1. Professor of Shipping Law, University of Cape Town, South Africa. These notes are based closely upon the author's work on Shipping Law & Admiralty Jurisdiction in South Africa (Juta) 1999, especially Part IV dealing with Marine Insurance.
  2. Perhaps the greatest was Grotius (Hugo de Groot, 1583-1645). On the life and work of Grotius, see Carey Miller (1982) Acta Juridica 66-98. Others included Voet, Van der Linden, Van Bynkershoek, Groenewegen, Van Leeuwen and Van der Keesel.
  3. In July 1891. These heads include all maritime lien claims (wages, damage, salvage bottomry and respondentia) and the comparatively narrow admiralty jurisdiction which the Writs of Prohibition and the battles between the Admiralty and common law jurisdiction had left to Admiralty, to an extent restored by the 1840 and 1861 English Acts. For a full discussion on the effect of s 6 and present South African admiralty jurisdiction see the author's work Shipping Law & Admiralty Jurisdiction in South Africa (Juta) 1999 Chapter 1.
  4. Though by an anomalous provision, English law as it was in November 1983 is applied.
  5. Almost boundless in extent by reason of a catchall 'maritime claim' which includes any 'marine or maritime matter'.
  6. English law was however directly applicable to marine insurance from 1879 to 1977. During this period a reception of much English marine insurance principle occurred. The author argues that this received English marine insurance law would now be part of the common law applicable to marine insurance in terms of s 6 of the 1983 Admiralty Jurisdiction Regulation Act. See further Hare op cit Chapter 17 especially §17-2.1.
  7. The nature and extent of the duty to disclose is examined in §18-5.1
  8. Even Professor Schoenbaum in Misrepresentation deals with the two concepts seamlessly.
  9. Oudtshoorn Municipality supra at 433A, quoting with approval from AN Oelofse Die uberrima fides leerstuk in die versekeringsreg unpublished doctoral thesis for the University of Stellenbosch (1983) at 286.
  10. See Carter v Boehm (1766) 3 Burr 1905 per Lord Mansfield at 1165. Cf the minority judgement of Miller JA in Oudtshoorn Municipality supra at 445D-E:
    'The object of devising a means or criterion for determination of the materiality of undisclosed facts must surely be to ensure, as far as is possible, that justice is done to both parties. The insurer is to be protected against non-disclosure which could gravely prejudice him but at the same time the insured ought not to be unfairly required to forfeit his rights under a policy which he entered into in good faith in accordance with his (objectively regarded) reasonable belief that all that was material had been disclosed.'
  11. See for example Schoenbaum "Misrepresentation, Non-Disclosure, and the Duty of Utmost Good Faith in Marine Insurance Law : A comparative analysis of American and English Law" Journal of Maritime Law and Commerce, Volume 29 No 1 1998 1 – 39 at 38 ‘the duty of utmost good faith and to avoid misrepresentation and omissions of material fact normally comes to an end with the formation of the contract and the issuance of the policy’.
  12. [1985] 1 Lloyds’ Rep 437 (QB) . See also Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Limited [1984] 1 Lloyds’ Rep 476 at 525 where Stephenson LJ quoted with approval the statement in Chalmers’ Marine Insurance Act 1906 (9th Ed, 1983, at 24), that the obligation of utmost good faith continues after the execution of the contract.
  13. Videtsky v Liberty Life Insurance Association of Africa Ltd 1990 (1) SA 386 (W). Cf Pereira v Marine and Trade Insurance Co Ltd 1975 (4) SA 745 (SCA)
  14. Described as one of its most noteworthy characteristics in Estate Thomas v Kerr (1903) 20 SC 354 at 374. See also Bank of Lisbon and South Africa Ltd v De Ornelas 1988 (3) SA 580 (SCA) at 606. See generally on equity and good faith in South Africa R Zimmermann Good Faith and Equity at Chapter 7 of Southern Cross, 1996. Zimmermann points out that there is in South Africa no distinction between courts of equity and common law, and that the South African High Court must apply South African law tempered by the Roman-Dutch principles of good faith.
  15. 1988 (3) SA 580 (SCA)
  16. See for example Van der Merwe et al The South African Law of Contract : General Principles §9.7 at 230 - 234
  17. It is thus possible to identify principles of good faith coming through in South African Contract Law to allow estoppel, rectification, undue influence, and ratification. The Bank of Lisbon decision has, in the view of Zimmerman (op cit at 260), artificially stifled the development of the law by unimaginative and formalistic conclusions.
  18. Videtski v Liberty Life Insurance Association 1990 (1) SA 386 (W). But cf. Perreira v Marine and Trade Insurance Co Ltd 1975 (4) SA 745 (SCA)
  19. The EC directive which gave rise to the English Unfair Contract Terms Act, 1977, deems a consumer contract unfair if ‘contrary to the requirement of good faith, it causes a significant imbalance of the parties’ rights and obligations … to the detriment of the consumer’. See further Dean Unfair Contract Terms (1993) 56 Modern Law Review 581.
  20. See a general discussion on good faith in English Contract Law by R Brownsword Two concepts of good faith (1994) 7 Journal of Contract Law 197.
  21. See for example Schoenbaum "Misrepresentation, Non-Disclosure, and the Duty of Utmost Good Faith in Marine Insurance Law : A comparative analysis of American and English Law" Journal of Maritime Law and Commerce, Volume 29 No 1 1998 1 - 39
  22. Mutual & Federal Insurance Company Limited v Outdshoorn Municipality 1985 (1) SA 419 (SCA) at 431
  23. 'Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact, and his believing the contrary' Carter v Boehm (1766) 3 Burr 1905, 1 WBl 594. See also London Assurance v Mansel (1879) 11 ChD 363: 'Whether it is life, or fire or marine assurance, I take it good faith is required in all cases …' (per Jessel MR at 367).
  24. Cf. Oudtshoorn Municality supra per Joubert JA who found that that there could be no good, better or best faith. There was, said the learned judge of appeal, only good and bad faith.
  25. Per Vaughan Williams LJ in China Traders Insurance Co v Royal Exchange Assurance Corporation [1898] 2 QB 187
  26. As an English judicial coining, it is probably more correct to use the English expression rather than to attempt to bestow an unwarranted pedigree of civilian antiquity upon the notion of the utmost good faith by using a Latin term. On the origins of the expression, see generally Schoenbaum "Misrepresentation" op cit at 1 - 3. Joubert JA in Oudtshoorn Municipality at 431 in which the learned judge alludes to an English decision of 1850 as the earliest mention of the expression. In fact it seems to have been used earlier, in the United States at least: in M'Lanahan v The Universal Insurance Co 26 US (1 Pet) 170, Judge Story, in 1878 states:
    'The contract of insurance has been said to be a contract uberrimae fidei, and the principles which govern it are those of an enlightened moral policy.'
  27. Ivamy General Principles op cit Chapter 12 at 136 and the cases cited therein
  28. Arnould Marine Insurance 7th Ed, 1901 at 610 quoting 3 Kent, Com 282
  29. The 7th Edition of Arnould is silent upon the extent to which the utmost good faith survives the formation of the contract.
  30. By the General Law Amendment Act, 1977
  31. Outdshoorn Municipality supra at 431 A, and the South African cases cited therein
  32. Oudtshoorn Municipality supra at 433 E - F
  33. It is interesting to note a parallel development away from the utmost good faith in the law of the United States: since Wilburn Boat Co v Firemen’s Fund Insurance Co 348 US 310, 1955 AMC 467 marine insurance law in the United States has been divided between Federal and State regimes. In the absence of an established federal admiralty rule, the federal judiciary should, in terms of Wilburn Boat, apply State Law to marine insurance contracts. Certain states have watered down the requirement of the utmost good faith which has led to a divergence in practice lamented by Professor Schoenbaum. See Schoenbaum "Misrepresentation" op cit, and see also MF Sturley "Restating the Law of Marine Insurance: A workable solution to the Wilburn Boat problem" Journal of Maritime Law and Commerce Vol 29 No 1 January 1998 at 41 in which Professor Sturley proposes a Restatement of the law of marine insurance to remedy the unsatisfactory results of Wilburn Boat.
  34. Pereira v Marine and Trade Insurance Co Ltd 1975 (4) SA 745 (SCA) at 755F in which the learned Chief Justice said 'Insurance policies are, admittedly, contracts uberrimae fidei and this casts upon the insured, or strictly the proponent for insurance, the duty to disclose to the insurer, before conclusion of the contract, all facts material to the risks which are known to the insured.'
  35. Thus for example the French and Belgian Code Civil 1134: 'Contracts must be performed or executed with good faith'.
  36. See for example the Code Civil 1892/3 read with Law no 67-522, sec 6 deals with the French concept of reticence in terms of which a contract is rendered voidable where there is non-disclosure of material information or misrepresentation which appreciably dimishes the insurer's opinion of the risk - without the necessity of a causal link between the misinformation or disclosure and the loss; The Scandinavian systems are part codified, but much reliance is placed upon the contractual guidelines of the Norwegian Marine Insurance Plan (now in its 1997 version), available on the internet via http://www.uctshiplaw.com/shiplink.htm. The Plan provides for disclosure in ss 3-1 to 3-7; The Italian Code of Navigation makes provision for marine insurance in ss 513 - 547; The German Commercial Code provides for marine insurance in ss 778 - 900, but these measures are superceded in practice by, and should be read with the German General Rules of Marine Insurance (Allgemeine Deutsche See-Versicherungs Bedingungen "ADS") especially paras 19 - 22. In German law a misrepresentation or non-disclosure in good faith may not be invoked against the assured, but where the assured lacks good faith the insurer will escape liability per par 20(1). It is especially interesting to note that the German ADS in s 13 now requires the utmost good faith in marine insurance.
    In Greece, Art 189 - 225 of the Greek Commercial Code and Art 257 - 288 of the Greek Code of Private Maritime Law (Law 3716/1958 enables an underwriter to annul an insurance contract if it can be shown that the insurer would not have entered into the contract or would have made it on different conditions, had he known of the correct factual situation.
    For a discussion on the Australian perspective see Havenga Good faith in insurance contracts - some lessons from Australia (1996) SAMercLJ 75.
    For further sources upon the seminar topic "Is the doctrine of utmost good faith out of date?" see the papers by Griggs, Kirby, Rohart and Staring published as the collected documentation of the 35th International Conference of the Comite Marime International held at Sydney, 1994.
  37. See generally Lubbe Bona fides, billikheid en die openbare belang (1990) TSAR 14.
  38. See for example Pereira v Marine and Trade Insurance Co Ltd 1975 (4) SA 745 (SCA) at 755F; The Oudtshoorn Municipality decision at 433 E:
    'There is a duty on both insured and insurer to disclose to each other prior to conclusion of the contract of insurance every fact relative and material to the risk (periculum or risicum ) or the assessment of the premium.'
  39. On such equality in insurance see Trakman Fairness, expediency and the law of insurance (1982) SAILJ Vol 6 No 4 88
  40. Oudtshoorn Municipality supra at 433 E: 'This duty of disclosure relates to material facts of which the parties had actual knowledge or constructive knowledge prior to conclusion of the contract of insurance.' Cf. AN Oelofse Die omvang can 'n versekerde se vorrkontraktuele openbaringsplig MB (1984) 94
  41. Like the well established and unequivocal English law use of the term utmost good faith which, as has been suggested above, could be regarded as having been imported into South African marine insurance law during the century of the direct application of English law in the Cape and the Orange Free State, the English law relating to the extent and the test of the duty to disclose remained settled as the 'prudent insurer' test for much of the last century and a half. Arnould Marine Insurance 7th Ed at 673 states:
    ‘All facts are material which would affect the mind of a rational underwriter, governing himself by the principles on which underwriters in practice act, as to whether he will take the risk at all and at what premium he will take it.
    This is the ‘reasonable underwriter test’. Section 18(2) of the 1906 Marine Insurance Act provides that 'every circumstance is material which would influence the judgement of a prudent insurer in fixing the premium, or determining whether he will take the risk.' Although this wording would seem to be clear, and although the prudent insurer test was upheld by the English courts as recently as Container Transport International v Oceanus Mutual Underwriting Association (Bermuda) Limited) [1982] 2 Lloyds’ Rep 178 (QB), the House of Lords saw fit in Pan Atlantic Company Limited v Insurance Company Limited [1994] 2 Lloyds’ Rep 427 to re-examine the test of materiality in the light of ss 18(1) and 20(2) of the 1906 Act. Lord Mustill found that the sections were an insufficient codification, and formed the opinion that ‘the duty of disclosure extend(s) to all matters which would have been taken into account by the underwriter when assessing the risk which he was consenting to assume.' The law Lords then introduced a further stage to the inquiry, and that is whether the underwriter was induced by the non-disclosure or misrepresentation to take on the risk. Furthermore, once the first stage of materiality has been established, there is a presumption of inducement, rebuttable by the assured. For a full discussion of the ‘titanic judicial struggles’ of the CTI and Pinetop cases, see Professor Schoenbaum Materiality op cit. See also M Clarke Insurers - influenced but not yet induced [1994] LMCLQ 449
  42. See footnote 122 below
  43. See for example Gordon & Getz: The South African Law of Insurance 4th Ed at 113 ‘the test is not whether the insurer in question would have himself been influenced by such circumstances, but whether, applying the standard of the judgement of a prudent, reasonable insurer he would have been influenced in his judgement’. See also the non-marine cases quoted ibid fn 12
  44. 1922 AD 33
  45. Mutual & Federal Insurance Company Limited v Outdshoorn Municipality 1985 (1) SA 419 (SCA) at 435
  46. Outdshoorn Municipality supra at 435 H. the minority judgement of Miller JA in which the learned judge favoured the retention of the description ‘uberrimae fides’ which he stated should not be taken too literally: ‘One may be less than honest but one cannot be more honest than honest. After the very many years in which the term has been used in this context, it is not, I think, potentially misleading. Miller JA also made reference to the desirability of a combination of a prudent insurer and reasonable assured test for materiality (at 443 E – G).
  47. Upon the distinction, if there be one, between non-disclosure and misrepresentation, see Madhuku Is there a distinction between misrepresentation and non-disclosure? (1995) SALJ 111; Scholtz Materiality of a misrepresentation or non-disclosure De Rebus May 1995 304; Ntsaluba A critical evaluation of the insurer's remedies arising from misrepresentation & breach of warranty (1996) 8 MercLJ 331
  48. Clearly the more recent development of the two tier test of Pinetop would not bind the South African court as it was a decision made after 1977 from which time English law no longer applied in South Africa – see §17-2.2.
  49. See eg Ionides v Pender (1874) LR Vol 1
  50. This is the view taken by AN Oelofse Die omvang can 'n versekerde se voorkontraktuele openbaringsplig MB (1984) 94
  51. As Miller JA sought to do in his dissenting judgement in Oudtshoorn Municipality at 446, arguing that the reasonable person should not be viewed in a vacuum.
  52. The reasonable insurer test was applied (though not to marine insurance) in Roome NO v Southern Life Association of Africa 1959 (3) SA 638 (D). For a discussion of whether the reasonable person should be put into the context of an insurer or an insured, see AJ Kerr The duty to disclose in a pre-contractual context SALJ (1985) 102 SALJ 611. See also DM Davis The duty of disclosure and the AD: A return to the charge (1983) SAILJ Vol 9 No 2 at 642 – 670 in which Professor Davis analysed the South African law prior to the Outdshoorn Municipality decision and concluded that neither the reasonable insurer nor the reasonable insured test was entirely satisfactory. The reform for which Professor Davis called was not given by the Outdshoorn Municipality decision which is criticised by Professor Davis in his edition of Gordon & Getz, op cit at 116 – 117.
  53. Miller JA made reference to the fact that the English 1954 Law Reform Committee report comprising 'a very respectable body including at that date Lord Justice Jenkins, Lord Justice Parker, Mr Justice Devlin, Mr Justice G Diplock and other famous men, had recommended that the law relating to the materiality of matters not disclosed should be changed so as to require that for the purpose of any contract of insurance no fact should be deemed material unless it would have been considered material by a reasonable insured.'
    See also the somewhat tentative approval of the reasonable insured test in Roome NO v Southern Life Association of South Africa 1959 (3) SA 638 (D) at 641.
  54. Gordon & Getz (4th Ed, reflecting the views of Prof Dennis Davis) at 116. See also A Hyman Non-Disclosure in Insurance 1979 SAILJ at 12
  55. Non-disclosure and breach of warranty: Law Commission working paper No. 73 and Law Commission Report No. 4 (Cmnd 8064 1979-1980). It is a matter of some regret to many English lawyers that the House of Lords in Pinetop was not guided by the above sentiments in correcting what was broadly perceived as the injustices of the prudent insurer test. The second stage of the Pinetop inquiry looks not at the reasonable person's perspective of what the prudent underwriter would expect to be disclosed, but rather at whether or not the particular insurer was induced into the contract by the non-disclosure - the more usual approach to misrepresentation.
    56.
  56. Marnewick The Codification of the South African law of marine insurance, unpublished LLM thesis submitted to the Faculty of Law of the University of Natal, 1996, of which Chapter 5 gives a thorough review of the law relating to non-disclosure in marine insurance in South Africa and England and then embarks upon a comparative analysis of the civil law countries and the USA and Canada. He points out that the old English objective 'prudent insurer' test of materiality is matched in civilian jurisdictions in the main with a subjective 'particular insurer' test. Dr Marnewick favours the reasonable person test of Oudtshoorn Municipality, but recognises that that decision, not being upon marine insurance law, is 'not the last word'. Prof van Niekerk in Openbaringsplig by verskeringskontrakte (1989) 1 SA Merc LJ 87 comments 'The proposer's duty to disclose is a matter upon which much is written and litigation frequently occurs. One can only hope that the many uncertainties that remain in our law concerning this important and contentious aspect of insurance law are soon swept away by our courts' (my translation). Cf Prof van Nikerk's The reform of South African Insurance law: a preliminary inquiry 1983 MBL 88. On the law in the USA see Schoenbaum Misrepresentation, op cit.
  57. See for example the remarks of Didcott J in Pillay v SA National Life Assurance 1991 (1) SA 363 (D) who favours legislative amendments to ensure that where it be shown that an insurer would have taken the risk but for the non-disclosure though at a higher premium, a claim should be allowed subject to the assured meeting the difference in the premium. Cf. van Niekerk [1991] 3 SA Merc LJ.
  58. Oudtshoorn Municpality supra at 432E - F
  59. Joubert JA went on to state ‘breach of this duty of disclosure amounts to mala fides or fraud, entitling the aggrieved party to avoid the contract of insurance’. With respect, this is an incorrect conclusion as there are many circumstances short of fraud or indeed mala fides which may be attendant upon a non-disclosure. The non-disclosure may be entirely innocent of malice. It would nevertheless entitle the insurer to avoid liability provided that the test of materiality was met.
  60. Anderson Shipping v Guardian National Insurance 1987 (3) SA 506 (SCA)
  61. Halsbury’s Laws of England 4th EditionVol 25 Insurance by E R Hardy Ivamy at 206
  62. The court’s finding in Anderson Shipping, supra was that the assured did not have either constructive or actual knowledge of the facts which were not disclosed.
  63. See for example Rand Bank Bpk v Santam Versekeringsmaatskappy Bpk 1965 (2) SA 456 (W): Nel v Santam Insurance Co Limited 1981 (2) SA 230 (T); Bonitas Medical Aid Fund v Volkskas Bank Limited and another 1992 (2) SA 42 (W) and on appeal 1993 (3) SA 779 (SCA) and Gorr and another NNO v Safficon Industrial Pty Limited 1994 (4) SA 536 (W). See also Anderson Shipping and Outdshoorn Municipality, supra.
  64. See e.g. Perreira v Marine and Trade Insurance 1975 (4) SA 745 (SCA)
  65. See §18-1.2
  66. Ionides v Pacific Fire and Marine (1871) LR 6 QB 674 and Bennett The Role of the Slip in Marine Insurance Law 1994 LMCLQ 94
  67. English Marine Insurance Act, 1906, s18(3)
  68. See for instance Arnould Marine Insurance 7th Ed, 1901, at 698 in which the dictum of Lord Mansfield in Carter v Boehm (1766) 3 Burr1909 was quoted as follows:
    ‘The assured need not mention what the underwriter knows, what way so ever he came by that knowledge; or what he ought to know; or takes upon himself the knowledge of; or waives being informed of; or what lessens the risk agreed and understood to be; or general topics of speculation; or every cause which may occasion natural perils, as the difficulty of the voyage, kind of seasons, probability of hurricanes, earthquakes, etc; or every cause which may occasion political perils, from the rupture of states, from war, and the various operations of it, upon the probability of safety from the continuance and return of peace, or from the imbecility of the enemy.’
    Arnould     includes also usages of the trade which the underwriter ought to know, usual clauses in mercantile contracts such as charter parties, general trade and revenue laws, and possibly also the contents of the daily Lloyd's Lists (upon which the courts were unsettled) unless the underwriter can be presumed to have consulted Lloyd's Lists with reference to the risk proposed before assuming it (at 705).
    69.
  69. Jordan v New Zealand Insurance1968 (2) SA 238 (E)
  70. See further §18-7
  71. The amendment occurred in terms of s 19 of Act 39 of 1969.
  72. Qilingele v SA Mutual Life Assurance Society 1993 (1) SA 69 (SCA).
  73. The section will be considered again in relation to warranties in §18-7.
  74. Clifford v Commercial Union Insurance Co of South Africa Ltd, unreported Case No 302/96 (SCA) per Schutz JA, May 4, 1998. In Clifford's case the interpretation of s 63(3) was not at issue in the pleadings, and Schutz JA concluded his comments on the section by indicating that he would let the matter stand with his comments, because upon whatever test, the misrepresentation in casu was material.
  75. Pillay v South African National Life Assurance Co Ltd 1991 (1) SA 363 (D) at 367A-E
  76. Per Schutz JA in Clifford's case:
    'He (Kriegler AJA in Qilingele) places particular emphasis on the reference to "the assessment of the risk under the said policy" as showing, if not very obviously, that the materiality relates to the assessment of the particular risk in the specific policy under consideration (at 75B-C). The emphasised words are, in my view, used for a far more obvious purpose entirely consistent with the traditional common law test of materiality; they recognise that what is material to the assessment of risk attaching to one kind of policy (eg life insurance ) is not necessarily material to the assessment of risk attaching to another kind of policy (e g fire insurance).'
  77. The Short Term Insurance Bill, 1998, currently published for information and approved by the Portfolio Committee on Finance of the House of Assembly in August 1998 (with amendments), fails to address the anomalies of s 63, and merely mirrors the section. It is to be hoped that when the Bill progresses, s 63 will be re-addressed.
  78. See for example Pathescope (Union) of SA Ltd v Mallinick 1927 AD 292 at 300; Christie The Law of Contract (1991) 341 - 344. And note the comments of Shutz JA in Clifford v Commercial Union Insurance Co of South Africa Ltd, supra.
  79. Allen v Sixteen Stirling Investments (Pty) Ltd 1974(4) SA 164 (D), cf. Trollip v Jordaan 1961 (1) SA 238 (SCA), and the commentary upon the apparent contradiction between the two judgements in Christie op cit at 344 - 345
  80. Bowditch v Peel and Magill 1921 AD 561 at 572
  81. Cf. The English law per s 84 of the Marine Insurance Act, 1906 which provides for the refunding of the premium in cases of voidness without fraud or illegality, no attachment of the risk, no insurable interest, pro rata for over insurance and double insurance.
  82. In insurance law however, actual restoration of or a tender to restore the premium is not a prerequisite of a valid repudiation of liability by the insurer where such repudiation is based upon material misrepresentation and/or non-disclosure by the insured: Stumbles NO v New Zealand Insurance Company Limited 1963 (2) SA 44 (SR).
  83. Even if the insurer is partly contributory to and illegality, he may still recover premiums provided his 'guilt' is equal to or less than that of the insured: Jabhay v Cassim 1939 AD 537. Cf. Ivamy Marine Insurance op cit at 84.
  84. See §18-6. It is also common for marine insurance policies to provided expressly for the retention of premiums in the event of misrepresentation, illegality, fraud or any other breach of the terms of the policy cf s 83 of the English Marine Insurance Act, 1906.
  85. Marine Insurance Act 1906 S.78(4). See also Rose Failure to sue and labour, LMCLQ 1989 at 190.
  86. Arnould 7th Edition at 30 quoting Kidston v Empire Insurance Company (1866) LR 1 CP 535 and also the celebrated judgement of Lord Blackburn in Aitchison v Lohre (1879) 4 AC 755
  87. See e.g. Gordon & Getz op cit at 406 fn 266
  88. See the Australian decision of Emperor Gold Mining Company Limited v Switzerland General Insurance Company Limited [1964] 1 Lloyds Rep 348, NSW quoted in Ivamy Marine Insurance op cit at 451 with qualified approval.
  89. The sue and labour clause is a common addition to standard marine insurance policies. See e.g. The Institute Time Clauses (Hulls) 1983 Clause 13 discussed in §19-1.2
  90. Perreira v Marine and Trade Insurance Company Limited 1975 (4) SA 745 (SCA)
  91. See further Gordon & Getz op cit at 405 in relation to the types of costs which may be covered.
  92. Aitchison v Lohr (1879) 4 App Cas 755 (HL). Cf English Marine Insurance Act, 1906, s 78
  93. The Morning Star (Incorporated General Insurances Limited v Shooter t/a Shooter's Fisheries) 1987 (1) SA 842 (SCA). The case was decided upon issues of causation rather than breach of implied duty to minimise the loss: the failure of the owners to pay the fines, and not the forfeiture caused the loss of the vessel, and cover was accordingly denied.

  94. Much confusion arises when reconciling contractual terminology in English law with that in South Africa. In English general commercial law a warranty is a non-essential, non-material term which seldom gives rise to the ability to rescind the contract. In English insurance law however, the warranty is the all-powerful, unquestioning term, automatically material and automatically entitling repudiation. Where English law refers to conditions, South African law uses the description ‘terms’. The English ‘condition’ is generally one which is regarded as so important that any breach of it will entitle the innocent party to treat the contract as discharged. See Bunge v Tradax [1981] 2 Lloyds’ Rep 1. In between the English condition and warranty is the so-called innominate term. See Photo Production v Securicor [1980] 1 Lloyds’ Rep 545. It is thus important, in English law particularly, to distinguish between the warranty in insurance and the warranty in general contract law. In South African law a warranty knows only the meaning ascribed to it in insurance law. English law has been held to apply to warranties in South African general insurance law: Colonial Mutual Life Assurance Society Limited v de Bruyn 1911 CPD 103 at 126 and Morris v Northern Assurance Company Limited 1911 CPD 293 at 304

  95. C Visser Warranties in insurance policies JBL Vol 1 No. 3 and Boberg Trumping an insurance warranty (1969) 86 SALJ 335
  96. See s.33(3) of the English Marine Insurance Act, 1906:
    ‘A warranty is a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date.’
    Perhaps even more onerous to the assured is s 34(2):
    ‘Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and the warranty complied with, before loss.’
  97. §18-5.2
  98. Lewis Ltd v Norwich Union Fire Insurance 1916 AD 509
  99. Innes CJ’s comment that ‘a strict observance of (a warranty’s) terms is a condition precedent to the incidence of liability’ should not lose sight however of the fact that the breach of warranty renders the contract voidable at the instance of the insurer. The contract is not automatically void ab initio, and liability will have attached in respect of all risks prior to the breach. See Lewis Ltd v Norwich Union Fire Assurance supra at 514 – 515.
  100. Promissory and affirmatory warranties are described in s 33(1) of the English Marine Insurance Act, 1906.
  101. See §18-5.2 above. The representation referred to in s 53(1) is a representation made to the insurer, which is not true, whether or not such representation has been warranted to be true. It has been seen in §18-5.2 that only where the particular insurer subjectively would have been affected in its assessment of the risk, may the representation or warranty then be relied upon to repudiate the policy and liability thereon.
  102. Gordon & Getz op cit at 230 et seq
  103. Gordon & Getz op cit at 231. This view is by no means unchallenged: see the footnotes quoted at Gordon & Getz op cit page 231 footnote 138 and particularly Reinecke 1984 TSAR 95.
  104. General Principles of Insurance at para 169
  105. See for example Lewis Ltd v Norwich Union Fire Insurance Company Limited 1916 AD 509 per Innes CJ, Norwich Union Fire Insurance Society Limited v South African Toilet Requisite Company Limited 1924 AD 212 per Solomon JA and even Jordan v New Zealand Insurance Company Limited 1968 (2) SA 238 (E), the decision which proved the catalyst for the promulgation of Section 63(3).
  106. See Van der Keessel 3 26 6
  107. Pillay v South African National Life Assurance Company Limited 1991 (1) SA 363 (D)
  108. The opportunity to clarify and expand s 63(3) was missed in the Short Term Insurance Act, 1998. The section cries out for amendment and is being revisited by a working group set up by the South African Law Commission.
  109. See s 33(3) of the English Marine Insurance Act, 1906.
  110. See for example Provincial Insurance Co v Morgan [1933] AC 240 HL. The principle had strong European roots. See for instance Emerigon op cit Chap I Sec V: 
    … where the agreements of the parties have been drawn up in an obscure and ambiguous manner, the magistrate is authorized to form his decision by the light which legal equity, the common law, the nature of the contract, and the circumstances of the case, may afford him.
  111. See further Birds Modern Insurance Law, Sweet & Maxwell, 1993 at 4 and 131.
  112. My paper is reproduced in the second volume of the conference papers and on this website.
  113. [1927] AC 139.
  114. Law Commission Report No. 104 Cmnd 8064, October 1980 at 82.
  115. Civil Code of Quebec – non-marine insurance article 2412.