Maree v C Booysen t/a NVM Beleggings & Versekeringsadviseurs (307/09) [2010] ZASCA 44; 2010 (5) SA 179 (SCA) ; [2010] 4 All SA 15 (SCA) (31 March 2010)

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[2010] ZASCA 44
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Maree v C Booysen t/a NVM Beleggings & Versekeringsadviseurs (307/09) [2010] ZASCA 44; 2010 (5) SA 179 (SCA) ; [2010] 4 All SA 15 (SCA) (31 March 2010)

THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Case no: 307/09
P
P MAREE
Appellant
and
CHRIS
BOOYSEN T/A NVM BELEGGINGS & Respondent
VERSEKERINGSADVISEURS
________________________________________________________________
Neutral citation:
Maree
v C Booysen t/a NVM Beleggings & Versekeringsadviseurs
(307/09)
[2010] ZASCA 44
(31 March 2010)
CORAM:
Navsa,
Mlambo and Bosielo JJA
HEARD:
11
March 2010
DELIVERED:
31
March 2010
SUMMARY:
Agreement
in terms of which an insurance broker is entitled to claim commission
from the insured in the event of the latter cancelling
a long-term
insurance policy within the statutory ‘cooling-off’ period is
unenforceable ─ provisions of the Long-term Insurance
Act 52 of
1998, the regulations thereunder and Policy Protection Rules
discussed.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from:
Free
State High Court (Bloemfontein) (Kruger
et
Mocumie JJ sitting as court
of first instance).
1. The appeal is upheld with costs.
2. The order of the court below is set
aside and substituted as follows:
‘
(a) The appeal is dismissed and the
appellant is ordered to pay 80 per cent of the respondent’s costs.’
The Magistrate’s order is changed to
the following extent:
‘
(a) The plaintiff’s claim is
dismissed with costs.
(b) The defendant’s counterclaim is
dismissed with costs.‘
________________________________________________________________
JUDGMENT
________________________________________________________________
NAVSA JA (Mlambo and Bosielo JJA
concurring)
[1] The Respondent, Mr Chris Booysen,
conducts business as an Insurance broker and consultant, under the
trade name NVM Beleggings
& Versekeringsadviseurs. He instituted
action against the appellant, Mr P P Maree, in the Kroonstad
Magistrates’ Court, for
payment of an amount of R47 638.27, being
commission he alleged would have been paid to him over a period of
time had the latter
not cancelled an insurance policy procured on his
behalf. The claim was based on a written agreement between them, the
provisions
of which will be dealt with in due course.
[2] Mr Maree opposed the action and in
a counterclaim sought a statement and debatement of account. The
Magistrates’ Court dismissed
Mr Booysen’s claim with costs, on
the basis that the written agreement on which the claim was based
contravened s 49 of the Long-term
Insurance Act 52 of 1998 (the Act),
read with the regulations promulgated thereunder. The Magistrate
granted Mr Maree’s counterclaim.
The applicable statutory
provisions will be examined later.
[3] Mr Booysen appealed the
Magistrates’ court decision to the Free State High Court in
Bloemfontein, which (Kruger J, Mocumie J
concurring) upheld the
appeal with costs, substituting the Magistrate’s order as follows:
‘
1.Verweerder word
gelas om eiser R47 738, 27 te betaal plus rente teen 15, 5% per jaar
vanaf 4 April 2006 tot op datum van finale
vereffening.
2. Verweerder se teeneis
word met koste van die hand gewys.’
[4] It is against that decision and
order that Mr Maree appeals, with the leave of the court below. The
background facts are largely
uncontested and are set out hereafter.
[5] Mr Booysen had rendered advisory
services to Mr Maree, a successful businessman, for approximately 20
years. The seeds of the
present antagonism between them were sown
when, during July 2006, Mr Booysen advised Mr Maree to have a
current Sanlam annuity
policy ‘paid up’
1
and to replace it with a Momentum Life policy. Mr Maree
initially proceeded to follow that advice.
[6] On 17 July 2006, Sanlam, as it was
statutorily obliged to, sent Mr Maree a document in which it set out
the impact of causing
the policy to be ‘paid up’. It appears
that, following on a further discussion with another Insurance
advisor based at a local
bank, Mr Maree came to the conclusion
that he had been wrongly advised by Mr Booysen and that the
latter had been motivated
by the commission to be earned on the
Momentum Life policy. This, of course, is denied by Mr Booysen, who
testified that the advice
he gave was based on the fact that
continued premiums on the Sanlam policy was not tax-effective for Mr
Maree and that, in the long
term the former would earn less in
commission on the new policy. For reasons that will become apparent
it is not necessary to resolve
this subsidiary dispute.
[7] On 21 July 2006 in a very curt
letter to Mr Booysen, Mr Maree wrote the following:
‘
Hiermee stel ons u in
kennis dat M.C. Ingenieurswerke BK
2
en P.P. Maree, nie meer van N V M Beleggings & versekerings
adviseurs se dienste gebruik sal maak nie.
Ons wil nie redes verskaf
nie en versoek dat u dit so sal respekteer. Ons kan u verseker dat
die besluit nie ligweg geneem is nie
en dit sal nie heroorweeg word
nie.’
[8] On 25 July 2006 Mr Maree wrote to
Momentum Life cancelling the policy that Mr Booysen had procured on
his behalf.
[9] On 31 August 2006, Mr Maree wrote
a further letter to Mr Booysen, stating that he had decided to
replace him with ABSA brokers.
The following are the relevant parts
of Mr Maree’s letter:
‘
My besluit om ABSA
Makelaars (Neels Greeff) as my nuwe makelaar aan te stel is my keuse
wat ek hoop jy sal respekteer.
Ek het slegs ‘n tweede
opinie ingewin nadat ek ‘n skrywe vanaf Sanlam, waarvan die opskrif
as volg was: “Impak om ‘n polis
volopbetaald te maak” ontvang
het.
Nadat ek ‘n tweede,
derde en vierde opinie ingewin het, het ek besluit om by Sanlam te
bly.’
[10] As a result of Mr Maree’s
cancellation of the Momentum Life policy Mr Booysen lost the
commission he would otherwise have
earned. This led to further
acrimonious exchanges between them and ultimately to the litigation
culminating in the present appeal.
It is clear from Mr Booysen’s
evidence that he took the view that he was entitled to compensation
because of the effort he had
expended in advising the appellant and
procuring the best available new policy for him.
[11] In his particulars of claim the
following is stated on behalf of Mr Booysen:
‘
3. Eiser en verweerder
het ‘n ooreenkoms aangegaan waarvolgens eiser aan verweerder sekere
advies gelewer het in verband met sy
polis portefeulje, welke advies
deur verweerder aanvaar is en is daar sekere polisse uitgeneem in
terme van die advies.
4. As gevolg van die
advies is Eiser geregtig op sekere kommissie ten bedrae van
R47 638, 27.’
[12] At this stage it is necessary to
have regard to the agreement on which Mr Booysen’s claim is based.
The following is the material
part of the agreement:
‘
Ek begryp en aanvaar
dat enige versekeringsbesigheid namens my, deur my tussenganger
geplaas, voorsiening maak dat my tussenganger
deur die betrokke
versekeraar vergoed sal word volgens die aard van die produk deur my
aanvaar, en soos op die kwotasie van die versekeraar/s
aan my
voorgelê, aangedui word. Ek en my tussenganger kom ooreen dat
sodanige vergoeding deur ons beide aanvaar sal word as vergoeding
vir
die dienste aan my gelewer. Indien my tussenganger se vergoeding
teruggevorder word deur die versekeraar as gevolg van my eie
(die
polishouer) se optrede tot nadeel van die tussenganger, aanvaar ek,
die ondergetekende dat ek steeds verantwoordelik sal wees
vir
genoemde, ooreengekome vergoeding.’
The ‘tussenganger’ (intermediary)
is a reference to Mr Booysen.
[13] I turn to deal with the manner in
which the court below dealt with the Magistrate’s findings.
[14] Kruger J recorded that Mr
Booysen accepted that he was not entitled to any commission from
Momentum Life because of Mr
Maree’s cancellation of the policy.
3
The learned judge noted that the Magistrate had decided the matter on
the basis that the agreement on which Mr Booysen relied was
in
contravention of the Act and that Mr Maree’s assent amounted to a
waiver which was not competent.
[15] The court below found that Mr
Booysen, as intermediary, had expended time and energy in procuring
the Momentum Life policy and,
as a result of Mr Maree’s
cancellation, was now deprived of the commission he would otherwise
have earned. In considering
the statutory provisions the Free State
High Court held that there was no prohibition against an agreement
between an intermediary
and his client, in this case, between Mr
Maree and Mr Booysen in terms of which the latter was able to look to
the former for compensation.
It held that the Act did not deprive the
intermediary of his right to recover commission that was his or her
due. Consequently the
court below made the order set out in para 3
above. The question before us is whether these conclusions were
correct.
[16] At this stage it is
necessary to consider the relevant statutory provisions, beginning
with Mr Maree’s entitlement to cancel
the Momentum Life policy. In
terms of Rule 6.1 of the Policyholder Protection Rules
4
(Long-Term Insurance), promulgated under s 62 of the Act, a new
policyholder has, what is commonly referred to as a ‘cooling-off’
period, within which to cancel any policy under appropriate
qualifying circumstances. It is undisputed that Mr Maree was
entitled
in terms of this rule to cancel the policy.
[17] Section 49 of the
Act, the applicability of which was debated in the Magistrates’
Court, in the court below and before us,
provides:
‘
No consideration shall
be offered or provided by a long-term insurer or a person on behalf
of the long-term insurer or accepted by
any independent intermediary
for rendering services as intermediary as referred to in the
regulations, other than commission contemplated
in the regulations
and otherwise than in accordance with the regulations.’
[18] Importantly, s 56 of the Act
provides that an agreement, in terms of which a person who has
entered into a long-term policy
waives a right to which he or she is
by virtue of the Act entitled, is void.
[19] Section 72(1)
(d)
of the Act empowers the Minister to make regulations ‘prohibiting
any consideration from being offered or provided, or limiting
the
consideration which may be offered or provided, from, by or on behalf
of a long-term insurer to any person for rendering services
as
intermediary. . .’.
[20] The material parts of regulation
3.2 of the Regulations, promulgated in terms of s 72 of the Act,
5
echoes s 49 and reads as follows:
‘
3.2
General
limitations.─
(1) No consideration shall, directly or indirectly, be provided to,
or accepted by or on behalf of, an independent intermediary for
rendering services as intermediary, otherwise than by way of the
payment of commission in monetary form.
(2) No commission shall
be paid or accepted otherwise than in accordance generally with this
Part and more particularly as specified
in the Table.’
[21] Regulation 3.8, consonant with s
56 of the Act, provides as follows:
‘
3.8
Voidness
of certain agreements.─
Any
agreement,
scheme or arrangement
to provide consideration for the rendering of services as
intermediary otherwise than in accordance with this Part shall be
void.’
(My emphasis.)
[22] ‘Rendering services as
intermediary’ is defined in the regulations as follows:
‘
[T]he 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.’
[23] Rule 19.1 of the Long-Term
Insurance Policy Protection Rules, in line with s 56 of the Act and
regulation 3.8, provides:
‘
No insurer or
intermediary may request or induce in any manner a policyholder to
waive any right or benefit conferred on the policyholder
by or in
terms of a provision of these Rules, or recognise, accept or act on
any such waiver, and any such waiver is null and void.’
[24] It was submitted on behalf of Mr
Booysen that s 49 was designed to regulate the relationship between
insurer and intermediary
and not the relationship between
intermediary and insured. Counsel on behalf of Mr Booysen contended
that s 49 ought to be read so
as to limit its operation so as to
ensure that it does not intrude upon the common-law right of parties
to provide separately for
‘consideration’ as between intermediary
and insured.
6
It was submitted that, at the very least, s 49 was ambiguous and that
courts should strive to avoid an interpretation that would
be absurd.
[25] It was contended further that the
regulations and rules should be read in the light of the
interpretation of s 49 set out in
the preceding paragraph.
[26] It was submitted that an
absurdity flowed from holding that the agreement in question was
prohibited in terms of the statutory
provisions referred to above The
absurdity, so it was submitted, was that an intermediary, such as
Mr Booysen would be deprived
of his commission, notwithstanding
the efforts expended in procuring a new policy. No other example of
an absurdity was provided
by counsel on behalf of Mr Booysen.
[27] The stated purpose of the Policy
Protection Rules is to ensure that intermediaries and insurers
conduct their business honestly,
fairly and with due care and
diligence.
7
Several provisions of the Act are designed to protect consumers.
8
The ‘cooling-off’ period is clearly designed to afford proper
time to consider the full implications and impact of the policy
in
question, without the consumer incurring any financial penalty.
[28] In my view s 49 is not ambiguous.
It limits the consideration to be offered by a long-term insurer to
persons such as intermediaries
to commission as contemplated in the
regulations. Furthermore, it restricts the consideration that may be
accepted by an independent
intermediary for rendering services as
such, to commission as contemplated by the regulations.
[29] Regulation 3.2, set out in para
18 is equally clear and echoes the provisions of s 49. Regulation 3.8
referred to in para 18,
in even clearer terms, renders void, ‘
any
agreement, scheme or arrangement to provide consideration for the
rendering of services as intermediary’ other than in accordance
with the regulations. (My emphasis.) It has not been suggested that
these regulations, in their emphatic and unambiguous terms are
ultra
vires
.
[30] It is common cause that in the
circumstances of this case, namely, the cancellation within the
‘cooling-off’ period, no commission
is payable by Momentum Life
to Mr Booysen, in terms of the tables and formulae provided for in
the regulations.
[31] In my view, the provisions of s
49, read with the regulations referred to in preceding paragraphs,
prohibit agreements of the
kind on which Mr Booysen relies.
[32] If such agreements were to be
enforced it would have the effect of penalising a consumer
financially for exercising the statutory
right to cancel a policy
within the ‘cooling-off’ period. The result of enforcing the
agreement would be to hold a consumer liable
for the loss of a
commission that never accrued. It is that very situation that the
legislature was keen to avoid.
[33] Mr Booysen is aggrieved that he
has not been compensated for the effort expended in procuring the
Momentum Life policy. The evidence
adduced shows that this grievance
is exaggerated. Furthermore, Mr Booysen was not unaware of the
consumer’s right to cancel a policy
within the ‘cooling-off’
period. The statutory provisions relating to restrictions on
commission set out above are provisions
which should be familiar to
intermediaries.
[34] One final aspect remains. The
Magistrate’s order granting Mr Maree’s counterclaim was, in the
light of his conclusion in
respect of the agreement on which Mr
Booysen relied, unnecessary and unjustified and liable to be set
aside with an attendant costs
order. Before us no time was spent on
this issue, save that Mr Maree, in heads of argument, submitted that
the Magistrate’s order
on this aspect should be set aside. In the
court below some time was devoted to the appellant’s counterclaim.
The parties are agreed
that 20 per cent is a fair estimate in this
regard and that in the event that Mr Maree is successful in the
present appeal his entitlement
to costs should be reduced in that
percentage.
[35] Following on the conclusions
reached above the following order is made:
1. The appeal is upheld with costs.
2. The order of the court below is set
aside and substituted as follows:
‘
(a) The appeal is dismissed and the
appellant is ordered to pay 80 per cent of the respondent’s costs.’
The Magistrate’s order is changed to
the following extent:
‘
(a) The plaintiff’s claim is
dismissed with costs.
(b) The defendant’s counterclaim is
dismissed with costs.’
_________________
M S NAVSA
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: B Knoetze SC
Instructed
by
HSL
Du Plessis Attorneys Kroonstad
Honey
Attorneys Bloemfontein
For
Respondent: P R Cronjé
Instructed
by
Thabo
Grimbeek Attorneys Kroonstad
Naudes
Bloemfontein
1
This means that the policy holder ceases paying premiums and the
policy then holds a reduced value upon maturity, relative to

premiums paid plus the investment value.
2
M C Ingenieurswerke CC is one of Mr Maree’s businesses.
3
Mr Maree was entitled in terms of the rules promulgated in terms of
the Act to cancel the policy within a 30 day-period of receipt
of
summarised information from Momentum Life ─ see para 16 infra.
4
Government Gazette No 26854, Government Notice No 1129, Regulation
8070.
5
Government Gazette No 19495, Government Notice 1492 of 27 November
1998 as amended.
6
In this regard Mr Booysen relied on Directive 132.A.ii (LT) of 30
January 2004 issued by the Registrar of Long-Term Insurance

(Financial Services Board). In this Directive approving of this
interpretation the Registrar’s office nevertheless indicated that
it intended to promote a legislative amendment to place this matter
beyond doubt.
7
See Rule 2 and Peter Havenga
The
Law of Insurance Intermediaries
(2001) p 55.
8
Section 45 of the Act for example is designed to protect the
consumer against unscrupulous salespersons who offer the prospective
policyholder inducements to enter into policies. The golden thread
running through the history of insurance legislation in South
Africa
is a commitment to consumer protection and to provide protection
against undesirable business practices. Section 48 provides
for
material information to be made available to a policyholder. Section
49 referred to above bears the heading
Limitation
of remuneration to intermediaries
.