In Majwe Mining Joint Venture (Pty) Ltd v Old Mutual Short-Term Insurance (Botswana) Limited, the Botswana appeal court was required to consider the date from which the time bar period provided for in the General Conditions in an insurance policy started running following the insurer’s disclaiming of liability for an indemnity.
In a communication of 12 November 2018, the insurer wrote to the insured and equivocally disclaimed liability recording:
“Our considered view therefore, is that the claim does not fall within the terms stated in the policy and is therefore repudiated.”
Action was commenced within the 12 month time bar period following receipt of that letter of rejection.
The question arose whether an earlier communication from the insurer of 2 February 2017 constituted an unequivocal communication to the insured of rejection of the claim.
That letter did not contain any formulation similar to the express rejection contained in the 2018 letter.
While the 2017 letter contained a prima facie conclusion that the insured’s loss was due in part or whole to the negligence of the insured’s own employees or sub-contractors (in respect of which cover was excluded) it did not actually reject the claim or disavow liability unequivocally as was required for the rejection (the court used the term “repudiation”) to be effective.
The 2017 letter deliberately refrained from using the words “reject”, “disclaim liability” or “repudiate”.
On the contrary that same letter offered, without prejudice, to pay half of the assessed claim in full settlement.
The court said that is not conduct consonant with conveying an unequivocal and total rejection of the claim.
And furthermore the subsequent conduct of the insurer was indicative of not rejecting the claim outright. Not only did it make a without prejudice offer but it also collaborated with the insured to commission a loss adjuster to provide professional advice in respect of causation, liability and quantum, and it footed the bill for the loss adjuster.
That commission of loss adjusting service was subsequent to and independent of the offer to settle.
Twelve months after the 2 February 2017 letter, the insurer did not inform the insured that the claim was time-barred, nor that it assumed that the claim was abandoned nor that it was closing its file. Instead it waited for the loss adjuster’s report which only came in many months later.
In the circumstances the claim was not time-barred.
The result would not be any different under South African law.
Insurers who wish to decline a claim and reject liability under the policy must communicate the rejection timeously, clearly and unambiguously to the insured.