Rippel v ABSA Brokers (Pty) Ltd (3198/2009) [2009] ZAKZDHC 49 (30 October 2009)

13

NOT

REPORTABLE

IN THE KWAZULU NATAL HIGH COURT,

DURBAN

REPUBLIC OF SOUTH AFRICA

CASE NO: 3198/2009

In the matter between:

DIETHARD RIPPEL

PLAINTIFF

and

ABSA BROKERS (PTY) LTD

DEFENDANT

JUDGMENT

GORVEN J

[1] The Plaintiff is a businessman who, during October 2005, was the longstanding managing director of a chemical company. For the past 20 or so years he had been provided with a company car. He had never before purchased a vehicle. He was about to leave the company and was, on 27 October, celebrating a birthday. On 25 October he approached NMI Umhlanga (“the dealership”) and selected an almost new vehicle. As a private banking client of ABSA Bank Limited he approached it for finance and signed the relevant finance application form (“the finance application”). He was told that, before he took delivery, he needed to have comprehensive insurance cover for the vehicle. It was arranged that he would be contacted by an employee of the defendant for that purpose. Since 27 October was his birthday, the vehicle would be ready to collect that afternoon from the dealership where he would sign the required car lease and insurance documents.

[2] That afternoon he was taken to the dealership by one David Beattie, a person he had known as a private banker and who had become his friend. He signed documents relating to the lease of the vehicle with one Gilda Horn (“Horn”) from ABSA Bank Limited, and those relating to insurance with one Angelique du Bois (“du Bois”). He thereafter drove off in the vehicle.

[3] The document signed by him relating to insurance is what has been termed a Short Term Product Evaluation Proposal Report (“the proposal”). This is a 10 page document which had been printed beforehand by du Bois. He also signed the client declaration on a form known as a FAIS Disclosure Record. On page 2 of the proposal it is reflected that no claims had been made in the last 36 months. It is common cause that this information is incorrect since he had been involved in a motor accident on 3 December 2004 in the company vehicle and a claim had been lodged on behalf of the company.

[4] On 5 August 2008 the vehicle purchased by the plaintiff was involved in a collision. The insurance had been placed with ABSA Insurance Co Ltd (“the insurance company”). On receipt of the claim the insurance company repudiated on the basis that the plaintiff had had a claim in the 36 months prior to signing the proposal. It is accepted by both parties that the insurance company was entitled to repudiate the claim.

[5] The plaintiff sued the defendant for damages claiming a breach of contract. It is common cause that the defendant undertook to procure comprehensive short term insurance for the plaintiff in respect of the vehicle. Only one term to this contract was pleaded, an implied term to the effect that the defendant would perform that mandate with reasonable care and skill and without negligence. It was accepted by the defendant that this obligation rested on it. The breach was pleaded as a failure to do one or more of the following, namely:

1. Ensure that all material information was disclosed to the insurance company.

2. Ensure that no incorrect information was given to the insurance company.

3. Warn the plaintiff to disclose all material information and of the consequences of failing to do so.

4. Assist the plaintiff to disclose all material information.

[6] The plaintiff gave evidence and called David Beattie as a witness. The plaintiff said that, prior to meeting with du Bois at the dealership in the mid to late afternoon of 27 October to sign the proposal, he does not recall speaking to her on the telephone. He was adamant that, even if he had spoken to her on the telephone, he would not have told her that he had not made a claim in the past 36 months. He stated that, at the dealership, he was not taken through the proposal nor did he read it. He knew that

he was at liberty to ask to read it, and was not pressurised not to do so, but simply trusted ABSA to make sure everything was accurate, since he was a private banking client with it. He said that he was simply told to sign and initial the proposal "here, here and here". The total time taken to sign the finance documents and the proposal was a maximum of three to five minutes. The plaintiff's witness, Beattie, confirmed that the signing process took less than five minutes. He expressed surprise at how short the process was since he had been involved in such processes before. Neither the plaintiff nor Beattie timed the process. The time to which they testified was an estimate. The plaintiff also stated that he had never before obtained insurance; the financial director had attended to that aspect of the company’s business.

[7] The defendant called two witnesses, du Bois and one Mary-Ann Ramsamy (“Ramsamy”). Du Bois testified that, during the morning of 27 October, she had been requested by her superior to arrange comprehensive insurance cover for the plaintiff's vehicle. The only document given to her was the two-page finance application generated by Horn for the plaintiff on 25 October. This contained only a work telephone number for the plaintiff and she could not contact him at that number. She had to obtain the plaintiff's cellphone number from Horn. When he did not answer a call to that number, she left a voicemail for him to return the call. She indicated that the defendant, in order to compile quotes and generate proposals, made use of a computing software system known as the Pro-Planner system. This system generated a number of computer screen pages with fields. Certain fields had to be completed. If they were not completed, the programme would not compile quotes or generate a proposal. The compulsory fields were highlighted on the screen in yellow. Amongst the highlighted items were security details and specified accessories to the vehicle. Other highlighted fields included whether the vehicle was to be used for business or private purposes and where the vehicle would be parked during the day and at night. There were fields to reflect whether the applicant had a no claim bonus, whether the applicant could provide

proof of a no claim bonus, whether the applicant had had uninterrupted vehicle insurance for the past 36 months and, if so, fields to reflect the number of claims made in the past 36, 24 and 12 month periods respectively. There was a non-highlighted field for the annual number of kilometres travelled.

[8] At some stage on the morning of 27 October she spoke to the plaintiff on the phone. Whilst doing so the Pro-Planner system was open on her computer and she took the plaintiff through the relevant fields. She could not specifically recall all the elements of the conversation since this process was followed with many clients. For the rest, she gave evidence as to her invariable practice. However, she testified that she did recall certain parts of the conversation. For example, she specifically recalled the plaintiff telling her that he had previously had a company car which had been insured through the company. From that she activated the yes answer in the programme as to whether he had had continuous insurance for the previous 36 month period. Because of that answer, it was necessary to reflect how many claims had been made in the past 36 months, 24 months and 12 months on the system. She said that she did not actually recall asking this but it was her standard practice as it was core information needed for a quote. Without it the no claim bonus could not be calculated which in turn affected the premium. As a result of the details furnished by the plaintiff, the system compiled quotes from insurance companies. She explained the quotes to the plaintiff and he selected the desired insurance company. Once he had made this selection, the programme generated the proposal which

she printed and took to the dealership that afternoon. Other than Horn, from whom she obtained the plaintiff’s cellphone number and the finance application, and the dealer who told her which extras to include, nobody gave her any documents or details relating to the plaintiff. She recalled having to get the information as to which extras were included in the sale from the dealer because the plaintiff, when asked, was not sure of these. This was not challenged in cross-examination.

[9] It was not disputed that the proposal with which she arrived at the dealership in the afternoon of 27 October was generated prior to her arrival. She said that, after the plaintiff completed the lease forms with Horn, she took him through the proposal to ensure that the material aspects were correct and that he understood. Only after this was done did he initial or sign in the relevant places. She denied that she simply asked the plaintiff to sign and initial the proposal "here, here and here". She had some specific memory of the meeting at the dealership and recalled having wished the plaintiff a happy birthday. She also specifically recalled that the plaintiff appeared to be in a bit of a hurry and did not ask any questions or ask for time to

read through the proposal himself. For the rest she relied in her evidence on her invariable practice.

[10] There is a clear conflict between the evidence of the plaintiff and du Bois. However, taken from the manner in which the evidence was given and arising from the probabilities, I have no hesitation in accepting the version of the defendant in relation to the telephone call prior to the meeting. du Bois impressed me as a truthful and careful witness. Her demeanour was open, attentive and her answers considered but not overly studied. She struck me as someone who had some recollection but did not overstate the extent to which she recalled the phone conversation. She conceded, against her own interests, that, during the phone conversation, she did not explain to the plaintiff that, if any incorrect answers were given, the insurance company would be entitled to repudiate any claim and avoid the agreement. At the time she made this concession she had heard the plaintiff give evidence to the effect that he had no recollection whatsoever of the phone call having taken place. Had she wished to embroider her evidence, the opportunity was there to do so without contradiction.

[11] As regards the phone conversation, the plaintiff had no recollection but was adamant that he had neither indicated that there had been insurance in place for the past 36 months nor that no claims had been made during that period. He repeatedly asked what he had to gain by denying this. The difficulty with this version does not arise only from the probabilities, which I will deal with later, but with the evidence of Ramsamy. Her uncontested evidence was that, after the plaintiff had lodged a claim, the insurance assessor had told her that two claims had been lodged during the 36 month period prior to the inception of the policy. She telephoned the plaintiff and asked whether he had had previous claims to which he replied that he had not. She asked if he was sure that he had not had claims because the insurance assessor said that he had had two claims. He asked whether these were in his personal capacity or through the business to which she responded that she meant claims in either capacity. He then said that claims had been lodged through the company. This was after she had telephoned him and asked for a no claim bonus letter from his company and he had undertaken to obtain one. As I indicated, this evidence was not contested. It is almost inconceivable that, when he himself had never had insurance cover and was requested to procure a letter from the company confirming that

no claims had been made, he thought that the question related only to personal claims. In the telephone conversation with du Bois he had told her that his insurance had previously been through the company. The next question in the Pro-Planner system related to whether or not claims had been made. The answer testified to by du Bois accords with that given to Ramsamy after the claim was lodged and it is therefore highly probable that this was his response. It is highly improbable that he did not know that the question by du Bois related to claims that would have been made through the company since that was the only insurance he had previously had.

[12] The probabilities are also overwhelmingly in the defendant's favour relating to the phone conversation. Du Bois indicated that she utilised whatever information she could from the finance application to begin completing the Pro-Planner fields. She said that the finance application reflected that the plaintiff was single but she had reflected him as a widower in the programme as evidenced by the proposal. Had she not gone through the Pro-Planner fields with him and only used the finance application, the proposal would have reflected him as single. She also recalled him telling her that he was a widower. The plaintiff confirmed in evidence that he was, at the time, a widower. In addition, the finance application reflects two different models of vehicle and she required clarity on which of these was to be purchased which she said she obtained from him. She also obtained information from him as to whether the vehicle would be used for business or private purposes. She said she had no other way of knowing that his previous vehicles had been insured through the company. She obtained information from him as to the average number of kilometres per year covered by him. This figure was confirmed by the plaintiff in evidence. It was submitted by Mr Finnigan, who appeared for the plaintiff, that she could have obtained this information from the private bankers. This was not put to her. All that was asked was whether she could have obtained the information in question from the plaintiff’s bank records. Her answer was that she

had no access to any records other than the finance application. This information was not contained in it. In any event, it is difficult to conceive how private bankers would know whether the vehicle would be used for business or private purposes, how many kilometres per year he would cover and that his previous vehicles had been insured through the company. Mr Finnigan specifically submitted that du Bois was not an untruthful witness, only that she did not have actual recollection of the phone call. I agree that she was not untruthful.

[13] A further aspect in favour of accepting the defendant's version on the phone call is that, as mentioned above, an attempt was being made to deliver the vehicle on the plaintiff's birthday. This was being done for a valued private client. The meeting was scheduled for the mid to late afternoon. It is highly unlikely that du Bois, with a proposal which had been generated from the Pro-Planner system and could only be changed on that system, would arrive with a printed proposal to be signed containing a premium not discussed with the plaintiff and with details which she had simply guessed at. If the details had turned out at the meeting to be wrong, and if the plaintiff had read through the proposal as she must have expected, this would have meant that an important client would not be able to take delivery of his vehicle that day as had been specially planned. She would have had to return to her office to not only correct entries on the system but to generate a fresh set of quotations and reprint a proposal. I could

mention other factors but the ones dealt with above suffice to convince me that the telephone call, as testified to by du Bois, took place on the morning of 27 October and that she completed the Pro-Planner fields with answers supplied by the plaintiff.

[14] It was not submitted on behalf of the plaintiff that, if du Bois had received the information from the plaintiff, material information had not been disclosed to the insurer. Nor was it submitted that, in that event, the defendant could be held to have failed to assist the plaintiff to disclose all material information. All material information was in fact disclosed in the proposal form. It was simply not all correct. As regards the averment in paragraph 17.2 of the particulars of claim that the defendant failed to ensure that no incorrect information was given to the insurer, if the information came from the plaintiff, there could

be no failure. It was not submitted that there was a duty on the defendant to independently verify information given to it by the client before submitting it to the insurance company in the form of a proposal. The only pleaded breach which can be relied on by the plaintiff is the third breach referred to in paragraph [5] of this judgment.

[15] Mr Finnigan sought to rely on the General Code of Conduct for Authorised Financial Service Providers and Representatives in order to give content to the terms of the agreement between the plaintiff and the defendant. This was, of course, not pleaded as a term of the contract. It is trite that a person relying on a contract must plead and prove those terms relied on.1 As indicated above, the term was pleaded on a very general basis. In particular, Mr Finnigan relied upon that portion of that document

which provides that a provider must "fully inform a client in regard to the completion or submission of any transaction requirement-… of the possible consequences of the misrepresentation or nondisclosure of a material fact or the inclusion of incorrect information". This was necessary to set up the third breach referred to in paragraph [5] of this judgment. This, as mentioned above, is the only pleaded breach still open to the plaintiff once du Bois’s evidence of the phone call is accepted. Reliance on this breach was, as mentioned above, not strictly open to the plaintiff. This point was not taken by Mr Bank, who appeared for the defendant

and who accepted that this would be a term of the agreement. I will accordingly not decide the matter on this basis.

[16] Mr Finnigan submitted that du Bois, at the meeting at the dealership, failed to refer the plaintiff to that section of the proposal which provided as follows:

The information you have given us forms the basis of this insurance contract. Insurers could repudiate the claim if they find that information given to us was not correct. Can you please confirm that all the information you have supplied, pertaining to your application for insurance is correct and that you do not know of any reason why an insurer should not grant you cover for the property to be insured?

He submitted that in so doing she failed to warn the plaintiff of the possible consequences of any incorrect information contained in the proposal. In her evidence in chief, however, du Bois was asked whether she dealt with this section of the proposal. She replied that she invariably dealt with it since it is important. Whilst she did not have specifically recall dealing with it on that occasion, she did specifically recall having taken the plaintiff through the proposal. She did not read each clause word for word but explained the meaning. She said that this exercise would definitely have included this aspect. She recalled that the plaintiff

seemed to understand her explanations and had no questions. There was no focussed challenge as to whether she had dealt with this

aspect. This was so even after she candidly conceded that she had not dealt with this in the phone call. The only challenge posed to her was on the general basis that the plaintiff’s evidence was that she did not take him through the document at all.

[17] Even if there had been such a challenge, the version of du Bois is, if anything, to be preferred to that of the plaintiff as to what took place during the meeting at the dealership. She had a clear recollection of having been through the document with the plaintiff and of his understanding the document and asking no questions. She also had a clear, invariable practise of mentioning the important aspects, including this one. She was in no hurry that afternoon. Against this, the plaintiff’s evidence is improbable. In the first place it was clear from a conspectus of his evidence that he was not concerned with what would take place that day. He had one goal in mind at the dealership and that was to sign whatever documents were necessary to allow him to take delivery of

the vehicle. His attitude was that he was dealing with his private bankers and that they would not mislead him. If his version were to be accepted it would mean that, even though du Bois had not spoken to him on the phone about material matters in the document and therefore must have completed it by guesswork, she placed it before him and simply told him to sign and initial it in various places without any explanation of what was contained in it and without even inviting him to read it if he wished to do so. This is highly improbable in the circumstances. Mr Finnigan submitted that, since this was a novel occasion for him, he was likely to have remembered more clearly than du Bois what happened since she had been involved in numerous such signings. However, as mentioned, it was clear from the evidence of the plaintiff that he was not at all concerned with the detail of the paperwork. He had decided that he could trust his bankers, and by extension the broker procured by them for him, and was not at all applying his mind to potential consequences. In addition, as submitted by Mr Bank, du Bois would definitely have remembered had she departed from her usual practise. The plaintiff’s evidence was vague as regards the entire process. The only thing about which he was definite was that the total time taken was a maximum of three to five minutes. How he could be definite about that when he had not timed the encounter eludes me. What is clear is that he was not in any way coerced to sign without reading. He said, in effect, that he

was prepared to sign a document never read by him prepared by a person he had never spoken to. The particulars of claim plead that a representation was made to him that all the information material to the insurance of the vehicle had been inserted into the proposal. He did not testify that any such representation had been made. This averment must have emanated from the plaintiff. The lack of evidence given by him in support of it further militates against accepting his version. If I were to make a finding on the probabilities, it would be that, as regards the events at the dealership, the defendant’s version is to be preferred.

[18] However, it is not necessary even to go as far as to find that the version of the defendant should be accepted over that of the plaintiff as regards the meeting. The plaintiff bore the onus to prove a breach on the part of the defendant. This would include proving on a balance of probabilities that the clause in question was not drawn to his attention. At best for the plaintiff the probabilities as to what took place at the dealership meeting are evenly balanced. In such an instance, the onus becomes decisive and the plaintiff must fail.

[19] A further factor against the plaintiff succeeding is whether he proved that, assuming the clause was not mentioned, he would have done anything other than sign the document if it had it been mentioned. If he would nevertheless have signed, no causal connection would exist between the failure to mention the clause and the repudiation. I am of the view that, given Ramsamy’s evidence and that of du Bois as to his answers to the question whether he had previously claimed, he would probably have signed the proposal even if it had been proved that the consequences of supplying inaccurate information had not been explained. There was certainly no evidence to the contrary.

[20] At the inception of the trial the parties agreed that the matter would not proceed on the issue of the quantum of any damages which ensued from any breach of the mandate. It was hoped that the aspect of quantum would be agreed by the time the trial on the initial aspects was complete. In the event, no such agreement was communicated to me. An order was therefore granted, in terms of Rule 33(4), that the issues to be dealt with separately and initially were whether the defendant breached its mandate and, if so, whether any such breach caused the insurance company to repudiate the insurance contract. In the light of what I have said above, I am of the view that the plaintiff failed to discharge the onus on him in both of these respects.

I therefore make the following order:

The plaintiff’s claim is dismissed with costs.

Date of hearing: 19 and 20 October 2009

Date of judgment: 30 October 2009

Counsel for the Plaintiff: D W Finnigan, instructed by Stirling Attorneys.

Counsel for the Defendant: W Bank, instructed by Ramsay Webber Incorporated c/o Woodhead Bigby & Irving.

1 Badenhorst v van Rensburg 1985 (2) SA 321 (T) at 335E-G