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COVID-19 damage heads to court

COVID-19 damage heads to court

Business Reporter


NAMIBIA’S biggest private tourism and hospitality operator, the Gondwana Collection, turned to the High Court of Namibia to force the short-term insurer, Hollard Insurance Company of Namibia, to honour its agreed commitments.


The court action by Gondwana stems from insured losses Gondwana suffered due to the Covid-19 outbreak, the State of Emergency and measures implemented by the government as a result of the Covid-19 pandemic outbreak.


The Managing Director of Gondwana, Gys Joubert, in his founding affidavit, says: “The tourism flagship-company has been compelled to bring a Court Application because Hollard refused to confirm that Gondwana’s claims are covered by the policy. Hollard instead embarked on a seemingly never-ending request for information”.


“Unless Hollard agrees that it is liable, Gondwana faces serious and irreparable harm to its business, while Hollard is able to avoid honouring its obligations towards Gondwana as the insured,” Joubert divulged under oath.


Documents filed at the High Court in Windhoek under case number HC-MD-CIV-MOT- GEN 2020 confirms the intention of Gondwana to lodge its application on 31 March 2021.


In a massive COVID-19 blow for insurers Gaurdrisk Insurance – a subsidiary of JSE-listed financial Services giant Momentum Metropolitan – has lost its appeal against a Western Cape High Court Judgement on the Covid-19 business interruption insurance case involving Café Chameleon.


It is widely seen as a new legal precedent in the ongoing COVID-19 business interruption insurance battles raging in South African Courts.


Other cases before the courts are Old Mutual and Santam which have been appealed or where lawyers waited for the Café Chameleon appeal ruling before deciding how to proceed. The ruling could open the way for billions of dollars more in pandemic claims against the country’s short term insurers.


The court pointed out that its decision in favour of Café Chameleon was fortified by much of the reasoning in the Financial Conduct Authority case in the United Kingdom around similar claims and recent judgements in the Western Cape involving Ma-Africa Hotels vs Santam and Interfax vs Old Mutual. The last two cases are on appeal.


The Gondwana legal action against Hollard can open the floodgates of COVID-19 claims from short-term insurers in Namibia who are waiting for legal precedents elsewhere.


In the meantime, Hollard served summons against Gondwana declaring a dispute between Hollard and Gondwana as to whether the proclamation of the State of Emergency resulted from the outbreak of COVID-19 in Windhoek or whether it is related to the world-wide outbreak.


Hollard now contends that the policy only obliges it in respect of each premise or branch if there was an interference in business. Hollard also concludes that according to the wording the policy only responds to a local outbreak of an infectious disease.


It also asks the court to order Gondwana to provide details of the manner in which each cancellation by a tourist and travel agent took place, the country of origin and a detailed list of those who referred to the Namibian situation when cancelled.


Gondwana said the Hollard request for details were met numerous times and it is now part of an endless quest to frustrate the process as all cooperation was rendered.


According to court documents, Gondwana does not want to argue the amount of the claim at this stage, but only asks for an order that Hollard Insurance confirms that the policy indeed approves the claim.


The tourism company employs approximately 1 100 people on a permanent basis, contributes N$202 million to suppliers, N$18 million in salaries and bonuses, N$70 million in levies and taxes to the government and an additional N$5 million to conservancies and community funds.


Approximately N$5 million in total is handed out to those Namibians in need as well as goodwill contributions to the vulnerable members of society.


Joubert said while Gondwana was relieved to realize that the devastation of COVID-19 and the State of Emergency was covered by its Hollard policy, their optimism quickly turned into concern as it became clear that Hollard is not prepared to honour its commitments in terms of the policy and therefore Gondwana now has to approach the Namibian High Court for a decision.


Gondwana points out that when looking for insurance and in the light of events like Ebola and the Ash Cloud from Iceland it wanted to be sure that it will have comprehensive coverage that would cover business interruption and pandemics that can hit anytime as it happened before.


“From the start, it must have been clear to Hollard that it was insuring the eventuality that Gondwana’s entire operation would be affected by an infectious and contagious disease”.


“If this were not so, Hollard would have been accepting a premium and issuing a policy where it knew that the cover it sold would not be provided,” Joubert pointed out in his affidavit.


Gondwana said the cover was not based on the amount of the premium but instead on the comprehensiveness of the cover and Hollard was not the cheapest quote received in the process. Despite having obtained cover for precisely such outbreaks Hollard, now seeks to retract from its contractual obligations.


Joubert says although Hollard states that it is considering the claim it has provided no indication of how long the process will take.


“Gondwana can simply not afford to wait any longer and must bring the application now to be heard in March 2021 or run the risk that it might not be around to pursue the claim.


Joubert points out that specific condition of the Business Interruption Section of the claim would potentially allow Hollard to avoid its obligations if Gondwana is wound up.


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