Cape Times

Court finds insurance dispute in favour of Fourways Mall owners

Gauteng High Court Judge says insurer didn’t read contract properly

IN A CASE that shows even profession­als neglect to read insurance contracts closely, a Gauteng High Court judge has ruled in favour of Fourways Mall owners in a separation of issues dispute about a more than R1 billion insurance claim for loss of rental income through the pandemic.

The Gauteng High Court ruled in favour of Fourways Mall joint owners Azrapart and Accelerate Property Fund on the separation of issues relating their claim against insurers for loss of business rental income due to lockdown restrictio­ns.

Judge Norman Manoim said in his judgment: “The case turns on a series of mishaps … Extraordin­ary as this might seem, it turns on the legal implicatio­ns of oversights in reading documents by employees of the parties.”

In November 2022, the plaintiffs instituted legal action claiming business interrupti­on insurance for loss of rental income during the pandemic, arguing that the insurers had indemnifie­d them (in various amounts) against business interrupti­on, which included loss caused by infectious and contagious diseases (ICD).

The bulk of the insurance claim was from AIG Insurance (70% of the risk), but other defendants were Old Mutual Insure, Bryte Insurance Company, Guardrisk Insurance Company and Insurance Underwrite­rs Managers.

As the case involved a number of issues, the property owners and defendants approached the judge to order a separation of three issues on the basis that if any one of the three was resolved in the insurer’s favour, that would end the claim.

Judge Manoim said in his judgment that the case did not revolve around whether Covid constitute­d an ICD for which the plaintiffs could claim in terms of their policies.

“Rather the question is whether the plaintiffs were covered at all for ICD, something the defendants all contend

that they weren’t, whilst the plaintiffs contend to the contrary,” the judge said.

He said between the time that the first request for an insurance quotation was made on July 23, 2019, and the time a final policy was signed in March 2020, there had been 10 iterations of the insurance contract, with the term ICD variously in or out. But on not one occasion were these modificati­ons noticed by the party to whom the document had been sent.

Judge Manoim said: “There is a simple explanatio­n for this. Insurance contracts are filled with dense type, most of which is unchanging. What the profession­als keep a look out for are the highlighte­d changes, and then, exclusions, premiums, and the limits.

“But where a term is not highlighte­d and is buried in a long list of densely

typed terms, infrequent­ly modified, they remain impercepti­ble to the quick look scrutiny that these profession­als typically exercise. Such is what happened in this case.”

From the exchanges of the documents, two candidates for the proper contract had emerged, which formed the subject matter of the dispute.

Judge Manoim said: “Was it a version that the plaintiffs’ broker had sent to all the defendants with ICD out (he says inadverten­tly), and which they all signed, after which he told them that they were now on risk.

“Or was it the penultimat­e version called a placement slip, with ICD back, in which the defendants had later all signed, or was it the policy, a still later and final version, which still has ICD in, and which only AIG, the lead insurer had signed, apparently without the inclusion being noticed by that company’s representa­tive.”

Judge Manoim ordered that the contract of insurance consisted of the policy in its final form as pleaded by the plaintiffs. He further ordered that the contract of insurance did not stand to be rectified as pleaded by the defendants.

“The dispute regarding the premium is decided in favour of the plaintiffs and the defence pleaded by the first to fourth defendants in paragraph 31.4 of their plea, fails.

“All costs associated with the determinat­ion of the separated issues are to be paid by the first to fifth defendants, jointly and severally, the one paying the other to be absolved, which costs include the costs of two counsel,” the judge ruled.