The joint owners of Fourways Mall have obtained important high court rulings in their attempt to claim more than R1 billion from five insurance companies for business interruption at the struggling super-regional mall linked to the Covid-19 pandemic.
The High Court in Johannesburg was required in terms of an application lodged by Azrapart (Pty) Ltd and JSE-listed Accelerate Property Fund, each 50% owners of the mall which is ultimately controlled by the Georgiou Group to issue an order on three separated issues relevant to the claim.
The importance of the rulings was that if any of the three separated issues was resolved in favour of the insurance companies, that would end the mall owners claim.
In a judgment handed down on Friday, Judge Norman Manoim issued rulings on each of the three disputed points in favour of the mall owners.
Accelerate last month asked existing shareholders to stump up as much as R200 million through theissue of new sharesto enable the repositioning of Fourways Mall and to settle existing debt.
The five insurance companies all assumed liability to indemnify the owners of the Fourways Mall for loss in various proportions.
They are:
- AIG South Africa (70% of the risk);
- Old Mutual Insure (14%);
- Bryte Insurance (8%);
- Guardrisk (8%);
- Alternatively, Guardrisk assumed 3% of the risk and Insurance Underwriting Managers 5%.
Judge Manoim said in 2020, like many businesses, the lockdown caused by the advent of the Covid-19 pandemic disrupted the business of the malls owners while also disrupting the businesses of the malls tenants, resulting in Azrapart and Accelerate suffering a major loss in rental income.
The malls owners claimed business interruption insurance from the insurers in November 2022.
They claimed the insurance companies had all, in various amounts, indemnified them against business interruption, which included loss caused by infectious and contagious diseases (ICDs).
Manoim stressed that the case does not concern whether Covid-19 constitutes an ICD for which the malls owner could claim in terms of their policies, but rather whether they were covered at all for ICDs.
The insurance companies all claimed the malls owners were not covered for ICDs, while the owners claimed they were.
Judge Manoim said the matter has yet to be fully litigated and he heard evidence on the limited separated issue, and thereafter argument.
The principal negotiations about the insurance cover were conducted on behalf of the malls owners by the local subsidiary of international insurance brokers firm Marsh and AIG with Old Mutual, Bryte and Guardrisk following on, but with some differences in the limits of their liability (and with these insurers all represented by the same legal team).
Insurance Underwriting Managers (IUM) presented a slightly different defence and was represented by a separate legal team.
Astonishing
Manoim said the case turns on a series of mishaps and the key issue was whether ICD insurance, on which the claim is now premised, formed part of the agreement between the parties.
Extraordinary as this might seem it turns on the legal implications of oversights in reading documents by employees of the parties, he said.
Between the time that the first request for a quotation was made by Marsh on 23 July 2019, and the time a final policy was signed in March 2020, there had been 10 iterations of the 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.
Manoim said there is a simple explanation for this, adding that insurance contracts are filled with dense type, most of which is unchanging.
What the professionals keep a lookout for are the highlighted changes, and then the exclusions, the premiums and the limits, he said.
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.
Two possible actual contracts
Manoim said in the various exchanges of documents between the mall owners broker Marsh and the insurers, two candidates for the proper contract emerged, and this forms the subject matter of the present dispute.
He said there is no dispute about what the term ICD means and this is not a dispute over interpretation, but over which is the correct contract.
If the plaintiffs [mall owners] are correct, they have cover. If they are not, they have no cover, and it is the end of their claim against the defendants [insurers], he said.
Three issues
The three separated issu
