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[2026] ZAGPJHC 283
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Nurscon Flexibles (Pty) Ltd v Santam Ltd and Another (068873/2024) [2026] ZAGPJHC 283 (6 March 2026)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
Case Number: 068873/2024
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED: YES
6 March
2026
In
the matter between:
NURSCON
FLEXIBLES (PTY) LTD
Plaintiff
and
SANTAM
LTD
First Defendant
VAN
FLYMEN & ASSOCIATES (PTY) LTD
Second Defendant
JUDGMENT
CRUTCHFIELD J
[1] The first
defendant, Santam Limited (“Santam”), excepts to the
plaintiff’s main claim, claim A, brought
by the plaintiff
against the first defendant (“the main claim”).
[2]
The plaintiff,
Nurscon Flexibles
(Pty) Ltd,
opposes the exception, seeking an order
that the exception be dismissed with costs.
[3]
The second defendant, Van Flymen & Associates (Pty) Ltd,
does not participate in the exception proceedings.
[4]
Santam’s exception is premised on the
main claim allegedly lacking averments necessary to sustain it.
Santam contends that
on a reasonable reading of the written contract
of insurance (“the policy”), underpinning the main claim,
the policy
cannot bear the meaning that the plaintiff ascribes to
it.
[5]
Santam
must “show that the (plaintiff’s) claim is (not may be)
bad in law”.
[1]
Santam
must persuade this court that the main claim is not capable of
supporting the relief sought on the strength thereof, “upon
every interpretation which the particulars of claim can reasonable
bear”.
[2]
[6]
The
plaintiff contends that the exception ignores the context in which
the relevant provisions of the policy stand to be construed
and that
the
evidence to be advanced at the trial regarding the surrounding
circumstances at the time that the policy was amended in 2021,
may
impact the proper interpretation of the policy.
Furthermore, that the exception calls for an interpretation of the
policy, a process that generally is not appropriate at the exception
stage of proceedings
.
[3]
[7]
The plaintiff contends that the interpretation advanced by it is one
that the policy may reasonably bear and
that it is
not appropriate to uphold the exception on the basis of Santam’s
interpretation of the policy.
[8]
The purpose
of the exception procedure is
inter
alia
to
“avoid the leading of unnecessary evidence”
[4]
at the trial.
[9]
Furthermore,
an exception that a pleading lacks averments necessary to sustain a
defence (or action) “is intended to obtain
a decision on a
point of law that will dispose of the case in whole or in part. If it
is not to have that effect, the exception
should not be
entertained.”
[5]
[10]
Santam argues that if it is correct that
the policy does not sustain an interpretation that construes the sum
insured as R350 million,
as opposed to R175 million, then
the exception is good, the main claim cannot be sustained and
upholding the exception will
serve to curtail considerably the
evidence to be led at the trial. This because the plaintiff will have
to lead evidence based
on one, as opposed to two, possible sums
insured.
[11]
For the purposes of the exception, I accept the pleadings as being
factually correct.
[12]
The plaintiff’s claim arises from the
policy, which includes cover for business interruption (“BI”).
[13]
The policy comprises the policy wording
annexed as “POC1” and the schedule as “POC2”,
to the amended particulars
of claim.
[14]
The
interpretation of a written contract requires the application of the
triad of text, purpose and context.
[6]
The
starting point is the text and the syntax of the relevant provisions
of the contract.
[15]
The parol evidence rule applies and thus in
the absence of a claim for rectification of the policy by the
plaintiff, the exception
turns solely on the policy.
[16]
The plaintiff’s claim for payment
arises under the BI section of the policy pursuant to an insured
event. In terms thereof,
the first defendant insured the plaintiff
for the loss of gross profit in the sum of R175 million. The
policy obliged the
plaintiff to pay a monthly premium of R40 104.01
in respect of the sum insured and recorded the indemnity period as
24 months.
[17]
The loss calculation clause is “item
1 Gross Profit (Difference Basis)” of the policy. It provides
for the manner in
which the amount payable for the business
interruption is to be calculated.
[18]
The loss calculation clause defines
underinsurance as “less any sum saved during the indemnity
period, in respect of such
of the charges and expenses of the
business payable out of gross profit ...”, subject to the
proviso that “the amount
payable shall be proportionately
reduced if the sum insured in respect of gross profit is less than
the sum produced by applying
the rate of gross profit to the annual
turnover, where the maximum indemnity period is 12 months or less, or
the appropriate multiple
of the annual turnover where the maximum
indemnity period exceeds 12 months”.
[19]
The exception turns on the proper
interpretation and application of the proviso, particularly of the
words “sum insured”
therein, in the context of the
policy.
[20]
In order to apply the proviso, the
plaintiff pleads that the sum insured in respect of gross profit is
R175 million, and that
the sum insured is insured on an annual
basis. Accordingly, the plaintiff pleads that the total sum insured
over the indemnity
period of 24 months is double the gross
profit of R175 million, being R350 million.
[21]
The first defendant’s exception is
that the policy does not sustain an interpretation whereby the sum
insured, for the purposes
of applying the proviso, can be construed
as being insured annually, amounting to R350 million.
[22]
The policy incepted during October 2020. In
terms thereof, the sum insured under the BI section was R142 million
at a monthly premium
of R44 834.82. The gross profit insured was
R140 million at a premium of R32 083.21. The indemnity period
was 12 months.
[23]
The parties amended the policy during
November 2021. In terms thereof, the sum insured under the BI section
increased from R142
million to R177 million, at a monthly premium of
R58 855.62. The gross profit insured increased from R140 million
to R175
million at a premium of R40 104.01, whilst the indemnity
period increased from 12 to 24 months.
[24]
The increases in the sum insured and the
monthly premium equate to increases of 25% respectively, whilst the
indemnity period doubled
from 12 to 24 months.
[25]
The essence of the plaintiff’s case
for purposes of the exception is that because Santam doubled the
indemnity period from
12 to 24 months, the sum insured must be
construed as having been doubled correspondingly, from R175 million
to R350 million over
the two year period, notwithstanding that the
policy does not make any such provision.
[26]
Accordingly, the plaintiff
contends
that the policy reasonably sustains an interpretation whereby the sum
insured under the BI section of the policy stands
to be construed as
R350 million as opposed to the amount stated in the policy,
being R175 million.
[27]
Santam denies that the policy can reasonably sustain such an
interpretation and argues that the plaintiff confuses the indemnity
period with the period of insurance.
[28]
It is against this background that I consider the exception.
[29]
The exception interprets the policy against
the background of established principles of insurance law. These
principles provide
context to the interpretative process of the
policy.
[30]
The policy does not define the term “sum
insured”. The latter is, however, a firmly established concept
in insurance,
being the maximum monetary limit of the insurer’s
liability to the insured under the policy. The insurer is not obliged
to
pay any more than the amount of the sum insured.
[31]
If the sum insured is less than what was at risk, then the
insurer pays
pro rata
because the insured was underinsured and
the insured becomes “self-insured” for the balance
.
[32]
The period of indemnity is the length of
the period for which the insurer must indemnify the insured for the
implications on the
business of the insured event. The policy defines
the indemnity period in such terms. The indemnity period is recorded
as 24 months.
Thus, the maximum indemnity period exceeds
12 months.
[33]
The period of insurance is the period for
which the policy endures and during which the insured event must
occur. The loss that
gives rise to the indemnity period must occur
during the period of the insurance. The policy period herein is one
year.
[34]
The plaintiff relies on the amendments to
the policy aforementioned in respect of the indemnity period, the sum
insured and the
monthly premium of 25% each in respect of the sum
insured and the premium, allegedly in order to ensure that the
plaintiff would
be covered for R175 million per annum over
24 months.
[35]
It is useful to remember that whilst the
indemnity period increased from 12 to 24 months, the period of
insurance remained one year.
[36]
The plaintiff pleads in paragraph 36.2 of
the particulars of claim and in its heads of argument that the sum
insured is insured
on an annual basis. In paragraph 24 of the
heads of argument, the plaintiff sets out in tabular form, the
increase in the
sum insured in the original policy and after the
amendment, being an increase of 25% in the sum insured and an
increase of 25%
in the premium from the original policy to the
amended policy whilst the indemnity period in the original policy was
12 months
and in the amended policy a period of 24 months. The
sum insured in respect of gross profits is stipulated in the policy
as R175 million.
[37]
The plaintiff advances an interpretation of
the proviso in terms of which the sum insured in respect of gross
profit is R175 million
and that sum is insured on an annual
basis, resulting in a total sum over 24 months of R350 million.
[38]
However, the policy wording makes provision
for multiplication of the turnover only, where the indemnity period
is more than 12 months.
It is logical that if the parties
increase the indemnity period from 12 months to 24 months, then they
multiply the relevant turnover
by two because it is not 12 months
turnover but 24 months.
[39]
The policy wording does not, however,
provide for multiplication of the sum insured. Nor does the policy
stipulate that the sum
insured is insured on an annual basis and, the
policy does not stipulate that the sum insured is R350 million
as the plaintiff
would contend.
[40]
The policy provides that the sum insured,
the maximum liability of the insurer to the insured under the policy,
as R175 million.
The policy does not state that the sum insured
is insured on an annual basis.
[41]
Nor is there any claim for rectification of
the policy be the plaintiff.
[42]
The policy does not provide for a sum
insured on an annual basis but only for a sum insured in respect of
material damage sustained
during the period of insurance.
[43]
The amount of the sum insured can only be
increased during the policy period by agreement between the parties.
There is no such
agreement to increase the amount of the sum insured
and the plaintiff does not rely on any such agreement.
[44]
There is no concept of a sum insured on an
annual basis in established insurance law. The sum insured is the
upper limit of the
insurer’s liability under the policy. There
is no provision in the policy for the doubling of the sum insured.
The policy
provides for the sum insured under BI cover as R175
million and not R350 million.
[45]
The plaintiff contends that if the first
defendant is correct and the insured sum of R175 million is not
an annual figure,
that means that the plaintiff is insured for a loss
of gross profit in the amount R87.5 million annually. The
plaintiff contends
that this is commercially nonsensical because the
amount of R87.5 million is 37.5% less than the original amount
of R140 million
for which the plaintiff was initially insured on
an annual basis. Subsequent to the amendments to the policy, the
plaintiff is
paying a premium that is 25% higher for significantly
less cover. That according to the plaintiff, defeats the purpose of
the amendment,
which was to increase the plaintiff’s cover.
[46]
Insofar as the plaintiff alleges that
Santam’s construction is commercially insensible, I disagree.
To the contrary, the plaintiff’s
version that the sum insured
is insured annually such that the increase is 150% from R175 000.00
to R350 000.00 whilst
the premium increases by 25%, that is
commercially insensible and makes no logical commercial sense.
[47]
The proper construction of the material
damage proviso is that the plaintiff was insured for one year and as
long as material damage
occurred during that year, the first
defendant would cover the plaintiff under the BI section of the
policy if the plaintiff took
out BI cover, which it did. Once the
damage occurred during the one year period of the insurance policy,
which it did, then the
maximum period of indemnity for the BI cover
is 24 months but the sum insured in respect of that 24 month period
remains R175 million.
[48]
The plaintiff’s difficulty is that
its claim arises from the policy, a written contract, and there is no
claim for rectification.
Whilst the plaintiff doubled its maximum
indemnity period from 12 to 24 months, it failed to double the
sum insured. There
is nothing in the policy that provides that the
sum insured will double automatically if the maximum period of
indemnity doubles
from 12 to 24 months.
[49]
The policy is to be construed against the
background of the surrounding circumstances, including the
established principles of insurance
law. Those principles tell us
that the sum insured is a fixed sum and that it is the maximum amount
of the insurer’s liability.
The policy in this matter does not
provide for a multiplication or increase of the sum insured. The
policy provides for multiplication
of the previous year’s
turnover but not of the sum insured.
[50]
The policy does not sustain the
construction advanced by the plaintiff that the sum insured was
insured annually over 24 months.
[51]
If regard is had to the written policy, it
does not state and nor does it imply what the plaintiff would have it
state or imply.
Viewed in its context and against the principles of
insurance law and the factual background of the increase in the
premium by
a mere 25%, the plaintiff’s main claim stands
contrary to the policy, which provides that the sum insured is
R175 million
and not R350 million.
[52]
In the circumstances, the policy does not
support the relief sought by the plaintiff on the strength of that
policy.
[53]
Accordingly,
Santam’s exception is good and serves to dispose of the main
claim.
[7]
Upholding the
exception will serve to avoid the leading of unnecessary evidence
[8]
and prevent the parties from preparing for trial in respect of the
main claim.
[54]
Whilst I intend to uphold the exception,
the plaintiff is entitled to an opportunity to amend its amended
particulars of claim.
[55]
In respect of the costs of the exception,
there is no reason why the costs should not follow the order on the
merits. Accordingly,
the plaintiff is liable for the costs of the
exception.
[56]
The matter is reasonably complex and both
parties utilised senior counsel. In the circumstances, the costs of
senior counsel will
be payable on scale C.
[57]
By virtue of the aforementioned, I grant the following order:
1. The first
defendant’s exception is upheld with costs including the costs
of senior counsel on scale C.
2. The plaintiff’s
main claim against the first defendant, claim A, is struck out.
3. The plaintiff is
granted leave to amend its amended particulars of claim within one
(1) month of the delivery of this judgment.
CRUTCHFIELD
J
JUDGE
OF THE HIGH COURT
JOHANNESBURG
For
the Plaintiff:
Adv J Babamia SC assisted by Adv Cloete
instructed by Shaheed
Dollie Inc.
For
the First Defendant:
Adv J F Mullins SC instructed by Savage, Jooste
and Adams Inc.
For
the Second Defendant:
Adv I Green SC instructed by Webber Wentzel.
Date
of the hearing:
21 July 2025.
Date
of the judgment:
6 March 2026.
[1]
Belet
Industries CC t/a Belet Cellular v MTN Service Provider (Pty)
Ltd
(936/2013)
[2014] ZASCA 181
(24 November 2014) quoting
Trustees,
Bus Industry Restructuring Fund v Breakthrough Investment CC &
Others
2008
(1) SA 67
(SCA) para [11].
[2]
Lewis v
Oneanate (Pty) Ltd & Another
[1992] ZASCA 174
;
1992 (4) SA 811
(A) at 817F-G.
[3]
Metanza
Metallurgical Laboraties (Pty) Ltd v Rados International Services SA
(Pty)
Ltd
2022 JDR 2009 (JG) (“
Metanza
”)
at para [25] – [30].
[4]
Dharumpal
Transport (Pty) Ltd v Dharumpal
1956
(1) SA 700
(A) at 706D-E.
[5]
Miller
& Others v Bellville Municipality
1971
(4) SA 544 (C).
[6]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) (“
Endumeni
”).
[7]
Miller
& Others v Bellville Municipality
1971
(4) SA 544 (C).
[8]
Dharumpal
Transport (Pty) Ltd v Dharumpal
1956 (1) SA 700
(A).