Massive Covid-19 blow for insurers: Guardrisk loses Supreme Court appeal

Guardrisk Insurance – a subsidiary of JSE-listed financial services giant Momentum Metropolitan – has lost its appeal against a Western Cape High Court judgment on the Covid-19 business interruption insurance case involving Café Chameleon.

The Supreme Court of Appeal (SCA) on Thursday morning, dismissed Guardrisk’s appeal case with costs, in the latest victory for the Cape Town restaurant.

The ruling by SCA Judge Azhar Cachalia was handed down electronically and circulated to the relevant parties.

It represents a new legal precedent in the ongoing Covid-19 business interruption insurance battles in South Africa, with many seeing the Café Chameleon case as a “test case” to reach finality on the matter.

Other cases are before the courts, including against Santam and Old Mutual, which have either been appealed or where lawyers from the insurers were awaiting the Café Chameleon vs Guardrisk appeal ruling before deciding on how to proceed.

Read:

Cape café’s ‘precedent setting’ business interruption insurance victory

Santam fails to get Guardrisk’s Café Chameleon appeal postponed

Old Mutual Insure the latest loser in Covid-19 claims battle

The SCA’s Guardrisk ruling on Thursday could open the way for billions of rand more in pandemic-related claims against the country’s short-term insurers, which have either paid out interim relief on certain Covid-19 business interruption insurance claims or opted not to pay-out until there is legal certainty on the issue.

It is unclear whether Guardrisk or other short-term insurers that may lose such appeals, will take the matter all the way to the Constitutional Court.

However, Café Chameleon’s owner Nico Schoeman has pleaded for the case to be finalised at the SCA, telling Moneyweb previously that the highest court for commercial matters in South Africa is the SCA.

Read: Café Chameleon wants business interruption insurance case concluded at SCA

“The central question in this appeal was whether the government’s imposition of a lockdown in response to multiple outbreaks of a ‘notifiable disease’ i.e. Covid-19, throughout the country, and predominantly in Cape Town, where Café Chameleon’s operates its business, was covered by the infectious diseases clause,” Judge Cachalia noted in his concluding remarks on the Guardrisk ruling.

“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,” he added.

Judge Cachalia pointed out that in coming to this conclusion, his decision was “fortified by much of the reasoning” in the Financial Conduct Authority test case in the United Kingdom around similar claims, in addition to the two recent judgments of the Western Cape High Court involving Ma-Afrika Hotels vs Santam; and Interfax vs Old Mutual.

Ren Dunster, attorney for Café Chameleon, said on Thursday in reaction to the SCA ruling that he and his client (Schoeman) were thrilled with the judgment.

“We applaud the urgency and clarity with which the judges dealt with the matter. We are privileged to have such a strong judiciary in South Africa,” he said.