One frequently reads English judgments on insurance law where Canadian, Australian and New Zealand cases are referred to. It seems clear that in the apartheid years the English courts lost the habit of looking to South African decisions for comparative reasoning. We can repay some of the debt owed to English law and that English lawyers will find useful decisions among the body of South African case law.
Can We Repay The Debt?
10 November 2005
Article by Mr Patrick Bracher of Deneys Reitz Attorneys
After the Cape was taken over by the British at the end of the eighteenth century British control lasted until 1910. Although Roman-Dutch law was retained as the common law of South Africa there was an inevitable movement to adopt English law and institutions. Court procedures, including the law of evidence, were substantially absorbed. In areas where Roman-Dutch law was of little assistance such as the law on companies, insolvency, negotiable instruments and intellectual property, English legislative patterns were followed. In shipping law and marine insurance together with fire and life assurance English law was influential in the development of an insurance jurisprudence.
Against this background Roman-Dutch law was kept as an excellent legal system founded on Roman law and developed in the Netherlands and continental Europe. It is based on time-honoured principles but is capable of development to meet modern conditions.
In the world of insurance English law was followed not only because certain principles were specifically adopted but because the wealth of English judicial precedent was a ready source of good example. In addition, English forms of insurance policies were used by South African insurers (many of them with British head offices). Judicial interpretation of the wording of these policies inEngland is highly persuasive in a South African court.
Slowly the worth of English precedent in South Africa gave way to the pursuit of insurance principles that are based on the Roman-Dutch law of contract. This has enabled South African courts to reason through insurance problems to an equitable result by applying principle rather than precedent. A good comparison is the long line of English cases that culminated in Pan-Atlantic Insurance v Pine Top Insurance Co in 1992 where the House of Laws laid down certain principles relating to avoidance of an insurance contract on the basis of material non-disclosure. These principles were, with respect, more easily dealt with by the South African courts which applied the Roman-Dutch law principles of misrepresentation inducing a contract. Those principles have been well-known for centuries in our common law and easily led to a workable solution regarding materiality and inducement (Mutual & Federal Insurance Co v Oudthoorn Municipality 1985).
Cases reported this year illustrate the point as well. In Axa General Insurance Limited v Gottlieb(Court of Appeal February 2005), the court debated to what extent fraudulent conduct by the insured vitiated the right to claim for losses before and after submission of a fraudulent claim. The South African appeal court recently took a mere six pages of double spaced typing to conclude that a false claim only affects rights accruing under the policy after termination as a result of the fraud. According to ordinary Roman-Dutch principles of contract, rights accrued remain extant and there is no penal principal in South African contract law. In doing so it refused to adopt certain contrary principles of English law suggested to it in argument.
Similarly, there is little to debate in South African contract law regarding a continuing duty of good faith and disclosure in relation to a contract. This issue was recently dealt with in the English courts in Marc Rich Agriculture Training SA v Fortis Corporate Insurance NV (November 2004, QBD),where the court referred to the duty of utmost good faith. South African courts have remarked that there is either good faith or not and the concept of “utmost good faith” has no additional meaning. The Court of Appeal in Blackburn Rovers Football v Avon Insurance (April 2005) referred to evidence the question whether a footballer’s degenerative back condition was normal disc degeneration or as a result of some traumatic cause. Similar issues relating to pre-existing conditions have been debated in the South African courts which recognise that most of us suffer from some medical defect or other and that not every such cause is a pre-existing condition (Concord Insurance v Oelofsen 1992). In the context of a contractual time bar, the failure of an underwriter to expressly rely on time limits has been debated as an implied term or estoppel both in England (Fortisbank SA v Trenwick International March 2005 QBD) and in South Africa (Union National South British Insurance v Padayachee 1985 AD).
The South African Short-Term Insurance Act specifically authorises Lloyd’s to conduct insurance business in South Africa. In addition, there are a number of major international insurers who conduct business through subsidiaries in the country. For that reason a great deal of insurance business is underwritten in terms of policies which are as familiar in London as they are inJohannesburg. A number of decisions in 2004 dealt with the interpretation of the wording of various Lloyd’s policies. For instance, in Van Zyl NO v Kiln Non-Marine Syndicate, the court found that a driver who had driven his vehicle after consuming large amounts was not entitled to an indemnity because there was wilful exposure to danger. In Napier NO v Van Schalkwyk the court found that a requirement to report damage to a vehicle within 24 hours of the accident was clear and unequivocal in its meaning and effect and the breach absolved the Lloyd’s insurer from liability. InCertain Underwriters of Lloyd’s of London v Harrison the Supreme Court of Appeal rejected a claim because of material non-disclosure of the fact that the vehicle had been imported into the country unlawfully thus prejudicing the insurer’s interest in salvage of the goods insured. Lloyd’s of London v Skilya Property Investments is a judgment in favour of the Lloyd’s insurers on an aviation insurance policy containing an exclusion for damage sustained whilst the aircraft was being used for an illegal purpose (in this case smuggling cigarettes). The law reports in South Africa are replete with similar decisions.
One frequently reads English judgments where Canadian, Australian and New Zealand cases are referred to. It seems clear that in the apartheid years the English courts lost the habit of looking to South African decisions for comparative reasoning. My theme is that we can repay some of the debt owed to English law and that English lawyers will find useful decisions among the body of South African case law.
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