Mutual and Federal Insurance Ltd. v Gouveia (132/2002) [2003] ZASCA 16 (25 March 2003)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2003
>>
[2003] ZASCA 16
|

|

Mutual and Federal Insurance Ltd. v Gouveia (132/2002) [2003] ZASCA 16; 2003 (4) SA 53 (SCA) (25 March 2003)

IN
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
REPORTABLE
CASE NO: 132/2002
In the matter between:
MUTUAL AND FEDERAL INSURANCE LIMITED
APPELLANT
and
MANUELLE GOUVEIA
RESPONDENT
CORAM: HARMS, FARLAM and MTHIYANE JJA
HEARD:
6 MARCH 2003
DELIVERED: 25
MARCH 2003
Summary:
Interpretation of an exception clause in a policy of insurance
__________________________________________________________________
JUDGMENT
MTHIYANE JA:
MTHIYANE JA:
[1]
This is an
appeal from the judgment of Mlambo J sitting in the Witwatersrand
Local Division. The appeal is concerned with the proper
interpretation of an exception clause in a policy of insurance.
[2]
On 9 June 2000, an Isuzu motor
vehicle belonging to the respondent (‘the plaintiff’) and
comprehensively insured by the appellant
(‘the Company’) under a
policy of insurance was hijacked in Houghton, Johannesburg, whilst it
was driven by a Mr Eduardo Cumbe
with the plaintiff’s permission.
At the time of the incident the plaintiff was aware that Cumbe was
not licensed to drive. He claimed
indemnity arising out of the loss
and, not surprisingly, the claim was repudiated. The Company relied
for its repudiation on an exception
clause the effect of which was
that liability would not follow if the loss occurred whilst the
vehicle was being driven by an unlicensed
driver. The plaintiff
instituted action for compensation against the Company for the loss
of the vehicle. The Court
a quo
ruled that the exception
clause was inapplicable and found the Company liable. The appeal is
against that decision and it is before
us with leave of this Court.
[3]
By agreement between the parties
the question of liability was dealt with first and the other issues
stood over for determination
at a later stage in terms of Uniform
rule 33 (4). The trial judge
was requested to decide this
question by way of a stated case and on the basis of certain agreed
facts in terms of rule 33 (1).
[4]
The following facts are common
cause and formed the foundation of the stated case in the Court
below:
‘
1.1 At the time the loss occurred there was in
existence a valid insurance agreement (policy) (‘the insurance
agreement’) containing
the terms as set out at annexure ‘A’ to
the plaintiff’s particulars of claim;
1.2
In terms of the said agreement of insurance the defendant undertook
to indemnify the plaintiff against the risks set out in the
agreement
of insurance;
1.3 The risks included inter alia
the risk of
loss in respect of an Isuzu KB 280 DT (‘the vehicle’)
1.4 The vehicle was hijacked on 9 June 2000 at the
intersection of 4
th
Avenue and 11
th
Avenue,
Houghton;
At
the time of the hijacking the vehicle was being driven by one
Eduardo Cumbe with the general knowledge and consent of the

plaintiff;
1.6 At all times material hereto and in particular at
the time of the hijacking to the plaintiff’s knowledge, the said Mr
Cumbe
was not in possession of a valid driver’s licence;
1.7 The vehicle has not been returned to the plaintiff;
1.8
The defendant has repudiated the plaintiff’s claim on the basis
that Mr Cumbe was not in possession of valid driver’s
licence.’
[5]
In section 1 of the policy
the company agreed to indemnify the insured against
‘loss of or damage to the vehicle’.
This obligation was
subject to a number of exceptions the relevant one being para 2 (b)
(i) (‘the exception clause’). It deals
with ‘Vehicle Use’ and
it reads:
‘
The Company shall not be liable in respect of:
1. . .
.
2. Any
accident, injury, loss, damage or liability caused, sustained or
incurred whilst any vehicle insured under the policy is being:
(a) . . .
(b) driven by the insured or with his general knowledge
or consent, by any person;
(i) unless he is licensed to drive such vehicle in
accordance with the legislation of the territory in which it is being
used . .
.’
[6]
In repudiating the claim the
Company invoked the exception clause which, it claimed, entitled it
to avoid liability on the ground
that at the time of the hijacking
the vehicle was driven by Cumbe who was, to the plaintiff’s
knowledge, not licensed to drive
the vehicle in accordance with the
laws of the territory in which it was driven.
[7]
The plaintiff’s
riposte
was
that the absence of a driver’s licence was irrelevant where the
vehicle was lost in a hijacking because the absence of such
licence
was not the cause of the loss. He maintained that the Company would
only be able to avoid liability where the loss was causally
related
to the driver having been unlicensed. It was contended in the
alternative that the loss had not occurred at the time of the
hijacking, but only after the thief had driven away with the vehicle.
This latter argument was rejected by the Court
a quo
who held
that ‘once a hijacking incident occurs, loss is occasioned
thereby’.
[8]
According to the learned Judge
the real issue in the case was whether the loss was ‘causally
connected to the lack of a driver’s
licence on the part of the
person who was driving the vehicle’. After examining certain
exceptions referred to in the policy, he
came to the conclusion that
liability would only be excluded if the loss is ‘caused’ by the
situation set out in the exception.
The specific situations mentioned
by him are where the loss was caused by ‘wear and tear, mechanical
or electrical breakdowns,
failures or breakages’ and cases where
death had occurred or personal injury sustained. He held that what
was contemplated in the
exception clause was a ‘loss’ occasioned
by or directly attributed to the lack of a valid driver’s licence
on the part of the
person driving the motor vehicle. Because the
hijacking had nothing to do with the lack of a valid driver’s
licence on the part
of the driver, he found that the exception clause
was inapplicable.
[9]
With respect I do not agree. I
fail to see how the instances cited by the judge
a quo
provide
a basis for reading causation into the exception clause. This
approach is not borne out by the clear words used in the clause
which, in my view, connote a
temporal
connection rather than a
causal
connection. This is especially so if regard is had to
the introductory conjunction ‘whilst’ used in the clause. The
clause
speaks of a ‘loss’ which is incurred ‘whilst’ the
vehicle is being driven. If
during that time
(hence the use of
the word ‘whilst’) the driver is unlicensed, the exception
applies. The proper approach to be adopted in interpreting
a policy
of insurance has been authoritatively stated to be the following:
‘
The ordinary rules relating to the interpretation of
contracts must be applied in construing a policy of insurance. A
court must therefore
endeavour to ascertain the intention of the
parties. Such intention is, in the first instance, to be gathered
from the language used
which, if clear, must be given effect to. This
involves giving the words used their plain, ordinary and popular
meaning unless the
context indicates otherwise (
Scottish Union &
National Insurance Co Ltd v Native Recruiting Corporation Ltd
1934
AD 458
at 464-5). Any provision which purports to place a limitation
upon a clearly expressed obligation to indemnify must be
restrictively
interpreted (
Auto Protection Insurance Co Ltd v
Hanmer-Strudwick
1964(1) SA 349 (A) at 354 C-D); for it is the
insurer’s duty to make clear what particular risks it wishes to
exclude . . . .’
1
[10]
There can be no question that
if the ordinary meaning of the words in the exception clause is given
effect to, the plaintiff and Cumbe
fell squarely within the terms of
the exception clause. Reading causation into the exception clause is
not justified by its wording.
I agree with the submission that such
an approach may have the effect that even in the case of an accident
involving an unlicensed
driver the insurer would still not be able to
rely on the exception clause, because it would have to prove, not
only the absence
of the licence, but also that the lack thereof
caused the accident. The practical effect would be that the company
would only be
exempted if the unlicensed driver’s lack of skill in
driving the vehicle caused the accident. That would mean that not
only causation
but also negligence on such a driver’s part is
required and that clearly, is not the intention conveyed in the
clause. It is true
that the exception clause
in casu
must be
restrictively interpreted but equally true is the fact that the
ordinary meaning of the words must be given effect to.
[11]
The clause must then be applied
to the facts agreed to by the parties in the stated case. At the time
of the loss the vehicle was
being driven by Cumbe, with the
plaintiff’s general knowledge and consent. Cumbe was, to the
plaintiff’s knowledge, not licensed
to drive such vehicle in
accordance with the legislation of the territory with which it was
being used. It does not assist for the
plaintiff now to say that the
loss occurred only after the vehicle was driven away by the thief.
The agreed facts in the stated case
stand in the way of that
argument. When the stated case was formulated it would appear that
the parties regarded hijacking as a composite
process involving both
the hijack and the theft. That much is clear from paragraph 1.5 of
the stated case which refers only to the
vehicle being driven ‘at
the time of the hijacking’. Nowhere in the stated case is there
reference made to ‘at the time of
the loss’. On an overall
conspectus of the terms of the policy and the agreed facts in the
stated case, I do not think it is open
to the plaintiff now to argue
that the ‘loss’ was not caused by the ‘hijacking’ and
thereby unilaterally enlarge the scope
of the stated case. The loss
post-hijack approach on which the plaintiff now seeks to rely appears
to be an afterthought. In the
context of this case there is no merit
in the argument and it was correctly rejected by the judge
a quo.
[12]
Accordingly the appeal succeeds
with costs. The order of the judge
a quo
is altered to read:
‘
The plaintiff’s claim is dismissed with costs.’
__________________
KK MTHIYANE
JUDGE OF APPEAL
CONCUR:
HARMS JA
FARLAM JA
1
Fedgen Insurance Ltd v Leyds
1995 (3) SA 33
AD at 38 B-C