C OF A (CIV)
NO.10/ 2003

IN THE COURT OF APPEAL OF LESOTHO

In
the matter between:-

LESOTHO NATIONAL GENERAL

INSURANCE CO. LTD. APPELLANT

and

SALEMANE PHAFANE RESPONDENT

13
and 20 APRIL 2005

CORAM: GROSSKOPF JA

SMALBERGER
JA

GAUNTLETT
JA

SUMMARY

Insurance
policy – clause 14 providing for a 12-month time bar to institute
action – clause 12 requiring insured to commence action
within 6
months after the insurer has disclaimed liability – clause 14
provides in clear and unambiguous terms that “in no case
whatever”
shall the insurer be liable after the expiration of the 12-month
period – no express or implied term providing for
the interruption
or suspension of the running of the 12-month period once the insurer
has disclaimed liability.

JUDGMENT

GROSSKOPF JA

[1] This appeal was postponed sine die on
2 October 2003 pending the resolution of the following applications:-

1. 
   An application to set aside as an irregular proceeding
   the notice of set down which led to a judgment by default being
   granted in
   the main action.

   
   

2. 
   An application for the rescission of the judgment by
   default referred to in 1 above.

   
   

3. 
   An application to stay execution on the said judgment.

   
   

[2] This Court ordered on 2 October 2003 that the appeal
could not be re-instated until an affidavit by the appellant’s
attorney
was filed stating that the above applications had been
resolved in the High Court. Such an affidavit has now been filed in
which
it was further mentioned that judgment was handed down on 26
August 2004 in the High Court in terms whereof the notice of set down
was set aside, the judgment by default rescinded and execution
stayed.

[3] This
Court further ordered on 2 October 2003:-

1. 
   that no order be made on the notice of motion of the
   respondent dated 21 August 2003 in which the respondent applied to
   have the
   appellant’s appeal struck off the roll;
   

   
   

2. 
   that the costs of the respondent’s said application
   and the costs of the hearing on 2 October 2003 be dealt with by this
   Court
   when the appeal is finally heard.

   
   

[4] The respondent claimed M105 600,00 from the
appellant as insurer in the High Court in terms of a motor vehicle
insurance policy.
The claim was for the respondent’s insured
vehicle which had been stolen. The appellant filed a special plea of
prescription together
with its plea on the merits. The parties
thereafter agreed upon a written statement of facts in terms of rule
32 (1) of the High
Court Rules for the adjudication of the special
plea. By agreement between the parties only the special plea was
argued before the
Court a quo while the merits of the
claim stood over for later adjudication. The Court a quo
dismissed the special plea with costs on 1 April 2003. The appellant
appeals against this order.

[5] The respondent had previously brought an application
in this Court to strike the appellant’s appeal from the roll on the
grounds
that the order of the Court a quo dismissing
the special appeal was an interlocutory order which required leave to
appeal. The respondent did not proceed with this
application before
us and it will accordingly be dismissed with costs.

[6] The following relevant facts were admitted by the
parties in their written statement for purposes of the special plea:

1. 
   The respondent’s insured motor vehicle was stolen on
   12 March 2000.

   
   

2. 
   Liability in respect of the respondent’s claim was
   repudiated on 23 January 2001.

   
   

3. 
   Action was instituted by the respondent on 30 May 2001,
   more than 14 months after the happening of the event, i.e. the theft
   of
   the vehicle.

   
   

4. 
   The respondent’s claim was neither the subject of
   pending action or arbitration on 11 March 2001, nor is it a claim
   under section
   11 of the policy.

   
   

[7] The appellant in its special plea denied liability
under the policy in view of the provisions of clause 14 of the
general conditions
of the policy which reads as follows:-

“In no case whatever shall the Company be liable
under this Policy after the expiration of twelve months from the
happening of the
event unless the claim is the subject of pending
action or arbitration or is a claim under Section 11.”

[8] The respondent on the other hand submitted that a
proper interpretation of clause 12 of the general conditions shows
that he had
6 months after the appellant’s disclaimer to institute
his action, irrespective of whether the 12 month period of clause 14
had
by then elapsed or not. Clause 12 provides as follows:-

“In
the event of the Company disclaiming liability in respect of any
claim and an action or suit be not commenced within six months
after
such disclaimer all benefit under this policy in respect of such
claim shall be forfeited.”

The court a quo agreed with the
respondent’s interpretation.

[9] On the respondent’s construction the insured who
has lodged his claim within the 12-month period will always have an
additional
6 months after the insurer’s disclaimer to institute his
action, even if the insurer disclaims liability on the last day of
the
12-month period. Such an interpretation in my view disregards the
clear wording of clause 14 which is introduced by the words “In
no
case whatever …”. Clause 14 should also be read together with
clause 12.

[10] It was held in Union National South British
Insurance Co Ltd v Padayachee and Another 1985 (1) SA 551
(A) at 559 H-I that a clause similar to the present clause 14:

“has
no need of a special interpretative approach or an implied term to
give it meaning or efficacy. It is clear and unambiguous; it
entitles
the insurer to refuse to pay any claim after the expiration of the
12-month period if no action is then pending. If, as
the end of the
12-month period approaches, the insured finds it impossible within
such period to furnish all the required information
…due to the
insurer’s own untoward delay in requesting such information, there
would to my mind be nothing to bar the insured
from issuing summons
within the 12 month period.”

[11] A similar approach was adopted in Kgaka v
Statsure Insurance Co Ltd and Another 2001 (4) SA 245 (T) at
247 H-248A where the learned judge remarked as follows in relation to
clauses in insurance policies barring
action after expiry of a period
of 12 months:

“They
provide an independent defence to a claim under the policy. All that
is necessary to make such a defence available to the insurer
is the
failure of the insured to institute action within 12 months of the
happening … These provisions provide a contractual defence
to the
insured’s claim. They have nothing to do with prescription and they
are therefore not affected by the provisions of the
Prescription Act
68 of 1969. The only question is therefore whether or not the claim
was the subject of a pending legal action within
12 months of the
happening.”

[12] On the respondent’s interpretation the provisions
of clause 12 serve to interrupt or suspend the running of the 12
month period
in clause 14. There is however no clause in the
insurance contract of the parties which expressly provides for any
such interruption
or suspension, and there is certainly no need to
imply a tacit term to provide for such interruption or suspension.
See the Padayachee case, supra, at
559C-560I, where the court rejected the insured’s argument that a
similar term should be implied in the contract of insurance.

[13] The respondent relied heavily on the case of SZ
Tooling Services CC v SA Eagle Insurance Co Ltd 1993 (1) SA
274 (A). The policy in that case contained a 24-month time bar for
legal action similar to our clause 14. That condition
did not however
play any role in the case. A further condition, similar to our clause
13, provided that in the event of a claim being
rejected and legal
action not being commenced within 3 months after such rejection all
benefit under the policy shall be forfeited.
The question in that
case was whether motion proceedings for declaratory relief instituted
within the 3-month period constituted
the required commencement of
“legal action”. The court held that it did. In my view the SZ
Tooling case does not provide any support for the
respondent’s contentions.

[14] In my judgment clauses 12 and 14 should be read
together. Reliance cannot be placed on clause 12 to the exclusion of
clause 14
which in clear and unambiguous terms entitles the insurer
to refuse to pay any claim after expiration of the 12-month period if
no
action is then pending. I am accordingly of the view that the
special plea should have been upheld and that the appeal should be
allowed with costs.

[15] The
following order is made:

1. 
   The appeal is upheld with costs, such costs to include
   the costs of the hearing on 2 October 2003.

   
   

2. 
   The order of the court a quo dismissing
   the special plea is set aside and the following order is substituted
   therefor:

   
   

“The
special plea is upheld with costs”.

3. The respondent’s application to strike the appeal
from the roll is dismissed with costs.

______________________

F.H. GROSSKOPF

JUDGE OF APPEAL

I agree _________________________

J.W. SMALBERGER

JUDGE OF APPEAL

I
agree _________________________

J.J. GAUNTLETT

JUDGE OF APPEAL

For the Appellant : Mr P.J. Loubser

For
the Respondent: Mr M. Ntlhoki