Grassy Knoll Trading 78 CC t/a Fat Cactus and Another v Guardrisk Insurance Company Limited (10035/2020) [2020] ZAWCHC 168; [2021] 1 All SA 503 (WCC) (20 November 2020)

Grassy Knoll Trading 78 CC t/a Fat Cactus and Another v Guardrisk Insurance Company Limited (10035/2020) [2020] ZAWCHC 168; [2021] 1 All SA 503 (WCC) (20 November 2020)

The court held that the disease clause in the applicants' insurance policy provides cover for business interruption losses caused by the COVID-19 pandemic and the South African government's response to it, provided there was an occurrence of COVID-19 within 50 kilometres of the insured premises. The court found that the government’s response is inextricably linked to the occurrence of the notifiable disease and forms part of the insured peril. The interpretation adopted by the full bench in Ma-Afrika Hotels v Santam Limited and Café Chameleon v Guardrisk Insurance Company Ltd was binding and applicable, supporting a broad construction of the disease clause. The court rejected Guardrisk’s...

Citation
[2020] ZAWCHC 168
Parties
Applicant: Grassy Knoll Trading 78 CC t/a Fat Cactus; Applicant: Fat Cactus Woodstock (Proprietary) Limited; Respondent: Guardrisk Insurance Company Limited
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
20 November 2020
Case Number
10035/2020
Procedural Posture
Civil Application / First Instance Judgment
Outcome
Application granted in part; declaratory relief granted confirming Guardrisk's liability to indemnify applicants for business interruption losses caused by COVID-19 and government measures. Further relief regarding claim processing and payment declined.
Judges
Norton
Legal Topics
Insurance Policy Interpretation, Business Interruption, Causation, Covid 19 Regulations
Commercial and Corporate Civil Procedure Insurance Policy Interpretation Business Interruption Causation Covid 19 Regulations

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Parties

Grassy Knoll Trading 78 CC t/a Fat Cactus

Applicant

Fat Cactus Woodstock (Proprietary) Limited

Applicant

Guardrisk Insurance Company Limited

Respondent

Procedural Posture

Civil Application / First Instance Judgment

Legal Issues

  1. 1 Does the disease clause in the applicants' insurance policy cover business interruption losses caused by the COVID-19 pandemic and the government's response, provided there was an occurrence of COVID-19 within 50 kilometres of the premises?
  2. 2 What is the required causal relationship between the occurrence of COVID-19 within the specified radius and the business interruption?
  3. 3 Does the government’s response to the pandemic form part of the insured peril under the policy wording?

Ratio Decidendi

The court held that the disease clause in the applicants' insurance policy provides cover for business interruption losses caused by the COVID-19 pandemic and the South African government's response to it, provided there was an occurrence of COVID-19 within 50 kilometres of the insured premises. The court found that the government’s response is inextricably linked to the occurrence of the notifiable disease and forms part of the insured peril. The interpretation adopted by the full bench in Ma-Afrika Hotels v Santam Limited and Café Chameleon v Guardrisk Insurance Company Ltd was binding and applicable, supporting a broad construction of the disease clause. The court rejected Guardrisk’s...

Court Disposition

Application granted in part; declaratory relief granted confirming Guardrisk's liability to indemnify applicants for business interruption losses caused by COVID-19 and government measures. Further relief regarding claim processing and payment declined.

Orders

  • The respondent is liable to indemnify the first applicant in terms of the Business Interruption section of policy number HIC 0000-10025 for any loss suffered as a result of interruption to or interference with its business caused by the COVID-19 pandemic and measures introduced by the South African government in...
  • The respondent is liable to indemnify the second applicant in terms of the Business Interruption section of policy number HIC 0000-43468 for any loss suffered as a result of interruption to or interference with its business caused by the COVID-19 pandemic and measures introduced by the South African government in...