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[2021] ZASCA 42
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King Price Insurance Company Ltd v Concise Consulting Services (Pty) Ltd (1067/2019) [2021] ZASCA 42 (13 April 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case No: 1067/2019
In the matter
between:
KING PRICE
INSURANCE COMPANY LTD
APPELLANT
and
CONCISE
CONSULTING SERVICES (PTY) LTD
RESPONDENT
Neutral
citation:
King
Price Insurance Company Ltd v Concise Consulting Services (Pty) Ltd
(1067/2019)
[2021] ZASCA 42
(13 April 2021)
Coram:
MBHA,
ZONDI and MOLEMELA JJA and KGOELE and ROGERS AJJA
Heard:
15
February 2021
Delivered:
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on
the
Supreme Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be have been at 10h00 on
13 April
2021.
Summary
:
Contract – insurance – repudiation – claim of
indemnification – whether false and misleading information
provided by the respondent’s employee to the insurer was
attributable to the respondent – whether such information
was
material to justify the repudiation of the claim and cancellation of
the contract. Held – the appellant failed to acquit
itself of
its onus to justify the repudiation and cancellation of the contract
of insurance – appeal dismissed with costs.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Louw J and Joyini AJ sitting as
the court of
appeal
):
The appeal is
dismissed with costs, which costs shall include the costs of two
counsel, where employed.
JUDGMENT
Mbha JA (Zondi
and Molemela JJA and Kgoele and Rogers AJA concurring)
[1]
This appeal concerns a repudiation by an insurance company of a claim
for indemnification under a contract
of insurance, on the ground that
an employee of the insured had submitted false, untrue and misleading
information, during the
claims process. It is against a judgment and
order of the full bench of the High Court, Gauteng Division, Pretoria
(Louw J and
Joyini AJ), given on appeal to it from the Magistrate’s
Court of Pretoria, in terms of which the insurer (the present
appellant, which was the successful defendant in the trial court and
the unsuccessful respondent in the full bench appeal) was
held liable
to indemnify the insured (the present respondent, which was the
unsuccessful plaintiff in the trial court and the successful
appellant in the full bench appeal) in terms of a contract of
insurance between the parties, for damages sustained to the insured’s
motor vehicle in an accident on 1 January 2014. The appeal
is with special leave of this Court.
[2]
It is necessary to set out, briefly, the factual matrix against which
the dispute arose and its litigation
history. The respondent, a
company registered in terms of the
Companies Act 71 of 2008
, was
insured in terms of a contract of insurance (the contract),
concluded with the appellant, a company which conducts business
as a
short-term insurer in terms of the
Short-term Insurance Act 53 of
1998
. This contract was in full force and effect from June 2013 until
its cancellation by the appellant on 17 January 2014 retrospectively
with effect from 1 January 2014.
[3]
The respondent was the owner of a 2008 Toyota Yaris motor vehicle
bearing registration letters and numbers
BSY 487 L (the
motor vehicle) which was comprehensively insured by the appellant in
terms of the contract. On 1 January 2014
during the early
hours of the morning this motor vehicle sustained damage during a
collision with a wall. The driver at the time
of the collision was
Mr Sibusiso Ngobese (Mr Ngobese), an employee of the respondent
who was also registered in terms of the
contract of insurance, as
being the regular driver of the said motor vehicle. Mr Paolos Tripani
(Mr Tripani), the respondent’s
managing director, reported the
incident and lodged a claim telephonically with the appellant on
1 January 2014. Mr Tripani
also instructed Mr Ngobese
to report the incident to the South African Police Services, which he
did.
[4]
On 8 January 2014 the appellant’s Ms Beverley-Ann Marais
contacted Mr Ngobese to obtain a
description of the events about
the incident. The call was made to Mr Ngobese after Mr Tripani
had explained to the appellant
that details regarding the incident
had to be obtained from Mr Ngobese, as he was the only person
who knew how the accident
had occurred. The appellant’s
assessor, Mr Charl Victor, conducted further telephonic interviews
with Mr Ngobese on 14 and
16 January 2014, when the latter’s
version was probed in greater detail.
[5]
On 17 January 2014 the appellant repudiated the respondent’s
claim and cancelled the contract
retrospectively from the date of the
incident. Its ground for doing so was that during the validation of
the claim it had come
to the appellant’s attention that Mr
Ngobese had supplied the appellant with dishonest information.
[6]
In repudiating the claim and cancelling the contract retrospectively,
the appellant referred specifically
to two different portions of the
policy wording on pages 9 and 10, which state the following:
‘
Be
honest
Always provide us
with true and complete information. This also applies when anyone
also acts on your behalf.
. . .
Keep your
promises
You need to give us:
. . .
—
True
and complete information to us and the authorities. We act on the
information you provide, therefore any information which
is
misleading, incorrect or false will prejudice the validity of your
claim.’
[7]
On 21 July 2014 the respondent issued a summons in the Magistrate’s
Court, Pretoria, against the
appellant claiming payment of the amount
of R75 000, being the fair and reasonable costs required to
repair the respondent’s
motor vehicle to its pre-collision
condition.
[8]
By the time the appellant pleaded, it no longer relied on page 10 of
the policy wording of the contract.
Over and above the policy wording
appearing on page 9, reliance was also placed on the policy wording
appearing on page 16, bearing
the heading ‘Fraud or dishonesty.
. . Honesty is always the best policy’. The appellant then
pleaded reliance on the
following policy wording in the relevant
paragraph of the plea:
‘
Fraud
or dishonesty. . . Honesty is always the best policy…
If you, or anyone
acting on your behalf submits a claim, or any information or
documentation relating to a claim, that is in any
way fraudulent,
dishonest or inflated, we will reject the entire claim and cancel
your policy retrospectively, from the date on
which the incident has
been reported, or from the actual incident date, whichever date is
earliest.’
[9]
The appellant pleaded further that either at the time or after the
respondent’s claim was lodged
with the appellant, and during
the investigation process conducted by the appellant’s
assessors, Mr Ngobese being the regular
driver of the motor vehicle,
and acting on behalf of the respondent, supplied the following
information to the appellant:
that he arrived at his home in
Klipfontein View, Midrand from Soweto at around 02h00 on 1 January
2014 and went to bed; that while
he was sleeping he was woken up by
his brother ‘Mpho’ at around 04h00 to 05h00 asking him to
assist because Mpho’s
wife was going into labour, whereafter he
took Mpho and his wife to Tembisa Hospital where he dropped them off
at the entrance
of the hospital; that the collision occurred because
the motor vehicle spun out of control and crashed into the wall after
he pulled
the handbrake because he had no brakes due to the motor
vehicle being in neutral; that he was not drinking alcohol prior to
or
at the time of the collision; and that he was alone in the motor
vehicle at the time of the collision.
[10] The
appellant then averred that the aforementioned information was untrue
and dishonest thus entitling the appellant
to repudiate the claim and
avoid the contract in that: during the period that Mr Ngobese was
allegedly sleeping, he was in fact
driving around the Soweto area;
according to the records from Tembisa Hospital, Mpho’s wife was
not treated there on 1 January
2014; and Mr Ngobese was not alone in
the motor vehicle at the time of the collision. Furthermore, he had
consumed alcohol prior
to or at the time of the collision and the
collision did not occur as alleged by him.
[11] At
the trial, the appellant led evidence to show that the spot where the
accident had occurred was along a straight
stretch of road. This was
in contrast with Mr Ngobese’s version that he lost control
as he was approaching a turn at
the end of that particular road.
[12] On
7 November 2017 the learned magistrate (Mr Tjale) handed down
judgment dismissing the respondent’s claim
with costs. He
found,
inter alia
, Mr Ngobese was dishonest and that the
information or representations made by him formed part of the claim
that was lodged
by the respondent; the information or representations
made by Mr Ngobese were material; Mr Ngobese was acting on behalf of
the
appellant when he made the representations and that the appellant
was accordingly entitled to avoid the contract of insurance.
[13] The
respondent’s subsequent appeal to the full bench yielded
positive results. The full bench upheld the
respondent’s appeal
and set aside the magistrate’s judgment in its entirety. The
full bench’s reasons may be
summarised as follows:
(a)
The
appellant as insurer bears the burden of proof to establish on a
preponderance of probabilities whether the respondent made
the false
statement or fraudulent representation with the wilful intention to
defraud and this was common cause. The clauses in
the contract relied
upon by the appellant to limit its obligation to indemnify required
to be interpreted strictly with proper
regard to the main purpose,
general nature and object of the contract of insurance.
In
casu
,
the appellant had failed to discharge the burden to establish
dishonesty or fraud on the part of the respondent with the intention
to deceive and defraud the appellant in order to get a benefit it
knew it was not entitled to.
(b)
When
Mr Ngobese provided the dishonest information to the appellant, he
was clearly not acting on behalf of the respondent. He was
merely
providing information at the request of the respondent. The
respondent itself did not know what the facts were.
(c)
The
false statements or misrepresentations made by Mr Ngobese were
insignificant and could not materially affect the assessment
of
indemnity.
[14] The
appellant’s case in this Court is pivoted, as it was in the
court below, on three main grounds namely:
(a)
First,
that Mr Ngobese was acting on behalf of the respondent when
submitting the false information to the appellant as contemplated
in
the contract of insurance.
(b)
Secondly,
that the respondent was obligated in terms of the agreement not to
supply false and misleading information.
(c)
Thirdly,
that the misrepresentations and untruths perpetrated by Mr Ngobese
were of a material nature such as to entitle the appellant
to both
repudiate the respondent’s claim and avoid the contract of
insurance retrospectively with effect from 1 January 2014.
[15] The
respondent’s defence, as appears from the heads of argument,
can be summarised as follows:
(a)
The
appellant failed to discharge the onus it had to prove facts pleaded
in its plea, all relating to the false information submitted
by Mr
Ngobese, including Mr Ngobese’s whereabouts during the period
before the accident; that his brother’s wife was
never treated
at Tembisa Hospital on 1 January 2014 and so forth. Alternatively,
such false statements were not material to the
appellant’s
liability to compensate the respondent.
(b)
Whatever
Mr Ngobese told the appellant’s investigator, Mr Victor, about
how the accident occurred, is not attributable to
the respondent,
with the consequence that the respondent has not contravened any of
the terms of the contract of insurance; and
(c)
If
it is found that Mr Ngobese provided untrue and misleading
information and if it is found that the information was provided in
the process of the respondent filing a claim as opposed to in the
appellant’s validation or investigation process, the contract
of insurance is ambiguous about what precisely is meant with ‘acting
on behalf of the insured’. Consequently, any reasonable
interpretation of that phrase by the respondent should triumph above
the appellant’s interpretation as the appellant is the
author
of the contract of insurance.
[1]
[16]
During argument before us, the issue about the truthfulness of Mr
Ngobese’s statements was rightly not seriously
pursued by the
respondent. Indeed, it was not even dealt with by the full court. The
main focus of the debate turned on the two
issues of the materiality
of Mr Ngobese’s untrue statements, and whether or not
Mr Ngobese was acting on behalf
of the respondent when he gave
the information to the appellant’s investigator during the
claims validation process.
[17] At
the outset, I need to dispel outright any notion that at the time
Mr Ngobese gave his statement to the
appellant he was submitting
the insurance claim in terms of the contract. Mr Tripani’s
uncontested evidence is that
after speaking to Mr Ngobese on the
day of the incident, he personally contacted the appellant and both
reported the incident
and then registered a claim telephonically. The
policy made provision for all claims to be lodged telephonically by
calling a specified
number. Clearly, Mr Ngobese’s
statement was given during the validation process, well after the
claim had already been
duly lodged.
[18] In
my view, the evidence and facts of this matter, viewed holistically,
show conclusively that when Mr Ngobese
told the appellant’s
investigator, Mr Victor, how the incident occurred, he was not
acting on behalf of the respondent.
Mr Tripani’s
uncontested testimony bears this out undoubtedly. Mr Tripani’s
evidence in this regard was as
follows:
‘
.
. .
Mr
Boot
:
. . . And you are
happy that [Mr Ngobese] when he gives [sic] the information to the
assessor is acting on behalf of the Company
in the finalisation of
that claim?--- I would not agree with the words “acting on
behalf of the Company”.
.
. .
Mr
Boot
:
Well, he is
representing the Company as the Insured Driver. --- He is relaying
the information, the nature of the incident, answering
questions.’
[19]
Also of importance is that there was no examination or
cross-examination of Mr Ngobese directed to the question
whether
he was or was not supplying information ‘on behalf of’
the respondent. The appellant’s legal representative
never put
to him in cross-examination that he was acting ‘on behalf of’
the respondent.
[20] In
cross-examination, Mr Tripani testified that as Mr Ngobese
was the only person who knew or had information
about how the
accident occurred, he was the person the appellant would have had to
contact to get a full picture of the accident.
Thus, the appellant
was the party that initiated contact with Mr Ngobese. Mr Tripani
only facilitated that to happen.
And, in doing so, Mr Tripani
never ever asked Mr Ngobese to fabricate anything that was not
true. Clearly, he was not
even aware of what Mr Ngobese was
going to say to the appellant’s investigator.
[21]
Importantly, sight must not be lost of the fact that the validation
exercise conducted by the appellant, through
its investigator
Mr Victor, was not a requirement for the institution or
lodgement of a claim in terms of the contract. It
was thus something
that was done entirely at the election of
the
appellant.
[22] It
is also important to note that ordinarily ‘acting on behalf of’
must denote the concept of agency,
which undoubtedly Mr Ngobese
was not. There is thus no cogent reason why Mr Ngobese, who was
clearly a witness as to
how the incident occurred, should be elevated
to an agent for, and thus acting on behalf of, the respondent in this
case.
[23]
Although the words ‘on the behalf of’ can in an
appropriate case have the broader meaning of acting
for the benefit
or in the interests of another, even though not as an agent,
[2]
I
consider that any ambiguity in this respect should be resolved
against the appellant. It would not be in keeping with the drastic
consequence of forfeiture of claims for an insured to be penalised
for fraudulent or dishonest information emanating not from the
insured (which would include conduct by an agent authorised to convey
fraudulent or dishonest information) but a third party. However,
and
even if one applied the broader meaning, the evidence does not show
that Mr Ngobese perceived himself to be acting for
the benefit
or in the interests of the respondent. His purpose in providing
dishonest information was almost certainly to shield
himself from
adverse consequences, whether at the hands of the insurer or the
respondent.
[24] As
I have found that Mr Ngobese was not acting on behalf of the
respondent when he gave his statement to the
appellant, no fault or
culpability of any sort whatsoever can be attributed to the
respondent. It follows that the appeal falls
to be dismissed.
Furthermore, in light of my finding in this regard, I do not deem it
necessary to further consider and determine
any other issue raised in
the appeal.
[25] In
the circumstances, the following order is made:
The appeal is
dismissed with costs, which costs shall include the costs of two
counsel, where employed.
B.H
MBHA
JUDGE
OF APPEAL
APPEARANCES:
For appellant:
P G Cilliers SC (with him B Boot SC)
Instructed by:
Weavind & Weavind Attorneys, Pretoria
Matsepes
Incorporated, Bloemfontein
For respondent:
T A L L Potgieter SC
Instructed
by: Savage Jooste &
Adams Attorneys, Pretoria
Honey
Attorneys, Bloemfontein
[1]
Van Zyl NO v Kiln Non-Marine Syndicate NO 510
of Lloyds of London
[2002] ZASCA 120
;
2003 (2) SA 440
(SCA) para 6.
[2]
See, for example,
South African Warehousing Services (Pty) Ltd
and Others v South British Insurance Co Ltd
1971 (3) SA 10
(A)
at 20D-F;
Premier Milling Company (Pty) Ltd v Van der Merwe and
Others
1989 (2) SA 1
(A) at 8C-E.