THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

NOT REPORTABLE
Case No: 383/2013

In the matter between:

VAN DE WETERING ENGINEERING
(PTY) LTD                                                                                         APPELLANT

and

REGENT INSURANCE COMPANY                                          RESPONDENT

Neutral citation: Van de Wetering Engineering v Regent Insurance (383/2013)
[2014] ZASCA 18 (26 March 2014)

Coram:
Mthiyane DP, Leach, Petse JJA, Van Zyl and Legodi AJJA

Heard:
25 February 2014
Delivered:
26 March 2014

Summary: Claim for indemnity in terms of a Prize Indemnity Insurance Policy ─
repudiated by insurer ─ Claim by insured company dismissed by high court ─ risk
insured against found not to have occurred ─ appeal dismissed.

______________________________________________________________________________

ORDER

On appeal from: North Gauteng High Court, Pretoria (AA Louw J sitting as court
of first instance):

1. The appeal is dismissed with costs.
2. The order of the court a quo in respect of the reserved costs on 28 July 2011 is
set aside.
3. The parties are granted leave to approach the court below, if so advised, to
present argument and for a ruling on the question of costs referred to in paragraph
2 of this order.
__________________________________________________________________

JUDGMENT

Mthiyane DP (Leach, Petse JJA, Van Zyl and Legodi AJJA concurring)

[1] The question to be considered in this appeal arises from a repudiation by the
respondent of the appellant’s claim for indemnification under a policy of
insurance. The appellant concluded a Prize Indemnity Insurance contract with the
respondent. The appellant, as insured, submitted a claim for indemnity under that
policy but this was rejected by the defendant as the insurer, for reasons which will
emerge later in the judgment. A subsequent action by the appellant in the high
court, to enforce its rights under the policy, failed ─ hence this appeal. The appeal
with the leave of the high court is against the judgment and order issued by AA

Louw J in the North Gauteng High Court, dismissing the appellant’s claim with
costs, including the wasted costs reserved on 28 July 2011.

[2] It is convenient to refer to the appellant as the plaintiff and the respondent as
the defendant. The plaintiff, Van de Wetering Engineering (Pty) Ltd is a company
which manufactures Afrit trailers. On 9 October 2008 it held a golf day for its
clients and potential clients at Zebula Country Estate. As part of a marketing
strategy to liven up proceedings, the plaintiff also sponsored a competition
analogous to a ‘hole-in-one’. In a golf game a ‘hole in one’ occurs when a player
hits the ball directly from the tee into the hole with one shot. It is however not
necessary that the ball should go directly into the hole. It may hit other objects or
the ground on its way.

[3] The plaintiff called its competition a ‘trailer-in-one’. This was because the
competition required a player to land the ball inside a trailer. A player who hit the
ball from the tee into the trailer with one shot would win a trailer worth R456 000.
If more than one player managed to get the ball into the trailer, the winner would
be the one whose ball ended up closest to the pin, which would be placed inside the
trailer.

[4] The plaintiff wished to be insured against the costs it would incur in the
event of one of the competitors succeeding in getting the ball into the trailer or
hitting it close to the pin located in the trailer. And so prior to the competition the
plaintiff, on 15 September 2008, took out a policy of insurance to cover itself
against liability to pay the prize in the event of anyone of the participating players
achieving a ‘trailer in one’ or hitting the ball nearest to the pin. This type of cover
is common in golf competitions. As I have already indicated it is known as prize

indemnity insurance or hole in one insurance. Prize indemnity insurance offers a
policy that would pay the winning golfer if he or she achieves a hole in one. The
main benefit of prize indemnity insurance is that the company sponsoring the
competition gets the benefits of marketing a high profile event or its products
without being required to cover the cost, if the high valued prize is won. All that it
loses in that event is the premium paid the insurer.

[5] It is fair to assume that the plaintiff would have taken the above factors into
account when it took out a prize indemnity insurance policy with the defendant.
The terms and conditions of the policy are set out in the policy and the schedule
annexed to the policy. In terms of the policy the defendant:
‘Indemnified the insured in respect of a liability to award a prize to the value of R456 000 (four
hundred and fifty six thousand rands only) to the first golfer who attempts to hit the ball inside
the trailer. Only if the ball lands inside the trailer and does not bounce out, will it be deemed a
win whilst, participating in the insured Event.’

[6] The policy stipulated further that the defendant ‘shall indemnify the insured
for the expenses incurred by the insured [the plaintiff] in presenting the Prize stated
. . . to a contestant golfer’ for making a ‘trailer in one’. The limit of the plaintiff’s
liability was, as I have indicated, stated in the schedule to the policy as R456 00,
being the sum assured. The premium paid by the plaintiff in exchange for the cover
was the sum of R45 600. In the schedule it is stated that the number of players
were not to exceed 80 amateurs and the attempts to hit a ‘trailer in one’ was also
limited to 80. Other details set out in the schedule included the distance from
where the players were to tee off, which was 160 metres from the trailer, and the
size of the trailer, the particulars of which are not relevant to the question to be
determined in this appeal.

[7] The policy also stipulated that the defendant’s liability thereunder was to be
subject to a number of conditions, one of which was the following:
‘2 The tournament shall be conducted in accordance with rules, regulations and guidelines
established by the International Professional Golfers Association (IPGA) or the International
Amateur Golfers Association (IAGA)’.

[8] The ‘trailer in one’ competition was to commence soon after the completion
of the round of golf, which the invitees of the plaintiff had played. Only some of
those persons who had partaken in the golf day took part in the ‘trailer in one’
competition.

[9] Before the competition started, the plaintiff’s managing director, Mr Andre
Van de Wetering, explained the rules of the competition to the participants. In
response to a question, he announced that the plaintiff’s employees could
participate in the competition for fun but could not win. In his evidence at the trial
he admitted that he made this announcement

[10] On the day and time of the competition the defendant had an assessor, Mr
Sareshen Reddy, in attendance to ensure that all of the conditions laid down by the
defendant were complied with. The announcement that the plaintiff’s employees
were not eligible to win the prize should they succeed in obtaining the ‘trailer in
one’ was made in the presence of approximately 160 people. Van de Wetering
stated in his evidence that when he made the announcement he was not sure of the
terms of the policy and wished to avoid the embarrassment which could follow
should an employee win and it turn out that the terms of the insurance contract
prohibited an employee from winning the prize.

[11] The competition began. Mr Van de Wetering was the first to hit a ball and,
amazingly, it bounced and landed inside the trailer. No other competitor succeeded
to hit a ball into the trailer, despite the fact all the 80 players and some 200 others
attempted to do so.

[12] After the competition the assessor, Mr Reddy, submitted a report to the
defendant’s underwriters KEU Underwriting Managers who had underwritten the
policy contract, on the defendant’s behalf. In a letter addressed to Ms Denise
Hattingh of the underwriters, he reported as follows:
‘I was told by Mr Andre van de Wetering, before the trailer competition could start that no one
that is employed by Afrit is allowed to win the trailer, but they are going to have a shot for fun.
Mr Andre Van de Wetering had started the competition by hitting the first ball for the trailer,
which had bounced and went in.
No one else that had participated in the competition had managed to get their balls in the trailer.
Furthermore to end the series of shots taken to win the trailer, Mr Andre van de Wetering had
taken another shot to close off the competition and he missed.’

[13] The assessor did not consider Mr Van de Wetering to have won for two
reasons. The first was that he was not eligible to participate in the competition as
he was an employee of the plaintiff. The second was that his ball had to enter the
trailer directly and not bounce. Mr Van de Wetering’s ball had bounced before
entering the trailer.

[14] Another significant factor is the following. In terms of the rules of the
competition the winner was to be announced at the prize giving ceremony at the
end of the round of golf later that evening. No winner was announced and no prize
was awarded to Mr Van de Wetering at the prize giving ceremony. No claim was
made to the defendant’s assessor, present at the competition for the purpose of

establishing who, if anybody had won. Mr Van de Wetering himself made no
claim. As already indicated, after the competition the assessor informed the
defendant that there was no winner and thus no claim.

[15] The competition was on a Thursday and, on the Monday after the
competition, Mr Van de Wetering said he perused the contents of the insurance
policy between the parties and could find no exclusion pertaining to the employees
of the plaintiff. The board and management of the plaintiff thereupon decided to
award the prize to Mr Van de Wetering. Mr Van de Wetering consequently
contacted the broker who proceeded to submit a claim for indemnity to the
defendant on the plaintiff’s behalf, to cover the cost of the prize of the trailer in the
sum of R456 000.

[16] As indicated the defendant repudiated liability on the two grounds referred
to in the assessor’s report, the most important of which was, in my view, that Mr
Van de Wetering was not eligible to partake in the trailer in one competition as he
was an employee of the plaintiff. The second reason, relating to the bouncing of
the ball before landing in the trailer, is groundless and I did not understand counsel
for defendant to place any reliance on it. It flounders in the face of the condition
stipulated in the schedule to the policy where it is stated that, an attempt to hit the
ball inside the trailer will be deemed a win ‘only if the ball lands inside the trailer
and not bounce out’. There is no mention of the ball bouncing before it lands inside
the trailer. Under the circumstances that ground cannot be upheld as an excuse for
the defendant’s refusal to pay the claim in terms of the policy of insurance.

[17] In the pre-trial minute dated 14 July 2011 it is recorded that the plaintiff
‘accepts that it bears the onus and duty to begin to prove that the occurrence

against which the insurance policy applied, occurred’ (that is, to bring the
plaintiff’s claim within the four corners of the policy). What is also minuted is the
plaintiff’s contention that the defendant bears the onus of justifying any
repudiation once the plaintiff has proved the aforegoing.

[18] In terms of the basic principles of indemnity insurance an insured is entitled
to recover the actual commercial value of what it has lost through the happening of
an event insured against. The ordinary rule is that an insured must prove that its
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.1

[19] In the present matter the peril insured against was the possibility of one of
the golfers partaking in the competition getting the ball into the trailer and thus
rendering the plaintiff liable to award the prize of the trailer to the winner. There
was however another twist to the tail. The winning golfer had to be eligible to
partake in the competition. Based on the announcement made by Mr Van de
Wetering before the commencement of the ‘trailer in one’ competition, the
defendant contends that Mr Van de Wetering was disqualified because he was an
employee of the plaintiff.

[20] On the contrary the plaintiff contends that there is nothing in the policy
which suggests that employees of the plaintiff were not eligible to participate. Mr
Van de Wetering avers that his announcement that employees could not win but
were entitled to play just for fun was a mistake, based on the fact that he had not
seen the conditions of the policy.

1 Walker v Santam Ltd 2009 (6) SA 224 (SCA) para 16.

[21] It is true that the policy does not say who may or may not participate in the
competition. But the policy cannot be interpreted and applied or considered in
isolation from the rules relating to participation in the competition. Those rules
applied in tandem with the policy. In general an assurance policy should be
construed in accordance with sound commercial and good business sense, so that
the provisions receive a fair and sensible application.2 This court cautioned against
interpreting a provision in a policy of insurance in a way that would conflict with a
business like interpretation.3 In my view what this means is that an insurance
policy the purpose of which is to cover perils in a business setting cannot be
considered in isolation from commercial and business practices. By parity of
reasoning a policy of insurance in a golf competition, the prize indemnity
insurance policy so called, cannot be considered in isolation from the rules of the
competition to which it is intended to apply. It is the rules of the competition which
determine who should play, how the game should be played, by whom, the ranking
of the particular player, to mention just a few important factors. Those rules were
that in order for it set by the appellant who was sponsoring the golf day, albeit to
seek to recover under the prior insurance its rules had at least to encompass the
conditions of liability prescribed by the insurance contract.

[22] The announcement made by Mr Van de Wetering that employees could not
win a trailer was part and parcel of the rules of the competition, laid down by the
appellant. Those rules excluded an employee of the appellant from winning the
prize. Although it was previously argued that it had not been shown that he was
such an employee, as managing director, he clearly was, as counsel for the plaintiff
correctly conceded before this court, was the case. Therefore the policy of

2 Grand Central Airport (Pty) Ltd v AIG South Africa Ltd 2004 (5) SA 284 (WLD) para 9.
3 Van Zyl NO v KLN Non-Marine Syndicate NO 510 of Lloyds of London 2003 (2) SA 440 (SCA) at 457 para 44.

insurance in issue in the present matter must be construed and applied with due
regard to the rules of the competition. There is some indication of this symbiosis
between the rules of the competition and the conditions of the policy. The policy
conditions are applicable in the present matter and it is stated that the company’s
liability under the policy shall be subject to certain conditions. The policy then
goes on to provide that the tournament, meaning the golf competition, shall be
conducted in accordance with the rules, regulations and guidelines established by
the IPGA or the IAGA. It is not however suggested that the IPGA and IAGA rules
apply here but the plaintiff’s case must stand or fall by the terms and conditions of
the policy and the rules of the ‘trailer in one’ competition as laid down by the
plaintiff. Clearly therefore the policy does not exist and cannot be construed and
applied in isolation from the rules of the competition as they applied to the golf day
event.

[23] It then remains to consider whether Mr Van de Wetering was eligible to win
the prize in the ‘trailer in one’ competition. If he was, the risk insured against
occurred and the plaintiff became entitled to recover the cost of the prize to be
awarded in the sum of R456 000 and the defendant was consequently liable to pay.
For the plaintiff to sustain a claim under the policy it must have become legally
liable to pay the prize of a trailer one. It is only then that the right to claim an
indemnity would have arisen.4 As the plaintiff failed to bring itself within the terms
and conditions of the policy considered together with the rules of the trailer in one
competition, Mr Van de Wetering was not eligible to win the prize in the
competition and the risk insured against, which was essential to render the plaintiff
liable, did not arise. In the circumstances the high court was justified in dismissing
the claim with costs. In that event the appeal must therefore fail.

4 Truck and General Insurance Co Ltd v Verulam Fuel Distributors CC & another 2007 (2) SA 26 (SCA) para 16.

[24] The order pertaining to the reserved costs on 28 July 2011 was made in error
and falls to be set aside. The parties may approach the court below, if so advised,
to present argument and ask for a ruling once more on those costs.5

[25] In the result:
1. The appeal is dismissed with costs.
2. The order of the court a quo in respect of the reserved costs on 28 July 2011 is
set aside.
3. The parties are granted leave to approach the court below, if so advised, to
present argument and for a ruling on the question of costs referred to in paragraph
2 of this order.

K K Mthiyane

Deputy President

5 Firestone South Africa (Pty) Ltd v Genticuro AG 1977 (4) SA 298 (A) at 307G-H.

Appearances

For the Appellant:

T A L L Potgieter
Instructed by:
Savage Jooste & Adams, Pretoria
Webbers Attorneys, Bloemfontein

For the Respondent:

J E Ferreira
Instructed by:
Norton Rose c/o Jacques van der Merwe
Attorneys, Pretoria
E G Cooper Majiedt, Bloemfontein