A word means what it means – even if you’re an insurer
Are you covered when a striking employee torches one of your vehicles? Most small business owners would answer this question in the affirmative. They would point to the Sasria riot cover which, for all intents and purposes, is a standard line on property and vehicle insurance policies written in South Africa. At a recent Deneys Reitz General & Insurance Litigation breakfast seminar held in Johannesburg we discovered claiming against the Sasria cover isn’t always a walk in the park.
Maria Philippides, director at Denys Reitz shared some of the lessons learned from the recent Supreme Court of Appeal (SCA) ruling in Sasria Limited versus Slabbert Burger Transport. The court had to decide whether “the burning of a truck, which had been driven by a non-striking employee” satisfied the “damage … directly related to or caused by … a strike” line in the Sasria policy.
Six steps to destroy a truck
The events in this case are typical of both legal and illegal strike activity. The insured – a large transport fleet operator – had taken out a policy in which the insurer agreed to indemnify the company “against loss of or damage to (the truck) directly related to or caused by … any riot, strike or public disorder, or any act or activity which is calculated or directed to bring about a riot, strike or public disorder.” While under cover of the above policy, Union members employed by Slabbert Burger Transport embarked on a lawful strike, with approximately half of the workforce participating. Trucks driven by non-striking members were damaged during the strike, and, in one incident a truck was destroyed after being set fire to. Philippides described the events which led to the destruction of the vehicle:
i. A driver employed by the insured (who was not participating in the strike) parked the truck at a Caltex truck-stop facility;
ii. Three unidentified men, two of whom were wearing dark blue overalls of the same type as those worn by the insured’s drivers, purchased among other things, a small quantity of petrol and a box of matches from the shop at the truck stop;
iii. After they left the shop, the truck was on fire;
iv. The fire started when a quantity of flammable liquid was ignited on the front left side of the truck;
v. No-one saw who ignited the flammable liquid or how it was ignited;
vi. The fire destroyed the truck.
Sasria refused the claim and it was left to the courts to decide “whether the damage to the truck was caused by a peril listed in the Sasria policy.” The trial court relied on a number of inferences to support its decision. An inference is defined as a fact which, although not proven, is in all likelihood true. And the SCA agreed with the trial court, adding that the following inferences “were the most probable of all the conceivable ones and had to be accepted.”
a) The purchase of the petrol and matches from the shop at the Truck stop probably led to the fire which destroyed the truck;
b) The truck was driven by an employee of the insured in defiance of the strike; and
c) Given the dress of two of the unidentified men, they were probably employees of the insured.
Was the truck covered or not?
Given the facts above we were surprised that Sasria refused the claim. Their argument was that the “meaning to be given to the word ‘strike’ is to be equated to situations of riot and / or public disorder.” In other words, in the absence of violence the damage was not covered. Fortunately sanity prevailed and the SCA turned to the Shorter Oxford Dictionary for the definition of the word: “A concerted cessation of work on the part of a body of workers for the purpose of obtaining some concession from the employer for employees.”
The Court made it clear the insurer couldn’t modify the meaning of a word. “The rule that a policy is to be interpreted against the party drafting its wording (the contra proferentem rule)” also came into play. Philippides noted that the Court couldn’t accept “a meaning which would restrict the scope of the insurer’s liability to indemnify its insured in the event of the destruction of the truck.” The SCA thus ruled that the destruction of the property (as described above) was “an act directly related to a strike and that it was caused by a peril listed in the Sasria policy.” They found for Slabbert Burger Transport.
Philippides says there are two important lessons from this case. The first is that the Court “favours a simple and ordinary meaning of words in interpreting clauses within a policy.” And the second is that “a policy is to be interpreted against the party drafting its wording.” This court action backfired against Sasria. There are a number of cases where fire claims have been refused due to the lack of an evidence trail which could be viewed differently today!
Editor’s thoughts:
This case raises a number of interesting questions around the perils covered in an insurance policy. We expect most policyholders believe Sasria will cover them from any strike related damage. The Supreme Court of Appeals seems to agree; but not everyone has the means to pursue the case that far! Have you ever claimed against a Sasria policy – and what was your experience? Add your comment below, or send it to [email protected]
