Insurance & Reinsurance
On 2 July 2020, the Gauteng Local Division of the High Court of South Africa, acting as a court of appeal, handed down judgment in the case of Anabella Resources CC v Genric Insurance Company Limited  JOL 47744 (GJ). The sole question to be decided was whether what the plaintiff claimed indemnification for from Genric was an "indemnifiable event" under the insurance contract between the parties. The decision in the plaintiff's favour reaffirms the importance of a textual as well as contextual interpretation of insurance contracts.
The plaintiff is a trader of gold, cash and diamonds which are stored in a safe at its premises. The plaintiff's financial manager would regularly ask the plaintiff's manager, who had the keys and combination to the safe, to access it. These requests were not unusual and made through an intercom at the premises, telephonically, or even via WhatsApp voice notes or text messaging.
On the day of the incident, the financial manager was driving when he was pulled over by a Metro Police officer. Suddenly, three men appeared, threatened the financial manager with a firearm and kidnapped him. The men knew the procedure for the financial manager to access the safe's contents and threatened to kill him if he did not instruct the plaintiff's manager to place R2.4 million in boxes, take them to the parking lot at the premises and hand them over to a man waiting in a car. It was not unusual to hand over large sums to customers and the financial manager's request did not raise suspicion. Once the money was handed over, the financial manager was released and the plaintiff later submitted a claim.
Rejecting the claim
Genric rejected the claim. The crux of Genric's rejection was that the employees at the premises:
To give context to these rejection grounds, the defined events included hijacking, theft and armed robbery whilst the property was in the custody and care of the insured and/or its authorised employee or approved security services provider. The insurance contract did not define armed robbery, but "theft and hijacking" was defined as "seizure of the insured property whilst stored and secured on the premises… where such seizure is accompanied by [its] unlawful removal… or accomplished by means of violence or threat of violence on or against the person or persons who are employed by the insured/or the insured whom, at the time of such seizure, are in actual lawful control of such insured property".
The court a quo agreed with Genric's rejection. The appeal court overruled that decision and observed that the matter involves a simple interpretation of the insurance contract of which the terms were "clear, ascertainable and without ambiguity". In doing so, it reaffirmed the approach to interpretation in Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ie that context and language, including the meaning of all the words used in a contract must be considered. It determined that the evidence of Genric's witness regarding the purpose and context of the insurance contract's provisions was inadmissible, finding that it was the court's function and not that of witnesses to interpret the insurance contract.
Interpreting armed robbery
Given that the insurance contract did not define armed robbery, the court considered its common law meaning, namely the theft of property by unlawfully and intentionally using violence or threats of violence to take it from someone else. This definition does not require that the threat of violence and the appropriation of the property must occur at the same place. The result was that the plaintiff's claim fell within the scope of the cover for armed robbery and Genric was liable to indemnify it.
Defining "theft and hijacking"
The court nevertheless considered whether "theft and hijacking", as defined, had occurred. It noted that the definition in the insurance contract contains the following elements:
The definition of "theft and hijacking" encompasses two scenarios. In the first scenario, the seizing of the property and the force used to effect it both occur at the premises where the property is located. In the second scenario, the seizing of the property is achieved by violence against an employee who is in "actual lawful control" of the property at the time of its seizure. The court found that the wording of the second scenario does not require that the violence or threat of violence must occur at the premises where the seizure of the goods occurs. Particular consideration was given to the words "accompanied by" and "accomplished by”.
Insofar as whether the financial manager was in actual lawful control of the cash, despite not being at the premises, the court decided that he was. He had control of and access to the safe containing the cash via the manager. The financial manager retained effective control of, and access to, the cash in the safe, be it telephonically or by way of WhatsApp even when absent from the premises. Therefore, the incident constituted "theft and hijacking" in addition to "armed robbery".
The judgment is correct, in our view. When an insurance contract does not define a word or phrase, its ordinary, dictionary meaning must be preferred and a court can take into account how it has been interpreted previously. When the insurance contract does provide a definition, then it is important that the definition is consistent with the risks the insurer intends to cover. An insurer's reading in of requirements outside the bounds of the express words used, in a way which would narrow the cover, is unlikely to find support with a court
To access a copy of the judgment, click here.