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[1995] ZASCA 61
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Theron v AA Life Assurance Association Ltd. (218/93) [1995] ZASCA 61; 1995 (4) SA 361 (AD); [1995] 2 All SA 581 (A) (25 May 1995)
Case No 218/93 /MC
IN THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE
DIVISION)
In die matter between
VINCENT CHARLES
THERON APPELLANT
and
A A LIFE ASSURANCE
ASSOCIATION LIMITED RESPONDENT
CORAM: HEFER, VIVIER et SCHUTZ JJA.
HEARD: 3 MAY 1995.
DELIVERED: 25 MAY 1995.
JUDGMENT
VIVIER JA/
2
VIVIER JA:
The appellant is the nominated beneficiary under a
life
insurance policy issued by the respondent on the
life of one Robert
Geoffrey Fortuin ("the insured"). The policy provided,
inter
alia, for basic life cover of R100 000,00 and an
additional
accidental death benefit of R100 000,00. On 21 July 1985
the
insured died as a result of multiple injuries sustained when he
was
run over by a motor vehicle, and after the respondent had
repudiated liability the appellant instituted action in the Cape
Provincial Division for payment of the beneficiary's benefit of
R200 000,00 in terms of the said policy. In its plea the
respondent repudiated liability on the ground, firstly, that the
proposal form contained certain material misrepresentations; secondly,
that the insured failed to disclose a material fact viz that
he was severely
mentally retarded; and thirdly, that the insured
3
lacked the necessary mental capacity to conclude the contract of
insurance. The Court a quo (Press AJ) upheld the repudiation based
on the third
ground and, without dealing with the first two grounds, dismissed the action
with costs. Leave to appeal to this Court
was granted pursuant to a petition to
the Chief Justice.
I must deal first with an application for
condonation of the late lodging of the notice of appeal as well as the requisite
number
of copies of the record. The application was opposed by the respondent.
Leave for appeal having been granted on 23 February 1993
the appellant had to
lodge the notice of appeal by 23 March 1993; instead of which it was only lodged
on 14 May 1993 ie just short
of two months late (AD Rule 5 (1) (d)). The record
had to be lodged by 22 May 1993; instead of which it was lodged on 22 June 1993
ie one month late (AD Rule 5 (4) (c)). The explanation for the delays furnished
by the appellant's attorney in an
4
affidavit filed in support of the application is the following. As far as
the late filing of the notice of appeal is concerned he
states that he was under
the mistaken impression that the petition for leave to appeal, once granted,
constituted the notice of appeal,
and that no further notice of appeal was
required. On 6 May 1993 he discovered that a notice of appeal was necessary and
he immediately
took steps to have one prepared and lodged. With regard to the
late lodging of the record the explanation consist of nothing more
than vague
references to obtaining the approval of the Legal Aid Board and difficulties
encountered with the preparation of the record.
I find the explanation
unconvincing and unacceptable. So, for example, it took the appellant's attorney
nearly a month to make two
telephone calls to the Legal Aid Board before the
contractors, Sneller Recordings, were instructed to proceed with the preparation
of the record. This lack of diligence
5
must further be seen against the background, stressed by counsel for the
respondent, that the petition for leave to appeal had also
been
late.
This Court has often warned that there is a limit beyond which
a litigant cannot escape the results of his attorney's remissness and
ineptitude
or the insufficiency of the explanation tendered and that condonation may be
refused whatever the merits of the appeal.
(See Finbro Furnishers (Pty) Ltd v
Registrar of Deeds, Bloemfontein, and Others
1985 (4) SA 773
(A) at 787 G H;
Ferreira v Ntshingila
1990 (4) SA 271
(A) at 281 D-H; Tshivhase Royal Council
and Another v Tshivhase and Another
[1992] ZASCA 185
;
1992 (4) SA 852
(A) at 859 E-F.) The
question is whether the present is such a case. In favour of the application it
can be said that the delays
in complying with the Rules were not excessive; the
application for condonation was made as soon as the appellant's
6
attorney realised that the Rules had not been complied with;
and
the administration of justice has not been delayed.
(See
Federated Employers Fire and General Insurance Co Ltd
and
Another v McKenzie
1969 (3) SA 360
(A) at 362 F-G). In
all
the circumstances it cannot be said, in my view, that this is a
case
in which the Court should refuse the application irrespective
of the
prospects of success (see Blumenthal and Another v Thomson
NO and Another
[1993] ZASCA 190
;
1994 (2) SA 118
(A) at 121 I - 122 B). I
accordingly proceed to consider the merits of the appeal.
The insurance policy concerned was issued on 20 March
1985 pursuant to and on the basis of a proposal form
signed by the
insured on 26 February 1985. The background facts which are
relevant for a consideration of the issues raised in the appeal may be
summarised as follows. The insured was born on 8 February 1961.
He first
attended school at the age of seven years in the
7
beginning of 1969 and when he left the Lotus River
Primary
School at the age of 15 years at the end of 1976 he had
not
progressed beyond the level of Std 2. By then he had reached
the
level of Std 2 in certain subjects while in others he was still
at the
Sub B or Std 1 levels. He thereafter attended the
Bridgetown
Primary School until he finally left school on 17 January
1979.
Little is known about his life from the time he left the Lotus
River
Primary School until he came to stay with Mrs Marlene
Christina
Williams ("Williams") in Mitchell's Plain as a boarder
during
about January 1985. He stayed there until his death in July
1985.
The respondent's case that he lacked the required mental capacity
to
contract rested mainly on his scholastic performance and the
evidence of two of his school teachers; the evidence of Mr
Mogamat Yusef Adams ("Adams") a bricklayer who lived opposite
Williams and who tried to convert the insured to the Muslim
faith;
8
and that of Dr Fenster, a psychiatrist who never met the
insured.
After twice failing the substandard at school, an
intellectual and scholastic assessment by a psychologist employed by the
Department
of Education revealed an intelligence quotient ("IQ") of 61, which
resulted in the insured being placed in a socalled adaptation
class for mentally
handicapped children in the Lotus River Primary School. On 19 August 1974 a
second assessment indicated an IQ
of 51. At the trial the expert witnesses, Dr
Fenster for the respondent and Mr Loebenstein for the appellant, were agreed
that according
to the authoritative manual on the classification of mental
retardation compiled by the American Psychiatric Association, the Diagnostic
and
Statistical Manual of Mental Disorders ("DSM III"), this placed the insured in
the category of the mildly mentally retarded.
Two of the insured's school teachers while he was at
the
9
Lotus River Primary School from about September 1973 to the
end
of 1976 testified on behalf of the respondent. Both Mrs
Schilder
and Mr Holmes expressed the view that the insured was
severely
mentally retarded and both painted a picture of the
insured as an
open-mouthed idiot with severe motor function
problems.
Schilder did, however, say that the insured made slow but
steady
progress while he was at school, that he was not ineducable
and
that, with proper supervision by someone taking an interest in
him
he could well have improved further to the level where he was
able
to live an independent life. Holmes initially said that the insured
could never have understood the full implications of taking out
an
insurance policy, but later conceded that he may well have been
able to do so had it been explained to him in simple language.
He
also conceded that he could not say whether the insured might in
later years have developed sufficiently to be able to operate on
his
10
own. Neither of these two witnesses ever saw the insured again after he
left their school.
No information of any kind was placed before the
trial Court concerning the insured's performance when he attended the Bridgetown
Primary School during the years 1977 and 1978. Nor is anything known about him
from the time he left school until the beginning of
1985, except that it was
common cause that he first worked for a flooring contractor and thereafter for a
considerable time as a
sweeper on the Railways.
William's evidence as to how the insured came to board with her was not
disputed. She told the trial Court that during about January
1985 she decided to
take in a boarder as she was divorced with small children and in need of money.
She placed an advertisement in
an English language newspaper and the insured
came to see her personally. She told him that she would provide
11
full board and lodging but that he would have to do his own washing and
ironing. The rent would be R25,00 per week, payable in advance.
He agreed and
moved in the same day. He stayed with her until the day he died. He always paid
the rent on time and did his own washing
and ironing. He was able to operate her
washing machine and to use the electric iron. Sometimes he made his own meals
using the kitchen
equipment for that purpose.
Williams testified
that the insured did not appear to her to be mentally retarded. He was
Afrikaans-speaking but could also speak
English to her children although his
English was not very good. He liked to watch television, particularly the news.
He seemed to
understand what he was watching and sometimes commented on it. He
bought the Argus newspaper every day and read it. Sometimes she
sent him to the
shops to buy bread or
12
milk and he always gave her the correct change. He used to carry a case
with him and on occasion she saw that it was rilled with ladies'
underwear. He
also used to carry a little black notebook in which she saw names recorded. She
understood that
he had his own business of selling ladies'
underwear.
The learned trial Judge said in his judgment that in the
initial stages of her evidence he was considerably impressed with Williams.
Three aspects of her evidence, however, gave him "cause for consternation". The
first two aspects mentioned by the learned Judge
both concern the fact that she
knew very little about the insured's business. I have difficulty in
understanding why Williams's ignorance
of the insured's business activities
could in any way reflect on her credibility as a witness, as the learned Judge
has suggested.
He was no more than a boarder in her home and there is no reason
why he should have told her more about his
13
business. I cannot see how her lack of more
detailed knowledge of his business could serve as any indication that she was
not a
truthful witness. The third aspect which gave the learned
trial
Judge cause for concern has more substance. It relates to
an
affidavit Williams made to the police in connection with
the
investigation into the deceased's death. The relevant portion
of
the affidavit reads as follows :
"Ek ken die oorledene Robert Fortuin. Hy het by my
geloseer tot en met die botsing wanneer hy dan noodlottig
beseer was. Tydens die tydperk dat hy by my gewoon het,
het hy baie gedrink en was ook baie onbeskof maar omdat hy
my gesê het dat hy geen ouers het nie, het ek hom jammer
gekry en dus het hy by my gebly.
Ek kan ook sê dat die oorledene vir homself gewerk het,
maar waar hy gewerk het en wat se soort werk hy gedoen
het, dit weet ek nie.
Ek het vir die oorledene die Vrydag voor die botsing nog
14
gesien en nie weer nie totdat die polisie my kom sê het dat
hy in 'n botsing betrokke was en dat hy oorlede is. Ek ken
die oorledene goed want hy het lank by ons gebly en dus het
ek horn so goed leer ken. Hy was kortgespanne en het altyd
moeilikheid gesoek. Hy het ook dikwels geryloop na plekke.
Ek het ook nie geweet dat hy 'n polis het nie. Ek het eintlik
niks van hom geweet nie."
Williams testified that
she was required to go to the Atlantis charge office from her home in Mitchell's
Plain late one evening to
give the statement; that the charge office was very
busy; that she spoke in English to the policeman who took her statement; and
that she was in a hurry to get home and did not read her
statement
before signing it. Regarding the nature of the insured's
work
Williams testified that she told the policeman that he worked
for
himself by selling ladies' underwear, but that she could not
say
15
where he worked or to whom he sold these
articles.
The trial Court found that Williams's statement
conflicted
with her evidence, which was to the effect
that the insured was not
a heavy drinker; that he was generally
well-behaved and on the odd
occasion when he was rude to her he
always apologised; and that
he sold ladies underwear. Williams's
explanation for these
differences was described as unconvincing and
unsatisfactory. In
my view the trial Court erred in finding that
Williams had made a
contradictory statement. If her evidence was attacked on
the
ground that she had made a conflicting statement that should
have
been proved by calling the policeman to whom she had made the
statement. That was not done and in view of her evidence about
what she told the policeman, coupled with her evidence (which
the
16
trial Court accepted) that she did not read the
statement before
signing it, it has not been shown that Williams made a
contradictory statement to the police. Furthermore, for reasons
of the case he was investigating, the policeman who took her
statement had good reason to emphasise the insured's drinking
habits and unacceptable conduct. This could easily account for
the differences relating to these aspects. Williams's evidence
as
to what she told the policeman about the insured's work is
corroborated by the fact that he wrote down that the insured
worked for himself. In my view the learned trial Judge's
criticism
of Williams's evidence was not justified and resulted in
his attaching
insufficient weight to material evidence given by her
on the issue
of the insured's mental capacity.
17
Williams's uncontradicted evidence that the insured
answered
her advertisement for a boarder and contracted
with her on the
terms testified to by her, is significant in two respects. In
the
absence of any suggestion that he learned about the advertisement
from another source, it must be accepted that he read it
himself.
This supports Williams's evidence that the insured used to read
the
Argus. It also raises a doubt about the reliability of the
evidence
given by Holmes and Fenster that the insured would not have
been
able to read and understand an English newspaper. Secondly,
the
insured would appear to have progressed to the stage where he
lived
an independent, self-sufficient life by the time he came to
live in her house. It was common cause at the trial that the insured never
received any disability grant from any source. There was further
18
no suggestion that he was being supported by anyone. In the absence of
any indication to the contrary it must be accepted, in my view,
that he was
earning a living on the open market. Furthermore, Williams's uncontradicted
evidence that he did his own washing and
ironing and cooked his own meals on
occasion showed that there was no longer anything amiss with his motor
functions. In my view
a totally different picture of the insured emerges from
her evidence from the one painted by Holmes and Schilder.
The trial
Court did not outright reject Williams's evidence. No doubt because he realised
the significance of those portions of her
evidence which were not disputed at
the trial, counsel for the appellant submitted that her evidence should have
been rejected
19
in toto on the basis that she had been part of a conspiracy to murder the
insured. It was suggested that a conspiracy had been formed
between, amongst
others, Williams, Mr Spencer James Whiting ("Whiting"), who was the insurance
agent who sold the policy in question
to the insured and the appellant. The
suggested plot entailed putting the insured in Williams's house and paying his
rent, taking
out the policy in his name, murdering him and claiming the benefits
due under the policy on the basis of fraudulent evidence that
there was nothing
wrong with him. In my view there is no factual basis whatsoever for the
submission. There was no evidence to that
effect, nor was it ever suggested to
any of the witnesses.
The trial Court relied heavily on the evidence of Adams
who
20
lived in a house opposite that of Williams and who had been at the Lotus
River Primary School with the insured. Although Adams himself
failed Sub A and
Std 4 he eventually passed Std 8. After they left school Adams lost contact with
the insured and only met him again
during May 1985 in Mitchell's Plain. Adams
was a bricklayer and a lay teacher in the Islamic religion. The insured
expressed a desire
to know more about this religion and Adams started teaching
him, seeing him virtually every night for that purpose. Adams said that
the
insured was slow of learning and could not be taught with his other pupils. His
level of understanding and reading was that of
a child in the substandards.
Adams had to use simple words to teach him anything and even then it took a long
time and much repetition
for him to remember
21
what he had been taught. He tried to teach the insured a verse in the
Arabic language which every Muslim must know but he only managed
to memorise
four or five words after two months. According to Adams the insured had not
changed from the time he was at school. He
said that the insured could neither
speak nor understand English. His Afrikaans was very poor and was like that of
someone in Std
1. He never saw the insured with a newspaper and when the news on
the television came on he immediately lost interest because he
could not
understand it. Adams considered that the insured would not have understood "what
insurance is all about". Adams said that
the insured told him that he did not
have his own business but that he helped a certain Rashad carry his bags. The
insured also told
him that Rashad had opened a bank account
22
for him and paid his rent and that he never had money of his own. Adam's
evidence as to the content of the insured's statements to
him falls within the
definition of "hearsay evidence" in
sec 3(4)
of the
Law of Evidence Amendment
Act 45 of 1988
("the
Act"). The
evidence was not objected to and seems to have
been admitted without the fact that it was hearsay evidence ever having been
considered.
It was not contended on appeal that it was admissible in terms of
sec 3
(1) (a) of the
Act and
in my view, had the learned trial Judge applied his
mind to the question and exercised his discretion whether to allow the evidence
"in the interests of justice" in terms of
sec 3
(1) (c) of the
Act, he
would not
have admitted the evidence. In my view the evidence was by its nature
unreliable. This is clearly shown by the fact that
the insured,
23
according to Williams, told her quite the
opposite from what he
told Adams. For the same reason her hearsay evidence in this
regard should have been excluded. There was no suggestion that
Rashad was not available to testify and it would have been a
simple
matter for him to tell the trial Court whether the insured had
worked
for him or not. He was not called as a witness.
Adams's evidence is in stark contrast to the evidence
of
Reginald Glenville Richter ("Richter") who was the
respondent's
branch manager in Cape Town during 1985. Richter testified that
a man who identified himself as the insured came into the branch
one day during the relevant time to pay an insurance premium in
cash. The person explained that his premiums were paid by way
of debit orders but that he was late in depositing sufficient
money
24
in his bank account to meet the current debit order and that he wanted to
pay the premium in cash. The person had no documentation
with him but supplied
his full names and date of birth from which it was possible to ascertain the
policy number.
He then paid in cash and was issued with a receipt. Richter
asked
him whether he wanted to continue to pay by way of debit order
in
future but he stated that he was undecided. He then left.
Richter
said that the person acted quite normally. The trial Judge said
in
his judgment that Richter made a good impression upon him and
that there was no reason to doubt his evidence. He went on to
say, however, that in the absence of evidence to confirm that
the
man Richter spoke to was indeed the insured, or, if he were the
insured, that he was not being assisted, the validity of
Richter's
25
evidence was doubtful. I cannot agree with the learned Judge. There was
no evidence to suggest that the person Richter spoke to was
an impostor or that
the insured was accompanied by another who did the talking. Neither was this
ever expressly put to Richter by
counsel for the respondent. Surely an impostor
would have gone there armed with the policy number which this person did not
have.
On the probabilities the trial Court should have found that it was indeed
the insured to whom Richter spoke. The learned trial Judge
also said that even
if it is accepted that Richter spoke to the insured who was unassisted, his
evidence does not take the matter
any further. Again I cannot agree. In my view
Richter's evidence is significant in that it shows that the insured understood
the
necessity for timeous payment of the premiums as
26
well as how to operate a bank account.
Whiting was the final
witness to give evidence of a contemporaneous nature. His evidence was that
during 1985 he was employed by the
respondent as an insurance consultant. He met
the insured in the bar of an hotel and told him that he was an insurance agent.
When
the insured told him that he had his own business he mentioned that he
could take out an insurance policy as an investment. The insured
expressed an
interest and they made an appointment to meet at the latter's home. On 26
February 1985 he went to the given address
where he met the insured. He
completed the proposal form in the presence of the insured who signed the form
on the same occasion.
They spoke in Afrikaans
27
and he recorded the answers on the proposal form in English. He explained
to the insured that the policy would provide for basic life
cover as well as
additional accident and investment benefits. The insured made it clear that his
real interest was in the investment
benefits and the fact that he could raise a
loan on the policy. When they came to section S of the form which provides for
authorisation
for the payment of premiums by way of stop orders, the insured
handed him a card containing details of a bank transmission account.
Whiting was
able to complete this section from the information appearing on the card and
this section was signed by the insured the
same day. Whiting's evidence was to
the effect that the insured appeared to him to be a perfectly normal person in
possession of
all his faculties who fully understood the
28
various aspects of the proposal form.
Whiting's evidence was
severely criticised by the trial Judge in a number of respects. Apart from
saying that he made "a singularly
bad impression" while giving evidence the
learned Judge refers to five portions of his evidence which he either finds
unacceptable
or which he regards as an indication that the insured did not
understand the transaction. I shall deal with each in turn.
Firstly,
the learned Judge did not believe Whiting's evidence that
he had
never met the appellant. Whiting admitted that he once
completed a proposal form in the name of the appellant without
ever meeting him. I find Whiting's explanation a perfectly
reasonable one and in my view there was insufficient reason to
reject his evidence in this regard as false.
29
Secondly, the learned Judge says in his judgment that,
in
view of the nature of the policy, he doubted whether
any
investment benefits were payable under the policy. He
could,
accordingly, not accept Whiting's evidence that he had
explained
such benefits to the insured. Elsewhere in the judgment
the
learned Judge simply assumes that no such benefits were
payable.
In my view the learned Judge erred in adopting this attitude.
According to section E of the application form the monthly
Vitamagna R 57-80
Accidental death or injury benefit 18-90
Waiver of premium benefit
1-54
R 80-24
According to the policy the Vitamagna
benefit would seem to be one of the "Vitaseries linked and reinforced
endowments". Clauses 2
and 9 of the policy provide that upon the insured
surviving to the maturity date the maturity benefits set out in the
30
schedules will be paid to him. What exactly the benefits were to which
the insured would have become entitled was never dealt with
at the trial, nor
were the schedules placed before the trial Court. Without that information the
learned Judge erred in rejecting
Whiting's evidence on this aspect.
The next part of Whiting's evidence which was criticised
by
the learned trial Judge is the following. Whiting was
asked in
cross-examination whether the following sentence in section Q of
the application form was explained to the insured "Ek stem in om
die standaard polisbewoording van die A A Mutual Lewens vir die
soort versekering waarom aansoek gedoen is te aanvaar". He
replied that he told the insured that the standard form of
contract
would be issued to him and that the insured understood what he
was
saying. In his judgment the learned trial Judge says that he was
31
"thoroughly unconvinced" that Whiting understood what was being referred
to, and that he has "little doubt that what was being imparted
to the insured
was other than was intended by the statement in the proposal form". A careful
reading of the record shows that when
Whiting was first asked whether he had
explained the sentence in issue to the insured he misunderstood the question as
referring
to the standard rates. The question was repeated and the
cross-examiner made it clear that he was not referring to the rates but
to the
actual contract itself. The question, in the end, was a simple one and the
answer, as I have said, was in the affirmative.
There does not appear to be any
basis for saying that Whiting did not understand what the question referred to
nor that he conveyed
something else to the insured than what was required
by
32
the proposal form.
Fourthly, the learned trial Judge said
that Whiting's evidence that arrangements for the payment of the premiums were
made before
the date upon which the proposal form was signed ie 26 February 1985
and that he did not open an account afterwards did not ring
true. In the first
place Whiting did not say that arrangements for the payment of the premiums had
already been made. He merely said
that the insured gave him a card containing
details of a bank account with the S A Perm. This information was then used to
complete
the authority for the payment of premiums by way of stop orders.
Furthermore, there is no evidence to suggest that the bank account,
details of
which Whiting said appeared on the card which the insured handed to him on
26
33
February 1985, did not then exist. There was
therefore insufficient reason not to accept Whiting's explicit evidence in this
regard.
Finally, the learned trial Judge found Whiting's evidence
that he used colloquial language to explain the questions in the proposal
form
either not true or an indication that Whiting was not dealing
with the normal or average person. These findings are, in my
view, totally unjustified. Why Whiting would lie in saying that
he used simple language is not clear. I find it quite natural and
realized that he was dealing with someone from a sub-economic area.
And the mere
fact that a proposal form is explained in simple language is no indication, in
my view, that the client is not a person
of average, normal
intelligence.
34
I proceed to deal with the expert evidence relating to the insured's
mental capacity. In his evidence in chief Fenster first expressed
the view that
the insured's IQ of 51 placed him in the category of severely mentally retarded,
but he soon qualified that by saying
that the insured was severely mentally
retarded "within the range of mild". In cross-examination he conceded that his
original assessment
was based on an out-dated classification which was no longer
accepted and that according to the current classification by the DSM
III (which
he appeared to accept as correct) a person with an IQ of between 50 and 70 was
classified as mildly mentally retarded.
It is not clear why he used an outdated
classification in the first place.
According to the DSM III mild mental retardation is
defined
35
as "strongly equivalent to the education category 'educable'". Dr
Fenster, however, expressed the firm opinion that the insured was
ineducable. He
further stated categorically that the insured was permanently and totally unfit
for employment on the open labour
market; that he had no doubt whatsoever that
his mental retardation was such that any observant layman would have noticed it
and
that it was "scientific and definite" that he did not have contractual
capacity. Other firmly expressed views were, infer alia, that
Williams's
evidence that the insured could read a newspaper was "impossible"; that when he
left school he was "unable to read Afrikaans";
and that he would not have been
able to pay the premiums on time.
It is quite clear from Dr Fenster's evidence that the
basic
36
premise for all these views was that the insured had at the age of 17-18
years not progressed beyond the level of Sub B at school,
and that it was
therefore impossible for him to have improved afterwards. This was repeatedly
stated by him under cross-examination,
and he then readily conceded that if this
fundamental premise was wrong his opinions would be wrong too.
Dr
Fenster's basic premise turned out to be incorrect. When the insured left Lotus
River Primary School at the end of 1976 at the
age of fifteen years he had, as I
have already indicated, reached the level of Std 2 in certain subjects while in
others he was still
at Std 1 or Sub B levels. So, for example, Holmes testified
that the insured's reading level was "between say late Std 1 and the
beginning
of Std 2". Nothing is known about his
37
progress during 1977 and 1978 and Dr Fenster was not entitled to assume
that he made no further progress during that time. In the
circumstances his view
that the insured was ineducable can carry little weight. It will further be
recalled that Schilder said that
the insured was not ineducable and that her
view is supported by the DSM III manual. For these reasons the respondent, on
whom the
onus rests, has not shown that the insured was ineducable.
Dr Fenster was also probably wrong when he said that
the
insured was unable to obtain work on the open
market. As I have
earlier shown, it is likely that the insured in fact obtained
such
employment after leaving school and that he was so employed at
the
time of his death. Dr Fenster's sweeping statement that
any
perceptive observer would have noticed his mental retardation
is
38
contradicted by Richter, Williams and Whiting who all met the insured.
His statement that the insured would not have been able to
meet the payments
under the policy was shown to be wrong. So was his statement that the insured
could not read Afrikaans when he
left school. In view of Holmes's evidence as to
the insured's reading ability it would seem that Dr Fenster was wrong also when
he
said that the insured could not read a newspaper.
The emphatic manner in which Dr Fenster expressed his opinions apparently
impressed the learned trial Judge, who, in accepting his
evidence, said in his
judgment: "The opinion of Dr Fenster was emphatic: it was scientific and
definite that the insured could not
have had the contractual ability to conclude
the agreement." For the reasons I have given the learned Judge erred
39
in accepting Dr Fenster's evidence. As for his opinion concerning the
insured's lack of contractual capacity being "scientific", Dr
Fenster's original
"scientific" labelling of the insured was indeed wrong in that the insured was
not severely mentally retarded.
Furthermore, adopting an inaccurate factual
basis for views so dogmatically expressed, can hardly be described as
"scientific".
Loebenstein, a clinical psychologist, expressed the
view that the insured was only mildly mentally retarded. He based this view on
the insured's IQ of 51 which followed an earlier test result of 61; the fact
that the insured was placed in an adaptation class at
school where he made
progress and was not ineducable in the view of his teachers; and the fact that
in later life he was self-supporting
40
and lived independently, having obviously acquired sufficient skills to
be employed on the open market. Loebenstein said that the
insured came from a
greatly deprived socio-economic background and was materially and socially
disadvantaged in his early life. He
was placed in the care of foster parents at
a young age and his relationship with them was very poor. His deprived
background and
home environment had a deleterious effect on his progress at
school and on his IQ tests but his performance would have improved once
he was
placed in a more stimulating environment. Loebenstein emphasised that "mild
mental retardation must always be examined in
a particular context at a
particular time" in order to determine the degree to which a person has
improved. In the case of the insured
there was no information available as to
the
41
"intervening factors and circumstances" in his life from the
time
he left school until the beginning of 1985. In the absence of
such
data it was not possible to assess his intellectual functioning
at the
time he took out the insurance policy. The trial Judge did
not
reject Loebenstein's evidence but attached little weight to it
on the
ground that there was no intervening factor. He said in this
regard:
"There is no evidence to indicate any intervening factor that contributed
substantially to his mental development. I am bound to accept
that there was a
measure of improvement, even if this is limited to his ability to write his
name, but I do not accept that any material
advancement of intellect occurred
between the age of 18 and 24."
The trial Judge concluded by assessing the insured's
mental
capacity at the time he entered into the contract
of insurance on the
same basis as Dr Fenster had done ie as that of someone who had
42
at the age of 17-18 years not progressed beyond Sub B. For the reasons I
have given the learned Judge erred in doing so. Moreover,
in saying that he does
not accept that the insured's intellectual level improved materially since he
left school because there was
no evidence to that effect, the learned Judge
would seem to have wrongly placed the onus of proving contractual capacity on
the plaintiff.
It was common cause that the onus of proving that the insured
lacked the required contractual capacity at the relevant time rested
throughout
on the respondent, so that it was for the respondent to prove that at the time
of contracting the insured's intellect
had not improved from that described by
his school teachers. For all we know his mental state may well have improved
since then.
(Cf Mitchell v Mitchell and Others 1930
43
AD 217 at 224.) Indeed, the evidence of the school teachers and
Loebenstein was that that was to be expected.
There are other
passages in the trial Court's judgment from which it would appear that the onus
was wrongly applied. The trial Court
found that the policy held out no benefit
at all for the insured. That finding, as I have indicated, was not justified. It
further
pointed out that no evidence whatsoever was led as to why the plaintiff
was named as the beneficiary, as if it was for the appellant
to give a reason
for the policy, and concluded that the insured had been "manoeuvred" into taking
out the policy. This finding was
totally unjustified. The trial Court then
proceeded as follows :
"[T]he most compelling reason for rejecting an
understanding
44
on an appropriate level on the part of the insured, is that there seems to
be no reason whatsoever for him to have concluded the
agreement."
What the learned Judge is saying in effect
is that the appellant bore
the onus of giving a reason for the policy and that in the absence
of
such explanation an inference of lack of contractual capacity
arises.
In the present case the onus is, in my view,
all-important.
An enquiry into the state of a man's mind
is, from the nature of
things, a very difficult and delicate one, as
was pointed out by
Innes CJ in Pheasant v Warne
1922 AD 481
at 489
and
by Tindall JA in Lange v Lange
1945 AD 332
at
344.
In the present case it is particularly so because, firstly,
nothing is
known about the insured during the crucial period of his
life just
45
before the contract in question was concluded,
and secondly, the
evidence adduced at the trial was so
contradictory.
The test for contractual capacity which is of application in the
present case is that which has been laid down in cases
such as
Prinsloo's Curators Bonis v Crafford and Prinsloo
1905
TS
669
and the two cases referred to in the preceding paragraph.
In
Prinsloo's case, supra, Solomon J stated at p 673 that the
test
was whether the person concerned
"was of sufficiently sound mind and understanding to realise the nature of
the obligation into which he was entering, and to appreciate
the duties and
responsibilities created by that contract."
In Pheasant
v Warne, supra, Innes CJ stated at p 488 :
"And a court of law called upon to decide a question of contractual
liability depending upon mental capacity
must
46
determine whether the person concerned was or was not at the time capable of
managing the particular affair in question - that is
to say whether his mind was
such that he could understand and appreciate the transaction into which he
purported to enter."
See also Lange v Lange, supra, at
341 - 342.
In my view the contract of insurance in question was a
fairly simple one and it did not require a high degree of intelligence to
understand
the nature of the contract and the nature of the obligations created
thereby. It was not in issue that by the time of the insured's
death no premiums
were outstanding and in view further of Richter's evidence it must be accepted
that the insured at least understood
his responsibility for paying the
premiums.
I have already referred in some detail to the conflicting
evidence relating to the insured's mental state at the relevant time.
47
There is an irreconcilable difference between the lay evidence of Adams,
on the one hand, and that of Williams, Richter and Whiting
on the other. I have
pointed out that the trial Court did not reject the evidence of Williams and
Richter and merely
criticised certain aspects of their evidence.
That criticism, as I
have indicated, was not justified. I have also pointed out that
the trial Court's rejection of Whiting's evidence was
unwarranted.
As for the expert witnesses Fenster's evidence was, as I have
indicated, fundamentally flawed and can carry very little
weight.
Loebenstein, on the other hand, emphasised the insured's
potential
for mental improvement resulting from a changed environment
after
leaving school. On a proper assessment of all the evidence and
on
a correct application of the onus the trial Court should have
held
48
that the respondent had not proved that the insured lacked
the
required mental capacity to conclude the contract in
question.
I proceed to deal with the defence that the proposal
form
contained the following misrepresentations which
grounded
repudiation of liability.
"1. There were no circumstances not disclosed in the proposal form relating
to the insured's health which may affect the risk of assurance
on his
life;
2. He was self-employed and was in receipt of earnings exceeding R650-00 per
month;
3.
He
had attained a Std 8
qualification;
4.
He had one
brother who was in good health."
It was
alleged in the pleadings that these statements were false in that, firstly,
there were circumstances relating to his health
which may affect the risk namely
that he was severely mentally
49
retarded; secondly, he was unemployed and not in receipt
of
earnings exceeding R650-00 per month; thirdly, he had
not
attained a Std 8 qualification; and fourthly, his
brother,
although in good health, was also mentally retarded.
Section Q
of the proposal form contains a warranty, over the insured's
signature, of the truth of the statements in the proposal form
and
his agreement that they form the basis of the insurance
contract.
An insurer's contractual right to repudiate liability on
the
ground of misrepresentation made to it, whether
elevated to a
warranty or not, was curtailed by sec 63 (3) of the Insurance
Act
>
27 of 1943, which, insofar as here relevant, provides as
follows:
"Notwithstanding anything to the contrary contained in any ... document
relating to (a domestic) policy, any such policy ... shall
not be invalidated
and the obligation of an
insurer
50
thereunder shall not be excluded ... on account of any representation made
to the insurer which is not true, whether or not such representation
has been
warranted to be true, unless the incorrectness of such representation is of such
a nature as to be likely to have materially
affected the assessment of the risk
under the said policy at the time of issue ... thereof."
This sub-section was fully considered in a recent decision
of
this Court in Qilingele v South African Mutual
Life
Assurance Society 1993 (1) SA 69 (A). In delivering the
judgment of the Court Kriegler AJA distinguished between the test for
materiality
in cases where the ground for repudiation is a
failure of the common law duty to disclose material facts, and the test
in those cases where the insured expressly vouched for the
truth of his
representations founding the contract of insurance and moreover did so by way of
warranty (at 73 A-F and 74 F-G),
51
The learned Judge stated the test in the latter type of case
as
follows, irrespective of whether the misrepresentations have
been
warranted to be true or not (at 75 B-E).
"The enquiry as to the materiality of the misrepresentation is consequently
not conducted in abstracto but is focused on the particular
assessment. From
that it follows that the evidence of the underwriter who attended to the
assessment is not only relevant but may
prove crucial. So, too, evidence that
the insurer had a particular approach to risks of the kind in question would be
relevant and
could be cogent. Obviously general considerations affecting the
assessment of the kind of risk in issue will bear on the probabilities
and will
be taken into account. But, and this serves to be emphasised, the enquiry is
aimed at determining whether the specific assessment
was probably materially
affected by the specific misrepresentation in
contention."
The learned Judge went on to say (at 75
G-H) that applying this
test involved a simple comparison between two assessments of the
risk undertaken. The first is done on the basis of the facts as
52
misrepresented by the insured. The second determines what the assessment
would have been on the facts truly stated. If there is a
significant disparity
between the two, then the materiality requirement in
sec 63
(3) is
satisfied.
Returning to the misrepresentations alleged in the
present case, it was common cause that the first misrepresentation alleged on
the
pleadings was not proved as the insured was not severely mentally retarded.
Counsel for the respondent contended in the alternative
that the statement was
false in that the insured had attended a special class at school. This was
clearly an afterthought and was
never canvassed at the trial. It is not possible
to say what effect this might have had on the assessment of the risk.
53
The second and fourth statements have not been shown to be false. Apart
from Williams's evidence that she had formed the impression
that the insured
worked for himself, there was no other admissible evidence of what the insured
did or what he earned. With regard
to the insured's brother, there was no
evidence that he was mentally retarded at the time the proposal form was signed.
The evidence
of Mr Heugh, the foreman at Atomic Steel where he had been employed
on the open market for more than six years, whose evidence was
not contested,
was to the effect that he is a normal, average person and that there is nothing
the matter with his mental ability.
That leaves the statement that the insured had passed Std 8 at school
which the parties agreed was false. Richter, the
54
respondent's branch manager, was the man who assessed the
risk
under the policy on behalf of the respondent. His evidence
was
to the effect that even had the insured indicated that he had
only
passed Std 2 or that he had had no schooling at all, it would
not
have affected the assessment of the risk. Richter's evidence
was
that, on the respondent's approach to this type of insurance,
a
person's academic qualifications were not regarded as material.
There was no other evidence on this issue and the respondent
has,
in my view, clearly failed to discharge the onus of proving that
this
specific misrepresentation materially affected the assessment of
the
risk. For these reasons the respondent has failed to show that
it
was entitled to repudiate the contract on the ground of
misrepresentation.
55
I deal finally with the defence based on the failure of the duty to
disclose material facts. The respondent's allegation on the pleadings
was that
the insured had failed to disclose that he was severely mentally retarded. I
have already said that the insured was not
proved to be severely mentally
retarded. As in the case of the first of the alleged misrepresentations, counsel
for the respondent
contended in the alternative that the insured should have
disclosed that he had been placed in a special class at school. In President
Versekeringsmaatskappy Bpk v Trust Bank van Afrika Bpk en 'n Ander
1989 (1) SA
208
at 216 D-G this Court held that the test of whether information should be
disclosed was whether the reasonable man (not the reasonable
insurer or insured)
would appreciate that the information should be conveyed
56
to the prospective insurer so that the insurer
itself could decide whether to accept the risk or to charge a higher premium
than usual.
On the facts of the present case I am unable to find that the
reasonable man would have considered that he should
inform the
insurer of the fact that he had been placed in a special class
at
school. In my view the reasonable man would have considered
the information entirely irrelevant. In his mind the information
could not have influenced the risk in any way or his ability to
comply with his obligations under the policy. I cannot therefore
find that the insured ought to have disclosed the fact that he
had
attended a special class at school to the respondent.
For these reasons the defences raised by the respondent
failed
and the Court a quo erred in granting judgment
with costs in its
57
favour. As far as the costs of counsel are
concerned Mr Laubscher appeared alone for the appellant at the hearing of
the
appeal although he had appeared with a senior at the trial.
He
asked for the trial costs of two counsel. I am satisfied
that,
having regard to the amount involved in the action and the
nature
of the issues in dispite between the parties, the matter
warranted
the employment of two counsel and that the costs of two
counsel
should be allowed to the extent to which two counsel have in
fact
been employed.
In the result the appeal succeeds with costs and the
following
orders are made:
1. Condonation is granted. The appellant is ordered
to
pay the costs of the application for
condonation.
58
2. The order of the Court a quo is set aside and it is
replaced
by the following order:
(a) Judgment is granted for the plaintiff in
the
amount of R200 000-00 with interest a tempore morae from 25 July 1988 to
date of payment.
(b) Defendant is further ordered to pay interest at
the rate of
12% per annum on the plaintiffs
taxed bill of costs from a date 15 days after the
allocatur of the Taxing Master.
(c) Defendant is ordered to pay the costs of the
action, such
costs to include the costs of
two
counsel.
3. The respondent is ordered to pay the costs of the
appeal,
including the costs of the application for leave
to appeal but
excluding the costs of counsel for the
appellant's supplementary
heads of argument.
W. VIVIER JA.
HEFER JA) concurred.
SCHUTZ JA
:
I find myself in disagreement with my two brethren as I
take
2
a view of the facts as a whole that differs fundamentally from
theirs.
Robert Geoffrey Fortuin ("the deceased") was born on 8
February 1961. His education was that given to the mentally retarded. He left
school on 17 January 1979 when he was nearly 18 and still in a special class.
The record is silent as to his activities during the
next five or six years. On
26 February 1985, when he was 24, he signed a proposal form for life cover
addressed to the A A Life Assurance
Association Limited (the respondent,
formerly the defendant). The insurance agent was one Whiting, who was obliged to
leave the respondent's
employ not long after, and who made a "singularly bad
impression" on the trial judge. According to him the deceased presented himself
as a perfectly normal person. The proposal provided for life
3
cover of R100 000 which was to be doubled to R200 000 if death were to be
accidentally caused. The beneficiary was the plaintiff,
Vincent Charles Theron,
who was described in the proposal as "friend." The record tells practically
nothing about him. Although he
was available to give evidence he did not do so,
and we do not have his version as to why he should have been so preferred or as
to the mental condition of the deceased at the time. The deceased's parents had
cast him away at an early age, and his only relation
was a younger brother
Jonathan, also mentally retarded when at school. In due course a policy was
issued. On 21 July 1985 the deceased
was struck by a motor vehicle while
walking. Upon his death the appellant claimed the accident benefit.
The pre-conditions to liability having been established
the
4
onus rested on the respondent to prove its defences of misrepresentation
or non-disclosure in the first instance, or of lack of mental
capacity to enter
into the insurance contract in the second. The court
a quo
found that
lack of mental capacity had been proved, and made no finding on
misrepresentation or non-disclosure.
The evidence fell into three categories. Mrs Schilder and Mr Holmes, both
remedial teachers, gave evidence for the respondent concerning
a limited period
of the deceased's school career during the mid-seventies. With an IQ of 51 he
only just qualified for education.
Had his score been a couple of points lower
he would have qualified only for training, not education. Their evidence was
accepted.
There is a chasm, not only in time, between their
evidence
5
and that of three witnesses called by the appellant concerning the
deceased's mental condition in 1985, Whiting aforesaid, the deceased's
landlady
Mrs Marlene Williams, and one Richter. According to them the deceased was quite
normal. The judge rejected the evidence
of Whiting, commented adversely on that
of Williams, and while not rejecting that of Richter, found that it was not
proved that the
man he had dealt with was the deceased. A very different picture
of the deceased at this time was painted by a witness called by
the respondent,
one Yusef Adams. It was that of the old Robert Fortuin. The judge accepted his
evidence. Two experts gave evidence,
Dr Fenster, a psychiatrist, for the
respondent, and Mr Loebenstein, a psychologist, for the appellant. Neither of
them had ever seen
the deceased, so that their conclusions
6
were much dependent upon which of the witnesses were telling the
truth.
When weighing both the expert and the lay witnesses, the question as to
the deceased's mental condition in 1985 is one of fact.
The legal principles applicable are clear and are set out in the judgment
of my brother Vivien
My view of the evidence leads me to disagree with my brethren on whether
the respondent discharged the onus of proving mental incapacity
in 1985. I shall
set out the reasons for my differing briefly. However, before doing so I find it
necessary to comment that despite
a record of more than 1600 pages, by the end
of the trial remarkably few facts had been proved. This did not bode well for
the onus-bearer.
This state of affairs may to some extent be explained
by
7
the many interventions by the trial judge, which at times tended to
hinder and even obstruct the flow of presentation.
The main thrust of the appellant's argument is that whatever had been
proved about the deceased's mental state in the mid seventies,
it had not
bridged the gap extending to 1985, and that there was no sufficient basis for
preferring the evidence of Adams about that
latter time to that of Williams,
Whiting and one Richter.
The one solid plank in this case is the evidence of Schilder and Holmes
who taught at Lotus Primary School. Whatever difficulty they
may have had in
recalling two pupils of many years before, I consider that they were reliable
witnesses and also skilled and sympathetic.
The details of their evidence are
set out in the judgment of
8
my brother Vivier and I do not propose repeating them. What it amounts to
is that by the end of 1976 when he was nearly 16 the deceased
had an IQ of 51
and had reached a level of somewhere between sub B and early Standard 2,
depending upon the subject, but this in
a special class where promotion was as
much a matter of encouragement as achievement. He did not have the retentive
capacity to perform
even simple tasks, was gullible and easily led, and did not
advance much. Neither Schilder nor Holmes thought that he would be able
to cope
with the import of a life policy. As against this it should be noted that he was
dragged down by a tragic home background
which probably affected his achievement
and may have reduced his IQ score by a few points. Nothing has been proved about
his last
two school years at Bridgetown save, as already stated, that
9
he left in January 1979 when he was still in a special class. It seems
to
me unlikely that he would have progressed much further during
those
two years.
What was his prognosis? Under cross-examination
Holmes
expressed some astonishment at the facts to which he was told
Mrs
Williams would depose. Having said that his projection was based
on
his knowledge of the deceased's performance at school, he
proceeded:
"And I would think it was a professional type of projection in my case
and I think the wealth of experience behind me, dealing with
handicapped
children, I found it incompatible that children who leave school who couldn't do
things will just dramatically when they
leave school, be able to cope with that,
M'Lord. I just couldn't concede that. I must have scientific evidence that it is
actually
so, but my perception as a professional trainman (sic on the record) I
feel I just couldn't project that kind of thing as a reality."
10
That is an opinion evidence to which I attach
weight.
Much of the opposed evidence of Dr.
Fenster and Mr Loebenstein was concerned with how reliably the school evidence
could be projected
forward. Dr. Fernster was emphatic that the deceased would
not have improved appreciably, that he would not have been able to hold
his own
in the open labour market and that he would not have had the capacity to
understand the inwardness of a contract of insurance.
Mr Loebenstein, on the
other hand, was of the view that one had to be much more cautious, that some
intervening event may have occurred
and that the unhappy home background may
have been removed. There was always hope.
I disagree with my brethren on their assessment of
both
11
experts.
Dr. Fenster was criticized as being dogmatic. He was dogmatic. But
dogmatism is sometimes the product of long experience and deep
understanding.
Advancing age may increase it manifestation. I do not consider that the fact
that Dr. Fenster stuck to his guns is
in itself a matter for criticism. There
are other grounds for criticism. It appeared that he was using definitions of
classes of
mental disorder or retardation which do not always accord with the
more muted language that has come to be accepted in our time,
sometimes I think
with the loss of the hard edge of old English words. The other main criticism
was that he kept re-iterating in
response to much that was put to him, that the
deceased was still in sub B at the age of 18. There were slight
variants.
12
In fairness to him I think that it should be remembered that at the stage
when he gave evidence no-one in court seemed to know quite
when the deceased had
left school or what standard he had attained. However, whatever criticisms of
him go home I regard the essential
core of his evidence as valid, and in
conformity with that of Mr. Holmes and ones own experience of life.
Mr. Loebenstein's evidence, on the other hand, does not impress me. He
tended to stick to the plus points for the plaintiff, and had
great difficulty
in accepting that Mrs. Williams's version might be false although he did concede
after much pushing that if Adams's
version were to be accepted, deceased may
have been much as he had been at school. Unlike Dr. Fenster he was not prepared
at all
to express an
13
opinion on the deceased's contractual capacity. There was no dogma here,
so that one had only Dr. Fenster's opinion opposed not by
a contrary opinion,
but only doubts as to its correctness. Mr. Loebenstein's lack of dogma was put
forward as a virtue showing what
a scientific approach he adopted when faced by
a paucity of facts. I do not think so. To my mind he was evasive at times,
particularly
in his refusal (supported by the trial judge) to say what he
actually thought about the deceased. To say that one cannot give a considered
expert opinion for lack of facts is one thing. To refuse to say what one thinks
about such facts as are available is another.
From what I have said so far it is apparent that I would have expected
the deceased of 1985 to be not much different from the
14
deceased of 1979. And this is exactly what Adams says. I shall not repeat
his evidence, which is set out in my brother's judgment.
Suffice it to say that
I regard him as an impressive witness.
When I turn to the three witnesses for the plaintiff, Williams, Whiting
and Richter, I have a serious difficulty. Each would have
it that the deceased
appeared to be quite normal. This I find very difficult to accept. It they had
described a somewhat improved
person it might have been otherwise, But they
would have him, between them, a man of affairs, a reader and a savourer of
current
affairs. It was as if he had been reborn. This I find not only
implausible but suspicious.
Indeed I find the facts surrounding this claim to be generally
suspicious. The suspicion in short is that a gullible moron was
prevailed
15
upon to take out insurance on his life appointing a "friend" as the
beneficiary, and was thereafter murdered. That was not pleaded.
No doubt if it
could have been proved, a plea equivalent to
de bloedige hand erft niet
would have been raised. But the suspicion remains. Once one suspects fraud one
must be on one's guard against wholesale fabrication,
something one does not
encounter with the great majority of witnesses. To my mind the most suspicious
aspect of the case is that
the plaintiff himself did not give evidence. It is
true that he bore no onus. But for the reasons already given he had a
substantial
case to meet, and I rind it surprising, if he was innocent, that he
did not go into the witness box in support of his witnesses,
all three of whom
had suffered various degrees of damage. It would have been so easy for him to
have explained why
18
The fact that a witness cannot be faulted does not necessarily mean that
she is telling the truth. In the result I consider that the
weight of the case
presented by the defendant is such as to outweigh the fact that Mrs Williams's
evidence has not been proved false,
given also the suspicion that in my opinion
attaches to any evidence put forward by the plaintiff, particularly created by
his own
failure to give evidence.
I would add that whatever unfortunate phrases he may have used I do not
think that the trial judge lost sight of the elementary principle
that the onus
lay on the defendant, just as I have not done in expressing surprise that the
plaintiff failed to give evidence.
I am therefore of the opinion that the defence has discharged the onus of
proving the deceased's lack of mental capacity.
19
In the circumstances I do not consider it necessary to deal with the
further defences raised. I would, however, express my respectful
agreement with
what my brother Vivier has said about the admission of evidence under
s 3
of the
Law of Evidence Amendment Act 45 of 1988
: about condonation and the costs the
thereanent: and about the employment of two counsel.
In the result I would dismiss the appeal with costs.
W P SCHUTZ JUDGE OF APPEAL