Estate Jonker v Liverpool & London & Globe Insurance Co Ltd

• Jurisdiction: South Africa
• Citation: 1931 AD 340

Estate Jonker Appellant v Liverpool & London & Globe Insurance Co Ltd Respondent
1931 AD 340

1931 AD p340

Citation	1931 AD 340
Court	Appellate Division
Judge	De Villiers CJ, Wessels JA, Curlewis JA, Stratford JA and Roos JA
Heard	April 21, 1931
Judgment	May 5, 1931

Flynote : Sleutelwoorde

Insurance — Action to be brought within three months of rejection of claim or award of arbitrator — Construction of policy — Rejection by insurer are dispute as to amount — Duty of insured to sue or claim arbitration within period — Insolvency of insured — Whether interruption.

Headnote : Kopnota

Appellant, the trustee in the insolvent estate of an insured, claimed in his declaration an amount alleged to be due under a policy of fire insurance. The respondent insurance company pleaded inter alia that it had by letter rejected the claim on 27th September, 1929, and that no action was commenced within three months of such rejection, relying upon clause 12 of the policy, which provided that "if the claim be made and rejected and an action or suit be not commenced within three months after such rejection, or (in case of an arbitration taking place in pursuance of the 17th condition of this policy) within three months after the arbitrators or umpire shall have made their award, all benefit under this policy shall be forfeited." To this plea the appellant replicated admitting that the respondent had rejected the claim on the ground of arson and fraud, but said that in the same letter it had also disputed the amount of loss or damage; that clause 17 of the, policy provided that "if any difference arises as to the amount of any loss or damage... such difference shall independently of all other questions be referred to the decision of an arbitrator. and it is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this policy, that the award by such arbitrator. . . of the amount of the loss or damage if disputed shall be first obtained," that on 24th March, 1930, the respondent by letter waived compliance with the, said clause 17 and the period of three months only ran from the date of such waiver and that in any event the insured became insolvent in December, 1929, six days before the three months expired, and that the period wait thereby extended to include a reasonable time after the trustee had receive instructions. A Provincial Division having allowed an exception to this replication.

Held, on appeal, assuming in favour of the appellant that the condition as to arbitration was not abrogated by the respondent's rejection of the claim on the ground of arson and fraud, that the three months ran from the, date of the rejection of the claim and not from the date of the waiver inasmuch as nothing short of an arbitration taking place in pursuance of clause 17 would serve to interrupt the period of three months, and the insured had taken no steps to have an arbitration within that period.

Held, further, that the insolvency of the insured did not interrupt the period of three months, and that the exception to the replication had rightly been allowed.

The decision of the Cape Provincial Division in Estate Jonker v Liverpool London & Globe Insurance Co., Ltd., confirmed.

1931 AD p341

Case Information

Appeal from a decision of the Cape Provincial Division (GARDINER, J. P., and WATERMEYER, J.).

The facts appear from the judgment of STRATFORD, J.A.

C. Newton Thompson, for the appellant: The claim referred to in clause 12 as being rejected is one which can be sued on at once, i.e., one in which the dispute as to the amount of damage has been determined by arbitration under clause 17. The three months could not begin to run till the company had waived the right to have the amount settled by arbitration. See le Voy v New Zealand Insurance Co. Ltd. (1930 CPD 427); de Wet v Kuhn (1910 CPD 263 at p. 267) and May on Insurance (sec. 479).

Alternatively the trustee has a reasonable time after he has received directions from the creditors at the second meeting within which to bring the action, as the general effect of the Insolvency Act is that a trustee shall not bring any disputed action until after he has received instructions at the second meeting. The effect of sequestration is to vest all claims which the insolvent has, in his trustee. See sec. 19 of Act 32 of 1916. If such claim arises out of a contract which contains a time limit the limitation is impliedly suspended by the Act. Reading sec. 19 (b) with sec. 74 (c) the effect is that all civil proceedings other than those excepted are staved until the appointment of a trustee and time has to be allowed for directions from the creditors. A trustee is not necessarily bound by a contract to the same extent as the insolvent, e.g., a trustee has been held not to be bound by a proviso in a lease prohibiting assignment without the landlord's consent. See Hermann v Klempman and Another (1922 W.L.D. 115); and Stalson v Brook (1922 W.L.D. 143). See also Naude's Executor v Maritz and Others (12 C.T.R. 216); Voet (44.3.11 in fin.); Grotius (Maasdorp's trans. 3.46.4); Schorer's (Note 516); Goudsmit's Pandects (Gould's trans., p. 292); Damhouder's Opera Omnia (Ch. 137, paras. 31, 32, 36 and 38 on p. 266 and p. 275, second last para.).

As to meaning of the word "claim" see Stroud's Judicial Dictionary s.v. "claim"; MacGillivray on Insurance Law (1912 ed., pp. 906-13) and May on Insurance (4th ed., para. 479) and as to meaning of word "suit" see para. 489.

Limitations are strictly construed - see May (para. 491). In case of doubt, i.e., if a policy is not clear, it must be construed against the company. See Littlejohn v Norwich Union Insurance Co.

1931 AD p342

(1905 T.H. 382) and cases collected in British and Empire Digest (vol. 29 and especially Nos. 24 and 25). The exceptions which were overruled in the court below cannot be argued now because there is no cross-appeal and secondly because an order overruling an exception is interlocutory and leave must be obtained from the court below. See Blaauwbosch Diamonds v Union Government (1915 AD 599) W. H. Mars, K.C. (with him A. J. Pienaar), for the respondent: The replication started a new case and was therefore vague and embarrassing.

The editions of MacGillivray and May on Insurance are out of date, as Jureidini v National British Insurance Co. (1915, A.C. 499) on the interpretation of clauses 12 and has been decided since.

There was only one exception and five reasons were given for it. As respondent succeeded on the exception I can argue any of the grounds. See Commissioner of Customs v Airton Timber Co. Ltd. (1926 AD at pp. 10-11).

Para. 1 of the replication in admitting the cancellation of another policy contains no answer to the plea para. 2, because the facts alleged were material to he disclosed. See Fine v General Assurance Co. Ltd. (1915 AD 213 at pp. 218, 219, 220, 221) and Colonial Industries Ltd. v Provincial Insurance Co. Ltd. (1922-9 AD 33 at pp. 40-2).

The rejection of the claim in toto on whatever ground is tantamount to Repudiation of the claim and the provisions of clause 17 of the policy making arbitration a condition precedent to any right of action ceased to be of effect after rejection. See Jureidini's case (supra) and Hurwitz's Trustee v Magdeburg Fire Insurance Co. (1917 T.P.D. 443 at pp. 447-8, 451-2). The words in brackets in clause 12 are meaningless in view of the decision in the former case. Those words only apply when there is a dispute as to the amount.

Alternatively the true construction of clauses 12 and 17 is that it was the duty of the person seeking to sue on the policy either to sue or nominate an arbitrator within three months of the date of rejection, because going before the arbitrator is part of the suit on the policy.

The sequestration of Jonker's estate did not interrupt the running of the three months. In any case the Insolvency Act provides for

1931 AD p343

the Appointment of a provisional trustee in cases of urgency; all that was required of him was to issue summons and then take the instructions of creditors. See sec. 67 of Act 32 of 1916, Naude's Executors v Vermaak's Heirs (19 C.S.C. 171); Homfray v Scroope (13 Q.B. 512 and 116 E.R. 1357).

Newton-Thompson, in reply: Jureidini's case is distinguishable because the latter part of clause 12 was not construed. There was no...