concerns about your business interruption insurance or need expert advice on policy interpretation, contact us personally.

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