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1984
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[1984] ZASCA 38
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Incorporated General Insurance Ltd. v Harris (41/84) [1984] ZASCA 38 (29 March 1984)
INCORPORATED GENERAL
INSURANCE LIMITED
APPELLANT
and
BENEDICT HARRIS
RESPONDENT
F S SMUTS, A J A
.
IN THE SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the matter between
INCORPORATED
G
ENERAL
INSURANCES LIMITED
APPELLANT
AND
BENEDICT HARRIS
RESPONDENT
CORAM
:RABIE,C J,
JANSEN, J A, et SMUTS, A J A.
HEARD
: 2 March 1984. DELIVERED: 29 March
1984.
JUDGMENT
SMUTS, A J A
:
This is an appeal against an order granted
by 2
2.
by ACKERMANN , J, in the Transvaal Provincial Division whereby appellant -
defendant in the Court a
quo
- was ordered to pay respondent the sum of
R4 800-00 with costs of suit in respect of a claim by the latter for payment of
R6 000-00.
The parties will hereafter be referred to as plaintiff and
defendant.
It appears that during 1975 plaintiff was the owner of a fleet of
buses with which he carried on the business of conveying passengers
for reward
in the town and district of Pietersburg and further afield. On 16 October 1975
defendant issued to plaintiff a policy
of insurance in respect of
21 3
3. 21 buses. By virtue of this policy plaintiff undertook to
"indemnify the insured against loss of or damage to any vehicle described
in the
schedule hereto and/or its accessories and spare parts whilst thereon". The
schedule referred to contains a list of 21 buses,
one of which is a 1971 model
Leyland with registration TAL 3319. A value is also placed on each of the 21
buses, ostensibly by the
insured. The value thus attached to the first five
buses enumerated in the schedule varies from R6 000-00 to R10 000-00. From the
sixth bus onwards the value is in each case stated to be R6 000-00. The model of
each vehicle is also specified. There are two of
1962, two of
1965 4
4. 1965, one each of 1967, 1968 and 1969, three of 1970, three of 1971 and
one of 1972.
Shortly after the insurance was effected the bus TAL 3319 was
involved in a head-on collision. It was extensively damaged. In terms
of the
policy defendant was entitled, at its option, to "repair,reinstate or replace
such vehicle or any part thereof and/or its
accessories and spare parts or may
pay in cash the amount of the loss or damage not exceeding the reasonable market
value of such
vehicle and/or its accessories and/or spare parts at the time of
such loss or damage". Defendant obtained possession of the bus for
the purpose
of deciding which course
to....5
5. to adopt. Thereafter, on 19 May 1976 , defendant notified
plaintiff that it was repudiating liability under the policy on the ground
that
he had failed to pay the premium due under the policy. Plaintiff accepted the
repudiation. Defendant had prior to 19 May 1976
sold and delivered the damaged
bus as scrap to one Sudner, who conducted a business of selling used truck spare
parts. The purchase
price was Rl 400-00. Defendant was accordingly not in a
position to return the damaged vehicle to plaintiff. Plaintiff thereupon
instituted action against defendant for payment of R6 000-00 as damages suffered
by him. His claim was based on alleged breach of
contract....6
6. contract. A number of defences were raised in the plea.
In addition to denying that it was ever in possession of the bus defendant
pleaded that the premium payable in terms of the policy was never paid and that
as a result thereof the policy never came into force,
or, if it did, that it was
lawfully cancelled.
It appears from the judgment of ACKERMANN, J, that at the
commencement of the trial the Court was informed by counsel that it had
been
agreed "that
the sole issue for determination was the value
of the bus
in its damaged condition after the collision, such value to be determined as at
December 1975".
It 7
7. It was common cause that once the value aforesaid was established
plaintiff would be entitled to judgment in that amount. It therefore
became
unnecessary to determine the legal basis for defendant's liability to compensate
plaintiff in damages.
In his particulars of claim plaintiff alleged that the
R6 000-00 claimed represented the "value of the said motor vehicle" at all
material times. In a request for particulars for the purposes of trial plaintiff
was asked to state "how precisely the amount of
R6 000-00 was computed". The
reply was as follows :
"The amount of R6 000-00 represents the
fair 8
8.
fair and reasonable market value of the vehicle. Plaintiff will also rely in
this regard on the fact that the vehicle concerned was
worth approximately R12
000-00 immediately before it was involved in a collision: during about November
1975, that the reasonable
and necessary cost of repairing the vehicle as a
result of the damage caused in the said collision was R5 821-98 and that the
vehicle
was removed by Defendant before it was repaired."
During the trial plaintiff led evidence as to the value of the vehicle before
the collision and of the cost of repairing the damage
caused thereby. In
addition evidence was allowed to be led, despite objection thereto, in regard to
the value of the undamaged component
parts of the bus. In giving
judgment 9
9. judgment the learned Judge in the Court a
quo
found
that the value of the bus before the collision had not been established but that
the evidence in regard to the value of the
component parts was sufficiently
reliable to enable him to find that loss in an amount of R4 800-00 had been
suffered by plaintiff.
He accordingly awarded plaintiff damages in that
a-mount.
In this Court it was contended on behalf of defendant that it was not legally
competent for the Court a
quo
to have granted judgment on the basis of
the value of the component parts.
It 10
10.
It was contended that in the light of the pleadings and the
agreement between the parties, stated above, plaintiff was only entitled
to the
value of the damaged bus as such. Counsel for plaintiff (who was also counsel in
the Court below) conceded, correctly I think,
that this submission was
well-founded and stated that the evidence of the value of the component parts
had been led merely as a check
on the reasonableness of the value placed by
plaintiff on the bus in its post-collision state.
On behalf of plaintiff it
was contended that ACKERMANN,J, was not justified in rejecting
plaintiff's ...11
11.
plaintiff's evidence that the pre-collision value of the bus was R12 000-00
nor that of N Kellerman, a witness called by plaintiff,
that the value of the
bus was between R12 000-00 and R13 000-00. It was pointed out that no witness
was called by defendant to controvert
this evidence and it was contended that
the reasons advanced by the Court a
quo
for not accepting the evidence of
plaintiff and the witness Kellerman as to the pre-collision value of the bus
were inadequate. This
argument was disputed on behalf of defendant and it
accordingly becomes necessary to examine the evidence in more detail.
It appears from plaintiff's evidence that
he 12
12.
he commenced his own business, known as the Hamba Byna Bus Service,in 1964.
Prior to that date he had been employed,for a period of
7 years, as the manager
of the Pietersburg Bantu Bus Services. Plaintiff testified that he bought a new
chassis in 1971 for R9 696-62
from the Leyland Motor Corporation. The cash price
was R8 600-00. Thereafter he purchased from a firm known as African Body and
Coach
the necessary body-section to enable him to assemble a complete bus. The
cost thereof was R4 500-00. The body-section was affixed
to the chassis and the
bus was then registered as TAL 3319. The total purchase price was accordingly
R14 196-62 but the
cash....13
13. cash price R13 100-00. At the time of the collision the bus
had done about 50 000 miles. If properly cared for it could, in plaintiff's
opinion, have lasted 18 years. There would have been no need even to consider
replacing the diesel engine with which it was fitted
before 200 000 miles had
been completed. He testified that the bus was in good condition and had been
used sparingly as he regarded
it as one of his special buses. In the light of
his experience he valued the bus at R12 000-00 at the time of the collision.
It appears from Kellerman's evidence
that he owned a business named
Sansusi where panel-
beating 14
14. beating, spraypainting and mechanical
repairs to vehicles were done. In addition he did repairs to damaged bodywork
and constructed
bodies for Vehicles, including buses. For a long period he had
had experience of buying and selling buses. Relations of his were
engaged in the
business of "heavy transport" and when they bought and sold vehicles he was
consulted. He was well acquainted with
the market prices of new and second hand
vehicles, including buses. This evidence by Kellerman was not attacked in
cross-examination.
No reason appears to exist for doubting Kellerman's ability
to testify to the value of a bus such as that with which this matter
is
concerned.
It 15
15. It appears from the evidence that Kellerman was asked by
plaintiff to submit a quotation in regard to the cost of repairing the
bus.
Kellerman inspected the damaged bus and quoted a figure of R5 821-98. This was
in respect of mechanical repairs as well as repairs
to the bodywork. Apart from
the damage caused by the collision he found the bus to be in good condition. He
valued the bus in its
pre-collision condition at between R12 000-00 and R13
000-00.
Plaintiff's valuation was subjected to criticism on various grounds
by counsel for defendant. This criticism was based, inter alia,
on the value
placed on the bus in the schedule to the policy
... and 16
16. and the "book value" thereof appearing in a "schedule of
depreciation" drawn up by plaintiff's book-keeper. It is not necessary
to
discuss the merits of this criticism, which was found by ACKERMANN,J, to be
invalid , as the grounds on which the learned Judge
rejected plaintiff's
valuation can in any event not be faulted.
In regard to this evidence he said
the following:
"The cash price of R13 100-00 for the bus
and chassis reflects the value
of the bus when new. Even making due allowance for inflation over a period of
4 years from date of purchase to the date of the collision,
it seems hard to
credit that,having been driven
for 17
17.
for at least 50 000 miles over this period of 4 years, the bus would only
have depreciated in value by the seemingly small amount
of Rl 100-00."
Later on in his judgment the learned Judge again stated that he had
"difficulty in accepting a pre-accident value of the bus at a
figure as high as
R12 000-00 or R13 000-00, having regard to the purchase price of the bus".
On
behalf of plaintiff it was contended, as I have already stated, that the learned
Judge had no reason to reject plaintiffs and Kellerman's
valuations as no
evidence to controvert it had been presented by defendant. The argument however
loses
sight....18
18. sight of the following evidence by Kellerman. After
testifying that he was under the impression that the purchase price of the
bus
had been between R15 000-00 and R16 000-00 in 1971, he went on to say that the
a-mount by which the bus would have depreciated
in value in the course of
travelling more or less 50 000 miles between 1971 and 1975 would be between R3
000-00 and R4 000-00. It
appears therefore that the Court a
quo
had
evidence before it from plaintiff's own witness that a substantial amount of
depreciation would have occurred over the period
of four years that the bus was
used before the collision took place. This evidence afforded ACKERMANN,J,
sufficient cause to doubt
whether the
depreciation 19
19.
depreciation caused to plaintiff's bus, which cost him R13 000-00,
would
have been as little as R1 100-00. Kellerman's val-uation of the bus was in turn
influenced by his mistaken view that it had
cost between R15 000-00 and R16
000-00 in 1971. On the basis that the pre-collision value of the vehicle was R12
000-00, counsel
for plaintiff sought to arrive at a figure in excess of R4
800-00 by means of subtracting the cost of necessary repairs from the
figure of
R12 000-00 and then again adding to the figure thus obtained the value of
certain component parts. As plaintiff failed
to establish the basis on which
this method of assessing value depends, viz the pre-collision value of the bus,
it is not necessary
to consider the correctness of counsel's
calculations and the arguments based thereon.
That 20
20.
That is however not yet the end of the matter. Kellerman also gave evidence
in regard to the value of the bus in its damaged state.
So did the witnessess S
J Sudner and G Marais who were called by defendant. Defendant's counsel
contended, on the strength of the
evidence of Sudner and Marais, that it was not
proved that the value of the damaged bus was more than Rl 400-00.
It appears
that Sudner made a busi
ness of buying wrecked heavy vehicles,
disman
tling 21
21.
tling them and selling the used parts thus obtained. He conceded that to a
large extent his purchases were a gamble. Sometimes the
wreck was found to
contain less sound parts than had been bargained for and sometimes more. He
conceded further that the offers he
made for wrecked vehicles were not
necessarily related to their intrinsic value because he was not in a position to
examine properly
what he was buying. Sudner testified that he initially offered
R900-00 for plaintiff's damaged bus. He was then told by
Marais 22
22.
Marais, who represented the firm of claims assessors who were dealing with
the matter on behalf of defendant and who had offered the
bus to him, that Rl
400-00 was required to enable the owner's claim to be settled. As a result he
increased his offer to Rl 400-00
which he regarded as a fair price. This offer
was then accepted. When he bought the bus the whole of the front of the vehicle
had
been cut away. He could not ascertain the mileage the bus had done since the
speedometer had been removed. All the controls were
missing as also the
windscreen.
The witness Marais testified that he re-garded it as uneconomical to repair
the bus. He
had 23
23. had seen a quotation for R3 300-00 by the Leyland Corporation
for mechanical repairs to the bus. He had also had sight of a quotation
for
repairs to the body-section of the bus in a sum of over R4 000-00. He knew that
the policy reflected an amount of R6 000-00 as
the insured value of the bus. It
is therefore understandable that he regarded the bus as not worth repairing and
that he sought to
sell it as scrap. For that purpose he approached Sudner and
others and eventually sold it to the latter for Rl 400-60 which he regarded
as a
reasonable price for the vehicle in the condition in which he found it. Marais
also saw the bus with the front already cut
away....24
24.
away and with the speedometer missing. In addition he did not know the
mileage registered by the bus. He conceded that knowledge thereof
was an
important factor in determining its market value. According to him the market
value of the bus in its pre-collision state
was R6 000-00. Notwithstanding his
concession that mileage was an important factor he nevertheless maintained that
the pre-collision
value would have remained R6 000-00 irrespective of whether
the bus had done 100 000, 50 000, 10 000 or even 5 000 miles. When it
was put to
him directly that his evidence was absurd, he persisted in his view of the
matter. Marais' evidence
that 25
25. that the value of the bus would remain R6 000-00 irrespective
of whether the mileage was 100 000 or 5 000 is patently ridiculous
and does not
instil confidence in his ability as a valuer. As stated, he saw the bus only
after the nose thereof had been removed,
with the resultant effect which that
fact would have had on a valuer or prospective buyer. It is clear that as Marais
did not regard
it as feasible to repair the bus that he would not have looked at
it through the eyes of anyone other than a dealer in scrap.
In arriving at
the conclusion that it would be uneconomical to repair the bus Marais was
furthermore 26
26. furthermore influenced by the statement in the schedule
to the policy that its value was R6 000-00 and the fact that the quotation
for
repairs to the body-work was in excess of R4 000-00. It appears from plaintiff's
evidence, which was accepted by ACKER-MANN,
J, that he had never proposed a
value of R6 000-00 for the bus; the value he had placed thereon had been much
higher. He became aware
of the figure of R6 000-00 appearing in the schedule
when he received the policy from defendant. By that time the collision had
already
taken place. The evidence discloses further that the quotation of more
than R4 000-00 for repairing the bodywork
of 27
27. was also exorbitant as the complete body-section had originally only cost
R4 500-00. Marais' conclu-sion that the bus was not
worth repairing was
there-fore based on grounds which are suspect.
Reliance was also placed on
behalf of defendant on the evidence of plaintiff's witness, Steele. He was
called to give evidence in
regard to the value of the undamaged component parts
of the bus. His occupation was that of a motor mechanic. He was the person who
had on behalf of Leyland Cor-poration drawn up the quotation for mechanical
re-pairs to the bus. He admitted that he had no experi-ence
of assessing the
value of a vehicle as a whole. His
experience 28
28. experience was limited to valuations of individual
parts. In cross-examination he testified that he regarded repairing the bus
as
an uneconomical proposition. It was on this evidence of his that counsel for
defendant relied. It appears however that Steele
also saw the bus only after
much of the front had been cut away. He could therefore also not have known what
distance it had covered.
In addition he also knew of the quotation by African
Body Works of R4 500-00 for repairs to the bodywork which, together with his
own
quotation of R3 800-00 for mechanical repairs, meant that the cost of repairs
would have exceeded R8 000-00.
Kellerman....29
29 Kellerman testified that he would have been prepared to
offer R3 000-00 for the bus as it was after the collision. This amount
would be
his initial offer for the purpose of thereafter negotiating and reaching
agreement with the owner as to a purchase price
acceptable to both parties. His
evidence in this regard reads as follows:
" as 'n mens oor 'n tweedehandse
voertuig kibbel, hy het sy prys, hy sê ek wil R6 000,00 he. Ek se ek is
bereid om R3 000,00 te gee. Dan kompromeer ons op R4
000,00 of so iets of R4
500,00. 'n Mens kan mos nie nou oor so iets praat
nie....30
30.
nie. Dit is die beloop van besig-heid. Sy prys is R6 000,00. Ek is bereid om
R3 000,00 te gee. Nou kibbel onsen ons se alright, ons
kom-promeer, ek sal jou
R4 000,00 of R4 500,00 gee, dit hang af hoe 'n groot behoefte jy aan daardie
voertuig het of hoe graag jy
horn wil hê, wat jy betaal.
Mag ek dit dan anders aan u stel. As daardie ander kant nou nie kom met 'n
prys nie, wat sou u sê sou die maksi-mum prys wees
waarvoor u daardie bus
in die beskadigde toestand sou gekoop
het? As ek wil geld maak uit hom
uit, dan probeer jy so min as moontlik, ek wil nie nou se nie, maar so 'n
bus, my gesonde verstand se vir my dat al sy komponente
lyk mooi, hy is goed en
so aan, ek begin by R3 000-00. As daardie man 'n potensiële klient is en jy
wil met hom gereeld besigheid
doen, dan sal jy hom 'n redelike prys
aanbied."
When asked what he thought could be obtained for the
bus 31
31.
bus on the open market in its damaged condition after
the collision he
replied as follows:
"Laat ek liewer my antwoord kwalifiseer deur 'n voorbeeld te gebruik. Daar is
administrasie PAT Administrasie wat ge-reeld vendusies
hou. Daar is 'n groot
Government Garage, Staatsgarage wat ge-reeld vendusies hou. Daar is Lebowa
Regering wat gereeld vendusies hou
en as ek daardie bus, as dit my bus sou
gewees het of as die eienaar hom op sy vendusie aanbied, dan gaan hy R3 500,00 ,
R4 000,00,
R5 000,00 vir hom kry, want dit is die mark , dit is die
aanvraag.
Dit wissel van R3 500,00 tot?
Tot R5 000,00. Die aanbod is daar. Hy is nog al die tyd daar. Nou ook.
Waar sou u se sou hierdie bus
in daardie kategorie geval het? So
beskadig soos wat hy was?
Ja, soos u dit gesien het?
Ek het reeds gese enigiets van R3 000,00
na 32
32.
na - kom ons sê dan R3 500,00 na R4 000,00 sou ek ook vir hom betaal op
'n veiling, maar dit is nie te se dat as dit myne was
, dat ek hom daar-voor sou
verkoop nie. Dit maak 'n verskil."
In cross-examination the following evidence appears:
"Maar ek het moeilikheid gehad, want u het vir Sy Edele gese u sou 'n prys
van R3 000,00 geoffer het as dit vir
jou persoonlik was? As ek hom moet
koop.
Dan se u op 'n vendusie sou dit miskien so hoog soos R5 000,00 gegaan
het? R4 500,00. Ek het dit ge-
kwalifiseer by R4 500,00 min of meer. R4 000,00 na R4 500,00.
Dan het u gese tussen R3 500,00 en R4 000,00. Wat is die billike markwaarde
of was daar nie een nie?
Die markwaarde word bepaal volgens
aanbod."
The...33
33.
The effect of this evidence is that Kellerman would have been prepared to
commence negotiations by offering a price of R3 000-00 so
as to obtain the best
possible price from his point of view. He did not regard R3 000-00 as the price
for which the owner would be
prepared to sell and expected that the owner might
want as much as R5 000-00. Depending on the demand the owner might even obtain
R5 000-00 but he himself would not have gone above R4 500-00. His offer would
have between R4 000-00 and R4 500-00. In the light
of all this evidence I find
it proved that Kellerman , who made a good impression on ACKERMANN, J, would, as
representing the ordinary'
knowledgeable
buyer 34
34. buyer, have regarded R3 000-00 as his initial offer for the
purpose of hard bargaining and would have been prepared to pay between
R4 000-00
and R4 500-00 for the damaged bus. There can be no doubt that plaintiff would
have commenced bargaining at a price in excess
of R5 000-00. A sale in the
vicinity of R4 250-00 would appear to be a fair reflection of the market price
on Kellerman's evidence.
The evidence given by Sudner cannot and does not
detract from the above conclusion. To start with,Sudner did not have any
knowledge
as to the real condition of the bus. Not only was he handicapped in
this respect but when he saw the bus,the front had been cut away
so that
it 35
35. it would have made a very sorry impression on him. Sudner did
furthermore not know that the bus had travelled only 50 000 miles
as the
speedometer had been removed. On his own evidence a purchase by him was in the
the nature of a gamble. A sale effected by
plaintiff of the damaged bus would
have been of a different nature. Not only would he himself have been able to
give more information
to the prospective purchasers as to the condition of the
bus and the distance it had travelled before the collision, but they would
have
seen the bus with all its bodywork still on the chassis, though of course
damaged. They would have been able to inspect the
bus and
would...36
36. would not have had to approach the matter as a gamble.
The evidence of
Marais and Steele can also not weigh up against that of Kellerman. Not only did
they not possess his experience but
in seeking to place a value of the damaged
bus they were handicapped in the respects I mentioned when dealing with their
evidence.
Marais' evidence is further rendered suspect by his evidence in regard
to the value to be placed on the bus irrespective of the distance
it may have
travelled. In my view Keller-man's evidence justified an award by the Court a
quo of R4 250-00 as the market value of
the bus in its
post-collision....37
37. post-collision state. It was due to no fault of
plaintiff that he was
unable to place better evidence thereof before the Court. He was denied the
opportunity of having the bus valued
by other valuers in its damaged condition
as the result of defendant's sale thereof to Sudner. It is clear that plaintiff
suffered
loss by this unlawful act. In the nature of things this is not a case
where plaintiff is able to prove the damage suffered by him
in exact figures.
Such evidence as he could obtain he placed before the Court a
quo
. It
thereupon became the duty of the Court to assess the amount of damages suffered
to the best of its ability (
Turkstra v Richard
1926
T P D 38
38. T P D 276).
I think that the evidence justifies the finding
that R4 250-00 would have been a fair assessment of the damages suffered by
plaintiff.
The appeal is accordingly allowed with costs. The judgment of the
Court a
quo
is altered to read
"Judgment for plaintiff in the amount of R4 250-00 with costs of
suit."
F S SMUTS, A J A.
RABIE, C J. )
Concur. JANSEN, J A. )