Summary of Judgment

1. Introduction

This judgment concerns an application for leave to appeal brought by AIG South Africa Ltd (AIG) against the whole of an earlier judgment and orders granted by the Gauteng Local Division, Johannesburg on 20 February 2023. The judgment is delivered by Mia J on 14 June 2023.

The parties in the leave application mirror the alignment in the main dispute. AIG is the applicant for leave to appeal and was the respondent in the main application. The respondents in the leave application are 43 Air School Holdings (Pty) Ltd, 43 Air School (Pty) Ltd, PTC Aviation (Pty) Ltd, and Jet Orientation Centre (Pty) Ltd (collectively, the insured parties who had sought relief in the main proceedings).

The procedural history, as set out by the court, is that application proceedings had been launched by 43 Air School, PTC, and JOC against AIG, seeking declaratory relief that AIG was obliged to indemnify them under an insurance policy for business interruption losses said to have followed from the announcement of the Covid-19 pandemic and the Government’s declaration of a national lockdown in response. After judgment was handed down on 20 February 2023, AIG sought leave to appeal that decision.

The general subject matter of the dispute, as reflected in this leave judgment, concerns the interpretation and application of insurance policy terms in the context of Covid-19-related business interruption and, in particular, the significance of whether the policy operates as a “joint policy” or a “composite policy”, and the correctness of reliance on the concept of interrelatedness in determining coverage and entitlement to indemnity.

2. Material Facts

The court relied primarily on procedural and contextual facts relevant to the statutory test for leave to appeal, rather than revisiting the evidentiary merits of the underlying insurance claim.

It was common cause that AIG sought leave to appeal against the whole of the judgment and orders of 20 February 2023, and that it requested that the costs of the leave application be costs in the appeal. It was also recorded that the underlying litigation involved an insurance claim for alleged business interruption losses arising after the Covid-19 pandemic announcement and the Government’s national lockdown response.

A further material fact was the manner in which the leave application was argued. AIG raised several grounds of appeal, and its counsel referred to two new foreign decisions (not identified in the judgment) which were not available at the time the matter was argued previously. AIG’s counsel also submitted that there remained a number of commercial and insurance-related matters requiring guidance and precedent, and that a referral to the Supreme Court of Appeal would be helpful.

The court recorded that the respondents’ heads of argument were silent on one of the issues emphasised by AIG, namely the question of joint and composite insurance and the limited guidance on the topic. However, during oral argument, and following the submissions made for AIG, counsel for the respondents elected not to make submissions on the merits and agreed that the matter be referred to the Supreme Court of Appeal. The court treated this as a consensus that the issues raised warranted appellate consideration.

3. Legal Issues

The central legal questions before the court were those prescribed by the statutory framework governing leave to appeal. The court had to determine whether leave to appeal should be granted on the basis that there was a reasonable prospect of success on appeal, and/or whether there existed some other compelling reason for the appeal to be heard, given the novelty and wider significance of the issues raised.

In character, the dispute before the court at this stage primarily concerned questions of law and evaluative judgment. It required application of the statutory tests in section 17 of the Superior Courts Act 10 of 2013 to the posture of the case, including an evaluative assessment of whether another court could come to a different conclusion and whether the issues were sufficiently important and novel to justify appellate scrutiny.

A further legal issue, linked to the forum for the appeal, was whether the matter should be directed to a Full Court of the Division or whether it warranted being heard by the Supreme Court of Appeal, as contemplated in section 17(6)(a). This required an assessment whether the appeal involved a question of law of importance or whether the administration of justice required consideration by the Supreme Court of Appeal.

4. Court’s Reasoning

The court approached the application through the statutory lens provided by the Superior Courts Act 10 of 2013. It referred expressly to section 17(1)(a), which permits leave to appeal where the judge is of the opinion that the appeal would have a reasonable prospect of success before another court. The court indicated that it had considered the heads of argument filed and had heard counsel.

On that basis, the court concluded that there was a reasonable prospect that another court might come to a different conclusion on the issues raised by AIG. The judgment identifies as a key factor the contention that reliance on the policy being a “joint policy” or a “composite policy”, and reliance on interrelatedness, may have been misplaced. The court described this issue as essential to the parties and potentially capable of guiding other parties, thereby indicating its broader practical importance beyond the immediate dispute.

In addition to reasonable prospects, the court addressed the alternative statutory basis for leave under section 17(1)(b), namely the presence of some other compelling reason why the appeal should be heard. The court accepted the submission that, irrespective of the merits, leave ought to be granted because the issues raised were novel, of broad and general interest, and potentially of application to the whole of the South African insurance industry. The court noted that there was consensus on this aspect.

Turning to the question of the appropriate appellate forum, the court referred to section 17(6)(a) and its requirement that, when leave is granted, the judge must direct that the appeal be heard by a Full Court unless the judge considers that the decision involves a question of law of importance (including because of its general application) or that the administration of justice requires consideration by the Supreme Court of Appeal. The court was satisfied that the matter involved a question relating to the interpretation of insurance contracts which has featured more prominently in recent times and may continue to do so. This formed the basis for directing that the appeal be heard by the Supreme Court of Appeal.

5. Outcome and Relief

The court granted AIG leave to appeal against the whole of the judgment and orders dated 20 February 2023.

The court directed that the appeal be heard by the Supreme Court of Appeal.

The court ordered that the costs of the application for leave to appeal would be costs in the appeal.

Cases Cited

Guardrisk Insurance Co v Café Chameleon 2021 (2) SA 323 (SCA).

Legislation Cited

Superior Courts Act 10 of 2013 (section 17(1)(a); section 17(1)(b); section 17(6)(a)).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the statutory requirements for leave to appeal were satisfied because there was a reasonable prospect that another court could reach a different conclusion on the issues raised, and because there was a compelling reason for the appeal to be heard given the novelty and broad importance of the issues to the insurance industry. The court further held that the matter raised a question of law of sufficient importance concerning the interpretation of insurance contracts to warrant a direct appeal to the Supreme Court of Appeal. Leave to appeal was accordingly granted, with costs to be costs in the appeal.

LEGAL PRINCIPLES

The judgment applied the principle that leave to appeal may be granted under section 17(1)(a) of the Superior Courts Act 10 of 2013 where the court is of the opinion that the appeal would have a reasonable prospect of success before another court, which entails an evaluative assessment of the likelihood that a different conclusion may be reached on appeal.

The judgment further applied the principle that leave to appeal may also be granted under section 17(1)(b) where there exists some other compelling reason for the appeal to be heard, including where the issues are novel, of general public or industry-wide importance, or where appellate guidance is needed.

Finally, the judgment applied section 17(6)(a), under which a court granting leave to appeal from a single-judge decision must ordinarily direct the appeal to a Full Court unless the matter involves a question of law of importance or the administration of justice requires that the Supreme Court of Appeal consider the decision. In this matter, the importance and recurring nature of disputes concerning the interpretation of insurance contracts, including questions related to joint and composite insurance, justified referral to the Supreme Court of Appeal.