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[2010] ZAWCHC 475
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Mohamed v Genis Medical Scheme (17351/2010) [2010] ZAWCHC 475 (15 September 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE
NUMBER:17351/2010
DATE:15
SEPTEMBER 2010
In
the matter between:
ASHRAF
DAWOOD MAHOMED
…....................................................................................................
Applicant
and
GENESIS
MEDICAL SCHEME
…..................................................................................................
Respondent
JUDGMENT
TRAVERSO,
DJP
:
This
application was brought as one of urgency.
At
the hearing of the matter, Mr
Ramdass
.
who appeared
for
the applicant, moved an amendment to the notice of
motion,
whereafter it read as follows:
"1.
That a
rule
nisi
do
issue calling upon the Respondent to show cause on a date to be
determined by the above Honourable Court, why an Order should
not
issue in the following terms,
pending
the decision of the Council of Medical Aid Schemes presently pending
before the Council:
1.1.
That the Respondent forthwith reinstates the membership of the
Applicant as a member of the Respondent;
1.2.
That the Respondent is ordered, for so long as the Applicant remains
a member of the Respondent, to deal with and process
and pay all
claims submitted by or on behalf of the Applicant in terms of its
rules and is interdicted from declining to deal
with, process and
pay any such claim;
1.3.
That the Respondent is ordered to stop the reversal of any payments
made to any service providers in respect of the hospitalisation
of
the baby born to the Applicant and his ex-wife on 9 February 2010;
1.4.
That, in the event that any reversals of payments have already been
made in respect of the hospitalisation of the baby born
to the
Applicant and his ex-wife, that such payment be re-effected
forthwith;
1.5.
That the Respondent forthwith make available to the Applicant a copy
of its rules;
1.6.
That the Respondent is ordered to pay the costs of this
application."
What
gave rise to this application is the following. The applicant, who
is a medical practitioner, completed an application form
to be
admitted to a "Hospital Plan" with the respondent on 20
December 2009. The cover was in respect of his "wife",
himself and five children. At the time his "wife" was
pregnant. On 9 February 2010 she gave birth to her sixth child,
a
daughter, who was born with a heart condition. This resulted in her
undergoing a procedure whereby a pacemaker was implanted.
The
procedure was performed at the Sunninghill Hospital. Another one of
his children developed a condition which is known as
a muco-coele in
December 2009. A procedure to drain this muco-coele was performed on
her during December 2009 prior to the applicant
completing the
application form in respect of the hospital plan.
There
was a recurrence of this muco-coele in 2010 and it was recommended
that the new muco-coele be excised under local anaesthetic.
The
applicant's "wife" applied for authorisation from the
respondent, but it was refused on the basis that the contemplated
procedure would not have been performed in a hospital and,
therefore, it would not have been covered by the policy. The
applicant
at a later stage again applied for pre authorisation for
the excision of the muco-coele, "in case the procedure had to
be
performed in a hospital". This time it was contemplated that
it might be done by a plastic surgeon.
On
29 June 2010 the respondent wrote to the applicant, informing him
that his membership with the respondent had been terminated,
because
of his non-disclosure of the fact that his daughter had had a
muco-coele, which was alleged to have been a material non-disclosure
on the part of the applicant. The applicant was of the view that the
disclosure was not material as muco-coele is a minor condition,
which is not directly linked to any of the questions contained in
the applicant's application form. By virtue, however, of the
allegations contained in the founding affidavit to this application,
the respondent realised that there were certain other
non-disclosures and/or material representations contained in the
application form which had been submitted to it.
Before
I deal with these allegations, it is necessary to state that it is
by now well established that where a party seeks to
terminate an
agreement on a ground which does not have substance, it is
nevertheless entitled to take advantage of the existence
of a
justifiable reason for termination, notwithstanding the fact that it
originally relied on an incorrect ground. (See
Putco
Limited v TV & Radio Guarantee Company
(Ptv)
Limited
1985
(4) SA 809
(A) at 832C-D.) This principle was accepted as correct by
Mr
Ramdass
.
The
other material misrepresentations and/or non-disclosures relied on
by the respondent are the following:
1.
In the application form the applicant referred to Tasneem as his
wife. In fact he had been divorced from her since October
2006. He,
therefore, falsely created the impression that they were still
married.
2.
He indicated in the application form that he was still living with
his wife at the same address, whereas in truth and in fact
they were
separated and lived apart. The respondent's rules provides that
ex-spouses may remain as adult dependants, but this
does not apply
to persons who are already divorced at the time when the principal
member joins the scheme.
3.
He claimed that Zareefa, who was born in June 2005, was his daughter
in the following circumstances: On 31 October 2006 he
and his wife
were divorced and his wife was awarded custody of four minor
children. Yet, a fifth child was included in the application
form
which was ostensibly born more than a year prior to the divorce. In
addition, the applicant disclosed that his spouse was
pregnant at
the time that the application was made. At that stage however the
parties had been divorced for more than two years.
It
is clear that there are certain anomalies relating to the fifth and
the sixth children and the applicant still gives no explanation
for
their inclusion as his dependants on the application form. The
applicant, in addition, failed to disclose that Lutfiya had,
contrary to his declaration in the proposal form, experienced a
benign growth in the form of a muco-coele on her lower lip. I
will
return to this non-disclosure at a later stage. However, the
previous misrepresentations are, in my view, material. I refer
to
those regarding to his marriage to Tasneem and the anomalies
regarding to his fifth and sixth daughters.
The
materiality or otherwise of a misrepresentation must be dealt with
objectively.
Boruchowitz
,
J, in
Mahadeo
v Dial Direct Insurance Limited
2008
(4) 80 (W), after considering various authorities dealing with the
test for materiality, summarises the position as follows
on pages 86
and following. He first refers to the amendment of the
Insurance
Amendment Act 17 of 2003
and the current wording thereof which he
quotes, and which I do not intend quoting in this judgment. I
continue to quote on page
86, paragraph 17:
"17.
The effect of the most recent amendment is to bring the law with
regard to positive representations into line with the
law on
non-disclosures. The statutory definition of materiality in
section
53(1)(b)
is effectively identical to that adopted in the
President
Versekeringsmaatskappy
case
supra, in relation to the common law position. The test remains
objective: The question whether the
particular information ought
to have been disclosed
is judged not from the point of the view
of the insurer, or the insured, but from the point of view of the
notional, reasonable
and prudent person. The subjective test
propounded in the
Qilinqele
case
would appear to no longer apply
18.
Thus, the test in respect of both positive and negative
misrepresentations is not whether the reasonable person would have
disclosed the fact in question, but whether the reasonable person
would have considered the fact reasonably relevant to the risk
and
its assessment by an insurer.
19.
The reasonable man's assessment of whether a fact is material will
often be influenced by the specific questions which the
insurer may
ask of the
proposer
for insurance, and what the insured considers to be relevant will
often depend upon the nature of the questions asked
in the proposal
form or, as in the present case, during the sales conversation. The
nature of the questions posed may lead to
the conclusion that a
reasonable person would not have regarded certain facts as material.
The questions put by the insurer may,
therefore, enlarge or limit
the proposer's duty of disclosure and depending on the
circumstances, served to define the limits
of what is material. In
certain instances, the nature and the range of questions may
constitute a waiver on the part of the insurer
of its right to
receive information about particular material facts...."
It
is trite that a person in the position of the applicant has a duty
of good faith to a party in the position of the respondent.
This
includes a duty not to misrepresent or fail to disclose a fact which
is material to the contract proposed to be entered
into.
In
the context of this case, at the time of making the proposal for
membership of the respondent's medical aid, the applicant
owed a
duty to the respondent to disclose all material matters
material
to the question of his and his declared dependants membership of the
scheme. Where, as in this case, the respondent has
been induced to
enter the contract with the applicant on the strength of
misrepresentations and nondisclosures, he is entitled
to avoid
the contract. This is so, irrespective of whether the
misrepresentations or nondisclosures were fraudulent, negligent
or completely innocent.
I
have no doubt that in the eyes of any reasonable, right thinking
person, these misrepresentations to which I have referred would
be
regarded as material. The reasons for this are so self-evident that
I do not believe that it requires any further motivation.
By the
same token, however, I am not convinced that the applicant's failure
to disclose the existence of his daughter's muco-coele
was material.
It is common cause that this is a minor ailment, less serious
apparently or at best as serious as a common cold.
The nature of the
questions contained in the applicant's form indicate that the
information required by the respondent related
to serious and/or
chronic conditions, which may in the future require hospital
treatment. There is no suggestion that muco-coele
falls within that
category.
To
summarise, therefore, I am satisfied that the applicant failed to
disclose material facts to the respondent and that the respondent
was, therefore, entitled to terminate the agreement. From this it
follows that the applicant failed to establish a
prima
facie
right,
though open to some doubt. He, therefore, failed to cross the first
hurdle necessary for obtaining the relief sought in
this
application. I am also satisfied that the matter did not require the
extremely urgent attention of the Court that was suggested
by the
applicant. There was nothing more than a suggestion of the
possibility that the applicant's daughter might, at some stage
in
the future, require treatment at a hospital.
There
was no suggestion that such treatment was not available at State
hospitals or alternatively that the applicant, or his "wife",
would be unable to afford to pay for such medical expenses pending
the outcome of the decision by the council of medical aid
schemes.
Both the applicant and his "wife" are medical doctors and
they do not appear to be destitute.
In
the circumstances the application is dismissed with costs, such
costs to include the costs of 16 and 19 August 2010.
TRAVERSO,
DJP