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[2010] ZAGPJHC 96
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Bruwer v Nova Risk Partners Limited (A5030/2010) [2010] ZAGPJHC 96; 2011 (1) SA 234 (GSJ) (25 October 2010)
Links to summary
REPORTABLE
IN THE SOUTH GAUTENG HIGH
COURT (JOHANNESBURG)
Case Number:
A5030/2010
Case Number
in Court
a
quo
:
2008/16953
DATE:
25/10/2010
In the matter between:
DONN
ETTIENE
BRUWER
............................................................
Appellant
and
NOVA RISK
PARTNERS
LIMITED
............................................
Respondent
_______________________________________________________________
JUDGMENT
_______________________________________________________________
C. J.
CLAASSEN J
:
This is an
appeal against the judgment handed down by Mathopo J in this court
on 28 October 2009. What is surprising is that the
record does not
disclose whether leave to appeal has been granted, either by the
court
a
quo
or the Supreme Court of Appeal. It will be assumed that appropriate
leave to appeal was obtained until the contrary has been
established.
At the outset of the hearing of
this appeal, condonation for the late filing of the appellant’s
heads of argument was granted
without opposition from the
respondent.
This case
concerns a claim for indemnification by an insured in terms of an
insurance policy which was repudiated by the insurer.
The insured is
the appellant and the insurer is the respondent. The case started
out as an application launched by the appellant
against the
respondent for an order to indemnify the appellant for damages
suffered together with an order for costs on an attorney
and client
scale. This matter came before Lamont J who referred the matter to
trial due to various disputes which could not be
resolved on the
papers. Lamont J referred the matter to trial ordering the appellant
to file a declaration where after normal
pleadings followed.
Ultimately the matter came before Mathopo J on trial.
Mathopo J
held that the appellant failed to disclose certain material
information entitling the respondent to void the policy
as a result
whereof the respondent’s repudiation of liability was upheld
and the appellant’s action was dismissed
with costs. It is
against this order which the appellant now appeals. For the sake of
convenience the parties will be referred
to as they were known in
the trial before Mathopo J i.e. the appellant was the plaintiff and
the respondent was the defendant.
BACKGROUND FACTS
Initially
the plaintiff was comprehensively insured by SA Eagle Insurance
Company against any damage to his motor vehicle. His
portfolio with
SA Eagle was taken over by the defendant, during 2003. While still
insured by SA Eagle, the plaintiff was involved
in two motor
collisions, one during 1994 for which he was charged but acquitted
and one during 1997 for which no prosecution
ensued due to a
nolle
prosequi
.
1
The
insurance policy in the instant case between the plaintiff and the
defendant took effect on 1 November 2003.
2
The annual anniversary date of this policy was 31 October 2004 and
was subject to a monthly premium of R1551.40. In exchange
for the
premium the defendant insured the plaintiff against damage,
liability or injury as set out therein. The indemnity covered
the
insurance of the plaintiff’s motor vehicle being a Fiat Palio.
The policy consisted of a booklet and a schedule attached
thereto.
It stipulated that words printed in italics were only intended for
explanation purposes.
3
The further provisions of the policy relevant to the present
dispute, are the following:
“
SECTION
5 – GENERAL CONDITIONS
Claims
If anything happens that could
result in a claim
you must:-
not, under any circumstances,
make any admission, statement or offer to any other party or do
anything that would be tantamount
to that in connection with any
event that may give rise to a claim against you, without the
Company’s written consent;
immediately advise the
Company as soon as you become aware of any possible prosecution or
inquest.
…
Disclosure
You must inform the Company of
all facts that are material to the acceptance of the insurance or the
premium that is charged. If
you fail to do this, the Company may, at
its option, declare this policy void. As this also applies during the
currency of this
policy, any changes must be reported immediately.
(
It
is therefore important for you to disclose all material facts that
may be of relevance to the Company
.)”
The “First Accident”
on 29/09/2006
On 29
September 2006 the plaintiff was involved in a motor collision while
driving his
Mazda
4X4 vehicle. He reported the details of this collision in a “MOTOR
CLAIM FORM” completed on the same day. This
form indicated
that he reported the incident to the Muldersdrift police station
under case number 425/09/06. He completed the
form in respect of the
place where and the manner in which the collision occurred by
stating that it occurred in Hendrik Potgieter
Drive, Krugersdorp
and: --
“
I
misjudged the speed with which the car in front of me stopped as I
was looking in my mirror to see if there were cars behind me
and I
bumped the other vehicle.”
The form also
indicated that he reported that he was tested for alcohol. He signed
the document on 13 October 2006.
4
I will refer to this accident as “the First Accident”.
The
plaintiff was subsequently charged with reckless/negligent driving.
5
The evidence disclosed some disputes between the two witnesses
testifying for the defendant namely Ms Orgina Willemina Stodart
and
Mr Mike de Kock as to when notification was given to the defendant
of this impending prosecution. What is, however, beyond
doubt is
that Stodart informed the plaintiff on 31 May 2007 in an e-mail that
De Kock, the defendant’s assessor/investigator,
would
accompany plaintiff to court for the trial set for 14 June 2007.
6
This e-mail confirms that there was a discussion between the
plaintiff and “Mike”.
7
It was also copied to Mr Hennie Naude of M & S Loss Adjusters
who acted on behalf of the defendant on the instructions of
Stodart.
De Kock did not, however, accompany him to court on 14 June. In any
event, the case was postponed to a date in October
2007. De Kock
testified that as a matter of norm, he would not accompany a client
to a court hearing as “he had nothing
to do there”.
Stodart
admitted that she was aware of the fact that the plaintiff was being
charged with reckless
/negligent
driving and driving under the influence of liquor.
8
Stodart testified that she was told by De Kock that there was a
prosecution in regard to the first accident when she appointed
him
in October 2006.
9
This
must be so because it was common cause that she appointed De Kock to
investigate this first accident. The plaintiff testified
that he was
told by Stodart to speak to De Kock. He further testified that he
told De Kock that he was going to plead guilty
to the charges. De
Kock denied being told this by plaintiff.
On 22 August
2007, Stodart attempted to obtain the results of tests done on
plaintiff for his blood alcohol count from a certain
Maryanne of the
Legal Office at Santam Insurance Company.
10
It is not clear from the evidence whether or not she was successful
in this endeavour. Be that as it may, it is beyond question
that
Stodart was aware that plaintiff was also being prosecuted for drunk
driving.
On 15
October 2007 the plaintiff was convicted of negligent driving and on
24 October 2007 was sentenced to a fine of R8 000.00
or six months’
imprisonment wholly suspended for five years on condition that he
was not convicted of reckless/negligent
driving committed during the
period of suspension. His driver’s licence was also endorsed.
11
On 23
October 2007 Stodart sent an e-mail to De Kock asking for urgent
clarification in regard to the outcome of the criminal
case against
the plaintiff.
12
In reply to this e-mail De Kock responded in an e-mail to Stodart
dated 20 November 2007, wherein he stated that he was finalising
his
report. This e-mail contained a note in manuscript stating:
“
24/10/200
7
Skuldig
Reckless & neg.
R8000-00 of 6 months.
Drunk
Driving. charged not guilty.”
13
The “Second
Accident” on 17/01/2008
The “Second
Accident” which forms the subject of the
present claim occurred on 17 January 2008. In this accident
plaintiff was the driver of his Fiat Palio vehicle which was insured
by the defendant. Plaintiff completed a “MOTOR CLAIM FORM”
in regard to this accident on 21 January 2008.
14
Also on 21 January 2008 the Fiat Palio was declared uneconomical to
repair by Ger-Matic CC.
15
It is common cause that on 22 January 2008 the motor claim form was
submitted by the plaintiff to Mr. Hennie Naude of the defendant’s
Loss Adjusters.
16
On 21
February 2008 Stodart addressed a letter to the plaintiff marked
“Without Prejudice”, stating that the defendant
was of
the view that there was sufficient information to indicate that the
second accident was attributable to the plaintiff
having driven
while under the influence of liquor and for that reason the claim
was repudiated (the “First Repudiation”).
17
The next day and on 22 February 2008, the defendant gave the
plaintiff thirty days notice of its intention to terminate the
policy as from 22 March 2008.
18
In a letter
dated 18 March 2008, Centriq Insurance Innovation, owners of the
defendant, wrote to the plaintiff attaching several
documents,
amongst others the warrant issued by the Krugersdorp Traffic Court
confirming the plaintiff’s conviction and
sentence in regard
to the first accident.
19
This would indicate that at least by 18 March 2008 the defendant
and/or its parent company, was aware of the conviction and sentence
on the first accident which occurred in October 2007. In response
hereto the plaintiff wrote an e-mail on 27 March 2008 to the
defendant requesting a copy of the assessor’s report which
alleged that he was under the influence of liquor.
20
In an e-mail four days later dated 31 March 2008, the plaintiff
again requested Stodart for information as to why his claim was
repudiated. In this regard the e-mail states the following:
“
The above and your e-mail
dated 11 March 2008 refers.
I have not
heard anything from Mike relating to my last claim.
It
is now more than two months later.
I have contacted him and he said he will revert to me regarding a
meeting, but he has not. I also do not know why he wishes to
meet
with me as
I
have provided you with all the requested information
.
You will appreciate that I am
paying my monthly instalments on the vehicle, whilst I do not have
the use of same and that same is
frustrating as it would seem that
you have done nothing to date to sort my claim out.
Should this
matter not be sorted out within five days after date hereof, I will
approach the Ombudsman for his advise (sic)
or
I will seek legal advise
(sic).”
21
(Emphasis added)
The very next
day on 1 April, the plaintiff received a response from De Kock
wherein he states the following:
“
I have again tried to
phone you today. Your landline number diverts and then goes dead and
your cell number remains engaged.
The same
applies to previous attempts.
Please
contact me regarding your claim.”
22
It appears
that the plaintiff was in Cape Town at that time and did not respond
immediately as a result whereof De Kock again sent
him an e-mail on 4
April 2008 wherein the following was stated:
“
Please
will you contact me regarding your claim
.
I need to see you regarding the claim as a matter of urgency.”
23
Nothing
further
of note transpired between the parties as a result whereof the
plaintiff proceeded to act upon his threat mentioned in his email
of
31 March. He instituted the application on 5 June 2008 for the
relief referred to above. After the institution of the application
the plaintiff was requested by the respondent’s attorneys of
record to supply it with information by filling in a questionnaire
consisting of some nine pages of questions. The plaintiff refused to
do so as litigation between the parties had already commenced.
24
On 20 August
2008 (two and a half months after the application was launched)
Stodart, as claims manager, wrote a letter to the
plaintiff (the
“Second Repudiation”) marked “Without Prejudice”,
wherein the following was stated:
“
In the
view of the circumstances surrounding this incident we referred this
claim to our principals, Nova Risk Partners.
Accordingly,
and without derogating from any other rights they may have, as you
have
failed
to submit any documentation
or
comply
with our reasonable requests for information and documentation
relevant
to the claim and you furthermore
failed
to disclose material information
relating to your
conviction
and suspension of your driver’s licence
in terms of section 63(1) of Act 93 of 1996, we are instructed to
inform you that they are denying liability in terms of:
Section 5 – General
Conditions
The Company will be relieved of
all liability if any person or entity claiming any benefit under
this policy fails to comply with
its conditions.
as soon as possible, give the
Company written details of the event and if applicable, a detailed
statement of the claim
give the Company any proofs
or statements or information which it may require and any
communication received from other parties.
Disclosure: You must inform the
Company of all facts that are material to the acceptance of
insurance or the premium that is charged.
If you fail to do this,
the Company may, at its option, declare this policy void. As this
also applies during the currency of
this policy, any changes must be
reported as soon as possible. (It is therefore important for you to
disclose all material facts
that may be of relevance to the
Company).
We regret to inform you that
your claim is therefore repudiated, and you will be held liable for
the towing, storage and release
fees on the 2005 Fiat Palio 1.2 EL.
........”
25
It would
appear that the towing and storage charges amounted to R14 802. 90.
26
THE ISSUES IN DISPUTE
In its
amended plea the defendant denied that the plaintiff complied with
all its contractual obligations in terms of the policy
and in particular in regard to the following:
“
6.2.1 Failing to disclose
to the Defendant a material fact relating to the risk; namely that
his driver’s licence had been
endorsed as a result of a
criminal conviction; and/or
Failing to disclose to the
Defendant a material fact relating to the risk; namely that he had
been convicted of reckless and
negligent driving; and/or
Failing to immediately advise
the Defendant of any possible prosecution or inquest; and/or
Failing to give the Defendant
any proofs or statements or information which the Defendant
required to investigate the accident;
and/or
Failing to
inform the Defendant of all facts that are material to the
acceptance of the insurance or the premium that is charged.”
27
The parties
agreed in their pre-trial conference that the defendant bore the
onus
to prove the aforesaid defences and that the plaintiff bore the
onus
to prove his claim. They further agreed the documents contained in
the bundle were what they purported to be without admitting
the
truth or correctness thereof and that copies of documents may be
used unless the originals were called for.
28
THE
JUDGMENT OF THE COURT
A
QUO
The court
a
quo
dismissed
plaintiff’s claim based on two main grounds: (i) a breach by
plaintiff of material non-disclosure; and (ii) a
breach of clause
3.1.6. The court found that the defendant succeeded in proving a
non-disclosure as set out in paragraphs 6.2.1,
6.2.2 and 6.2.5 of
the defendant’s plea. The court found that the plaintiff’s
failure to (i) inform the defendant
of the fact that his driver’s
licence had been endorsed; and (ii) that he was convicted of
negligent driving; and (iii)
inform the defendant of all material
facts affecting the acceptance of the insurance risk and/or the
premium that is to be charged,
were proved entitling the defendant
to void the policy and repudiate the plaintiff’s claim in
regard to the second accident.
In coming to this conclusion the
court
a
quo
relied only on the contents of clause 6 of the policy.
29
No reference was made to the contents of clause 3.1.7 which obliges
the plaintiff to advise the defendant as soon as he became
aware “of
any possible prosecution or inquest.” The court
a
quo
did not seek to interpret the impact of this latter clause on the
generality of the clause 6 obligation to disclose material
facts.
In coming to
a conclusion that there was a material non-disclosure on the part of
the plaintiff, the court
a
quo
held as follows:
“
[32] A conviction of
negligent driving together with a heavy fine and the endorsement of a
silence (sic ‘licence’) is
an indication of the
seriousness of the matter, which was a material fact which should
have been disclosed and failure to do so
amounts to a material breach
justifying repudiation.
[33] I agree
with the defendant that a conviction of negligent driving which if
(sic, ‘is’) disclosed would assist the
insurer to
reassess whether it should remain on risk and if so on what terms
(i.e. whether the premiums are to the (sic ‘be’)
increased or not).
[36] I have no doubt that there
was a duty on the plaintiff to disclose the conviction and sentence
because such facts were actually
known to him. His failure to
disclose amounts to lack of good faith.
[38] A
criminal conviction of negligent driving is much more serious than a
pending case as it may be an indication of carelessness
on the part
of the insured especially when the court has imposed a fine and
endorsed the insured’s license. There is no reason
why the
insurer would not have reassessed the risk and adjusted the premiums
charged in accordance with the plaintiff’s new
driving record.”
30
In addition
the court
a
quo
found that the plaintiff’s claim should be dismissed on his
alleged contravention of clause 3.1.6 of the policy. In this
regard
the court
a
quo
found as follows:
“
[39] I
further agree with the defendant’s counsel’s submissions
that in terms of clause 3.1.6 of the agreement, the
plaintiff was
obliged to
‘Not,
under any circumstances,
make
any admission
,
statement or offer to any other party or do anything that would be
tantamount to that in connection with any event that may rise
to a
claim against you,
without
the company’s written consent
’
(My emphasis) Notwithstanding this fact, the plaintiff proceeded to
plead guilty on a charge of negligent driving without the written
consent of the defendant. On this basis alone, I would also dismiss
the action”
31
In my view,
the second ground upon which the court
a
quo
dismissed the plaintiff’s claim, constituted a misdirection.
No reliance on a contravention of clause 3.1.6 of the policy
agreement was relied upon by the defendant (i) in its plea; nor (ii)
in evidence tendered on behalf of the defendant by Stodart
and De
Kock; nor (iii) as grounds for repudiation in the two letters of
repudiation. The relevance of clause 3.1.6 was raised
for the first
time in argument after the close of the parties’ respective
cases. No request on behalf of the defendant
was made to amend its
plea to incorporate the aforesaid alleged contravention of clause
3.1.6 as an additional ground for repudiating
the plaintiff’s
claim. However, even if the defendant attempted to do so, such
amendment should not have been entertained
purely on the basis that
it was never traversed during the evidence tendered before court.
The court
a
quo
’s
dismissal of the plaintiff’s claim on this ground, cannot,
therefore, stand.
THE LAW
In order to
adjudicate the parties’ respective contentions regarding their
rights and duties flowing from the insurance agreement,
it is trite
that the agreement will first have to be properly interpreted and
construed. Interpretation is aimed at determining
the common
intention of the parties as expressed in the terms of the contract.
This has been called “the general rule”
or “the
golden rule” of interpretation.
32
The “golden rule” of interpreting contracts, equally
applies to the interpretation of insurance contracts. Interpretation
is the process by which the exact content and meaning of the terms
of a contract are determined. The interpretation of a contract
of
insurance is not a matter peculiar to insurance.
33
An insurance policy and the other documents making up the insurance
contract are therefore generally interpreted according to
the
ordinary rules of interpretation applicable to contracts in general.
34
The
interpretation of contracts is a question of law.
35
Consequently, it is for the court to construe the contract between
the parties according to the applicable legal principles and
in this
the views of technical experts and/or witnesses for either party are
not conclusive.
36
Even where the words and/or phrase to be interpreted are not linked
to any specific jurisdiction, a comparative approach commends
itself
and would be persuasive especially in the absence of any clear local
authority.
37
Some rules
of interpretation are always applied: The rule that words should be
accorded their ordinary grammatical meaning; the
rule that words
should be read in the context of the contract as a whole; and the
rule that every word should, if possible, receive
effect. These are
regarded as the primary rules of interpretation. Some of the
“residual” or secondary rules are
applied almost as a
matter of course such as the rule favouring the validity of the
contract. Just as the presence of every word
or phrase in the
contract is relevant to its interpretation, so too may the
absence
of certain words, phrases or provisions from the contract be
relevant in its interpretation and to ascertain what the parties
intended those words, phrases or provisions which do appear in it,
to mean.
38
In my view this rule is particularly apposite in the construction of
clause 3.1.7 in the present case. Another way of stating
this rule
is
expressio
unius est exclusio alterius
,
which means that if a document contains a special reference to a
particular
thing
,
it is
prima
facie
assumed that the parties intended to exclude everything else, even
that which would have been implied in the circumstances had
it not
been for the special reference.
39
This assumption has been called not so much a rule of interpretation
but rather a principle of common sense which may serve as
a guide in
determining the intention of the parties to a document which has
been imperfectly expressed.
40
In regard to
insurance contracts, it has been authoritatively held that clauses
which limit or exclude an insurer’s obligation
to render
performance to the insured and which are expressed in vague or
ambiguous language should be strictly interpreted. The
reason given
is that because the insurer usually drafts the policy which contains
its promise to the insured as well as any limitations
on that
promise, it is its duty to make clear and spell out plainly the
limitations it wishes to impose and the risks it wishes
to exclude.
41
As will be indicated herein later, I am of the view that this
particular rule of interpretation finds application in the proper
construction of the insurance agreement in the present case.
Finally the
courts have also formulated a rule that a contract of insurance
should be construed in favour of the insured rather
than the insurer
where an ambiguity arises on the face of the policy.
42
This rule has been justified simply by saying that an insured’s
claim for indemnity should not be defeated and that a policy
should
be upheld in favour of the insured and not be forfeited.
43
This rule is often used in conjunction with the rule that
limitations on or exceptions to the insurer’s obligation must
be interpreted strictly and therefore in favour of the insured.
44
This rule will also be of assistance in the present case.
Applying these aforesaid
principles of interpretation to the facts of the present case, will,
in my view, prove a salutary approach
to the resolution of the
disputes and issues referred to above.
EVALUATION
Because t
he
proper interpretation of the insurance contract in the present
instance being a matter of law, care should be taken not to
be
persuaded by the views of the witnesses. Interpretation is a matter
for the courts and not for witnesses. The provisions of
the contract
must first be properly construed to establish if on the proven facts
there was a non-disclosure. Only if such investigation
leads to a
result that there was a contractual non-disclosure, does it become
necessary to enquire if such non-disclosure was
material entitling
the insurer to repudiate the claim.
Clause 3.1.7
of section 5 deals specifically with
claims
.
It obliges the insured to advise the insurer immediately “as
soon as you become aware of any possible
prosecution
or inquest”. This is a clause specifically dealing with the
performance duties resting upon an insured in regard to the
submission of claims. As will be indicated in the next paragraph,
clause 3.1.7 on the face of it is clear and unambiguous. The
problem
arises when it is compared to the provisions of clause 6 dealing
with
disclosure.
The
interplay between the specifics of clause 3.1.7 and the generality
of clause 6 dealing with disclosure, causes confusion,
uncertainty
and ambiguity. It is unclear to what extent the specifics of the
contractual duty of
disclosure
when making
claims
are influenced or over ridden by a
clause
dealing with the general duty to disclose
.
In my view, this uncertainty introduces ambiguity and vagueness.
The
circumstances surrounding the duty which rested upon the plaintiff
to disclose information regarding the “first accident”
should, as a matter of simple logic, primarily be determined by the
provisions set out in clause 3.1.7. In my view this clause
is clear
and unambiguous. It uses language and words which have plain and
ordinary meanings.
45
What is required is information regarding “any possible
prosecution” and nothing else. The absence in the clause
of a
demand to supply information regarding a conviction or sentence is
significant. If indeed information regarding a conviction
and
sentence which follows upon any prosecution was deemed relevant
and/or material, it would have been a simple matter to include
those
words in clause 3.1.7 as was done in the case of
Heslop
v General Accident, Fire and Life Assurance Corporation Ltd
1962 (3) SA 511
(AD) where the clause requiring interpretation read
as follows:
“
Have
you or your paid driver or any person who to your present knowledge
will drive the insured car been
convicted
of any offence in connection with the driving of a motor vehicle
including a motorcycle, or is any
prosecution
pending? If so, give particulars of any such
conviction
and/or impending
prosecution
.”
[Emphasis added]
In my view
nothing prevented the defendant, as author of the agreement, to
include a requirement in clause 3.1.7 that information
was required
regarding any possible prosecution,
and/or
conviction and/or sentence and/or suspension or endorsement of a
licence
,
if they deemed it of material value to assess the risk and/or the
premium payable. The defendant’s failure to be clear
and
unambiguous in their request for information regarding claims, must,
therefore, redound to their disadvantage. In my view,
the plaintiff
should not be prejudiced for having complied meticulously with the
contents of this clause. He gave sufficient
information of the
impending prosecution in regard to the first accident as early as 31
May 2007 i.e. fourteen days prior to
the first trial date set for
such prosecution.
The
defendant’s failure to expressly stipulate that information
regarding a conviction, sentence and/or endorsement of a
licence was
required, in my view, amounted to a representation to the plaintiff
that no information beyond any prosecution,
was required.
Considering comparative law in this regard, it is of some moment
what
MacGillivray
and Parkington on Insurance Law
has to say regarding instances where questions asked of the insured
may relate to material facts in his possession on subject
matter
beyond the ambit of the questions asked. In this regard paragraph
646 at p 260 of the Eighth Edition, states the following:
“
It is
more likely, however, that the questions asked will limit the duty of
disclosure, in that, if questions are asked on
particular
subjects
and the answers to them are warranted, it may be inferred that the
insurer has waived his right to information,
either
on the same matters but outside the scope of the questions, or on
matters kindred to the subject matter of the questions.
Thus, if an insurer asks, ‘How many accidents have you had in
the last three years?’ it may well be implied that he
does not
want to know of accidents before that time, though these would still
be material. If it were asked whether any of the
proposer’s
parents, brothers or sisters had died of consumption or been
afflicted with insanity, it might well be inferred
that the insurer
had waived similar information concerning more remote relatives, so
that he could not avoid the policy for non-disclosure
of an aunt’s
death of consumption or an uncle’s insanity. Whether or not
such waiver is present
depends
on a true construction of the proposal form
,
the test being, would a
reasonable
man
reading the proposal form be justified in thinking that the insurer
had
restricted
his right to receive all material information, and consented to the
omission of the particular information in issue?”
46
(Emphasis
added)
I find the
remarks of MacGillivray’s
supra,
particularly apposite to the facts of the present case. In my view
the plaintiff was entitled to assume that the defendant was
not
interested in receiving information of actual convictions, sentences
and/or endorsements of licences. In my view the court
a
quo
was not correct in attributing to the plaintiff, as an attorney,
knowledge as to what kind of information affected the defendant’s
computation of risk and premiums. In any event it is a question of
interpretation as to what a reasonable man would have expected
the
question posed in clause 3.1.7 demanded. In this regard the court
a
quo,
with respect, correctly referred to case law stating that the test
is an objective one regarding the materiality of any non-disclosure
as viewed through the lens of the reasonable man and not the insured
nor the insurer.
47
A court of law is, therefore, abundantly suitable to determine this
question. In my view the court
a
quo
should have accepted the evidence of the plaintiff as confirmed by
Stodart and De Kock that indeed he disclosed the fact of a
pending
prosecution to them timeously. The fact that he did not disclose the
fact of the conviction and sentence, was, in my
view, not a breach
of his contractual obligations. On the proven facts there was no
non-disclosure and the question of materiality
does not arise.
Such
conviction and sentence w
ere,
however, disclosed to the parent company of the defendant not later
than 18 March 2008. It appeared that they had already
been placed in
possession of the warrant of conviction and sentence passed by the
Krugersdorp Traffic Court. It is of some significance
that the
defendant had, by that time (21 February 2008),
48
already repudiated the claim on a false ground which was not
persisted in, i.e. the alleged drunken driving by the plaintiff.
In addition
the evidence is clear that the conviction of negligent driving did
not in any way affect the insurance risk or calculation
of the
premium as the insurance policy expressly indemnified the plaintiff
against such negligence.
49
In any event, Exhibit A25 dated 20 November 2007 which was sent by
De Kock to Stodart already contained a note in manuscript
regarding
the conviction and sentence. In my view that was more than adequate
compliance with the duty to inform the defendant
not only of the
prosecution but also of the conviction and sentence.
In my view,
the importance of the endorsement of plaintiff’s licence is a
red herring. Neither of the two repudiations relied
on the
endorsement of the licence as a
ground for repudiation. The second repudiation relied on an alleged
“suspension” of the licence as ground for repudiation.
It is common cause that plaintiff’s licence was never
suspended, only endorsed.
50
As such, there has, in fact to date, never been a repudiation of the
claim based on the alleged endorsement! Nor did the defendant’s
plea remedy this deficiency in its case. There is no allegation that
it sought to repudiate on that basis in the plea itself.
The plea
merely records the alleged failure to inform the defendant of such
endorsement as a breach, but does not seek to allege
that
repudiation ensued as a result thereof. In addition, there was no
admissible evidence that an endorsement of a driver’s
licence
will affect the calculation of the risk and/or the premium. If
failure to disclose the fact of an endorsement of the
plaintiff’s
driver’s licence constituted a contractual non-disclosure,
there should have been evidence to this effect.
51
In addition,
t
he
court
a
quo
failed to take into consideration the ameliorating effect of the
provisions of section 53(1)(a) and (b) of the Short-Term Insurance
Act No 53 of 1998 (as amended). Section 53(1)(a) serves to limit an
insurer’s right to repudiate a claim premised on a
non-disclosure to instances where same
“is
such as to be likely to have materially affected the assessment of
the risk under the policy concerned at the time of
its issue or at
the time of any renewal or variation thereof.”
Section 53(1)(b) of the Act provides that
“non-disclosure
shall be regarded as material if a reasonable, prudent person would
consider that the particular information
constituting the
representation or which was not disclosed, as the case may be,
should have been correctly disclosed to the short-term
insurer so
that the insurer could form its own view as to the effect of such
information on the assessment of the relevant risk.”
The
predecessor to this provision was section 63(3) of the Insurance Act
27 of 1943. It has been deemed to be similar in its effect
and
meaning.
52
The aim of
these measures, it has been said, is to protect claimants under
insurance contracts against repudiations based on inconsequential
inaccuracies or trivial misstatements in insurance proposals.
53
Applying the
provisions of the aforesaid sections to the facts in this case, I am
of the view that the non-disclosure of the actual
conviction and
sentence and endorsement of the licence would not have been regarded
by a reasonable prudent person as affecting
the calculation of the
risk and/or premium. The plaintiff’s failure to disclose the
fact of the conviction, sentence and
endorsement of his licence was,
therefore inconsequential. In my view, the court
a
quo
should have held that the plaintiff was also protected by the
provisions of the aforesaid Act.
Finally
applying the principles that exclusionary clauses should be
restrictively interpreted and that a court should be inclined
towards upholding the policy against producing a forfeiture, I am of
the view that the court
a
quo
should have dismissed the defendant’s defences and found for
the plaintiff. The court should have come to this conclusion
on the
basis that the strict interpretation of the policy demanded
notification only of the impending prosecution by the plaintiff
to
the defendant, which occurred, and that the various attempts by the
defendant to repudiate the policy were based not only
on incorrect
grounds, but also on spurious grounds. The final repudiation dated
20 August 2008, not only came at the very least
seven months late,
54
it was also based on incorrect grounds. It was based on an alleged
suspension of the licence which never took place. It was based
on a
failure to submit information in response to reasonable requests.
Yet Stodart admitted that no reasonable request for information
was
directed at the plaintiff prior to the launching of the application.
55
Furthermore she admitted that information in the form of the motor
claim form was submitted thus making the grounds for repudiation,
in
my view, wrongful. The previous attempted repudiation based on an
alleged driving of the insured vehicle by the plaintiff
under the
influence of liquor also proved to be futile. In my view, the
defendant failed altogether to prove this defence of
failing to
supply adequate information to it by the plaintiff.
Finally it
would seem to me as if the ground for repudiating on the basis that
inadequate information was submitted, related to
a failure to refer
to two previous accidents which occurred more than five years prior
to 1 November 2003. Stodart admitted that
an alleged failure to
supply adequate information relating to these accidents could not
sustain a ground for repudiation.
56
CONCLUSION
For all of the aforesaid
reasons I am of the view that the appeal should succeed and I
therefore make the following order:
The appeal is upheld with
costs.
The order of
the court
a
quo
is set aside and substituted with the following:
“
1. The
Defendant is directed to indemnify the Plaintiff, in terms of the
insurance agreement between the Plaintiff and the Defendant
for:
The damages suffered by the
Plaintiff, resulting from the collision on 17 January 2008, in
respect of the Plaintiff’s
2005 Fiat Palio motor vehicle with
registration numbers and letters ‘SFT471GP’.
2. Costs of suit which are to
include the application costs reserved by Lamont J.”
DATED THE _______ DAY OF OCTOBER
2010 AT JOHANNESBURG
__________________________
C. J. CLAASSEN
JUDGE OF THE HIGH COURT
I agree
_________________________
T.
M.
MASIPA
JUDGE OF THE HIGH COURT
I agree
__________________________
P. COPPIN
JUDGE OF THE HIGH COURT
It is so ordered.
Counsel for the Appellant: Adv
J. van Rooyen
Counsel for the Respondent: Adv
B. P. Geach SC
Attorney for the Appellant:
Greyling Orchard Attorneys
Attorney for the Respondent:
Naudés Attorneys and Savage Jooste & Adams Inc
The appeal
was argued on 21 October 2010.
1
See Evidence of Bruwer Record p 268 line 15 to p
271 line 8; Evidence of Stodart Record p 384 line 17 to Record p 386
line 4.
2
See Record p 21 Annexure DEB002, p 70 Annexure C
and p 167 Annexure POC2.
3
See Record p 13 Annexure DEB001 and p 159
Annexure POC1.
4
See Annexure RA4, Record pp 140 – 142 and
Exhibit A15 – A17, Record pp 428 – 430.
5
See Exhibit A20, Record p 432.
6
See Annexure A18, Record p 431.
7
See Exhibit A18, Record p 431.
8
See Record p 305 lines 19 – 21.
9
See Record p 365 lines 11 – 18.
10
See Exhibit A140, Record p 476.
11
See Exhibit A42, Record p 443.
12
See Exhibit A23, Record p 433.
13
See Exhibit A25, Record p 434.
14
See Exhibit A26, Record p 435.
15
See Exhibit A29, Record p 437.
16
See Exhibit A30, Record p 438.
17
See Exhibit A33, Record p 439.
18
See Exhibit A34, Record p 440.
19
See Exhibit A41, Record p 442.
20
See Exhibit A91, Record p 455.
21
See Exhibit A92, Record p 456.
22
See Exhibit A93, Record p 457.
23
See Exhibit A94, Record – 458.
24
See Evidence of Bruwer, Record pp 276 line 14 –
278 line 4.
25
See Exhibit A117, Record p 474. It would appear
that this letter constitutes the second repudiation of the claim by
the defendant
after it was first repudiated on 21 February 2008
based on the plaintiff’s alleged driving under the influence
of intoxicating
liquor.
26
See Exhibit A150, Record p 478.
27
See Defendant’s Amended Plea, paragraph 6,
Record p 147-5
28
See Record pp 190 – 191.
29
See paragraph [22] of the judgment at Record pp
212 and 213.
30
See Judgment, Record pp 218 – 220
31
See Judgment, Record p 220
32
See
Joubert v Enslin
1910 AD 6
at 37;
Jonnes v Anglo-African
Shipping Co Ltd
1972 (2) SA 827
(A) at
834;
Cinema City (Pty) Ltd v
Morgenstern Family Estates (Pty) Ltd
1980 (1) SA 796
(A) at 804; Reinecke, Van der Merwe, Van Niekerk en
Havenga “General Principles of Insurance Law” paragraph
216 –
220.
33
See
Silverstone v
North British and Mercantile Insurance Co
1907 ORC 73.
34
See
Fedgen Insurance
Ltd v Luyds
1995 (3) SA 33
(A) at 38A
35
See
Marine and Trade
Insurance Co Ltd v Van Heerden
1977
(3) SA 553
(A) at 558F;
Blackshaws
(Pty) Ltd v Constantia Insurance Co Ltd
1983 (1) SA 120
(A) at 126F
36
See
Ameen v SA Eagle
Insurance Co Ltd
1997 (1) SA 628
(D)
at 631D
37
See
Sikweyiya v
Aegis Insurance Co Ltd
1995 (4) SA 143
(E)
38
See
Concord
Insurance Co Ltd v Oelofsen
1992 (4)
SA 669
(A) at 674D – G; Reinecke
et
al supra
at paragraph 224
39
See Wessels
Contract
paragraph 1950;
R v Vlotman
1912 AD 136
at 141;
Cargo Africa CC v
Gilby’s Distillers and Vintners
1996 (2) SA 324
(C) at 329I.
40
See
Poynton v Cran
1910 AD 205
at 222; Reinecke
et al
at paragraph 232.
41
See
Lange and Co v
The SA Fire and Life Assurance Co
[1867] 5 S 358 at 365;
Auto Protection
Insurance Co Ltd v Hanmer-Strudwick
1964 (1) SA 349
(A) at 354;
Fedgen
Insurance Ltd v Luyds
supra
at 38C;
Botha’s Trucking v Global
Insurance Co Ltd
1999 (3) SA 378
(T)
at 382H; Reinecke
et al supra
at paragraph 233.
42
Kliptown Clothing Industries (Pty) Ltd v
Marine and Trade Insurance Co of SA Ltd
1961 (1) SA 103
(A) at 107C citing
Smith
v Accident Insurance Co
[1850] EngR 538
;
[1870] LR 5
Exch 302
at 308-9
43
See
Pereira v Marine
and Trade Insurance Co Ltd
1975 (4) SA
745
(A) at 752H
44
See Reinecke
et al
paragraph 236
45
The reference to “inquest” is
irrelevant for purposes of a proper interpretation of this clause.
46
The corresponding paragraph in the previous
edition of the work was cited with approval by Woolf J in
Hair
v Prudential Assurance Co Ltd
[1983] 2
Lloyd’s Rep 667 at 673. In that case it was held that where
the proposal form contained a declaration that “I
warrant that
all the information entered above is true and complete and that
nothing materially affecting the risk has been concealed,”
the
assured was not bound to disclose any material facts outside the
scope of the specific questions asked on the ground that
if it was
intended that the assured should answer matters even though he was
not questioned about them, the insurer should have
stated clearly
the need for such disclosure and left space on the proposal form for
the assured to put in details.
47
See in this regard paragraph [27] of the judgment
a quo
where reference is made to
Mutual and
Federal Insurance Co Ltd v Oudtshoorn Municipality
1985 (1) SA 419
(A) at 435F – I;
Weber
v Santam Versekeringsmaatskappy Bpk
1983 (1) SA 381
(A) at 410H – 411D;
President
Versekeringsmaatskappy Bpk v Trust Bank van Afrika Bpk en ‘n
Ander
1989 (1) SA 208
(A) at 216F;
Commercial Union Insurance Co of SA Ltd
v Lotter
[1998] ZASCA 103
;
1999 (2) SA 147
(SCA) at 154B
48
See Exhibit A33, record p 439.
49
See Evidence of Stodart Record p 359 lines 4 - 24
50
It is interesting to note that although the
sentence required such endorsement, plaintiff’s licence was in
fact not so endorsed.
51
See
Mutual and
Federal Insurance Co Ltd v Da Costa
2008 (3) SA 439
(SCA), paragraph [12] at p 444 where Farlam JA said
the following:
“[12] In the circumstances of the present case, in the absence
of evidence indicating that a reasonable insurer in the
position of
the appellant, if it had known the true facts, would have refused to
extend the cover of the respondent’s policy
to the vehicle
presently under consideration or would have only accepted it at a
higher premium, I do not think we can hold that
the
misrepresentation relied on was material. It follows that the first
point argued on behalf of the appellant cannot be upheld.”
52
See
Mutual and
Federal Co Ltd v Oudtshoorn Municipality
1985 (1) SA 419
(A) at 435F – I
53
Q
ilingele v SA Mutual Life Assurance
Society
1993 (1) SA 69
(A) at 74B.
Whilst no doubt providing some measure of welcome protection to
insured against the abuse by insurers of the warranty
technique, the
measure is no model of clarity and has been criticised by courts and
academic writers as not going far enough
and requiring fundamental
reconsideration and revision. See further Reinecke
et
al
pp 270
et
seq
.
54
See
Resisto Dairy v
Auto Protection Insurance Co
1963 (1)
SA 632
(AD) at 643B - C
55
See Stodart’s evidence, Record p 376 lines
10 – 12;
Resisto Dairy
supra at p 645D
56
See Stodart’s evidence Record pp 385 - 386.