Commercial Law Index

The court considered whether the second respondent was an agent of the appellants and entitled to a commission.

The court held that an agency is a fiduciary relationship created when a principal gives authority to an agent to act on his behalf which is accepted by the agent. The court also held that for a real estate agent to claim commission they must show that there was an introduction of a purchaser which was an efficient cause in bringing about the sale of a property. Professional Conduct for Legal Practitioners 2007 Rule 7(2)(b) does not forbid a legal practitioner from engaging in the business of a commission agent. 

The court found that there was no illegality in the agency agreement between the second respondent and appellants.

The court accordingly dismissed the appeal and awarded costs to the respondent.
 

The respondent’s non-disclosure of the nature of a business conducted by a tenant on its insured premises was held to be material for the purposes of s 53(1) of the Short-Term Insurance Act. The court ruled that the failure to advise appellant of highly flammable materials being used to manufacture truck and trailer bodies on the property rendered the insurance contract void. The court found that a reasonable, prudent person would have viewed the disclosure of this information as relevant to the overall risk assessment, and that appellant had been induced into extending the cover.

The respondent unsuccessfully raised the defence of estoppel based on appellant’s failure to conduct a survey of the premises, at respondent’s request, to identify potential risks which could affect the policy. The court found that no misrepresentation could be shown on appellant’s part; estoppel was therefore not established.

Wallis JA concurred with the majority ruling but focused his reasoning on the practical and logical flaws in the respondent’s justification for its non-disclosure.

The appellant had decided not to claim two previous accidents because he did not want to lose his no-claim bonus. This case highlights the effects of an “OUT bonus” clause within an insurance policy that positively discourages clients from submitting claims.

The court considered whether the appellant’s failure to disclose the two previous incidents in which the vehicle was damaged within 30 days, allowed the respondent to avoid liability in terms of the contract. The court had to decide whether the appellant’s inaction amounted to a breach of the insurance policy, which had stated in plain language that one is rewarded for not claiming.

The court held that the insurer’s policy created a self-absorption of any damage caused by the insured, whereby, the insured was to be paid 10% of their premiums after the first three years of the policy. The court held that this formed the basis of the appellant’s decision to not disclose his claims.

The court was not satisfied that the appellant’s failure to disclose the two previous incidents within 30 days amounted to a rejection of the claim. The court held that the obligation to report “incidents” created uncertainty, especially in situations whereby the insured had no intention of lodging a claim. In this case, it was evident that the appellant’s decision not to claim was a result of the attraction of the OUT bonus.

Thus, the court upheld the appellant’s claim and held that the defendant was liable to compensate the appellant.

A dispute between the company and the bank arose in respect of a specimen signature card allegedly issued for Susan Margaret Howard Bristow (Susan) as a director of the company. The dispute arose because the signature of Dr. Alex Babitunga authenticating Susan's specimen signature card was apparently forged. Additional words written on the card, altering the previous arrangements with the bank requiring two signatures for authorisation of withdrawals, appeared without any initials, signatures, authentication or stamping by the person or persons who cancelled them. The bank permitted certain withdrawals from the company bank account in accordance with the instructions on the card; as opposed to the earlier instructions.

The respondent alleged that the appellant had acted in breach of its duty to the respondent as its customer and had been negligent in permitting the respondent’s accounts to be cleared of all the money in them without the respondent’s authority.

The issues were whether the lower court erred in law and in fact in not holding that the respondent was estopped from saying that Susan Bristow was not an authorized signatory to the respondent's account.

The court explained that the principles of estoppel provides that when one person has, by his or her declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon that belief, neither he or she nor his or her representative shall be allowed, in any suit or proceeding between himself or herself and that person or his or her representative, to deny the truth of that thing. One of the conditions for the doctrine to apply is, therefore that the act or omission by the person against whom estoppel is to be set up, as a defense, must have been intentionally caused, in the instant case the fraud which the two courts below found had caused the appellant to act to its detriment believing it to be true was unknown to the respondent until the police report. The court held that the defense of estoppel was not available to the bank against the company because the respondent was unaware of Susan's fraudulent signatures on the cheques until the police investigation and report.

The court held that all documents concerning the respondent's accounts were in the possession and custody of appellant bank. Only the appellant knew and was responsible for entries on the bank accounts, it bore responsibility as the banker to what entries were made on those accounts without respondent's authority. The appeal was therefore dismissed with costs.