Tag archives: Fraud

Life insurance and fraud

By Donald Dinnie on February 24, 2023 Posted in Insurance

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

By Donald Dinnie on July 30, 2020 Posted in Insurance

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

Interpreting insurance contracts: a refresher (part 4 – fraudulent claims)

By Donald Dinnie on July 28, 2020 Posted in Insurance

At common law, in the absence of a fraud clause in the insurance policy, fraud can only be relied upon to the extent to which it prejudices the insurer. If an element of the claim is fraudulent only the fraudulent portion of the claim is forfeited at common law. There is no implied term in … Continue reading

Arbitration clauses usually do not survive termination of contract for fraud

By Donald Dinnie and Patrick Bracher (ZA) on July 21, 2020 Posted in General

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

Setting aside arbitration finding for fraud discovered after award (UK)

By Patrick Bracher (ZA) on August 7, 2019 Posted in General

The English commercial court set out the limited basis on which an arbitration award can be set aside when it is alleged that evidence of fraud that would have affected the decision only came to light after the award. The merits of an arbitration award are rarely reviewed. Public policy exceptions such as fraud can … Continue reading

Fraud as a defence to payment under a guarantee

By Patrick Bracher (ZA) on March 25, 2019 Posted in Insurance

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

By Patrick Bracher (ZA) on October 21, 2018 Posted in General

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’

By Patrick Bracher (ZA) on September 19, 2018 Posted in Insurance

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

By Patrick Bracher (ZA) on May 13, 2018 Posted in General

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

Bank sued for paying on instructions to director acting fraudulently (UK)

By Patrick Bracher (ZA) on February 13, 2018 Posted in Banking

A sole shareholder and director who had dominant influence over the affairs of the plaintiff company acted fraudulently and paid out the company’s money from its bank accounts for his own personal benefit. The bank was held liable because on the facts it was found that any reasonable banker would have realised that there were … Continue reading

Court refuses to enforce demand guarantee because of possible fraud

By Patrick Bracher (ZA) on August 1, 2016 Posted in Insurance

The Johannesburg High Court was invited to enforce a demand guarantee in the form of a performance bond because allegations relating to fraud had not been adjudicated on and this would be left to a parallel arbitration process. That is not the correct approach to these matters. The cause of action arose from a guarantee … Continue reading

Bank held liable for the fraudulent conduct of a former director of its customer

By Aslam Moosajee (ZA) on May 23, 2016 Posted in Banking

A bank needs to ensure that a company has authorised its director to allow the company’s bank account to be debited each month, if the payments settle the director’s personal obligations. This much is clear from the recent SCA judgment in First National Bank and Another v Scenematic One (Pty) Ltd. Mr Naude, a former … Continue reading

Combating insurance fraud

By Donald Dinnie on August 18, 2015 Posted in Insurance

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

By Donald Dinnie on June 30, 2015 Posted in Insurance

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

By Donald Dinnie on November 11, 2014 Posted in Insurance

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

By Donald Dinnie on October 22, 2014 Posted in Insurance

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

By Donald Dinnie on August 3, 2014 Posted in Insurance

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