MiWay not getting its way in a car theft case: Victory for the insureds
26 Jul 2023
The North Gauteng High Court recently handed down a judgment which will undoubtedly gain support from many policyholders. Whilst the matter specifically relates to a car insurance claim, the principles laid down in this case will certainly find application in other insurance cases. The case is significant for both the insurers and the insureds alike. For insurers, it serves as a reminder that claims should not be rejected on negligible discrepancies and inconsistencies. Insurance claims that are being rejected based on “dishonest and misleading information” clauses are becoming more prevalent. These clauses are crucial and serve a key role in preventing and dissuading inter alia insurance fraud. They, however, should not be misused to repudiate claims that are legitimate and valid. For insureds, this decision is crucial because it highlights the importance of supplying correct and truthful information to the insurer; complying with the insurer’s requests during the investigation stage of the claim; the importance of reliability and consistency. Another massive “add on” benefit of this judgment is the reminder that it sends to the magistrates. As this was an appeal from the Magistrate Court, the courts should not mero motu raise a defence for any party in the proceedings unless pleaded. Given the significance thereof, it is worthwhile to provide a conspectus of this court decision.
Mr Molefe’s car was stolen on 22 January 2018 after a series of events that occurred during the preceding day. On 21 January 2018, Mr Molefe attended a cycling event. After the event he, along with his two friends, went to his place whereby he changed the vehicles – dropped one vehicle and drove in another. They attended a social event and, on their way to the event, he dropped off one of his friends. At the event, they met with two women who were unknown to them. As they were about to leave, these women asked for a lift. Mr Molefe and his friend obliged to the request. It appears that they did not drive to their respective residences. Instead, Mr Molefe drove to his cousin’s place. They did not stay long at his cousin’s place, as the two ladies were hungry and they drove off to a nearby garage to, seemingly, grab something to eat. Mr Molefe does not recall anything after the visit to the garage. He woke up the next day in an unknown location, without his car, and other belongings. As a result, he could not make the necessary phone calls immediately. He ultimately managed to contact his family later, after he had made his way to a nearby shop. Subsequently, he reported his stolen vehicle to the police and thereafter contacted MiWay to report the incident. An important fact to point out is that, when Mr Molefe woke up at the unknown location, he was feeling “tired, sleepy and very much dizzy”. He later found out that his friend, with whom he attended the event, had the same symptoms. When submitting his claim with MiWay, he had initially reported that they had left the event around 00h00. Later, he reported that they left much later than that, as they arrived at his cousin’s place some time past 04h00. This was one discrepancy upon which MiWay relied for rejecting the claim. There were other details (which were of less significance) relating to their trips, which were only relayed to the insurer at a later stage. Mr Molefe proceeded to deregister the concerned vehicle and had it listed as stolen. MiWay rejected the claim on the basis of dishonest and misleading information provided by Mr Molefe.
Issue for determination
The court had to establish, based on the evidence before it, whether the inconsistencies in Mr Molefe’s evidence and version of events were sufficiently material and prejudicial to warrant a repudiation of the claim.
Court’s findings and reasoning
During the proceedings, Mr Molefe was the only witness; MiWay did not have any witnesses; relevant exhibits were handed in as part of evidence. Recordings of the interviews (with the Assessor) were also handed in. The court considered the chain of events and Mr Molefe’s actions subsequent to the car theft i.e., he reported and opened a case of theft at the police station; he reported the incident to the insurer; he went to see a doctor and submitted the medical certificate to the insurer; he timeously obliged with the insurer’s requests and cooperated throughout; his version of events was congruent with that of his friend; he deregistered the vehicle and listed it as stolen; there was no argument and/or evidence countering his allegation that he lost all his belongings on that fateful night. The court considered these factors holistically and concluded that Mr Molefe had discharged the onus of proof that his vehicle was indeed stolen. MiWay did not produce any evidence to counter Mr Molefe’s case. The court found it unnecessary to delve into the “fraud” issue – as this was never pleaded by MiWay. Instead, this was raised voluntarily by the magistrate in the court a quo. The court further zoomed into the relevant clause upon which MiWay relied for the rejection of the claim and deemed it necessary to deal with the long-established principles of interpretation of clauses that seek to limit the liability of the insurer. The court remarked that proper regard to the “main purpose, general nature and object of the contract” must be had. Furthermore, it dealt with the technique of interpretation of such policy clauses. Against the above, the court found MiWay liable to pay in terms of the insurance policy.
From the above discussion, the importance of honesty and giving truthful information is obvious. For insureds, it is critical that the version of events surrounding the incident is accurately relayed to the insurer. Where there is evidence in the form of a document, it must be kept safe and made available to the insurer. Vitally, the explanation and description of events do not need to be absolutely correct, but it must be substantially correct and sensible – failing which an insurer will be able to rely on “false, dishonest and misleading information” clause to reject a claim. The judgment, once more, highlights the approach of our courts towards cases of insurance repudiation – the purpose of the policy will, insofar as possible, be given effect to. In closing, it must be noted that, by his own admission, Mr Molefe had an open alcohol beverage in the vehicle which he had been consuming. Whilst there was no evidence of intoxication, it is interesting that the insurer did not rely on “drunk and driving” (at least in terms of the judgment) to repudiate. The insurer could have, in the absence of medical evidence, relied on circumstantial evidence to argue that Mr Molefe was reckless, which in turn, resulted in his vehicle being stolen.
Article sourced from Adams & Adams.
- Is failure to adhere to insurance policy conditions always problematic?
- Competition Commission raids premises of eight major long-term insurance companies
- The terms, the terms… Personal-lines insurance policies
- What to do in the event of a sudden loss of income