What could have easily served as a cautionary tale for those going out for a night on the town has instead become an advisory for non-life insurers and financial services providers to tread carefully when interpreting an ambiguous clause in a contract.
According to “the salient facts” stated in a recent High Court judgment in the appeal case of Thabo Molefe versus MiWay Insurance Company, Molefe – on the morning of 22 January 2018 – woke up in an “unknown” location without his cellphone, wallet, keys, and, most importantly, his 2010 Mercedes Benz.
Molefe stated that he and a friend had attended a social event the previous evening where they met and socialised with two unknown women. When he and his friend were ready to leave, Molefe said the women asked them for a lift. After briefly stopping at his cousin’s place, Molefe, his friend, and the two women left for a nearby garage to buy food.
When he woke up a few hours later, he was missing his vehicle, his friend, and his memory of what had transpired in the time in between. Although he managed to track down his friend much later, he had no such luck with his car.
Both Molefe and his friend reported that they woke up feeling “tired, sleepy, very much dizzy” – symptoms that, they claimed, persisted for days after. They suspected that the women had drugged them.
The same day, Molefe reported the vehicle as stolen to the police. The day after, he submitted his claim in terms of his insurance policy (taken out in late 2017) with MiWay.
On 16 February 2018, MiWay rejected his claim, alleging that Molefe had breached a clause of the agreement when he supplied them with “dishonest” information.
The clause at play reads: “If I or anyone acting on my behalf submits a claim or any information or documentation relating to any claim, which is in any way fraudulent, dishonest or inflated, all benefits under this policy in respect of such a claim will not be paid.”
When Molefe originally lodged his claim, he said he left the social event around midnight. He reported that he had an open alcoholic beverage in his vehicle when they left. He also mentioned that he had stopped at his cousin’s place before dropping off the two women.
Discrepancies
This is where things got murky.
In a subsequent WhatsApp message, Molefe informed the MiWay assessor that he could have underestimated the time they left the social event because they only arrived at his cousin’s home after 4am.
Video footage from the nearby garage, which he later obtained and handed over to the MiWay assessor, corroborated the adjusted timeline. It showed a woman getting out of the vehicle at about 4.30am, entering the garage shop, and returning to the vehicle, after which the vehicle is seen driving away.
Other discrepancies MiWay queried were whether the two women were dropped off before or after Molefe lost consciousness and where the alcoholic beverage was kept in the vehicle (inside the car or in the boot).
Dissatisfied with MiWay’s outright rejection, Molefe instituted a claim against the company for payment of R164 880, the replacement value of the stolen vehicle, in the Magistrate’s Court in Pretoria.
The court dismissed his claim with costs. Refusing to leave it there, he lodged an appeal with the High Court in Pretoria.
Discrepancies were not material
Acting Judge Collen Matshitse upheld the appeal, granting judgment in favour of Molefe and ordering MiWay to also pay his costs, including the cost of counsel.
In his judgment handed down on 20 June, Acting Judge Matshitse said the Magistrate’s Court had dismissed Molefe’s claim on grounds that he had acted fraudulently. However, Matshitse said MiWay’s defence to the action was not founded on fraud, “but rather on the fact that Mr Molefe had been dishonest”.
The judge also took into consideration that Molefe had deregistered the vehicle, and it had been listed as stolen.
“There was no evidence presented to counter this evidence, and it was never disputed by MiWay,” he said.
He found that Molefe gave his “unqualified assistance” to MiWay assessors at “all times” and that his version of events had been subsequently corroborated by individuals contacted by MiWay.
At the crux of the latest ruling was “material misdirection”. He found that the question that needed to be asked was whether the discrepancies in Molefe’s evidence were so “material and prejudicial” to MiWay that it entitled them to repudiate the claim. Referring to “the technique of interpretation of written contractual documents consistently adopted by South African courts”, the judge ruled they weren’t.
The ‘golden rule’
Acting Judge Matshitse said the “golden rule” of interpretation, as held by the then Appellate Division in Coopers & Lybrand v Bryant, requires that the language in the document be given its grammatical and ordinary meaning, “unless this would result in some absurdity, or some repugnancy or inconsistency with the rest of the instrument”.
Following this, when the language of the document is on the face of it ambiguous, the insurer is required to apply “extrinsic evidence regarding the surrounding circumstances by considering previous negotiations and correspondence between the parties, subsequent; conduct of the parties showing the sense in which they acted on the document, save direct evidence of their own intentions”.
In Coopers & Lybrand v Bryant, counsel for the appellant submitted that in analysing the wording of the contract to determine the reciprocal responsibilities of the parties, the contract had to be interpreted in contra proferentum against the insurer. Simply put, when there is doubt, the drafter of the contract loses the benefit of it.
Material matters
Acting Judge Matshitse said the test was that – to the extent that there is any dishonesty or discrepancies in a version – it must be material to MiWay’s obligation to indemnify Molefe for the theft of his motor vehicle.
“In my view, absent any evidence being led by on behalf of MiWay establishing how and on what basis it was allegedly prejudiced, there was no basis upon which the court a quo (from which) could have found that the discrepancies in Mr Molefe’s version were so momentous that they were prejudiced. In fact, it is my view, that they were not material at all,” Acting Judge Matshitse said, adding there had been no basis on which MiWay should have dismissed Molefe’s claim.
Moonstone Information Refinery contacted MiWay, asking for their response to the judgment and whether they are considering an appeal.
“We have noted the judgement and will not be challenging the ruling. No further statements will be shared on the matter,” said Youlon Naidoo, the executive head: claims and procurement at MiWay.
