Guardrisk Insurance Company Limited v Cafe Chameleon CC (632/20) [2020] ZASCA 173; [2021] 1 All SA 707 (SCA); 2021 (2) SA 323 (SCA) (17 December 2020)

Guardrisk Insurance Company Limited v Cafe Chameleon CC (632/20) [2020] ZASCA 173; [2021] 1 All SA 707 (SCA); 2021 (2) SA 323 (SCA) (17 December 2020)

The Supreme Court of Appeal held that the infectious diseases clause in the insurance policy covers business interruption losses resulting from the government-imposed Covid-19 lockdown, provided that the notifiable disease occurred within 50 km of the insured premises. The court found that the government response, whether local or national, is integral to the insured peril and that the policy does not confine cover to only localised responses. The occurrence of Covid-19 in Cape Town was a proximate cause of the business interruption, and the lockdown was a direct response to this outbreak. Technical arguments regarding notification, the trends clause, and policy timing were rejected. The...

Citation
[2020] ZASCA 173
Parties
Appellant: Guardrisk Insurance Company Limited; Respondent: Cafe Chameleon CC
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
17 December 2020
Case Number
632/20
Procedural Posture
Civil Appeal / Appeal From Western Cape Division of the High Court, Cape Town
Outcome
Appeal dismissed, with paragraphs 2 and 3 of the order of the court a quo set aside; insurer liable to indemnify insured for business interruption losses arising from the Covid-19 lockdown.
Judges
Cachalia, Saldulker, Mbha, Ledwaba, Eksteen
Legal Topics
Business Interruption Insurance, Causation, Contractual Interpretation, Notifiable Disease, Government Lockdown, Policy Wording
Commercial and Corporate Civil Procedure Business Interruption Insurance Causation Contractual Interpretation Notifiable Disease Government Lockdown Policy Wording

Case Brief

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Parties

Guardrisk Insurance Company Limited

Appellant

Cafe Chameleon CC

Respondent

Procedural Posture

Civil Appeal / Appeal From Western Cape Division of the High Court, Cape Town

Legal Issues

  1. 1 Whether the insurance policy covers business interruption losses caused by the government-imposed Covid-19 lockdown.
  2. 2 Whether the occurrence of Covid-19 within 50 km of the insured premises triggers indemnity under the infectious diseases clause.
  3. 3 Whether the national lockdown is causally linked to the local occurrence of the notifiable disease for purposes of insurance cover.

Ratio Decidendi

The Supreme Court of Appeal held that the infectious diseases clause in the insurance policy covers business interruption losses resulting from the government-imposed Covid-19 lockdown, provided that the notifiable disease occurred within 50 km of the insured premises. The court found that the government response, whether local or national, is integral to the insured peril and that the policy does not confine cover to only localised responses. The occurrence of Covid-19 in Cape Town was a proximate cause of the business interruption, and the lockdown was a direct response to this outbreak. Technical arguments regarding notification, the trends clause, and policy timing were rejected. The...

Court Disposition

Appeal dismissed, with paragraphs 2 and 3 of the order of the court a quo set aside; insurer liable to indemnify insured for business interruption losses arising from the Covid-19 lockdown.

Orders

  • Paragraphs 2 and 3 of the order of the court a quo are set aside.
  • Save as aforesaid, the appeal is dismissed with costs, including the costs of three counsel.