African Environmental Drilling CC v Almega Finansiele Dienste (47753/08) [2014] ZAGPPHC 473 (10 July 2014)

African Environmental Drilling CC v Almega Finansiele Dienste (47753/08) [2014] ZAGPPHC 473 (10 July 2014)

The court found that the applicant failed to prove the respondent's mandate was to procure insurance on the same terms as the Santam policy, as the relevant Santam contract was not in existence at the time of the mandate and no evidence was led regarding its terms. The Zurich policy's indemnification basis provided for payment of either the cost of replacement with similar property or the market value before destruction, whichever was lower, and did not require payout of the new replacement value. The court held that the average clause (awery) does not apply to total loss situations, only to partial loss, and thus Zurich's reduced payout was not contractually justified. The applicant...

Citation
[2014] ZAGPPHC 473
Parties
Applicant: African Environmental Drilling CC; Respondent: Almega Finansiele Dienste
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
10 July 2014
Case Number
47753/08
Procedural Posture
Civil Trial / Final Judgment
Outcome
Claim dismissed with costs.
Judges
C.P. Rabie
Legal Topics
Professional Negligence, Insurance Broker Liability, Underinsurance, Average Clause, Basis of Indemnification
Delict Commercial and Corporate Professional Negligence Insurance Broker Liability Underinsurance Average Clause Basis of Indemnification

Case Brief

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Parties

African Environmental Drilling CC

Applicant

Almega Finansiele Dienste

Respondent

Procedural Posture

Civil Trial / Final Judgment

Legal Issues

  1. 1 Whether the respondent breached its mandate as insurance broker to procure insurance on terms equivalent to the applicant's other policies.
  2. 2 Whether the respondent was negligent in failing to ensure the insured property was covered for its reasonable market value or purchase price.
  3. 3 Whether the principle of average (awery) applied to the insurance payout for total loss under the Zurich policy.

Ratio Decidendi

The court found that the applicant failed to prove the respondent's mandate was to procure insurance on the same terms as the Santam policy, as the relevant Santam contract was not in existence at the time of the mandate and no evidence was led regarding its terms. The Zurich policy's indemnification basis provided for payment of either the cost of replacement with similar property or the market value before destruction, whichever was lower, and did not require payout of the new replacement value. The court held that the average clause (awery) does not apply to total loss situations, only to partial loss, and thus Zurich's reduced payout was not contractually justified. The applicant...

Court Disposition

Claim dismissed with costs.

Orders

  • The applicant's claim is dismissed.
  • The applicant is ordered to pay the respondent's costs, including the costs of Senior Counsel.