Hollard Insurance Company Ltd v Unitrans Fuel and Chemical (Pty) Ltd and Another (A5052/2010) [2012] ZAGPJHC 87 (8 May 2012)

REPORTABLE

SOUTH GAUTENG HIGH COURT, JOHANNESBURG

CASE NO: A5052/2010

DATE:08/05/2012

In the matter between:

THE HOLLARD INSURANCE COMPANY LIMITED....................................Appellant

and

UNITRANS FUEL AND CHEMICAL (PTY) LIMITED...................................First Respondent

KLIPSTONE TRANSPORT (PTY) LIMITED.................................................Second Respondent

J U D G M E N T

VICTOR J

[1] The appellant is the insurer of a Mercedes Benz truck tractor with registration number HJB 422 GP, “the truck tractor”. A collision occurred between it and the first respondent’s vehicle.

[2] The matter first came before Gildenhys J in May 2006. The parties in those proceedings were Snyman Vervoer (represented in that trial by the liquidator) and Unitrans Fuel and Chemicals Pty Ltd, the first respondent in these proceedings. The only issue for determination was the question of negligence.

[3] On 18 May 2006 the respondents were successful in asserting that Snyman Vervoer’s driver was negligent. The appellant was not a party to those proceedings. Of importance is the agreement noted by Gildehuys J in his judgement that the parties agreed the vicarious liability of their respective drivers and only the question of negligence had to be determined. In the result, the question of vicarious liability was not a justiciable issue in that trial.

[4] Based on that victory the respondents instituted an action against the appellant on the basis that the appellant was the insurer of the truck tractor and was therefore obliged to indemnify them as third parties arising out the negligence of the entity in liquidation being Snymans Vervoer. The trial came before the court a quo. The respondents’ assertion that the appellant was liable to indemnify them as a third party arising out of Snyman Vervoer’s insolvency was successful.

[5] The appellant appeals that decision. The issues raised in the appeal can be crystallized into four issues: firstly whether the truck tractor was being driven by the driver of Snyman Vervoer on the order of the insured, Omnipact SA Investments 91 Pty Ltd “Omnipact” as required by the contract of insurance and secondly whether the contractual provisions of the insurance agreement had been complied with. Thirdly whether the appellant’s liability had been determined in the trial before Gildenhys J and thus the appellant was estopped on the question of vicarious liability by virtue of issue Estoppel or res judicata. Fourthly whether the provisions of Section 156 of the Insolvency Act No. 24 of 1936 (“the Act”) apply.

[6] On behalf of the appellant it was submitted that the evidence unequivocally demonstrated that the vehicle was not been driven on the order of Omnipact and that there had not been compliance with the terms of the insurance contract.

INDEMNIFICATION BY INSURER IN CIRCUMSTANCES WHERE THE INSURED IS SEQUESTARTED

[7] It is trite law that an insurer can be held liable to a third party if the insured has been liquidated or sequestrated as the case may be. S 156 of the Insolvency Act provides that:

Whenever any person is obliged to indemnify another person in respect of any liability incurred by the insured towards a third party, the latter shall on the sequestration of the estate of the insured, be entitled to recover from the insured the amount of the insured’s liability towards the third party but not exceeding the maximum amount for which the insurer has bound himself to indemnify the insured.’

[8] As stated in Unitrans Freight (Pty) Ltd v Santam Ltd 2004 (6) SA 21 (SCA) at para 7

“[7] The section does not add to the contractual liability of an insurer. It merely allows a person who is not a party to the policy of insurance to recover directly from the insurer in particular circumstances. It entitles a person who has a claim against someone who is indemnified against such liability by an insurer to pursue the claim directly against the insurer if the estate of the indemnified person is sequestrated.”

[9] Upon a proper application of s 156 of the Insolvency Act it is still necessary to show that there is a good claim in law against the insolvent and that the insurer is obliged in law to indemnify the insolvent entity against the claim. See Le Roux v Standard General Versekeringsmaatskappy BPK 2000 (4) SA 1035 (SCA) at para [7]. The sole benefit enacted by s156 of the Insolvency Act is to give a third party a direct right of action against the insurer. That is where the benefit ceases.

[10] In Coetzee v Attorney's Insurance Indemnity Fund 2003 (1) SA 1 (SCA) para [20]), it was clearly held that the claimant would have to prove that the insured would have succeeded against the insurer in his claim for an indemnity.

[11] Heher JA in Coetzee supra referred to the well established principles by Schutz JA in Woodley v Guardian Assurance Co of SA Ltd 1976 (1) SA 758 (W) at 759E - H and Van Schalkwyk J in Canadian Superior Oil Ltd v Concord Insurance Co Ltd (formerly INA Insurance Co Ltd) 1992 (4) SA 263 (W) at 273H - 274B :

'What the third party can recover, however, and whether the third party's claim is of such a kind as is covered by the indemnity conferred upon the insured, are matters which have to be determined by reference to the contract of insurance. If the liability is not of the kind covered by the indemnity provided by the insurer, then, it stands to reason, there will be no liability upon the insurer to the third party. So also, if the liability is of a kind for which the contract of insurance makes provision subject to a condition, the insurer will only be obliged to pay if the condition has been fulfilled.'

[12] The court a quo found that the truck tractor was being driven for and on behalf of an entity known as Snyman Vervoer CC (in liquidation) on the order of or with the permission of another entity known as Omnipact. This finding included on an acceptance of the judgement of Gildenhys J where the question of vicarious liability was not traversed as a justiciable issue.

[13] On a close analysis of the evidence in the court a quo I find that the evidence led in the trial in the court a quo was contrary to the finding that the insured vehicle was driven on the order of Omnipact. The evidence in this regard was neither vague nor unclear.

[14] Having stated the legal principles above one of the dispositive issues in this appeal is whether the lack of compliance with the provisions of the Contract of Insurance brings the Appellant’s liability within the provisions of S156 of the Insolvency Act.