THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA
JUDGMENT

Case number: 410/08
In the matter between:
GARRY OWEN WALKER

APPELLANT
and
SANTAM LIMITED

1st RESPONDENT
MUTUAL & FEDERAL INSURANCE COMPANY LTD     2nd RESPONDENT
ALEXANDER FORBES INSURANCE COMPANY LTD    3rd RESPONDENT

Neutral citation:
Walker
v
Santam
(410/2008)
[2009] ZASCA
(28 May 2009)

Coram:
Nugent JA, Kroon and Griesel AJJA
Heard:
13 May 2009
Delivered:
28 May 2009
Summary:
Indemnity insurance – repudiation by insurers –sufficiency
of proof of loss.

ORDER

On appeal from: High Court, Grahamstown (Leach J and Nduna AJ, sitting as a
court of appeal from a magistrate’s court):
Order:
The appeal succeeds with costs. The order of the High Court is set
aside and substituted with the following:

‘The appeal is dismissed with costs.’

JUDGMENT

GRIESEL  AJA (NUGENT JA  and KROON AJA concur):
Introduction
[1] On 7 August 2002 the appellant’s motor vehicle, a 1996 BMW 323i, was
hijacked in East London and damaged beyond repair. The appellant was
insured against events of this nature with a ‘co-insurance panel’ comprising the
three respondents herein jointly and severally, namely Santam Limited, Mutual
& Federal Insurance Company Limited and Alexander Forbes Insurance
Company Limited. (The policy in question was issued and administered on
behalf of the panel by Alexander Forbes). The appellant duly lodged a claim for
compensation in terms of the policy, but the respondents repudiated liability.
After selling the wreck of the vehicle to a local scrap dealer for an amount of
R21 000, the appellant instituted action against the respondents in the
magistrate’s court in East London, claiming the difference between the insured
value of the car in its undamaged condition (R98 100) and the value of the
wreck, less the compulsory excess, being five percent of the difference. The

respondents defended the action, but the magistrate granted judgment in
favour of the appellant for payment of R73 245 together with interest at the
prescribed rate and costs.
[2] On appeal to the Eastern Cape High Court in Grahamstown, the court
below (per Leach J; Nduna AJ concurring) reversed the judgment of the
magistrate, holding that ‘the evidence that was placed before the court was
insufficient to enable the court to determine the value of the motor vehicle in its
damaged condition’. In the result, so it was held, the plaintiff had failed to prove
the quantum of his damages. The judgment of the magistrate was accordingly
set aside and substituted with one of absolution from the instance with costs.
Leave to appeal against this judgment was refused by the court below, but was
subsequently granted by this court on petition.
Factual background
[3] The appellant has been employed in the motor vehicle industry for more
than 30 years. At the time of the incident he was the senior sales manager of
Ronnies Motors in Nahoon, East London. On 26 July 2002 he bought the BMW
in question from his employer for use by his wife and insured it under his
existing policy with Alexander Forbes. Less than two weeks later, while being
driven by one of the appellant’s sons, the car was hijacked and damaged
beyond repair.
[4] Some time after lodging his claim, the appellant was informed by Mrs
Photenhauer, manager of the Eastern Cape Region of Alexander Forbes, that ‘it
had all been sorted out, the cheque was on her desk, it would be going into [his]
account the next day’. Apparently the amount was calculated on the basis of the
insured value of the car less the excess of five percent, such value having been
ascertained by the assessor appointed on behalf of the respondents.
[5] A few days later, however, by letter dated 27 September 2002,
Alexander Forbes advised the appellant ‘that the insurer had stopped settle-
ment of your motor claim and requested that further investigation be effected’.
At a later stage, according to the appellant, Mrs Photenhauer informed him tele-

phonically that ‘there’s been another issue now’ and that the matter ‘was now
going to go into dispute’. She did not, however, elaborate as to what the other
‘issue’ was and the appellant was not informed of the reason for the decision.
[6] After repeatedly pressing them for reasons for their repudiation, the
appellant was informed by Alexander Forbes by letter dated 29 October 2002
that the insurers were ‘not able to entertain [his] claim’, based on ‘inter alia’
certain clauses in the policy, which were then quoted verbatim. The clauses in
question deal with ‘general conditions relating to your insurance cover’,
including the definitions of ‘you’ and ‘we’ in the policy; the duty on the insured to
comply with the terms of the policy; to inform the insurers of any increase of
risk; to give information that is ‘complete and truthful’; and to take reasonable
care to prevent loss, damage and accidents. The letter failed to inform the
appellant, however, in what respect(s) he is alleged to have breached any of
those general duties.
[7] After receiving notice of repudiation of his claim, the appellant took
urgent steps to dispose of the wreck so as to avoid incurring storage charges. A
further reason for urgency was the fact that the appellant needed to settle the
purchase price of the vehicle with his employer. He accordingly approached ‘the
two main scrap-yards in East London that buy accident damaged vehicles’ for
quotations. The one company, Hillbank Motor Consultants, offered to pay him
R21 000, whereas the other, Heine & Strydom, offered some R5 000 less. His
evidence in this regard reads as follows:
‘What happened with the wreck is I got a price, a value for it from it’s called Hillbank
Motor Consultants, they generally buy wrecks. I think they’re contracted to most of the
insurance companies. And they gave a value against percentage of book [value], I
think, I’m open to correction, I think it’s 22 or 23 percent of book value that they pay,
which is a standard contract to the amount of most of the insurance companies. So I
asked them for a price on the car which they duly gave me.’
Later he testified as follows:

‘Did you consider that you could have done things differently and obtained a higher or
better amount? --- I don’t think so. I fought quite hard to get that much for it.

Do you think that you did everything that was reasonable in the circumstances? --- I do
believe I did.’
[8] The appellant thereupon contacted Mrs Photenhauer and informed her
of the offer obtained and his intentions in that regard. He testified as follows:
‘And I actually phoned Mrs Photenhauer, although technically [it] didn’t have anything
to do with them, but I said to her I would like to place it on record that I’m getting so
much for the wreck, so that in case down the road if we have to end up fighting about
this claim, it is recorded, which I did do. And they were in agreement, that’s what they
would [have] sold the wreck for, you know, had the claim been settled in the normal
way.

[. . . ]
The only reason I discussed it with her, that I said to her that we’re going to go into a
dispute about my claim. We’re going to go and fight about it, so I said I am asking you
and informing you that I’m going to sell the wreck, and this is what I have been offered.
Are you in agreement with me that this is a fair value, I don’t want you to come down
the road and say that I gave the thing away or something. And that is where we got –
she said to me it’s not really her business to agree or disagree, but she said yes, the
value that you’re getting is acceptable.’
[9] After disposing of the wreck, the appellant sent a letter, dated 6
November 2002, to Mrs Photenhauer, confirming the telephone conversation
and the sale of the wreck to Hillbank for R21 000 inclusive of VAT, to which she
responded the next day:
‘We acknowledge receipt of your fax dated 6 November 2002 confirming that you have sold the
wreck to Hillbank Motors in amount of R21 000 inclusive of VAT. We will keep a copy of the fax
on file for record purposes. Due to the repudiation of the abovementioned claim by the insurer,
your action is acceptable.’
[10] At a later stage, shortly before action was instituted, the appellant’s
attorneys in a letter of demand pointed out that their client had not yet been

informed of the respondents’ reasons for repudiating the claim, to which
Alexander Forbes replied enigmatically:
‘The underwriter is not obliged to commit to one single reason for repudiation if more than one
reason exists.’
[11] The plea filed in the magistrate’s court in opposition to the plaintiff’s
claim likewise failed to shed light on the nature of the respondents’ defence: the
appellant’s averments relating to the occurrence of the insured event; the
damage to the vehicle beyond economical repair; his compliance with all his
obligations in terms of the policy; and the damage suffered by him were all met
with bare denials. During the trial, the appellant’s evidence went largely
unchallenged and as the trial progressed the initial disputes disappeared one by
one. The respondents closed their case without adducing any evidence. By the
time it came to judgment, the only ‘defence’ that remained alive, was the
argument advanced on behalf of the respondents that the appellant had failed
to establish the value of the insured vehicle in its damaged state. (In fairness to
the respondents it should be pointed out that this very argument was
foreshadowed during the opening address of the appellant’s counsel, when the
respondents’ attorney drew attention to the fact that the appellant had not filed
any expert summary in respect of the post-collision value of the vehicle.)
[12] The respondents’ opposition to the claim was based almost entirely on
the decision of this court in Erasmus v Davis,1 where the majority held that
evidence based on a percentage of the pre-collision value of a vehicle was
insufficient to establish the post-collision value of such vehicle. Referring to the
evidence of the appellant that I have quoted above, the respondents argued
that the same conclusion should follow in this case.
[13] The magistrate, however, distinguished Erasmus v Davis on the basis
that the relationship between the appellant and the respondents in this case is
‘contractual rather than delictual’. He accordingly granted judgment in favour of
the appellant.

1 1969 (2) SA 1 (A).

Judgment of the court below
[14] In its judgment on appeal, the court below rejected the magistrate’s
attempt to distinguish Erasmus v Davis and said the following:
‘It was argued, as I understood the argument, that in the light of the fact that this was
an insurance claim, there should be a lighter onus which had to be applied, which
distinguished the present claim from the decision in Erasmus v Davis which dealt with a
delictual claim. However, it is quite clear that this is a civil claim, and the onus remains
the same in a civil claim whether it is delictual or based in contract, even if the contract
is one of insurance, and that is proof on a balance of probabilities of the amount of
damages suffered. Even if there was a somewhat lighter onus it would still require
evidence to be led, and there was no evidence to establish the value of the vehicle in
its pre-damage [sic – should be “post-damage”] state.’
[15] I respectfully disagree with this approach. Our law recognises a clear
distinction between claims based on contract and those based on delict.2
Erasmus v Davis dealt with an ordinary delictual claim for damages arising out
of a motor collision. This case, on the other hand, is based squarely on a
contract of indemnity insurance, as counsel for the respondents rightly pointed
out. This fact, in my view, has important consequences – not only with regard to
the onus of proof, but also to the facta probanda required in order to succeed.
[16] In terms of basic principles of indemnity insurance the insured is entitled
to recover the actual commercial value of what he has lost through the
happening of the event insured against. The ordinary rule is that an insured
must prove that his claim falls within the primary risk insured against, whilst the
onus is on the insurer seeking to avoid liability to prove the application of an
exception.3 In the case of total loss of the insured item, the insurer acquires a
right to salvage in whatever remains and is of value in respect of the item once
the insurer has fully indemnified the insured.4 There is a corresponding duty on

2 See eg Trotman v Edwick 1951 (1) SA 443 (A) at 449A–B.
3 Van Zyl NO v Kiln Non-Marine Syndicate No 510 of Lloyds of London 2003 (2) SA 440 (SCA)
para 7.
4 Cf eg 12 Lawsa (1st reissue) paras 403–405 and the authorities referred to therein.

the insured to surrender the remains of the insured item as salvage.
Furthermore, there is an implied duty on the insured to minimise his loss. 5
[17] Applied to the facts of the present case, the respondents were liable in
terms of the policy in question to compensate the appellant ‘if the vehicle or any
part of it (including accessories) is lost or damaged’.6 The ‘maximum amount
payable’ would be the lower of ‘the sum stated in the Policy Schedule, or the
retail value (adjusted for mileage and condition) . . .’ The sum stated in the
Policy Schedule in this case was R98 100 and the appellant’s unchallenged
evidence established that this sum equalled the retail value of the vehicle. His
evidence further established conclusively that the vehicle was damaged beyond
repair. He has accordingly succeeded in bringing himself within the primary risk
insured against, with the result that the respondents were contractually bound to
indemnify him in an amount of R98 100, less the ‘first amount payable’
amounting to 5% of the agreed loss, unless the respondents could establish
some valid excuse for refusing to pay.
[18] Had the respondents complied with their contractual obligations, the
value of the wreck would not have been an issue between the parties when the
claim was made (a) because the wreck had not yet been disposed of and
(b) because the respondents would in any event have been entitled to the wreck
of the car in accordance with their right to salvage. In all probability the
respondents would have disposed of the wreck to the same scrap dealer that
bought it from the appellant and probably at the same price (as Mrs Photen-
hauer admitted to the appellant).7
[19] Instead, the respondents repudiated liability for reasons that, to this
day, remain unknown. The conclusion is irresistible that the respondents had no
valid excuse for repudiating liability. Faced with such repudiation, it was
incumbent upon the appellant to take reasonable steps to minimise his loss. His
own evidence that he did everything reasonable in order to get the best price

5 D M Davis Gordon & Getz The South African Law of Insurance 4ed (1993) p 251–252.
6 The term ‘compensate/compensation’ is defined in the policy as ‘[the respondents’] liability to
settle your approved claim either by payment, by repair or by replacement (at out choice).’
7 Para 8 above.

available went unchallenged. Thus, it was not suggested to the appellant that
the wreck could or should have been sold in a market other than the one in
which it was eventually sold – a market, I may add, that has been established
by the respondents themselves, as members of the short-term insurance
industry. Nor was it suggested to the appellant that the price obtained for the
wreck was in any way unreasonable, or that a better price could have been
obtained if the wreck were to have been disposed of elsewhere or in some other
manner, eg, by advertising in the local press; by public auction or by
approaching other scrap dealers in East London.
[20] Can the respondents in these circumstances avoid liability simply
because the appellant has failed to adduce expert evidence as to the post-
collision value of the wreck where they have failed to show that there was any-
thing more that he could have or should have done so as to minimise his loss?
The answer must clearly be no. It is not necessary for purposes of this case to
decide whether the onus rests on the appellant to prove that he took reasonable
steps to minimise his loss, or whether it is for the respondents to prove that he
has failed to do so. It is sufficient to hold, as I do, that on the evidence in this
case the appellant has proved – at least prima facie – that he has taken
reasonable steps to minimise his loss and the respondents have failed to rebut
such prima facie case.
[21] It follows from the foregoing that the reliance on Erasmus v Davis, both
by the respondents and by the court below, was entirely misplaced. It is
accordingly not necessary for this court to consider whether or not the evidence
adduced on behalf of the appellant as to the value of the vehicle in its post-
damage state was sufficient.

[22] It follows that the judgment of the court below cannot stand. In the
result, the appeal succeeds with costs. The order of the court below is set aside
and is substituted with the following:
‘The appeal is dismissed with costs.’

B M GRIESEL
Acting Judge of Appeal

APPEARANCES:
FOR APPELLANT:
G S Wernberg

Instructed by

Van Rensburg & Associates

East London

Jordaans Rijkheer & Partners

Bloemfontein

FOR RESPONDENT:
B P Geach SC

Klagsbrun de Vries & Van de Venter

Hatfield

Honey Attorneys

Bloemfontein