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[2016] ZASCA 149
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Muller v Sanlam Life Insurance Limited (1162/2015) [2016] ZASCA 149 (30 September 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 1162/2015
In
the matter between:
PIETER
JOHANNES MULLER
APPELLANT
and
SANLAM
LIFE INSURANCE LIMITED
RESPONDENT
Neutral
Citation:
Muller
v Sanlam
(1162/2015)
[2016] ZASCA 149
(30 September 2016)
Coram:
Lewis,
Seriti and Willis JJA and Fourie and Potterill AJJA
Heard:
5
September 2016
Delivered:
30
September 2016
Summary:
Procedure:
Application for reinstatement of an appeal and condonation for late
compliance with rules of court refused because of
extreme and
inexplicable delay, and no reasonable prospects of success on appeal.
Prescription:
Debt of long term insurer becomes due when insured dies and
beneficiary has knowledge of the death and of the existence
of the
policy.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (Saldanha J sitting as
court of first instance).
1
The application for condonation and reinstatement of the appeal on
the roll is dismissed with costs.
2
The appeal is struck from the roll.
JUDGMENT
Lewis
JA (Seriti and Willis JJA and Fourie and Potterill AJJA concurring)
[1]
Mr Muller, the applicant for reinstatement of his appeal on the roll,
and condonation of his failure to comply with the rules
of this
court, claimed from the respondent, Sanlam Life Insurance Ltd
(Sanlam), payment of the benefits under four life insurance
policies.
The policies were all in respect of Muller’s former wife, Mrs
Muller. They had divorced several years before her
death, for
business reasons, he alleged. She had been killed in an alleged
hijacking incident on 3 September 2006. The policies
had been taken
out in 2005 and 2006. Muller was the owner of two of the policies and
the beneficiary in respect of the other two,
which were owned by Mrs
Muller. Muller proceeded by way of an application, instituted on 10
May 2011, in the Western Cape High
Court, claiming payment of some R8
876 778.
[2]
The application was thus brought almost five years after the death of
the insured. Sanlam raised several defences, including
one that
Muller was complicit in the death of his former wife, and
prescription. The parties agreed that the defence of prescription
should be separated out in terms of rule 33(4) of the Uniform Rules
of Court and determined before other issues were considered.
Saldanha
J ordered that the defence, and any responses to it such as estoppel
and waiver, be referred to oral evidence. Muller
testified, as did
his insurance broker, Mr G Botha, and Muller’s fiancée,
Ms H Broodryk.
[3]
Saldanha J found that the claim had prescribed and dismissed it, but
gave leave to Muller to appeal to this court since he considered
that
there might be a reasonable prospect of success on appeal arising
from the provisions of a new rule promulgated in terms of
the
Long-Term Insurance Act 52 of 1998. The rules applicable at the time
of Ms Muller’s death, and at the time when prescription
would
ordinarily have run, had been promulgated in 2004. The new rule had
come into effect on 1 January 2011.
Condonation
and reinstatement
[4]
Before turning to the argument raised by Muller as to the effect of
the new rule, it is necessary to consider whether the appeal
that he
purportedly lodged should be reinstated, and his non-compliance with
the rules of court should be condoned. The following
chronology tells
a tale of egregious flouting of the rules of this court. Saldanha J
handed down judgment on 26 November 2013.
He granted leave to appeal
to Muller on 20 March 2014. Muller should have lodged his notice of
appeal with this court within one
month – that is on or before
24 April 2014. He did lodge such a notice with the Registrar of the
Western Cape High Court
(by then a Division of the High Court) but
failed to lodge a notice of appeal in this court timeously or for
that matter at all.
This, he says, is through inadvertence. It is not
clear whether such a notice was ever lodged in this court: no notice
appears
in the record. He does, however, ask that the late filing be
condoned. I will assume in Muller’s favour that such a notice
was lodged albeit out of time.
[5]
Secondly, Muller states in his founding affidavit in the condonation
application that he was unable to lodge the record of the
proceedings
within three months, as required by rule 8(1) of this court. He
provides no proper explanation for this failure. On
16 April 2014
Muller’s attorneys, T C Botha Inc (T C Botha), instructed
another firm, Heyns and Partners (Heyns), to obtain
a quotation for
the typing of the record. Heyns sent an email request to
a transcription service, iAfrica Transcriptions
(iAfrica) some two
weeks later. Heyns followed up on the request only two months later,
on 7 July 2014. Before then, on 5 May 2014,
Sanlam’s attorneys,
Werksmans, had reminded T C Botha that the record had to be lodged
within three months from 16 April
2014.
[6]
The attorneys, T C Botha or Heyns, failed to act on this advice, and
instructed iAfrica transcription services only on 4 August
2014.
Werksmans was advised of this on 10 December 2014 by iAfrica. By then
the appeal had lapsed (it actually lapsed in July 2014),
but no
application for reinstatement or condonation was brought until 11
December 2015, 16 months after it should have been.
[7]
This is simply astonishing, especially given that T C Botha had noted
on 4 November 2014 that the transcription had been sent
to him by
Docex the previous week. Yet Heyns had collected the transcript two
months before then, on 4 September 2014. No explanation
for the two
month delay is advanced. To add insult to injury, T C Botha only
instructed iAfrica to prepare the appeal record three
weeks later, on
27 November 2014.
[8]
In February 2015 iAfrica sent to T C Botha a provisional index and
requested any outstanding information required for the preparation
of
the record. T C Botha reacted to the correspondence only three months
later, on 5 May 2015, when he asked for input from Werksmans.
Again,
there is no explanation for the delay.
[9]
On 7 May 2015, Werksmans objected to the late response from T C Botha
and pointed out that the appeal had already lapsed. Werksmans
only
provided its input in August 2015, but it considered that the appeal
had already lapsed. There was no application for condonation
of which
the firm was aware.
[10]
The record of appeal was ready for collection from iAfrica on 24
August 2015. Yet it was served on Sanlam only 11 weeks later
and
filed in this court a month after that in December 2015. Again, no
proper explanations for these delays have been proffered.
Sanlam thus
opposes the application for reinstatement and condonation.
[11]
Condonation is not to be granted merely because it is sought: ‘it
is not to be had merely for the asking’:
Uitenhage
Transitional Local Council v South African Revenue Service
2004
(1) SA 292
(SCA) para 6, where Heher JA said that a full, detailed
and accurate account of the causes of the delay must be furnished so
that
the court can assess where responsibility lies. In
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Ltd
& Others
[2013] ZASCA 5
;
[2013] 2 All SA 251
(SCA)
para 11 Ponnan JA said:
‘
Factors
which usually weigh with this court in considering an application for
condonation include the degree of non-compliance,
the explanation
therefor, the importance of the case, a respondent’s interest
in the finality of the judgment of the court
below, the convenience
of this court and the avoidance of unnecessary delay in the
administration of justice.’
[12]
These principles were endorsed again in
Commissioner,
South African Revenue Service v Van der Merwe
[2015]
ZASCA 86
;
2016 (1) SA 599
(SCA), para 11. To them must be added the
requirement that there should at least be reasonable prospects of
success on appeal.
If it appears that an injustice may have been done
to a party by a court a quo, then that may be weighed against the
degree of
his or her non-compliance.
[13]
I consider that Muller and his legal advisers have conducted this
litigation in a deplorable fashion. They have shown no interest
at
all in pursuing the appeal properly or at all. However, since the
court a quo gave leave to appeal on the basis that another
court
might consider the change in rule to have affected the law of
prescription, I think that I should examine the proposition,
and the
other arguments raised by Muller, albeit briefly, and only in order
to determine whether there are reasonable prospects
of success on
appeal.
The
arguments on prescription
Sanlam
did not reject the claim until 2011
[14]
There are several strings to Muller’s bow on prescription.
First, he contends that until a claim has been repudiated
by an
insurer, the debt does not become due. But there is no authority for
that proposition.
Section 12(1)
of the
Prescription Act 68 of 1969
provides that ‘prescription shall commence to run as soon
as the debt is due;
s 12(3)
states that a ‘debt shall not be
deemed to be due until the creditor has knowledge of the identity of
the debtor and the
facts from which the debt arises: provided that a
creditor shall be deemed to have such knowledge if he could have
acquired it
by exercising reasonable care’.
[15]
In
Danielz
NO v De Wet & another
2009 (6) SA 42
(C) (paras 48, and 50 to 54) the court stated
that the Act applies to insurance contracts as to all other
contracts. Traverso
DJP stated that in terms of the insurance
contract in issue, the debt became due when the insured died. That
was the date on which
prescription commenced to run.
[16]
Muller knew of the death of his former wife and the existence of the
policies on that date – 13 September 2006. Thus
the debt would
have prescribed on 12 September 2009, three years later. That Muller
was aware of the debt immediately is confirmed
by the fact that he
consulted his broker, G Botha, very soon after the death and claims
were lodged on his behalf. And he had taken
out the policies not long
before his former wife’s death so he was fully aware of their
existence and their terms. Yet no
proceedings were instituted until
10 May 2011, more than four years after the debt became due.
[17]
Sanlam accepted that it bore the onus of proving that the debt had
prescribed. It argued that the contention of Muller that
prescription
would only begin to run on the date when it rejected his claim was
unsustainable. As Nugent JA said in
Duet
& Magnum Financial Services CC v Koster
[2010] ZASCA 34
;
[2010] 4 All SA 154
(SCA) para 24: ‘At times
the exercise of a right calls for no action on the part of the
“debtor”, but only for
the “debtor” to submit
himself or herself to the exercise of the right.’
[18]
It was thus not incumbent on Sanlam to accept or reject Muller’s
claims on the policies. Only when process was served
on it in terms
of the Act would it be obliged to defend the claim. Thus the numerous
queries directed by the broker, G Botha, who
represented Muller in
dealing with Sanlam, did not require an answer from it, whether
accepting the claim or rejecting it.
[19]
Although the court considered cases that have dealt with the time at
which a debt becomes due, I do not think it is necessary
to repeat
the established principles again. Muller had all the knowledge of the
facts underlying his cause of action on the date
of his former wife’s
death. In
Minister
of Finance & others v Gore NO
[2006] ZASCA 98
;
2007 (1) SA 111
(SCA) this court said (para 17) that
‘time begins to run against the creditor when it has the
minimum facts that are necessary
to institute action. The running of
prescription is not postponed until a creditor becomes aware of the
full extent of its legal
rights, nor until the creditor has evidence
that would enable it to prove a case “comfortably”’
(footnotes omitted).
The
change to the Long-Term Insurance rules
[20]
Muller argues that these general principles have changed since the
promulgation of a new rule16 under s 62 of the Long-Term
Insurance
Act. The rules promulgated in 2004 were applicable in 2005 and 2006
when the policies were taken out. They did not then
in any way affect
the running of prescription. The objective of the rules is ‘to
ensure that policies . . . are entered into,
executed and enforced in
accordance with sound insurance principles and practice in the
interests of the parties and in the public
interest’ (rule 2).
[21]
Rule 16.1 formerly provided that an insurer must ensure, where it
rejects a claim, or disputes the quantum of a claim, that
the person
entitled to claim a benefit is notified in writing of the reasons for
the rejection or the quantum disputed. The latter
may within 90 days
after the date of notification make representations in respect of the
insurer’s decision.
[22]
The amended rule, which came into operation on 1 January 2011, now
provides that an insurer must ‘accept, reject, or
dispute a
claim or the quantum of a claim for a benefit under a policy within a
reasonable period after receipt of a claim’.
It must notify the
policyholder of its decision within 10 days of making it. The rule
further obliges insurers to give reasons
for decisions, and gives the
policyholder 90 days to make representations to it, and to notify him
or her of the right to complain
under the
Financial Services Ombud
Schemes Act 37 of 2004
.
[23]
Muller argues that the new rule applies retrospectively and that
because Sanlam did not reject his claim within a reasonable
period,
prescription has not begun to run. The proposition has only to be
stated to be rejected. First, the rules do not purport
to change the
Prescription Act. They
cannot do so. They do no more than protect the
interests of insured and insurer. The new
rule 16
provides for
greater transparency and places burdens on the insurer to act
reasonably promptly and to give information. It
also regulates
time limitation periods.
Rule 16(2)(d)
provides that, for the
purposes of
s 12(1)
of the
Prescription Act, ‘a
debt is due
after the expiry of the period of prescription referred to in
16(1)
(c)
(ii)’.
The latter subsection provides that the policyholder may, ‘within
a period of not less than 90 days after the
date of receipt of the
notice [of reasons for the decision] make representations to the
relevant insurer in respect of the decision’.
Thus, according
to this rule, the debt will become due only after the 90-day period
has expired.
[24]
The statutory provisions regulating prescription are thus affected by
the rule, but whether it would have applied to Sanlam’s
debt
need not be decided, given that the debt had prescribed before the
new rule had even been promulgated. It could not revive
Sanlam’s
debt. Although Muller has argued that the new rule applies to
policies entered into before 1 January 2011, it is
not necessary to
determine whether this is so. The debt had prescribed long before
then.
Estoppel
and waiver
[25]
Muller argues that Sanlam is estopped from relying upon prescription
since it had represented to him, falsely, that the policy
benefits
were not yet payable as certain documents had not been made
available. These included the inquest report, which was obtained
only
in 2010, and police and prosecutor’s reports relating to the
criminal charge that Muller might have faced. Sanlam had
continued to
correspond with G Botha, the broker, until December 2010 when it
informed him that it was not yet in a position to
make a decision.
[26]
A request for documents does not amount to a false representation
that prescription would not be relied upon. But Muller in
any event
testified that he had discussed the matter with his legal
representatives, and gained the impression from them that Sanlam
could not rely on prescription. So it was not Sanlam that created the
false impression, but his lawyers. Moreover, the correspondence
and
conduct relied upon by Muller to substantiate his assertion that he
had been misled by Sanlam’s conduct, all occurred
after the
debt had already become prescribed. Various requests for documents
were made by Sanlam and letters were sent by G Botha
to Sanlam
after 12 September 2009, when the debt had already become prescribed.
They could not have had any effect, at that stage,
on the running of
prescription. In the previous year, 2008, there had been no exchanges
between Sanlam, on the one hand, and Muller’s
broker and
attorneys on the other.
[27]
The fact that Sanlam may have added to Muller’s false
impression – that it would not rely on prescription –
is
thus of no consequence. If Muller had had proper legal advice, he
would have issued summons before September 2009 in order to
avoid the
spectre of prescription.
[28]
As for waiver – in order to show that Sanlam had waived its
right to rely on prescription, as Muller contends it did,
Muller had
to show an unequivocal intention on the part of Sanlam to abandon its
right to rely on prescription. That intention
can exist only where
the creditor has knowledge of the right. The inference that it
knowingly abandoned its right to rely on prescription
can be drawn
only from the objective manifestations of its state of mind. No such
inference can be drawn on the facts in this matter.
(See
Road
Accident Fund v Mothupi
2000 (4) SA 38
(SCA) paras 15-24.) That argument must thus also fail.
Reciprocity
[29]
Muller argued before the high court (although it did not press this
point on appeal) that Sanlam’s obligation to pay
the death
benefits was reciprocal to Muller’s obligation to pay the
premiums. If that were correct,
s 13(2)
of the
Prescription Act
would
have delayed the running of prescription. The section provides:
‘
A
debt which arises from contract and which would, but for the
provisions of this subsection, become prescribed before a reciprocal
debt which arises from the same contract becomes prescribed, shall
not become prescribed before the reciprocal debt becomes prescribed.’
The
argument is without merit, as the high court found. An insurance
contract is not reciprocal, particularly where an insured is
required
to pay the premiums in advance of the insurer’s obligation to
pay out a benefit. In
Robin
v Guarantee Life Assurance Co Ltd
[1984] ZASCA 72
;
1984 (4) SA 558
(A) at 573A-D Trengove JA, relying on
Halsbury’s
Laws of England
4 ed Vol 25 (para 548) said that a whole life insurance policy (which
Sanlam’s policies were) requires an insurer, in consideration
for the payment of premiums, to pay a specified sum of money at the
end of the insured’s life. Trengove JA continued: ‘Under
whole life insurance, if the policy is kept in force, the sum insured
will become payable whenever death occurs – the only
question
is
when
it will become payable.’
[30]
The performances of the different obligations under the contract are
thus not reciprocal. See also 12
Lawsa
(first reissue, 2002) para 251, where the authors point out
that a contract of life insurance is traditionally construed
as a
unilateral contract: the insured is given an election whether or not
to pay the premiums. If he or she does not, the contract
comes to an
end. In my view, Saldanha J correctly held that the parties’
obligations were not reciprocal and that
s 13(2)
did not save the
debt from prescribing.
[31]
In the circumstances there are no reasonable prospects of success on
appeal and the application for reinstatement and condonation
falls to
be dismissed.
Costs
[32]
Muller has asked that, in the event of Sanlam succeeding, it should
not be awarded costs. That is presumably because it had
taken so long
to respond to Muller’s claim. The request is not justifiable.
It is true that Sanlam did not act with expedition,
and that it
continued to entertain queries and respond to letters long after the
debt had prescribed. But then Muller and his broker
and attorneys
were just as tardy and pursued the claim with little vigour. Sanlam
is entitled to its costs.
[33]
Accordingly:
1
The application for condonation and reinstatement of the appeal on
the roll is dismissed with costs.
2
The appeal is struck from the roll.
_______________________
C
H Lewis
Judge
of Appeal
APPEARANCES
For the
Appellant:
S Joubert SC (with him E Muller)
Instructed
by:
Dr T C Botha Attorneys Inc
c/o Heyns & Partners,
Cape Town
McIntyre & Van der
Post Attorneys, Bloemfontein
For the Respondent:
A De V La Grange
SC
Instructed
by:
Werksmans Attorneys, Cape Town
Phatshoane Henney Inc,
Bloemfontein