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[2021] ZAGPJHC 172
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Ngwenya N.O v Ombudsman for Long-Term Insurance and Others (17326/2018) [2021] ZAGPJHC 172 (30 August 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 17326/2018
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED:
NO
30
August 2021
In
the matter between:
PHILLIP
SIPHIWE NGWENYA NO
Applicant
And
OMBUDSMAN
FOR LONG-TERM INSURANCE
First Respondent
NEDGROUP
LIFE ASSURANCE COMPANY LIMITED
Second Respondent
NEDBANK
LIMITED
Third Respondent
Judgment
Mdalana-Mayisela
J
[1]
This is an application for review brought in terms of Uniform Rule 53
under common law. The applicant seeks to review
and set aside a
decision of the first respondent dated 16 January 2017, refusing
leave to appeal to the Appeal Tribunal against
a final determination
dated 18 November 2016. The applicant also seeks an order for payment
of R40 000.00 against the second and
third respondents. The second
respondent is opposing the application.
[2]
Much of the background set out hereafter is common cause. The
applicant is the husband of the late Mrs Ngwenya, and the executor
of
her estate. The applicant is bringing this application in his
representative capacity. On 7 September 2011, at the third
respondent’s
Southgate branch, the deceased applied for a loan
of R40 000.00 and a Credit Life policy (“the policy”) by
completing
a pre-agreement quotation with a duly authorised third
respondent’s representative. On 19 September 2011, the deceased
and
the representative of the third respondent signed an application
for a secured personal loan document. This document was a combination
of the forms required for the Loan and the policy. The purpose of the
policy was to operate as security for the R40 000.00 personal
loan in
the event of deceased’s death. The policy was covered by the
second respondent. According to the second respondent,
the policy was
concluded with the deceased on 19 September 2011.
[3]
The third respondent disbursed the loan amount of R40 000.00 to the
deceased’s bank account on 29 September 2011, which
was
repayable in 60 instalments commencing from 1 October 2011. The first
insurance premium in the amount of R104.71 was debited
from the
deceased’s bank account on 4 October 2011.
[4]
The deceased died on 24 September 2012. The applicant notified the
second respondent of her death on 1 October 2012 and the
requisite
documentation was submitted on the same day for assessment of the
claim under the policy.
[5]
Following the assessment of the claim, the second respondent found
that the deceased consulted with medical practitioners and
was
treated for a medical condition which was related to the cause of the
death, since 10 June 2011, which was prior to the commencement
of the
policy. On 19 March 2013, the second respondent rejected the claim on
the basis of an exclusion under the policy, which
provided that
liability would not arise where death resulted from a condition that
pre-existed the existence of the policy, if
such death occurred
before the expiration of 12 months from the date of commencement of
the policy. The applicant lodged a complaint
to the first respondent
in relation to the rejection of the claim. The first respondent gave
a provisional determination on 13
October 2016 finding against the
applicant. The applicant submitted further submissions on 26 October
2016. The first respondent
gave the final determination on 18
November 2016, dismissing the applicant’s claim.
[6]
On 14 December 2016 the applicant filed an application to the first
respondent for leave to appeal to the Appeal Tribunal against
the
first respondent’s final determination. The first respondent
refused leave to appeal. It is this decision that the applicant
seeks
to have reviewed and set aside.
[7]
The applicant in his notice of motion in prayer 2 is seeking payment
of the amount of R40 000.00 against the second and third
respondents.
I first dispose of this prayer. The applicant is not seeking the
review and setting aside of the final determination
of the first
respondent and the substitution thereof, instead he wants to appeal
that decision. Rule 3.5 of the Rules of the Ombudsman
for Long Term
Insurance provides that a determination made by the Ombudsman shall
be binding on the subscribing member concerned.
Therefore, the
applicant cannot disregard the final determination and seek payment
in this court without first seeking that it
be reviewed and set
aside, and substituted. The relief sought in prayer 2 cannot be
sustained at this stage.
[8]
During argument Counsel for the applicant submitted that the review
is brought both under common law and under section 6(2)(e)(iii)
of
the Promotion of Administrative Justice Act No, 3 of 2000 (“PAJA”).
No mention of PAJA is made anywhere in the papers
filed by the
applicant in this application. In any event the reliance on PAJA is
misplaced in that the exercise of power by the
first respondent does
not fall within the ambit of PAJA. The first respondent is the
Ombudsman established in terms of the
Financial Services Ombud
Schemes Act 37 of 2004
. Its functions include determining disputes
between subscribing members of the long-term insurance industry and
their respective
policy holders. PAJA applies to administrative
decision taken by organ of state.
Section 1
of PAJA defines
administrative action to mean any decision (being of an
administrative nature) taken by an organ of state when
exercising a
constitutional or public power or performing a public function in
terms of legislation which adversely affects the
rights of any person
and which has a direct, external legal effect. The impugned decision
does not constitute an administrative
action as defined in PAJA and
the first respondent is not an organ of state (see
De Lange v
Ombudsman for Long Term Insurance and Others (919/2011) (2012)
ZAECPEHC 45 (26 June 2012) paragraphs [10] to [11])
.
[9]
I now deal with a review under common law. The applicant after his
leave to appeal application was dismissed by the first respondent
he
did not apply to the Appeal Tribunal for leave to appeal against the
first respondent’s decision. He brought this review
application. Rule 6.1 of the Ombudsman Rules provides that a
complainant who or a subscribing member which feels aggrieved by any
determination by the Ombudsman may apply to the Ombudsman for leave
to appeal against it to a designated Appeal Tribunal. In terms
of
Rules 6.6 and 6.7 the Appeal Tribunal is vested with power to
determine all issues of a procedural or evidentiary nature, and
its
decision shall be final and binding. The applicant has not exhausted
the internal remedy provided by the Rules of Ombudsman.
However,
because this review application is brought under common law, the
existence of internal remedy is not in itself sufficient
to defer
access to judicial review until it has been exhausted (see
Koyabe
v Minister for Home Affairs ZACC 23
2009 (12) BCLR 1192
(CC);
2010
(4) SA 327
(CC).
[10]
The grounds for review under common law were stated in
Johannesburg
Stock Exchange and Another v Witwatersrand Nigel Ltd and Another
1988
(3) SA 132
(A) at 152 A-E
. The Appellate Division held as
follows:
‘
Broadly
in order to establish review grounds it must be shown that the
president failed to apply his mind to the relevant issues
in
accordance with the ‘behests of the statute and tenets of
natural justice (see National Transport Commission and Another
v
Chetty’s Motor Transport (Pty) Ltd
1972 (3) SA 726
(A) at
735F-G; Johannesburg Local Road Transportation Board and Others v
David Morton Transport (Pty) Ltd
1976 (1) SA 887
(A) at 895B –
C; Theron en Andere v Ring van Wellington van die NG Sendingkerk in
Sui-Afrika en Andere
1976 (2) SA 1
(A) at 14F-G). Such failure may be
shown by proof, inter alia, that the decision was arrived at
arbitrarily or capriciously or
mala fide or as a result of
unwarranted adherence to a fixed principle or in order to further an
ulterior or improper purpose;
or that the president misconceived the
nature of the discretion conferred upon him and took into account
irrelevant considerations
or ignored relevant
ones; or that the decision of the president was so grossly
unreasonable as to warrant the inference that he
had failed to apply
his mind to the matter in the manner aforestated. (see cases cited
above; and Northwest townships Pty Ltd v
Administrator Transvaal, and
Another 1975 (4) SA 1 (T) at 8D-G; Goldberg and Others v Minister of
Prisons and Others (supra) at
48D-H; Suliman and Others v Minister of
Community Development 1981 (1) (A) at 1123 (A).) Some of these
grounds tend to overla
p.’
[11]
The central issue for determination in this review is whether the
first respondent committed a reviewable error in determining
the
applicant’s leave to appeal application. The main issue in
dispute between the parties is the inception and commencement
date of
the policy, and whether the deceased died before the expiration of 12
months period referred to in the exclusion.
[12]
It is common cause between the parties that the policy was signed by
the deceased and the second respondent’s representative
on 19
September 2011 and that the deceased died on 24 September 2012.
Regarding the nature and scope of the policy, it provides
credit life
cover (death and disability cover) to the third respondent for those
clients who have a valid loan agreement with the
third respondent,
who qualify for cover in terms of the policy and who wish to be
covered. On written request to the third respondent,
a third
respondent’s client who qualifies under the policy shall be
covered in the event of death and disability (life assured).
In the
case of a valid claim, the proceeds of the policy will be credited to
the third respondent. It is underwritten by the second
respondent. It
is silent about its inception and commencement dates save for the
further advance commencement date, where it provides
that if the life
assured takes a further advance against the loan, all exclusions and
pre-existing clauses will apply to the increased
loan amount with
effect from the date of the advance.
[13]
The second respondent, during the determination of the claim by the
first respondent, submitted that the inception date of
the policy is
29 September 2011 and the commencement date is 1 October 2011. The
applicant submitted to the first respondent that
the commencement
date is 19 September 2011 because that is the date on which the
agreement was concluded between the parties. The
first respondent in
the provisional determination found that the commencement date is 1
October 2011 in accordance with the screenshots
of the bank systems.
[14]
After the applicant made further submissions challenging the
provisional finding, the first respondent made a final determination
that the commencement date is 1 October 2011. Again the first
respondent made that determination relying on the second respondent’s
submission, and also on the policy which provides that the first
premium is due and payable together with the 1
st
instalment on the loan. Thereafter premiums are due monthly on the
instalment date of each successive month until expiry of the
loan
term or cancellation of the loan by the third respondent. Premiums
will be paid monthly to the second respondent within 15
business days
of the date on which the premiums are due and payable by the life
assured to the third respondent.
[15]
The applicant applied for leave to appeal to the Appeal Tribunal
against the final determination of the first respondent on
the
grounds
inter alia
that the first respondent erred in not
finding that the policy between the deceased and the second
respondent was concluded on
19 September 2011 when it was signed by
both parties, and that the deceased started participating in the
Credit life policy scheme
from that date.
[16]
The first respondent in refusing leave to appeal concluded that,
although it could be said that the applicant’s submissions
may
be arguable on appeal, he was satisfied that there is no reasonable
prospect of success on appeal.
[17]
The applicant contends that the first respondent in determining the
applicant’s complaint ignored relevant considerations
and
failed to apply his mind to the relevant issues and that he should
have granted leave to appeal to the Appeal Tribunal on the
basis that
there is a prospect of success on appeal. The applicant further
submits that the leave to appeal decision should be
declared
unreasonable because it was not supported by the expressed terms of
the policy. The alleged relevant considerations that
were ignored are
as follow:
[17.1]
Paragraph 15 of the Pre-agreement quotation which provides that
‘
should the client accept this quotation, this together with
the terms and conditions, shall become the Agreement between Nedbank
and the client
; and that the agreement together with policy were
signed on 19 September 2011.
[17.2]
That the policy was dependent on the existence of the loan agreement
and as such the participation in the policy, with no
express terms in
the policy to the contrary, commenced when the loan agreement was
granted and the policy was approved by the second
respondent.
[17.3]
That in terms of the law of contract, disbursement of the loan to the
deceased’s bank account was only a delivery,
and consensus
between the parties had been reached when the loan agreement and the
policy were signed on 19 September 2011.
[18]
The applicant further contends that the first respondent was wrong in
his interpretation of the policy, specifically the meaning
he
attributed to participation in the insurance scheme and the
commencement thereof.
[19]
The second respondent contends that the first respondent considered
the applicant’s submissions, applied a correct test
applicable
to the application for leave to appeal with reference to case law,
analysed the relevant terms of the loan agreement
and policy, and
properly applied his mind to the matter before making his decision.
[20]
The second respondent further contends that the applicant is not
alleging any gross irregularity in the leave to appeal proceedings,
has failed to prove that the leave to appeal decision is reviewable
under common law, and his disagreement with first respondent’s
conclusions of law and fact does not suffice for a review.
[21]
An error of law can, in appropriate circumstances, found a review in
terms of the common law. This is so when the error is
material and
affects the outcome of the proceedings. If, for example, a statutory
criterion was wrongly interpreted by a tribunal
and on application of
the correct approach the facts do not support the impugned decision,
a review ought to succeed. So too, where
it can be said that the
tribunal asked itself the wrong question or based its decision on
some matter not prescribed for its decision
or failed to apply its
mind to the relevant issues in accordance with the behests of a
statute (see Hirt & Carter (Pty) Ltd
v Amtsen N O and Others
(277/2020)
[2021] ZASCA 85
(18 June 2021).
[22]
It seems to me that this a matter which turns on interpretation of
the contract concluded by the parties particularly in light
of the
fact that the contract is silent on when the 12 months commences. The
first respondent interpreted the contract and concluded
that the
commencement date was when the loan amount of R40 000,00 was
disbursed to the deceased, and not at the time when the contract
was
signed. The applicant argues otherwise and contends that the
commencement date was when the contract was signed. In the light
of
the view that I take of this matter I decline to proffer my
interpretation of the contract.
[23]
I agree with the first respondent in his ruling dismissing the leave
to appeal that the matter raises an arguable point of
law on appeal.
I however do not agree with the first respondent that after finding
that the matter raises arguable point of law
on appeal, that he came
to the conclusion that the appeal would have no prospects of success.
The converse is in fact true. To
this end leave to appeal should be
granted to the Appeal Tribunal. That being the case it follows that
the decision refusing leave
to appeal should be reviewed and set
aside.
[24]
It will serve no purpose to remit the matter back to the first
respondent for reconsideration of his decision to refuse leave
to
appeal. The first respondent has already provided his detailed
reasons why he is of the view that leave to appeal should be
refused.
The first respondent has already found that the matter does raise
arguable point of law on appeal. It is on this basis
that I am
inclined to substitute the decision of the first respondent and grant
leave to appeal to the Appeal Tribunal.
[25]
I see no reason why costs should not follow the event.
[26]
In the result the following order is made:
ORDER
1.
The decision of the first respondent dated 16 January 2017, refusing
leave to appeal to the Appeal Tribunal in case no 2016/XX/2146
is
reviewed and set aside.
2.
Leave to appeal is granted to the Appeal Tribunal against the first
respondent’s final determination dated 18 November
2016.
3.
The second respondent is ordered to pay the costs of this
application.
MMP
Mdalana-Mayisela J
Judge
of the High Court
Gauteng
Division
(
Digitally
submitted by uploading on Caselines and emailing to the parties)
Date
of delivery:
30 August 2021
Appearances:
On
behalf of the Applicant:
Adv N Ralikhuvana
Instructed
by:
Mudzusi Mulobela Attorneys
On
behalf of the second respondent:
Adv H Pretorius
Instructed
by:
Clyde & Co Inc.