STAR ENTERTAINMENT GROUP LTD AND OTHERS V CHUBB INSURANCE AUSTRALIA LTD AND OTHERS

[2021] FCA 907, Federal Court of Australia, Chief Justice Allsop, 5 August 2021

Insurance (business interruption) – Policy covering business interruption following physical loss or damage to insured property – Exclusion for loss resulting from public authority action – Business interruption Civil Authority Extension for loss for retarding any conflagration or other catastrophe – Whether measures closing premises following COVID-19 were within Civil Authority Extension

Star and its associated companies operated casinos and associated hotel, food and beverage, and retail businesses at various sites in Sydney, Brisbane and the Gold Coast. On 18 March 2020 the Commonwealth Governor General issued a Biosecurity Declaration, and from February 2020 Australia implemented a series of protective restrictions which either closed or restricted access to Star’s premises. Star was insured by an Industrial Special Risks Policy. The primary cover was for material damage, with the word “damage” being defined as physical loss, destruction or damage. Exclusion 1(b) removed from cover “physical loss, destruction of or damage to the Property Insured ... resulting from confiscation, nationalisation, requisition or damage to property by or under the order of any Government or Public or Local Authority”. The business interruption section of the policy stated that business interruption losses consequent on physical damage to insured property was covered, and the Civil Authority Extension, Memorandum 7, provided that “the word ‘Damage’ ... is extended to include loss resulting from or caused by any lawfully constituted authority in connection with or for the purpose of retarding any conflagration or other catastrophe”. The issue was whether Star’s losses were covered by Memorandum 7.