About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Gqeberha
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Gqeberha
>>
2022
>>
[2022] ZAECQBHC 24
|
|
Multisure Corporation (Pty) Ltd v KGA Life Limited and Others (2780/2021) [2022] ZAECQBHC 24 (30 August 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
NOT
REPORTABLE
Case
no: 2780/2021
In
the matter between:
MULTISURE
CORPORATION (PTY)LTD
Applicant
and
KGA
LIFE LIMITED
First Respondent
Q
LINK HOLDINGS (PTY) LTD
Second Respondent
AFRICAN
UNITY LIFE LIMITED
Third Respondent
JUDGMENT
Govindjee
J
Background
[1]
The
applicant (‘Multisure’) conducts business as an
independent intermediary, as defined in s 1 of the Long-term
Insurance
Act, 1998
[1]
(‘the
LIA’).
[2]
It markets and
sells funeral cover plans to individuals and families. The first
respondent (‘KGA’) is a ‘licenced
insurer’
and a ‘long-term insurer’ as defined in the LIA, also
underwriting funeral policies.
[2]
Multisure
entered into a written intermediary agreement (‘the
intermediary agreement’) for KGA to underwrite the funeral
policies of its clients. The intermediary agreement commenced on 1
January 2015. That intermediary agreement incorporates a ‘Master
Policy’. Premiums due are paid directly to KGA through
deduction from the social grants received by the clients, who are
referred to as ‘policyholders’ in the intermediary
agreement.
[3]
Some 8000 ‘group
scheme policies’ are in focus, with approximately 18000 lives
insured. Multisure cancelled the intermediary
agreement on 5 July
2021 and entered into a new agreement for the third respondent
(‘AUL’) to provide underwriting
services to its clients,
in place of KGA. KGA refused to give effect to the transfer (referred
to as ‘releasing the book’)
[4]
without individual notification, from each client, of cancellation.
This resulted in proceedings before Schoeman J in this court,
and an
outcome in favour of Multisure (‘the order’).
[3]
The executory part of the learned judge’s order is in the
following
terms:
‘
1.
That ‘the Intermediary Agreement – Multisure Corporation
– Underwritten by KGA Life Ltd’ and the Master
Policy
forming part thereof (‘the Agreement’) between the
Applicant and the First Respondent has been cancelled and
accordingly
is of no further force and effect from 1 September 2021.
2.
That the Group Scheme established and underwritten by the First
Respondent by virtue of the provisions of the Agreement (‘the
Group Scheme’) has been terminated accordingly with effect from
1 September 2021 and is of no further force and effect (save
to the
extent that the First Respondent retains any risk beyond the
termination date by virtue of the provisions of the Group Scheme).
3.
That Q Link is authorised within 24 hours of the service upon it of
this order to alter the deduction codes on its electronic
administrative system which currently provide for payment by the
South African Social Security Agency (‘SASSA’) to
the
First Respondent of premiums payable by insured persons in terms of
policies forming part of the Group Scheme, to instead provide
for
payment of premiums payable by insured persons in terms of policies
transferred to and now forming part of the group scheme
concluded
with the Third Respondent (‘AUL’) to AUL.
4.
That the First Respondent within 24 hours of the service upon it of
this order to pay directly to AUL, by means of electronic
funds
transfer to its bank account the full aggregate amount of all
premiums received by the First Respondent from SASSA (as directed
by
Q Link in terms of its payment and deduction system) from members of
the Group Scheme as established pursuant to the Agreement
with effect
from 1 September 2021.’
[4]
Multisure
launched an urgent application in terms of
s 18
of the
Superior
Courts Act, 2013
.
[5]
It seeks to
bring the order into operation pending the SCA’s determination
of an appeal by KGA. According to KGA, there are
two insurmountable
obstacles to the application. Firstly, the implementation of the
order pending the appeal would be unlawful
since it would effectively
resurrect a ‘group’ that ceased to exist upon
commencement of the Insurance Act, 2017,
[6]
(‘the Act’) and unlawfully create a new ‘group’,
supposedly underwritten by AUL. Secondly, the individual
policyholders, despite being prejudiced by the implementation of the
order, have not been joined. In addition, KGA disputes that
Multisure
has succeeded in meeting the requirements for the relief it seeks. It
is convenient to describe the arrangement between
Multisure and KGA
and the changes brought about by the Act before turning to these
arguments.
The
intermediary arrangement
[5]
The intermediary agreement explains the contract between Multisure
and
KGA in the following terms:
‘
4.
The contract
4.1
The Intermediary [Multisure] has approached
KGA to underwrite a funeral group scheme in terms whereof
funeral and
associated benefits are offered to assured lives.
4.2
KGA is willing to underwrite the group
scheme subject to the terms and conditions of the Master Policy
and
as set forth in this agreement.
4.3
The monthly premium payable shall be
calculated in terms of the quotation, annexure B hereto.
4.4
The Intermediary undertakes to collect and
receive risk premiums from the members of the group scheme
[the
policyholders] on behalf of KGA, subject to the terms and conditions
set forth in this agreement and the Master Policy …’
[6]
‘Group scheme’ is defined in the intermediary agreement
to
mean ‘an assistance business group scheme in terms whereof
policy benefits under an assistance policy are provided to the
member, his dependants and/or extended family. ‘Policyholder’
is defined as the ‘approved and active individual
member of the
group scheme’.
[7]
Multisure’s
obligations in terms of the intermediary agreement include
maintaining proper records of policyholders and the
assured lives and
their dependents in respect of the group scheme, collecting premiums
on behalf of the policyholders and paying
the whole amount of such
premiums over to KGA on a monthly basis.
[7]
Multisure could not amend the Master Policy or the membership details
after giving notice of cancellation.
[8]
Once a group scheme commenced, KGA required notification of any
changes by the 10
th
day of the month. In the absence of any notification, the contract
provides that KGA will accept the previous month’s membership
as the lives to be insured for the month without any changes to the
relevant premium, which becomes due, owing and payable by
Multisure.
[9]
Multisure was
entitled to various fees, as arranged ‘between the intermediary
and its clients’ and commission as agreed
with KGA.
[10]
[8]
The termination clause provides:
‘
9.
Either party may terminate this agreement by giving not less than one
calendar month’s written notice on or before the
first of the
month of his intention to cancel this agreement … The
intermediary shall remain liable for premium payments
during the
notice month and acknowledges that no changes may be made to
membership lists during the notice month.
9.1
In the event of termination:
9.1.1 …
9.1.2 All monies due by
the intermediary to KGA shall be payable to KGA on demand.
9.1.3 The Intermediary
shall no longer be allowed to collect premiums on behalf of KGA for
the notice month and all intermediary
functions performed by the
intermediary shall immediately vest in KGA on the date of the letter
of cancellation …’
[9]
A clause dealing with ‘compliance’ adds the following:
‘
8.2.7
As and when this agreement is cancelled for whatsoever reason, by the
intermediary or KGA, the intermediary is obliged in
terms of this
contract to notify, in writing, each and every policyholder on the
book of the intermediary that the underwriting
agreement with KGA is
cancelled;
8.2.8
Proof of this notice must be provided to KGA by the
intermediary as confirmation that all the policyholders have been
notified of the cancellation of the underwriting agreement; and
8.2.9
The compliance responsibility of Rule 15(b) of the Policyholder
Protection Rules rests with the Intermediary;
[11]
8.2.10
Non-compliance of this clause is a serious breach of the agreement
and will lead to action in terms of clause 9 below and
KGA also
reserves their right to claim damages from the intermediary …’
[10]
As
indicated, KGA was willing to underwrite the group scheme subject to
the terms and conditions of the Master Policy and the intermediary
agreement. The Master Policy regulates funeral policies issued to a
qualifying applicant for membership, once accepted by KGA for
membership, by Multisure. Those policies are then underwritten by
KGA
[12]
and Multisure must
provide each member with a participation certificate.
[13]
[11]
The Master
Policy deals with ‘cessation of cover’ in the following
terms:
[14]
‘
The
cessation of cover shall occur in any of the following circumstances:
·
…When the Policyholder
cancels the Master Policy with the
Assurer …’
Somewhat
confusingly, ‘policyholder’ in the context of the Master
Policy is Multisure. Clause 14 of the Master Policy
confirms that
either Multisure or KGA may cancel the Master Policy at any time by
giving the other party one calendar month’s
written notice. As
was the case in the intermediary agreement, this is coupled with a
clause providing that Multisure may not amend
the Funeral Policy or
the membership detail after giving notice of cancellation.
[15]
The
legislative amendment
[12]
Insurers
must generally be licensed to conduct life or non-life insurance
business. In addition to being licensed in this way, the
insurer must
be specifically licensed to conduct one or more of the classes or
sub-classes of insurance business set out in Schedule
2 of the Act.
Insurers are restricted to conducting insurance business for which
they have been licensed, subject to any conditions
imposed by the
Prudential Authority.
[16]
Failure to comply may result in suspension or withdrawal of the
licence.
[17]
Section 70 of the
Act provides that the Minister of Finance may make regulations
identifying a kind, type or category of contract
as an insurance
policy that may be entered into under the risk class of life
insurance business in Table 1 of Schedule 2 of the
Act.
[18]
That table lists ‘funeral’ as a class and ‘individual’
and ‘group’ as sub-classes, providing
a description of
each.
[13]
‘Group’ is defined in Schedule 2 to refer to ‘an
insurance policy entered
into with -
a.
an autonomous association of persons united voluntarily to meet
their
common or shared economic and social needs and aspirations (other
than obtaining insurance), which association is
democratically-controlled;
b.
an employer; or
c.
a fund,
where
the association, employer or fund holds the insurance policy
exclusively for the benefit of a beneficiary.’ Similarly,
‘underwritten on a group basis’ means where the risks
covered under an insurance policy are rated based on the
characteristics
of a group of people together, as opposed to that of
the individual or individuals to whom the policy relates.
[19]
[14]
This is a
change from the definition of ‘group scheme’ that
operated in terms of the LIA prior to the promulgation of
the
Act.
[20]
It is common cause
that the scheme in question no longer qualifies as a ‘group’
within the ambit of the Act. KGA argues
that the contracts between
Multisure and its clients endured only as individual policies.
Multisure rejects this interpretation,
arguing that until the group
was ‘converted’ into individual policies, it remains ‘a
group’.
Section
18
of the
Superior Courts Act, 2013
[15]
The
operation and execution of decisions subject to an appeal are
suspended pending the determination of the appeal unless a court,
under exceptional circumstances, orders otherwise. To do so, a court
must be satisfied that the applicant has proved, on a balance
of
probabilities, that it ‘will suffer irreparable harm if the
court does not so order and that the other party will not
suffer
irreparable harm if the court so orders’.
[21]
If so satisfied, a court must immediately record its reasons for
doing so and the automatic right of appeal enjoyed by an aggrieved
party will be dealt with on an extremely urgent basis. Pending that
outcome, the order is automatically suspended.
[22]
[16]
These
provisos exist because of the potential prejudice that may be caused
to a party that is ultimately successful on appeal. It
is evident
that the applicant must meet three requirements: exceptional
circumstances, including consideration of the prospects
of success on
appeal; that it will suffer irreparable harm if the order is not
made; and that the party against whom the order
is sought will not
suffer irreparable harm if the order is made.
[23]
Exceptional
circumstances
[17]
To meet
this requirement, something out of the ordinary and of an unusual
nature, different from the general rule and uncommon,
should be
discernible. The circumstances concerned must arise out of, or be
incidental to, the particular case. Importantly, this
is a question
of fact to be decided on a case-by-case basis.
[24]
The actual predicaments in which the litigants find themselves in has
been held to be central to the enquiry.
[25]
It has been held that a strict meaning should be given to the phrase,
and any circumstances alleged to be ‘exceptional’
must be
carefully examined.
[26]
The
SCA has confirmed that the exceptionality of an order in terms of
ss
18(1)
and
18
(3) is underscored by the wording of
s 18(4)
of the
Superior Courts Act, 2013
, and that a ‘heavy onus’ is
placed on the applicant.
[27]
In short, the circumstances must be ‘truly exceptional’.
[28]
It is also now clear that the prospects of success are relevant to
the enquiry.
[29]
[18]
Various
facts were placed before court to support the application, including
the following. Multisure has not received any commission
for
intermediary services since August 2021 and estimated, during June
2022, that it would have received an amount in excess of
R5,5 million
were it not for the pending appeal.
[30]
Multisure receives an income from ‘debit order’ funeral
policies and ‘new SASSA’ policies and ‘legal
assist’ clients, but cannot sustain its operations on this
basis, operating as a loss since 1 September 2021. Multisure’s
accounting officer confirms that its revenue has plummeted during the
period 1 September 2021 to 28 February 2022. The total negative
change in its financial affairs during that period is more than R1,75
million and it made a loss in excess of R700 000 during
that
period.
[31]
[19]
As Multisure conveyed in correspondence to KGA’s legal
representatives on 18 May
2022, it has since been forced to sell
shares and draw from savings in order to keep its business afloat.
Multisure’s sole
owner has also placed an immovable property on
the market as part of the efforts to keep it in business. Two branch
offices have
closed between October and December 2021 and all
business is now conducted virtually. As a result, three full-time
staff members
and four part-time staff members have been retrenched.
Multisure was unable to pay bonuses during December 2021, or to offer
increased
monthly remuneration or salaries to match offers being
received by staff members, and blames this for the loss of two senior
and
experienced staff members employed at its head office in
Gqeberha. Despite the various mitigatory steps, it may be accepted
that
it will have to continue downsizing in the event that it is
unable to enforce the order in its favour. It is clear that
Multisure’s
adverse financial predicament is ongoing. In short,
Multisure has been placed in an extraordinary position as a result of
the events
in question. This is very different, for example, to an
ordinary claim for damages where the very existence of a company is
not
in issue. Whether this constitutes ‘exceptional
circumstances’ for purposes of the
s 18
must be determined with
due cognisance of the prospects of the judgment of Schoeman J being
upheld on appeal.
[20]
For reasons
that follow, my assessment of KGA’s prospects of success on
appeal supports the conclusion that Multisure has
demonstrated
exceptional circumstances. The contract between Multisure and its
clients is detailed on the ‘membership application
funeral
insurance’ form (‘the contract’). The client
declares that they ‘apply for membership of Multisure’s
funeral cover in accordance with the terms and conditions which I
have read and understood as set out herein’. A specimen
blank
copy formed part of the papers. It contains the ‘terms and
conditions for funeral policy holders’. The contract
itself is
couched in the form of a mandate, linked to the application for
funeral cover and the terms of the Master Policy.
[32]
The contract provides that the Master Policy is available for
inspection and contains the ‘full rules and conditions of this
contract’. Clause 20 of the contract adds that ‘Should
there be a discrepancy the conditions as set out in the Master
Policy
will prevail.’
[21]
The applicant for membership expressly authorises Multisure to issue
and deliver payment
instructions to the applicant’s bank in
order to meet the premium obligations of the contract. The client
acknowledges in
the contract, for example, that all payment
instructions issued by Multisure shall be treated by their bank as if
the instruction
had been personally issued by the client. The
contract refers specifically to ‘authority’ and ‘mandate’
in its terms, adding the following, under the heading ‘cancellation’:
‘
I
/ We agree that although this Authority and Mandate may be cancelled
by me / us, such cancellation will not cancel the Agreement.
I / We
shall not be entitled to any refund of amounts which you have
withdrawn while this authority was in force, if such amounts
were
legally owing to you.’
There
is a solitary reference to KGA, as underwriter, in the contract, it
being authorised to obtain any necessary medical information
pertaining to the signatory.
[22]
The Master
Policy defines a ‘funeral policy’ as ‘the policy
issued to the ‘Member’ by Multisure and
underwritten by
KGA in terms of the Master Policy’. The ‘Master Policy’
is defined as ‘the policy issued
by KGA to Multisure’. A
policy number would have been allocated to Multisure on the inception
date. An applicant whose application
for membership has been accepted
by KGA becomes a ‘member’.
[33]
KGA is then obliged to ‘issue a participation certificate in
respect of each new Member on registration and on notification
of any
change in the Member’s or Dependant’s details’. It
is one of Multisure’s obligations, as policyholder,
to provide
each member with this participation certificate.
[23]
Read in the context of the contract, it is apparent that there is
cessation of coverage
for members in certain circumstances.
Cancellation of the intermediary agreement, which is not in dispute,
resulted in Multisure
being required to ‘notify, in writing,
each and every policyholder on the book of the intermediary that the
underwriting
agreement with KGA is cancelled’. On my reading,
intermediary functions vested in KGA for the notice month, but not
beyond.
It must be accepted that the linked Master Policy similarly
fell away and was treated by both parties as cancelled upon
expiration
of the notice period. There is nothing in the Master
Policy or intermediary agreement to suggest that Multisure could not
occasion
this in one sweep and on behalf of all its clients, who are
the members referred to in the Master Policy. In fact, it was not
open
to the member to do so directly. While cessation of cover would
occur at the death of the member, subject to clause 4.2 of the Master
Policy, or when a monthly premium was not received by KGA timeously,
the member could not cancel their own membership with KGA
or
themselves cancel the Master Policy. It was incumbent upon Multisure
to perform either of those acts, bearing in mind its contract
with
its clients linked to funeral insurance. As indicated, that contract
effectively incorporates the Master Policy, affording
it pre-eminence
where necessary and referring to it as containing the ‘full
rules and conditions of this contract’.
[24]
Such action
on the part of Multisure on behalf of its clients is consistent with
the provisions in the Master Policy that apply
in the event of death
of a member.
[34]
A qualifying
spouse automatically becomes the new member, and the funeral policy
is converted to either a single policy or individual
policy. No
amendment form is required by KGA. The Master Policy states that ‘The
onus shall rest with the Policyholder to
instruct the Assurer to
cancel the Funeral Policy if the spouse does not wish to continue
with the Funeral Policy’. As indicated,
‘policyholder’
in this context refers to Multisure. In other words, it is not the
member who performs the act of cancellation
themselves. Multisure,
having been responsible for payment of the monthly premium to KGA in
respect of every member in terms of
the Master Policy, does so on
behalf of the member and by way of an instruction to KGA. That there
are multiple members that have
given Multisure this power does not
change the position. Its cancellation of the intermediary agreement
marked the end of KGA’s
role as underwriter to its clients and
it was contractually obliged to inform each of its clients of this
reality. It follows that
the Master Policy could not survive this
cancellation.
[25]
KGA’s
reliance on the legislative change to justify its position appears to
me to be tenuous. On its interpretation, each
individual member must
cancel the Master Policy directly with it simply because the
erstwhile definition of a ‘group scheme’
has given way
(at least for newer policies) to a new definition of a ‘group’.
That interpretation conflicts with the
wording of the intermediary
agreement, the Master Policy and the contract. It appears to impose
an obligation on members where
none previously existed, and without
proper appreciation of the contractual arrangements at play. Despite
the wording of the various
agreements, it eliminates Multisure from
the picture as if it were not the focal point of the entire scheme.
Each of Multisure’s
clients had granted it a mandate for
purposes of obtaining funeral insurance. Once KGA’s role as
underwriter fell away, preventing
these persons from maintaining
their relationship with Multisure and from being covered by AUL would
be to their detriment. It
may also amount to contravention of the
Policyholder Protection Rules (Long-term Insurance), 2017 (‘PPR’)
requirements
for the fair treatment of policyholders. Multisure’s
mandate included providing payment instructions to their clients’
banks in order to obtain the necessary premiums on a monthly basis.
Transferring from one underwriter to another would appear to
fall
within the terms of the contracts of mandate, based on the ordinary
rules of interpretation. Alternatively, in the event that
this may
have exceeded the expressed bounds, it was open for clients to elect
to reject Multisure’s performance of its mandate
when they were
advised of the change.
[35]
SMS
messages were sent to each client as early as 30 June 2021, coupled
with website and postal notification during July 2021.
[26]
Mr
Nepgen
,
for Multisure, pointed out that accepting KGA’s proposition
would mean that it was entitled to cancel the intermediary agreement
itself at any time after the legislative developments, retain all
Multisure’s clients until individual communication was
received
from each of those clients and retain the entire insurance premium on
an ongoing basis without any deduction of commission.
It is difficult
to accept that this could have been the legislature’s intention
in crafting Schedule 2 of the Act. This would
amount to a legislative
amendment creating some new contractual relationships and terminating
others. Such an outcome, in this
instance, would be manifestly
unjust. That aside, there appears to be no basis to interpret any of
the agreements or the legislation
and regulations in such a manner.
It certainly does not appear to have been the intention of any of the
parties to the various
agreements that KGA, as underwriter, would
somehow overtake Multisure and become party to an arrangement with
Multisure’s
clients in its absence as intermediary.
[36]
[27]
Finally, it is important to add reference to the PPR provisos as to
‘validity of
contracts’ in support of this understanding:
‘
7.3.1
A policy is not void merely because a provision of a law, including a
provision of the Act or the Insurance Act, has been
contravened or
not complied with in connection with that policy.
7.3.2
If a person has entered into a policy with an insurer who was, in
terms of the Act or the Insurance Act, prohibited from entering
or
not authorised to enter into the policy … that person …
may cancel the policy, whereupon that person shall be
deemed to be in
the same legal position in respect of such insurer … as if the
policy had been cancelled by that person
on account of a breach of
contract by such insurer …’
[28]
This
confirms the extent to which policyholder protection is extended.
Even a violation of insurance law does not necessarily invalidate
a
policy. Failure to convert a group policy to individual policies
following the statutory change to the notion of a ‘group’
may fall within this form of protection, to the benefit of the
individuals concerned. Following this logic, the purported transfer
of the ‘group’ from KGA to AUL at Multisure’s
instance, even if in contravention of insurance law because of
the
new definition of a ‘group’, would not automatically
invalidate those policies. Policyholders who had individually
mandated Multisure to obtain funeral cover for them may be
transferred to AUL because of these mandates, and will remain
protected
once transferred to AUL. It might be added that this
appears to be consistent with trade usage and the notion of a
‘transfer
of book’. Given that the elements of such a
trade usage have not been fully canvassed, I make no finding in this
regard.
[37]
[29]
It would then be for AUL to comply with the applicable insurance law
and regulations, in
respect of its licencing requirements and the
like. KGA had no difficulty in persisting as underwriter to the
‘group’
scheme subsequent to the amendments in 2018. This
despite the notion of ‘underwritten on a group basis’ no
longer being
apposite given the change in definition to ‘group’.
Since that change, the risks covered by such underwriting should
not
have been ‘rated based on the characteristics of a group of
people together, as opposed to that of the … individuals
to
whom the policy relates’. The position seems to be that AUL
will be obliged to rate the risk as underwriter on an individual
basis. Again, it is not necessary to make a definitive finding in
this regard for present purposes. To the extent that the order
of
Schoeman J may be found to erroneously refer to a ‘group
scheme’ with AUL, instead of making reference to ‘individual’
cover for Multisure’s clients because of the legislative
change, this may be cured by amendment or variation of the order.
In
all these circumstances, the prospects of success on appeal appear to
be limited and exceptional circumstances have been demonstrated
for
purposes of this application.
Irreparable
harm
[30]
The
requirement for Multisure to demonstrate that it will suffer
‘irreperable harm’ if the relief it seeks is not granted
is, in this instance, closely linked to the consideration of
exceptional circumstance. In
Premier
for the Province of Gauteng and Others v DA and Others
[38]
the SCA confirmed that there is no prohibition on the same set of
facts giving rise to irreparable harm and exceptional circumstances.
The ordinary meaning of harm is ‘injury, damage or ill effect’.
For harm to be irreparable, the effects or consequences
must be
irreversible or permanent.
[39]
The financial harm occasioned to Multisure is continuous and serious,
as described. The business is losing money with each passing
month.
Multisure has downsized and been forced to rely on savings and the
sale of shares. Its owner has placed an immovable property
on the
market in order to raise further capital. It has established, on a
balance of probabilities, that it will suffer irreparable
harm if the
relief sought is not granted.
[31]
As to the potential harm to KGA, Multisure took the point that KGA
will no longer be on
risk pending determination of the appeal by the
SCA. Any financial losses could be rectified by a return of premiums
to KGA if
it succeeds with its appeal. The probabilities favour this
conclusion, so that Multisure succeeds in proving that KGA will not
suffer irreparable harm if the order is implemented immediately. In
any event, as
Mr Nepgen
pointed out, Uniform Rule 49(12) has
been interpreted to refer to the situation where execution follows an
order in terms of
s18
of the
Superior Courts Act, 2013
. The subrule
provides for security for the restitution of any sum obtained upon
execution. This supports the conclusion that Multisure
has succeeded
in proving that KGA will not suffer irreparable harm if the order is
implemented immediately.
Non-joinder
[32]
The
test for a plea of non-joinder or misjoinder is whether or not a
party has a ‘direct and substantial interest’ in
the
subject matter of the action, that is, a legal interest in the
subject matter of the litigation which may be affected prejudicially
by the judgment of the court.
[40]
The mere fact that a party may have an interest in the outcome of the
litigation does not warrant a non-joinder plea.
[41]
The rule is that any person is a necessary party and should be joined
if such person has a direct and substantial interest in any
order the
court might make, or if such an order cannot be sustained or carried
into effect without prejudicing that party.
[42]
[33]
The ‘subject matter’ of these
proceedings relates only to whether the order should be brought into
operation pending
the appeal to the SCA. That order was taken without
any such joinder. Nevertheless, I accept that these proceedings may
well be
of some interest to the individuals concerned. But given the
‘transfer(s)’ to AUL occasioned by the order, I am of the
view that the persons insured have no direct and substantial interest
that may be affected prejudicially by the judgment of this
court. The
order sought by Multisure in these proceedings, giving effect to the
order of Schoeman J, is capable of being effected
without
substantially affecting their interests. The plea must, therefore, be
dismissed.
Urgency
[34]
The
approach to adopt when dealing with an urgent application is governed
by Uniform
Rule 6(12).
In terms of that rule, the court has
discretionary power to dispense with the forms and service provided
for in the rules and to
dispose of the matter at such time and place
and in such manner and in accordance with such procedure as it deems
fit.
[43]
The first question is
whether there must be a departure at all from the usual process.
[44]
[35]
The
applicant is expected, in the founding affidavit, to ‘set forth
explicitly the circumstances which is averred render the
matter
urgent and the reasons why the applicant claims that substantial
redress could not be afforded at a hearing in due course’.
[45]
Put differently, if the matter were to follow its normal course as
laid down by the rules, would the applicant be afforded substantial
redress. If not, the matter qualifies to be enrolled and heard as an
urgent application. If so, the application does not pass the
test for
urgency. The question as to the absence of ‘substantial
redress’ in an application brought on usual timeframes
lies at
the heart of the question of urgency.
[46]
[36]
In my view, the matter was properly launched on an urgent basis,
although with some delay.
Much of the perceived lateness is explained
by the attempts to avoid litigation and other circumstances that
arose in typical fashion
for matters of this nature. Any prejudice to
KGA is outweighed by the exigency of the matter and the impact of the
current position
on Multisure, as already indicated. The Uniform
Rules must be interpreted to advance the right of access to courts
and the present
circumstances warrant a departure from the normal
procedures and timeframes in the interests of justice.
Conclusion
[37]
The
specified s 18 requirements for the relief sought have been
satisfied. This court nevertheless retains a wide general discretion
to determine the conditions upon which the right to execute should be
exercised and considerations of what is just and equitable
in the
particular circumstances remain relevant.
[47]
For reasons already canvassed as part of the consideration of the
prospects of success on appeal, I am of the view that the
intermediary
agreement and Master Policy have been cancelled and are
of no further force and effect from 1 September 2021. The Group
Scheme
underwritten by the First Respondent was terminated with
effect from this date. It is just and equitable for Q Link to alter
the
deduction codes on its system immediately so that SASSA may
transfer its payment of the relevant premiums previously paid to KGA
to AUL. It is also just and equitable for the full aggregate amount
of the premiums paid to KGA from 1 September 2021 to be paid
to AUL,
which will enable Multisure to obtain its commission and fees for
this period from AUL. In coming to this decision, I note
that the
order specifically defines ‘Group Scheme’. I read the
single reference to ‘group scheme’ in paragraph
(c) of
the order to refer to policies underwritten by AUL at the instance of
Multisure on behalf of its clients, to be risk assessed
on an
individual basis given the legislative position.
[38]
KGA has unsuccessfully opposed this application and, applying the
usual principles, must
be saddled with the costs of these
proceedings.
[39]
This court has deviated from
s 18(1)
of the
Superior Courts Act,
2013
, and is obliged, in terms of
s 18(4)
, to immediately record its
reasons for doing so. The reasons appear from this judgment. This
judgment is subject to the automatic
right of appeal enjoyed by KGA
in the event that it is aggrieved by this outcome, such appeal to be
dealt with on an extremely
urgent basis.
Order
[40]
The following order will issue:
1.
The application is heard on an urgent basis pursuant to the
provisions of Rule
6(12) of the Uniform Rules of Court.
2.
The operation of the order granted by the Honourable Madam Justice
Schoeman,
delivered on 15 March 2022, is not suspended pending the
outcome of the First Respondent’s appeal to the Supreme Court
of
Appeal, or any subsequent appeal.
3.
The First Respondent is ordered to pay the costs of this application.
A.
GOVINDJEE
JUDGE
OF THE HIGH COURT
Heard:28
July 2022
Delivered:30
August 2022
Appearances:
Applicant’s
Counsel:
Adv JJ Nepgen
Instructed
by
: Vic Skelton Inc.
Attorneys
for the Applicant
18
Gibson Road
Mount
Croix
Gqeberha
Email:vsalaw@gmail.com
First
Respondent’s Counsel:
Adv RG Buchanan SC
Instructed
by
: Greyvensteins Inc.
First
Respondent’s Attorneys
St
Georges House
104
Park Drive
Central
Gqeberha
Email:melanieb@greyvensteins.co.za
[1]
Act
52 of 1998.
[2]
This
is defined in the applicable regulations as a person, other than a
representative, rendering services as intermediary: Regulation
3.1
of the Regulations under the Long-term Insurance Act, 1998 (Act 52
of 1998)
GNR
1492
of
27 November 1998, as amended. ‘Rendering services as
intermediary’ is also defined in the regulations to
refer
to performance by a person other than a long-term insurer or a
policyholder, on behalf of a long-term insurer or a policyholder,
of
any act directed towards entering into, maintaining or servicing a
policy or collecting, accounting for or paying premiums
or providing
administrative services in relation to a policy, and includes the
performance of such an act in relation to a fund,
a member of a fund
and the agreement between the member and the fund: part 3A of the
Regulations. Also see the definition of
‘independent
intermediary’ in chapter 1 of the Policyholder Protection
Rules (Long-term Insurance), 2017 (GN 1407
of 15 December 2017) (
GG
No. 41321).
[3]
Approximately
four years prior to the litigation, the South African Social
Security Agency (‘SASSA’) procured the
services of Q
Link to administer deductions from social benefits administered by
SASSA. SASSA then arranged that it would make
payment directly to
the insurer in respect of group schemes, and not to the
intermediary, and proceeded accordingly.
[4]
The
‘book’ in this context refers to the persons (or
members), represented by a particular intermediary, who obtained
funeral insurance from the insurer.
[5]
Act
10 of 2013.
[6]
Act
18 of 2007.
[7]
Clause
8.1 of the agreement.
[8]
Clause
7.6 of the agreement.
[9]
Clause
7.8 of the agreement.
[10]
Clause
15 of the agreement.
[11]
Rule
15
(b)
of the Policyholder Protection Rules (Long-term Insurance), 2004
(GNR 1129 of 30 September 2004) read ‘A cancellation of
an
agreement referred to in Rule 11 will only be effective if …
all individual policyholders have to the satisfaction
of the
registrar been notified of such cancellation’.
These
rules have been repealed by GN 1407 published in
GG
41321
of 15 December 2017.
[12]
Clause
1.2 of the Master Policy. Multisure is, for purposes of the Master
Policy, referred to as the ‘policyholder’,
insured
persons are referred to as ‘members’ and KGA is referred
to as the ‘assurer’.
[13]
Clause
6.4 of the Master Policy.
[14]
Clause
4.5 of the Master Policy.
[15]
Clause
15.5 of the Master Policy.
[16]
S
25 of the Act.
[17]
Ss
27, 29 of the Act.
[18]
The
Minister has not exercised this power to date.
[19]
Schedule
2 of the Act.
[20]
A
group scheme was defined more broadly as ‘a scheme or
arrangement which provides for the entering into of one or more
policies, other than an individual policy, in terms of which two or
more persons without an insurable interest in each other,
for the
purposes of the scheme, are the lives insured’.
[21]
Ss
18(1)
and
18
(3) of the
Superior Courts Act, 2013
.
[22]
S
18(4)
of the
Superior Courts Act, 2013
.
[23]
Knoop
NO v Gupta
(Execution)
2021 (3) SA 135
(SCA) para 45. Also see
Incubeta
Holdings (Pty) Ltd v Ellis
2014 (3) SA 189
(GJ) (‘
Incubeta
Holdings
’)
para 24.
[24]
See
Premier
for the Province of Gauteng v Democratic Alliance
[2021] 1 All SA 60
(SCA) para 14.
[25]
See
Incubeta
Holdings
supra fn 23 para 22.
[26]
MV
Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas
2002
(6) 150 (C) at 156I-157C. Also see
Incubeta
Holdings
supra
fn 23 at 194J-195I.
[27]
University
of the Free State v Afriforum
2018
(3) SA 428
(SCA) (‘
University
of the Free State
’)
para 11.
[28]
See
Avnit
v First Rand Bank Limited
[2014] ZASCA 132.
Also see
Ntlemeza
v Helen Suzman Foundation
2017 (5) SA 402
(SCA) at 413D.
[29]
See
University
of the Free State
supra fn 27 para 15, citing, with approval,
Minister
of Social Development Western Cape and Others v Justice Alliance of
South Africa & Another
[2016] ZAWCHC 34
para 27.
[30]
Multisure
estimates the commission withheld to be over R560 000 per
month.
[31]
Multisure
adds, in reply, that a loss in excess of R400 000 was
experienced between 1 March and 31 May 2002.
[32]
See,
in general, DH van Zyl ‘Mandate and negotiorum gestio’
in JA Faris (ed)
LAWSA
(3
rd
Ed) (vol 28(1)) paras 55-69. Also see P Havenga
The
Law of Insurance Intermediaries
(2001) (Juta) at pp2-6.
[33]
The
Master Policy provides that the assurance of persons insured
commences on the first day of the month following the month in
which
the acceptance by KGA of the member’s application has been
granted and the first monthly premium received by KGA.
[34]
Clause
4.2 of the Master Policy.
[35]
See
Van Zyl op cit fn 32 para 61. Also see
Dreyer
v Sonop
[1951] ZAFSHC 1
;
Kunene-Msimanga
and Others v Regional Tourism Organisation of Southern Africa and
Others
[2022] ZAGPJHC 366 paras 140-141.
[36]
On
the possibility of a life-insurance policy constituting a
stipulatio
alteri
,
see
Crossman
v Capital Alliance Group Risk
(unreported,
Gauteng Local Division, Johannesburg) (case no. 34636/2020) (21
April 2022) para 28-30.
[37]
See
in general Havenga op cit fn 32 at 3, 10-11.
[38]
Premier
for the Province of Gauteng v Democratic Allicance
supra
fn 24 para 25.
[39]
Knoop
NO and Another v Gupta
(Tayob
as Intervening Party)
supra
fn 23.
[40]
Henri
Viljoen (Pty) Ltd v Awerbuch Bros
1953
(2) SA 151
(O) at 168-170.
[41]
Judicial
Service Commission v Cape Bar Council
2013
(1) SA 170
(SCA) at 176I-177A.
[42]
One
South Africa Movement v President of the RSA
2020
(5) SA 576
(GP) at para 22. Also see
Gordon
v Department of Health, KwaZulu-Natal
[2008] ZASCA 99
para 9.
[43]
Uniform
Rule 6(12)
(a)
.
[44]
Luna
Meubel Vervaardigers v Makin and Another
1977
(4) SA 135
(W) at 136H-137F.
[45]
Uniform
Rule 6(12)
(b)
.
Also see
Kati
v MEC, Department of Finance, Eastern Cape Province
(unreported case no. 929/2006) (High Court of South Africa, Bhisho)
at 9.
[46]
See
East
Rock Trading 7 (Pty) Ltd and Another v Eagle Valley Granite (Pty)
Ltd and Others
[2011] ZAGPJHC 196.
[47]
Minister
of Social Development Western Cape and Others v Justice Alliance of
South Africa and Another
[2016]
ZAWCHC 34
para 26.