Standard General Insurance Company Ltd. v Verdun Estates (Pty) Ltd. (524/88) [1990] ZASCA 27; 1990 (2) SA 693 (AD); (26 March 1990)

IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)

CASE NUMBER 524/88

LOWER COURT NUMBER 12272/86

In the matter between:

STANDARD GENERAL INSURANCE COMPANY LIMITED APPELLANTandVERDUN ESTATES (PROPRIETARY) LIMITED FIRST RESPONDENT

JAN SMIT SECOND RESPONDENT

Coram: HOEXTER, NESTADT et MILNE JJA, FRIEDMAN et GOLDSTONE AJJA.

Date heard: 13 March 1990

Date delivered: 26 March 1990

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JUDGMENT

GOLDSTONE AJA:

Conradie J in the Capé Provincial Division of the Supreme Court dismissed with costs the claim of the appellant for payment the sum of R6877,78. The judgment of the Court a quo is reported in 1988 (4) SA 779 (C) as Standard General Insurance Co. Ltd v Verdun Estates (Pty) Ltd and Another. With leave of the Court a quo the appellant now appeals to this Court against the judgment and order.

The facts material to the appeal are not in dispute. On 10 September 1982, the second respondent, an employee of the first respondent, was driving a tractor which was owned by his employer. He was doing so with the knowledge and consent of his employer and within the course and scope of his employment.

3The tractor was insured by the appellant in terms of the provisions ofthe Compulsory Motor Vehicle Insurance Act, No. 56 of 1972 (the Act).At the comer of Voortrekker and Van Riebeeck Streets, Prinoe Alfred Hamlet,Cape, the tractor collided with a motor vehicle driven by one Saayman.The collision was partly attributable to the fault of the second respondentwho, to the knowledge of the first respondent, did not have a driver's

licence.

As a result of the collision, Saayman sustained bodily injuries. Pursuant to the terms of the Act, Saayman claimed compensation from the appellant. The claim was settled on 21 November 1985, when the appellant paid to Saayman the amount of R11462,97. In the Court a quo, the appellant claimed payment from the respondents of the sum of R6877,78 representing 60% of the amount paid to Saayman. It is common cause that in respect cf the collision the second respondent was 60% at fault.

All of the aforegoing appears from a written statement of facts submitted to the court a quo in terms of rule 33(1) of the Uniform Rules of Court.4 The following further agreed facts are recorded therein:

"11.2 The MVA 13 form was lodged on behalf of Saayman on 9th August 1984, before the expiration óf a period of two years from the collision;

11.3 In terms of Sections 24(1) and 25(2) of the Act, Saayman's summonswas to have been served after expiry of 90 days from 9th August1984 (ie. after 7th November 1984) but before 11th December

1984;

11.4 By letter dated 15th October 1984... the Plaintiff undertook not to plead prescription in respect of Saayman's claim until 31st March 1985; 11.5 The expiry date of the aforesaid undertaking was extended by letter dated 22nd February 1985 to 30th June 1985 and again by letter dated 30th May 1985 to 31st December 1985...;

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11.6 On 21st November 1985 Saayman's claim was settled by the Plaintiff paying compensation to him ih the sum of of R11462,97 without summons ever having been issued by Saayman;

11.7 The first and second defendants were not advised of nor were

they parties to the undertaking or the extensions thereof mentioned in paragraphs 11.4 and 11.5 above; 11.8 Were it not for the said undertakings, Saayman's claim against the Plaintiff would, under the provisions of sections 24(1) and 25(2) of the Act, have become prescribed on 11th December 1984 and insofar as that Act may be applicable, on 10th September 1985 in terms of section 11(d) of the Prescription Act, No. 68 of 1969 (as amended); 11.9 Had it not been for the extension of prescription Saayman could and would have served a summons claiming compensation on the

6 Plaintiff before the period of prescription had run out."

In the statement of agreed facts the respective contentions of the parties are set out as follows:

"12. The Plaintiff contends that in terms of section 28(2)(a)(ii) read with section 28(1) of the Act, it has a right tó recover the sum of R6877,78 (being a 60% portion of R11462,97) frcm the First Defendant and that it has a similar right against the Second Defendant in terms of section 28(1) and 28(3) of the Act.

13. The Defendants contend that because of the provisions of section

24(1) read with section 25(2) Saayman's claim against the plaintiff became prescribed on 11th December 1984 and that the Plaintiff's payment to Saayman cn 21st November 1985 was therefore not made under section 21 of the Act. Insofar as it rnay be necessary to establish a basis for the payment, the Defendants contend that it was made pursuant to an agreement of which the extended

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undertaking not to plead prescription formed part.

14. Were this Hbnourable Court to uphold the Plaintiff's contentions, the Defendants would be liable to pay the Plaintiff the sum of R6877,78 plus costs. Were the Defendant's ccntentions to be upheld,. the Plaintiff's claims should be dismissed and judgment entered in favour of the Defendants, with costs."

As emerges from the written statement of facts, the appellant's claim is

founded upon the statutory right of recourse created by the provisions

of section 28 of the Act. Insofar as it is now relevant, it is there providedthat:

"28(1) When an authorized insurer has paid any ocmpensation under

section 21 or 26 it may recover frcm the owner of the insured motor vehicle in question, or frcm any person whose negligence or other unlawful act caused the loss or damage in guestion, so much of the amount paid by way of ccmpensation as the third

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party could, but for the provisions of secticn 27, have recovered from the owner or frcm the person whose negligence or other unlawful act caused the loss or damage, as the case may be, if the authorized insurer had not paid any such compensation."

This right of recourse, in the circumstances set out in section 28(2) and (3), only arises, therefore, where the insurer has paid compensation under section 21 or 26 of the Act. Section 26 provides for payment to suppliers of certain goods and services and is not now relevant. Section 21(1), insofar as it is material, provides that:

" An authorized insurer which has insured or is deemed to have insured

a motor vehicle in terms of section 12, 13 or 14 shall, subject to

the provisions of this Act, be obliged to compensate any person whatsoever (in this Act called the third party) for any loss or damage which the third party has suffered..."

On behalf of the respondents it was submitted that the claim under section

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21, prior to payment by the appêllant (as the authorized insurer) became

extinguished by reason of the provisions of section 10(1) of the Prescription Act No. 68 of 1969 (the Prescription Act) read with section 24(1 )(a) of the Act. It is there provided that:

"10(1) Subject to the provisions of this Chapter and of Chapter IV, a debt shall be extinguished by prescription after the lapse of the period which in terms of the relevant law applies in respect of the prescription of such debt."

The relevant law, here the Act, provides in section 24(1)(a) that:

"24(1)(a) Notwithstanding the provisions of any other law relating to prescription, but subject to the provisions of paragraph (b) of this subsection, the right to claim compensation under section 21 from an authorized insurer shall become prescribed upon the expiration of a pericd of two years frcm the date upon which the claim arose: Provided that prescription shall be suspended

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during the period of ninety days referred to in section 25(2)."

There was some debate with oounsel as to whether the terms of the Prescription Act are applicable to the Act or whether section 24 is a self-contained provision. The latter conclusion finds some support frcm the following dictum of Friedman J in Terblanche v SA Eagle Insurance Co. Ltd. 1983 (2) SA 501 (N) at 504 F-H where the leamed Judge in considering the 1978 amendments to section 24(1) of the Act said:

" It is a rule of statutory interpretation that the Legislature is presumed to be acquainted with the state of the law (Steyn Die Uitleg van Wette 5th ed at 132). When it passed the amending Act, the Legislature must be presumed to have been aware that the common law relating to, inter alia, the suspension of prescriptian applied to , s 24(1) as it then was; yet despite such awareness it passed s 24(1)(b) categorising two classes of persons who, in any event, enjoyed common law protection (ie minors and persons under curatorship) and one class who may or may not have (ie persons detained under the Mental Health

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Act). In my view, it did so for the reason, and could only have done so for the reason, that it intended to bring about a change in the law as the Courts had interpreted it to be with reference to the old s 11(2) and to the new s 24(1) (prior to the amendment), that is to say, to now exclude the common law relating to all aspects of prescription from the prescriptive provisions of the MVA Act (see Erasmus v Protea Assuransiemaatskappy Bpk 1982 (2) SA 64 (N) at 69 F - H)."

In Erasmus v Protea Assuransiemaatskappy Bpk, Page J referred only to the provisions of section 24(1)(b) in relatipn to the suspension of prescription. He was nct referring to the provisions of section 24(1) as a whole.

In my judgment the statement of law by Friedman J is too widely cast.In terms of section 16(1) of the Prescription Act the provisions of Chapter

III thereof shall-

" save in so far as they are inconsistent with the provisions of any

12 Act of Parliament which prescribes a specified period within which

a claim is to be made or an action is to be instituted in respect

of a debt or imposes conditions on the institution of an action for

the recovery of a debt, apply to any debt arising after the commencement

of this Act." i

(Section 10 is to be found in Chapter III of the Prescription Act).