Tag archives: Fraud

The issue of joinder in the absence of a claim by the plaintiff

This blog was co-authored by Dylan Hampton, Candidate Attorney. In the Ross and Another v Nedbank Limited case, the plaintiffs instituted an action against the defendant bank, for breaching its duty of care owed to the plaintiffs.  The delictual claim alleged that the bank negligently allowed the withdrawing of money from a third-party account belonging … Continue reading

The terms of an agreement induced by fraud cannot be enforced

This blog was co-authored by Naledi Etsane, Candidate Attorney. In Titan Asset Management v Lanzerac, six plaintiffs instituted an action against Lanzerac Estates Investments (Pty) Ltd (first defendant) and Markus Jooste (the second defendant) in relation to a number of inter-related contracts entered into in respect of the sale of their interests in various businesses, … Continue reading

Life insurance and fraud

In this judgment (dealt with here on material non-disclosure) the second material issue dealt with by the court was whether the insured truthfully represented his medical conditions in relation to his continued ability to work. The insurer alleged that the insured did not tell either the insurer or the examining doctor that he could perform … Continue reading

Fraudulent insurance claim denied

The insured, in an Israeli Supreme Court case, claimed under a jewellers block policy alleging he had been a victim of a violent robbery in which diamonds and cash worth approximately $11 million had been stolen. The evidence established that diamonds worth about $6 million of the claim were in the insured’s stock and had … Continue reading

Arbitration clauses usually do not survive termination of contract for fraud

An arbitration or similar adjudication clause, contained in an agreement that is found to have been induced by fraud, does not survive the avoidance of the agreement. That would be offensive to justice. The position can only change if the parties specifically make provision in their contract for a dispute regarding fraud, misrepresentation or concealment … Continue reading

Fraud as a defence to payment under a guarantee

The guarantor in Raubex Construction (Pty) Ltd v Bryte Insurance Company alleged that payment under a guarantee was not due because of fraud on the part of the beneficiary. A mere error, misunderstanding or oversight, however unreasonable, does not amount to fraud and is insufficient to show that the contentions of the beneficiary are deliberately … Continue reading

Fraudulent misrepresentation defeats voetstoots clause in sale

Where a seller had fraudulently failed to disclose a defective roof and sewerage system covered by buildings constructed without required statutory approval he was successfully sued in delict for fraudulent misrepresentation and fraudulent nondisclosure. Because the conduct was fraudulent the delictual claim defeated the voetstoots clause in the deed of sale as well as the … Continue reading

‘Fraudulent devices’

The English Supreme Court had the following to say regarding the standard insurance policy fraud clause which excludes liability if the insured makes a claim ‘by fraudulent devices’. The court said: ‘The expression is borrowed from a standard clause avoiding contracts of fire insurance which was widely used in the 19th and early 20th Centuries. … Continue reading

Good faith requirement in a guarantee

Where a retention guarantee was provided to a construction company for an amount to be demanded but not exceeding ‘a good faith estimate of the costs’ claimed, the contractor had to show that the demand was made in the honest belief that it was a correct estimate of what it was entitled to be paid … Continue reading

Combating insurance fraud

Even though the law discourages fraudulent insurance claims, South African insurers still have to protect themselves when it comes to fraud. While the English courts apply draconian and deterrent laws to prevent fraud, South African law only disallows the portion of an insurance claim that is fraudulent. The valid part of a partially fraudulent claim … Continue reading

Insurers, settlement agreements and fraud

Insurers should remember that, in the absence of fraud, settlement of an ill-founded claim is nonetheless binding and if you settle despite a reasonable suspicion of fraud you will be bound by the settlement. That was confirmed as a well-established principle of English law recently in Hayward v Zurich Insurance Co. It is also a … Continue reading

Fraudulent insurance claims and private prosecutions

The insurer AXA in the UK successfully brought a private prosecution for a fraudulent claim. The insured alleged that he had damaged his back in the course of his employment and claimed £100 000 against his employer. Medical records showed that the back injury pre-existed the date of the alleged injury and evidence suggested that … Continue reading

Fraudulent insurance claims

In English law an insured who uses a fraudulent device to promote an otherwise valid claim forfeits the claim. This is not the position in South African law. Unless there is an appropriately worded fraud clause an insured who embellishes their claim with a lie where it is in all other respects valid will not … Continue reading

Proving fraud

Insurers who seek to rely on the fraud exclusion in a policy should bear in mind that the insurer bears the onus of proving the fraud. The question is always: can you prove the facts that establish the defence? The onus is an ordinary civil one on a balance of probabilities but fraud will not … Continue reading