An aerial view of Fourways Mall, Witkoppen and William Nicol Drive. Picture: Karen Sandison/ Independent Newspapers.
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.
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