Guardrisk Insurance Company Limited v Café Chameleon CC

Café Chameleon CC operated a restaurant in Cape Town insured under a business interruption policy issued by Guardrisk Insurance Company Limited. The policy included an extension covering loss resulting from interruption of business due to a notifiable disease occurring within a 50 km radius of the premises. Covid-19, a notifiable disease under regulations issued in terms of the National Health Act, spread rapidly in Cape Town during March 2020. In response, the South African government declared a national state of disaster and imposed a nationwide lockdown under the Disaster Management Act, forcing restaurants to close from 27 March 2020. Café Chameleon suffered substantial loss of income and claimed indemnity under the policy. Guardrisk repudiated the claim, contending that the policy did not cover losses caused by a national lockdown or a pandemic response not confined to local occurrences. Café Chameleon sought declaratory relief in the Western Cape High Court, which found in its favour. Guardrisk appealed to the Supreme Court of Appeal.

The appeal was dismissed save that paragraphs 2 and 3 of the High Court’s order (relating to abandoned incidental relief) were set aside. Guardrisk was ordered to pay the costs of the appeal, including the costs of three counsel.

This decision is a leading South African authority on Covid‑19 business interruption insurance claims. It confirmed that notifiable disease extensions may cover losses caused by government lockdown measures where the disease occurred within the specified radius. The case clarified the interpretation of insurance contracts in the context of pandemics and rejected attempts to exclude cover based on the scale or national character of governmental responses.