About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Pietermaritzburg
>>
2013
>>
[2013] ZAKZPHC 11
|
|
Jerrier v Outrance Insurance Company Ltd (4160/2010) [2013] ZAKZPHC 11 (20 March 2013)
IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH AFRICA
CASE NO: 4160/2010
In the
matter between:
SHERWIN
JERRIER
.................................................................................................
Plaintiff
and
OUTSURANCE
INSURANCE COMPANY LIMITED
...........................................
Defendant
J U D G M E N T
KOEN
J
INTRODUCTION
:
[1] This is an action in which the Plaintiff claims payment of the
sum of R608 772,20, interest thereon and costs. The claim
is
founded on an insurance contract, concluded during or about December
2008 to early January 2009, in terms whereof the Plaintiff
avers that
the Defendant was obliged to indemnify him for loss or damage
sustained in respect of a
2009 Audi R8
4.2 FSI Quattro A/T motor
vehicle bearing registration letters Sherla - ZN
1
.
This vehicle was damaged in a collision which occurred on 8 January
2010. It is contended that the amount claimed represents the
necessary costs of restoring the vehicle to its pre-accident
condition.
THE ISSUES:
[2] The trial proceeded on the issue of liability only, pursuant to
an order granted to that effect by the consent of the parties.
[3] On the pleadings, the accident and damages are denied. The
Plaintiff’s unchallenged evidence however established that
a
collision did occur on the N2 south on the 8 January 2010 at
approximately 23h00, resulting in certain damages to the vehicle.
[4] It is common cause that the Defendant was duly advised of this
incident and that the Plaintiff at that time had complied with
his
obligations insofar as the payment of the premium was concerned.
[5] The Defendant has however denied being obliged to indemnify the
Plaintiff. The basis for such denial is founded on the following
two
provisions in the policy:
(a) ‘Your responsibilities
In order to have cover you need
to:
pay your premiums
provide us with true and
complete information when you apply for cover, submit a claim or
make changes to your facility. This
also applies when anyone else
acts on your behalf.
inform us immediately of any
changes to your circumstances that may influence whether we give you
cover, the conditions of cover
or the premium we charge.
- E.g. If you sell your car and
buy another one, you need to inform us about the change before you
can take delivery of this car
so that you can be certain that your
car is OUTsured by the time you drive off the showroom floor.
…
Claims
…
Time periods
You need to:
- report your claim or any
incident that may lead to a claim to us as soon as possible, but not
later than 30 days, after any incident.
This includes incidents for
which you do not want to claim but which may result in a claim in the
future.
E.g. If your car is involved in
an accident with another car and there is no apparent damage to
either car, we still want to know
about this incident so that we can
take steps to limit the effects of any claim which may be made by the
other person.
- report any lost items, fire,
theft, highjack … to the police within 24 hours of the
incident’.
And
(b) ‘What is not covered
under comprehensive cover
Driving under the influence
If any person who drives the
vehicle:
is under the influence of
alcohol or drugs
has a concentration of alcohol
in the blood exceeding the legal limit or failed a breathalyser test
refuses to give either breath or blood sample’.
[6] The Defendant pleads with reference to the first provision quoted
that:
‘
6.3.1
The warranties, statements and answers given during the application
for insurance and at each renewal thereof constituted
the basis of
the contract of the insurance and were warranted by the Plaintiff to
be true and complete;
6.3.2 The Plaintiff, at the
conclusion of the agreement of insurance and at every subsequent
renewal thereof, warranted that:
6.3.2.1 The regular driver of
the insured vehicle was involved in only one previous incident
whether a claim was submitted or not
in the last three years being on
2 April 2008 for accidental damage;
6.3.3 The statements and answers
warranted by the Plaintiff to be true and correct as set out in 6.3.2
above were not true at the
conclusion of the agreement and/or at the
subsequent renewal thereof, in that:
6.3.3.1 On or about 11 April
2009 the Plaintiff who is the regular driver of the insured vehicle
was involved in a motor vehicle
collision at or near Beach road,
Amanzimtoti wherein the insured vehicle collided with another vehicle
with registration number
NPN 30285.
6.3.3.2 The Plaintiff failed to
disclose the above incident to the Defendant.
6.3.4 The incorrectness of the
information alternatively failure to disclose this information was of
such a nature as to materially
affect the assessment of the risk, the
acceptance of the risk and the determination of the terms and
conditions and the premium
applicable by the Defendant under the said
insurance agreement.
6.3.5 The Defendant consequently
elected to avoid the insurance agreement, as it was entitled to do,
and to reject the claim made
upon it by the Plaintiff, alternatively
the Defendant hereby elects to avoid the insurance agreement and
tenders repayment of the
premium paid by the Plaintiff to the
Defendant in respect of the cover provided thereunder’.
(This defence will hereinafter be referred to as the ‘non-disclosure
defence’).
[7] In the alternative, the Defendant pleads:
‘
6.4.1 That the Defendant would not be
obliged to pay the Plaintiff any amount in respect of loss or damage
to the insured vehicle
where the driver of the insured vehicle was
under the influence of alcohol or drugs, had a concentration of
alcohol in the blood
exceeding the legal limit or failed a
breathalyser test.
6.4.2 …
6.4.3 The Defendant pleads further that the driver of the vehicle at
the time of the incident;
6.4.3.1 Was under the influence of alcohol;
6.4.3.2 Had a concentration of alcohol in the blood exceeding the
legal limit’.
(This defence will hereinafter be referred to as the ‘driving
under the influence’ defence).
[8] The Defendant bears the onus of proving the aforesaid defences on
a balance of probability. The defences are considered below
in turn
in the order pleaded.
DISCUSSION OF RELEVANT CASE LAW RELATING TO NON-DISCLOSURE:
[9] It is trite law that Insurance is a contract based on the utmost
good faith.
[10] In
Mutual and Federal Insurance Co Limited v Oudtshoorn
Municipality
2
,
Joubert JA held that ‘… the Court applies the
reasonable man test by deciding upon a consideration of the relevant
facts of the particular case whether or not the undisclosed
information or facts are reasonably relative to the risk or the
assessment
of the premiums. If the answer is in the affirmative, the
undisclosed information or facts are material
3
…
The court does not, in applying this test, judge the issue of
materiality from the point of view of the reasonable insurer.
Nor is
it judged from the point of view of the reasonable insured. The court
judges it objectively from the point of the average
prudent person or
reasonable man’.
[11] In
Pillay v South African National Life Assurance Co.
Limited
4
Didcott
J approved the statement of Bowen LJ made more than a century before
that ‘…every fact was material and had
to be disclosed
“…which would affect the mind of the underwriter at the
time the policy is made, either as to undertaking
the contract or as
to the premium on which he would take it”.’
[12] In
Qilingele v South African Mutual Life Assurance Society
5
it
was stated that ‘… what has to be ascertained is whether
the result likely to have been caused by the misrepresentation
was
material. Materiality is not a relative concept; something is either
material or it is not. The word material denotes substance,
as
opposed to form’.
[13] In
Fourie v SentrasureBpk
6
it
was also stated that the test to be applied to determine whether the
non-disclosure was material was objective. Materiality also
relates
no less to the determination of the premium at which a risk will be
accepted, than to the acceptance of the risk itself.
[14] In
President VersekeringsmaatskappyBpk v Trust Bank Bpk
7
it
was stated that the question is not if in the mind of the reasonable
man, the information will have an influence on the risk
but if it
will have an effect on the decision of the insurer to accept the risk
or not.
[15] In
Liberty Life Association of Africa Limited v De Waal and
‘n ander
NNO
8
the court held ‘… die vraag is nie net of die
onjuisteinligting die risikosoubeinvloed het nie, maar ook of dit ‘n
uitwerkingsougehad het op die Appellant se beoordeling van die
risiko’.
[16] In
Bruwer v Nova Risk Partners
9
it
washeld that the interplay between the specificity of one clause
10
and the generality of a general provision in the policy relating to
disclosure
11
on the facts of that case resulted in uncertainty as to what the
insured was required to disclose. Whether such uncertainty arises
will obviously depend on the facts of each case.
12
THE FACTS:
[17] The non-disclosure relates to two events that occurred, namely:
(a) On 2 April 2008 the Plaintiff damaged his vehicle when a wheel
struck a pothole. The damage apparently amounted to some R15 000.
This incident was not reported to the Defendant and no claim was made
in respect thereof.
(b) On or about 11 April 2009 the Plaintiff was involved in a
collision with the vehicle in Beach Road, Amanzintoti. The Plaintiff
testified that he thought the damage would be approximately R20 000
which would not make it worth for him to claim in the
light of the
amount of the excess payable. He also considered that the collision
was due to his fault and thought that he could
not claim for the
damage sustained. Within two weeks of the occurrence of that incident
he had however discovered that the damage
in fact amounted to some
R200 000-00.
[18] There is a dispute on the evidence as to how the incident of 11
April 2009 occurred and what it entailed. The Plaintiff testified
that he had come out of a parking lot in Beach Road and hit a tow bar
on a bakkie that was parked there as he pulled off, creating
the
impression that this all happened at low speed. According to his
evidence, the right hand side light on the vehicle was damaged
and
some other damage was caused to the vehicle on the right. The
Defendant called the driver of the other vehicle, Mr Larcher.
He
testified that the Plaintiff had driven at high speed up and down the
road at a pub where he had been earlier in the afternoon,
and then
later came to Beach Road where he was revving the engine of the
vehicle before pulling off at huge speed, when he lost
control and
collided with the back of his (Mr Larcher’s) bakkie. He saw his
bakkie ‘jump’ in the air. The light,
exhaust and tow bar
on his bakkie were damaged. The plaintiff’s vehicle stopped
further down the road, initially he said
about 500 metres but later
conceded that the Plaintiff might have stopped 200 metres away (which
might still be too generous an
estimate). He witnessed the collision.
His description of the damage to the plaintiff’s vehicle, was
that it was major. The
Plaintiff’s vehicle could not be driven
from the scene. The front right wheel had become completely detached.
When the vehicle
was pulled onto a flatbed trailer which removed the
vehicle from the scene the front bumper scraped on the road. The
vehicle had
skidded down the road after the collision before it came
to a standstill. He went to the Plaintiff who was in an argumentative
and pugnacious mood. He testified that the Plaintiff urinated on the
front of the bumper of his vehicle, as if the whole incident
was a
joke. In his view the Plaintiff was ‘full of alcohol’.
The Plaintiff had told him that he should not go to the
police and
that he would settle the damages in respect of his bakkie.
[19] Mr Larcher’s evidence was criticised for overstating the
estimate of the distance the vehicle had travelled before it
came to
a standstill after the collision, and for the conflict between his
evidence in court and what he had said to the Defendant’s
investigator regarding the place where the Plaintiff urinated after
disembarking from the vehicle. Mr Larcher had told the investigator,
Mr Herbst, that the Plaintiff had urinated against the door of the
vehicle, as contrasted to his evidence in court that the Plaintiff
had urinated on or against the front of his bumper.
[20] I am mindful that the position of exactly where the Plaintiff
allegedly urinated against the vehicle was not dealt with in
the
cross-examination of the Plaintiff and that he therefore did not have
the opportunity of commenting thereon. In my view however
this is an
immaterial discrepancy. Likewise, Mr Larcher’s possible
overestimate of the exact distance from impact to where
the vehicle
came to a standstill is not all that significant.
[21] On what is material, Mr Larcher’s evidence is consistent,
namely that this was no minor accident. The Plaintiff was
in
probability under the influence of alcohol, revving the engine of the
vehicle and after the accident urinated next to or against
the car,
wherever exactly it may be, in a built up area. That is not the
conduct of a sober, responsible person.
[22] But most importantly, a collision causing Mr Larcher’sbakkie
to ‘jump’ and the vehicle thereafter still
careering or
skidding some distance, even if less than 200 metres, down a tar
road, resulting in the front right wheel of the vehicle
coming off
completely so that the vehicle could not be driven, suggests gross
negligence, if not reckless driving and behaviour.
DISCUSSION:
[23] Accepting the above factual matrix, the question is whether the
non-disclosure of that incident to the Defendant at the time
it
occurred excuses liability or whether the manner in which it was
disclosed to the Defendant’s investigator, at the time
the
claim was made in respect of the accident which occurred on 8 January
2010, excuses liability. I shall consider the latter
first.
[24] Regarding the Plaintiff’s obligation to make disclosure at
the time of claiming, the relevant provision in the policy
provides:
‘
In
order to have cover you need to … provide us with true and
complete information when you … submit a claim …’.
[25] The only evidence in this regard was that of the investigator,
Mr Herbst. The transcript of his interview with the Plaintiff
was by
agreement between the parties admitted to be an accurate record of
what was said. During an interview, which appears to
have taken place
on 13 January 2010, the following was said:
‘
MR
HERBST
:
Have you as the incident driver in the last three years suffered any
losses relating to any vehicle whether a claim was submitted
or not …
[indistinct].
[Noise on microphone]
MR JERRIER
: Well the rim
and the front fender and for me to basically … [indistinct].
MR HERBST
: Ja, when was
that accident?
MR JERRIER
:
That was round about April last year
13
.
MR HERBST
:
April last year.
MR JERRIER
:
March/April.
MR HERBST
:
Okay, but you were covered by Outsurance.
MR JERRIER
: I was covered
with Outsurance but it was not worth me claiming.
MR HERBST
: No that is
fine. Has an insurance company ever cancelled or refused to give you
cover?
MR JERRIER
:
No’.
[26] In a subsequent follow-up interview on 20 January 2010, the
following was said:
‘
MR
HERBST
:
Okay 100%. Just touching on your previous insurance, your previous
claim, you told me that you had a previous incident where you
damaged
your rim for R15 000
14
,
you didn’t claim because it was within excess?
MR JERRIER
:
No, no the rim was R15 000 but I also damaged the fender and
things like that.
15
MR HERBST
: Okay, you told
me you hit a pothole or something like that?
MR JERRIER
: Ja, the
pothole was a rim which was the R15 000 but I also damaged the
front bonnet and the front headlight in a different
incident which I
also didn’t claim for, ja’.
…
Later the interview continues
‘
MR
HERBST
:
Okay no, obviously ja, because I’ve also ascertained that the
previous claim that you had was in excess of about R200 000
where you were in Toti in front of Almega, you were revving the car.
The car jumped into gear and you smashed into a bakkie?
MR JERRIER
: Yes, but I
did not claim anything.
MR HERBST
: No 100%, but
remember I asked you any claims, any accidents whether a claim was
submitted or not and you told me it was only for
the rim and you said
to me the reason why you didn’t claim for that is because it
was within excess, okay’.
[27] A fair reading of these portions of the transcript does not
suggest to me as the only reasonable inference, that the Plaintiff
did not provide ‘true and complete information when submitting
the claim’. At the first interview the Plaintiff admittedly
seemed to refer to only one incident (although the answer to the
initial question was not recorded and the end of the answer to
the
investigator’s question was simply marked ‘[Indistinct]’.
When the matter was however revisited at the second
interview, the
Plaintiff of his own volition referred to both incidents which he had
not claimed for, without being prompted by
the investigator.
[28] It seems to me that the only contractual context in which the
non-disclosure of the accidents may validly be raised as excusing
liability, is in relation to the provision which reads (omitting
irrelevant words):
‘
you
need to … inform us immediately of any changes to your
circumstances that may influence whether we give you cover, the
conditions of cover or the premium we charge … this includes
incidents for which you do not want to claim but which may
result in
a claim in the future’.
[29] Both the previous incidents, even if the Plaintiff did not want
to claim and had undertaken personal liability for any claim
in
respect of Mr Larcher’sbakkie against him, were incidents
‘which may result in a claim in the future’. In
my view
it would be sufficient if they were incidents which may result in a
claim, in the sense of ‘could’ result in
a claim, it
being irrelevant whether they ever actually would result in a claim,
whether such failure might be due simply to no
claim being pursued by
any party, or whether a claim is precluded by an inclusive full and
final settlement offer in settlement
previously made, or for whatever
reason.
[30] Both incidents would cause a reasonable man to conclude that
knowledge of their occurrence would indicate a change to the
Plaintiff’s circumstances, at the very least from a claims
history perspective, but also as a moral risk, that
may
(not
necessarily would) influence whether the Defendant would give the
Plaintiff cover, the conditions of cover or the premium
they would
charge.
[31] The Defendant adduced the evidence of Mr Luan Van Rooyen, an
in-house actuary of the Defendant, who was the only witness to
testify on the probability of these incidents influencing whether the
Defendant would give cover, the conditions of cover or the
premium
charged. I do not intend summarising his evidence in any great detail
as it is a matter of record. Stripped to its essentials,
he testified
as to the importance of an insured’s incident history and the
previous claims experience of the regular driver
of a vehicle, as one
of the ‘Risk and Rating’ factors. Leaving aside the
quantum
16
of claims, he testified that the existence of previous claims, even
if not proceeded with and withdrawn, could and probably certainly
would result in an adjustment in premium or other terms relating to
the acceptance of the insured risk. He explained that the occurrence
of incidents which may involve claims, may trigger a multi claimant
process, which is a computer activated mechanism, dependant
on a
number of considerations including incident frequency, even incidents
that are reported and then withdrawn for whatever reason,
which will
have an impact when an insured requests a change, or at the time of
renewal, or when another claim is reported. He could
not state
unequivocally whether the multi-claim alert would have been raised
had the previous two incidents been reported, but
certainly believed
it could have kicked in. He opined that it was only in approximately
10% of multi claim cases, where action
would not be taken by the
Defendant.
[32] Whatever Mr Van Rooyen’s actual experience and whatever
the Defendant’s policies may be, his evidence is simply
consistent with the view I believe a reasonable man would have taken
of the two incidents and the impact they would have, being
the
question decisive of the issue, namely that they amounted to a change
to the plaintiff’s circumstances that may influence
whether
cover is given (or continued), the conditions of such cover, or the
premium charged.
[33] Mr Sichel for the Plaintiff was critical of the wording of the
Defendant’s policy conditions, particularly the examples
that
are provided, as lacking in particularity and not adequately drawing
the attention of the Plaintiff to the need to have reported
such
incidents. The problem with giving examples, is of course always that
examples of all conceivable applications can never be
provided, and
if the very situation which arises is not covered by one of a myriad
of examples to be given, the same complaint
will remain. The general
principle as to what was required to be disclosed was in my view
adequately stated in the policy.
[34] The Plaintiff should have reported these previous incidents
within the time frames required in terms of the policy, even if
he
did not want to claim. He failed to do so. This failure amounted to a
material non-disclosure or breach of the terms of the
policy,
absolving the Defendant from liability.
[35] Absolution from the instance was sought at the end of the
plaintiff’s case, and dismissed. I did so as I did not at
that
time think that the Defendant necessarily had an unanswerable case,
particularly in the absence of what it stance would be
in relation to
the non-disclosure, and whether its track record might not show that
it adopts a more benevolent attitude to that
which I considered to be
the attitude of the reasonable man. At the end of the trial, I am
however satisfied that the Defendant
has discharged the onus.
THE DRIVING UNDER THE INFLUENCE DEFENCE:
[36] In the light of my conclusions above, it is unnecessary to
consider the driving under the influence of alcohol defence. I
accordingly do not deal with it in any great detail, but in the event
of this judgment being appealed and it possibly assuming
significance, I make the following few brief observations.
[37] The Defendant in this regard relied extensively on a written
statement by the former manager of the Plaintiff”s restaurant,
Mr Johan Gouws, recoded by the investigator and stating that the
Plaintiff on the evening concerned had consumed between ‘8
and
9 double brandy and coke between 20h00 and 23h00” after he was
already drunk when he arrived at the restaurant. I am
not persuaded
that the interest of justice justify the admission of the statement
in evidence. It relates to a highly material
and potentially decisive
issue, on which no cross-examination would possible to establish
possible bias and/or mistake. However,
even if the statement was
admitted, the evidential weight to be attached thereto in terms of s
35 of the Civil Proceedings Evidence
Act 25 of 1965 would be so
minimal as not to disturb the direct
viva voce
evidence of the
Plaintiff and his friend Mr Ruthnum who arrived at the scene, both of
whom disputed that the Plaintiff was under
the influence.
[38] I accept the expert evidence of Professor Saayman unreservedly.
His conclusions are however on the factual finding of what
was
consumed. In his view the consumption of two double brandies over the
time involved as the Plaintiff testified would not have
left the
Plaintiff under the influence of alcohol. In his professional view,
the half tablet of Serrepress taken in the morning
would contribute
insubstantially to the Plaintiff’s behaviour. Furthermore he
was of the view that the Plaintiff’s
conduct that evening would
not accord with a person who had consumed eight to ten double
brandies.
COSTS:
[39] Regarding costs, the Defendant was successful. The hearing
lasted materially longer than the two days for which the matter
had
previously been enrolled on the 16 March 2012 when it was adjourned
due to the two days being insufficient, and the costs reserved.
The
Plaintiff should accordingly also be liable for the costs of that
postponement that were reserved.
ORDER:
[40] Accordingly, the Plaintiff’s claim is dismissed with
costs, including the costs previously reserved in respect of the
hearing that was scheduled for 16 March 2012.
____________________
DATES OF TRIAL: 18, 19 & 20 FEBRUARY 2013.
DATE OF
JUDGMENT HANDED DOWN: 20 MARCH 2013
PLAINTIFF’S
COUNSEL: ADV R D S SICHEL
PLAINTIFF’S
ATTORNEYS: BROGAN & OLIVE
c/o AUSTEN
SMITH ATTORNEYS
Tel.: 033
392 0500
DEFENDANT’S
COUNSEL: ADV. C PRETORIUS
DEFENDANT’S
ATTORNEYS: HARDEMANN & ASSOCIATES INC
c/o VIV
GREENE ATTORNEYS
Ref.:
OUT/13762.MAE
Tel.: 033
342 2766
1
Hereinafter
referred to as ‘the vehicle’.
Here
2
1985
(1) SA 419
(A) at 435 F – I.
3
The
test for materiality at common law does not appear to be different
from the statutory definition as contained in
s 53
(1) (b) of the
Short-Term Insurance Act 53 of 1998
.
4
1991
(1) SA 363
D at 369 F.
5
1993
(1) SA 69
(AD) at 74H.
6
1997
(4) SA 950
(NKA) at 980 B – C
7
1999
(1) SA 208
(AD) at 216F.
8
1999
(4) SA 1177
(SCA) at 1182 G – H.
9
2011
(1) SA 234
(GSJ) at para [32].
10
A
specific clause, like the one
in casu
requiring reporting
incidents for which the insured does not want to claim but which may
result in a claim in the future. The
clause in that decision
required that the insurer be advised ‘as soon as you become
aware of any possible prosecution or
inquest’.
11
A
general clause, like the one
in casu
requiring that the insured be informed
immediately of any changes to circumstances that may influence
whether we give you cover,
the conditions of cover or the premium
charged. The clause in that case provided that
‘you
must inform the company of all facts that are material to the
acceptance of the insurance or the premium that is charged.
If you
fail to do this, the company may, at its option, declare this policy
void. As this also applies during the currency of
the policy, any
changes must be reported immediately’.
12
Such
uncertainty does not arise in this matter, as the terms of the
specific provision in the policy of insurance are clear, and
were
not complied with.
13
That
would have been 2009, thus referring to the second accident?
14
Although
the first interview referred to the incident ‘about April last
year’ i.e.2009, it might be that damage to
the rim of R15000
was referred to in the portion marked ‘[Indistinct]’
otherwise the follow-up interview would not
have referred to it as
the ‘previous incident where you damaged your rim for R15 000,
which in fact had occurred during
April 2008.
15
The
only incident on the evidence where damage of that nature occurred
was in the incident of 11 April 2009.
16
He
testified however that a claim of R200 000-00 on a vehicle insured
for R850 000-00 would raise alarm bells and probably initiate
an
investigation had it been reported.