Business Interruption Test Case

Business Interruption COVID-19 Claims upheld by NSW Court of Appeal

Business interruption cover is designed to protect a business for a financial loss incurred because it cannot trade for a period due to loss or damage to the business itself from an interruption covered by the policy.

For some businesses, the COVID-19 pandemic interrupted trade and caused financial loss but since 2005-06, losses arising from quarantinable or infectious diseases were specifically excluded from this cover and insurers have argued that it was never their intent to cover claims arising from a global pandemic.

On November 18, 2020, the New South Wales Court of Appeal determined in two separate test cases, that COVID-19 is not a disease declared to be a quarantinable disease under the Quarantine Act and therefore, the exclusion in the infectious diseases benefit does not apply.

So what does this mean for you?

Unfortunately, this does not mean that all claims for COVID-19 related business interruption losses must now be paid – it simply means that businesses holding policies with the Quarantine Act exclusion may have one less hurdle to overcome in presenting their claim.

Insurers will continue to argue that their policies do have exclusions relating to pandemics and that it was never the intent to cover this type and scale of event.   A High Court challenge to the decision is likely, which will delay any claim settlements for some months yet.

In addition, policy coverage varies from insurer to insurer and some policies do have appropriate wording to deny this type of event.

 

What you can do

  1. To find out more about this issue please visit https://www.insurancecouncil.com.au/issues-submissions/bi-test-case
  2. If you have business interruption cover and believe you have suffered a financial loss from COVID 19, please contact your broker to discuss your policy coverage and potentially lodge a notification with your insurer

There will be further communications to come on this matter, in the meantime, please contact your broker to discuss your particular circumstances.

 

End-of-Financial-Year

End of Financial Year Checklist

It’s that time of year again and the End of Financial Year is upon us. Before 30 June take a moment to review your business so you can start the new financial year off on the right track.

1. Review your business story
How has your business changed in the past year? As your business evolves to cope with your clients ever
increasing expectations and technology advancements, consider any improvements you made and if this has now changed your goals.

Do a financial health check to consider your current cash flow, profitability and return on investment. If possible see if there are benchmark figures for your industry available and compare your business performance to these.

Often, businesses forget to look at their systems and processes. Whilst it can be a tedious task to review and implement a new way of doing things, the long-term benefits of implementing something that will save you time, is a business win.

The aim of this exercise is to identify any weaknesses you find and to develop a plan to address them. You don’t need to do all the work yourself either, get your staff to help out and come up with ways to improve the business.

Actions out of this process should be documented, assigned to an owner and have clear timeframes agreed for resolution.

2. Have a clear strategy – Look at where you want to be in the future
Have a clear understanding of:

  • How you are unique.
  • Understand your industry, its unique qualities and opportunities.
  • Understand your customer, who you are going to serve and how you are going to do it. You can’t be everything to everyone.

3. Prepare a budget
Ensure that you have, or have access to, sufficient resources to achieve your objectives. Regularly monitor your actual results and identify the reasons for variations.

4. Cash flow is still king
Many businesses discover that even though their business is profitable, cash flow problems can be its downfall by stopping expansion plans or not having money available at the right time to increase staff or product lines. Ensure you understand any seasonal fluctuations in your business and also ensure you have a good invoicing system. Most accounting packages can send out automated reminders to customers who are slow to pay or perhaps it may be necessary to allocate a little more energy to chase up older debtors.

5. Review your marketing plan
Is it achieving your objectives? Measure the success of each campaign or activity to determine its effectiveness. Increase focus on products with a high margin and reward your employees for achieving targets in your preferred areas. The reward must be easy to understand and easily measured, monitored and communicated during the financial year.

6. Review your risk management plan
Some key issues to address might be:

  • Major damage at your own, a key supplier or key customers premises. This could have a disastrous effect on your business.
  • Loss of a key supplier.
  • Failure of a key customer.
  • Loss or illness of key staff members.
  • Damage to your reputation through a social media attack.

Take some time to think about your options, if any of these, or similar events occurred.

7. Don’t be afraid to bring in the professionals
A lot of businesses make the mistake of not reaching out to the specialists when they need help. There are a wide range of specialists, from business coaches, accountants, marketers, investments advisors etc. out there ready to help you achieve your objectives and keep you on track. Finally, although it may appear hard, it will put you in a good position to explore new
opportunities, minimise risk, maximise profits and help you sleep better at night.

Zane Keleher

Piranha backs young speedway driver for Australian title campaign

Piranha Insurance Brokers are proudly sponsoring promising young Rockhampton speedway driver Zane Keleher, paying for new tyres for his 2020 Australian Championships campaign.

Keleher was automatically seeded into the 2020 Australian Championships at Kurri Kurri, after moving to Mildura and racing regularly in both state and local competitions.

He has one more race to go before the titles kick off on 4th January 2020. Keleher will race in the Phil Crump Invitational at Mildura on the 29th December.

Business owners Heather and Peter Peirano recently caught up with Zane before his next meet and paid the bill for new tyres.

“Zane Keleher is a great example and inspiration to young speedway riders in Rockhampton.  We are so proud to sponsor him and hope the new tyres we’ve bought him will help his campaign to make the podium at the Aussie Champs and the upcoming invitational,” Heather said.

Zane came 1st in the Handlebar Heroes Speedway Bike Spectacular held in Rockhampton in July and  2nd in the Victorian and South Australian State Titles. In the last Australian Championships (January 2019) he placed 14th and this year he will be looking to get onto the podium.

In November the young racing enthusiast competed in the inaugural FIM Oceania Speedway Championships and placed 9th in a field of nine Australians and seven internationals.

Zane had hoped for a better result but was knocked out early, making him hungry for success in the Australian Championships in January.

“Living in Mildura has been the best thing I’ve done this year and the results are showing,” Zane said.

“I can’t wait to start the Aussies and show southerners the back of me.”

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Ongoing hot conditions increasing fire risk for the region – tips to be prepared

Queensland Fire and Emergency Services has extended its total fire ban for much of Central Queensland and has issued a statement about heightened fire conditions for the weekend.

Are you prepared?

The local fire ban will remain in place until 2359 hrs on Friday, 20 December for residents in the Central Highlands, Isaac, Mackay, Whitsunday, Woorabinda, Banana, Gladstone, Livingstone and Rockhampton Local Government Areas.

“Heightened fire conditions are perfect for bushfires to ignite and spread quickly,” A QFES statement read.

“Under a local fire ban all open fires are prohibited and all permits to light fire which have been issued in the designated areas have been cancelled.

“Power tools may be used during a local fire ban however QFES encourages people to use these with extreme care and ensure adequate equipment is available to extinguish any fire which may start.

“This may include having a person available to watch out for any ignitions that occur.”

FIRE PREPARATION ESSENTIALS…

1. A Fire extinguisher

2. Smoke detectors in every room

3. A fire blanket

4. A quick and easy way out (ie. don’t accidentally lock yourself in with key locked windows and doors)

5. Download the Queensland Fire and Emergency Services “Get Ready Guide” and  prepare your home and evacuation plan

6. Purchase good quality insurance sourced via an insurance broker and make sure your home and contents cover value is up to date.

Airbnb – what are your rights?

Do you have rights to share your home?

Airbnb has become a central player in the sharing economy in the last decade. While its usage has presented opportunities to ease the financial burden of a mortgage, there are legal implications that hosts of strata-titled properties should be aware of.

In a recent case of Estens v Owners Corporation SP 11825 [2017] NSWCATCD 52, the NSW Civil & Administrative Tribunal (NCAT) found that strata by-laws which prohibited short term letting, like Airbnb, were invalid.

In this case, Ms Estens took the owner corporation of her apartment building to NCAT after it passed a by-law which prohibited short term letting as a result of a complaint by one of Ms Estens’ neighbours about the conduct of Ms Estens’ Airbnb guests.

Ms Estens argued that the by-law was invalid because it prohibited or restricted the dealing of a lot or transfer, lease, mortgage and infringed section 139(2) of the Strata Schemes Management Act 2015 (NSW) (SSMA).

NCAT concluded that an Airbnb letting constituted a tenancy or lease as it had specific commencement and end dates and gave the tenant exclusive use of the property. It found that the by-law prohibited or restricted the dealing of a lease and was therefore invalid by reason of section 139(2) of the SSMA.

This decision seems in conflict with that of the Western Australian Supreme Court in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104, which had considered the WA equivalent of section 139(2) yet upheld a by-law prohibiting short term letting. However, it is consistent with the decision of Owners Corporation PS 501391P v Balcombe [2016] VSC 384, in which the

Supreme Court of Victoria found that owner corporations did not have authority to ban short term letting.

In Queensland, strata property is governed by the Body Corporate and Community Management Act 1997. However, there have been no cases which deal directly with Airbnb and strata property.

What arises out of the above cases is that there is currently no uniform approach across the country as to whether owners of strata property can rent out their homes on Airbnb, if in contravention of a strata by-law.

It seems that the wording of the by-law might be important in deciding whether it infringes the equivalent section 139(2) provisions in the various state legislations that deal with strata property.

It is suggested that owners of strata property review their Body Corporate by-laws before renting out their homes on Airbnb to ensure that they comply with any legal obligations.

Insurance issues arising in the gig economy

What is the gig economy?

‘Gig’ is a slang term referring to a ‘job for a specified period of time’ and harks back to when musicians were engaged for a performance or a ‘gig’. The gig economy refers to the growing trend towards freelance or contract workers, as well as the share economy of resources such as property and equipment. In the US, almost 30 per cent of the workforce now participate in the gig economy. That is expected to grow to 50 per cent by 2027.

Some highly recognisable examples of the gig economy at work are:

  • Uber and Lyft – ride sharing
  • Airbnb – accommodation sharing
  • Airtasker – task sharing
  • Dozr – construction equipment sharing

The gig economy is clearly the way of the future. This poses both challenges and opportunities in the corporate and insurance worlds in terms of how best to classify, assign and transfer risk in these ‘non traditional’ employment and commercial relationships.

What are some of the risks emerging from the gig economy?

The risks that have already emerged with some prevalence from the gig economy include:

1. Who insures the workers?

It remains unclear who insures gig workers in various scenarios. For instance, if an Uber driver is involved in an accident, who insures that driver for compensation and damages arising from any personal injuries sustained? There have been different judicial approaches to this issue in various jurisdictions and situations. This gives rise to great uncertainty for both the drivers and the corporation.

In another example, who insures an Airtasker worker who suffers injury when attending a domestic home to perform a contracted task? Airtasker eschews responsibility. The homeowner’s public liability cover (an extension to home and contents insurance) excludes claims by workers. The homeowner may have direct liability to the Airtasker worker, unless another insurance solution can be found.

2. Who insures the work performed?

A similar issue arises for consideration about who insures for the negligence of gig workers. If you are engaging with a freelancer who does not hold appropriate insurance cover, you may not have recourse against an insurer (and its deep pockets) in the event the gig worker causes loss and damage.

3. Who insures the property?

A standard insurance policy wording may not cover property that is ‘hired out’ via a platform such as Airbnb or Dozr.

Again, the platforms Airbnb and Dozr see their purpose as ‘connecting supply with demand’ and exclude liability. This creates a few issues for the property owner namely:

  • Are they covered if the hirer causes damage to their property?
  • Are they covered if the hirer suffers property damage, personal injury, loss or other damage arising from the hire of the property?

How can insurance help?

In some instances, the new and emerging risks arising from the gig economy can be assigned through properly drafted contracts and agreements that clearly spell out where the liability (and the obligation to insure) falls.

However, some of the risks identified above will not be covered by standard or traditional insurance policies.

New products providing coverage directed at the gig economy are constantly being developed. This may otherwise be achieved by amending or endorsing existing policies. However, insurance arrangements should be carefully reviewed to ensure that you are covered for risks arising from the gig economy.

What should you do to protect yourself?

The gig economy offers much in the way of flexibility and free market engagement – but review your insurance to make sure you are covered in the event something goes wrong.

If you are a member of the gig economy, or you engage with members of the gig economy, talk to your broker about your insurance needs.

Queensland Smoke Alarm Laws and you

Whether you are a home owner, a renter, a landlord or a renovator/builder, the smoke alarm legislation introduced by Queensland Fire and Emergency Services from 1 January 2017 will affect you!

As a landlord….

  • Existing smoke alarms manufactured more than 10 years ago must be replaced with photoelectric smoke alarms which comply with Australian Standards (AS) 3786-2014. All smoke alarms should be interconnected within the property.
  • Smoke alarms should be installed on each storey including – in every bedroom; in hallways that connect bedrooms and the rest of the property and if there are no bedrooms on a storey, at least one smoke alarm should be installed in the most likely path of travel to exit the property.
  • Any person can legally install a battery powered alarm, but 240-volt hard-wired smoke alarms must be connected by a licensed electrician.
  • Within 30 days before the start of a tenancy in a domestic residence, you must test and clean each smoke alarm in the property.

As a tenant….

  • During the tenancy, you must test and clean each smoke alarm in the property, at least once every 12 months. To test a smoke alarm, press the ‘test’ button.

As a home owner….

  • Existing smoke alarms manufactured more than 10 years ago must be replaced with photoelectric smoke alarms which comply with Australian Standards (AS) 3786-2014.
  • Smoke alarms that do not operate when tested must be replaced immediately.
  • It is recommended that smoke alarms be either hardwired or powered by a non-removable 10-year battery, and ionisation smoke alarms be replaced with a photoelectric type as soon as possible.

As a renovator/builder….

  • All new or substantially renovated homes or units require hardwired, photoelectric interconnected smoke alarms. For existing dwellings, the smoke alarms can also be powered by a non-removable 10-year battery.
  • Smoke alarms must be installed on each storey, in each bedroom, in hallways that connect bedrooms and the rest of the dwelling, and if there are no bedrooms on a storey, at least one smoke alarm must be installed in the most likely path of travel to exit the dwelling.
  • It is essential to also have a well-practiced fire escape plan.

For further details, refer to Queensland Fire and Emergency Services’ website at www.qfes.qld.gov.au/community-safety/ smokealarms

Single Touch Payroll is here

The biggest change to payroll in history is here and compulsory for businesses with 19 or fewer employees.

What is it?

Single Touch payroll (STP) is an ATO compliance regulation which requires employers to send employee payroll information, including salary, wages, PAYG withholding and superannuation to the ATO at the same time as their standard pay run.

Why is it happening?

The government likes STP for a number of reasons.

  • It’s a much more efficient way to operate the taxation system.
  • It will make the black economy more difficult…at least in theory…because the ATO will know who is being paid, how much they’re being paid and when.

What are the benefits?

The ATO will be able to pre-fill the BAS for employers, eliminating errors and double handling.

Online access to Payment Summaries means that employers no longer have to provide Payment summaries at the end of the year, as the ATO will already have this information.

What’s the scale of this?

ABS data reveals that there are approximately 782,000 businesses with 19 or fewer employees in Australia…about 37 per cent of all Australian businesses.

What are the concerns?

Worries range from businesses not being aware of the changes to some employers not even having digital payroll software. A lot of small businesses are struggling to come to grips with why the change is needed.

What’s the ATO approach?

The ATO has said that they weren’t interested in cracking the whip to ensure short-term compliance and are instead taking a long-term view, but they certainly want to bring all businesses into the digital world.

What’s the solution?

A number of third party software providers have introduced low cost solutions for micro-businesses, while larger businesses should have already have updated software to deal with the changes.

That’s not a cyclone…this is a cyclone

That’s not a cyclone…this is a cyclone

Although the effects of Cyclones Debbie, Yasi, Marcia and Larry are generally well known, these are dwarfed by Cyclone Mahina.

Cyclone Mahina is the deadliest cyclone in recorded Australian history, striking Bathurst Bay in Cape York on the 4th March 1899, with its destructive winds and storm surge combining to kill over 400 people. Thankfully, storms like this occur extremely rarely, with research by scientists finding that “on average”’ super cyclones occur in the region only once every two or three centuries.

A pearling fleet was anchored in or near the bay before the storm, but within an hour the fleet had either been driven ashore, onto the reef, or sunk at their anchorages.

A storm surge, reportedly 13 metres high, swept across Princess Charlotte Bay and then 5 kilometres inland destroying anything left of the fleet and the settlement. Apart from the sailors, around 100 indigenous

Australians were killed, but as indigenous people were not counted as part of the population at the time, no accurate numbers are known. Tragically, they had tried to help the shipwrecked survivors, but the back surge caught them and swept them away.

Thousands of fish and some sharks and

dolphins were found several kilometres inland and on Flinders Island, dolphins were found on the 15.2 metre cliffs.

The cyclone continued southwest over Cape York Peninsula, emerging into the Gulf of Carpentaria before doubling back and dissipating on the 10th March. Measuring cyclones is a complicated task as the biggest or strongest are often not the most

destructive, but one good measure of

intensity is pressure.

The lower the pressure, the more air gets sucked into the cyclone and this ultimately results in more power. A study in 2014, found the lowest pressure of around 880 hectopascals for Mahina, based upon modelling of meteorological variables needed to induce the world record setting surge height…by comparison, Cyclone Yasi was 930 hectopascals.

Hopefully, we won’t see anything like Cyclone Mahina in 2017/18, but Queensland, and more particularly North Queensland, is facing another nervous cyclone season, with weather forecasters predicting a dozen cyclones could form off the Australian coast this summer. Of those, up to four could cross the Queensland coast, but even tropical cyclones which do not make the coast can still have a significant impact on coastal communities. Heavy rainfall causing major flooding, storm surges causing coastal inundation and destructive winds causing damage to property and infrastructure are a common occurrence.

 

BREAK OUT:

The State Emergency Service recommend having an Emergency Kit ready for storm season that contains essential items you may need during and after a severe storm.

An Emergency Kit contains essential items that you and other members of your household may need during and after a severe storm.

An employer’s right of dismissal for lies in a job application

Employers may sometimes come across job applicants who have embellished, exaggerated or stretched the truth about their qualifications, skills and experience in order to gain employment. While lying on a job application through a résumé, CV, cover letter or job interview may not be a criminal offence, it will be considered fraud if an individual presents false documents to back up claims of qualifications, education or job history. It is also illegal to impersonate a doctor, a police officer and various other occupations.

In these situations, an employer may take disciplinary action, and go so far as to dismiss the employee, even if the misrepresentation does not relate to the qualifications or skills required to perform the role. This is because of the inherent requirements of trust and honesty in the employment relationship. Furthermore, even a little stretching of the truth could amount to a breach of the employment contract.

In Jacques v The McCarroll Motor Group [2014] FWC 5793, the Applicant was a trainee motor mechanic who lied in a job interview and said that he had around six modules left to complete in the near future for his trade qualifications. However, the Applicant actually had 14 modules left to complete and had not made any progress since starting the job. The Fair Work Commission found that the dismissal was not ‘harsh, unjust or unreasonable’ because the Applicant’s misrepresentations had demolished the trust and confidence necessary to maintain the employment relationship. Furthermore, the Applicant could not satisfy the foundation element of the employment without his trade qualifications.

In 2015, Jeffrey Flanagan pleaded guilty to deception charges when it was uncovered that he had falsified his employment history and gave fictional references on his résumé. Myer, who had hired Mr Flanagan as an executive, had terminated his employment on the first day and referred this matter to police.

More recently, in Tham v Hertz Australia Pty Ltd T/A Hertz [2018] FWC 3967, an employer was able to dismiss an employee due to exaggerated employment dates on his CV, despite the fact that the misrepresentation did not directly relate to the employee’s role and there were procedural deficiencies in the disciplinary action taken by the employer.

The key takeaway for employers is that there is a right to dismiss an employee who intentionally lies in their job application or provides false details. However, employers should ensure that any immediate dismissal is due to sufficiently serious dishonesty and that all procedural matters are followed during the disciplinary and dismissal process.