Pretcor v Ekermans (13/2006) [2007] ZANWHC 49 (20 September 2007)

IN THE HIGH COURT

OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)

CIVIL APPEAL NO: 13/2006

In the matter between:

PRETCOR

Appellant

and

ELBRED

SIMON EKERMANS Respondent

CIVIL APPEAL

LEEUW J: SWART AJ

DATE OF HEARING : 10 AUGUST 2007

DATE OF JUDGMENT : 20 SEPTEMBER 2007

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COUNSEL

FOR THE APPELLANT : ADV G DIAMOND

COUNSEL

FOR THE RESPONDENT : ADV G J SCHEEPERS

JUDGMENT

SWART AJ:

[1] This matter comes before the Court by way of an appeal from the Magistrates Court, Coligny, in an action in which the Appellant was the Defendant and Respondent was the Plaintiff. I shall refer to the parties as the Plaintiff and the Defendant.

[2] The action related to the repudiation of an insurance claim lodged with SA Eagle Insurance Company (SA Eagle) by Plaintiff. Plaintiff claimed that Respondent was his broker and in terms of an oral agreement, Defendant undertook to enter into a contract of insurance with SA Eagle on his behalf.

[3] He alleged that Defendant undertook to ensure that all relevant documentation relating to the contract so entered into with SA Eagle would be properly completed and that the necessary and relevant information be correctly and accurately disclosed to SA Eagle.

[4] He alleged further that Defendant undertook to ensure that Plaintiff’s vehicles, including an Isuzu KB light delivery vehicle (Isuzu) would be properly insured.

[5] Plaintiff claimed that Defendant breached the agreement in that he neglected to handle the application for insurance with proper care in that he inter alia neglected to ensure that the Isuzu was properly insured.

[6] The Isuzu was stolen and Plaintiff lodged a claim with SA Eagle, who repudiated the claim on the basis that the Isuzu was not insured (and/or specified for the use thereof for purposes of business, as it was stolen whilst Plaintiff used it for purposes of business).

[7] Plaintiff therefore claimed an order directing the Defendant to pay the amount of R13 500-00 (thirteen thousand five hundred rand), being damages he suffered as a result of Defendant’s alleged breach of contract, together with costs. He succeeded in this action and this appeal is brought by the Defendant in consequence of the decision of the Magistrate.

[8] Although various issues were raised on the merits, counsel for the Plaintiff conceded that the actual issue on the merits revolves around the application for insurance and more specifically whether Plaintiff proved that he had mandated Defendant to insure the Isuzu for the purpose of using it for business. He further conceded that should this Court find that Plaintiff did not prove that he mandated Defendant to insure the Isuzu for business use, the appeal must succeed.

[9] As a result I deem it necessary to investigate the circumstances at the time that Plaintiff applied for insurance through a representative of Defendant.

[10] It is common cause that during a visit by Defendant’s representative, one Oosthuizen, two different application forms were completed by Oosthuizen in the presence of Plaintiff and on information obtained from Plaintiff. The one application form was for a policy of insurance for Plaintiff’s business assets and the other was for his private assets. Plaintiff subsequently signed both application forms.

[11] The Plaintiff inter alia testified that Oosthuizen:-

“Hy het gevra wat wou ek alles laat verseker. Hy het na die vorige polis gekyk… Ek het gesê die Isuzu is my besigheidsvoertuig en die Maxima moet vir my woning verseker word…”

[12] On the question raised by the Magistrate he replied:-

“Die bakkie was tevore verseker vir besigheidsdoeleindes. Die vorige polis het Kobus deurgekyk.”

[13] In cross-examination the Plaintiff was questioned about the two applications as follows:-

“V: U het getuig u het 2 aansoeke geteken.

A: Ja.

V: 1 is persoonlike polis en 1 ‘n besigheidspolis.

…….

V: Die aansoeke is in u kantoor voltooi.

V: U is teenwoordig tydens die voltooiing.

V: U gee die inligting vir die voltooiing.

V: Dit is voltooi a.g.v. u inligting.

V: Die volledigheid van die dokument, dit was volledig voltooi toe u teken.

……

V: Die skedule van die versekerde voertuie.

V: U gee inligting.

V: Dit was uitsluitlik inligting binne u kennis.

A: Ja”

[14] In further cross-examination he testified that no vehicle was specified for business use when applications were filled in. When he was confronted with the fact that to his own knowledge the applications were incorrect, yet he signed the incorrect applications for insurance he replied inter alia:-

“Ek het gedink hy gaan dit skei…

Onder indruk sal geskei word.”

[15] When confronted with his previous evidence to the effect that the vehicle was previously insured for business purposes, he completely changed his version by testifying:-

“Nie versekering op bakkie gehad nie … Finansies nie goed nie, en nie nodig nie…”

[16] The following passage relating to his evidence is also relevant:-

“V: Uit u getuienis, bakkie altyd vir besigheid gebruik u vir Kobus so gesê. Duidelik u weet ‘n voertuig vir besigheid gebruik moet so gespesifiseer word.

V: Verskil tussen privaat en besigheids- versekering.

A: Neem aan risiko is hoer.

V: Beskou as belangrike feit wat u moes openbaar by die aansoek.

A: Ja.”

[17] The learned Magistrate made the following finding on facts proven:-

“Dit is op ‘n oorwig van waarskynlikhede bewys dat:-

…..

Die verweerder bewus was of moes gewees het dat die betrokke voertuig uitsluitlik vir besiheidsdoeleindes gebruik was;

In die lig van [9], [17] en [30] word bevind dat die verweerder se getuie nie vir eiser geadviseer het oor versekering van sy voertuig vir besigheidsdoeleindes nie, maar dat die eiser ook nie hiervoor gevra het nie.”

[18] I can find no factual basis whatsoever for the Magistrate’s finding that the Defendant should have known that the Isuzu was used solely for business purposes, especially in view of his finding on the facts that such use and the insurance thereof was never discussed or mentioned by any of the parties.

[19] In view of Plaintiff’s contradictory evidence I can find no fault with the Magistrate’s finding that Plaintiff did not request that the Isuzu be insured for business purposes.

[20] The learned Magistrate also came to the following conclusion in paragraph 9.6 of his judgment:-

“9.6 Die eiser se getuienis kan nie uitgelê word as dat hy tydens ondertekening van die aansoek bewus was dat die gebruiksbeskrywing foutief was nie.”

[21] I disagree with the learned Magistrate. As indicated herein in paragraph [14], Plaintiff, on the assumption that it was incorrect, was fully aware thereof.

[22] The fact that two separate applications were made is a clear indication that Plaintiff intended a distinction to be made between assets to be insured for business purposes and assets to be insured for private purposes. The further fact that Plaintiff was aware that the Isuzu was indicated on the application form for private purposes before signing it lead to the probable inference that the Defendant was mandated to insure it for private use.

[23] The Plaintiff, knowing that the Isuzu was indicated on the application form for private purposes, and not with his business assets in the second application, signed the application forms as was completed without raising any objection that it is incorrect. In my view he confirmed the correctness thereof by affixing his signature thereto, and thus mandating the Defendant to insure the Isuzu for private use.

[24] The legal duty owed by a broker to his client has been described in Leanerts v JSN Motors (Pty) Ltd and Another 2001 (4) SA 1100 (WLD) on 1108 F-J as follows:-

“On general principles it seems clear enough that the position in South African law is that an insurance broker performs a mandate on behalf of the insured. Accordingly, he/she owes the insured a duty to exercise reasonable care and skill in the execution of the mandate… This is the fundamental quality of the general duty owed. It stands to reason that in order to perform the general duty the broker will have to take reasonable steps, depending on the circumstances.

The nature of the steps to be taken will differ from case to case. Some of these steps have judicially been identified by the English Courts (which recognise the same fundamental duty by the broker) to include the following:-

[i] He must ascertain his client’s needs by instruction or otherwise;

[ii] he must use reasonable skill and care to procure the cover which his client has asked for, either expressly or by necessary implication…

(The “Superhills Cover case [1990] 2 Lloyds” Rep 431 (QB) at 445.)”

On 1109 A-D it was also described as follows:-

“The ordinary function of the insurance broker or other intermediary is to receive instructions from his principal as to the nature of the risk or risks and the rate or rates of premium at which he wishes to insure, to communicate the material facts to the potential insurers and to obtain insurance for his principal in accordance with his principal’s instructions and on the best terms available. The liability of an insurance agent to his employer for negligence is comparable to that of any agent. He is bound to exercise reasonable care in the duties which he has undertaken. In no case does the law require an extraordinary degree of skill on the part of the agent but only such a reasonable and ordinary degree as a person of average capacity and ordinary ability in his situation and profession might fairly be expected to ………….

The precise extent of the insurance intermediary’s duties must depend in the last resort on the circumstances of the particular case, including the particular instructions which he has received from his client. In many cases those duties will include advising his client on the type of insurance best suited to his requirements and, subject to his client’s instructions, exercising reasonable care to obtain insurance which will best meet those requirements.”

(Emphasis added.)

[25] I am of the view that the circumstances clearly show that the Defendant was instructed to insure the Isuzu for private purposes. The Plaintiff by signing the application form as such confirmed his instruction. By subsequently obtaining insurance in accordance with the instructions, the Defendant performed the mandate.

[26] The Plaintiff, on his version, knowing that the application form was incorrect and failing to draw the broker’s attention thereto, was the cause of the loss, and not the Defendant not performing its mandate. The Plaintiff has only himself to blame.

[27] For these reasons I am of the view that the Magistrate erred in his finding in favour of the Plaintiff, and the following order is made:-

[a] The appeal is allowed with costs.

[b] The order of the Magistrate is set aside and is substituted with the following:-

“Plaintiff’s action is dismissed with costs.”

A

J SWART

ACTING

JUDGE OF THE HIGH COURT

I agree.

M M LEEUW

JUDGE OF THE HIGH COURT

ATTORNEYS FOR THE APPELLANT: SMIT STANTON INC.