Penderis and Gutman NNO v Liquidators Short-Term Business AA Mutual Insurance Association Ltd (93/91) [1992] ZASCA 178; 1992 (4) SA 836 (AD); [1992] 2 All SA 505 (A) (28 September 1992)

Penderis and Gutman NNO v Liquidators Short-Term Business AA Mutual Insurance Association Ltd (93/91) [1992] ZASCA 178; 1992 (4) SA 836 (AD); [1992] 2 All SA 505 (A) (28 September 1992)

The Supreme Court of Appeal held that the respondents failed to discharge the onus of proving that the insurance cover ceased due to dishonour of the debit order for lack of funds as required by clause 13 of the policy. The dishonour resulted from the bank's unilateral freezing of the overdraft facility, not from an actual absence of funds in the insured's account. The respondents did not plead or prove any contractual term entitling the bank to suspend the overdraft without notice upon destruction of the hypothecated goods. The terms of the bond did not provide for such a right, and the evidence presented was contradictory and unreliable. The court found that the insurer, as drafter of...

Citation
[1992] ZASCA 178
Parties
Appellant: C M Penderis and Solomon Gutman NNO; Respondent: Liquidators Short-Term Business, AA Mutual Insurance Association Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
28 September 1992
Case Number
93/91
Procedural Posture
Civil Appeal / Appeal From the Court a Quo; Judgment Delivered
Outcome
Appeal upheld; declaratory order granted in favour of appellants; insurer liable to indemnify under the policy.
Judges
Botha, Goldstone, Van den Heever, Van Coller, Harms
Legal Topics
Insurance Contracts, Burden of Proof, Interpretation of Contracts, Banking Practices
Commercial and Corporate Civil Procedure Insurance Contracts Burden of Proof Interpretation of Contracts Banking Practices

Case Brief

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Parties

C M Penderis and Solomon Gutman NNO

Appellant

Liquidators Short-Term Business, AA Mutual Insurance Association Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From the Court a Quo; Judgment Delivered

Legal Issues

  1. 1 Whether the insurance policy was in force at the time of the fire on 1 October 1985.
  2. 2 Whether the dishonour of the debit order was due to lack of funds as contemplated by clause 13 of the policy.
  3. 3 Whether the bank was entitled to suspend the insured's overdraft facility without notice upon destruction of the hypothecated goods.

Ratio Decidendi

The Supreme Court of Appeal held that the respondents failed to discharge the onus of proving that the insurance cover ceased due to dishonour of the debit order for lack of funds as required by clause 13 of the policy. The dishonour resulted from the bank's unilateral freezing of the overdraft facility, not from an actual absence of funds in the insured's account. The respondents did not plead or prove any contractual term entitling the bank to suspend the overdraft without notice upon destruction of the hypothecated goods. The terms of the bond did not provide for such a right, and the evidence presented was contradictory and unreliable. The court found that the insurer, as drafter of...

Court Disposition

Appeal upheld; declaratory order granted in favour of appellants; insurer liable to indemnify under the policy.

Orders

  • The appeal is upheld.
  • It is declared that the insurance policy was of full force and effect on 1 October 1985 when the fire occurred and that the first defendant is liable to indemnify the plaintiffs in accordance with the provisions of the policy.