Metcash Trading Ltd v Credit Guarantee Insurance Corporation of Africa Ltd

• Jurisdiction: South Africa
• Citation: 2004 (5) SA 520 (SCA)

Metcash Trading Ltd v Credit Guarantee Insurance Corporation of Africa Ltd
2004 (5) SA 520 (SCA)

2004 (5) SA p520

Citation	2004 (5) SA 520 (SCA)
Case No	96/2003
Court	Supreme Court of Appeal
Judge	Howie P, Brand JA, Lewis JA, Jones AJA and Southwood AJA
Heard	March 9, 2004
Judgment	March 25, 2004
Counsel	A Subel SC (with him W G la Grange) for the appellant.; A P Rubens SC (with him L N Harris) for the respondent.

Flynote : Sleutelwoorde C

Insurance — Policy — Interpretation of — Requirements regarding lodging of claim contained in operating condition of policy — Investment insurance policy — Contention that operating condition meaningless in that dates specified could not be related to identifiable dates E rejected — Interpretation adopted which rendered policy workable in practice and avoided absurd results.

Insurance — Policy — Interpretation of — Requirements regarding lodging of claim contained in operating condition of policy — Claim for indemnity — Whether claim required to be for specified F amount of money — Words 'any claim' referring to claim for indemnification by insured in terms of policy, and such claim to be for fixed or specific amount.

Headnote : Kopnota

The appellant held an interest in a business in Zaïre (Metro Zaïre) to whom it had made certain long and medium-term loans. In order to secure its investment the appellant arranged for insurance G cover for this interest and the loans ('the insured investment'). In the policy the respondent agreed that in the event of the appellant sustaining monetary loss in respect of the insured investment due to a 'cause of loss', the respondent would indemnify the appellant in the manner stipulated in the policy. Causes of loss were defined in the policy to include expropriation, war and transfer restrictions. On H 21 September 1991 the store where Metro Zaïre conducted its business was burned down and looted in circumstances falling within the policy definition of war. On 23 September 1991 the appellant's agent faxed a letter to the respondent informing the respondent that the Metro Zaïre store had been severely damaged and looted and recording 'our official notification of a pending claim, which will be raised as soon as details are received'. A number of meetings were I held thereafter between the parties and their agents and there was an extensive exchange of correspondence. Eventually on 1 October 1993 the appellant's agent delivered to the respondent a letter (dated 28 September 1993) in which the former claimed R72 000 for the loss of 'share capital' (in terms of definition 1.1.2 of the policy of the appellant's shareholding in Metro Zaïre) and R3 467 492,25 for the J

2004 (5) SA p521

long-term loan. The letter also informed the respondent that the appellant was still waiting for information relating to its A medium-term loan and would finalise that part of the claim as soon as that information had been received. On 3 October 1994 the respondent addressed a letter to the appellant informing the appellant that the respondent did not accept liability for the claim 'due to prescription' and referring the appellant to operating condition 12.2 read with definition 1.1.2. The appellant instituted B action under the policy, to which the respondent pleaded that it was not liable for the appellant's claim because it had not been lodged timeously as required by operating condition 12.2 read with operating condition 8 of the policy. In its replication the appellant averred that operating condition 12.2 was void for vagueness and that in any event it had lodged its claim timeously. The Court a quo rejected the appellant's contentions, upheld the defence C raised in the respondent's plea and dismissed the appellant's claims with costs. The appellant noted an appeal against that judgment. The policy provided in clause 8: 'A claim shall be considered for settlement: Where the Loss is due to expropriation or war 12 months after the occurrence of a Cause of Loss; Where the Loss is due to transfer restrictions immediately after the occurrence of the Cause of Loss.' It provided further in clause 12.2 'Nor shall the Corporation D be liable for any claim which is not lodged within a period of one year after the dates specified in Operating Condition 8.' The appellant's counsel contended, first that operating condition 12.2 was meaningless as 'the dates specified in Operating Condition 8' cannot be related to identifiable dates in operating condition 8 and accordingly that operating condition 12.2 was void for vagueness; and, secondly, that in E any event the appellant had lodged a claim timeously within the proper meaning of clause 12.2. The appellant's counsel argued further that in order to qualify as a claim in terms of the policy a demand did not need to require payment of any particular amount. All that was required was that there be a communication of the insured's assertion of its right to indemnity under the policy. That, according to the argument, took place on 23 September 1991 when the appellant's agent F notified the respondent of the occurrence of a cause of loss and informed the respondent that a claim would be made in terms of the policy.

Held, that it was clear that operating condition 8 specified two dates by reference to two events - the dates of consideration of claims under the policy. In terms of clause 8.1, where G the loss was due to expropriation or war, the date was 12 months after the occurrence of the cause of loss and in terms of clause 8.2, where the loss was due to transfer restrictions, the date of the occurrence of the cause of loss. There was therefore no difficulty about determining the dates specified in operating condition 8. (Paragraph [12] at 526J - 527E.) H

Held, further, when the two operating conditions were read together it was also clear that the relevant dates determined in clauses 8.1 and 8.2 were the dates from which a claim would be considered for settlement by the respondent. Operating condition 8 gave the insured the right to make or lodge a claim upon the occurrence of a cause of loss (ie immediately) but the insured is not obliged to do so. Operating condition 12.2 gave the insured a I period of 12 months from when the insurer became obliged to consider a claim, to lodge a claim. Where the loss was due to expropriation or war this period of 12 months ran from a date 12 months after the occurrence of J

2004 (5) SA p522

the cause of loss (ie the insured had a period of 24 months within which to lodge a claim) and where the loss was due to transfer A restrictions, this period of 12 months ran from the date of the occurrence of the cause of loss (ie the insured has a period of 12 months within which to lodge a claim). (Paragraph [13] at 527E/F - H.)

Held, further, that the insurer could clearly consider a claim only after it had been lodged. A claim falling under clause 8.1 could be lodged at any time within 12 months after the occurrence B causing loss but the insurer would not be obliged to consider the claim until 12 months after the date of the occurrence causing loss. If such a claim was lodged after 12 months had elapsed the insurer would be obliged to consider the claim immediately. A claim falling under clause 8.2 had to be considered as soon as it was lodged. This interpretation made the policy workable in practice and avoided the absurd result contended for by the appellant's counsel. (Paragraph [13] at 527H - I/J.)

Held, further, as to the contention that a claim need not be for a specific amount, that the words 'any claim' referred to a claim C for indemnification by the insured in terms of the policy, and that such claim for indemnification had to be for a fixed or specific amount. (Paragraph [16] at 528G/H - I.)

Held, further, that the appellant had failed to lodge with the respondent a demand for an indemnity in a particular amount before 21 September 1993: the first demand for an indemnity in a particular amount was contained in the letter addressed to the D respondent on 28 September 1993 and was received by the respondent on 1 October 1993. (Paragraph [17] at 528I - J.)

Held, accordingly, that the appeal had to be dismissed.

Cases Considered

Annotations

Reported cases E

Aktiebolaget Hässle and Another v Triomed (Pty) Ltd 2003 (1) SA 155 (SCA): referred to

Blackshaws (Pty) Ltd v Constantia Insurance Co Ltd 1983 (1) SA 120 (A)...