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

1 Guardrisk Insurance Company v Café Chameleon [2020] ZASCA 173; [2021] 1 All SA 707 (SCA);
2021 (2) SA 323 (SCA).

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.’

2The Financial Conduct Authority v Arch Insurance (UK) Limited and Others (Hospitality Insurance
Group Action and Another Intervening) [2020] EWHC 2448 (Comm).

[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

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").

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

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.

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.

6 Ibid para 32.
7 Ibid para 45.

[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.

8 Centriq Insurance Company Ltd v Oosthuizen and Another [2019] ZASCA 11; 2019 (3) SA 387 (SCA)
para 17.

[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 court9 – 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

9 At paras 51 et seq.

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.
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
7 October 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this
case and does not form part of the judgments of the Supreme Court of Appeal
Santam Limited v Ma-Afrika Hotels (Pty) Ltd & Another (255/2021) [2021] ZASCA
141 (7 October 2021)
Today the Supreme Court of Appeal (SCA) handed down judgment dismissing, with
costs including the costs of three counsel, an appeal against the decision of the
Western Cape Division of the High Court of South Africa, Cape Town (the high court).
This appeal concerned the applicable indemnity period in relation to business
interruption losses under insurance policies. It involved claims by two companies
under insurance policies, based on the outbreak of the Covid-19 pandemic. Although
the question before the SCA was limited to a consideration of the period during which,
according to the policy, the indemnity operated, the SCA also, in dealing with the
background, for context, and a better appreciation of how the present dispute arose,
dealt briefly with the dispute concerning the question of whether Ma-Afrika Hotels (Pty)
Ltd (Ma-Afrika) and the Stellenbosch Kitchen (Pty) Ltd (the Kitchen) were indemnified
in relation to the events in question and the high court’s conclusions in that regard.
Ma-Afrika operates hotels and businesses in the Western Cape. The Kitchen is a
restaurant that operates on the premises of Ma-Afrika’s Stellenbosch Hotel. Ma-Afrika
and the Kitchen were the respondents in this matter. 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 Limited (Santam) and
the Kitchen held one. In terms of the policies, Ma-Afrika and the Kitchen were
indemnified for loss of revenue. 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.
On or about 11 March 2020, according to Ma-Afrika and the Kitchen, an insurable
event catered for by the policies they held with Santam occurred, namely, 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. This elicited a response from Santam to 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.
That only was for the period 15 to 27 March 2020, due to the outbreak at that
establishment, causing revenue losses only for that period.
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 followed, so Santam contended, that the proximate
cause of the damage determined whether there was 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 recorded 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’. Ma-Afrika and the Kitchen contended that
the indemnity period was 18 months.
The SCA held that in interpreting the policy, the starting point was 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 was 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.
The SCA held further that 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 indicated 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 and not three months, as contended by Santam.
Having regard to the analysis of the text, the context, as well as the purpose of the
policy and the Schedule, the SCA found, the words ‘under the Section’ in the
Memorandum should be understood to refer to the ‘Extensions and Clauses’ section
within the second large block of the Schedule, and not as contended by Santam . In
the Court’s view the indemnity period in relation to claims for loss of revenue due to
business interruption, ineluctably, was 18 months. In any event, given that the policies
were admittedly difficult to navigate, and assuming, at best for Santam, that there was
a meaningful degree of uncertainty concerning the indemnity periods, a conclusion
might be reached that on that aspect the policies were ambiguous. This meant that
the long-standing contra proferentem rule would apply against Santam and the
interpretation advanced on behalf of Ma-Afrika and the Kitchen would triumph. The
high court’s decision that the indemnity period was 18 months was thus correct and
the appeal had to fail. Finally, the SCA held that there was force in the argument on
behalf of Ma-Afrika and the Kitchen, which essentially was that Santam had twisted
and turned, and changed tack in order, studiously, to avoid liability. Hopefully, held the
SCA, that was now at an end. It accordingly, dismissed Santam’s appeal.
~~~~ends~~~~