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[2017] ZAGPJHC 360
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Global Aviation Investments (Pty) Ltd and Others v Ingosstrakh (18553/2014) [2017] ZAGPJHC 360 (26 May 2017)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 18553/2014
26
May 2017
In
the matter between:
GLOBAL
AVIATION
INVESTMENTS
1
ST
APPLICANT
(PTY)
LTD
GLOBAL
AVIATION
INVESTMENTS
2
ND
APPLICANT
GROUP
(BVI) LTD
GLOBAL
AVIATION
OPERATIONS
3
RD
APPLICANT
(PTY)
LTD
And
INGOSSTRAKH
RESPONDENT
JUDGMENT
VICTOR
J
:
[1]
On 13 November 2012 the plaintiff’s MD82 aircraft with
registration number ZS-TOG and Aircraft Manager Serial Number 49905
sustained damage during a rejected take-off at OR Tambo International
Airport when a warning light in the cockpit showed a landing
gear
anomaly. Both engines ingested non organic foreign material while
under full power resulting in damage to the aircraft itself
and to
the left and right hand side engines. The aircraft had to be removed
from the runway and this resulted in a closure of the
runway for 5
hours.
[2]
The questions for determination include whether on a proper
interpretation of the Airline Hull All Risk Insurance Policy Number
BO509AD231523 policy, constructive total loss (CTL) was covered and
whether it was at the applicant’s election to declare
the loss
a CTL and what the respondents’ obligations were in terms of
the policy
[3]
The deponent on behalf of the applicant is Mr Jonathan Rosenzweig and
he sets out a very detailed history. He was responsible
for the
aircraft. He holds a commercial pilot’s license and is a
designated flight examiner to test pilot trainees training.
He also
gives a very detailed exposition of his experience in the field and
since 2001 he has been employed by Global Airways Group
operating at
O.R Tambo International Airport. The applicant relies on clauses in
the insurance policy for the damage suffered by
it.
[4]
Section 1 deals with
‘
Hull
Coverage’ and ’Cover’
is
defined as follows:
‘
This
Section covers the Insured Property being Aircraft owned,
operated or used by or on behalf of the insured for which
the
insured is responsible as per the Schedule of the Aircraft against
all risks of loss or damage whilst in flight, taxiing or
on the
ground, howsoever occasioned, except as hereinafter excluded,
sustained during the Period of Insurance’.
Clause
‘3(b) Under the legend” Agreed Value - Total Loss:
A
total loss may be detained under this insurance at the option of the
Insured, in the event that the cost of the repair of the
damage
together with the cost of salvage and/or transport from the place of
accident to the place of repair and return to service
be estimated at
75% of the agreed value. In such event the Insurers will pay
the agreed value of the Aircraft. However any
increase in the agreed
value of the Aircraft concerned, as provided in clause 11 of this
section, shall not be taken into account
in the application of this
provision.
This
provision shall not however preclude the declaration of a total loss
following the agreement between the insurers and the insured
in the
event that such costs be estimated at less than seventy five percent
of the agreed value, in such event the insurers will
pay the agreed
value of the aircraft.
However
any increase in the agreed value of the aircraft concerned, as
provided for in clause 11 of this section, shall not be taken
into
account.’
[5]
Clause 8 of Section 2 defines that the policy would be governed by
the Applicant’s domicile
[6]
One month from 13 November 2012 after the damage was incurred, the
third applicant submitted a full aircraft and engine repair
costing
to Airclaims and the quotation amounted to US$2 088 696.80 with
a statement that only visible damage was quoted for.
Airclaims
is a company appointed by the respondent to assess the damage to the
aircraft.
[7]
This quote was obtained from Global Aviation Maintenance (Pty) Ltd
(GAM) an associated company of the applicant. The quotation
exceeded
the constructive total loss (the CTL) threshold, as referred to in
clause 3(b) of the policy.
[8]
The applicant also contends that GAM is the approved maintence
supplier approved by the South African Civil Aviation Authority
(SACAA). GAM was the only Aviation Maintenance Organisation (AMO)
which had access to technical data supplied by Boeing. It also
had
the requisite B category licence with the MD-80 type rating issued by
SACCA which allowed it to carry out maintenance.
[9]
The first applicant in its founding affidavit sets out that it was of
the view that Global Aviation Maintenance was really the
only service
provider who could repair this kind of aircraft in accordance with
the manufacturer’s recommendations. It alleged
that Airclaims
either deliberately or mistakenly suggested companies that were not
competent to repair the aircraft to service
level. These included
Nevergreen Aircraft Industries, Star Air Maintenance (Pty) Limited
and Jetworxs and the contention is that
Global Aviation Maintenance
(Pty) Limited, a related company, was the only company in South
Africa that could repair this aircraft.
[10]
The respondent on the other hand had also included a quotation which
demonstrated that the aircraft was not a CTL and that
it could be
repaired for half the amount and therefore asserted that the
provisions of clause 3(b) did not apply. Reference was
made to the
Civil Aviation Regulations setting out in great detail what is
required of a service provider that could repair the
aircraft in
question and contended that no other company other than an
entity that holds a category B license could repair
the aircraft.
Interpretation
of Clause 3(b)
[11]
The applicant relied on a number of cases and made the submission
that once an aircraft was damaged the option to have it declared
CTL
was really at the option of the insured. The applicant also submitted
that the cost estimate could be made only by an entity
selected by
the insured. In the result the applicants’ case involved a
proper interpretation of clause 3(b). The applicants
relied on the
word ‘may’ in line 1 of clause 3(b). I deal with
the first part of that clause where the words:
‘
A
total loss may be declared under this insurance at the option of the
insured, in the event that the cost of the repair of the
damage
together with the cost of salvage and or transfer from the place of
the accident to the place of repair be estimated at
seventy five
percent or more of the value.’
[12]
In my view a strict construction of those words does not suggest that
it is only the insured that can elect the cost of such
repair. This
clause only gives the applicant a right to declare and this is
captured by the words “may be declared”.
This does not
preclude the respondent from also providing estimates of what the
cost of repair would be. It is only relevant to
the situation where
both the insured and the insurer are
ad
idem
that the cost is seventy five
percent or more than the agreed value, bearing in mind that the
agreed value in this matter was $2 500
000.
[13]
The applicant contends that it was only GAM who could provide a
quote. This must be compared with the fact that by the time
the
insurer, that is the respondent, obtained a quote its service
provider had the necessary B category accreditation. It matters
not
whether the accreditation is obtained after the insured event (that
is the damage in this instance), it is acceptable that
indeed even 1
year after the collision that an entity with a B category
accreditation can made such an assessment.
[14]
The applicant also sought to argue that the entity appointed by the
respondent did not even inspect the aircraft. The affidavits
are very
clear on behalf of the first respondent, the aircraft certainly was
inspected. On a proper construction of the affidavit
and the
quote, it certainly was inspected. Therefore it was not simply
an academic exercise.
[15]
The applicants further contend that based on a case of
Kliptown
Clothing Industries (Pty) Ltd v Marine & Trade Insurance Co of SA
Ltd
1961 (1) SA 103
(A)
where
there is possible ambiguity, in a contract of insurance that
ambiguity must be construed in favour of the insured as opposed
to
the insurer.
[16]
In my view there is no ambiguity. In particular, if one had
regard to the contract together with its endorsements and
one such
particular endorsement is number 4, where the definition of an
agreement value clause is set out.
‘
It
is hereby understood and agreed that in consideration of the insured
aircraft being covered on an agreement value basis, all
reference
herein to replacement shall be deemed to be deleted, but only in
respect of claims adjusted on the basis of a total loss.’
This
was in amplification of clause 4 of the main agreement which referred
to the cost of the repair in the case of partial loss.
Endorsement no 4 goes on to provide that the claims arising in
respect of partial loss of damage the insurer shall retain the right
to repair, replace or make good as they deem it expedient.
[17]
Therefore in my view and upon proper interpretation of this contract,
it cannot be said that it is only the insured (that is
the applicant
in this matter) who can select where the aircraft must be repaired or
select that the aircraft is in fact a CTL.
In respect of clause 4 of
the main agreement which defines partial loss, a formula is set out
and the insured is paid in a particular
way.
[18]
For example, in the event of damage being repaired by the insured and
not the insurer, the actual wages paid for labour will
be allowed at
normal rates plus two hundred and fifty percent, or alternatively at
the insured’s option (again insured) shall
be charged at the
insured’s average man hour tariff applicable at the time,
material and parts shall be allowed at actual
cost plus up to thirty
percent.
[19]
In other words clause 4 in the main agreement specifically applies to
when the insured does the repairs. But the endorsement
to that
clause clearly provides for an insurer to retain the right to repair,
replace or make good the aircraft as they deem fit.
Compromise
[20]
There is a further claim in support of its claim which the applicants
contend for, and that is that there was a compromise
on behalf of the
respondent. It is common cause that Mr Van Der Merwe was appointed on
behalf of the respondent to assist in the
evaluation of the damage
and to investigate further. Mr Van Der Merwe is an aviation surveyor
and his final paragraph in his report
of 28 December 2012 makes the
following, and I emphasize:
‘
Subject
to the underwriter’s agreement we recommend a loss reserve be
established on the basis of a constructive total loss.
We
additionally recommend a fee reserve of £8 000. We trust the
above and aforementioned is found to be in order and look
forward to
receiving underwriter’s return comments accordingly. In the
meantime our investigations continue with further
reports to follow.’
[21]
The compromise claimed by the applicants must be assessed in the
light of all the evidence that is before the court. Clearly
this
letter sent by Mr Van Der Merwe (the Aviation Surveyor on behalf of
the first respondent) says unequivocally
‘
subject
to the underwriter’s agreement
’
,
that is the respondent, he makes a particular recommendation. He also
says that he looks forward to receiving the underwriter’s
comments by return. Whatever recommendation he makes, he is still
reliant on the final instruction of the first respondent. The
applicant has also quoted in detail excerpts from a meeting held with
Mr Van Der Merwe.
[22]
What is of importance here is that Mr Van Der Merwe was informed at
the time that Global Aviation was the only company who
could do the
repairs, and they persuaded him that they, the insured (that is the
applicant), could make an election as to whether
the aircraft should
be a CTL or be repaired. On a proper reading of the transcript of
that meeting it is clear that based on the
information given to Mr
Van Der Merwe he could never have been in a position to appreciate
the full facts, and therefore did not
and could not bind the first
respondent if regard be had to his report which I have referred to in
great detail.
[23]
On the question of the dispute of fact on whether the aircraft is a
CTL or whether I must accept the respondent’s version
of
partial loss and the cost of repair, the respondent has requested the
court to take into account that much before the time when
this matter
was enrolled and indeed 1 week before the hearing of this matter, the
applicant was requested by the respondent not
to proceed with
argument because of the disputes of fact, and they were pivotal
issues to be decided.
[24]
The applicant did not use the opportunity to postpone this matter for
trial instead it was bent on obtaining its relief despite
the
apparent and manifest dispute of facts. In my view on any basis the
disputes of fact are significant as to whether this damage
constitutes a CTL or whether I must accept the respondents’
valuation. I accept that the respondent’s valuator did
have the
necessary B category and could provide the valuation that it did.
[25]
On a proper application of the Plascon-Evans Rules I must therefore
accept the version of the respondents and only if the version
is
uncreditworthy, fictitious, implausible or so farfetched can I reject
it merely on these affidavits. Basically the applicants
contend that
the cost of repair is almost $2 600 000. The respondent on the
other hand contends that the cost of repair is
R1 100 000 and
this quote was received from the accredited AMO. There is more than
R1 000 000 difference and this is
highly significant. The
applicants suggestion that the respondents ex AMO or expert did not
actually inspect the aircraft means
that it would be impossible on
these papers as they stand to make a finding that the aircraft was in
fact a CTL and therefore exceeded
the seventy five percent of the
agreed value between the parties.
[26]
I cannot accept that the SACAA are the appropriate agencies to
delegate and indicate which service provider must do the repairs.
As
I understand the correspondence from that governing body, it is their
duty to make sure that a repairer has the necessary qualification
and
the fact that Global Aviation was mentioned in that letter is no more
than that, that Global Aviation did have the necessary
B category
accreditation to effect the repairs. Furthermore on a proper analysis
and context of Mr Van Der Merwe’s input
I cannot find that he
bound the respondents or that he in fact reached a compromise, even a
conditional compromise on this.
[27]
A further submission on behalf of the respondent is that of
repudiation. On 29 September 2014 the respondent requested the
applicant to tender the aircraft for repair, and that the failure to
do so would constitute a repudiation of the policy. The applicants
failed to do so and on 30 January 2015 the respondents accepted the
applicant’s repudiation and cancelled the policy. In
the
result, there is before me now a claim on behalf of the applicants in
respect of the policy which the respondents contend has
been
cancelled.
[28]
The applicants also filed a further set of Heads of Argument dealing
with the issues raised by the respondent, and reference
is made to
the fact again that Phoebus Apollo (that is the service provider)
chosen by the first respondent was not an accredited
AMO and didn’t
have the B category accreditation and therefore there could be no
repudiation of the policy by the applicant.
But in any event the main
submission by the applicant was that it would exercise its rights in
terms of clause 3(b) of the insurance
policy and it had the option to
elect whether to pronounce the aircraft a CTL or alternatively what
and in addition decide which
service provider to use or which AMO to
use to make that valuation.
[29]
The respondent has sought an order of costs on the attorney and
client scale having regard to the forewarning the applicant
had as to
the massive disputes of fact in this matter. The applicant relied on
the case of
Marques v Trust Bank of
Africa Ltd & another
1988 (2) SA
526
(W)
530 – 531 where Morris AJ
differed with other cases and found that counsel should not be
saddled with the burden of having
to decide whether the disputes of
such a nature are incapable of resolution on the papers because that
was the very issue the court
had to decide.
[30]
The respondent referred the court to a recent appellant division
authority, where it was clear that a party had to make its
election
if it was to proceed with seeking relief by way of notice of motion.
It must at his own peril proceed by way of application.
I refer to
the case of
Tamarillo (Pty) Ltd v B N
Aitken (Pty) Ltd
1982 (1) SA 398
(A)
at 430
(g – h), also the case of
Carrara
& Lecuona (Pty) Ltd v Van Der Heever Investments Ltd And Others
1973 (3) Sa 716
(T)
720 (b – f),
where the principle is reiterated namely that a party should not
proceed by way of motion proceedings in the
event that it could have
anticipated a dispute of fact.
[31]
The further question is whether the applicant’s conduct is such
as to justify an attorney and client order. In my view
the case made
out by the applicants is founded on potential disputes of fact. In
addition, when the answering affidavit was filed
and when the further
supplementary affidavit was filed by Phoebus Apollo Aircraft
Repairers, the applicant should have demurred
before it set out to
progress the application to the extent it did. I do not see how, at
the very end when the shoe pinches, that
the applicant can then seek
a referral to trial in the face of all the warnings given by the
respondents. I asked the parties whether
the applicants claim had
prescribed or would prescribe if I were to dismiss the application. I
am advised that the applicants have
until December 2015 in order to
file an action in the event that I dismiss this claim.
[32]
I have given careful consideration to the amount of work that has
gone into this application however there is nothing that
persuades me
on the applicant’s case that it should have proceeded by way of
application.
[33]
I am also not convinced that an attorney client scale award would be
appropriate in these circumstances. In particular the
vigour with
which the applicants seek to progress their claim must be seen in
context. There are large damages involved and I do
not find it
appropriate to punish the applicants because their livelihood is at
stake, and they decided to persevere none the less.
In
the result the order that I make is the following:
The
application is dismissed with costs, including the costs of two
counsel and it stands as between party and party.
______________________
M.
VICTOR
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION
Appearances
:
Case
Nr: 18553/2014
Counsel for Plaintiff: B.W Maselle
Instructed by: Cranko Karp &
Associates Inc.
2
ND
Floor West Wing
Oakhurst
Office Park
Parktown
(011)
643 – 3909
Counsel for Defendant: Bruce Berridge
SC
Appearing with: Anban Govender
Instructed by: Clyde & Co (Inc. as
Daniel Le Roux and Ass.)
6
th
Floor Katherine & West Building
114
West Street, Sandton
(010)
286 – 0367
Date
of hearing
: 2015-05-19
Date
of judgment
: 2015-05-25