Cape Town – The Supreme Court of Appeal (SCA) decision in favour of local restaurant Café Chameleon has been hailed as precedent setting for other business interruption insurance cases being heard in lower courts across the country.
After the judgment yesterday, South Africa's largest short-term insurer, Santam, reiterated its decision to apply for leave to appeal last month's Western Cape High Court judgment in the Contingent Business Interruption (CBI) matter between itself and Ma-Afrika Hotels and Stellenbosch Kitchen.
Santam said while there were similarities between its own case and the Café Chameleon and Guardrisk case, there were also “material differences in the initial judgments” handed down by the High Court.
In a unanimous judgment, the SCA dismissed an appeal by Guardrisk Insurance against a ruling upholding Café Chameleon's insurance claim arising from the Covid-19 pandemic.
It ordered Guardrisk to pay the costs of the appeal, including the costs of three counsel.
“The central question in this appeal was whether the government's imposition of a lockdown in response to multiple outbreaks of a ‘notifiable disease', that is, Covid-19, throughout the country, and predominantly in Cape Town, where Café Chameleon's operates its business, was covered by the infectious diseases clause.
“The question was answered in favour of Café Chameleon, as was the question whether the outbreak of Covid-19 in Cape Town was the cause of its business interruption,” the SCA found.
It accepted Café Chameleon's submission that its business interruption was caused by both the occurrence of Covid-19 within a 50km radius and the government lockdown and that a fair reading of the policy provided cover for both the outbreak of the disease and the government's national response.
The judgment further stated it was fortified by much of the reasoning in the UK's Financial Conduct Authority test case and two recent judgments of the Western Cape High Court: Ma-Afrika Hotels and Another v Santam Limited and Interfax (Pty) Ltd and Another v Old Mutual. Café Chameleon attorney Ren Dunster said he and his client Nico Schoeman were thrilled at the decision.
“We applaud the urgency and clarity with which the judges dealt with the matter,” Dunster said.
Guardrisk General Insurance executive head Walter Cronje said: “Our legal team is currently studying the judgment and we will comment further as soon as we receive their analysis.”
Specialist public loss adjuster Insurance Claims Africa (ICA), said now that legal certainty had been established, there should be nothing left for insurers to do but resolve their customers' claims.
ICA described the judgment as “precedent setting” for all other Business Interruption insurance cases being heard in lower courts across the country.
ICA chief executive Ryan Woolley said the ruling was a significant win for an industry that had suffered tremendous losses.
“The latest statistics show that Cape Town hotel occupancy is sitting at a devastating 18%. The rest of the country is in a similar position.
’’The time has come for insurers to stop hiding behind their legal teams, and to honour their customers' claims. We call for immediate resolution of all valid claims,” Woolley said.
In a statement, Santam said: “Matters involving Contingent Business Interruption are complex in nature and require careful consideration. Santam will consider this judgment in assessing its potential impact on our own appeal involving Ma-Afrika Hotels and Stellenbosch Kitchen.
“Santam believes that the Western Cape High Court erred in its judgment regarding causation and the insured peril, the trends clause and the indemnity period, and has therefore decided to take the matter to the SCA.
’’The decision to appeal suspends implementation of the Western Cape High Court judgment which ruled in favour of the policyholders.”
Ma-Afrika Hotels chief executive André Pieterse congratulated Café Chameleon.
“We call on Santam Insurance to forgo their attempt to further delay payment of claims and to withdraw their application for a right to appeal the full bench decision of the Cape High Court wherein Santam Insurance lost its case against Ma-Afrika Hotels.”
The tourism and hospitality sector sustains over 740 000 direct and 1.5 million indirect jobs, and contributes 8.6% to the South African economy.
Since March 2020 when the Covid-19 outbreak occurred and subsequently the national lockdown was imposed, tourism and hospitality businesses of all sizes have suffered tremendous losses and many have been forced to close their doors, putting thousands of jobs at risk.
Cape Times