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[2016] ZASCA 84
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Malani and Others v Natalia Financial Brokers CC (20850/2014) [2016] ZASCA 84 (31 May 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
no: 20850/2014
Not
Reportable
In
the matter between:
SHAKIRA
MALANI First
Appellant
WAHEEDA
MALANI Second
Appellant
MOHAMED
ZAKARIA
MALANI Third
Appellant
NASEEM
FATHIMA MOHAMED
ANWAR Fourth
Appellant
And
NATALIA
FINANCIAL BROKERS
CC Respondent
Neutral
Citation:
Malani
v Natalia Financial Brokers CC
(20850/2014)
[2014] ZASCA 84
(31 May 2016)
Coram:
Theron,
Wallis and Mathopo JJA
Heard:
17
May 2016
Delivered
31
May 2016
Summary
:
Negligence - Claim for pure economic loss based on omission –
No evidence that the insured had instructed the insurance
broker to
amend beneficiary on a policy – The appellants, as disappointed
beneficiaries, failed to establish negligence on
the part of the
insurance broker.
ORDER
On
appeal from
:
KwaZulu
Natal Division of the High Court, Pietermaritzburg (Koen J sitting as
court of first instance):
The appeal is dismissed,
with costs.
JUDGMENT
Theron JA (Wallis and
Mathopo JJA concurring):
[1]
The appellants, children of the late Ahmed Ebrahim Malani (the
deceased), instituted action in the KwaZulu Division of the High
Court (Pietermaritzburg) against the respondent, Natalia Financial
Brokers CC, an insurance brokerage, in which they claimed damages
based on the alleged wrongful and negligent failure of one of its
members, Mr Krishna Bangaru, to cause them to be substituted
as
beneficiaries on a life policy which the deceased held with Old
Mutual Life Assurance (‘Old Mutual’). The claim
is based
on the alleged negligent breach of a legal duty owed to them by Mr
Bangaru to submit a beneficiary appointment form, signed
by the
deceased, to the insurance company, in terms of which they were
appointed as beneficiaries on the policy. The high
court, (Koen
J), dismissed their claim, finding that they had failed to prove that
they had suffered damages, the quantum of any
damages and that such
damages arose from the conduct of the respondent. It is against this
finding that the appellants appeal,
with the leave of the high court.
[2]
The background facts are set out briefly. The deceased had taken out
a life policy (‘the policy’) with Old Mutual
to the value
of five million rand. During September 1995, he ceded the policy to
Nedperm Bank Limited (‘Nedbank’) as
collateral security
for his indebtedness to Nedbank.
[3]
On 27 May 2006 the deceased nominated Ms Jayanthri Naidoo, his
‘childhood sweetheart’ and with whom he was engaged
in a
romantic relationship, as the sole beneficiary on the policy. It was
common cause that the respondent had no part in taking
out the policy
nor with the appointment of Ms Naidoo as a beneficiary. The deceased
was married a number of times and had fathered
five children. He was
a heavy drinker and his abuse of alcohol became progressively worse
over the years and adversely affected
his health.
[4]
It was common cause that on 28 March 2008, a meeting was held at the
offices of Mr Sangham, an attorney, friend and business
partner of
the deceased. Mr Bangaru, Mr Ally Malani, the brother of the
deceased, and Mr Sangham were present at the meeting. On
the evidence
of Mr Sangham and Mr Malani, a beneficiary appointment form, signed
by the deceased, and nominating the appellants
as beneficiaries on
the policy, was handed to Mr Bangaru at that meeting. His alleged
negligence lay in a failure to submit the
change of beneficiary form
to Old Mutual. The primary issue in the case was whether Mr Bangaru
was indeed given this form on that
date with instructions to submit
it to Old Mutual. He denied that the form was given to him at that
meeting or that he had seen
it prior to receiving the summons.
[5]
In a subsequent note, Mr Sangham recorded what had transpired at the
meeting as follows:
‘
1.
R5M
(a) Write to OM requesting a copy of
cession to Perm, within 10 days.
(b) Change beneficiary to children of
AEM.
2.
Momentum
(a) Request copy of cession to Nedcor
within 10 days.
3. Personal life – Annual
Premium’.
[6]
On 31 March 2008, an employee of the respondent, acting on the
instructions of Mr Bangaru, sent a letter to Old Mutual, which
reads:
‘
Please
note above policy is ceded to Permanent Building Society, please can
we have copies of the original cession forms’.
A
letter from Mr Bangaru was attached from which it was evident that Mr
Bangaru acted for the deceased and was his nominated broker.
It is
apparent therefore that Mr Bangaru carried out the first instruction
in Mr Sangham’s note. The more controversial issue
related to
the meaning of the reference to a change of beneficiary in respect of
this policy.
[7]
Mr Bangaru testified that Mr Malani and Mrs Zora Malani, the
deceased’s sister, visited his office on 2 April 2008 and
requested that he substitute the appellants as beneficiaries on the
policy. According to Mr Bangaru, he informed them that he could
only
accept instructions from the deceased. He said that he had, in a
letter dated 9 April 2009 sought clarification from the deceased.
The
letter reads, in relevant part:
‘
Your
brother and sister came in to see me on the 02/04/2008 to change the
beneficiary on your policy which was ceded to Nedbank
policy number:
9827898 and beneficiary J Naidoo.
I
informed them that I could not do this without your written
instruction and they are the 3rd party.
Please
advise what I should do.’
Evidence
was led of a post book entry reflecting that the respondent had sent
a letter to the deceased on 15 April 2008.
[8]
The deceased died on 3 December 2009. At the time of his death
several amounts secured by the cession remained unsatisfied.
The fact
that these amounts were owing to Nedbank was overlooked and the full
proceeds of the policy were paid to Ms Naidoo on
28 December 2009.
[9]
Subsequent to the death of the deceased, and during 2010, Mr Sangham,
together with Mr Bangaru, attended a consultation with
counsel with
regard to possible action against Ms Naidoo. The consultation was
terminated at an early stage. It would appear that
counsel was
concerned at the prospect of a possible action against Mr Bangaru.
But before the consultation was terminated Mr Sangham
had taken the
opportunity to leaf through Mr Bangaru’s file. It is
significant that when the conference started Mr Bangaru
was not asked
why he had not submitted the beneficiary nomination form to Old
Mutual and that no mention was made of any such form.
[10]
The appellants accepted that their claim was delictual in nature. In
order for the appellants to succeed in their claim they
had to
establish the existence of a duty of care owed to them by the
respondent and the breach of such duty. They also had to prove
that
in consequence of such breach they suffered damages and the quantum
thereof. On the facts of this case, the appellants were
required to
establish that the respondent (i) had a legal duty to take steps to
change the beneficiary on the policy; (ii) was
instructed to do so;
(iii) negligently did not do so; (iv) by its conduct or omission,
caused the proceeds of the policy to be
paid to Ms Naidoo instead of
the appellants, and (v) the quantum of their damages.
[11]
The conduct which the appellants contend was unlawful, was Mr
Bangaru’s failure
to
furnish Old Mutual with the beneficiary nomination form,
alternatively, the failure to contact the deceased and follow up the
oral request to change the beneficiary.
[12]
The high court considered the issues of causation and quantum first
because it was of the view that those issues were dispositive
of the
entire action. The high court assumed, for purposes of the judgment,
that the appellants had satisfied the requirements
of wrongfulness
and negligent omission.
[13]
The policy under consideration contained an express term that the
deceased had the right to nominate a beneficiary and that
a
nomination of a beneficiary and an amendment or cancellation thereof
had to be in writing and would only become effective on
receipt
thereof by Old Mutual. The high court reasoned that the true wishes
of the insured in nominating a beneficiary should not
be defeated by
a contractual provision inserted for the benefit of the insured. It
was of the view that the beneficiary nomination
form should be given
effect as the will of the insured, irrespective of whether Old
Mutual’s prescripts were complied with.
On this basis it held
that the appellants’ action was against Ms Naidoo and their
claim against the respondent could only
succeed for any shortfall not
recovered from Ms Naidoo.
[14]
Interesting though these issues might have been from a legal
perspective they did not arise unless it was shown that Mr Bangaru
was in fact given the beneficiary nomination form and instructed to
send it to Old Mutual. I prefer therefore to start with the
factual
dispute. Both parties agree that the deceased did not give
instructions to the respondent personally. The instructions
were
relayed through intermediaries.
[15]
On the probabilities, had Mr Bangaru been given the beneficiary
appointment form, signed by the deceased on 28 March
2008,
there could have been no conceivable reason for him not to have
included a paragraph in the letter dated 31 March 2008 to
Old Mutual,
to that effect and attach the form. It has not been suggested that
there would have been any advantage or benefit to
Mr Bangaru not to
carry out instructions to remit the form to Old Mutual.
[16]
The objective evidence supports Mr Bangaru’s version that the
only instructions he received in respect of a change of
beneficiary
came from the deceased’s brother and sister at a meeting on 2
April 2008. It is likely that there was such a
meeting because he had
to deal with the cession of another policy from the deceased to his
brother and the relevant cession form
is dated 2 April 2008 and there
is no dispute that Mr Bangaru dealt with that appropriately. On 9
April 2008 he addressed the letter
quoted in para 7 to the deceased
recording that meeting. No reliable evidence was tendered to show
that this letter was a forgery
as contended by the appellants. The
only basis for this contention was that a different font was used in
this letter and other
letters written by Mr Bangaru. Mr Bangaru’s
explanation that he had a number of computers operated by different
staff members
at his office and this accounted for the differences in
the font, was, in my view, reasonable. On the evidence the only
letter
that this post book entry could relate to was the letter dated
9 April 2008. The appellant accepted and rightly so, that the post
book was not forged.
[17]
On the appellant’s version, the respondent was instructed, some
twenty months before the deceased’s death, to change
the
beneficiary on the policy. During this time, and prior to the death
of the deceased, no enquiry was made as to whether the
respondent had
carried out this instruction. A note by Mrs Malani, dated November
2009, about a month before her brother’s
death, reflected that
she was advised that Ms Naidoo was still the beneficiary under this
insurance policy, but that provoked no
enquiry as to why Mr Banagru
had not sent the beneficiary nomination form to Old Mutual. After the
death of the deceased, the appellants
took no steps to enquire about
the policy from Old Mutual. This inaction on the part of the
appellants is at odds with the probabilities.
[18]
An inherent untruth surfaced in the evidence of Mrs Malani,
when she stated that she had taken the deceased to see Mr
Bangaru and
the deceased had, in her presence, instructed Mr Bangaru to change
the beneficiary. Her evidence in this record was
as follows:
‘
Did
he not say that to you? - - - Did Mr Bangaroo tell you that I came
into his office with my brother Ahmed, together with him,
to change
this policy. I went – it was just Ahmed and myself, with the
instructions from Mr Naren Sangham, please take Ahmed
there, Zora,
you take Ahmed and go there’. And then every Friday we have
lunch at my house, for the past thirty some odd
years, lunch on a
Friday at my house. And I remember very clearly taking Ahmed
with me and going, and Ahmed instructing him
in front of me, which
satisfied me, and we both walked back to my house. We went walking
and we came back walking.
Is
this Ahmed the deceased? --- Yes, Ahmed the deceased.’
This
evidence is contrary to the appellants’ pleaded case as well as
evidence led on their behalf at the trial.
[19]
Another improbability in the appellants’ case relates to what
transpired at the meeting with counsel. There was no suggestion
at
that meeting, that the appellants were in a possession of a
beneficiary appointment form signed by the deceased. It is difficult
to understand why, in these circumstances, Mr Sangham, who acted for
the appellants, would have arranged a consultation, with a
potential
defendant, much less perused the contents of his file. The potential
for a conflict of interests was obvious.
[20]
While the high court said it did not make a firm factual finding on
whether the appellants had discharged the onus of proving
that the
respondent owed the appellants a duty of care, it did conclude that:
‘
If
the matter came down to a straight evaluation of the evidence and the
merits, I would have been inclined to conclude that the
Plaintiffs
had in any event not discharge the onus overall.’
This
is suggestive, that if it had been called upon to do so, it would
have made a finding adverse to the appellants. I have no
reservations
in finding that the appellants have not discharged the onus resting
on them. They failed to establish that the deceased
had instructed
the respondent to change the beneficiary on the policy. This was
fatal to their case.
[21]
For these reasons, the appeal is dismissed with costs.
____________________
L
V Theron
Judge
of Appeal
APPEARANCES
For
Appellants: AJ
Rall SC
Instructed
by:
BJ
Nicholson Attorney, Pietermaritzburg
Webbers,
Bloemfontein
For
Respondent: AJ
Dickson SC
Instructed
by:
Vennis
Attorneys, Pietermaritzburg
Honey
Attorneys, Bloemfontein