Appeal court rules – insurer Guardrisk has to pay Café Chameleon’s full claim

The Supreme Court of Appeal (SCA) has decided in favour of Café Chameleon, one of the establishments that took its insurer, Guardrisk, to court for failing to pay out its business interruption insurance claim. Legal certainty has now been established and all that is left is for other insurers to settle their clients’ claims.

Guardrisk appealed the decision of the Western Cape division of the High Court that it must pay Café Chameleon’s claim. The SCA has now dismissed the appeal and ordered Guardrisk to settle Café Chameleon’s full claim and legal costs.

This judgment now sets precedent for all other claims for business interruption insurance heard in lower courts across the country, as well as the appeal by Santam against the ruling in the Ma-Afrika case.

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Happy comments

Ren Dunster, attorney for Café Chameleon, said he and his client, Nico Schoeman, were pleased with the judgment.

“We applaud the urgency and clarity with which the judges dealt with the matter. We are privileged to have such a strong judiciary in South Africa.”

Insurance Claims Africa (ICA), a specialist loss adjustment company, represents over 850 claimants in the tourism and hospitality sector in their battle to get large insurers to pay out on business interruption claims.

Ryan Woolley, chief executive officer (CEO) of ICA, said the ruling against Guardrisk was a significant win for an industry that had suffered tremendous losses. “As South Africa faces a second wave of the Covid-19 pandemic, hope of survival is fast evaporating for many of these businesses who were counting on the summer holidays to carry them through to 2021.”

He said the latest statistics indicated that hotel occupancy in Cape Town was at a devastating 18%, with the rest of the country in a similar position.

“Without urgent payouts from insurers, many doors are going to close and many more thousands of jobs are going to be decimated. The time has come for insurers to stop hiding behind their legal teams and honour their clients’ claims.”

André Pieterse, chairman and CEO of Ma-Afrika Hotels, was also happy with the “significant win and the impact that this will have on all legitimate claims”.  He called on Santam to forgo its attempt to further delay payment of claims and withdraw its application for a right to appeal the full bench decision of the Cape High Court, wherein Santam lost its case against Ma-Afrika Hotels.

“To date, Santam have shown total disregard for the decisions of eight High Court judges who have so far ruled against them and other short-term insurers. It will be a total disgrace and do irreparable harm to the tourist Industry and the short-term insurance business if Santam should ignore today’s ruling by the SCA and continue with its application seeking leave to appeal.”

ALSO READ: Court orders insurance giants Santam to pay business claims

The tourism and hospitality sector sustains over 740,000 direct and 1.5 million indirect jobs and contributes 8.6% to the South African economy. Since March 2020, when the Covid-19 outbreak occurred and the national lockdown was imposed, tourism and hospitality businesses of all sizes have suffered tremendous losses. Many were forced to close their doors, putting thousands of jobs at risk.

Supported judgment

The judgment was also supported by the UK’s Financial Conduct Authority test case and two recent judgments of the Western Cape High Court regarding Ma-Afrika Hotels and another against Santam Limited and Interfax (Pty) Ltd and another against Old Mutual.

ALSO READ: UK ruling positive development for SA claimants

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