Outsurance Insurance Company Ltd v Mavela (2887/2021) [2023] ZAFSHC 257 (3 July 2023)

80 Reportability

Insurance Law

Brief Summary

Insurance — Repudiation of claim — Defendant's application for leave to amend plea to include jurisdictional challenge — Plaintiff's claim for damages following repudiation of insurance claim after vehicle accident — Defendant's late application for amendment and condonation sought — Court finds insufficient explanation for delay and that defendant had acquiesced to court's jurisdiction by participating in proceedings — Condonation application dismissed, along with amendment application, with costs awarded to plaintiff.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerned an opposed interlocutory application in the Free State Division of the High Court (Bloemfontein) in which the defendant, Outsurance Insurance Company Ltd, sought condonation for the late filing of an application and, consequentially, leave to amend its plea by introducing a special plea challenging the court’s jurisdiction.

The respondent, Simon Mavela, was the plaintiff in the main action, and the applicant was the defendant. The main action was already enrolled for trial on 24, 25, and 27 January 2023 following the close of pleadings and pre-trial processes.

The underlying dispute in the action concerned a claim for damages arising from the repudiation of an insurance claim after the plaintiff’s motor vehicle was damaged in an accident on 12 April 2021. The defendant resisted the claim in the main action on the basis that the plaintiff was allegedly driving under the influence of alcohol, entitling the insurer to repudiate liability. Against that procedural backdrop, shortly before trial, the defendant sought to introduce a jurisdictional objection by amendment.

2. Material Facts

The court treated as common cause that the plaintiff had instituted an action for damages against the defendant arising from the defendant’s repudiation of an insurance claim after a motor vehicle accident that occurred on the road between Hobhouse and Wepener in the Free State Province on 12 April 2021. The matter had progressed to the stage where pleadings had closed and trial dates had been allocated.

It was also not disputed that the defendant delivered a notice of intention to amend its plea on 15 December 2022, seeking to introduce a special plea of jurisdiction. The plaintiff delivered a notice of objection to the proposed amendment on 21 December 2022. In terms of Rule 28(4) of the Uniform Rules of Court, the defendant was required to deliver its application for leave to amend within 10 days of the objection, meaning that the application was due on or before 9 January 2023.

The defendant only filed the amendment application on 23 January 2023, approximately 10 days late, and accordingly sought condonation. The explanation advanced was that the defendant’s attorney had pursued correspondence about postponement and had been on leave, that the plaintiff’s attorneys reverted later than anticipated, and that the application was finalised shortly before trial and filed on 23 January 2023.

The plaintiff disputed that the explanation justified condonation and contended that the late application was a stratagem to delay the trial. In opposing the amendment, the plaintiff also relied on the defendant’s litigation conduct up to that point, including that the defendant had pleaded to the merits, participated in pre-trial proceedings, and had not raised any jurisdictional objection at the appropriate stage. The judgment also recorded that at a pre-trial conference held on 23 June 2022, the defendant confirmed that the parties agreed the matter was properly before the court.

On the merits of the proposed amendment, the defendant’s jurisdictional challenge was premised on the allegation that both parties were not domiciled within the court’s area of jurisdiction and that the cause of action did not occur within that jurisdiction.

3. Legal Issues

The court was required to determine whether the defendant had shown sufficient cause for condonation of its late filing under the rules, having regard to the degree of lateness, the adequacy of the explanation, the interests of justice, and the defendant’s prospects of success in the proposed amendment.

A further legal issue, relevant to prospects, was whether the proposed special plea of jurisdiction had any reasonable prospect of success given that it was sought after litis contestatio, and after the defendant had pleaded to the merits and participated in pre-trial processes, raising the question whether the defendant had acquiesced in the court’s jurisdiction.

These issues involved the application of established legal principles to the procedural facts (lateness, explanation, litigation conduct), rather than the resolution of factual disputes about the underlying insurance repudiation.

4. Court’s Reasoning

The court reiterated the settled principle that condonation is not granted for the mere asking. An applicant for condonation must provide a full, detailed, and accurate explanation for the default so that the court can understand how the non-compliance arose and can assess responsibility for it. The court identified as material considerations the degree of lateness, prospects of success, the avoidance of unnecessary delay, and the interests of justice.

Although the lateness was characterised as not extreme (about 10 days), the court held that the explanation did not satisfactorily justify the non-compliance. The court was not persuaded that the attorney’s vacation leave constituted a valid reason, especially where the attorney had nonetheless been able to engage in email correspondence during that period. The court also reasoned that, once the defendant became aware that the time period had expired (recorded as 13 January 2023 when the plaintiff’s attorneys pointed out the lapse), condonation ought to have been sought promptly, yet the application was only filed on 23 January 2023, on the eve of trial.

In evaluating the circumstances, the court accepted that the timing supported the plaintiff’s contention that the application was intended to delay the trial, and it concluded that the default was wilful.

The court then considered whether good prospects on the merits of the proposed amendment could mitigate the consequences of wilful default. It analysed the intended amendment and held that the proposed jurisdictional objection should have been raised in limine. The defendant had already pleaded to the merits, sought dismissal of the action (or apportionment), and participated in pre-trial procedures. On the court’s reasoning, by the time of litis contestatio (recorded as having occurred during September 2021), the defendant was deemed to have acquiesced in the court’s jurisdiction, even if the failure to raise the jurisdiction point earlier resulted from a mistake or lack of knowledge.

In support of this conclusion, the court relied on authority stating that a defendant who pleads to the merits without raising jurisdictional objection becomes bound to accept the court’s jurisdiction after litis contestatio. The court emphasised the inconsistency of invoking the court’s jurisdiction to obtain a merits determination while later seeking to repudiate that jurisdiction if unsuccessful. On that basis, the court held that the proposed special plea had no prospects of success, and therefore it was not in the interests of justice to grant condonation to pursue an amendment introducing a futile defence.

Because condonation was refused, the application for leave to amend necessarily failed.

5. Outcome and Relief

The court dismissed the condonation application. As a consequence, it also dismissed the defendant’s application for leave to amend its plea to include the proposed special plea of jurisdiction. The defendant was ordered to pay the costs.

Cases Cited

Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Company Ltd and Others (619/12) [2013] ZASCA 5 (11 March 2013).

Muladzi v Old Mutual Life Assurance Company (South Africa) Limited (95/2016) [2017] ZASCA 88 (6 June 2017).

Rennie v Kamby Farms (Pty) Ltd 1989 (2) SA 124 (A).

Purser v Sales; Purser and Another v Sales and Another [2000] ZASCA 135; 2001 (3) SA 445 (SCA).

Advertising Regulatory Board NPC and Others v Bliss Brands (Pty) Ltd 2022 (4) SA 57 (SCA).

Legislation Cited

No legislation was cited in the judgment beyond reference to the Uniform Rules of Court.

Rules of Court Cited

Uniform Rules of Court, Rule 28(4).

Held

The court held that the defendant failed to provide a satisfactory explanation for its late filing and that the default was wilful in the context of the timing (on the eve of trial) and the defendant’s conduct. It further held that the proposed amendment to raise a special plea of jurisdiction lacked prospects of success because the defendant had already pleaded to the merits and participated in pre-trial proceedings, with litis contestatio having occurred, thereby amounting to acquiescence in the court’s jurisdiction. Condonation was therefore refused, the amendment application failed, and costs followed the result against the defendant.

LEGAL PRINCIPLES

Condonation is discretionary and is not granted merely because it is requested; an applicant must demonstrate sufficient cause through a full, detailed, and accurate explanation accounting for the entire period of delay, enabling the court to assess how the default occurred and where responsibility lies.

In deciding condonation, relevant considerations include the degree of lateness, the adequacy of the explanation, the applicant’s prospects of success in the underlying step sought, the need to avoid unnecessary delay in litigation, and the broader interests of justice.

An objection to a court’s jurisdiction should be raised in limine. Where a defendant pleads to the merits without objecting to jurisdiction and litis contestatio occurs, the defendant is generally treated as having acquiesced in the court’s jurisdiction and is bound by that election, even if the failure to raise jurisdiction earlier arose from mistake.