AUSTRALIA Trends and Developments Contributed by: Michael Polorotoff, Jeremy Peck, Emily Daffy and Scott Cowell, Moray & Agnew
Otherwise, in Allianz Australia Insurance Ltd v Unit - ing Church in Australia Property Trust (NSW) [2025] FCAFC 8, the majority of the Court commented (by way of obiter) that exclusions for loss arising from fact and circumstances known by the insured prior to the inception of such policies (“prior circumstanc- es exclusions”) are void by reason of Section 52 of the ICA. Section 52 prohibits contracting out of the operation of the Act. The Court found that the prior circumstance exclusion in this case had the effect of transforming what is a matter for disclosure (gov- erned by Sections 21 and 28 of the Act) into a general exclusion from cover in all instances. Its effect is to substantially exclude the application of the duty of disclosure provisions. While the potency of prior circumstances exclusions had been significantly diluted by the prevalence of continuous cover extensions over the years, this deci- sion will narrow underwriters’ options to non-disclo- sure and misrepresentation, and as a result require underwriters to establish prejudice in seeking a rem- edy. This decision also has implications for other lines of business, including D&O. Cyber In the last 12 months, regulatory activity has been notable. In September 2025, the first-ever civil penalty proceedings for breaches of the Privacy Act reached its conclusion, with pathology services provider Australian Clinical Labs (ACL) being ordered to pay AUD5.8 million for a breach in 2022, which exposed the information of more than 220,000 clients. The Australian Information Commissioner had alleged that serious systemic failures at ACL had led to their cli- ents’ information being exposed. It was the first judi- cial consideration of the obligation to take reasonable steps to protect an individual’s privacy, as required under the Privacy Act. The breaches arose from ACL’s knowledge of a breach and its knowledge of the inad- equate response undertaken by its cybersecurity con- sultant in response. As a result, it was alleged that the sensitive health data of clients remained exposed for more than 12 months. ASIC has also been active in enforcing cyber risk obligations. ASIC has commenced two enforcement proceedings against financial planning firm Fortnum
Private Wealth and FIIG Securities. In each case, ASIC alleges breaches of Section 912A, which outlines gen- eral obligations of financial services licensees, includ- ing the duty to provide the services efficiently, hon- estly and fairly; to have adequate resources to perform their services; and to have adequate risk management systems. Otherwise, the costly implications of data breaches continue without any clear indication as to how vic- tims of data breaches can be best placed to recover compensation while the companies at the centre of the breaches bear the extraordinary costs burden of defending multiple actions. Medibank and Optus face consumer class actions in the Federal Court in addition to representative (or class action) complaints made to the Office of the Australian Information Commissioner (OAIC). In addition, Optus is now also the subject of a civil penalty proceeding brought against it by the Australian Communications and Media Authority for failing to protect the confidentiality of the personally identifiable information of its customers. These pro- ceedings are moving at a stately pace. In the mean- time, substantial breaches continue apace, including a breach of Qantas, exposing the details of 6 million members of its loyalty scheme. Liability Historical abuse continues to dominate the liabil- ity landscape in Australia and to drive claims costs. Defendants and their insurers may also see a rise in care damages in light of a recent decision of the High Court. Amendments to the law around vicarious liability The High Court in Bird v DP [2024] HCA 41 emphati- cally rejected any extension of the scope of the doctrine of vicarious liability (a form of strict liability whereby a defendant is attributed with the liability of another, despite the defendant bring free of fault) beyond employment, in finding that a relationship akin to employment between the Catholic Church and a parish priest, not employed by the Church, was not sufficient to impose a finding of vicarious liability. That decision puts Australia at odds with the devel- oped common law in both Canada and the United Kingdom. The legislatures in the Australian Capital
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