Repudiation Overturned

Court rules that the insured did not act recklessly.

In the recent judgment of Govender versus Guardrisk Insurance Company Limited (64633/2019) [2023] ZAGPPHC 125 (2 March 2023), the High Court (HC) had to determine whether Guardrisk (the defendant) was liable to indemnify Mr. Sashin Govender (the plaintiff) for his red Ferrari, which was damaged beyond repair in a motor vehicle collision.

Mr. Govender insured the Ferrari with Guardrisk, however, his claim in respect of his Ferrari was repudiated.

The claim at hand

On 22 February 2019, Mr. Govender and his mother (his passenger) were cruising in the evening along William Nicol Road in Fourways, Johannesburg, in inclement weather. Mr. Govender, in a very unfortunate and abrupt manner, lost control of the Ferrari and collided with a lamp pole on the island, which resulted in a very unpleasant motor vehicle collision for the Ferrari specifically. Mr. Govender and his mother suffered no serious injuries; however, the Ferrari was damaged beyond repair, as it was almost split in half.

Fortunately, Mr. Govender had insured his vehicle with Guardrisk, and it was common cause that the policy was effective on the date of collision. Guardrisk, however, repudiated Mr. Govender’s claim in accordance with clause 3 of the general terms and conditions of the insurance policy, by contending that he failed to “take all reasonable precautions to prevent loss, damage, accidents…”

The rationale of the repudiation was that Mr. Govender was travelling at an excessive speed, given the weather conditions on the day in question, which were described as wet. Furthermore, Guardrisk contended that such speed was so excessive (which it alleged to have been 135km per hour) that it was tantamount to being reckless, which is a direct breach of clause 3 and, therefore, refused to indemnify Mr. Govender for his Ferrari.

The issue for determination by the HC

As a result, the issue for determination by the HC, in consideration of the prevailing weather conditions, was whether Mr. Govender was travelling at a speed so excessive that it could have been considered to amount to recklessness in the circumstances. The litigants agreed with each other to the extent that only a finding of recklessness would absolve Guardrisk from liability. In assessing whether Guardrisk would be absolved, there was a heavy reliance placed on the experts utilised in the matter, given that the parties were not able to access the black box of the Ferrari (which recorded, inter alia, real time data relating to speed) as it was damaged in the collision.

In consideration of the weather conditions, the experts were only able to agree on the most pertinent aspect of this case, that the effect of water on the surface of a road can cause hydro or aquaplaning regardless of the quantity. Hydro or aquaplaning is described as an instance where, in casu, the Ferrari loses contact with the road surface as a result of the water.

The HC then posed a question critical to this enquiry: was it foreseeable to Mr. Govender that there would be sufficient water on the road surface to cause aquaplaning? Mr. Govender’s evidence was that he saw no water and actually thought he drove into a puddle after the fact. The evidence presented to the Court indicated that there was no puddle, and the probabilities highly favoured water running across the road from left to right.

The HC referred to the case of Santam Ltd versus CC Designing CC 1999 (4) SA 199 (C) at 210D-E (quoting with approval the English case of Fraser versus BN Furman (Productions) Ltd) which held as follows: “What in my judgment is reasonable as between the insured and the insurer, without being repugnant to the commercial purpose of the contract, is that the insured, where he does recognise a danger, should not deliberately court it by taking measures which he himself knows are inadequate to avert it. In other words, it is not enough that the employer’s omission to take any particular precaution to avoid accidents should be negligent, it must be at least reckless, i.e., made with actual recognition by the insured himself that a danger exists, not caring whether or not it is averted.”

The finality of the matter

Ultimately, the HC found that in light of the wet weather conditions, there was no evidence to the effect that Mr. Govender knew or foresaw that such road conditions could cause him to lose control of the Ferrari. Mr. Govender was found not to be reckless in casu and Guardrisk was ordered to pay R1 827 500.

The case serves as a cautionary one to insurers, regarding the test for recklessness in pursuance of repudiating a claim. If an insurer cannot satisfy any Court on the probabilities of a matter that the insured had foresight, as they foresaw the possibility of harm occurring and proceeded with their action whilst accepting that the risk may materialise, the insurer in suitable circumstances will not be absolved from liability.

Article by Kagiso Tshandu
Senior Associate
Fairbridges Wertheim Becker

Featured in FANEWS, April 2023 – Edition 154