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Insurance policy interpretation contra proferentum – armed robbery, theft and hijacking

06 October 2020 Donald Dinnie, Norton Rose Fulbright
Donald Dinnie, Norton Rose Fulbright

Donald Dinnie, Norton Rose Fulbright

The Gauteng High Court considered what constitutes armed robbery, theft and hijacking as indemnifiable events under an insurance policy in Anabella Resources CC v Genric Insurance Company.

The policy did not contain a definition of armed robbery and the definition of theft and hijacking required ‘actual lawful control’ by the insured or its employees of the seized property at the time of the seizure.

The court had to consider whether the indemnifiable events had to all take place at the premises from which the property was removed and from a person in actual control of the property at the time of removal of the property from the premises.

The insured traded gold, cash and diamonds at its business premises. The insured’s financial manager was abducted and forced to instruct the insured’s general manager to remove valuables from the safe and give them to a person who would arrive in their parking lot. The thieves knew the operating procedure of the insured because this type of instruction from the financial manager to the general manager had happened in similar ways before, for customers. Therefore, the instructions did not seem strange, and were carried out. The theft only became apparent to the insured after the financial manager was released.

The force and threats applied to the financial manager were done off the premises. The actions on the premises were carried out under the assumption that they were lawful. The insurer therefore argued that the theft had not occurred on the premises.

When interpreting a policy, consideration has to be given to the context and language of the policy including the meaning of all the words used in the contract, and whether the meaning is clear or ambiguous.

The court held that for the purposes of robbery, force may be exercised remotely, away from the place where the goods are removed. The robbery can occur at two places. The place where the violence occurs and the place where the taking of the property occurs. The theft and hijacking definition did not require that the force occur at the premises where the seizing of the goods occurred. Once again it was sufficient if the force occurred at a location remote from where the taking of the property occurred.

That interpretation is also consistent with the common law definitions of robbery. It is sufficient that the insured is in effective or lawful control of the property, even if remotely.

The indemnifiable event in the policy wording did not require that force against an employee occur at the premises where the property was secured or from where it was removed.

The decision is unsurprising on the wording of the policy.

While the court commenced its judgment by saying that the words of the contract were clear, ascertainable and without ambiguity, the court in conclusion, said that the obligation lies with the insurer as the author of the contract to give certainty to the risks it wishes to exclude and absent that certainty, the provisions of the policy will be construed in favour of the insured in accordance with the contra proferentem rule. The court did not say what was ambiguous about the wording or why reference to the rule was necessary to make its findings. It was not. It had also been common cause at the trial that the wording was clear and unambiguous.

In a long line of authority, our courts have made it clear that the rule only applies where there is genuine ambiguity which cannot otherwise be resolved by applying the ordinary principles of construction. The rule should not be relied on to create ambiguity where there is none.

First published by: Financial Institutions Legal Snapshot

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