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The Café Chameleon case is the only one that the SCA has heard and one that most insurers have said will give them the legal clarity they need to proceed with their own case. Photo: Getty Images
- The Supreme Court of Appeals has published its ruling in the business interruption case between Guardrisk and its client Café Chameleon.
- This was one of three cases in which the Western Cape Superior Court ruled in favor of clients, ordering insurers to pay for business interruption losses caused by the closure.
- It is the only case that has been heard by the SCA and one that most insurers have said will give them the legal clarity they need to proceed with their own cases.
The Supreme Court of Appeals (SCA) dismissed Guardrisk’s case and ordered the insurer, which is owned by Momentum Metropolitan, to pay the lock-out claims.
The SCA said that the closure that the government instituted in response to multiple outbreaks of a notifiable disease, something was covered by the infectious disease clause of many insurers.
The Court said that the question of whether the lockdown is a covered claim event because the Covid-19 outbreak in Cape Town was the cause of the disruption of Café Chameleon’s business. The Western Cape Superior Court also issued the same ruling in July, but Guardrisk decided to appeal it to the SCA, expecting a different outcome.
The SCA said Guardrisk accepted that Covid-19 is a notifiable disease as defined in its policy and that there were positive cases within 50 km of the Café Chameleon facility, both essential requirements of the insured risk.
The SCA said that because by law notifiable diseases must be reported to government authorities, they may require specific government action at the national, provincial and local levels, and the lockdown response to Covid-19 exemplified this.
Judge Azhar Cachalia wrote in the ruling that because the contracting parties should have anticipated this risk of a government response.
“Therefore, I accept the central assertion of Café Chameleon that a notifiable disease almost always carries the risk of a government response, making it an integral part of the insured peril,” Judge Cachalia wrote.
The SCA dismissed Guardrisk’s appeal with costs.
Guardrisk, on the other hand, had argued, among other things, that its ‘reportable illness’ extension did not cover losses caused by the closure of the facilities as a result of a government order and that it required that the disease be localized and not at the national or global.
He also argued that there was no causal link between the Covid-19 outbreak in Cape Town and the positive cases within the 50 km radius of Café Chameleon and the disruption of his client’s business.
‘Time to stop flirting’
Insurance Claims Africa, a public loss adjustment firm that has spearheaded the legal fight for many of the companies with rejected closure claims, said Santam did not need to appeal to Ma-Afrika, as the Guardrisk SCA decision settled a precedent for all insurers. .
Santam had requested in November to appeal his own business interruption case at the SCA, but ICA believes that the legal certainty the insurer was seeking has now been established, especially since the Guardrisk case was led by five SCA judges.
“The time has come for insurers to stop hiding behind their legal teams and honoring their clients’ claims. We call for the immediate resolution of all valid claims. For ten months, companies in the insurance sector have erected obstacle after obstacle in their determination not to meet their obligations to their clients, “said Ryan Woolley, CEO of ICA.
