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[2021] ZASCA 141
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Santam Limited v Ma-Afrika Hotels (Pty) Ltd & Another (255/2021) [2021] ZASCA 141; [2022] 1 All SA 376 (SCA) (7 October 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 255/2021
In the matter
between:
SANTAM
LIMITED, a division of which is
HOSPITALITY
AND LEISURE INSURANCE
APPELLANT
and
MA-AFRIKA
HOTELS (PTY) LTD
FIRST RESPONDENT
THE
STELLENBOSCH KITCHEN (PTY) LTD
SECOND
RESPONDENT
Neutral
citation:
Santam
Limited v Ma-Afrika Hotels (Pty) Ltd & Another
(255/2021)
[2021] ZASCA 141
(7 October 2021)
Coram:
NAVSA
ADP and MBHA, MAKGOKA, GORVEN and MABINDLA-BOQWANA JJA
Heard:
27
August 2021
Delivered:
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, publication on the Supreme
Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 10h00 on 7 October 2021.
Summary:
Interpretation of insurance contract –
whether agreed indemnity period is 18 months or three months for
infectious diseases
cover – principles restated.
ORDER
On
appeal from
:
Western Cape Division of the High
Court, Cape Town (Goliath DJP and Cloete and Mantame JJ sitting as
court of first instance): judgment
reported
sub
nom
Ma-Afrika Hotels (Pty) Ltd and
Another v Santam Limited
[2021] 1 All SA 195
(WCC).
The
appeal is dismissed with costs including costs occasioned by the
employment of three counsel.
JUDGMENT
Navsa ADP
and Mabindla-Boqwana JA (Mbha, Makgoka and Gorven JJA concurring)
[1]
This appeal concerns the applicable indemnity period in relation to
business interruption
losses under insurance policies. It involves
claims by two companies based on the outbreak of the Covid-19
pandemic. In terms of
the policies, infectious disease indemnity
cover was provided by the appellant, Santam Limited (Santam), to the
two respondents,
Ma-Afrika Hotels (Pty) Ltd (Ma-Afrika) and The
Stellenbosch Kitchen (Pty) Ltd (the Kitchen), to cover losses by
business entities
through which they conducted businesses. During
June 2020, Ma-Afrika and the Kitchen approached the Western Cape
Division of the
High Court, Cape Town (the high court) on an urgent
basis seeking a declaratory order against Santam,
inter alia
,
in the following terms:
‘
2.
Declaring that [Santam] is
liable to indemnify [Ma-Afrika] in terms of the Business Interruption
section of a policy of insurance number HLU0000-01259 issued in
respect of the [Ma-Afrika’s] Best Western Cape Suites Hotel
and
the Village Cafe, for such loss that [Ma-Afrika] is able to prove to
have suffered as a result of loss of revenue occasioned
by the
occurrence of a notifiable disease in the form of Covid-19 occurring
within a radius of 40 kilometres of the insured premises
on or about
11 March 2020;
3.
Declaring that [Santam] is liable to indemnify [Ma-Afrika] in terms
of the Business
Interruption section of a policy of insurance number
HLU0000-01301 issued in respect of [Ma-Afrika’s] Coopmanshuijs
Boutique
Hotel & Spa, for such loss that [Ma-Afrika] is able to
prove to have suffered as a result of loss of revenue occasioned by
the occurrence of a notifiable disease in the form of Covid-19
occurring within a radius of 40 kilometres of the insured premises
on
or about 16 March 2020;
4.
Declaring that [Santam] is liable to indemnify [Ma-Afrika] in terms
of the Business
Interruption section of a policy of insurance number
HLU0000-01291 issued in respect of [Ma-Afrika’s] Rivierbos
Guest House,
for such loss that [Ma-Afrika] is able to prove to have
suffered as a result of loss of revenue occasioned by the occurrence
of
a notifiable disease in the form of Covid-19 occurring within a
radius of 40 kilometres of the insured premises on or about 16 March
2020;
5.
Declaring that [Santam] is liable to indemnify [the Kitchen] in terms
of the
Business Interruption section of a policy of insurance number
HLU0000-07179 issued in respect of [the Kitchen’s] The
Stellenbosch
Kitchen, for such loss that [the Kitchen] is able to
prove to have suffered as a result of loss of revenue occasioned by
the occurrence
of a notifiable disease in the form of Covid-19
occurring within a radius of 40 kilometres of the insured premises on
or about
16 March 2020;
6.
Declaring that the indemnity period for the loss described in
paragraphs 2 to
5 above is 18 months;
7.
Declaring that [Santam] is liable to indemnify [Ma-Afrika] in terms
of the Business
Interruption section of a policy of insurance number
HLU0000-01303 issued in respect of the [Ma-Afrika’s] The
Stellenbosch
Hotel for the full duration of the indemnity period of
18 months and not to limit the indemnity period from 15 to 27 March
2020,
for such loss that [Ma-Afrika] is able to prove to have
suffered as a result of loss of revenue occasioned by the occurrence
of
a notifiable disease in the form of Covid-19 occurring within a
radius of 40 kilometres of the insured premises on or about 16 March
2020.
’
[2]
The high court granted the relief sought and ordered Santam to pay
Ma-Afrika and the
Kitchen’s costs, including the costs of three
counsel, on the scale as between party and party, as taxed or agreed,
as well
as the reserved costs. Initially, Santam sought leave to
appeal in the high court against the whole judgment and order, but
after
this Court’s judgment in
Guardrisk
Insurance Company v Café
Chameleon
(Guardrisk)
[1]
was handed down in December 2020, Santam confined its application for
leave to appeal to those parts of the judgment and orders
that relate
to the indemnity period.
[3]
In
Guardrisk
, in respect of a similar policy, this Court held
that the insured was indemnified in relation to the outbreak of
Covid-19. Thus,
the issue before us is whether, as contended by
Santam, the indemnity cover is for three months or, as contended on
behalf of Ma-Afrika
and the Kitchen, the indemnity cover extends to
18 months, as ordered by the high court in paras 6 and 7 of the
notice of motion.
[4]
The appeal is before us with the leave of the high court. The
background is set out
hereafter. The question before us is limited to
a consideration of the period during which, according to the policy,
the indemnity
operates. However, for context, and a better
appreciation of how the present dispute arose, we deal briefly with
the dispute concerning
the question of whether Ma-Afrika and the
Kitchen were indemnified in relation to the events in question and
the high court’s
conclusions in that regard.
[5]
Ma-Afrika operates hotels and businesses in the Western Cape, namely,
Best Western
Cape Suites Hotel, the Village Café, Best Western
Cape International Inc, Best Western Cape International Licensing
Inc,
situated in Zonnebloem, Coopmanshuijs Boutique Hotel and Spa in
Stellenbosch, Rivierbos Guest House in Stellenbosch, and the
Stellenbosch
Hotel in Stellenbosch. The Kitchen is a restaurant that
operates on the premises of the Stellenbosch Hotel.
[6]
At the time of the outbreak of the Covid-19 pandemic in South Africa,
during March
2020, Ma-Afrika held four insurance policies with
business interruption cover provided by Santam and the Kitchen held
one. In terms
of the policies, Ma-Afrika and the Kitchen were
indemnified for loss of revenue. The four policies held by Ma-Afrika
relate to
the business entities referred to above. The combined total
of business interruption cover for loss of revenue under the four
policies
was R105 482 456. The Kitchen was covered for loss
of revenue in the amount of R16 947 368. The insurable
event
in terms of the policy was the outbreak of a ‘notifiable
disease’ at or within a 40 km radius of each of the aforesaid
establishments.
[7]
On or about 11 March 2020, in the view of Ma-Afrika and the Kitchen,
an insurable
event catered for by the policies they held with Santam
occurred, a notifiable disease in the form of Covid-19, within a 40
km
radius of each of them. Consequently, on 1 April 2020, they lodged
a claim. An exchange of correspondence followed between the parties,
with Ma-Afrika and the Kitchen, through their attorneys, finally
sending Santam a letter of demand, insisting that they were entitled
to be indemnified in relation to a full period of 18 months, which
they contended was the period catered for by the policy.
[8]
This elicited a response from Santam, notifying Ma-Afrika and the
Kitchen that four
of the five claims for business interruption losses
had been rejected, with only the claim in respect of the Stellenbosch
Hotel
being accepted, and only for the period 15
to 27 March 2020, due to the outbreak at that establishment, causing
revenue losses only for that period. The remaining four claims
were
rejected outright by Santam on the basis that none of the losses
claimed were caused by the notifiable disease occurring within
a 40
km radius of the premises. Santam contended further that the losses
suffered were because of a government lockdown and general
concern or
fear instead of a local outbreak of the notifiable disease.
[9]
This prompted Ma-Afrika and the Kitchen to approach the high court
for the relief
set out at para 1 of this judgment. As can be seen,
Ma-Afrika and the Kitchen sought a declaration that the indemnity
period for
the loss of revenue claim was 18 months.
[10] It is by now
well-known that the Covid-19 pandemic has claimed the lives of
millions of people
worldwide. Governments throughout the world have
taken measures to curb its effects. Our government, on 15 March 2020,
responded
by declaring a National State of Disaster in terms of s
27(1) of the Disaster Management Act 57 of 2002, with the responsible
Minister,
on 18 March 2020, promulgating regulations in terms of the
Act. The National State of Disaster has since been extended from time
to time, and the regulations promulgated in terms thereof have also
undergone modifications to deal with prevailing conditions.
In the
main, the regulations contain measures designed to contain the spread
of Covid-19 by curtailing movement and social interaction.
[11]
In their founding affidavit Ma-Afrika and the Kitchen provided the
factual basis for their claims
as follows:
‘
43.
The insured peril or insurable event covered by the policy has taken
place. Insofar as [Ma-Afrika’s]
claim in respect of the Best
Western Cape Suites Hotel is concerned (which is in Zonnebloem, a
suburb of Cape Town), the insurable
event occurred on 11 March 2020
when it was widely reported in the media that a patient living in
Cape Town, who had returned from
Europe two days before, had been
diagnosed with COVID-19. This was the first person in the Western
Cape to contract the virus.
A copy of the report that appeared on the
website
businesslive.co.za
on 11 March 2020 is annexed hereto as
"FA15"
.
44.
Regarding the four other claims where the business premises are all
in Stellenbosch, the
insurable event occurred when it was confirmed
on 16 March 2020 that the first positive case of COVID-19 was
diagnosed at Tygerberg
Hospital. The applicants’ attorneys of
record received confirmation of this fact in an email sent on 3 June
2020 by Ms Laticia
Pienaar, the Principal Communications Officer at
Tygerberg Hospital, a copy of which is annexed hereto as
"FA16"
.
45.
Tygerberg Hospital is within the 40 kilometre radius of the business
premises in Stellenbosch
.’
[12]
In relation to the contention by Santam that the losses were caused
by the lockdown regulations
and not on account of the occurrence of
the event insured against, Ma-Afrika and the Kitchen stated the
following:
‘
53.
The national lockdown is a direct consequence of the insurable event.
The lockdown was a response
to the occurrence of the Notifiable
Disease.
54.
Without the occurrence of the Notifiable Disease, there would have
been no lockdown. The
occurrence of the Notifiable Disease was the
single dominant and determining causative fact from which the
applicants’ loss
flowed. Put another way, the occurrence of the
Notifiable Disease was never too remote either in time or operation
to be excluded
as the proximate cause of the loss. Its efficacy and
operation were never interrupted or displaced by another cause such
as lockdown.
The Notifiable Disease was indispensable.
55.
It is the applicants’ case that the language of the policy and
its purpose is entirely
consistent with the above approach. If the
respondent wished to exclude certain instances of the range of
governmental reactions
to the occurrence of the Notifiable Disease,
it could have done so. It did not and it cannot read them in now.
’
[13]
Santam opposed the application for declaratory relief sought by
Ma-Afrika and the Kitchen. The
following are the material parts of
Santam’s affidavit filed in opposition to the relief sought:
‘
11
[Santam’s] case, in summary is that:
11.1 the
applicants have failed to establish that the insured events that they
rely on – namely
the reported cases of COVID-19 in Cape
Town and at Tygerberg Hospital on 11 and 16 March 2020 – were
the proximate cause
(or dominant or effective cause) of the
interruption to their business and loss of revenue. They have failed
to establish either
factual or legal causation;
11.2 the
proximate cause of the interruption to the applicants’
business, and any loss of revenue
that may have been suffered, was
not the local cases of COVID-19 but the national lockdown imposed in
the light of the global pandemic.
The global spread of the COVID-19
pandemic led to the South African government taking steps to deal
with it, including declaring
a national state of disaster and
thereafter ordering what is referred to as a national lockdown from
23h59 on 26 March 2020;
11.3 the
applicants have not established that they have suffered any loss of
revenue, as contemplated by
the policy, in consequence of the insured
event. The policy also limits the loss of revenue to the amount by
which the revenue
in the indemnity period falls short of the standard
revenue, as adjusted in terms of what is referred to as a trends
clause in
the policy. The steps taken by the South African government
and the national lockdown in particular, meant that the applicants
were prohibited by law from conducting their business. This had the
consequence, applying the relevant provisions of the policy,
that the
applicants are not entitled to an indemnity under the policy for a
loss of revenue.’
[14]
In respect of the claim for loss of revenue, Santam stated the
following:
‘
The
applicants do not seek the payment of any monetary amount at this
stage. The loss of revenue is something they will still have
to
establish. The court is therefore being asked in these proceedings to
determine whether the insured event was the proximate
cause of an as
yet unquantified loss. The question of causation also arises in
relation to the quantification of any loss the applicants
may seek to
prove in the future. The relief sought by the applicants can only be
granted if the Court finds, in respect of the
declaratory relief
sought, that the facts relied upon by the applicants were the
proximate cause of their loss.’
[15]
Additionally, Santam went on to state that Ma-Afrika and the Kitchen
had not proved that the
local events relied on by them, the two
infections in Cape Town and at Tygerberg Hospital, caused the
interruption of their business
and loss of revenue. They reiterated
that:
‘
The
cause of any loss is the global and national events caused by the
rapid worldwide spread of COVID-19 and what followed from
that.’
[16]
Santam was also adamant that Ma-Afrika and the Kitchen deliberately
chose not to take extended
insurance cover, as provided for by the
policy, in relation to cancellation of bookings, which formed a
substantial part of their
claims for loss of revenue and that their
claims were thus unwarranted.
[17]
Furthermore, and importantly for present purposes, Santam relied on
an indemnity period clause
in the policy. According to Santam, the
policy defines an indemnity period as commencing with the damage as
contemplated, which
results in the loss and ends ‘not later
than the number of months thereafter stated in the Schedule during
which the result
of the business shall be affected in consequence of
the Damage’. It follows, so Santam contended, that the
proximate cause
of the damage determines whether there is an
indemnity
and
its duration. Santam submitted further, that the
maximum period of the indemnity in terms of a ‘memorandum’
to the
business interruption section of the policy records that
‘extensions’ to the policy are limited to three months.
This
applied, so Santam said, because infectious disease cover is an
‘extension’ to the business interruption cover and
therefore subject to the ‘memorandum’. If Santam were to
be held liable for business interruption losses, it insisted
that the
policy limited liability to a maximum of three months.
[18]
The dispute was adjudicated in the high court by a panel of three
judges (Goliath DJP and Cloete
and Mantame JJ). They were unanimous
on the result reflected in the order, set out at the commencement of
this judgment, but Cloete
J provided separate reasons for reaching
that conclusion.
[19]
The first judgment (Goliath DJP with Mantame J concurring),
recognised that the central issue
that the court was called upon to
decide was the interpretation and wording of the material parts of
the policy dealing with infectious
diseases. It reasoned that the
purpose of the policy was to provide protection in the event of an
insured’s business being
interrupted due to the outbreak of an
infectious disease. It accepted that the introduction of the Disaster
Management Regulations
was an official government response to the
countrywide threat posed by Covid-19, which in terms of the
regulations under the
National Health Act 61 of 2003
, was a
notifiable disease. Goliath DJP concluded as follows:
‘
It
therefore, appears to be a logical conclusion that the only textual –
and purposeful – interpretation of the clause
is that the
insured peril covers Covid-19 and the government’s response to
Covid-19.’
[20]
Goliath DJP rejected Santam’s contention that Ma-Afrika and the
Kitchen had failed to prove
factual causation. She considered whether
the peril insured against was the proximate cause of the loss
suffered by them. Santam
had argued that even if one had imagined
away the local occurrence, namely, the outbreak of Covid-19, within a
40 km radius of
any of the establishments, the national lockdown
would still have occurred, and their businesses would have been
affected. Thus,
so the argument went, the businesses were interrupted
by the governmental action rather than the local outbreak, which was
what
was insured against.
[21]
The first judgment had regard to the three categories of policy
wording. First, infectious diseases
clauses, where a notifiable
disease had occurred in the vicinity, or within a given radius of the
premises, comprising words similar
or identical to those in the
policies presently under scrutiny. Second, ‘hybrid’
clauses, which refer to restrictions
imposed on the relevant premises
and to the occurrence or manifestation of a notifiable disease.
Third, ‘denial of access’
clauses, where there has been a
prevention or hindrance to, or use of, the premises in consequence of
restrictions imposed by a
public authority.
[22]
The
ratio of
the first judgment in relation to the interpretation of the relevant
clauses, with reference to a foreign judgment,
The
Financial Conduct Authority v Arch Insurance (UK) Limited and Others
(Hospitality Insurance Group Action and Another Intervening)
(FCA),
[2]
is set out hereunder:
‘
[74]
We are in agreement with the conclusion in FCA that construing the
policy in a composite was undoubtedly the proper starting
point.
Insurance is intended to serve as a social safety net to cover
financially devastating losses and compensate injured parties.
This
is precisely the safety net required as a result of the unprecedented
Covid-19 pandemic. The policy does not state that the
infectious
disease must be limited to a local outbreak only, or that the local
authority response must be exclusively due to such
local outbreak
only, and no other, or that the policy does not respond where the
disease and the response is broad and national.
It therefore appears
that notwithstanding the fact that the nature of the policy and the
specific provisions in the extensions
are essentially local in
nature, it cannot be said that the nationwide or global events were
not contemplated or insured. We are
in agreement with the conclusion
reached in FCA at para 104 that:
“
They
must also have contemplated that the authorities might take action in
relation to the outbreak of a notifiable disease as a
whole, and not
to particular parts of an outbreak and would be most unlikely to take
action which had any regard to whether cases
fell within or outside a
line 25 miles away from any particular insured premises.”
[75]
We therefore conclude that the Covid-19 and government response to
Covid-19 are inseparably part of the same insured peril.
The breakout
of a notifiable disease, whether reported to a local or national
authority always comes with the risk of a government
response, and
make the government response part of the insured peril of notifiable
diseases. We are satisfied that both factual
and legal causation are
established in respect of the trigger event referred to in the
policy. We accordingly conclude that the
national response to the
Covid-19 disease that has a local occurrence is sufficient to satisfy
the policy. Had it not been for
Covid-19 and the government’s
response, the applicants’ business would not have been
interrupted and they would not
have suffered their loss. In our view
the applicants’ losses are exactly what they had insured
themselves against.’
[23]
The first judgment then turned to deal with the indemnity periods
provided for in the policy.
As shown above, Ma-Afrika and the Kitchen
had sought a declaration that the period of indemnity was 18 months.
In the business
interruption section of the policy, ‘indemnity
period’ is defined as ‘[t]he period beginning with the
commencement
of the Damage and ending not later than the number of
months thereafter stated in the Schedule during which the results of
the
business shall be affected in consequence of the Damage’.
In the first part of the Schedule for business interruption cover,
the ‘indemnity period’ is listed as ‘18 MONTHS’.
The first judgment considered this to be a deliberate
emphasis.
[24]
Santam had submitted that the indemnity period, if operative, was
three months. It contended
that the 18 months referred to in the
preceding paragraph did not relate to the event in question. In the
words of the first judgment,
Santam ‘focused on a “Memorandum”
tucked away at the end of the Schedule . . .’ which is in fine
print
and reads as follows: ‘Extensions under the Section are
limited to an Indemnity Period of 3 Months’.
[25]
The
ratio
of the first judgment on this issue is set out as
follows:
‘
[87]
It is evident that the infectious disease clause is not one of the
twenty-six items listed under the “Extensions and
Clauses”
heading in the Schedule. Some of these items, like “Loss of
Tourist Attraction” and “Loss of Aesthetic
Attraction”
expressly record an indemnity period of three months. Others do not,
like the “Bush Fire” extension.
It appears that the
residual three month period may be applicable to these listed
extensions. It could be reasonably concluded
that the residual
indemnity period does not apply to the infectious disease clause
because it is not a listed extension. Instead,
it comes as a standard
feature of the business interruption section.
[88]
Santam contends for a narrow interpretation of the indemnity period.
Ultimately, as written, the policy is “capable of
both a
broader and narrower meaning it is that which is favourable to the
insured . . . which must be employed.” The broader
meaning is,
of course, the eighteen-month indemnity period.
[89]
In the face of the eighteen month stipulation, Santam’s
insistence on a three-month limit to the clause essentially amounts
to a limitation on a clearly expressed obligation to indemnify. It
must, accordingly, be restrictively interpreted. As the Supreme
Court
of Appeal recently held, “any provision that places a
limitation upon an obligation to indemnify is usually restrictively
interpreted, for it is the insurer’s duty to spell out clearly
the specific risks it wishes to exclude.”
[3]
[90]
It is clear that there is an obvious ambiguity between the two
indemnity periods. In the circumstances the
contra
proferentum
principle should be invoked. Consequently, the ambiguity must be
resolved against Santam. If Santam wanted to limit the indemnity
period for infectious diseases to three months in this contract that
it drafted, it could simply have added the clause to the long
list of
specific extensions. We therefore declare that the indemnity period
in respect of the infectious disease extension clause
is eighteen
(18) months.
’
[26]
In the second judgment, Cloete J considered that it was the case for
Ma-Afrika and the Kitchen
that the trigger event, in terms of the
policy, was the occurrence of a notifiable disease within the
localised radial limit and
it was an integral component of the
government’s national response, and that the response must
therefore constitute part
of the peril insured against. Against that,
she considered Santam’s contention that it was only the local
occurrence that
was the peril insured against, and not the government
response. She preferred the approach of Ma-Afrika and the Kitchen.
[27]
In respect of causation, Cloete J concluded as follows:
‘
I
thus conclude that in the present case the local occurrences of
Covid-19 within the 40 kilometre radial limit and the government’s
response to the presence of the disease in South Africa (including
those local occurrences, on my reasoning) are inseparably part
of the
same insured peril; that but for the presence of those local
occurrences (which of themselves were part of a broader health
risk)
the business interruption would not have occurred; and that the
insured peril was the proximate cause of the business interruption
and any consequent loss’
[28]
In relation to the indemnity period, the second judgment, in addition
to considering the provisions
in the Schedule dealt with in the first
judgment, had regard to item 3 thereof, where reference is made to an
indemnity period
in the context of limitation of cover for loss of
revenue and increase in cost of working in consequence of the
‘Damage’
suffered by an insured. The formula provided
ends as follows:
‘
.
. . provided that the amount payable shall be proportionately reduced
if the sum insured in respect of revenue is less than the
revenue
rentals where the maximum indemnity period is 12 months or less or
the appropriate multiple of the annual revenue rentals
where the
maximum indemnity period exceeds 12 months.
’
[29]
Considering item 3 of the Schedule, the second judgment went on to
state the following:
‘
(a)
Item 3 thus
implicitly contemplates that the maximum indemnity period may exceed
12 months. It also draws no distinction between
"main"
cover for loss of revenue and increase in cost of working due to
business interruption and the infectious diseases
clause extension,
whereas the listed extensions in the "Schedule" limit the
indemnity period, almost without exception,
to a maximum of 3 months.
(b)
A related feature is that the insured is not given the option to take
the extension of infectious diseases cover when regard
is had to the
plain wording of the "Schedule" read in light of the
business interruption section of the policy as a whole.
This cover
instead appears to be embedded in the policy itself or put
differently, in the main business interruption cover with
its
accompanying indemnity period of 18 months
.
’
[30]
That then is the background to, and the context within which, the
present appeal is to be decided.
The parties’ submissions
before the high court and before us, and the high court’s
considerations and conclusions will
become clearer later in this
judgment when we reproduce in precise form the relevant Schedules and
applicable parts of the policy.
[31]
We pause, briefly, to record the core findings of this Court in
Guardrisk
.
[4]
This Court held that a notifiable disease usually required a
government response, and this entailed that the response was part
of
the insured peril.
[5]
The Court went on to find that nothing in the language of the policy
supported the interpretation favoured by the insurer, namely,
that
the policy covered only a response to a local outbreak and not a
countrywide one.
[6]
The Court went on to hold that the insured risk was Covid-19 and
government’s response to it, and but for the event –
Covid-19 and the response – the business would not have been
interrupted, making the outbreak within the stipulated radius
the
factual cause of the business interruption.
[7]
[32]
In heads of argument in this Court, counsel on behalf of Ma-Afrika
and the Kitchen accused Santam
of duplicity in that Santam, in its
application for leave to appeal, had stated that the matter was one
of national significance
as it had industry- wide implications,
whilst, at the same time, adopting a contrary posture in a public
posting, where it
claimed that this applied only to the Ma-Afrika
policy and that each case depended on its own facts and the
particulars of each
policy. Furthermore, counsel criticised Santam,
essentially, as being obstructive and unjustifiably resisting the
claims. First,
by insisting that it would pay out claims only in the
event of an insured being able to prove loss in relation to a
particular
case or cases of Covid-19 within the prescribed
geographical radius. Second, it relied on government’s official
response
to Covid-19 to reject claims and was adamant that losses due
to lockdown were excluded under the policy. As stated earlier, after
this Court’s judgment in
Guardrisk,
Santam was
constrained to limit its appeal to the indemnity period, contending
for a shorter period of indemnification, which is
the issue to be
confronted in this appeal. The present appeal was described by
counsel for Ma-Afrika and the Kitchen as Santam’s
last stand.
We shall, in the paragraphs that follow, examine closely the relevant
parts of the policy, consider the parties’
submissions, and
determine whether this description is justified.
[33]
It must be stated at the outset, as we will demonstrate in the
paragraphs that follow, that this
is not an easy policy to navigate.
Counsel for Santam conceded as much. We reproduce immediately
hereunder, the first page of the
policy document of one of the five
policies in question, which are all identical.
[34]
As can be seen from the first page, this is specialised hospitality
and leisure insurance. Santam
is identified as the insurer and
Ma-Afrika as the insured.
[35]
The page of the policy document that follows immediately thereafter
is reproduced hereunder:
[36]
One sees from this page that the ‘Policy Sections in Force’
are those listed in the
first block. Related premiums are listed
alongside each. They are ‘Fire, Business Interruption, Theft,
Money, Accidental
Damage, Public Liability – Claims Made,
Motor, Claims Preparation Costs, Extended Public Liability (SHA), and
Extended Motor
Liability (SHA)’. This is followed by Schedules
that relate to each of these Policy Sections, including the ‘Business
Interruption’ Schedule. The endorsement that appears under the
totals for the premiums indicating that there is Covid-19
exclusion
was not part of the policy at the time of the insured event.
[37]
Crucially, for present purposes, in the Business Interruption
Schedule, the categories of loss
or indemnity that an insured can
choose insurance cover for, should a peril materialise, are listed
under eight items. We shall,
for convenience, refer to this Schedule
as the Main Schedule. The Main Schedule is set out hereunder in the
exact form as it appears
in the Policy. ‘Loss of Revenue’,
as will be seen, is catered for and has the sum insured stipulated
alongside it.
[38]
The reader’s attention is drawn to the words that appear at the
end of the first large
block of the Main Schedule: ‘Indemnity
Period: 18 MONTHS’. That should be contrasted with what appears
under the title
‘MEMORANDUM’, at the end of the Schedule,
where an ‘. . .Indemnity Period of 3 Months’ is set out.
The
bold heading to the second large block of the table, namely,
‘Extensions and Clauses’ is also of significance. It is
important to note that alongside every item, but two, in the second
large block, under the heading ‘Extensions and Clauses’
a
‘3 Month Indemnity Period’ is stipulated. The two
excluded items are ‘Public Utilities: Extended cover’
and
‘Removal of Fallen Trees’.
[39]
What follows at the end of all the Schedules related to the Policy
Sections in force, is what
Santam refers to as a ‘Premium
Summary’, which are effectively a repeat of what is contained
in each Schedule, except
that it includes columns in relation to each
Schedule providing for a ‘Rate’, a ‘Premium’
and ‘SASRIA’
.The premiums to be paid by an insured in
respect of Business Interruption Cover, in relation to the categories
of loss set out
within the second large block in the Main Schedule
under “Extensions and Losses’, are listed in that
‘Premium
Summary’.
[40]
After the Premium Summary, the policy wording in relation to each of
the Policy Sections in Force
appears. The Business Interruption
Section policy wording commences with ‘DEFINED EVENTS’
giving rise to loss, set
out with reference to other sections of the
policy, including under (vi), a wider category of ‘[a]ny other
material damage
insurance covering the interest of the insured but
only in respect of perils insured under the fire section thereof’.
As
will become apparent later, this part of the policy is central to
Santam’s submissions that the indemnity period is three
months
and not 18 months as contended by Ma-Afrika and the Kitchen. For ease
of reference, we reproduce hereunder that part of
the policy:
The
‘SPECIFIC CONDITIONS’ that appear immediately after the
‘DEFINED EVENTS’, relate to the headings of
loss listed
in the first large block of the Main Schedule, from item 1 to item 8.
Loss of Revenue is catered for under Item 3 which
reads as follows:
‘
BUSINESS
INTERRUPTION
.
. .
Item
3 Revenue
The
insurance under this item is limited to
(a) Loss of revenue and
(b) Increase in cost of working
And
the amount payable as indemnity hereunder shall be
(a) In respect of loss of
revenue the amount by which the revenue during the indemnity period
shall in consequence of the Damage
fall short of the standard revenue
(b) In respect of increase in
cost of working the additional expenditure necessarily and reasonably
incurred for the sole purpose
of avoiding or diminishing the loss of
revenue which but for that expenditure, would have taken place during
the indemnity period
in consequence of the Damage, but not exceeding
the amount of loss of revenue thereby avoided
Less
any sum saved during the indemnity period in respect of such of the
charges and expenses of the business payable out of revenue
as may
cease or be reduced in consequence of the Damage, provided that the
amount payable shall be proportionately reduced if the
sum insured in
respect of revenue is less than the revenue rentals where the maximum
indemnity period is 12 months or less or the
appropriate multiple of
the annual revenue rentals where the maximum indemnity period exceeds
12 months.’
[41]
As can be seen from the last line of that part of the policy
immediately preceding this paragraph,
reference is made to instances
where the indemnity period might exceed 12 months. That same
concluding line appears in relation
to other categories of loss, such
as gross rentals and gross profits, under items 2 and 3.
[42]
Items 4, 5, 6, 7 and 8 relate to loss or indemnity in respect of the
following categories:
Item
4: Additional increase in Cost of Working;
Item
5: Wages (Number of Weeks Basis);
Item
6: Fines and Penalties for Breach of Contract;
Item
7: Loss of Use (Levies); and
Item
8: Cancellation of bookings (If stated in the Schedule to be
included).
Following
on item 8 (Cancellation of bookings), the heading ‘Definitions’
appears, ostensibly relating back to the listed
categories of loss in
Items 1 to 8, such as revenue, gross profits, etc. Under that heading
the following definition of ‘indemnity
period’ appears:
‘
The
period beginning with the commencement of the Damage and ending not
later than the number of months thereafter
stated
in the Schedule
during which the results of the business shall be affected in
consequence of the Damage.’ (Our emphasis.)
[43]
In relation to further items of loss that appear under the heading
‘Extensions and Clauses’
in the Main Schedule, reproduced
under para 37 above, within the second large block, such as ‘Loss
of Tourist Attraction’
and ‘Loss of Aesthetic
Attraction’, the policy in another part of the Business
Interruption section, refers to the
indemnity period as follows:
‘
Loss
of Tourist Attraction Extension (If stated in the Schedule to be
included)
Loss
as insured by this Section resulting in interruption or interference
with the Business due to prevention of access or damage
to the
specified tourist attraction stated in the Schedule. The indemnity
period in respect of this extension shall not exceed
3 months.
Loss
of Aesthetic Attraction (If stated in the Schedule to be included)
Loss
as insured by this Section resulting in interruption or interference
with the Business due to prevention of access or damage
to the
specified aesthetic attraction stated in the Schedule. The indemnity
period in respect of the extension shall not exceed
3 months.’
[44]
Still under ‘Extensions and Clauses’, certain other
perils, against which insurance
cover is provided, are listed:
‘
BUSINESS
INTERRUPTION
.
. .
Infectious
Diseases/Pollution/Shark and Animal Attack Extension
Loss
as insured by this Section resulting in interruption or interference
with the Business due to:
(a)
Murder or suicide occurring at the Premises
(b)
Notifiable Disease occurring at the Premises or attributable to food
or drink supplied
from the Premises
(c)
Closure of the Premises due to defective sanitation, vermin or pests
on the order
of the competent local authority
(d)
Notifiable Disease occurring within a radius of 40 kilometres of the
Premises
(e)
Witness call and/or jury service by the Insured or any of the
insured’s directors,
partners or employees
(f)
Chemical or oil pollution of beaches, rivers or waterways within 40
kilometres of
the Premises
(g)
Shark attack or attack by wild game including hippopotamus,
rhinoceros, lion, leopard,
cheetah, crocodile and elephant within 40
kilometres of the Premises
Special
Provisions
(a)
“Notifiable Disease” shall mean illness sustained by any
person resulting
from
(i) Food or drink poisoning, or
(ii) Any human infectious or
human contagious disease an outbreak of which the competent local
authority has stipulated shall be
notified to them
Excluding
Acquired Immune Deficiency Syndrome (AIDS) or an AIDS related
condition.
’
[45]
Those are the most significant parts of the policy, against which the
issue to be addressed in
this appeal are to be decided. We shall,
however, in the discussion that ensues refer to other parts of the
policy wording and
to other Schedules within the Business
Interruption section.
[46]
We now turn to the interpretation of the policy and the Schedules.
The approach in interpreting
insurance contracts was recently
restated by this Court in
Centriq Insurance Company Ltd v
Oosthuizen and Another (Centriq),
where the Court held:
‘
[I
]nsurance
contracts are contracts like any other and must be construed by
having regard to their language, context and purpose in
what is a
unitary exercise. A commercially sensible meaning is to be adopted
instead of one that is insensible or at odds with
the purpose of the
contract. The analysis is objective and is aimed at establishing
what the parties must be taken to have
intended, having regard to the
words they used in the light of the document as a whole and of the
factual matrix within which they
concluded the contract.’
[8]
[47]
Santam’s contention that the indemnity period is limited to
three months, primarily rests
on the Defined Events clause of the
policy, set out at para 40 above in the Business Interruption section
of the Policy, and on
the interpretation of the words ‘Extension
under the Section’ under ‘MEMORANDUM’, appearing at
the end
of the Schedule reproduced in para 37 above, and to the
‘Extensions and Clauses’ part of the Business
Interruption
Section of the Policy.
[48]
The submissions on behalf of Santam on how the policy should be
construed are, for reasons that
will become clear later, best dealt
with by reference to the relevant parts of Santam’s heads of
argument, which we reproduce
hereafter, including for convenience,
the restatement in the submissions, of what appears at para 40 above.
Santam contends that:
‘
7.
The main cover under the Business Interruption Section
of the
Policies is for:
“
Defined
Events
Loss following interruption of
the business in consequence of damage occurring during the period of
insurance at the premises in
respect of which payment has been made
or liability admitted under:
(i)
Defined
events 1,2,3,4,5,6,7, and 8 of the fire section of this Policy
(ii)
The
buildings combined sections of this Policy
(iii)
The
office contents section of this Policy
(iv)
The
theft section of this Policy
(v)
The
goods in transit section of this Policy
(vi)
Any
other material damage insurance covering the interest of the Insured
but only in respect of perils insured under the fire section
thereof
(hereinafter termed Damage)”.
8.
Notwithstanding the fact that the words “hereinafter termed
Damage” appear in
brackets as part of sub-clause (vi) and on a
strict grammatical construction would apply only to that sub-clause,
it is plain that
when read in context they must refer to all of the
Defined Events. If they did not, the business interruption insurance
for events
(i) to (v) would not work, because the quantification
provisions depend upon there having been “Damage”.
“Damage”
therefore means loss following on business
interruption in consequence of any one of the Defined Events.
9.
Business interruption insurance is designed to cover losses
(including a loss of profits
or revenue) consequent upon a peril
insured against, such as fire or other catastrophe. In older
phraseology it was referred to
as consequential loss insurance. An
ordinary insurance policy covering property would provide cover only
against physical damage
and not against other financial losses.
10. This
is reflected in the main business interruption wording of the
Policies. The Defined Events reflect
a traditional formulation.
Damage is defined with reference to
actual damage to
the
insured property by one of the insured perils listed. The
consequential business interruption cover is therefore triggered
by
physical damage
to the insured’s premises by a listed
peril.
11.
The Business Interruption wording defines the indemnity period as
follows:
“
Indemnity
period – The period beginning with the commencement of the
Damage and ending not later than the number of months
thereafter
stated
in the schedule
during which the results of the business shall be affected in
consequence of the Damage.”
12.
The reference to “the schedule” is to the Business
Interruption Schedule at
p29. This schedule identifies two different
indemnity periods – 18 months for the main business
interruption cover and 3
months for the cover provided by all
extensions.
13.
In this case, none of the Defined Events have occurred and there has
been no physical damage
at Ma-Afrika’s premises. Ma-Afrika did
not therefore seek to be indemnified under the main Business
Interruption Section
of the Policies. Ma-Afrika’s right to an
indemnity is under the Infectious Disease Extension. The extensions
provide non-damage
cover because, unlike the main business
interruption cover, they do not require physical damage to the
insured’s property.
14.
The Policy makes it clear that the indemnity period for the ‘Defined
Events’
in the main part of the Business Interruption Section
is 18 months, whereas the indemnity period for all extensions to that
cover
(without exception) is 3 months:
14.1. The general insuring
clause reads as follows (with our emphasis):
“
Subject
to the terms, exceptions and conditions (precedent or otherwise) and
in consideration of, and conditional upon, the prior
payment of the
premium by or on behalf of the Insured and receipt thereof by or on
behalf of the Company, the Company specified
in the Schedule
agrees
to indemnify
or compensate the Insured by payment or, at the option of the
Company, by replacement, reinstatement or repair
in
respect of the defined events occurring during the period of
insurance
and
as
otherwise provided under the within sections
up
to the sums insured, limits of indemnity, compensation and other
amounts specified”
14.2. The leading part of the
Schedule, lists the sections that are in force, including “Business
Interruption”, and
then provides that
“
Policy
wordings are attached only in respect of
those
sections
shown as insured in this index” (emphasis added).
.
. .
14.4. The Schedule includes the
Business Interruption Schedule, which records in items 3 and 4 the
main basis of cover (Revenue
and Additional increase in cost of
working). The more detailed provisions of these two items are to be
found in the main business
interruption wording.
14.5. The Business Interruption
Schedule states an indemnity period of “18 MONTHS” which
is the indemnity period applicable
to the main business interruption
cover. Then follow two definitions . . . a list of extensions and
clauses; and the deductible
(none specific to this Section). This is
then immediately followed by the Memorandum:
“
MEMORANDUM”
NOTE: Extensions under the
Section are limited to an Indemnity Period of 3 Months”
14.6. The Memorandum is not, as
the High Court found, “tucked away at the end of the Schedule
in fine print”. It is
part of a single-page Business
Interruption Schedule, which sets out details of the cover in a
similar way and with the same prominence.
14.7. The Memorandum refers in
terms to extensions under “the Section”. The
capitalisation makes entirely clear that
this is a reference to the
Business Interruption Section of the Policy.
14.8. Memoranda are commonly
used throughout the policy Schedule reflecting the scope of the cover
and other provisions; for example,
the limit of claim preparation
costs, extending cover in certain instances, or limiting in others.
14.9. The Infectious Disease
Extension . . . extends the insurance to provide cover for “Loss
as insured by this Section resulting
in interruption or interference
with the Business due to . . . Notifiable Disease occurring within a
radius of 40 kilometres of
the Premises . . .” The effect of
the introductory word is to include business interruption loss of
that kind within what
is insured by this section – and
therefore into the concept of “Damage”.
14.10 The Infectious Disease
Extension is in both form and substance an extension. The indemnity
period for the Infectious Disease
Extension is therefore that stated
in the Schedule, which is plainly “an Indemnity Period of 3
Months”.’(The
italicised parts are our emphasis)
[49]
It is, in our view, hardly possible to imagine a more tortured,
convoluted and intricate an approach
to the reading of the policy. It
appears to us to be a desperate re-running by Santam of the
submissions, accepted by courts in
some foreign jurisdictions,
especially in the United States of America – discussed in the
judgment of the high court
[9]
– that claims for business interruption losses due to Covid-19
must fail for lack of proof of ‘physical damage’,
on the
basis that that is what standard business interruption cover
traditionally contemplated. That issue was put to rest in
Guardrisk
,
which held the insurer in that case liable for the business
interruption losses due to the outbreak of the pandemic, extending
to
and including government’s response. It will be recalled that
in the high court and in
Guardrisk,
an attempt was made
to restrict that part of the policy in regard to a notifiable disease
to an occurrence that occurred physically
at the premises or within a
radius restrictively interpreted. That failed.
[50]
It is clear, in our view, whatever the erstwhile ‘traditional
approach’ might have
been in relation to providing insurance
cover, insurers have in the past provided cover against the peril of
a notifiable disease.
Since the outbreak of the pandemic, not
unsurprisingly, given its duration and the resulting devastation,
they appear no longer
to offer and provide such cover.
[51]
The convoluted reading of the policy and its Schedules proposed by
Santam also seeks to overcome
the apparent irreconcilable
contradiction between the indemnity period of 18 MONTHS at the end of
the first large block of the
Schedule in para 37, with the
three-month period at the end of it. We shall, in the paragraphs that
follow demonstrate the fallacy
of Santam’s approach.
[52]
We are firmly of the view that in interpreting the policy, the
starting point is to look to see,
from the Schedule on the second
page of the policy, which ‘Policy Sections’ were in
force. They included a ‘Business
Interruption Section’.
The next step is to consider the perils which might result in
business interruption, in respect of
which the insured would enjoy
insurance cover. The perils, indisputably, included notifiable
infectious diseases.
[53]
One would proceed from that point to consider for which losses,
flowing from business interruption
due to a notifiable infectious
disease, Ma-Afrika and the Kitchen would receive insurance cover. In
that exercise, one would proceed
to the Main Schedule. The first
large block on that page indicates clearly that loss of ‘Revenue’
and the ‘Additional
increase in cost of working’ that
ensued from that
and
other perils would be covered. That, from
the policy wording, is what the insured sought and what Santam
provided cover for. Ma-Afrika
and the Kitchen or any other business
entity, looking at what appeared at the end of that first large block
of the Main Schedule,
would be comforted to see that indemnity in
relation to those losses would extend for a period of 18 months. It
is as simple as
that.
[54]
Under ‘Extensions and Clauses’, within the second large
block on that Schedule, there
is a further menu or laundry-list, of
which an insured might select extended cover in relation to other
forms of loss, flowing
from business interruption, due to any of the
listed perils that might ensue. Twenty-four extensions are listed.
From this block,
Ma-Afrika and the Kitchen chose 13 out of 24
extensions. This part of the Schedule also lists the ‘Sum
Insured’ next
to some of those items indicated with a ‘Yes’.
For some of the items no sum insured is indicated. For instance,
there
is an amount of R5000 allocated to ‘Removal of fallen
trees’, whilst no sum insured appears for the item, ‘Loss
of Liquor Licence extension’.
[55]
Importantly, the Premium Summary Schedule referred to earlier,
provides details of the sum insured,
alongside categories of loss, as
well as the associated premiums. So, one would see, against ‘Loss
of Revenue and ‘Additional
increase in cost of working’,
a repeat of the sums insured that appear in that part of the Schedule
reproduced in para 37
above, and alongside each of those two items a
premium is stipulated.
[56]
For most of the 24 extensions in the Main Schedule, a premium is
calculated. While a ‘notifiable
infectious disease’ is
peculiarly located under ‘Extensions and Clauses’ in the
policy wording, perhaps due to
the erstwhile ‘traditional
approach’ to extending insurance cover only in relation to
physical damage, as alluded to
by Santam, the insurance industry has
evolved and where it is located must be seen in that light. In the
present formulation of
the Policy, it is not an ‘extension’
to the categories of loss set out in the first large block of the
Main Schedule.
That the Policy itself has not evolved and has not
been refined to make for easy reading is due to no fault on the part
of the
insured. It is significant that ‘a notifiable disease’
does not appear on the list in the Premium Schedule. It is a
peril
and not a category of loss. Once again, it is as simple as that.
[57]
We now turn our focus to the significance of the stipulated ‘3-month’
indemnity period
in various parts of the policy. Alongside each of
the listed ‘extensions’ in the second large block in the
Main Schedule,
appearing in para 37 above, there is an inscription ‘3
Months Indemnity Period’, except for two items, namely, ‘Public
Utilities: Extended cover’ and ‘Removal of fallen trees’.
The compelling conclusion is that each of the listed
items are those
to be selected from, and those indicated by a ‘Yes’, were
agreed by the contracting parties as ‘extended
cover’ for
business interruption losses, but with indemnity for a shorter
duration, which explains why the trouble was taken
to list the
shorter indemnity period next to each item. It also explains the
additional premiums in the Schedule referred to above.
[58]
In the policy wording, as set out in para 43 above, under ‘Loss
of Tourist Attraction Extension
(if stated in the Schedule to be
included)’ and ‘Loss of Aesthetic Attraction Extension
(if stated in the Schedule
to be included)’ a statement is made
that ‘[t]he indemnity period in respect of this extension shall
not exceed 3 months’.
Further down, under ‘Surrounding
Property/Loss of Key Tenant extension (if stated in the Schedule to
be included)’,
a 3-month indemnity period is also specified by
inclusion of these words ‘[n]otwithstanding the indemnity
period reflected
in the Schedule, the indemnity period in respect of
this extension shall not exceed 3 months’. Against that, it is
notable
that in the policy wording in relation to Loss of Revenue, as
pointed out in para 40 above, the possibility of an 18-month
indemnity
is envisaged. And as pointed out in para 41 above, so too,
in relation to Items 1 and 2, namely, ‘Gross Profit’ and
‘Gross Rentals’.
[59]
This takes us to the meaning of the expression ‘under the
Section’ appearing below
the second large block of the Business
Interruption section of the Main Schedule. The word ‘section’
is not defined
in the policy. Counsel for Santam submitted that
‘under the Section’, where it appears at the end of the
Main Schedule
could only mean ‘under the Business Interruption
section’ in the policy, in support of the thesis that in
respect of
business interruption cover beyond that of physical
damage, one was dealing with an ‘extension’ in respect of
which,
indemnity cover was limited to 3 months. He further stated
that capitalisation (assuming of the word Memorandum) makes this
point
clear. He also referred to paragraph 3 of the second page of
the Schedule at para 35 above, where the following is stated ‘(3)
Policy wordings are attached only in respect
of those sections
shown as insured in this index.’(Our emphasis.)
[60]
The word ‘section’ appears many times in the policy, both
in Schedules and policy
wording, and is not as consistently applied
as Santam’s counsel contends. While it may primarily refer to
the ‘Policy
Sections in Force’, it is not always used in
that sense in all instances in the Schedules and the policy. Context
becomes
important in understanding its meaning. Counsel for Ma-Afrika
and the Kitchen referred to use of ‘this section’ in the
second block of the Theft Section in the Schedule where it is
mentioned that ‘this section will only be effective on the
following provisions . . . ’ In that block ‘section’,
refers to ‘Guest/Customer theft Extension’
and not to the
overall ‘Theft Section’. Other examples where use of
‘this section’ may not be referring
to the ‘main
section’ but to sub-topics are in the Fire section. In
paragraphs such as ‘Kitchen Extraction Maintenance’,
‘Thatch Roof Penetration’, ‘Bush Clearance
Standard’ and others, a statement is made ‘Cover provided
by this section…’. There is no inherent magic to the
capitalisation. The ‘18 MONTHS’ at the foot of the
first
large block of the Schedule is capitalised, arguably to emphasise
that it would be the indemnity period in relation to the
list
immediately above it.
[61]
Having regard to the analysis of the text, the context, as well as
the purpose of the policy
and the Schedule, the words ‘under
the Section’ should be understood to refer to the ‘Extensions
and Clauses’
section within the second large block of the
Schedule. Our conclusions on the interpretation of the policies is
not only cohesive,
but makes business sense, in contrast to the
contorted approach advanced on behalf of Santam. In our view the
indemnity period
in relation to claims for loss of revenue due to
business interruption ineluctably is 18 months.
[62]
Given that the policies are admittedly difficult to navigate, and
assuming, at best for Santam,
that there is a meaningful degree of
uncertainty concerning the indemnity periods, a conclusion might be
reached that on that aspect
the policies are ambiguous. Of course,
that for obvious reasons is a conclusion that Santam is loath to
concede because the long-standing
contra proferentem
rule will
apply against it and the interpretation advanced on behalf of
Ma-Afrika and the Kitchen must triumph. Against the conclusions
set
out above, we do not need to engage in the further debate of whether
the indemnity period is a limitation and therefore should
be
restrictively applied. It is also not necessary to engage in a
discussion concerning Santam’s criticism of the description
by
the high court of insurance policies being a social safety net.
Finally, there is force in the argument on behalf of Ma-Afrika
and
the Kitchen, which essentially is that Santam has twisted and turned
and changed tack in order, studiously, to avoid liability.
Hopefully
that is now at an end. The high court’s conclusion that the
indemnity period is 18 months cannot be faulted and
the appeal must
thus fail.
[63]
As to costs, both sides engaged at least three counsel. In view of
the importance of the issues raised on appeal, it was agreed
between
the parties that the use of three counsel was justified.
[64]
The following order is made:
The
appeal is dismissed with costs including costs occasioned by the
employment of three counsel.
M
S NAVSA
ACTING
DEPUTY PRESIDENT
N
P MABINDLA-BOQWANA
JUDGE OF APPEAL
Appearances
For appellant:
T Plewman QC (appearing with L A Rose-Innes SC and M Maddison)
Instructed by:
Norton Rose Fulbright South Africa Inc., Cape Town
Webbers Attorneys, Bloemfontein
For
respondents:
J J Gauntlett SC QC (appearing with
M du P Van der Nest SC, G Elliot SC, P Long and
J
Mitchell)
Instructed
by:
Thomson Wilks Inc., Cape Town
Honey Attorneys, Bloemfontein.
[1]
Guardrisk Insurance Company v Café
Chameleon
[2020]
ZASCA 173; [2021] 1 All SA 707 (SCA); 2021 (2) SA 323 (SCA).
[2]
The
Financial Conduct Authority v Arch Insurance (UK) Limited and Others
(Hospitality Insurance Group Action and Another Intervening)
[2020]
EWHC 2448 (Comm).
[3]
This footnote is repeated here as it appears in
the high court judgment:
Centriq
Insurance Company Ltd v Oosthuizen and Another
[2019]
ZASCA 11
;
2019
(3) SA 387
(SCA)
]
para
18
; See also
Allianz
Insurance Ltd v RHI Refractories Africa (Pty) Ltd
[2007] ZASCA 174
;
2008 (3) SA 425
(SCA) para 7 ("[A]n exception
clause is restrictively interpreted against the insurer, because it
purports to limit what
would otherwise be a clear obligation to
indemnify"). This is a pedigreed rule of interpretation: see
Norwich Union Fire Insurance Society
Ltd. v SA Toilet Requisite Co Ltd
("It
is laid down that, as insurance is a contract of indemnity, it is to
be construed reasonably and fairly to that end.
Hence conditions and
provisos will be strictly construed against the insurers because
they have for their object the limitation
of the scope and purpose
of the contract").
[4]
Guardrisk Insurance Company v Café
Chameleon
[2020]
ZASCA 173; [2021] 1 All SA 707 (SCA); 2021 (2) SA 323 (SCA).
[5]
Ibid paras 19-20.
[6]
Ibid para 32.
[7]
Ibid para 45.
[8]
Centriq Insurance Company Ltd v Oosthuizen and
Another
[2019] ZASCA 11
;
2019
(3) SA 387
(SCA)
para 17.
[9]
At paras 51
et seq
.