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[1996] ZASCA 121
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Malindi v Commercial Union Insurance Company Ltd. (103/95) [1996] ZASCA 121; 1997 (1) SA 327 (SCA); [1997] 1 All SA 255 (A); (27 September 1996)
Reportable
CASE NO 103/95
IN THE SUPREME COURT OF
SOUTH AFRICA
(APPELLATE DIVISION)
In the matter between:
ENOCH MALINDI
Appellant
and
COMMERCIAL UNION INSURANCE
COMPANY LIMITED
Respondent
COURT
: E M Grosskopf, F H Grosskopf, Marais,
Olivier and Plewman JJA
HEARD
: 17 September 1996
DELIVERED
: 27 September 1996
JUDGMENT
Olivier J A:
I have had the benefit of reading the judgment
prepared by my brother, Marais JA. I agree with the
conclusion reached by him, but would prefer to base
2
such conclusion on the approach set out hereunder.
The appellant was injured in a motor vehicle collision which occurred on 7 February 1987. A
completed claim form was submitted to the respondent,
the appointed agent in terms of the Motor Vehicle
Accidents Act, 84 of 1986 ('the Act').
The respondent did not object to the validity of the
claim form. On 19 December 1990 the respondent wrote
to the appellant's attorneys as follows:
'We refer to the above matter and wish to advise
that we are prepared to settle your client's
claim as follows:
Quantum
Future medical expenditure
We are prepared to contribute an amount of
R2 250,00 towards your client's future medical
expenditure.
Future earnings
We are not prepared to consider this portion of
your client's claim as we are not satisfied with
the documentary proof in this respect.
General Damages
We are prepared to contribute an amount of
3
R2 000,00 towards your client's general damages.
In addition, we are prepared to contribute an
amount of R300,00 towards your client's legal
costs.
This offer is made without prejudice and must not
be construed as an admission of liability on our
part. It is made purely in order to avoid
litigation. It will remain open for acceptance
for a period of 60 days from the date hereof. If
it is not accepted within this period, it will
lapse. It is made subject to our being discharged in the normal manner.'
The appellant did not accept the offer contained in
the letter and nothing further happened, until he
instituted action during June 1993. The respondent
then raised prescription as a defence and it pleaded
that the said letter was a valid offer in terms of
section 14 (2) of the Act, which had the effect of
terminating the suspension of prescription 90 days
after 19 December 1990, the date of the letter.
Section 14 (2) reads as follows:
(2) If an appointed agent does not within 60
days after receipt of a claim as set out in
section 15 (1)object to the validity
thereof, prescription shall, notwithstand-
4
ing the provisions of subssection (1) be
interrupted until after the expiration of a
period of 90 days from the date on which the
appointed-agent delivers to the claimant or
his representative per registered post or by
hand a notice to-
(a) repudiate liability; or
(b) convey an offer of settlement of the
claim to the claimant or his
representative.'
The appellant denied that the letter was a valid offer as required by sec 14 (2) of the Act. He
averred that it was defective on two grounds:
(1)
It was only open for acceptance for a period of 60 days. In the appellant's view, under section
14 (2) of the Act the offer must remain open for
90 days;
(2)
The paragraph in the letter dealing with future earnings suspends the offer pending the
submission by the appellant of proper documentary
proof.
As far as paragraph (1) is concerned, the appellant
based his case mainly on
Ngantweni v National Employers General Insurance Co Ltd
1991 (2) SA 645
5
(C), which was followed in
Lucas v Sentraboer (Co-
operative) Ltd.
1995 (1) SA 334
(W). The respondent,
however, relied on the contrary decision of Flemming
DJP in
Joka v Commercial Union Insurance Company of
South Africa
1994 (3) 391 (W).
In
Ngantweni
's case two consecutive offers were made
by the appointed owner. Both were made subject to
acceptance within 30 days. De Kock J held that for an
offer to satisfy the requirements of section 14 ,(2)
(b) of the Act, it had to be 'unqualified and
unconditional' (650 C-D) or 'open, unrestricted' (650
F - G). It must remain open for 90 days; the offers
under consideration did not do so, and thus were not
valid offers for the purpose of. setting in motion the
resumption of the running of prescription.
In
Jpka
's case, the offer was open for acceptance
within 60 days. Flemming DJP held that it was a valid
offer for the purposes of section 14 (2) of the Act.
The ratio of his decision was stated as follows (at
393 H - I):
'Section 14 (2) governs the running of
prescription and not the period for which an
offer must be open. It understandably leaves the
parties to the common law. In the result,a
defendant can make an offer which is open for 120
6
days or for 20 minutes. Regardless of the period
for which it is open, an offer can be 'an offer
of settlement of the claim' as meant in sec 14 (
2) . It commences the countdown to the
recommencement of ticking of the prescription
clock.'
In the present matter a Full Bench (Eloff JP,
Preiss and Claasen JJ) put its seal of approval on the
Joka case. Eloff JP formulated the ratio decidendi of
the court as follows:
'It will be seen that section 14 (2) does not
specifically say for what period the offer is to
remain open to effectively bring about the
termination of interruption of prescription . The reasoning in support of plaintiff has perforce to
be that an implication has to be read into it. ' Is it a necessary implication? I think not. All
that the legislature required an appointed agent
to do to revive the running of prescription is to
repudiate the claim or to make an offer. The
period of 90 days was fixed to allow the
plaintiff to take timeous steps to interrupt the
complete running of prescription by instituting
action. There is, with respect to the views
expressed in Ngantwenl's case, nothing in the
wording used in the Act to support the conclusion
7
that the legislature intended to accord the plaintiff the luxury of considering an offer of
settlement for 90 days. Nor can I agree that the intention of the legislature would be frustrated
unless the claimant be allowed 90 day in which
to conclude the offer.'
Pursuant to leave granted by that court, the matter
is now before us.
'In my view, Eloff DJP followed the correct
jurisprudential approach. Section 14 (2) of the Act
does not state for what period the offer is to remain
open. The plain and ordinary meaning of the words of
section 14 (2) does not justify the conclusion that
the offer should be kept open for 90 days. Such a
qualification can then be read into the section only
if it is a necessary implication, which it will only
be if in the absence thereof, the application of the
plain and ordinary meaning would lead to some
absurdity, inconsistency, hardship or anomaly,
which from a consideration of the enactment as a
whole, a court of law is satisfied the legislature
could not have intended (see
Bhyat v Commissioner
for
Immigration
1932 AD 129).
This principle was
encapsulated by Lord Bramwell in
Cowper Essex v
Ac
ton
Local Board
14 AC 153
at 169 in the rule:
8
'The words of a statute never should in
interpretation be added to or subtracted from,
without almost a necessity.' (See also
Land- en
Landboubank van Suid-Afrika v Rousseau NO
[1992] ZASCA 222
;
1993
(1) SA 513
(A) at 518 H).
In the present case, the adoption of the ordinary
and grammatical meaning of the words leads to no
absurdity, inconsistency or inequity whatsoever. The manifest object of the whole of section 14 (2) is/to
place a duty on the insurer either to make an offer or
to repudiate liability if it wishes to terminate the
suspension of the running of prescription. By not
qualifying the words 'offer' or 'repudiating' further,
the legislature clearly intended these terms to bear their ordinary meaning. A valid offer requires such
certainty that mere acceptance would result in a
contract. According to the common law, an offeror
can stipulate the life of the period for which the offer is open for acceptance. There is nothing in
. section 14 (2) to indicate that the insurer cannot
likewise limit the period for which the offer is to
remain open. If the plaintiff does not accept it
within the stipulated period, his remedy is to
institute action. As he or she is the claimant who
has already prepared full particulars of the claim for
purposes of lodging the prescribed claim, the
institution of action is merely a formal step. There
9
are thus no considerations of sufficient force to
override the plain and unambiguous language used in
section 14 (2) (a) of the Act.
The second ground on which reliance was placed, is
without any merit whatsoever. The rejection of the
claim in respect of future earnings was unambiguous.
The fact that an explanation was given for such
rejection did not change the rejection into an
invitation to re-open negotiations or to provide further proof of these claims. There is, moreover,
no evidence that the letter was so understood by the
appellant.
The appeal is dismissed with costs.
Concur
:
E M Grosskopf
F H Grosskopf F H
Plewman
CASE NO. 103/95
IN THE SUPREME COURT OF
SOUTH AFRICA
(APPELLATE DIVISION)
In the matter between:
MALINDI : ENOCH
Appellant
and
COMMERCIAL UNION INSURANCE
COMPANY LIMITED
Respondent
CORAM
:
E M Grosskopf, F H Grosskopf, Marais
Olivier et Plewman JJA
HEARD
:
17 September 1996
DELIVERED
: 27 September 1996
JUDGMENT
MARAIS JA/
2
MARAIS JA:
The issue for consideration in this appeal is one which has
given rise to conflicting decisions in the Provincial Divisions. Section
14 of the Motor Vehicle Accidents Act No 84 of 1986 ("the Act")
governs the prescription of claims made under the Act. The relevant
provisions are these:
"14. Prescription of claim. - (1) (a) Notwithstanding the
provisions of any other law relating to prescription, but subject to the
provisions of paragraph (b) of this subsection, the right to claim compensation under section 8 from an appointed agent in respect
of
claims referred to in section 6 (1) (a) (i) shall become prescribed upon
the expiration of a period of two years from the date upon which the
claim arose: Provided that prescription shall be suspended during the
periods referred to in subsection (2) of this section and section 15 (2).
(b)
(2) If an appointed agent does not within 60 days after receipt
of a claim as set out in section 15 (1) object to the validity thereof,
prescription shall, notwithstanding the provisions of subsection (1), be
interrupted until after the expiration of a period of 90 days from the
3
date on which the appointed agent delivers to the claimant or his
representative per registered post or by hand a notice to -
(a)
repudiate liability; or
(b)
convey an offer of settlement of the claim to the
claimant or his representative.
(3)
(4
(5)
(6)
"
The general scheme of things appears with reasonable
clarity. Barring exceptions to the general rule, prescription
commences to run against a would-be claimant from the date of the
accident. If nothing is done by either party which would interrupt or
suspend the running of prescription, the claim will prescribe two years later. If a claimant lodges a claim in the manner prescribed
by section
15 of the Act, and the recipient does not object to its validity within
60 days after its receipt, the running of prescription against the claim
4
will be suspended indefinitely and will resume running only if the
recipient of the claim does one of two things. It may either repudiate
liability or convey an offer of settlement of the claim to the claimant
or his representative. In either event, the running of prescription against the claim will resume 90 days thereafter. Inasmuch as
the lodging of a claim in terms of section 15 of the Act is a condition
precedent to a claimant's right to sue, it follows that a claimant who
lodges such a claim will always have a minimum period of two years
and 90 days available within which to institute legal proceedings in a
court of law and, in practice, the period will probably be longer, as it
is highly unlikely that a repudiation of liability will occur or an offer
of settlement will be made on the same day that a claim in terms of
section 15 is received.
It will be gathered from this that while a claimant is able
5
unilaterally to suspend the running of prescription by the mere lodging of a claim, the recipient is able unilaterally to cause prescription
to
resume running either by repudiating liability or by making an offer
of settlement. It goes without saying that if the recipient adopts the
latter course, the offer which it makes must be an offer of the kind
contemplated by section 14 (2) (b) of the Act. If it is not, it will not trigger the resumption of the running of prescription against
the claim.
The issue which has given rise to dissension is whether or not an offer to settle the claim which affords the claimant a period of
less than 90
days within which to accept the offer is such an offer. It was held that
it was not in Ngantweni v National Employers General Insurance
Co
1991 (2) SA 645
(C) and Lucas v Sentraboer (Co-operative) Ltd
1995 (1) SA 334
(W). It was held that it was in Joka v Commercial
Union Insurance Co of SA Ltd
1994 (3) SA 391
(W) and m caw by
6
the Court a quo (Eloff JP, Preiss J and Claasen J). The issue comes
before us by virtue of leave to appeal granted by the latter Court.
The courts which held that an offer of settlement which
gave the claimant less than 90 days to accept the offer was not an
offer of the kind contemplated by section 14 (2) (b) of the Act, did so
solely on the strength of what they considered to be the purpose of the
provision, namely, not only "to give even greater protection to third
parties against losing their right to recover compensation than they had
before", but also "to afford the claimant the same opportunity to
consider an offer of settlement during the full period of suspension
under section 14 (2) that is allowed the agent by section 15 (2) (a)".
The words quoted are those of de Kock J in Ngantweni's case, supra,
at p 650 E-F. The latter purpose, so it was said, would be frustrated
if an offer could be made "which the claimant is unable to convert into
7
a settlement of his claim through acceptance thereof at any time during
the 90-day period". (Ibid at p 650 F)
With all due respect, I am unable to agree. Conclusions regarding the purpose of the relevant provisions cannot rest upon a
priori assumptions as to what was intended, and what policy
considerations motivated the legislature in so intending. They must be
derived from the language of the legislation. I can find nothing in the
language of the relevant provisions which lends any support to the notion that one of the objectives of the legislation was to compel
recipients of claims under the Act, when making offers of settlement,
to keep them open for acceptance for 90 days on pain of such offers
being inefficacious to trigger the resumption of the running of
prescription, if they were not so kept open. The provisions deal
explicitly with the subject of prescription and nothing else. They do
8
not purport to lay down a prescribed spatium deliberandi which must
be accorded to a claimant when an offer of settlement is made to
enable him or her to decide whether or not to accept the offer. Giving
the language of the provisions its ordinary meaning, all that they do
is provide a claimant who is faced with such an offer with a
reasonable period of time within which to consider the offer and to
sue if it be rejected. The very fact that the institution of legal
proceedings may also have to be accomplished within the period of 90
days if prescription is to be averted, demonstrates that the legislature
could not have intended that the
entire
period of 90 days had also to be available for the consideration of the offer. Ex hypothesi it could
not be if summons might have to be issued within the same period in
order to avert prescription of the claim.
It is abundantly clear that the selfsame period of 90 days
9
following upon a repudiation of a claim for which section 14 (2) (a)
of the Act provides, is afforded solely to enable a claimant to decide
whether or not a resort to litigation should be had, and if so, to
institute the litigation. Again, the need to actually institute the
litigation within the period of 90 days if prescription is to be averted,
will diminish pro tanto the period of time available to decide whether
or not to sue. This shows that the legislature was not concerned to
provide a spatuim deliberandi of any particular length in either section
14 (2) (a) or (b); it was concerned to provide a period of time within
which a resort to legal action could be had if that were necessary to
avert prescription.
On the face of it, a period of 90 days is a far longer
period than would be regarded as reasonable for the consideration of an offer of settlement. That too points away from the purpose
of the
10
provision being to provide a specific spatium deliberandi of 90 days
for the consideration of an offer of settlement.
Acceptance of the contrary proposition would not
necessarily be beneficial for claimants. Indeed, it could have results
quite different from those which its supporters envisage. If only an
offer which is open for acceptance for 90 days will provide a claimant
with a corresponding 90 days within which to institute a claim which
might otherwise prescribe, then an offer which is open for acceptance
for a lesser period will not provide that claimant with the 90 days
within which to institute action which the legislature intended to be the
consequence of the making of an offer of settlement in the form
provided by section 14 (2) (b). To illustrate: A claimant lodges a
claim six months after an accident. Prescription will thus have run for
six months. The recipient repudiates liability within a week. For 90
11
days thereafter the running of prescription is suspended but it resumes
running on the 91st day and continues running. The claimant does
nothing to pursue his claim and a point is reached when the claim is
about to be extinguished by prescription. On that very day the
recipient of the claim delivers to the claimant by hand an offer of
settlement which is open for acceptance for 60 days. If that is not to
be regarded as an offer of settlement within the meaning of section 14
(2) (b), what will the consequences be for the claimant? Prescription
will continue to run against his claim because the offer will not
provide him with another 90 days during which the running of
prescription against his claim will be suspended. The claim will
therefore prescribe on that day notwithstanding the making of the offer
of settlement, unless he issues and serves summons on that day. He
will therefore not only have had virtually no time to consider the offer
12
before issuing summons, he will also have had no additional time
within which to actually issue summons. The same result follows if
one postulates, instead of a repudiation of liability, followed much
later by an offer which was open for acceptance for 60 days, an early
offer of settlement which does give 90 days for its acceptance,
followed by a much later offer which was open for acceptance for
only 60 days. In these circumstances therefore, the contention is
subversive of the very benefits which its adherents consider it is
intended to provide.
Support for the contention that the offer had to remain
open for acceptance for 90 days was sought in the decision of this
Court in Santam Insurance Limited v Williams
[1992] ZASCA 1
;
1992 (2) SA 273
(A). The issue in that case was whether the making of a second offer
of settlement had the effect of providing a claimant with a further
13
period of 90 days during which the running of prescription against his
claim would be suspended. The conclusion was that it did. It is true
that the court considered that the 90 day period in question was
intended mfer alia to afford a claimant an opportunity to consider the
offer, but I do not understand the decision as laying down that the
entire period of 90 days must be made available for that purpose
before the offer will qualify as an offer within the meaning of section
14 (2) (b) of the Act. That was not the issue which was before it, and
when the judgment is considered in its entirety, I think it is plain that
the court was doing no more than laying down that a new offer,
irrespective of how long it might be open for acceptance, would result
in the claimant acquiring another period of 90 days during which the
running of prescription against his claim would be suspended, and
during which it would be open to him to issue summons. That of
14
course would be an interpretation of the relevant provision which
would enlarge the scope given to a claimant to avoid the barring of his
claim by prescription and that is manifestly the purpose of the
provision as has been frequently recognised by the courts.
If the legislature did intend to restrict the right which the
recipient of a claim would have at common law to make such offers
of settlement as it thought fit, it has given scant indication of any such
intention in the Act. Thus it has not prohibited the making of oral
offers of settlement, nor has it decreed that any such offer shall remain
open for acceptance for any particular period of time. Oral offers of
settlement would obviously not be offers of the kind contemplated by
section 14 (2) (b) for the latter are to be made by way of a "notice"
delivered to the claimant or his representative "per registered post or
by hand". Yet they may be made. They will afford the claimant no
15
relief in the form of a suspension of prescription if prescription is running when they are made. It is so of course that, if such
an offer
is made at a time when the running of prescription is suspended, it
will not trigger the resumed running of prescription, but the fact
remains that the legislature has not sought to shield a claimant against
the making of an oral offer which allows less than 90 days for
acceptance even although prescription is running against the claimant.
In the light of that, there is little, if any, reason to suppose that it
intended to do so in the case of the written offers referred to in section
14 (2) (b) of the Act. The provision is resoundingly silent on such
matters as the terms upon which such offers may be made.
If an offer is to qualify as an offer within the meaning of
section 14 (2) (b) and have the consequences spelt out in section 14,
it will obviously have to be a bona fide offer, the time for acceptance
16
of which is not so short as to render the offer illusory, and it will have
to be an offer which, if accepted, will dispose of the claim. It will
also have to be conveyed to the claimant or his representative by notice by registered post or by hand. But there is no warrant for
reading into the provisions of the Act any other requirements with
which the offer will have to conform. There are certainly no such
other requirements expressly spelt out in the Act and it is trite that
they cannot be regarded as having been impliedly required unless such
an inference is quite inescapable. That is manifestly not the case.
In the instant case the offer made was open for acceptance
for 60 days which can hardly be described as a derisory period of
time, indicative of a lack of bona fides. It was an offer which, if
accepted, would have disposed of the claim and it was made in the
manner required by the Act. It served therefore, after the lapse of 90
17
days after the date upon which it was made, to trigger the resumption
of the running of prescription and by the time the claimant (now the
appellant) instituted action, prescription had supervened and the claim
was prescribed. The Court a quo before which the issue was raised
by way of a stated case, was therefore correct in upholding the plea, of
prescription and in dismissing the appellant's action with costs. The
cases of Ngantwen: and Lucas, supra, must therefore be regarded as having been wrongly decided in this respect, and the case of Joka,
supra, as correctly decided.
It remains to dispose of a further contention raised by the
appellant for the first time in this Court. It was that the offer made by
the respondent was not an offer which, if accepted, would have
disposed of the claim. It was based upon a paragraph of the letter in
which the offer was made, which read:
18
"FUTURE EARNINGS
We are not prepared to consider this portion of your client's
claim as we are not satisfied with the documentary proof in this
respect."
Apart from the fact that this contention was not raised for
consideration in the stated case, and can therefore not legitimately be
raised in these proceedings, there is no merit in the contention. The
opening paragraph of the letter reads:
"We refer to the above matter and wish to advise that we are
prepared to settle your client's claim (my emphasis) as
follows:-"
The concluding paragraph reads:
"This offer is made without prejudice and must not be construed
as an admission of liability on our part. It is made purely in
order to avoid litigation. It will remain open for acceptance for
a period of 60 days from the date hereof. If it is not accepted
within this period, it will lapse. It is made subject to our being
discharged in the normal manner."
It was plainly intended to be an offer which, if accepted, would put an
19
end to the appellant's claim in its entirety. The reference to inadequate
documentary proof of the claim for future earnings was simply the respondent's explanation for making no offer under that head and,
when read in the context of the letter as a whole, not an invitation to
the appellant to submit further evidence to enable the respondent, to
reconsider this particular head of alleged damage. The appeal is dismissed with costs.
E M GROSSKOPF JA) CONCUR
F M GROSSKOPF JA)