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[2016] ZASCA 13
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Renasa Insurance Company Limited v Watson and Another (32/2014) [2016] ZASCA 13 (11 March 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 32/2015
In
the matter between:
RENASA
INSURANCE COMPANY LIMITED
APPELLANT
and
CHRISTOPHER
BRIAN WATSON
FIRST
RESPONDENT
FLASHCOR
201 CC
SECOND RESPONDENT
Neutral
citation:
Renasa
Insurance Company Limited v Watson
(32/2014)
[2016] ZASCA 13
(11 March 2016)
Coram:
Ponnan,
Tshiqi, Saldulker and Mbha JJA and Fourie AJA
Heard:
22
February 2016
Delivered:
11
March 2016
Summary:
Insurance
policy ─ alleged fraudulent claim ─ arson ─ insurer
failing to discharge onus of proving that insured
was the arsonist or
that insured is precluded from claiming loss due to his failure to
take reasonable steps and precautions to
prevent the loss.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town
(Savage
AJ sitting as court of first instance):
The
appeal is dismissed with costs.
JUDGMENT
Fourie
AJA (
Ponnan,
Tshiqi, Saldulker and Mbha JJA
concurring):
[1]
This appeal has its origin in a fire that erupted during the morning
of 10 January 2011 in industrial premises in Elsies
River, Cape
Town (the premises) owned by the second respondent, Flashcor 201 CC
(Flashcor). The premises were let to the first
respondent, Mr C B
Watson (Watson), who conducted a print finishing business from the
premises under the name and style of Canterbury
Coaters.
[2]
The appellant, Renasa Insurance Company Limited (Renasa), is an
insurer which had insured Watson and Flashcor, with inception
from 1
October 2007, under a written short-term insurance policy against
loss or damage caused by, inter alia, fire. In terms of
the latest
annual policy renewal undertaken on 20 October 2010, Renasa
indemnified Watson as the sole proprietor of Canterbury
Coaters
against the loss or damage of plant, machinery and stock suffered as
a consequence of fire for an agreed insured sum of
R17 545 871.
In addition, Renasa insured Flashcor against the loss of or damage to
the buildings on the premises as a
consequence of fire for an agreed
insured sum of R640 001-91.
[3]
Pursuant to the fire of 10 January 2011, Watson and Flashcor lodged
claims with Renasa under the insurance policy for payment
of the
amount of R17 545 871 for the loss or damage caused to the
plant and machinery, and R640 001-91 for the damage
to the
building, respectively. Renasa, however, repudiated the claims with
the result that Watson and Flashcor instituted action
against Renasa
in the Western Cape High Court, Cape Town, for payment of the amounts
claimed under the insurance policy.
[4]
The matter first came before Davis J who dealt with the issue of
Watson’s locus standi. Renasa contended that Canterbury
Coaters
was in fact a partnership between Watson and Mr P Hampson
(Hampson), but after hearing evidence Davis J held that,
although
Hampson had made an investment in the business, Canterbury Coaters
was at all material times a sole proprietorship owned
by Watson.
[5]
It was subsequently agreed by the parties and ordered by the court
below in terms of Uniform rule 33(4), that the issue as to
Renasa’s
liability to make payment of the claims would be adjudicated first,
with the issue regarding the quantum of the
claims to stand over for
later determination, if necessary. The trial then proceeded before
Savage AJ. After hearing evidence the
trial judge held in favour of
Watson and Flashcor, declaring Renasa to be liable for such loss as
they may prove they have suffered
as a consequence of the damage
caused by the fire. Renasa now appeals, with the leave of the court a
quo, against the whole of
this order.
[6]
Renasa’s repudiation of the claims under the policy and its
defence in the court a quo and on appeal, was based on two
provisions, pleaded in the alternative, under the General Conditions
of the insurance policy. These are clauses 8 and 5, respectively.
[7]
Clause 8 of the General Conditions provides that:
‘
8.
Fraud
If
any claim under this policy is in any respect fraudulent or if any
fraudulent means or devices are used by the insured or anyone
acting
on their behalf or with their knowledge or consent to obtain any
benefit under this policy or if any event is occasioned
by the wilful
act or with the connivance of the insured, the benefit afforded under
this policy in respect of any such claims shall
be forfeited.’
[8]
Clause 5 of the General Conditions reads as follows:
‘
5.
Prevention of Loss
The
insured shall take all reasonable steps and precautions to prevent
accidents or losses.’
[9]
In paragraph 9.3 of its plea Renasa denied liability to indemnify
Watson and Flashcor under clause 8 on the basis that:
‘
9.3.1
On or about 10 January 2011 the first plaintiff [Watson] acting alone
and/or in his capacity as a member
of the second plaintiff
[Flashcor], alternatively, parties unbeknown to the defendant
[Renasa], but on the instruction, and with
the first and/or second
plaintiff’s knowledge and consent, and with their connivance,
set fire to the immovable property
and the movable equipment situate
thereon, with a view to fraudulently obtaining a benefit under the
policy to which the insured
would ordinarily not be entitled to.
9.3.2
Accordingly, in terms of clause 8 of the policy, any claim which
either the first and/or the second plaintiffs
may have been entitled
to, is forfeited.’
[10]
In its trial particulars, Renasa alleged that the fire was ignited by
Watson and/or those instructed by him on 10 January 2011
between
08h00 and 09h00. Renasa futher placed reliance on the ‘deliberate
participation of the plaintiffs in some manner
in the happening of
the fire at the property’ in breach of General Condition 8 of
the policy, and ‘on any and all acts
and representations of the
plaintiffs, which were calculated to conceal or otherwise to prevent
the detection of the plaintiffs’
deliberate participation in
some manner in the happening of the fire.’
[11]
In the alternative, Renasa pleaded that the plaintiffs had breached
clause 5 of the General Conditions of the policy, in that:
‘
9.5.1
It was an express, alternatively implied, further alternatively tacit
term of the policy that:
9.5.1.1
The first and second plaintiffs were obliged to take all reasonable
steps and precautions to prevent the fire, and losses
sustained in
consequence thereof.
.
. .
9.5.2
In breach of the aforegoing and aware that the premises, and the
goods situate thereon were subject to a fire risk on 10 January
2011,
the plaintiffs failed to take any or all reasonable steps and
precautions to prevent the fire, and losses sustained in consequence
thereof, in circumstances where had the first and/or second plaintiff
done so, a fire would have been avoided.
9.5.3
In the premises, defendant is not obliged to pay plaintiffs the sum
claimed or any portion thereof.’
[12]
In its trial particulars, Renasa alleged that the steps that Watson
and Flashcor ought to have taken to prevent or avoid the
fire were:
not to leave the property unattended, ensure that the accelerants
deployed therein for the purposes of setting fire
thereto were not
ignited, secure the property to prevent access by an intruder, direct
employees to remain in attendance to deter
an intruder from gaining
access to the property, summon the fire department and discontinue
the electricity supply to the premises.
[13]
It was common cause that Watson and Flashcor established prima facie
that their claims fell within the ambit of the promised
protection
offered by the policy. Therefore, Renasa as the insurer bore the onus
of establishing its right to repudiate their claims
for the reasons
pleaded by it. See
Commercial
Union Assurance Company of South Africa Ltd v Kwazulu Finance and
Investment Corporation and another
[1995] ZASCA 63
;
1995 (3) SA 751
(A) at 756H-I; (414/93)
[1995] ZASCA 63
(30 May
1995).
[14]
Turning firstly to the defence based on clause 8 of the General
Conditions, Renasa had to prove on a balance of probabilities
that
Watson acting alone, or parties unbeknown to Renasa acting on the
instructions of Watson and/or Flashcor, and with their knowledge,
consent and connivance, set fire to the premises in order to
fraudulently obtain a benefit under the policy. As was reiterated
by
the trial judge, it is not for Watson or Flashcor to disprove
Watson’s guilt as an arsonist, nor that someone else set
fire
to the premises. Savage AJ concluded that, upon a conspectus of the
evidence as a whole, Renasa had failed to discharge the
onus of
showing that Watson deliberately set fire to the premises, or that
others with his and/or Flashcor’s knowledge and
consent did so.
Renasa contends that, in so finding, the trial judge misdirected
herself in material respects.
[15]
As relevant background it is necessary to set out in some detail the
events of 10 January 2011 leading up to and following
the eruption of
the fire. Watson, who resided on a farm in the Piketberg district,
120 kilometres from the premises, left his residence
in the early
hours of the morning of 10 January 2011. The reason for his early
departure was to ensure that he would be at the
premises when the
workforce arrived for the new work year after the end of year
holidays. It was established by means of a tracking
device in the
vehicle driven by Watson that he had arrived at the premises at
06h19. He had a set of keys which allowed him entry
to the premises.
He says that he experienced some difficulty in unlocking and opening
the outer perimeter gate whereafter he found
the main door to the
premises unlocked.
[16]
Watson described how he then entered the premises through the front
door and established that the burglar alarm and CCTV system
had been
disarmed. Upon entering he immediately smelt petrol and when he
entered the factory area of the premises, there was a
strong odour of
petrol everywhere. He was met by a carefully constructed arson scene
with a number of plastic drums filled with
petrol strategically
suspended from the cable trays above the printing and other machines
in the factory area. Mr Leon Niemand,
a specialist fire investigator
who testified on behalf of Renasa, described the modus operandi
employed as one where the tops and
doors of the machines were left
open and the hanging drums were positioned more or less horizontally
by stringing them together
with fishing gut fed through holes drilled
in the bottom of the drums. This prevented the fuel in the drums from
spilling, but
once the gut would part the drums would swing into a
vertical position and spill the fuel onto the fire thereby destroying
or damaging
the printing and other valuable machines.
[17]
Watson testified that he had also noticed that the boot of his Audi
TT RS Quattro sports car, which he had parked in the factory
area on
7 January 2011, was open. On closer examination he found a
fuel-drenched cloth in the boot of the car. I should add that
this
sports car was less than a year old and was clearly a prized
possession of his.
[18]
According to Watson he was in a state of shock while surveying this
surreal scene. He established that the electricity supply
to the
machines had been cut by switching off the electrical circuit
breakers. He then decided to alert the police and found their
emergency number (10111) in the telephone directory. His telephone
records confirm that he phoned the emergency number at 06h32
and
members of the Elsies River Police Station were despatched to the
scene. Watson went outside to await the police who arrived
at the
premises at 06h45. Constables Sampson and Petersen were the police
members who attended the scene after they had received
notice of the
complaint at 06h34. They entered the premises with Watson and
surveyed the well-constructed arson scene in the factory.
They found
no one else on the premises nor any evidence of forced entry. They
confirmed that the burglar alarm and CCTV system
had been
disconnected.
[19]
The police witnesses also confirmed that Watson’s sports car
was parked in the factory area with its boot open. They
thought that
paraffin had been poured in the car while Watson was of the view that
it was diesel. After conferring, the constables
informed Watson that
they did not want him to remain at the premises and asked him to
follow them to the police station to open
a criminal case docket.
Watson and the police left the premises and he locked the door and
security gate. The tracker device in
his truck recorded him leaving
the premises at 07h00 for the nearby Elsies River Police Station
where he arrived at 07h03.
[20]
Upon leaving the premises, Constables Sampson and Petersen took no
steps to secure the scene nor did they ask Watson to arrange
private
security to do so. They did not cordon off the premises or the
building and apparently made no attempt to notify the fire
brigade or
any other emergency services of the potential fire threat.
[21]
At the police station Watson was kept waiting for a while before a
policewoman with a poor command of English took his statement.
She
warned him not to re-enter the premises as the forensic division of
the police would contact him to take fingerprints. He called
an
employee, Ms Ravenscroft, and instructed her to advise the other
employees that they should go home. This she did, except that
she
could not succeed in contacting one person, Mr George Mpumalani, an
employee who was still on his way to work.
[22]
Watson then returned to the premises where he arrived at 08h11. He
sat outside in his truck and soon thereafter Mr Mpumalani
arrived.
Watson advised him that there would be no work that day. Watson’s
understanding was that the police were now in
control of the scene
and would contact him when they needed access to the premises. He had
faith in the police to disarm what he
described as the ‘bomb’
at the premises and believed that they would do what was necessary.
He was very distraught
and needed to talk to someone, so he decided
to visit friends in Claremont with whom he normally stayed when he
was in Cape Town.
He left the premises at 08h19 and arrived at his
friends’ house in Claremont at 08h44. This was confirmed by Ms
Jessica Gaine
who testified that, upon his arrival, Watson was very
distressed. While Watson was there he received a telephone call from
his
business associate, Hampson, to say that the building on the
premises was on fire.
[23]
Watson returned to the premises where he arrived at 09h33. By then
the fire had been extinguished by members of the fire fighting
services which had been called to the scene. Mr Mark Bywater of
a neighbouring business noticed smoke coming out of the roof
of the
factory building on the premises and he used a forklift truck to
remove the motorised steel gate so that the fire department
could
gain access to the premises. Bywater testified that he telephoned
Hampson, with whom he was acquainted, to advise him of
the fire, but
upon breaking the news to him, Hampson seemed rather unconcerned. He
said that he thought that Hampson would have
acted a little more
shocked, but he did not. When, during cross-examination, Bywater was
asked about Hampson’s reaction he
said that ‘he was about
as calm as you are now’.
[24]
Mr Albertus Hanekom of the fire department testified that the call
reporting the fire had been received at the fire station
at 09h02 and
they responded immediately arriving at the premises at 09h10. They
had to force the office door open to gain entry
to the premises,
whereupon they discovered the fire in the factory section. He gained
the impression that there were multiple fires
and he noticed that all
the 25 litre plastic drums that had apparently been hanging from
ropes suspended from the cable trays,
had by then dropped to the
floor spilling fuel onto the fire. He immediately suspected arson and
upon extinguishing the fire, the
premises were handed over to Warrant
Officer Nimb of the SAPS who arrived on the scene at 10h50.
[25]
Warrant Officer Nimb formed the opinion that access to the scene was
gained by a person who had a key to the premises. It was
clear to him
that the motive was arson and his impression was that there had been
several separate fires on the scene. He was unable
to say how these
fires were caused nor was he able to say whether the fires were
started manually or by means of a delay device.
He confirmed that
Watson’s Audi sports car was parked in the factory area with an
open boot, in which there was a white cloth
which smelt strongly of
diesel. The premises were cordoned off by the police, although Watson
did testify that at the initial stage
the scene was crawling with
people, estimating there to have been at least 30 people inside the
premises. In the days after the
fire the scene was visited by a
number of expert witnesses, almost exclusively at the request of
Renasa. I will in due course refer
to their evidence and the
conclusions drawn by them from what they observed at the scene.
[26]
Against the above background, it was common cause between the parties
that the fire was as a result of arson. What Renasa set
out to prove
through their witnesses is that Watson was the arsonist. This
necessarily involved establishing how, on the probabilities,
Watson
would have initiated the fire. As emphasised by Van Blerk JA in
Taljaard v Sentrale Raad vir Koöperatiewe Assuransie Beperk
1974 (2) SA 450
(A) at 451A-B:
‘
Die
bewyslas het deurgaans by die respondent [the insurer] berus om ‘n
brandstigting te bewys en dat appellant [the insured]
die huis aan
die brand gesteek het. Die brandstigting en die identiteit van die
brandstigter is onderling afhanklik van mekaar.
Alhoewel daar nie ‘n
plig op die respondent gerus het om deur getuienis alle moontlike
oorsake van die brand uit te skakel
nie . . . moet hy die hof oortuig
dat sy verduideliking van hoe die brand ontstaan het die korrekte een
is . . . op grond dat dit
die mees aanneemlike en waarskynlikste is.
. . .’
[27]
With regard to the discharging of the onus on a balance of
probabilities Holmes JA said the following in
Ocean Accident and
Guarantee Corporation Limited v Koch
1963 (4) SA 147
(A) at
159B-C:
‘
As
to the balancing of probabilities, I agree with the remarks of Selke
J in Govan v Skidmore
1952 (1) SA 732
(N) at p 734, namely
“
.
. . in finding facts or making inferences in a civil case, it seems
to me that one may, as Wigmore conveys in his work on Evidence,
3
rd
ed, para 32, by balancing probabilities select a conclusion which
seems to be the more natural, or plausible, conclusion from amongst
several conceivable ones, even though that conclusion be not the only
reasonable one.”’
[28]
Renasa’s witnesses were unable to provide any clarity as to how
the fire started, and in particular, whether it was started
manually
or by means of some delay device. Ms A Burger (Burger), Renasa’s
primary fire expert and investigator agreed that
she could establish
no cause and no origin for the fire and that she was able to point to
a range of possible causes only. She
testified that there were
‘separate areas of fire where there is burning’. She
readily conceded that there was a multitude
of possibilities as to
how and where the fire started. Therefore she could not present the
court with a probable cause or the origin
of the fire. She was unable
to locate a delay device, although she agreed that one would normally
expect a fire investigator to
find such a device had it been used to
ignite the fire. She added, though, that in one per cent of cases a
delay device may not
be found and that this could be one of those
cases.
[29]
It appears from the evidence of Burger that Renasa had placed some
limitations on her investigation as to the cause and the
origin of
the fire. For example, she was only allowed to test two samples taken
from the areas where severe localised fire damage
was observed,
whilst she agreed that the better way of doing it would have been to
have sifted through the burnt material in search
of evidence of a
delay device. Be this as it may, the fact of the matter is that
Burger was unable to make any meaningful contribution
in determining
the probable cause or the origin of the fire.
[30]
Mr G B Vincent (Vincent), an independent loss adjuster, who was one
of the first on the scene on behalf of Renasa, testified
that there
were about nine ‘different manual points of ignition’,
but qualified this statement by adding ‘when
I say manual
ignition I am saying manual ignition as against spontaneous
combustion’. During cross-examination he explained
that his
understanding of ‘manual’ is that it involved someone
being there to light the fire. However, Vincent by his
own admission
is not a fire expert and his ‘opinion’ as to the manner
of ignition of the fire amounted to no more than
‘in my mind at
that stage they [the points of ignition] must have been manual’.
[31]
Mr I R Mumford (Mumford), an industrial engineer who testified on
behalf of Renasa, also speculated as to how the fire could
have
started, explaining that electricity could have been the source to
ignite a fire, eg by using a heating coil, but added that
there was
no evidence that electricity was used to start this fire. Mumford
alluded to internet articles regarding delay devices
used to ignite
fires, but readily conceded that he could not provide meaningful
assistance as he is ‘definitely not a fire
forensic expert’.
[32]
In the result the trial court found itself in a situation where, on
the evidence, there appeared to have been multiple points
of
ignition, or ‘seats’ of fire as suggested by Burger, that
were isolated from any electrical or heat source that
could act as
the medium for ignition. None of Renasa’s witnesses, including
Warrant Officer Nimb, could explain how, on the
probabilities, all
these fires were ignited and whether ignition was manual or by means
of a delay device.
[33]
This notwithstanding, counsel for Renasa submitted that Renasa had
proved that ignition was not manual, but by means of an
unknown and
unlocated delay device and that Watson was the arsonist who set the
device. To this end counsel employed a process
of inferential
reasoning by submitting that, apart from Watson, ‘there is
simply no-one else who would have used such a device
in order to
ignite the fire’ and the fact that no delay device was found
‘is testimony to the ingenuity of the arsonist
─ and
there was no-one who had shown more ingenuity during the course of
this trial than Mr Watson’. These are self-serving
submissions
unsupported by the evidence. Moreover, the reasoning is circuitous.
Significantly too, it was never put to Watson how
he is alleged to
have started the fire, whether manually or by means of a delay
device, nor when he is alleged to have ignited
the fire.
[34]
Above all Renasa was faced with the improbability ─ indeed the
illogicality ─ as to why, if Watson was the arsonist
who had
carefully prepared the scene and was ready to set the tinderbox
alight, he would summon the police thereby thwarting his
intention to
burn down the factory. Counsel for Renasa submitted that this was a
calculated move on the part of Watson, which he
described as ‘a
bold move to create an alibi’ and that had the police not left
the scene, Watson could ‘have
loudly proclaimed to the world
that [he] had saved his premises’.
[35]
I must confess that the logic of this submission escapes me. As held
by the court a quo, if Watson was the arsonist, he would
then have
had to gamble on the fact that the police, once called, would either
not arrive or would act contrary to their duties
and standing orders
by leaving the scene unsecured. To my mind, one would ordinarily
expect the police, when summoned to a scene
of this nature, to take
the necessary steps to manage the scene and prevent the flammable
liquid from being ignited. The phone
call to the police would
therefore effectively have thwarted his carefully planned operation
to burn the factory down. Such behaviour
would, in my opinion, make
no sense and it rather shows that Watson was not the arsonist. I
should also add that it was not put
to Watson in cross-examination
that he called the police in order to create an alibi for himself.
[36]
There is the further strange conduct on the part of Watson, if he was
the arsonist, to park his Audi in the building with the
intention of
having it destroyed by the fire. The evidence shows that he could
have sold the vehicle, had he chosen, in the market
for virtually the
same price that he had paid for it, yet he rather took the risk that
the insurer of the Audi (not Renasa) may
not compensate him for the
damage to the vehicle. Had he been short of funds he could have sold
it for close to R700 000 as
testified to by the sales manager of
the Audi Centre, Claremont, Cape Town. I should mention that,
immediately upon being paid
out by his insurer, Watson purchased a
similar vehicle. In view of the above, I agree with the conclusion of
the trial judge that
the inference that Watson started the fire and
placed his beloved Audi on the scene is not the more plausible. Quite
the contrary,
it is in fact illogical and untenable.
[37]
Counsel for Renasa placed much store on what he described as Watson’s
powerful motive to commit the arson. He submitted
that the financial
evidence showed that the business of Canterbury Coaters was in
decline, was unlikely to survive and at best
for Watson was barely
profitable. He also emphasised that should the claim succeed almost
the entire, very large, windfall generated
by the fire would accrue
to Watson. He was therefore the one person who could possibly have
benefited from the fire.
[38]
This submission is largely based upon the evidence of Ms D Ladopoulos
(Ladopoulos), an accountant who testified on behalf of
Renasa. An
analysis of her evidence, however, shows that the dark picture which
she sought to depict of the business of Canterbury
Coaters, was based
on a forward-looking viability analysis, coupled with her prediction
that at some point in the future the business
would run into
financial difficulty, which would only be deferred by funds derived
from the sale of the stock and the Audi vehicle.
However, it does not
appear to me that the financial evidence as a whole justified this
bleak prognosis, particularly when one
has regard to the concessions
made by Ladopoulus during cross-examination.
[39]
Ladopoulos conceded that, as at the date of the fire, Watson was
factually solvent with a nett asset value of approximately
R5
million, having assets of approximately R6,5 million and liabilities
of approximately R1,5 million. She further accepted that,
at the time
of the fire, Watson had access to funds of R1,4 million, made up of
the balance in his bond account, cash at the bank,
stock in the
factory and the Audi.
[40]
This resulted in the further concession by Ladopoulos that there were
no indications of commercial insolvency on the part of
Watson at the
time of the fire. All of his staff had been paid, he had taken
healthy drawings from the business, was the proud
owner of a new Audi
TT sports car, was living on a beautiful farm and had no liabilities,
save for a modest bond account. Nor did
he have any creditors of note
demanding payment from him. In addition, independent evidence showed
that a large order had been
placed with Canterbury Coaters to
commence in January 2011, which could not be proceeded with due to
the damage caused by the fire.
To this I should add that Watson’s
accountant, Mr Swanepoel, testified that he did not regard the
business as being
in any financial trouble at the time.
[41]
In my view, the financial evidence presented by Renasa falls well
short of proof that Watson had a motive to burn the factory
down due
to the precarious financial position of the business. On the
contrary, I am in agreement with the trial court that Ladopoulos
failed to take sufficient account of the overall financial position
of Watson over a number of years and that she placed insufficient
emphasis on the fact that he was not trading in insolvent
circumstances. The conduct of Watson following the fire, by being
prepared
to settle for second hand machines as he was keen to get his
factory up and running, also does not fit the profile of an arsonist
who was facing financial ruin or motivated by financial gain.
[42]
Finally, in this regard, I agree with the submission on behalf of
Watson, that it is difficult to accept that a commercially
solvent
businessman with a nett asset value of R5 million, including a
paid-up vehicle with a marketable value of R690 000,
cash in the
bank of R120 000, a debtors’ book of R560 000 and
stock worth R270 000, as well as a large order
waiting to be
completed early in the new year, would resort to complex fraud and
arson, rather than simply liquidating some of
his assets, if he
thought he was in need of funds.
[43]
It should be borne in mind that the trial judge found Watson to be a
credible witness. She had the opportunity of assessing
Watson’s
credibility as a witness over a period of seven days, which included
four and a half days under cross-examination
while he was
unrepresented. Counsel for Renasa submitted that the judge a quo had
misdirected herself in accepting Watson’s
evidence. However, in
her closely reasoned judgment the trial judge carefully considered
all the facts and circumstances relevant
to the reliability of Watson
as a witness, and I find no room for interfering with her finding in
this regard. As held by the court
a quo, Watson was certainly
argumentative, cautious and wary of being misinterpreted. I should
add that he was also rather verbose
in answering questions,
particularly under cross-examination. However, this does not
necessarily indicate a lack of honesty on
his part, but rather
appears to be, as held by the court below, ‘the conduct of a
man who had risked much in running a high
court trial against an
institutional opponent in circumstances in which it was clear that
Renasa had from early on fingered him
as the culprit’.
[44]
The trial judge concluded that the fire was probably ignited manually
and that the use of a delay device could be excluded
as no such
device was found. As recorded above, Renasa contends that the trial
court ought to have found that Watson was the arsonist
who started
the fire by means of a delay device. As I understood Renasa’s
case, Watson would have ignited the fire by means
of a remote delay
device after departing from the premises at 08h19, but not later than
09h02. In fact, it was submitted on behalf
of Renasa that it was
inconceivable that an arsonist would have risked manually igniting
the fire during this critical period (08h19-09h02)
on Monday 10
January 2011, the first day of work, in broad daylight with people
around, especially also after the police had already
attended the
scene. According to Renasa the fire could only have been ignited by
means of a delay device.
[45]
However, the difficulty facing Renasa is the lack of a factual basis
for the drawing of an inference that a delay device was
used to
ignite the fire and that Watson was the arsonist. There is simply no
evidence (whether direct or circumstantial or any
other probative
material) as to how the fire started (the source of the ignition);
where the fire started (the point(s) of ignition
or fire origin) and
at what time it ignited. In the absence of proof of these crucial
elements, the trial court correctly held
that, in weighing the
cumulative effect of all the proven facts, Renasa had not discharged
the onus of showing that Watson deliberately
set fire to the
premises, or that others with his knowledge or consent did so. It
follows that the court a quo correctly dismissed
Renasa’s
defence based on clause 8 of the General Conditions of the insurance
policy.
[46]
This brings me to Renasa’s alternative defence based on clause
5 of the insurance policy. It immediately strikes one
that the
factual premise of this defence is wholly at odds with that of the
main defence based on clause 8. In the case of the
latter, Renasa
contends that Watson was the arsonist who ignited the fire by means
of a delay device. The alternative defence,
however, is based on a
factual premise that the fire was ignited manually by an unknown
arsonist who had no connection with Watson,
and Watson is said to
have been at fault by failing to take reasonable steps to prevent the
arsonist from so doing. As recorded
earlier, the critical time
when Watson was supposed to have taken these steps was between the
time of his departure from the premises
at 08h19 and 09h02.
[47]
The case law dealing with the interpretation of provisions in
insurance contracts similar to clause 5, was considered by the
full
court in
Santam
Limited v CC Designing CC
1999
(4) SA 199
(C). It concluded that a clause of this nature should not
be construed as an exclusion of liability where the loss was caused
merely
by the negligence of the insured, but that proof of
recklessness is required. The court a quo, relying on this judgment
of the
full court, held that Renasa failed to prove recklessness on
the part of Watson and that the alternative defence could accordingly
not succeed. Counsel for Renasa submitted that the bar was set too
high by requiring Renasa to prove recklessness on the part of
Watson.
[48]
In view of the conclusion that I have reached on the alternative
defence, it is not necessary to consider whether or not the
full
court in
Santam
Limited v CC Designing CC
,
and accordingly the court a quo too, correctly interpreted clause 5.
Having regard to the wording of clause 5, it is at the very
least
clear that to require an insured to take steps to prevent a loss,
proof of foreseeability of loss eventuating is required.
This would
require proof that the reasonable person in the position of the
insured would have foreseen the reasonable possibility
of the loss
eventuating and would therefore have taken reasonable steps to
prevent same.
[49]
As recorded earlier, Renasa itself contends that it is inconceivable
that an unknown arsonist would have risked manually igniting
the fire
during this critical period. This proposition was put to Watson
during cross-examination and he agreed with it, as appears
from the
following extract of the record:
‘
.
. . it is inconceivable, and I put it that high, that he [the
arsonist] would have done it on the first day of work . . . between
8:30 and 9:30 ─ I would say it is inconceivable that anybody
would do that. I totally agree with you.’
[50]
It therefore became common cause that a reasonable person in the
position of Watson would not have foreseen, as a reasonable
possibility, that an unknown arsonist would have attempted to
manually ignite the fire after Watson’s departure from the
premises. It accordingly follows that a reasonable person would not
have foreseen, as a reasonable possibility, that his or her
conduct
in leaving the premises unattended during this period, would cause
loss to eventuate by virtue of the fire being ignited
manually by an
unknown arsonist. Therefore, in these circumstances, Watson could
hardly have been required to take steps to guard
against loss caused
by an eventuality which was inconceivable. I accordingly conclude
that the alternative defence of Renasa also
had to fail.
[51]
In the result the appeal is dismissed with costs.
________________________
P B FOURIE
ACTING JUDGE OF APPEAL
APPEARANCES:
For
Appellant:
R W F Macwilliam SC
Instructed
by:
Everinghams
Inc, Cape Town
Webbers,
Bloemfontein
For
Respondent:
A D Brown
Instructed
by:
De
Klerk and Van Gend Inc, Cape Town
McIntyre
and Van der Post, Bloemfontein