Concise Consulting Services (Pty) Limited v King Price Insurance Company Limited

• Jurisdiction: South Africa
• Judge: Joyini AJ
• Judgment Date: 09 May 2019
• Docket Number: A88/2018
• Court: Gauteng Division, Pretoria
• Hearing Date: 16 April 2019
• Citation: 2019 JDR 0969 (GP)

Joyini AJ:

[1]

This is an appeal in terms of Magistrate's Court Rule 51(3) read together with Uniform Court Rule 50 from the Magistrate's Court to the High Court of South Africa. The Appellant noted an appeal against the entire judgment. The Court started with the Appellant's application for

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condonation and for the re-instatement of the appeal. The Respondent did not object to the granting of the application and as such, it was granted.

BACKGROUND FACTS

[2]

The issues that arose for determination will be best understood against the background that follows. By way of summary, on 1 January 2014, the Appellany's Toyota Yaris (2008) motor vehicle (registration number XXXX) sustained damage during a collision with a wall. It was comprehensively insured by the Respondent. The driver at the time of the collision was Mr Sibusiso Ngobese who is both an employee of the Appellant and registered as being the regular driver of the said vehicle. After the Appellant had lodged the claim, he provided the Respondent (after being requested by the latter) with Mr Ngobese's contact details. On 17 January 2014, the Respondent repudiated the Appellant's claim alleging that, during the validation of the claim, it had come to the Respondent's attention that Mr Ngobese supplied the Respondent with false information about inter alia his whereabouts before and after the accident. The trial proceedings in the Court a quo were adjudicated upon by the Honourable Magistrate Tlale, on 7 November 2016, 6 February 2017, 28 March 2017, and 25 April 2017.

[3]

On 7 November 2017, the Court a quo handed down the judgment in which it was ordered that the Plaintiff's claim be dismissed with costs including costs of a Counsel. The said order was preceded by the following findings of the Court a quo:

3.1

Mr Ngobese was acting on behalf of the Plaintiff;

3.2

The information or representations made by Mr Ngobese formed part of the claim that was lodged by the Plaintiff;

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3.3

The information or representations made by Mr Ngobese were material;

3.4

The Plaintiff failed to show on a balance of probabilities that the Defendant's version was untrue;

3.5

The Defendant's version was true and the Plaintiff's version was false; and

3.6

The Defendant was indeed entitled to avoid the agreement of insurance.

ISSUES FOR DETERMINATION

[4]

Whether the Honourable Magistrate:

4.1

Erred in finding that the driver of the vehicle, Mr Ngobese, was acting on behalf of the Appellant;

4.2

Erred in finding that the information or representations made by the driver of the vehicle, Mr Ngobese, formed part of the claim that was lodged by the Appellant;

4.3

Failed to find that the Appellant was comprehensively insured by the Respondent, regardless of whether or not the driver of the vehicle, Mr Ngobese, had been candid about his route and the events of the evening of the day when the accident took place, the Respondent should have been obliged to honour the written insurance agreement;

4.4

Failed to restrictively interpret, the allegedly breached conditions upon which the Respondent's relied in support of the rejection of the Appellant's claim on the grounds of dishonesty;

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4.5

Erred in finding that the information or representation made by Mr Ngobese were material.

LAW

[5]

I agree with the Appellant that the finding by the Court a quo that " ... the information or representations made by Mr Ngobese were material", forms the basis of the Appellant's grounds for appeal. That is why I have decided to start with it.

South African law on materiality

[6]

In Strydom v Engen Petroleum Limited, [1] the insured had knowingly made a fraudulent statement aimed at showing that he had not been negligent in relation to the motor collision which had resulted in damage to his car. The fraudulent statement was, however, of no consequence, in that it did not affect the insurer's position to its prejudice and was therefore not material. It was not necessary for the insured to have made fraudulent statement in the first place because he was covered against his own negligence.

[7]

In Visser v 1Life Direct Insurance Limited, [2] the court correctly founded that the insurer failed to prove that the deceased had a material pre-existing medical condition that should have been disclosed. The aforementioned Insurance Acts say that a policy cannot be invalidated and an insurer cannot exclude or limit its obligations under a policy or increase the policyholders obligations under the policy due to a misrepresentation or non-disclosure unless it is material.

[8]

In Qilingele v South African Mutual Life, [3] the court considered whether the falsehood of the misrepresentation was such that it probably would have affected the assessment of the risk undertaken by the particular

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Insurer. This was done by comparing an assessment of the risk on the basis of facts distorted by the misrepresentation with what the assessment would have been on the facts had they been truly stated. In cases of this nature, the onus is on the insurer to prove a material misrepresentation. The onus arises from the general principle that the party who alleges something must prove it.

[9]

In Weber v. Santam Versekerings maatskappy Bpk. [4] it was held that the court does not in applying this test judge the issue of materiality from the point of view of a reasonable insurer. Nor is it judged from the point of view of a reasonable insured. The court judges it objectively from the point of view of the average prudent person or reasonable man. This reasonable man test is fair and just to both insurer and insured inasmuch as it does not give preference to one of them over the other. Both of them are treated on a par.

English law on materiality

[10]

In Versloot Dredging BV and Another (Appellants) v HDI Gerling Industrie Versicherung AG and Others (Respondents) [5] , the issue on this appeal was whether the insurers of a ship were entitled to repudiate liability on the ground that the insured had lied in the claim. The vessel DC MERWESTONE was incapacitated by a flood in her engine room. Her main engine was damaged beyond repair. The flood was caused by (i) the crew's negligence in failing to close the sea inlet valve in the emergency fire pumps, (ii) damage to the pumps, (iii) the negligence of previous contractors who had failed to seal bulkheads and (iv) defects in the engine room pumping system. The appellant owners presented an insurance claim to the respondent insurers for €3,241,310.60. They...