Pay up, Supreme Court of Appeal tells Guardrisk

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The Café Chameleon case is the only one that has been heard by the SCA and one which most insurers have said will give them the legal clarity they need to proceed with their own case. Photo: Getty Images
The Café Chameleon case is the only one that has been heard by the SCA and one which most insurers have said will give them the legal clarity they need to proceed with their own case. Photo: Getty Images
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  • The Supreme Court of Appeal has published its judgment in the business interruption case between Guardrisk and its client Café Chameleon.
  • This was one of the three cases in which the Western Cape High Court ruled in favour of clients, ordering insurers to pay for business interruption losses caused by the lockdown.
  • It is the only case that has been heard by the SCA and one which most insurers have said will give them the legal clarity they need to proceed with their own cases.


The Supreme Court of Appeal (SCA) has dismissed Guardrisk's case and ordered the insurer, which is owned by Momentum Metropolitan, to pay lockdown claims.

The SCA said the lockdown which the government instituted in response to multiple outbreaks of a notifiable disease, something was covered by many insurers' infectious diseases clause.

The Court said the question of whether the lockdown is a covered claim event because the outbreak of Covid-19 in Cape Town was the cause of Café Chameleon’s business interruption. The Western Cape High Court also made the same ruling in July, but Guardrisk decided to appeal it at the SCA, hoping for 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 Café Chameleon’s premises – both essential requirements of the insured peril.

The SCA said because by law notifiable diseases have to be reported to government authorities, they may necessitate specific governmental action nationally, provincially and locally, and the lockdown response to Covid-19 exemplified this.

Judge Azhar Cachalia wrote in the judgment that because at the contracting parties should have foreseen this risk of a government response.

"I, therefore, accept Café Chameleon’s core submission that a notifiable disease almost always carries the risk of a government response, making it part and parcel of the insured peril," wrote Judge Cachalia.

The SCA dismissed Guardrisk's appeal with costs.

Guardrisk had, on the other hand, argued - among other things - that its 'notifiable disease' extension did not cover losses caused by closure of the premises as a result of a government order and that it required such disease to be localised and not be countrywide or global.

It 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 interruption of its client's business.

'Time to stop dilly-dallying'

Insurance Claims Africa, a specialist public loss adjustment firm that has spearheaded the legal fight for many of the businesses with rejected lockdown claims, said there was no need for Santam to appeal Ma-Afrika, as the Guardrisk SCA decision set a precedent for all insurers.

Santam had applied in November to appeal its own business interruption case at the SCA, but ICA believes that the legal certainty the insurer was looking for has been established now, especially since the Guardrisk case was head by five SCA judges.

"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. For ten months, companies in the insurance sector have erected one obstacle after another in their determination not to meet their obligations to their customers," said ICA CEO Ryan Woolley.

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