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Business Interruption Case heard in High Court – Judgment reserved

The Western Cape High Court case between Ma-Afrika and Stellenbosch Kitchen versus Santam was heard on 1 September, with the ruling delayed. The applicants’ legal team requested that the judgment be handed down before the Café Chameleon appeal case, which is to be heard by the SCA on 16 November.

Café Chameleon won its case in late June against Guardrisk, a subsidiary of Momentum Metropolitan. Guardrisk is taking the ruling on appeal at the SCA. Most insurers have complied with an instruction from the FSCA to either pay an interim amount or offer clients a settlement option.

Moneyweb reports that ICA joined forces with the Stellenbosch-based hospitality group in its litigation against the insurance giant which claims the government’s lockdown is the reason for the loss and that the lockdown itself is not ‘an insured peril’ under its Contingent Business Interruption policies.

Fin24 reports that Santam, in its heads of argument, said that Covid-19 was not a notifiable disease according to the policy. The applicant’s lawyers argued that the interpretation and definition Santam used for notifiable disease was ‘restrictive and pragmatic’. Advocate Mike van der Nest SC, speaking for the applicants, said infectious diseases were not new and the fact that they had the potential to cause a pandemic are not new – and the details of the contract between Santam and the applicant companies shows the company ‘took a bad bet’.

Speaking for Santam, Advocate Dennis Fine SC said the main issue was whether the insured peril, being the local occurrence, caused the business interruption and losses that the applicants claimed. ‘This requires a consideration of the proximate cause of the loss, involving the application of the tests for factual and legal causation to the relevant facts of this case,’ Fine said.

A strong case was put forward by the applicants for consideration of the fact that, where is ambiguity in the policy wording, the benefit of such doubt should go the insured. It cites both the Café Chameleon case and the FSCA’s views which found that the national lockdown could not be used as an excuse to reject claims. As this Court found (in the Café Chameleon case), “it is difficult not to accept that there is indeed a clear nexus between the Covid-19 outbreak and the regulatory regime that caused the interruption of the applicant’s business.”

Click here to read the full text of the Ma-Afrika answering affidavit.

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