Enaz (PTY) Ltd v Mutual & Federal Insurance Co. Ltd and Another (1614/2002) [2003] ZAWCHC 60 (4 November 2003)

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[2003] ZAWCHC 60
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Enaz (PTY) Ltd v Mutual & Federal Insurance Co. Ltd and Another (1614/2002) [2003] ZAWCHC 60 (4 November 2003)

IN THE HIGH COURT OF SOUTH AFRICA
(Cape
of Good Hope Provincial Division)
REPORTABLE
Case
No. 1614/2002
In
the matter between
ENAZ
(PTY) LTD
Plaintiff
And
MUTUAL & FEDERAL INSURANCE CO. LTD
First Defendant
SKY
MARKET FINANCIAL SERVICES (PTY) LTD Second
Defendant
JUDGMENT DELIVERED ON 4 NOVEMBER 2003.
DAVIS
J
Introduction.
On 5 March 2002 plaintiff instituted action
against defendants, claiming payment of the sum of R100 000 in
respect of damages against
first defendant and alternatively second
defendant. Plaintiff’s claim against first defendant was based on
the latter’s failure
to indemnify plaintiff against the loss
occasioned by theft of money from plaintiff’s premises in Port
Nolloth. The alternative
claim was lodged against second defendant
which was its insurance broker at all material times and which, it
alleged, breached the
terms of a mandate agreement between the
parties.
Both defendants defended the action.
Shortly before the trial date, on 25 August 2003,
plaintiff withdrew its action against first defendant, giving notice
that, by agreement,
plaintiff and first defendant were each to bear
their own costs. Plaintiff did not amend its claim against second
defendant and
in respect of this action against second defendant,
the matter proceeded to trial on 9 September 2003.
The
parties did however reach agreement on the material facts of the
case. Briefly stated these facts are the following: Plaintiff
carries
on business as a retailer in Springbok, Northern Cape and Port
Nolloth. Second defendant was incorporated in 1998 and at
that time
subsumed the business of Sky Insurance Brokers which had acted as
plaintiff’s insurance broker from about May 1992.
In
terms of an agreement between plaintiff and second defendant, the
latter had to take all reasonable steps to procure such insurance
cover as plaintiff instructed from time to time, and, in doing so,
was under a duty to exercise reasonable care, skill and diligence.
In
June 2002 plaintiff, represented by second defendant, and First
Central Insurance Ltd (‘First Central’) which carried on business
as a registered insurer concluded a written Multimark III contract of
commercial insurance. On 19 January 2001 second defendant
cancelled
this agreement with First Central. On the same day, again
representing plaintiff, second defendant entered into an agreement
with Mutual and Federal Insurance Company Ltd (‘Mutual and
Federal’) in terms of which a written Multimark III contract of
commercial
insurance with policy No. 3368270 and reference No.
ENAZP01/002 was concluded.
It
was not disputed by either of the parties that, with effect from
1989, the short term insurance industry introduced standardised
insurance policies under the name and style ‘Multimark’. This
series of contracts for commercial insurance introduced a safe
grading system which was incorporated in the second and subsequent
versions of the Multimark contracts, including the Multimark III
series, of which plaintiff’s policy number 3368270 was an example.
The
limits of indemnity afforded to an insured in the event of money
being stolen from its business premises outside business hours
appeared from the policy schedules to the contract. It was also
agreed that the agreement with Mutual and Federal was concluded
on
the same terms and conditions as the earlier agreement with First
Central. From time to time second defendant furnished plaintiff
with
updated policy schedules similar to the original policy schedule. Up
until 28 June 2001 the indemnity offered to plaintiff
by Mutual and
Federal was limited to a maximum of R100 000 in the event of money
being stolen from plaintiff’s business premises
at the Spar
Supermarket in Port Nolloth during normal business hours and, in the
event of the theft occurring outside of business
hours, the indemnity
provided was linked,
inter alia
to the category of safe
utilised by plaintiff at the time.
The
safe category limits were set out in the policy as follows:
SABS
no grading……………………….. R 2 500
SABS
category I grading……………….. R 5 000
SABS
category II grading……………… R12 500
SABS
category II HAD grading……….. R25 000
SABS
category II ADM grading ……… R50 000
SABS
category II ADM grading D3…… R75 000
SABS
category III grading…………….. R100 000
SABS
category IV grading……………. R200 000
The
limits of the indemnity was set out thus:
Springbok
R250 000;
Port
Nolloth R100 000;
Vleismark
R15 000.
On
28 June 2002 Mutual and Federal represented by Mr M Williams advised
second defendant, represented by Mr P Williams, in writing
about
certain requirements pertaining to plaintiff’s policy of insurance.
This letter read as follows:
‘
Following
a recent survey conducted at both Springbok Spar and Port Nolloth
Spar it has been recommended by our Surveyor that the
following
survey requirements be implemented within 30 days of this letter.
SPRINGBOK
SPAR
.
A
wiring certificate has to be obtained in the light of the recent
fires that have taken place.
The
gas bottles are not stored according to Municipal regulations. The
bottles are at present being stored inside the building
next to the
restaurant area. They have to be stored in a steal cage that has to
be installed outside the building so that the
gases can escape
freely.
PORT NOLLOTH SPAR
As
is the case with the Springbok Spar, the owners of this branch have
to obtain a wiring certificate too.
The
safe being used at present is not an SABS approved safe and we
require that a KAT4ADM safe be installed at the premises.
Would
you be so kind as to inform us once the above requirements have been
implemented as failure to do so in the prescribed period
will result
in termination of cover from the date of this letter.’
Subsequent
to the receipt of this letter of 28 June 2001 and prior to the theft
of money, Mr P Williams, on behalf of second defendant,
telephoned Mr
B Burger, representing plaintiff, and informed him that Mutual and
Federal had extended plaintiff’s policy of insurance
upon certain
conditions, including the following:
Plaintiff
was to be indemnified in respect of loss of money through theft from
the safe at plaintiff’s Port Nolloth business premises
outside
business hours for a period of thirty days from 28 June 2001 and for
a maximum amount of R100 000;
Plaintiff
should replace its existing safe with a KAT4ADM safe within a period
of thirty days from 28 June 2001 failing which plaintiff’s
cover
would terminate from 28 June 2001.
Plaintiff,
again represented by Mr B Burger, accepted the conditions as conveyed
to him by Mr P Williams, although it should be noted
that there is
some disagreement between the parties as to the exact meaning of the
letter of 28 June 2001.
On
15 July 2001 and before the period of thirty days as stipulated in
the letter of 28 June 2001 had expired, a sum of R100 260.71
in cash
was stolen from the safe at plaintiff’s Port Nolloth business
premises. The theft occurred outside of normal business
hours. The
safe in use at the time of the theft was a model OQ4 commercial safe
which had no SABS grading.
Prior
to the perusal of the letter of 28 June 2001, it is common cause that
second defendant had no knowledge of the quality and/or
grading of
the safe in use at plaintiff’s Port Nolloth business premises.
Plaintiff
lodged a claim for R100 000 against Mutual and Federal in terms of
the policy of insurance. Mutual and Federal repudiated
the claim on
the grounds that the safe in use at the time of the theft had no SABS
grading. It tendered payment of the sum of R2
500 which tender was
refused. It is also common cause that plaintiff complied with all
the other obligations rested upon it in terms
of the policy schedule.
Plaintiff’s
Case
.
Plaintiff
called one witness, being Mr Barend Burger, a shareholder and
director of plaintiff, who had been authorised to bring the
action on
behalf of plaintiff and who managed plaintiff’s Spar retail store
at Springbok. Mr Burger testified that he received
a letter on 1
February 2001 from Mr Peter Williams on behalf of second defendant to
the effect that the second defendant ‘had become
a little uneasy
with regard to the stability of First Central Insurance Limited… In
light of the above we invoked the cancellation
clause in your policy
with effect from 19 January 2001 and immediately arranged replacement
cover with Mutual and Federal. The replacement
cover is on precisely
the same terms and conditions and at the same premiums. New policies
are currently being issued and will be
forwarded to you shortly’
He
testified that on approximately 1 June, which was the renewal date
for the relevant insurance, he obtained an insurance schedule
for the
previous year’s insurance which was evaluated with his broker, Mr
Williams. He described himself as a shopkeeper and
testified that,
in the evaluation of the appropriate insurance cover, he was
dependent upon his insurance broker who had the necessary
expertise,
unlike himself.
He
testified that he only saw the letter of 28 June 2001 in the chambers
of his counsel during the preparation for trial. However
he had
first heard of the necessity of the requirement for a SABS graded
safe when he received a telephone call from Mr Williams
on 13 July
2001. He confirmed the veracity of the contents of the facsimile
dated 28 June 2001 which referred to a survey which
was undertaken by
Mutual and Federal of plaintiff’s premises. Mr Burger explained
that this survey was necessary because plaintiff
had become a client
of Mutual and Federal.
Mr
Burger confirmed that the necessary graded safe had been installed on
8 August 2001 and that during 13 July 2001 to 8 August 2001
he had
been under the impression that plaintiff was covered in the amount of
R100 000 in the event of a theft of cash after business
hours He
testified further that he would never have been prepared to pay a
premium of R14 875.00 for cover which amounted to no
more than R2500.
He confirmed that Mr Williams had never raised the issue of a SABS
graded safe until 13 July 2001.
Under
cross-examination, Mr Burger confirmed that he had ordered the SABS
approved safe on 30 July 2001. The safe was delivered on
8 August
2001. He also conceded that he had never adequately read the policy
document.
The
second defendant called Mr Peter Williams, a former shareholder and
director of second defendant who was responsible for handling
plaintiff’s commercial insurance port folio during his tenure and
who, somewhat ironically given the nature of this dispute, continued
to act in this capacity until the present time although he was
employed by a different brokerage. Mr Williams testified that he
had
written to Mutual and Federal on 28 June 2001 to express his concern
at the time taken to renew the policies of plaintiff particularly
as
a result of the survey which had been undertaken. Given this delay,
he had requested Mutual and Federal to ‘hold us covered’
in the
amount of the last previous sum assured plus 15%.
He
testified further that, when the letter of 28 June 2001 of Mutual and
Federal had been written, he had been on leave. He was somewhat
uncertain as to when he had received the letter and estimated that it
was approximately on 2 July 2001. Upon return from leave he
phoned Mr
Burger and informed him that there was a problem with regard to the
safe and that plaintiff needed a SABS category 4 grading
safe.
Mr
Williams insisted that, when he read the letter of Mutual and Federal
dated 28 June 2001, he considered that plaintiff had thirty
days to
rectify the position. As he told the court, under normal
circumstances Mutual and Federal would not have issued the fire
policy with the existing system of wiring. It had however undertaken
to cover plaintiff for thirty days until the wiring faults had
been
rectified. Once the period of thirty days had terminated and there
was a fire because of the faulty wiring, then as far as
Mr Williams
was concerned, the letter clearly indicated that plaintiff would not
be covered. In his view, this approach was reflective
of standard
industry practice.
He
arrived at a similar conclusion with regard to the safe. In the
ordinary course, failure to have a KAT4ADM safe installed on
the
premises would have meant that cover would have been limited to
R2500. However in terms of the letter of 28 June 2001, Mr Williams
had taken the view that Mutual and Federal were prepared to continue
with the existing level of cover for thirty days. For this
reason he
considered that the Port Nolloth premises had cover of R100 000 for
a theft of cash during the thirty day period.
Under
cross-examination, Mr Williams informed the court that he ‘inherited’
plaintiff as a client when he joined second defendant.
The issue of
the safe grading system had been in place since 1988 and he had made
the assumption that plaintiff had already been
informed of these
requirements. He did concede that he was aware of the specifications
with regard to the safe category limits as
contained in the policy
schedule to which I have already made reference.
Williams
did not dispute that plaintiff would have immediately replaced the
existing safe had Mr Burger known about the relevant safe
grading
requirements at an earlier stage. Mr Williams also appeared to
concede that his advice had been based upon his interpretation
of the
letter of 28 June 2001. Further he confirmed that he would have
informed Burger that, if the Mutual and Federal interpretation
of the
letter was proved to be correct, then he had incorrectly advised
Burger of the correct position.
The
duty of an insurance broker.
The duty of an insurance broker,
in the performance of the mandate on behalf of the insured, is to
exercise reasonable care and skill
in the execution of his or her
mandate.
Lenaerts v J S N Motors (Pty) Ltd and Another
2001
(4) SA 1100
(W) at 1108 F.
In
Harvest Trucking Company Ltd
v
P.B. Davis Insurance Services
[1991] 2 Lloyds Report 638
(QB) at 643, the court acknowledged the difficulty in defining with
any precision the exact scope of the
duty. It went on to say ‘The
precise extent of the insurance intermediary’s duties must depend
in the last resort on the circumstances
of the particular case,
including the particular instructions which he has received from his
client. In many cases those duties
will include advising his client
on the type of insurance best suited to his requirements and, subject
to his client’s instructions,
exercising reasonable care to obtain
insurance which will best meet those requirements. It is normally
not an ordinary part of
a broker’s or intermediary’s duty to
construe or interpret the policy to his client, but this again is not
of course a universal
rule. If a broker or intermediary is asked to
explain the terms of a policy to his client and does so, then he must
exercise due
care in giving an accurate explanation. Again if the
only insurance which the intermediary is able to obtain contains
unusual, limiting
or exempting provisions which, if they are not
brought to the notice of the assured may result in the policy not
conforming to the
client’s reasonable and known requirements, the
duty falling on the agent, namely to exercise reasonable care in the
duties which
he has undertaken, may in those circumstances, entail
that the intermediary should bring the existence of the limiting or
exempting
provisions to the express notice of the client, discuss the
nature of the problem with him and take reasonable steps either to
obtain
alternative insurance, if any is available, or alternatively
to advise the client as to the best way of acting so that his
business
procedures conform to any requirements laid down by the
policy.’
See
also Robert Merkin ‘The legal position of insurance brokers’
1994(11) South African Mercantile Law Journal 78.
More
recently in
Lapperman Diamond Cutting Works (Pty) Ltd v MIB Group
(Pty) Ltd and another
(unreported decision of the Supreme Court
of Appeal: Case No. 312/2002)
Lewis JA
this
dictum Harvest
Trucking Co
, supra with approval. An issue was a provision in the
policy that the insured shall keep ‘detailed records of all sales,
purchases
and other transactions and that such records shall be
available for inspection by the Underwriters or their representatives
in case
of a claim being made under this Insurance Certificate’.
Claims were made by the insured in respect of diamonds stolen from
its
premises. It transpired that because the diamond trade is one
with a tradition of confidentiality ‘deals are done informally,
and records are not retained. A contract for the sale of a diamond
may take place on the handshake, or may be recorded on a slip
of
paper that is subsequently discarded or destroyed. Such transactions
are referred to as being ‘off-the-book’ (at para 11).
The
essence of the insured’s case in
Lapperman
that the brokers,
as experts in the field of diamond insurance, would have known of the
practice of doing ‘off-the-book’ transactions
and should
therefore have drawn the insured’s attention to the key clause and
alerted the insured to the fact that it would be
in breach of a
promissory warranty and hence would lose indemnity, should it not
keep full records of all transactions.
Much
of the decision turned on the legal duty of an expert broker, it
being common cause that the defendant was an expert in the field
of
diamond insurance. The following conclusion reached by
Lewis JA,
on
behalf of a unanimous court, is of relevance to the law applicable in
the present case: “The second difficulty with the appellant’s
argument relates to a broker’s duty in principle. Even if the
representatives of the MIB Group had had knowledge of the practice
in
the diamond trade, was it then incumbent upon them to ask Lapperman
whether the appellant did off-the-book transactions? I consider
not.
The authorities on which the appellant relies, and the evidence of
the experts on insurance broking, suggest that once the insured
is
apprised of the duty to keep full records of all transactions, there
is no need for the broker to go further and ask whether
the insured
does in fact keep records…A broker does not, and cannot be expected
to control the business of the insured. Even a
specialist broker’s
duty does not encompass the duty to ensure that the insured complies
with his obligations under the policy.
He is not the insured’s
keeper. This duty, as a specialist broker, is discharged when he has
done everything reasonably necessary
to draw the attention of the
insured to obligations imposed by the policy. It is the insured’s
responsibility to ensure compliance’.
(at paras 43-45).
Plaintiffs
case.
Mr Botha contended on behalf of plaintiff that,
provided that plaintiff can prove that the breach of the defendant
was
a
cause of the loss (as opposed to
the
cause), he
or she should succeed even if there was another contributing cause
for the loss, be it an innocent one, the actions of
a third party or
the carelessness of the plaintiff in failing to take reasonable
precautions to avoid it.
In
this connection Mr Botha referred to a passage from the judgment of
Nienaber JA Thoroughbred Breeder’s Association Price
Waterhouse
(4) SA 551(SCA) at paras 66-67: ‘The defence of a
preponderance of fault on the part of the plaintiff, on which the
Court
a quo
appears to rely is incongruent within the field of
contract. Where a plaintiff can prove that the breach of the
defendant was
a
(as opposed to
the
thereof) he should
succeed even if there was another contributing cause for the loss, be
it an innocent one, the actions of a third
party…..or logically,
the carelessness of the plaintiff himself in failing to take
reasonable precautions to avoid it. The defendant
who commits a
breach of contract does so independently of any of the extraneous
factors mentioned above. All the requirements for
his liability will
have been fulfilled. In the absence of a contrary term in the
agreement itself or of legislative intervention
excluding or reducing
his claim, he should therefore be held fully liable, regardless of
whether the plaintiff’s
culpa
the dominent or pre-eminent
cause of the loss…A plaintiff who sues for damages for breach of
contract for a loss allegedly sustained
through the negligence of
defendant but who was himself careless in relation to the
non-avoidance of such loss, may therefore be
non suited: (a) if there
was a term in the contract to that effect; (b) if the plaintiff’s
own carelessness is held to be the sole
cause of the loss, either in
its totality or, to that extent, in relation to a particular segment
thereof; or (c) if the defendant’s
negligence was, comparatively
speaking, so negligible or minimal as to be discountable and a
significant cause of the loss, which,
strictly speaking, is simply an
instance of (b)’.
Mr
Botha submitted that by virtue of Williams’ own admission, second
defendant had not acted reasonably in the circumstances and
was
clearly in breach of the agreement. Had a simple question about the
SABS grading been raised with Mr Burger, the position would
have been
rectified and the expected indemnity would have been safeguarded. Mr
Botha submitted that, whatever Mr Williams’ interpretation
of the
letter from Mutual and Federal of 28 June 2001, there was a breach of
the policy of insurance upon the conclusion of the agreement
with
Mutual and Federal in January 2001 in that a SABS graded safe had not
been installed. Clearly had R100 000 been left in a safe
with a SABS
category 3 grading, the insurer would not have repudiated the policy.
Mr
Botha also attacked Mr Williams’ interpretation of the letter of 28
June, When Mutual and Federal employed the word ‘cover’
in the
letter, it could only have meant a reference to existing cover which
could not be extended beyond the limit of the existing
cover of R2500
(in the case of a cash loss) to R100 000 once no SABS graded safe
had been installed.
For
these reasons, Mr Botha submitted that a reasonable or prudent
broker would, at the very least, have made enquiries about the
exact
meaning of the letter in question and acted accordingly to safeguard
the interests of his client, in this case plaintiff.
Second
defendant’s case.
Miss
Gordon-Turner, who appeared on behalf of second defendant, focused a
considerable amount of her argument on the business record
and
testimony of Mr Burger, a director of plaintiff. She described him
as an experienced bilingual businessman with a tertiary
education.
He was accustomed to dealing with relatively complex commercial
negotiations and conceded that he did make his own assessments
of the
advice given by the broker in order to come to an independent
decision. This submission was supported by certain entries
in Mr
Burger’s diary which formed part of the evidence presented to the
court. Furthermore, Mr Burger was in receipt of a complete
policy
document including the relevant schedules and had conceded that there
was a note in an annual insurance summary which warned
him to read it
together with the policy for which it was not a substitute.
Mr
Williams had testified that second defendant had not been plaintiff’s
broker in 1989, when the safe grading was introduced by
the insurance
industry. This system was a notorious fact amongst brokers at the
time and Williams assumed that any broker would
then have advised his
or her clients concerning its introduction and import. Ms
Gordon-Turner submitted that this piece of Mr Williams’
evidence
had not been challenged or contradicted.
She
also noted that Mr Burger had been conscious of the distinction
between different qualities of safe for, as early as 1988, he
had
caused a Category 4 safe to be installed at plaintiff’s Springbok
retail premises, pursuant to a money loss which had occurred
at these
premises. Furthermore, she contended that the construction placed
upon the letter of 28 July 2001 by Mr Williams had
been a
reasonable one. In her view, it was clear that the cause of
plaintiff’s loss had been the repudiation of the policy by the
insurer and not any conduct on the part of second defendant. The
omissions on the part of second defendant, to the extent that they
were admitted, were not material in that they occurred in the
previous period of insurance in relation to a different contract of
insurance, and did not cause the loss. The damages suffered were too
remote for the loss to fall upon second defendant. In addition,
she
alluded to plaintiff’s own negligence as being a key factor in the
loss suffered.
Evaluation.
To
return to Mr Burger’s evidence which both counsel debated at
length: He testified that he first became aware that an SABS approved
safe was required at his Port Nolloth premises on 13 July 2001
pursuant to a telephone conversation with Mr Williams. According
to
the pleadings, plaintiff alleges that during the period June 1999 to
July 2001, the second defendant failed to advise plaintiff
that the
cover provided in terms of the policies of insurance with first
defendant for theft of money outside of business hours was
limited to
R2500 by virtue of the plaintiff using a non SABS approved safe at
its Port Nolloth premises. In terms of clause 15.2
of the pleadings,
plaintiff avers:
‘
During
the same period, the Second Defendant failed to advise the plaintiff
that it should replace the safe at its Port Nolloth premises
with a
SABS approved safe in order to maximise the cover applicable in terms
of the policy of insurance with the First Defendant.
15.3 During
the same period the Second Defendant (whether directly or by
omission) led the Plaintiff to believe that it enjoyed maximum
insurance cover against the risk of loss arising from the theft of
money from its Port Nolloth premises howsoever occurring.
15.4
During or about June and July 2001, the Second Defendant failed
to inform the plaintiff that, unless the safe at its Port Nolloth
premises was replaced with a SABS approved safe within thirty days,
all cover would terminate and that, in the event that a theft
occurred outside of normal business hours and within the period of
thirty days, the cover provided by the first defendant would be
limited to R2500’.
Much
of the debate between counsel centered on the period in 1992 when Mr
Williams joined second defendant. Williams’ explanation
as to the
installation of an SABS approved safe was that a safe grading system
was a notorious fact among all brokers at the time
and for this
reason he had assumed that plaintiff had been advised accordingly.
Ms Gordon-Turner also contended that Mr Burger had
been conscious of
the difference between the qualities of safes since as early as 1988
when he had caused a Category 4 safe to be
installed at plaintiff’s
Springbok retail premises pursuant to a money loss. Furthermore, the
policy details which was hardly
a complicated document specified
expressly that the limits of cover for money loss was dependent on
the nature of the safe installed
at the premises.
Plaintiff’s
conduct may well be relevant legally to the dispute. Mr Botha sought
to counter this with reference to the
Thoroughbred
Breeders Association
, supra and the consequent argument that, so
long as the plaintiff can prove that the breach of the defendant was
a cause of the loss,
plaintiff should succeed.
However,
as Ms Gordon-Turner correctly observed, the critical event took place
once Mutual and Federal had taken over as plaintiff’s
short term
insurer, and conducted a survey of the premises. Upon receipt of the
letter of 28 June 2001, it is common cause that,
at the very latest
on 13 July, Mr Williams conveyed to Mr Burger that there was a
pressing need for the installation of a KAT4ADM
safe to be installed
at the Port Nolloth premises. Assuming that Mr Williams’
construction of the letter was correct, plaintiff
would have had
thirty days from 28 June 2001 to install the requisite safe.
Mr
Botha contended however that the construction of the letter from Mr
Williams was completely unreasonable. I disagree. The letter
clearly indicates in the last paragraph that failure to implement the
above requirements (including the installation of a KAT4ADM
safe at
the Port Nolloth premises) ‘will result in termination of cover
from the date of this letter 28 June 2001. The very first
paragraph
of the letter urges that ‘the following survey requirements be
implemented within thirty days of this letter’. Clearly
this was
intended to define a prescribed period of thirty days from 28 June.
The argument that the reference to cover, insofar as
a money loss was
concerned, could only have meant R2500, cannot be correct in that,
absent an SABS grading safe, cover of R2500
would have always been
available to plaintiff. Indeed pursuant to its repudiation of the
policy, Mutual and Federal offered second
defendant R2500. In my
view, Mr Williams was correct to assume on the basis of this letter
that his client had thirty days to rectify
the situation. It was
never suggested that the delay between 28 June 2001 and 13 July 2001
was sufficient in itself to justify a
conclusion that Mr Williams had
been negligent.
To
all intents and purposes this reasonable interpretation of the letter
by Mr Williams and his subsequent conduct puts an end to
this
dispute.
To
the extent that it was contended that between 1999 and 28 June 2001
second defendant had negligently failed to inform plaintiff
of the
need to have a SABS approved safe, the clear and simple statement in
the insurance policy which was available to Mr Burger
as well as his
own knowledge about the importance of a SABS approved safe (being
evidenced by the installation of a similar safe
in Springbok) serves
to support a similar conclusion to that reached by
Lewis JA
in
Lapperman Diamond Cutting Works, supra
which I have already
cited namely ‘A broker does not and cannot be expected to control
the business of the insured. Even a specialist
broker’s duties (in
this case there was no allegation that Mr Williams was such a
specialist broker) does not encompass a duty
to ensure that the
insured complies with his obligations under the policy. He is not
the insured’s keeper. His duty, as a specialist
broker is
discharged when he has done everything reasonably necessary to draw
the attention of the insured to obligations imposed
by the policy. It
is the insured’s responsibility to ensure compliance (at para 44).
Mr Burger may well be classified as being
in the same position as the
insured referred to in this
dictum
.
Mr
Williams contended that he had reasonably assumed that the attention
of plaintiff had been drawn to the safe grading system at
the
inception of the policy and that this perception had been supported
by the acquisition of the necessary safe for the Springbok
premises.
There
is however no need to make a definitive finding in this regard, for,
to the extent that it is incorrect, Williams did everything
reasonably necessary to draw the attention of the insured to the
obligation imposed by the policy pursuant to the letter of 28 June
2001. It was the action of Mutual and Federal, contrary to the
contents of this letter, that lies at the legal heart of plaintiff’s
failure to recover its loss.
For
these reasons the action is dismissed with costs.
________________
DAVIS
J