Court name
High Court
Case name
Otto v Channel Life Namibia Ltd and Another
Media neutral citation
[2007] NAHC 205





CASE NO











REPORTABLE















CASE
NO. I.
1818/2003








IN THE HIGH COURT OF NAMIBIA







In the matter between:










GUDRUN
OTTO



PLAINTIFF




And











CHANNEL LIFE NAMIBIA LTD


DAVID
BRUNI N.O.




FIRST DEFENDANT


SECOND
DEFENDANT








Coram: Shivute,
JP



Heard on: 20 –
24/10/2003; 11 – 14/11/2003 and 26/11/2003



Delivered
on: 28/05/2007







JUDGMENT







SHIVUTE, JP:



Introduction




  1. The plaintiff,
    a female aged 54 years old at the time of the hearing of this
    matter, instituted action against defendant for payment of N$500
    000 plus interest at the rate of 20% per annum in respect of an
    insurance agreement for disability entered into between plaintiff
    and the defendant on or about 13 May 1999. It was common cause or at
    any rate was not disputed that plaintiff trade qualified as a tour
    guide. She worked for tour companies on a freelance basis driving
    buses for tourists and taking tourists to places of interest in the
    country and where a vehicle she happened to drive could not reach,
    walking with them to those places and giving them information about
    the place.









  1. Defendant was
    originally cited as Fedsure
    Life
    Assurance of Namibia Ltd. Since the institution of the action,
    however, defendant underwent a name change and became known as
    Channel Life Namibia Limited. Amended particulars of claim were then
    filed to reflect this change and other matters that in the meantime
    came to light as will be discussed next.









  1. During the hearing
    of the matter it emerged that plaintiff was an unrehabilitated
    insolvent and the Court
    mero
    moto
    raised the question whether in those circumstances plaintiff had
    locus
    standi
    to issue summons and invited argument in this regard. Prior to
    hearing argument, however, counsel representing the respective
    parties agreed that plaintiff could continue with the action but on
    behalf of her insolvent estate and not in her personal capacity. The
    parties furthermore agreed that the trustee in her insolvent estate
    would have refused to sue had he been approached at the time of the
    institution of the action. Consequently, plaintiff would have been
    entitled to personally act on behalf of her insolvent estate. It was
    a further term of the agreement that in the event that plaintiff
    succeeded with her action, ‘any payments are to be made to her
    trustees, Messrs Investment trust’.









  1. Counsel for
    plaintiff also
    in
    the end obtained from the trustee confirmation in writing regarding
    the trustee’s attitude towards the action. In a letter filed
    of record, the trustee who is now the second respondent, declined to
    institute action on behalf of the plaintiff and consented to and
    ratified, insofar as may be necessary, the institution of the action
    by plaintiff on behalf of her insolvent estate. He also waived his
    right to be party to the proceedings.









  1. Although counsel
    submitted extensive written heads of argument that were of immense
    benefit to the Court on the issue of
    locus
    standi,
    in the end they were
    ad
    idem
    regarding the legal position on the issue as reflected in the
    agreement. There can be little doubt that the agreement reflects the
    correct legal position.
    1









  1. The pleadings
    were subsequently amended, unopposed,
    inter
    alios
    joining the trustee as the second defendant. Accordingly, the second
    defendant is cited in his capacity as trustee in the insolvent
    estate of plaintiff and no relief was sought against him.









  1. In
    terms of the written agreement of insurance (the agreement) the
    defendant agreed to provide disability benefits to the plaintiff as
    follows:








"Capital
Sum Disability Benefit



Benefit



The benefit as
specified in the schedule plus any benefit increase occasioned by
FAIM shall be payable on the total and permanent disablement of the
life in
sured."




  1. The acronym ‘FAIM’
    stands for ‘Fedsure Life’s Inflation Master'. The
    schedule to the agreement gave the capital sum disability benefit as
    being N$500 000. It was on this basis that plaintiff claimed N$500
    000 from the defendant.









  1. Total and
    permanent disablement” is defined in the agreement as meaning:








"total
and permanent inability of the life insured due to sickness, injury,
disease, illness or surgical operation to engage in own or similar
occupation."












  1. It was also common
    ground between the parties that o
    n
    12 June 2001 plaintiff was diagnosed with a disc degeneration of
    levels L3-4 and L4-5 lumbar spine and extensive degeneration to
    spine. Medical opinion is also unanimous that plaintiff is
    incapacitated for the type of work she performed as a tour guide/bus
    driver such as walking and driving long distances.









  1. According to the
    amended
    particulars of claim,








"As
a direct consequence of the aforesaid injury the plaintiff was unable
to continue in her occupation as a tour guide/bus driver for and on
behalf of Springbok Atlas or any other company to that extend (
sic)
which disability and impairment is of such a permanent nature that
she cannot continue in her present occupation or something similar to
that extend (
sic)2"








  1. In its amended
    plea
    defendant
    admitted the agreement but averred as follows:








"3.2 At the
time of entering into the agreement, the plaintiff was aware of the
following facts, namely:










      1. that she suffered from depression
        and anxiety and had a history in this regard;












      1. that
        she received prescribed anxiolytic therapy (Alzam) on a number of
        occasions
        prior
        to her application for the said insurance which forms the subject
        matter of the written agreement."











  1. Alternatively to paragraphs 3.2.1 and
    3.2.2 above:








"3.2.3 that
she fraudulently and/or dishonestly obtained prescribed medicine from
Dr Nieuwoudt on various occasions for feigned symptoms of anxiety
and/or sleeplessness."











"3.2 The
plaintiff failed to inform the defendant of the aforesaid facts.







3.3 The
said facts materially affected the risk in that with the knowledge of
the said facts the defendant would not have accepted the risk,
alternatively not have accepted the risk on the terms and conditions
set out in the written agreement.







3.4 In the premises
the defendant was entitled to avoid the written agreement which it
did, alternatively, which it hereby does."












  1. The defendant
    also filed amended further particulars to its plea wherein it was
    alleged as follows:








"Plaintiff
had [a] duty to disclose in view of the fact that the condition she
suffered from was material to the risk she sought to insure.







Plaintiff was
specifically appraised of the duty to disclose by virtue of clauses
13.06 (f), 13.07, 13.09 and 21 of the application form and clause 2
.2
(g) and 2.4 (b) of the confidential report which she completed prior
to the agreement being entered in … As is further evident from
clause 21 above plaintiff warranted her answers.







Defendant avoids
the contract because
of
plaintiff’s non-disclosure referred to in the particulars of
claim (
sic)
and her breaches of the warranty referred to above."








  1. In replication,
    p
    laintiff
    denied that she had had a history of depression and anxiety and
    pleaded that section 54(1) of the Long-term Insurance Act, 1998 (Act
    5 of 1998) applied to the agreement and that by virtue of the
    provisions thereof the defendant could not as a matter of law avoid
    the agreement merely because of alleged non-disclosure. These and
    other issues that have crystallised between the parties will be
    dealt with in greater detail but first a summary of the evidence
    that has a bearing on those issues that call for decision.








Evidence
on behalf of the Plaintiff




  1. Plaintiff
    testified and
    was
    cross-examined at length. In addition three witnesses testified on
    her behalf. Plaintiff’s evidence may be summarised as follows:
    As previously discussed, plaintiff was aged 54 at the time of the
    hearing. She testified that she passed standard 10 and had lived and
    worked on a farm. She subsequently trained as a tour guide under the
    tutelage of a renowned tour guide for a period of six years. During
    the period of training already, she had started doing specialised
    guided tours, an activity she had engaged in for 24 years until her
    present disability put a stop to it. Her earnings fluctuated between
    N$10 000 and N$15 000.00 per month if gratuities or tips ranging
    between N$2 500.00 and N$4 000.00 depending on whether she did a
    specialised tour or not - with specialised tours generating more
    gratuities - are included. She had no level of computer literacy
    whatsoever and did not even know how to switch on a computer. As a
    result of her disability, she was unable to sit or stand for any
    lengthy period of time without taking strong medication. Her left
    leg would have to be operated on while her right leg had already
    been operated on. Upon becoming disabled, she had initially stopped
    doing tours but circumstances had compelled her to do more tours
    subsequent to the institution of the action: She had foster children
    and their dependants as well as her own extended family to support
    and this forced her to do guided tours even though she had to do so
    under medication in order to suppress pain. On the question whether
    or not there was a job similar to a tour guide that she could
    possibly do in the light of her disability, plaintiff was adamant
    that there was no similar occupation that she could think of and
    that, in any event, she would not earn the money she had earned in
    her pre-disability occupation should she find alternative similar
    occupation.









  1. On the issue
    of the application form for insurance that she had signed, plaintiff
    testified that the Afrikaans version of the form that she signed was
    filled in on her behalf by one Marlene Erasmus, an insurance broker
    at the time working for Bank Windhoek and that plaintiff neither
    read nor completed the proposal form herself. Ms Erasmus filled in
    the form as they were chatting and because they knew each other very
    well she did not take the precaution of being attentive so as to be
    able to have a vivid recollection of the type of questions Ms
    Erasmus put to her during the process.









  1. According
    to plaintiff, her mother tongue was German and that although she
    understood Afrikaans relatively well; she could not at all say that
    she was fluent in the Afrikaans language.









  1. On the answers
    given
    to certain clauses in the proposal form and the confidential medical
    report which the defendant in its amended further particulars
    alleged were wrongly answered, it will be recalled that the first
    clause complained of is clause 13.06 (f) which is to be found in its
    original version in tab C, page 8 of the bundle of documents and the
    translation thereof is to be found in tab C, page 95 of the bundle.
    The first question as translated was formulated as follows:












"Do
you, or have you ever, suffered from the following: any nervous or
mental complaint, e.g. epilepsy, blackouts, paralysis, anxiety or
depression?"








  1. It is common cause
    that
    plaintiff
    answered in the negative. In her evidence-in-chief she explained
    that she had neither suffered from nor had she been diagnosed with
    any of the above conditions and that as far as she was concerned she
    had answered the question correctly. She explained in
    cross-examination that she was also not advised that a document
    authored by her Windhoek-based medical Doctor Nieuwoudt and
    addressed to the insurer contained information that she was
    suffering from depression.



  2. The plaintiff
    offered the same

    explanation with regard to the question asked in clause 2.2 (g) of
    the confidential medical report that the defendant alleged was
    wrongly answered. The question in clause 2.2 (g) is essentially a
    replica of the question posed in clause 13.06 (f) above.









  1. The next question
    is to be found in clause 13.07, which was translated as reading:








"In
the last year, have you consulted a doctor or specialist or were you
admitted to a hospital, or did you undergo a diagnostic investigation
including electrocardiograms, X-rays, blood tests, other
investigations or hospitalisation?"












  1. Plaintiff
    answered in the negative. She testified, however, that the correct
    answer should have been in the affirmative, for the simple reason
    that she had consulted a doctor as she had suffered from malaria
    during the period referred to in the proposal form. She says she had
    no intention to conceal the fact that she had seen a doctor during
    the period in question. Moreover, she had told Ms Erasmus that her
    usual doctor was Dr Nieuwoudt. She also happened to mention to Ms
    Erasmus that she, plaintiff, had on one occasion consulted an
    Outjo-based Dr Burger and that because the application form was
    filled in while she was in Outjo; and given the fact that the
    insurer also required a form to be completed by a doctor, Ms Erasmus
    inserted Dr Burger’s name in the column requiring plaintiff to
    state her family doctor since it would be convenient for plaintiff
    to be examined by a local doctor instead of her having to travel all
    the way to Windhoek for that purpose.









  1. The next disputed
    answer given
    to
    a question in the application form is to be found in clause 13.09
    thereof and it is translated as follows:








"Are
you currently taking or have you ever taken drugs, tranquilisers or
other medicines?"












  1. Plaintiff’s
    answer was an emphatic ‘No’. She stated in
    evidence-in-chief that that was the correct answer. As far as her
    understanding of the above terms went, she had never taken drugs or
    tranquilisers. She added that though she did take Alzam after it was
    prescribed to her by Dr Nieuwoudt on 24 February 1997. Alzam, also
    known as Xanor (misspelled in the record as ‘Sanor’),
    features prominently in this case. More about Alzam later. The
    Alzam was prescribed to enable her to sleep as she had difficulties
    sleeping owing to ‘certain worries’. She received the
    minimum dosage of 20 tablets and that although she was told to take
    three tablets a day she only took one tablet a night. She did not
    tell Dr Nieuwoudt that she had stress nor did Dr Nieuwoudt inform
    her that she had displayed stress-related symptoms. On the contrary
    she mentioned that she had a lot of worries related to a precarious
    situation at the farm and the people under her care. She has had a
    positive outlook towards her work and had not experienced any stress
    that she found to be too severe to manage. Plaintiff confirmed that
    Dr Nieuwoudt prescribed Alzam to her on a number of occasions but
    that she only took the tablets that were prescribed to her in
    February 1997 and the rest she gave to her brother. She explained
    that for the period between 1997 and 2001 she and her brother had
    problems concerning family crop farming businesses that were heavily
    indebted and adversely affected by the drought and by the sheer
    number of workers at those farms that stood to lose their jobs and
    the resultant loss of income. Her concerns were confirmed when the
    family farms were ultimately sold. And these worries that are not
    work-related had preoccupied her.









  1. After she had
    noticed the improvement the first prescription of Alzam
    brought
    about to her own situation, she decided to give the rest of the
    tablets subsequently prescribed to her by Dr Nieuwoudt to her
    brother since her brother too had experienced sleeping problems. Her
    brother was a type of person who would not readily seek medical
    attention and that explains why he did not go to the doctor to
    obtain his own prescription.









  1. As far as she was
    concerned, the Alzam tablets that she

    had received from Dr Nieuwoudt were sleeping tablets and that she
    did not use them on any repetitive basis. She did however concede
    during cross-examination that Dr Nieuwoudt told her that Alzam was,
    in effect, a tranquiliser and that in addition to Alzam, at least on
    one occasion, Dr Nieuwoudt prescribed her a proper sleeping tablet
    called Dormicum (misspelled in the transcribed record as
    ‘Dormicome’). The reasons she gave in cross-examination
    as to why she answered in the negative to the question enquiring
    whether or not she took medicine ranged from the explanation that
    she did not personally complete the application form to essentially
    blaming the person who filled in the form on her behalf for what she
    considered was a mistake and finally that she was not clear about
    the use of the word ‘drugs’ in the clause.









  1. According to
    plaintiff
    ,
    she did not have any work-related stress. She had enjoyed her work
    and was very enthusiastic about it as she had considered it not only
    as a job but more of a hobby.









  1. In
    the question in clause 2.4 (b) of the confidential medical report,
    plaintiff was asked:








"If not
already stated, have you during the past 5 years:



(b) Consulted
any doctors or specialists, including regular general check-up?"
















  1. Plaintiff’s
    answer was a ‘No’. In her testimony she acknowledged the
    answer was incorrect and that the correct answer should have been a
    ‘Yes’. She protested that she could not have given such
    an answer since it was evident from the same document that she had
    been treated for malaria, a fact she had disclosed to the medical
    examiner who completed the confidential medical report. The
    explanation she offered for the wrong answer was that she did not
    complete the report personally.









  1. The next clause
    complained of by defendant was clause 21 on the application form
    which is in essence a declaration warranting
    inter
    alios

    the correctness of the information provided in the preceding
    clauses. It is quite a detailed clause. Its translated version spans
    closer to two pages. Plaintiff testified that the contents of clause
    21 were neither drawn to her attention nor was she asked to read
    through the declaration before she signed the document.









  1. Giving evidence on
    events leading to
    defendant’s
    repudiation of liability, plaintiff testified that after she had
    filed her claim supported as it was by the diagnosis confirming her
    disability, she first received a letter dated 10 September 2001
    wherein she was advised that the claim had been unsuccessful due to
    alleged material non-disclosure at the time of the application.
    Reference was made in the letter to depression and anxiety states
    that had allegedly been of concern to underwriters. The paragraph
    conveying this information in the letter reads:












"Depression
and anxiety states have long been a major concern of underwriters,
and if there is a history of depression, no disability benefits will
be offered."












  1. Upon receipt
    of this letter plaintiff sought and obtained the assistance of Dr
    Estie Maritz who talked to a representative of the defendant with a
    view to persuading defendant to reconsider their position. Plaintiff
    had previously seen Dr Maritz as part of plaintiff’s
    compulsory medical examination at the instance of a tour company
    that she had worked for. Suffice it to say that Dr Maritz’s
    intervention did not yield the desired results. By a letter dated 05
    October 2001 Dr Maritz was informed by defendant:








"This
claim was repudiated on the grounds that she no-disclosed a history
of anxiety and depression…







You mentioned to me that this was a
short period of reactive depression and therefore of little
consequence.







The medical report,
of which a copy is enclosed, indicates differently. The anxiety and
depression lasted virtually the whole of 1997. This is material to
the assessment of disability benefits. Had we been aware of this
history we would not have considered acceptance

of disablement benefits.







The relevance of
any material medical information is decided by the company
underwriters, if a different decision would be offered on the full
facts, then the information is material. The applicant for insurance
must disclose all facts, and not only those they thought to be
material

(
sic)."
















  1. By a letter dated
    6 December 2001, plaintiff was informed by the insurer
    ,
    inter alia
    ,
    as follows:








"We regret to
advise that after reconsideration of all the medical reports, that
our previous decision to repudiate the claim was justified.







The medical reports in our possession
reaffirm that there was material no-disclosure.




You received
prescribed anxiolytic therapy (Alzam) on a number of occasions prior
to the application for insurance in March 1999. The relevance of this
information is important. We would not grant disability benefits
under such circumstances."
















  1. Plaintiff
    also testified that subsequent to the policy of disability
    insurance, she had successfully applied for a medical insurance
    policy styled ‘Ultramed’ with defendant in the year
    2000. Plaintiff was required to fill in the application form and to
    have a confidential medical report completed by a medical
    practitioner. In the application form for the medical insurance
    plaintiff was asked questions similar to those she was asked in
    respect of the application for disability insurance. Such questions
    included whether she had or have ever had anxiety state or
    depression, to which she answered in the negative; whether she had
    suffered from illnesses such as malaria and to which she answered in
    the affirmative; and whether she was taking drugs, tranquilisers ‘or
    other medicines’; to which she answered in the affirmative.









  1. In respect of the
    confidential medical report that plaintiff said was completed by Dr
    Nieuwoudt,
    one of the questions asked was whether plaintiff had had anxiety
    state or depression and Dr Nieuwoudt ticked against the "Yes"
    column and under the column requiring details such as the nature of
    the complaint, Dr Nieuwoudt indicated that plaintiff had
    ‘stress-related anxiety’. Plaintiff contended that the
    doctor’s answer on this aspect was incorrect as she had not
    had anxiety state.









  1. Dr Nieuwoudt
    likewise ticked ‘Yes’ on the question whether or not
    plaintiff had taken any medicines and the doctor explained that
    plaintiff had taken Xanor "for stress-related anxiety in 1997,
    1999". In any event the point was, so plaintiff stressed,
    defendant was in possession of this information and had accepted the
    proposal and issued the policy for medical insurance without raising
    any query regarding plaintiff’s insurability. As a matter of
    fact, so plaintiff added, plaintiff had successfully claimed under
    this policy.









  1. Plaintiff also
    testified about the clinical examination conducted on her by
    defendant’s expert witness, Dr Pieter Coetzer
    ,
    on 25 August 2003 and related that contrary to what was stated in Dr
    Coetzer’s report, she had great difficulties undressing during
    the examination. Another aspect of Dr Coetzer’s report that
    she considered incorrect was a statement in the report that she had
    taken one Voltaren (misspelled in the record as ‘Vortarin’)
    tablet whereas she had allegedly told Dr Coetzer that she had taken
    more than one Voltaren tablets.









  1. On the revelation
    that she
    had
    been declared insolvent after she had voluntarily surrendered her
    estate, plaintiff explained that she only informed counsel appearing
    on her behalf of this status during the hearing because she thought
    that her insolvency had no bearing on her disability. The other
    explanation given by plaintiff in this regard was that she thought
    she had been rehabilitated. Such belief was based on certain hearsay
    evidence, which even though not objected to, should not have formed
    part of the record. It will therefore be ignored. Plaintiff stated
    furthermore that she was not aware that she had to apply for
    rehabilitation.









  1. During
    cross-examination plaintiff
    was
    confronted with statements contained in paragraphs 6.1 and 6.2 of
    the declaration contained in the claim form for disability that she
    had personally completed and that read as follows:








"6.1 I confirm
that I am solvent and my estate has not been sequestrated.







6.2 I herby declare
that the answers given by me in this form are in every respect true
and complete and no material information has been withheld or
omitted.
"
















  1. It was common
    cause that plaintiff signed
    the
    declaration. Although she explained that she had not considered the
    issue of insolvency being relevant to her disability claim, she
    conceded that she had made a mistake on both scores.









  1. The next witness
    to be called
    on
    behalf of plaintiff was Ms Nadia Schlusche (misspelled in the record
    as ‘Fthlusche’). Ms Schlusche was the Managing Director
    of a tour company and her evidence related mainly to the inner
    workings of the tourism industry and to considerations of what
    levels of skill was required to becoming a successful tour operator
    or tour guide. Ms Schlusche also testified about the availability of
    occupations similar to a tour guide in the country and stated that
    the occupation closest to tour guiding would be nature conservation.
    To become a nature conservationist would, however, require a
    certain level of training, which plaintiff clearly lacks. According
    to Ms Schlusche, a tour operator is the entity that arranges tour
    excursions and it in turn employs tour processors, i.e. persons that
    process bookings and perform other administrative functions to
    ensure a successful tour. Tour operators then hire tour guides who
    then take out tourists to places of interest in the country. To
    operate in the tourism industry as a tour processor required a high
    degree of skill in administration and computer literacy would be a
    minimum requirement. At least three months extensive computer
    training was required to acquire the skills necessary to operate as
    a tour processor. Ms Schlusche dismissed suggestions that one could
    be trained to use a computer in three days. The training and
    administrative skills required to become a tour operator are vastly
    different from the skills and training necessary to becoming a tour
    guide.









  1. Ms Shlusche was
    acquainted with plaintiff
    whom
    she described as the best tour guide one could possibly get and
    someone who was well known in the industry. As far as Ms Shlusche
    was concerned, owing to her lack of administrative skills and
    outdoor type of character, plaintiff would not easily fit in the
    office environment. She would therefore not employ her in an office
    environment. Ms Schlusche also testified about the salaries and
    other income earned by both tour guides as well as tour processors.
    Her evidence on the earnings of tour guides essentially tallies with
    plaintiff’s evidence in this regard, save that in computing
    the monthly income of a freelance tour guide, Ms Schlusche added a
    rider to the effect that the overall pay was dependant on the number
    of days that the tour guide may work - which days were not
    guaranteed - as well as on the amount of tips that a tour guide may
    or may not get. Some clients do not tip at all and others tip well.
    Tour processors earn between N$5 500 and N$8 000 depending on
    experience and performance.









  1. Dr Nieuwoudt
    also testified on behalf of plaintiff, but not as an expert. It will
    be recalled that he is the general medical practitioner who had
    treated plaintiff from time to time. He stated that he obtained his
    MB ChB degree in 1977 and that he was in private practice. Relying
    on his clinical notes, Dr Nieuwoudt related that since 1996 he had
    seen plaintiff for a variety of causes. He had seen her on a good
    number of occasions but I propose to summarise his evidence only in
    respect of the number of times he had seen her and she allegedly
    complained of stress and/or where Dr Nieuwoudt prescribed Alzam.
    These occasions total seven in number and are as follows:









  1. On 24 February
    1997 he saw plaintiff who complained of stress and he prescribed
    Alzam of 0,25

    milligrams (mg) per day. Alzam is used to treat stress but may also
    be used as a sleeping tablet. He considered 0,25mg per day to be a
    very low dosage and which had not much therapeutic value. At no
    stage did Dr Nieuwoudt make any formal diagnosis of stress and
    relied only on the
    ipse
    dixit
    of plaintiff in prescribing Alzam. He did not diagnose anxiety or
    depression either during the period that he had seen her. According
    to Dr Nieuwoudt, plaintiff had told him at the time that she was
    concerned about her horses she was doing trails with and which may
    not have a place to stay since the farm where they were kept was
    being sold. He could not recall plaintiff complaining about
    work-related stress.









  1. Six months later
    on 8 August 1997
    ,
    he saw her again and she complained, among other things, of stress.
    He then prescribed a dosage of 0,25mg of Alzam to be taken twice a
    day. However, he again did not make any formal diagnosis of stress
    and relied on what he was told by plaintiff. Dr Nieuwoudt stated
    that it was a common practice for patients to give medicines
    prescribed to them to other people, a practice doctors do not
    condone.









  1. On 4 December
    1997, a month and a day later, he saw plaintiff again and on this
    occasion Dr
    Nieuwoudt
    wrote in his clinical notes:








"Stress/anxiety
neurosis/Alzam is helping well, she is using 0,25mg per day. Alzam
0,25mg (30)."












  1. Dr Nieuwoudt
    explained that ‘anxiety neurosis’ is a mental disorder
    and that although he was not a psychologist; he could make a
    provisional diagnosis of anxiety and would then refer the patient to
    a psychiatrist or a psychologist for advice on the treatment. He,
    however, did not adopt this procedure in respect of plaintiff,
    because plaintiff did not present symptoms of ‘anxiety
    neurosis’, which incidentally is called anxiety disorder in
    modern terminology. He lamented the use of ‘anxiety neurosis’
    in his notes not because it was an old fashioned expression but
    because, in his view, plaintiff did not have such a condition. At no
    stage was plaintiff booked off work because of any mental disorders.









  1. Dr Nieuwoudt
    was asked in cross-examination why he used the term ‘anxiety
    neurosis’ in his notes when, according to him, plaintiff did
    not present symptoms of anxiety disorder. He explained that the
    phrase was simply meant for his own guidance and that, in effect, it
    had no significance.









  1. When asked whether
    he was not concerned that other people who may
    read
    through his notes may be misled by the use of the phrase, Dr
    Nieuwoudt’s reaction was simply to state that he had no
    comment.









  1. On 11
    May 1998, over five months after the last Alzam was prescribed, 30
    tablets with a dosage of 0,25mg of Alzam were again prescribed for
    plaintiff. On account of the lack of details in his notes in respect
    of this prescription, Dr Nieuwoudt surmised that this prescription
    may have been requested over the telephone.









  1. On 24 June 1998, a
    little over a month since the last prescription of Alzam,
    thirty
    (30) tablets of 0,25mg of Alzam were again prescribed for plaintiff.
    This time, so Dr Nieuwoudt testified, the prescription was requested
    by telephone.









  1. On 18 November
    1998 again
    thirty
    (30) tablets of 0,25mg Alzam were prescribed.









  1. The last time Dr
    Nieuwoudt
    prescribed Alzam was on 21 January 2000. The dosage was again 0,25mg
    but no indications on the notes of the number of the tablets
    prescribed.









  1. According to Dr
    Nieuwoudt,
    he had done many confidential medical reports for insurance
    companies and that from his experience doctors who compile these
    reports do not tell the insurers in detail the drugs that they had
    prescribed to their patients. On the contrary they use their
    discretion and disclose only the information that they considered to
    be relevant or useful to the company. In the case of plaintiff, Dr
    Nieuwoudt had to inform the insurer that he had prescribed Alzam
    because Alzam was written up in his notes over a period of time.
    Given the low dosage and the intermittent prescription of Alzam he
    did not, however, consider that plaintiff used Alzam on any
    repetitive basis. He did not discuss with plaintiff any stress
    management programmes nor did he feel the need to refer her for
    psychotherapy.









  1. Dr Nieuwoudt
    indicated in cross-examination that he must have explained to
    plaintiff the consequences of using Alzam and that he must have made
    it known to her that Alzam was not merely a sleeping tablet. That
    explains why on 24 February 1997 he had prescribed Dormicum which is
    a sleeping tablet in addition to Alzam. Dr Nieuwoudt explained
    further that Alzam was meant to treat the stress while the Dormicum
    was meant to help plaintiff sleep at night. He conceded in
    cross-examination that he must have told plaintiff that he was
    treating her for stress for plaintiff had complained of stress. He
    furthermore, again in cross-examination, accepted that for him to
    have had prescribed Xanor in addition to what plaintiff told him
    about stress, he must have observed symptoms of stress and must have
    therefore made a diagnosis of stress. Dr Nieuwoudt made it clear in
    re-examination that he definitely made a diagnosis of stress, having
    excluded anxiety disorder and depression.









  1. Dr Nieuwoudt
    stressed in evidence-in-chief that during the period that he had
    seen her, plaintiff did not display a history of depression or
    anxiety. What she displayed, however, were occasional symptoms of
    stress.









  1. Dr Nieuwoudt
    confirmed that he had completed the confidential medical report in
    respect of plaintiff relating to the ‘Ultramed’ product
    and exp
    lained
    that he had ticked the ‘Yes’ column enquiring whether
    plaintiff had suffered from anxiety state or depression, etc. for
    the reason that he thought plaintiff presented stress-related
    anxiety but added that he did not make any diagnosis of anxiety. He
    contended that if plaintiff were to be asked a similar question and
    were to answer in the negative and not having been advised that she
    had anxiety, she would ‘probably’ not be wrong in her
    answer. After he completed the confidential medical report he did
    not receive any query from the insurer.









  1. Dr Nieuwoudt
    also confirmed that he had written a letter to defendant essentially
    detailing the number of times that symptoms of stress were noted or
    Alzam was prescribed. Apart from recalling that the letter was
    requested in connection with depression, he could not recollect the
    circumstances in which the letter was written. The contents of the
    letter are important and played a central role in evidence. It
    therefore becomes necessary to quote it in full. The body of the
    letter reads as follows:








"2
October 2001







Re:
Miss G. Otto







She has been a patient of mine from
6/3/96.



At that time she had Brucellosis.







On the 24/2/97 I
saw her with a left knee which was painful and she also mentioned
that she had a lot of stress which was
work-related.



I treated her with Alzam.







On the 8/8/97, I
saw her again with
stress-related
symptoms. She was clinically healthy and I treated her again with
Alzam 0,25mg bd (only 20) and Halcian 0,25mg (10).







On 4/12/97, I saw her again with
symptoms of anxiety neurosis and I prescribed Alzam 0,25mg bd (30)
because it had helped her.







On 11/5/98 she
again received a prescription for
Alzam
0,25mg (30) and on the 24/6/98 she received Alzam 0,25mg (30) again.







On the 18/11/98
she received Alzam 0,25mg (30) and she was given Alzam (30) again on
21/1/01.







A diagnosis of
depression was never made. She never used large quantity of Alzam and
not for long periods of time either.







The stress symptoms
she showed were as a result of business, financial and other reasons.
She does not have a depressive personality and always came across as
a positive person. It is possible that she sometimes, because of
circumstances, had mild reactive depression, but she never needed
anti-depressants according to my knowledge.







Dr GJN Nieuwoudt



BSc (Landbou) MB
ChB (Stell)"












  1. Dr Nieuwoudt
    explained that reference to work-related stress in the letter was
    incorrect because, as already related, plaintiff never complained to
    him about work-related stress. He went on to say that the
    stress-related symptoms he observed on plaintiff included
    palpitations and insomnia. The Alzam tablets that were prescribed
    for plaintiff totalled some 200 tablets over a period of three
    years. With regard to the last sentence in the letter above, Dr
    Nieuwoudt stated that the opinion expressed therein regarding mild
    reactive depression amounted to speculation on his part since he had
    never seen plaintiff in a depressive state.









  1. The next witness
    to be called on behalf of plaintiff was an expert witness, Dr Estie
    Maritz

    who is in private practice. Dr Maritz testified that she obtained an
    MB ChB degree in 1989. She obtained a further diploma in aerospace
    medicine. She had 15 years experience as a medical doctor. In 1990
    she was appointed as a psychiatric medical officer at the Mental
    Institute of the Sterkfontein Hospital (misspelled as ‘Sterfontein’
    in the record) South Africa, where she continued to work until 1993.
    Since that year she had been acting as a medical consultant in the
    transport industry - airlines and tour operators - in the country.
    Her responsibilities as a consultant involved the medical
    examination and evaluation of possible risk criteria that may cause
    disability. The main risk factor she looks out for would be sudden
    incapacitation. In relation to persons that work for tour companies,
    she examines drivers mostly.









  1. With regard to her
    work in the
    psychiatric
    institution in South Africa, Dr Maritz relayed that she was exposed
    to working with cases of mental disorders as diagnosed by the DSM IV
    (Diagnostic and Statistical Manual IV), which is a manual used to
    diagnose psychiatric disorders. Although she was not a qualified
    psychiatrist therefore, she was conversant with the practice of
    psychiatry and the diagnoses of mental disorders. Additionally Dr
    Maritz had been exposed to the study of pharmacology, having done a
    course in pharmacology.









  1. Dr Maritz knew
    plaintiff personally
    ,
    having examined her for the first time in 2000 on behalf of a tour
    company that had employed plaintiff. During such medical
    examination, plaintiff was found to have been medically fit to drive
    buses. Things changed dramatically in April 2001 when plaintiff was
    diagnosed with a severe degenerative disease of the lumbar spine.
    Needless to say that plaintiff subsequently became disabled to do
    her job as a tour guide/bus driver. Dr Maritz assisted plaintiff by
    completing a confidential specialist medical report in respect of
    plaintiff’s disability claim and helped her manage her pain by
    the use of schedule 7 drugs. In spite of her experiencing this pain
    and having lost her income as well having had her disability claim
    repudiated, Dr Maritz testified that plaintiff did not require any
    central nervous system drugs that are necessary for the support of
    stress symptoms, psychiatric illness or other mental disorders. She
    found plaintiff to function normally under these pressures.









  1. According to Dr
    Maritz, to diagnose someone

    for an anxiety disorder one had to consider a whole series of
    criteria as well as a scale of stressors, including psychosocial
    stressors that are employed to determine the nature and level of
    stress. Dr Maritz had talked to Dr Nieuwoudt about the treatment
    regime extended to the plaintiff and had seen the latter doctor’s
    clinical notes on the plaintiff. Having regard to those notes and
    having observed plaintiff herself, Dr Maritz opined that plaintiff
    did not suffer from chronic stress that required to be managed by
    the use of drugs.









  1. Dr Maritz also
    testified about the use of Alzam by plaintiff.
    She
    stated that Alzam or Xanor belongs to a class of drugs that were
    widely used for sleep induction. The dosage and the frequency of the
    prescription of Xanor as recorded in Dr Nieuwoudt’s notes were
    not indicative of stress management. Xanor comes in a variety of
    dosages, but 0,25mg is the weakest dosage on the market and if Xanor
    were to have had any therapeutic benefit on the treatment of
    symptoms of anxiety, it had to be used much more frequently than it
    had been prescribed to plaintiff. The dosage and frequency can also
    not amount to anxiolytic therapy.









  1. Dr Maritz revealed
    that plaintiff had admitted to her sometime after the disability
    claim had been declined that she had given some of the Xanor
    prescribed to her to her brother, a practice that was allegedly
    common among lay persons.









  1. Talking about the
    letter she had received from the defendant after she sought to
    persuade the defendant to reconsider the claim, Dr Maritz indicated
    that reference in the letter to her allegedly having indicated that
    plaintiff had
    a
    short period of reactive depression was quoted out of context. She
    stated that she did not tell the author that plaintiff had suffered
    from reactive depression. All she mentioned to the author of the
    letter was that most people would suffer, in their lifetime, a short
    spell of reactive depression and that such short period of reactive
    depression could not therefore be said to amount to a depressive
    disorder or anxiety disorder for that matter. In any event, so Dr
    Maritz concluded this aspect of her evidence, plaintiff had never
    been diagnosed with depressive disorder or anxiety.









  1. Dr Maritz agreed
    in cross-examination that Dr
    Nieuwoudt
    clearly conveyed the message in some of the passages in his letter
    of 2 October 2001 that he had treated plaintiff for stress, but that
    the level of such stress had not progressed to a disorder as
    understood in psychiatry. Insolvency or financial loss was one of
    the stressors that may trigger stress and scores five (5) on the
    scale used to determine stressors. She also commented on the
    treatment of plaintiff with Alzam and stated that the use of Alzam
    was appropriate for the management of the type of stress identified
    by Dr Nieuwoudt.









  1. Dr Maritz
    disclosed in cross-examination that she did not give all the
    information at her disposal regarding her treatment of plaintiff for
    pain management. She was concerned that further details of the
    treatment regime would be used against plaintiff by defendant.

    She had also declined to cooperate with defendant’s expert
    witness as she had felt that the expert clinically examined
    plaintiff in the country without first having obtained the requisite
    local registration as a medical practitioner.









  1. Dr Maritz
    concluded her evidence
    under
    cross-examination with an unsolicited broadside aimed at defendant
    over what she perceived to have been an unfair characterisation of
    plaintiff by defendant during the trial. Her evidence concluded the
    case for plaintiff.








Evidence on behalf of the defendant




  1. Defendant
    commenced its case by calling its expert witness Dr Pieter Coetzer.
    Dr Coetzer has long and impressive curriculum vitae, which I will
    endeavour to summarise as practicable as possible. Having obtained
    his basic MB ChB degree from the University of Pretoria in 1977, Dr
    Coetzer served his houseman ship at a provincial hospital in South
    Africa for a year prior to taking up a position at the hospital as
    medical officer. In 1991 he obtained a BSc post-graduate degree in
    sports medicine from the University of Cape Town. Dr Coetzer is a
    Fellow of the American Academy of Disability Evaluating Physicians
    (AADEP) and is Board Certified as an Independent Medical Examiner by
    the American Board of Independent Medical Examiners (ABIME). At the
    time of his testimony, Dr Coetzer was the Chief Medical Advisor to
    Sanlam Life Insurance Company that he says is the second biggest
    insurer in South Africa but that other than both being insurance
    companies, it had no relationship with the defendant. He had fifteen
    years experience in insurance medicine and his functions in Sanlam
    included the underwriting and claims assessment. As far as
    underwriting was concerned, he was a member of the insurance
    industry-wide Medical and Underwriting Committee of the Life
    Offices’ Association (LOA); Chairman (
    sic)
    of the Independent Claims Assessment Panel; Fellow of the South
    African Institute of Life Underwriters; Member International
    Committee for Life, Disability and Health Insurance Medicine
    (ICLAM). Dr Coetzer had practised sports medicine and has published
    many learned articles and had co-authored policy documents on behalf
    of the insurance industry. He had acted as a resource person at
    workshops and seminars such as disability assessment workshops on
    psychiatric ground; post-traumatic stress disorder seminar;
    workshops on the assessment of disability due to low-back pain and
    made presentations to various re-insurers.









  1. Dr Coetzer’s evidence and
    opinions may be summarised as follows:









  1. He was approached
    by defendant and given relevant documentation
    in
    respect of plaintiff’s claim. He was then asked to give
    defendant an opinion on two matters. Firstly, the effect of
    non-disclosure of certain medical detail at the time of the
    application and secondly the merits of the disability claim.









  1. Dr Coetzer related
    that f
    or
    an insurer to adequately assess the risk when considering an
    application for insurance, it must be in possession of all relevant
    medical facts relating to the risk to be covered.









  1. It is for that
    reason that questions are included in application forms for
    insurance. Such questions are designed to assist applicants to
    provide relevant information. Applicants
    ,
    as a general proposition, are not at liberty to make value judgments
    of what medical facts are relevant and what not.









  1. In comparing the
    answers given by plaintiff to questions 13.06(f), 13.07 and 13.09 in
    her application form as well as the answers in questions 2
    .2(g)
    and 2.4(b) of the confidential medical report with the letter by Dr
    Nieuwoudt dated 2 October 2001 (Dr Nieuwoudt’s letter) it
    appeared that such questions were not answered truthfully, because
    Dr Nieuwoudt in his letter stated that plaintiff had been treated
    for stress-related symptoms due to business, financial or other
    reasons on the dates detailed in his report and on which dates Alzam
    - a schedule 5 drug and anxiolytic - was prescribed.









  1. Even if plaintiff
    was not aware that her condition was an anxiety state or nervous
    complaint, she should still have mentioned in her application, which
    was only three months after the last consultation for stress on 18
    November

    1998, that she had consulted a doctor (question 13.07 and 2.4(b))
    and that she was prescribed medications (question 13.09). Had these
    questions been answered in the affirmative, defendant would then
    have requested a report from Dr Nieuwoudt regarding the
    consultations and medications prescribed. Dr Nieuwoudt’s
    letter would have resulted in defendant or any other reasonable
    insurer declining disability benefits.









  1. It is not the
    dosage or frequency of the drug prescribed that is important but the
    repetitive

    pattern over a period in question and the cause of stress that would
    make the risk unacceptable.









  1. Claims experience
    had

    shown that work-related stress over a long period of time could
    transform into chronic anxiety and/or depressive episodes.
    Socio-economic factors could cause progression of the condition.









  1. Repeated prescriptions for a schedule
    5 drug is indicative of stress too severe to manage through leave
    from work, stress management programmes or psychotherapy.









  1. Underwriting
    practice
    of
    most, if not all, insurers in South Africa and Namibia was to
    decline disability benefits where there was a history of
    work-related stress that (a) occurs repeatedly and was severe enough
    to warrant a doctor’s consultation or (b) where it was treated
    with a schedule 5 drug within the two year period prior to
    application. Anxiety disorders were advanced stages of stress.
    Stress is a precursor to one of the anxiety disorders. Most if not
    all people suffer from stress. However, a person who suffers from
    stress and goes to see a doctor on more than one occasion and is
    given a schedule 5 drug meant that such person could not cope with
    stress and that is a substantial risk to an insurer.









  1. Dr Coetzer
    explained that although principles in medicine were universal,
    insurance medicine differed from clinical medicine in the sense that
    insurance medicine was all about risk rating. The insurer must
    consider the applicant’s health condition almost as snapshot
    on the day of the application. Based on the information provided in
    the application form and the accompanying documentation, the insurer
    must decide on the applicant’s mortality and mobility for the
    next 30 or 40 years. In contradistinction with clinical medicine,
    the clinical doctor has more time at his or her disposal to observe
    the patient’s health condition and to take remedial action if
    and when required. The insurer could not.









  1. There
    were three categories of medical conditions that an insurer was
    cautious of insuring disability for. One of such categories is a
    pain-related condition where the severity of the disability is based
    upon the self-report of the patient. Pain cannot be rated in terms
    of medical number. It is not possible to predict how long a
    subjective condition like pain will take before it can lead to claim
    and therefore it is not possible to put a premium loading on such a
    condition.









  1. Dr Coetzer
    concluded his evidence on disability by stating that t
    he
    disability benefits that plaintiff claimed would have been declined
    by defendant had plaintiff made full disclosure.









  1. It followed
    that the non-disclosure was material to the assessment of the risk.









  1. With regard to the
    clinical
    examination of plaintiff, Dr Coetzer explained that on 21 August
    2003 and prior to the commencement of the trial he had consulted
    with plaintiff for an hour and ten minutes in Windhoek. Plaintiff
    arrived at the consulting rooms alone on two crutches. She informed
    Dr Coetzer that she had driven her own car to the rooms. Her
    complaints were: chronic pain and limitation of the movement of the
    left hip; chronic lower back pain and restriction of movement and
    slight pain in the right replaced hip.









  1. She indicated that
    she was taking Voltaren 50mg tablets 3 times a day, every day;
    Cortisone tablets one 3 times a day every day, name and dosage of
    which she did not know; Voltaren injections 2-3 times per week and
    various other painkillers, including Disprin, when necessary.

    She indicated that she took only one Voltaren tablet in the morning
    before she went for the examination.









  1. Other pertinent
    observations

    Dr Coetzer made during the course of the examination were that
    plaintiff did not put any weight on her left leg and that she
    managed to undress fairly easily. Although she could put on her
    socks and shoes herself with some discomfort, she could not tie her
    shoe laces.









  1. Dr Coetzer
    explained that t
    he
    purpose of the clinical examination was to evaluate the whole person
    impairment of the plaintiff according to the American Medical
    Association’s Guide to the Evaluation of Permanent Impairment,
    5
    th
    edition (AMA Guides) with specific focus on impairment of the
    lumbosacral spine.









  1. According to Dr
    Coetzer, in assessing a disability claim one must first determine
    what the diagnosis was in order to verify whether the diagnosis was
    made correctly following international criteria. Secondly, given

    that most disability benefits were paid only where there had been
    permanent disability, one must determine whether adequate treatment
    had occurred. The next step would be to write the impairment.
    Impairment means the loss of function. The AMA Guides are the
    international benchmark for writing impairment in terms of medical
    numbers.









  1. That specific
    impairment and the organ or system in the body said to have been
    impaired is then correlated to the job description of the claimant.
    If the impairment precludes the claimant from performing his or her
    work a disability claim would be admitted. If not, of course it
    would be declined. In assessing disability one has to, as
    a
    last step, take into account the contractual requirements of the
    policy, whether it defines own occupation only or whether it refers
    to own or reasonable alternative or own or similar occupation.









  1. Having examined
    plaintiff
    ,
    Dr Coetzer agreed that plaintiff had permanent impairment due to the
    following diagnoses:








(a) Total
hip replacement.



(b) Advanced
osteo-arthritis left hip, awaiting hip replacement.



(c) Disc
degeneration and disc space narrowing of levels L3-4 and L4-5,
without neurological sequelae.








  1. Dr Coetzer
    concluded that

    as plaintiff’s claim rested on her complaint of pain which was
    not objectively quantifiable, it was essential to establish her
    sincerity and credibility. According to his assessment, plaintiff’s
    version could not be accepted at face value for the following
    reasons:








(a) She
had four out of five Waddel signs positive.



(b) Her
ROM assessment of lumbosacral spine movement was invalidated by the
SLR validity test, as the SLR exceeded the best true lumbar flexion
by more that 15°.



(c) The
X-rays of the left hip obtained after the examination did not fit the
clinical picture presented during the examination, and hardly
warranted urgent hip replacement.



(d) The pain
questionnaire provided indicated that all activities made the pain
worse. One would expect that certain activities would have no effect
on back pain or even improve it, e.g. lying down, sleeping, etc.



(e) The utilisation
of analgesics does not match the severity (80 out of 100) nor the
frequency (90% of the time) of the pain as described by plaintiff.
She used only anti-inflammatory and cortisone on an intermittent
basis. Many analgesics that could control pain and improve quality of
life were available.








  1. The facts mentioned in (a) to (e)
    above point to symptom exaggeration or psychosomatic overlay.









  1. Plaintiff was
    disabled as far as her previous occupation as a tour guide/bus
    driver was concerned , but she would be able to work in an
    occupation that was mainly sedentary in nature allowing for
    voluntary periodic standing and walking.









  1. As alternative
    employment it may be an option to work in a travel agency or to
    organise t
    ours
    provided the remuneration was not significantly less than her
    previous earnings.









  1. Dr Coetzer
    conceded in cross-examination that although he ha
    d
    expressed the opinion contained in the paragraph [96]

    above,
    he did not profess to have expertise in the workings of the tourism
    industry in the country and that he expressed the opinion on the
    basis that he had the expertise to determine the function
    capabilities that plaintiff had and could apply to the job
    requirements of a category of certain occupations. He agreed though
    that he had no expertise to deal with the issues of plaintiff’s
    skill level or skill transfer.









  1. Dr Coetzer was
    also asked in cross-examination to comment on why an insurer would
    have
    an exclusion clause in one policy and not in another. He explained
    that the risk in the two products would not be the same. In a
    disability policy, for example, people would be inclined to claim
    disability for psychiatric reasons, because they personally benefit
    from the lump sum payable should they succeed. In the case of a
    hospital or medical policy on the other hand, any monies paid out
    goes towards hospital expenses and so the patient gains nothing.
    There would be therefore no motivation for people to want to abuse
    the system and only genuine cases would claim.









  1. According to Dr
    Coetzer, the use of a schedule 5 drug for psychological conditions
    over a period of more than
    a
    year would result in the declining of disability insurance. An
    exception would be an acute stress disorder which is attributable to
    an identifiable external force. In practice the doctor would
    volunteer information if Alzam was used for an acute stress disorder
    thereby obviating the need to seek more information.









  1. Dr Coetzer’s
    report was based on the assumption that plaintiff had taken all the
    Alzam drugs prescribed to her by Dr
    Nieuwoudt.
    On the basis that that information was incorrect since plaintiff
    testified, as already noted, that she only took the tablets
    prescribed to her on the first occasion and that she gave the rest
    to her brother, Dr Coetzer’s reaction was that the insurer
    would be concerned about the integrity and honesty of the claimant
    since she had proved that she was capable of deceiving her doctor.
    The insurer would, in assessing the risk, take into account the
    moral character of the applicant.









  1. His opinion on
    stress

    was based on the assumption that plaintiff suffered from
    work-related stress, because that was what was stated in Dr
    Nieuwoudt’s letter. On the assumption that stress was not
    work-related, Dr Coetzer’s reaction was that, the cause of
    stress was irrelevant. The fact that a person had sought medical
    attention meant that such person was a substantial risk in
    comparison to a person who could cope with stress without medical
    intervention. All stress reactions would lead to the declining of
    disability benefits.









  1. On the questions
    contained
    in the health questionnaire, Dr Coetzer conceded that if plaintiff
    was not advised by her doctor that she had anxiety or one of the
    conditions listed in question 13.06 (f) then she was entitled to
    answer in the negative and that questions 13.06 (f) and 2.2 (g) were
    therefore answered correctly.









  1. Stress in itself may not be a problem
    for clinical medicine but it is for medical insurance. It is
    perceived as a precursor to the anxiety syndromes.









  1. The next witness
    called on behalf of defendant was

    Ms Gerda Ochse (misspelled in the record as ‘Uschu’),
    Executive: Risk and Operations of defendant. She was in charge of
    the administration of policies, risk management as well as claims
    underwriting. She had been in the insurance industry since 1995.
    Prior to working for defendant, she was employed by Sanlam where she
    rose to the position of the company’s Chief Underwriter and
    Manager of New Business Department. She was appointed by defendant
    in 2000 and became Manager: Underwriting and Claims. Her
    appointment meant that defendant’s underwriting and claims
    assessment business that was hitherto done in South Africa was done
    locally. She also served as a Board member of the committee for
    underwriting and claims of the Life Association of Namibia.









  1. At the request of
    counsel for plaintiff Ms
    Ochse
    managed to get a policy that was subsequently cancelled by
    plaintiff. In the policy plaintiff’s monthly income was
    indicated to have been R8000.00 (
    sic).
    In that policy document, plaintiff answered in the affirmative to
    question 13.07 asking whether she had seen a doctor in the last five
    years, giving details that she had seen the doctor for insurance HIV
    test. She had answered in the negative to question 13.09 enquiring
    whether she had taken drugs, tranquillisers or medicine. The company
    had issued the policy.









  1. As regards the
    repudiation of plaintiff’s disability
    policy,
    Ms Ochse explained that the claim was declined and the policy
    repudiated on the ground that material information was not disclosed
    at the application stage. In terms of defendant’s underwriting
    practice, no disability benefits should have been accorded to
    plaintiff had the information been disclosed at the time of the
    application.









  1. According to
    defendant
    ’s
    Underwriting Guidelines, if there were symptoms of any type of
    stress or anxiety within the period of three years before
    application, insurance will be declined. If the period was more than
    three years, then there would be a 100% loading of premium. If there
    was an indication of stress coupled with the use of anxiolytic
    within the period of three years before application then no
    disability insurance would be granted. Had defendant been aware of
    the medical treatment given to plaintiff by Dr Nieuwoudt at the time
    of the application, the application for disability benefits would
    have been declined.









  1. Ms Ochse
    confirmed that plaintiff had taken out the medical policy with
    defendant subsequent to the issuing of the policy for disability and
    explained that the application for the medical policy was not
    declined even though Dr Nieuwoudt had indicated in the confidential
    medical report that plaintiff had been treated for stress-related
    anxiety, because claims for mental illnesses and emotional disorders
    were specifically excluded in the medical policy.









  1. Ms Ochse confirmed
    in cross-examination that she personally dealt with the application
    for the medical insurance but that at the time she did not know that
    plaintiff had a disability policy
    .









  1. On the question
    why defendant did not use the information regarding
    stress-related
    treatment disclosed by Dr Nieuwoudt to determine whether such
    information was disclosed in the application for the disability
    policy, Ms Ochse explained that the two policies were on computer
    systems that were not linked. Moreover, in the absence of an
    indication in the medical policy that plaintiff had another policy
    with defendant, no attempt was made to search for the old policy. In
    any event, in effect it was trusted that plaintiff disclosed all
    material information.









  1. Ms Ochse
    was asked during cross-examination to comment on the fact that it
    appeared that prior to the receipt of Dr Nieuwoudt’s letter
    defendant was in possession of information on the basis of which it
    decided to repudiate the claim. Ms Ochse in the end indicated that
    she did not know where such information could have originated. She
    indicated that the information could not have come from the
    documents in respect of the medical insurance policy, because the
    documents in respect thereof were kept in Windhoek and the form
    wherein a recommendation to repudiate was made was written by a
    person or persons based in Johannesburg.









  1. Ms Ochse
    also agreed with the testimony of Dr Coetzer that as long as it had
    been disclosed that an applicant for disability insurance had been
    prescribed Alzam, irrespective of the reason therefor or the dosage,
    disability insurance would be declined. The insurer worked on the
    assumption that someone who takes Alzam or any other schedule 5
    anxiolytic would have some form of stress or some condition that may
    progress. In that event the tendency was to decline the application.
    The applicant may however provide evidence rebutting the presumption
    for further consideration by the insurer.









  1. The third witness
    for the defendant was Mr Ricardo Patrick Jankowski. Mr Jankowski was
    a computer trainer
    employed
    by an employment agency called Jobs Unlimited. His short evidence
    was essentially to the effect that he ran a three day computer
    course that he stated was at intermediate level. The course
    introduced trainees to basic concepts on how to use a computer. At
    the end of the course trainees were expected not only to have the
    basic skills but also to apply those skills to working environments
    by way of doing general office work such as typing documents and
    working on a personal computer. The course cost N$450.00 at the time
    of the witness’s testimony.









  1. Mr Jankowski also
    testified about a tailor-made computer course that he ran for
    employees of Namibia Wildlife Resorts

    who did reservations. He added though that the course had been
    discontinued.









  1. The next witness
    to be called on behalf of defendant was Ms Marl
    ene
    Erasmus. It will be recalled that Ms Erasmus was the Bank Windhoek
    broker who was said to have completed the application form for
    disability insurance on behalf of plaintiff. Ms Erasmus confirmed
    that she had indeed completed the form in Afrikaans. She did not
    know plaintiff before and so did not know her personal history. Her
    evidence on this aspect was contrary to that of plaintiff who stated
    that she knew Ms Erasmus well, but this aspect of plaintiff’s
    evidence was not canvassed with Ms Erasmus. Her evidence in this
    regard therefore remains undisputed. All the information relating to
    plaintiff was obtained from plaintiff. She read out the questions on
    the form and plaintiff gave her the answers which she ticked. At no
    stage during the completion of the report did plaintiff indicate
    that she did not understand Afrikaans.









  1. Plaintiff gave the
    name of her doctor as Dr Burger

    and Ms Erasmus vehemently denied that she had agreed with plaintiff
    to put Dr Burger’s name on the form with full knowledge that
    plaintiff’s family doctor was Dr Nieuwoudt. Ms Erasmus was
    adamant that she ticked the ‘No’ box after plaintiff
    indicated that she did not see a doctor in the last five years.









  1. When it came to
    the declaration on the form, Ms Erasmus said she had given the
    declaration to plaintiff and told plaintiff to read the declaration
    carefully since it formed the basis of the contract and that she
    should sign if she
    had
    agreed with its contents. Ms Erasmus entered her name and address as
    well as the plaintiff’s particulars on the space reserved for
    that purpose on the report and thereafter sent the confidential
    medical report to the doctor for completion. Since it was
    confidential, the doctor was required to send the report directly to
    the insurer.









  1. The evidence of Mr
    Frederick Albertus Botha concluded the evidence on behalf of the
    defendant. Mr Botha was a tax partner at Price Waterhouse and
    Coopers whose evidence concerned the interpretation of plaintiff’s
    tax returns for the years 1997 and 1998. The thrust of Mr Botha’s
    evidence appears to be that no income was declared and no expenses
    were claimed in the returns during the periods under review.









  1. The issues that
    have
    crystallised
    from the pleadings and call for decision are:








(a) Whether
defendant discharged its onus to prove on a balance of probabilities
that plaintiff failed to disclose that she suffered from depression
and anxiety and had a history of these conditions and



(b) Whether defendant discharged its
onus to prove that plaintiff failed to disclose that had she received
anxiolytic therapy on a number of occasions prior to her application
for disability insurance.















Material non-disclosure




  1. An insured has
    duty to disclose when applying for insurance. Such applicant must
    answer questions put to him or her on a proposal from truthfully or
    accurately. He or she is obliged to volun
    teer
    knowledge material to the risk whether or not asked to do so.
    3









  1. As was stated in
    a South African case of
    Munns
    and Another v Santam Ltd
    4








The general
principle in our law is that it is the duty of a proposer for
insurance to disclose any f
act,
exclusively within his knowledge, which it is material for the
insurer to know. The information material for the insurer to know is
information that may influence his opinion as to risk that he is
incurring and consequently as to whether he will take it, or what
premium he will charge if he does take it. The test of materiality is
that of the reasonable man, whatever the insured's own assessment of
the fact in question is, that is if a reasonable man would recognise
that it is material to disclose the fact in question, disclosure is
required. (Reference to authorities omitted)












  1. Furthermore,








The insured must,
therefore, disclose to the insurer, before the contract is concluded
every material circumstance which he knows.
5
















  1. A fact is material
    for the purposes of non-disclosure if it is one which would
    influence the opinion of a reasonable or prudent insurer in deciding
    whether or not to accept the risk or what premium to stipulate;
    and/or whether to impose particular terms.
    6









  1. The Full Bench of
    this Court in
    Wilke
    NO v Swabou Life (supra)

    established that in determining whether undisclosed facts were
    material or not, the Court's function is to decide the issue
    objectively from the standpoint of a reasonable and prudent person.
    7
    The objective test has therefore been adopted by this Court.
    8









  1. It will be
    recalled that defendant alleged plaintiff should have disclosed that
    she had suffered from depression and anxiety states and that she had
    had a history in this regard. Disclosure of information with regard
    to depression or anxiety was required in terms of clause 13.06(f) of
    the proposal form.









  1. Defendant found
    itself in an
    untenable
    position during the trial as far as the allegation of non-disclosure
    of alleged anxiety was concerned. Having based its plea and
    undoubtedly the conclusions as well as opinions of its expert
    witness on the information supplied by Dr Nieuwoudt in his letter of
    2 October 2001 in this regard, Dr Nieuwoudt in evidence essentially
    backtracked on the information supplied and then, contrary to the
    message he appeared to have conveyed in the letter, claimed that
    reference in the letter to anxiety did not have any significant
    meaning, as he had used that term for his own records only.
    Significantly and perhaps fatally for defendant on this issue, Dr
    Nieuwoudt then maintained that he had in fact not diagnosed
    plaintiff as having, nor did he advise her of, symptoms of anxiety
    or depression. As if to add insult to injury, defendant came to
    learn for the first time in Court from plaintiff that plaintiff did
    not take all the Alzam tablets prescribed to her by Nieuwoudt.









  1. Faced with this,
    rather extraordinary change of heart, on the part of Dr Nieuwoudt,
    Dr. Coetzer conceded, as already relayed, that in the light of the
    evidence that plaintiff was not advised that she had suffered from
    these conditions, the answer in the negative was justified. Counsel
    for defendant also conceded that much. The issue of depression or
    anxiety as canvassed in clause 13.06(f) of the proposal form and
    clause 2.2(g) of the confidential medical report therefore falls
    away.









  1. Faced with
    pl
    aintiff’s
    evidence, defendant changed tact to counter the new evidence
    relating to the use of Alzam. As observed when presenting the
    summary of Dr Coetzer’s evidence, emphasis changed from
    anxiety and depression to stress in view of Dr Nieuwoudt’s
    concession in cross-examination that he must have had diagnosed
    stress for him to have had prescribed Alzam. The difficulty with
    this change of tact on the part of defendant was that the new
    direction does not accord with the pleadings as set out above. The
    issues are defined by pleadings.
    9
    Nowhere in the




pleadings is stress pleaded as a basis
for the repudiation of the agreement.








  1. The clause to be
    considered next is clause 13.07 which asked the same question as
    asked in clause 2.4(b) of the confidential medical report.
    Plaintiff answered that she did not consult a doctor, which as
    plaintiff in evidence conceded, was an incorrect answer, because she
    had evidently consulted a doctor during the period. Plaintiff
    appears to blame Ms. Erasmus who completed the form on her behalf.
    Ms. Erasmus insisted that she had ticked the answers that she was
    given by plaintiff and I have no reason to doubt her evidence. She
    does not appear to me to have had a motive to tick an answer
    different from that given by plaintiff. Apart from an innuendo, if I
    understand it correctly, to the effect that being a broker she had a
    particular interest in the successful outcome of the application for
    insurance and would therefore not have an interest in ensuring that
    correct answers were given, no serious criticism was directed
    against her evidence. It was not suggested, nor was there a basis
    for a suggestion that Ms Erasmus, for example, intentionally ticked
    the wrong answer in order to implicate plaintiff or to ensure that
    the application succeeded.









  1. For the purposes
    of non-disclosure it is immaterial who completed the proposal form
    and the confidential medical report. In
    Alpine
    Caterers Namibia (Pty) Ltd v Owen and Others
    10,
    quoting Innes CJ in
    Burger
    v Central South African Railways

    1903 TS 571, Frank J (as he then was) stated:








"It is a sound
principle of law that a man, when he signs a contract, is taken to be
bound by the ordinary meaning and effect of the words which appear
over his signature."
















  1. The learned Judge
    further
    noted that Innes CJ's approach was confirmed in
    George
    v Fairmead (Pty) Ltd
    11
    where Fagan CJ observed:








"When a man is asked to put his
signature to a document he cannot fail to realise that he is called
upon to signify, by doing so, his assent to whatever words appear
above his signature."
















  1. "Man",
    "he" and/or "his" in the quotations in our
    context and in this day and age must surely be understood to include
    "woman", "she" or "hers" respectively.









  1. It is therefore of
    no assistance to plaintiff to say that she did not complete the
    forms personally. She signed both documents and warranted their
    correctness.









  1. It is indeed so
    that in
    the
    confidential medical report compiled in connection with the
    application for disability plaintiff disclosed that she had
    consulted doctors and gave their names and a list of ailments and
    investigations in respect of which she had consulted the doctors
    for. At the time of the consideration of her proposal for disability
    policy, therefore, defendant must have been aware that she had
    consulted certain doctors during the relevant period and this
    consideration may be crucial when evaluating the materiality of the
    non-disclosure.









  1. I am persuaded
    that defendant has discharged the onus of proving that plaintiff
    should have disclosed that she had seen a doctor.










  1. The next disputed question is to be
    found in clause 13.09. It will be recalled that plaintiff answered
    in the negative to the question enquiring whether she was, at the
    time of the application taking or had ever taken drugs,
    tranquilisers or other medicines.









  1. Plaintiff's
    explanation for what was clearly an incorrect answer amounted to
    this that she did not take drugs or tranquilisers; that she was not
    clear about the use of the word ‘drug’; that she did not
    consider tranquillisers to be drugs and that as rule Dr Nieuwoudt
    did not discuss with her what medicine he was going to prescribe.
    She regarded the Alzam she was given by Dr Nieuwoudt as a sleeping
    pill and not as a tranquiliser. As I understand Dr. Nieuwoudt’s
    evidence in this regard, Dr Nieuwoudt did not specifically say that
    he had actually explained to plaintiff that the Alzam she was
    prescribing was a tranquilliser. On the contrary, he believed that
    he must have explained to her that Alzam was not a mere sleeping
    pill. It would seem therefore that rather than stating a fact, Dr
    Nieuwoudt actually drew an inference. He may well have drawn the
    inference from the objective fact that on one occasion he prescribed
    both Alzam and a proper sleeping tablet, the combination of which
    was supposed to treat different complains. The view I take of the
    matter is that whether or not Dr Nieuwoudt explained to plaintiff
    that Alzam was a tranquilliser or not, plaintiff should have
    disclosed to the insurer that she had taken medicine. The question
    was not whether she had taken Alzam but whether she had taken drugs,
    tranquillisers or ‘other medicine’. It is evident that
    in addition to Alzam, she had taken other medicine.









  1. According to Dr.
    Coetzer "ever" in question 13.09 meant 5 years, but Mr.
    Coleman, counsel for the plaintiff, makes a valid point that nowhere
    in the application form is the insured informed of this. The point
    does not, however, detract from the fact that plaintiff should have
    given a positive answer to the question.









  1. On the question
    why plaintiff answered in the negative to the question whether or
    not she had taken medicine, Dr. Nieuwoudt testified that plaintiff
    might have forgotten or that she did not think that Alzam was
    mentionable like headache tablets.




Plaintiff herself
did not testify to this and Dr
Nieuwoudt’s
testimony on this aspect at best amounts to speculation.








  1. In any event the
    net encompassing disclosure of material facts is cast rather wide
    and the omission to disclose a material fact cannot be excused on
    the basis of forgetfulness or mistake. In this regard, it was
    stated in
    Beyers
    Estate
    v
    Southern
    Life
    Association
    case (
    supra)
    as follows:








It is
well-established law that it is immaterial whether the omission to
communicate a material fact arises from intention or indifference or
a mistake, or from it not being present to the mind of the assured
that the fact was one which it was material to make known …
His duty is carefully and diligently to review all the facts known to
himself bearing on the risk proposed to the insurers, and to state
every circumstance which any reasonable man might suppose could in
any way influence the insurers in considering and deciding whether
they will enter into the contract.
12








  1. Gordon & Getz
    op.
    cit.
    on pages 123-124 make a similar point:








A proposer who
makes a reckless statement cannot be said to believe in its truth.
If he ‘does not attempt to tax his memory, or really try to
think about the matter, and apply his mind to it; if he was casual
and negligent in the answers he gave’, then he does not fulfil
his obligations to disclose everything material to the insurer.















Anxiolytic therapy?




  1. The next enquiry
    is whether defendant discharged the duty of proving that plaintiff
    received anxiolytic therapy as alleged in the amended plea. It was
    common cause that Alzam or
    Xanor
    was an anxiolytic.









  1. Dr Nieuwoudt
    testified in evidence-in-chief that he prescribed Alzam on a low
    dosage and intermittently and when requested by plaintiff. He did
    not diagnose plaintiff with any disorder so as to place her on
    therapy. In cross-examination, however, he conceded that he must
    have diagnosed stress; otherwise he would not have prescribed Alzam.









  1. As already
    observed, plaintiff stated that
    she
    only took the Alzam tablets from the batch that was prescribed to
    her on the first occasion. The rest she gave to her brother.
    However difficult it may be to believe given the sheer number of
    tablets that was allegedly given to plaintiff’s brother in
    contrast to those she says she took, there is no evidence gainsaying
    plaintiff's evidence in this regard and given the evidence of both
    Doctors Maritz and Nieuwoudt that lay people often share prescribed
    medicine contrary to medical advice, plaintiff’s evidence has
    to be accepted.









  1. Dr Maritz's
    evidence was to the effect that the dosage and frequency of the
    prescription of Alzam had no therapeutic value and that the way the
    drug was prescribed was consistent with "other

    uses of the drug.









  1. The Concise Oxford
    D
    ictionary,
    10
    th
    edition, defines "therapy" as "treatment intended to
    relieve or heal a disorder; the treatment of mental or psychological
    disorders by psychological means".









  1. "Disorder"
    in the context of medicine is defined in the same dictionary as "a
    disruption of normal physical and or mental functions". Given
    that it has been conceded on behalf of plaintiff that plaintiff had
    not been diagnosed of symptoms of a mental disorder as understood in
    psychiatry, it seems to me that it has not been proven on a balance
    of probabilities that the Alzam plaintiff received was part of a
    therapy according to the grammatical meaning of that word.








Alternative plea




  1. It
    remains to consider the alternative to paragraph 3.2.2 of
    defendant’s amended plea. To recapitulate, in the alternative
    to paragraph 3.2.2 defendant averred that plaintiff had obtained
    prescribed medicine from Dr Nieuwoudt in effect by false pretences
    and that she should have informed defendant of this.









  1. It is undoubtedly
    so that on her own evidence, plaintiff obtained Alzam from Dr
    Nieuwoudt in circumstances that could properly be described as
    false. She pretended to the doctor that she needed Alzam when she
    instead and having obtained the prescription she passed on the
    tablets to her brother. If Dr Nieuwoudt’s entry in his
    clinical notes is anything to go by, it seems that on 4 December
    1997, plaintiff must have represented to Dr Nieuwoudt that Alzam was
    helping well while knowing that the last time she had taken the
    tablets was about nine months previously. Defendant’s
    alternative averment is therefore borne out by evidence. The issue
    of the of failure to disclose, as it were, her questionable conduct
    is germane to what has been referred to in the law of insurance as
    the "moral hazard", an issue I shall advert to in due
    course since this issue is in turn relevant to the consideration of
    the materiality of the undisclosed fact. I would first turn to
    consider the issue of warranty in view of the finding that plaintiff
    should have disclosed that she had received medicines and in view of
    the finding regarding plaintiff’s moral integrity.








Warranty




  1. Plaintiff pleaded
    that the agreement between the parties
    was
    subject to section 54(1) of the Long-term Insurance Act, 1998 (Act
    No.5 of 1998) (the Act). Section 54(1) of the Act is a successor to
    Section 63(3) of the Insurance Act, No.27 of 1943, which latter
    section was considered by this Court in the
    Wilke
    NO's
    case (
    supra).
    Section 54 (1) of the Act virtually mimics section 63(3) of Act 27,
    1943 and the new section reads as follows:








"Notwithstanding
anything to the contrary contained in any domestic policy or any
document relating to such policy, any such policy issued before or
after the commencement of this Act shall not be invalidated, and the
obligation of a registered insurer or reinsurer thereunder shall not
be excluded or limited, and the obligations of the owner thereof
shall not be increased, on account of any representation made to the
registered insurer or reinsurer which is not true, whether or not
such representation has been warranted to be true, unless the
incorrectness of such representation is of such a nature as to be
likely to have materially affected the assessment of the risk under
such policy at the time of its issue or of any reinstatement or
renewal thereof."












  1. The object of the
    enactment was set out in
    Qilingele
    v South African Mutual Life Assurance
    (supra)
    as
    follows
    :








"The
object of the enactment is manifest, namely to protect claimants
under insurance contracts against repudiations based on
inconsequential inaccuracies or trivial misstatements in insurance
proposals. An insurer's right to repudiate liability on the basis of
the untruth of a representation made to it, whether elevated to a
warranty or not, was curtailed. This was done by, first, providing
generally that liability could not be avoided on account of any
misrepresentation, warranted or not, and then adding a qualification.
By structuring the provision in that way the draftsman ensured that
the
onus
to prove the requisite elements of the qualification – and
hence of the right to avoid liability – would rest on the
insurer."
13



(Emphasis
added)
















  1. As previously
    observed
    ,
    this court held in
    Wilke
    NO
    case (
    supra)
    that the test for determining whether the incorrectness of
    representation materially affected the assessment of the risk is
    objective. Insofar as Mr Frank, counsel for defendant, relied on the
    Qilingele
    (
    supra)
    decision for the proposition that,








"In
the field of warranties the test is not that of a reasonable man, but
whether the particular insurer regarded the information material,"















I must point
out that I am bound by the
Wilke
NO
case (
supra);
being a decision of the full Court.








  1. In an attempt to
    discharge the onus to prove that the undisclosed fac
    ts
    materially affected the risk, defendant led the evidence of its
    expert witness, Dr Coetzer as well as its underwriter, Ms Ochse. It
    will be recalled that Dr Coetzer’s evidence on the aspect on
    failure to disclose that plaintiff had received medicine and had
    consulted a doctor during the period referred to in the proposal
    form was that had these facts been disclose, defendant would have
    asked for a report from Dr Nieuwoudt regarding the consultations and
    the medicines prescribed. If Dr Nieuwoudt had written a letter
    similar to his letter of 2 October 2001, defendant or any other
    reasonable insurer would have declined to grant disability benefits.
    Dr Coetzer also added that it was not the dosage or frequency of the
    drug that the insurer was concerned about. What was of concern was
    the repetitive pattern of the drug used and the cause for the
    condition being treated. Socio-economic factors can cause the
    progression of work-related stress.









  1. It will also be
    rec
    alled
    that Ms Ochse also agreed with the view expressed by Dr Coetzer to
    the effect that so long as it had been disclosed that an applicant
    for disability insurance had been prescribed Alzam, disability
    insurance would be declined irrespective of the reason for the
    prescription or the dosage.









  1. It cannot be
    emphasised too strongly that the above evidence must be evaluated
    objectively from the stand point of a reasonable man
    and
    prudent person and not from the stand point of a reasonable insurer.
    Mr Coleman argued and I agree with him that a reasonable person
    would not regard it to be reasonable to simply decline the
    application on the mere mention of Alzam without enquiring the
    reason for use and the dosage. This would be particularly so because
    as it has been demonstrated in this case, apart from being an
    anxiolytic, Alzam also had other uses as testified about by Dr
    Maritz who testified that it could also be used as sleep induction
    and as mentioned in the Internet extract handed up by Mr Coleman and
    to which no objection was raised showed. To summarily decline the
    proposal without first making enquiries so as to satisfy one of the
    circumstances that led to the taking of the drug would, in my view,
    not satisfy the test of a reasonable or prudent person.









  1. Moreover,
    defendant had received information contained in the confidential
    medical report in respect of the medical policy to the effect that
    plaintiff had seen a doctor and had been treated for work-related
    stress, but this information was not used to assess the subsequent
    proposal for disability cover. By neglecting to collate relevant
    and intertwined information in order to assess the risk in the
    proposal for disability insurance and/or to ensure that its computer
    systems were linked so as to be able to facilitate the collation of
    such information defendant acted to its own detriment.









  1. Returning now to
    the
    materiality or otherwise of the failure to disclose that plaintiff
    had seen a doctor, Mr Frank argued that even if plaintiff did not
    take the medication prescribed to her by Dr. Nieuwoudt, she should
    have disclosed the fact that she had obtained medicine from Dr
    Nieuwoudt under false pretences as that would have had affected the
    moral hazard of doing business with her. Mr Frank submitted further
    that the doctor/patient relationship as well as the fact that
    insurers rely on the information provided by doctors in the
    assessment of risks were principles at stake in this case. If a
    person could abuse the doctor/patient trust to feign a condition, so
    Mr Frank asked, what will prevent the person from abusing that trust
    to facilitate an insurance claim, especially in cases such as the
    present where the nature of the complaint, namely lower back pain,
    could not be objectively assessed? This is essentially a ‘moral
    hazard’ argument and it is to this principle that I propose to
    turn next.









  1. In Munns
    and
    Another
    v
    Santam
    Ltd
    (
    supra)
    Tshabalala AJP stated as follows in relation to the so-called moral
    hazard:








"It
is elementary that one of the matters to be considered by an
insurance company in entering into contractual relations with a
proposed assured is the question of the moral integrity of the
proposer – what has been called ‘the moral hazard’".
14
















  1. The following
    examples of moral hazard could be distilled from reported cases:
    failure
    to disclose facts relating to financial and business integrity;
    15
    failure to disclose the quality of management;
    16
    previous financial difficulties;
    17
    that the premises covered by a fire insurance contract housed a
    brothel;
    18
    that a previous loss occurred as a result of carelessness by the
    insured;
    19
    failure to disclose a previous conviction of robbery.
    20









  1. There is, however,
    authority for the proposition that the "moral hazard"
    principle is not as important to long-term insurance contracts such
    as life insurance (and I would add, disability insurance) as is to
    cases of short-term insurance. In
    AA
    Mutual
    Life
    Assurance
    Association
    Ltd
    v
    Cronje21,
    Eloff DJP stated the following in relation to the failure to
    disclose previous insolvency in a proposal for life insurance and I
    respectfully endorse the
    dictum:








"The
reasonable man postulated by cases, would not, in my opinion,
consider the moral hazard as important in the context of an
application for life insurance, as would be the case with, e.g. fire
insurance. With life insurance the risk under consideration relates
to the state of health of the person concerned, and to factors which
may endanger his life. It is to my mind far-fetched to suggest as
counsel for the appellant did, that disclosure of the insolvency of
the deceased might have prompted the appellant to investigate the
circumstances of the moral sequestration to find out if they reveal
something adverse to the moral integrity of the deceased, or which
could bear on the risk or the possible loading of the premium."
22
















  1. I conclude then
    that although I found that plaintiff should have disclosed that she
    had taken medicine and that she had consulted a doctor, a reasonable
    man in possession of the relevant facts would not conclude that the
    undisclosed information was of such a nature as to likely to have
    materially affected the assessment of the risk.

    Defendant was accordingly not entitled to repudiate the agreement.








Disability




  1. The issue of disability remains to be
    considered next.









  1. According to the
    minutes of the
    second
    Rule 37 conference to be found in tab "A", page 103, of
    the bundle of documents, the parties agreed in paragraph 1.2 as
    follows:








"Plaintiff
bears the onus to prove her disability but the parties agree that
according to the experts of both sides she is disabled for her own
occupation as tour guide/bus driver. The only issue remaining in this
context is whether she is able to work in a similar occupation as
defined in the policy."












  1. I could not find
    the definition of
    “similar
    occupation” in the policy. So I take it that it must have its
    ordinary meaning, which according to the Concise Oxford Dictionary,
    10
    th
    edition, page 1337, is defined as “of the same kind in
    appearance, character or quantity, without being identical”.
    In the context of the present matter, I would accept that a similar
    occupation should be understood to mean an occupation of the same
    kind in character as a tour guide to which plaintiff could
    reasonably be expected to apply her knowledge, qualification and
    experience, provided that the remuneration is not significantly less
    than her previous earnings.









  1. In an attempt to
    prove the remaining issue
    ,
    as previously noted, plaintiff testified and called Ms Schlusche.
    The evidence of both the plaintiff and Ms Schlusche has been
    presented in the summary of evidence. At the pain of being
    repetitive, it essentially amounted to this that given plaintiff’s
    disability; the pain that she experiences; her lack of
    administrative as well as computer skills; her outdoor outlook,
    there was virtually no occupation similar to tour guide/bus driver
    that she could do.









  1. Defendant led the
    evidence of Dr Coetzer who in the end
    and
    fairly conceded that he did not possess the expertise to testify
    about skills necessary for alternative occupation for plaintiff as
    well as Mr Jankowski.









  1. Apart form establishing that an
    average person may be able to acquire computer skills in three days,
    Mr Jankowski’s evidence did not contribute much to the
    enquiry.









  1. Defendant also
    gave
    the
    summary of expert opinion by one Dinette Venter who was supposed to
    have testified on this aspect of the case but this person in the end
    was not called and no explanation was given in this regard.









  1. It will be
    recollected that the evidence with regard to plaintiff‘s
    income
    was
    that plaintiff earned between N$10000 and N$15000 a month depending
    on whether she did what she referred to as a specialised tour or
    not. Her estimate of the income was in essence corroborated by the
    evidence of Ms Schlusche who appears to me to have had intimate
    knowledge of the tourism industry in this country. Counsel for
    defendant submitted that plaintiff’s income had not been
    established. Counsel referred to tax returns for the relevant period
    as well as to plaintiff’s bank statement, which did not
    reflect income that plaintiff claimed to have earned. While I agree
    that the tax returns and other instances detailed by Mr Frank
    clearly cast a shadow on plaintiff’s credibility - which may
    explain why an attempt appeared to have been made to withhold the
    tax returns from the court by stating,
    inter
    alios
    ,
    that plaintiff did not render tax returns during the relevant period
    - I am nevertheless persuaded that Ms Schluche’s evidence puts
    beyond doubt the level of income plaintiff commanded before
    disability. Ms Schlusche appeared to me to be a fairly independent
    witness who did not appear to have taken personal interest in the
    predicament that plaintiff found herself in when compared, for
    example, to Dr Maritz, who at some point appeared to have lost sight
    of objectivity and in effect became a character witness for
    plaintiff as exemplified by a rather dramatic statement she made
    just shortly after counsel for defendant had finished
    cross-examining her. I do not understand Mr Frank to level any
    criticism at Ms Schlusche as witness.









  1. Now Ms Shlusche’s
    further evidence on the aspect of ‘similar occupation’
    and in recapitulation, was that the occupation that came closest to
    a tour guide would be a nature conservationist. For plaintiff to
    become a nature conservationist she would require training. Ms
    Schlusche did not testify about salary structures of nature
    conservationists. As previously mentioned, plaintiff does not
    possess the skills of tour processors who on the evidence of Ms
    Schlusche, appear to be highly trained individuals who command
    between N$5000 and N$8000 a month. Even if she had such skills, it
    would be apparent from Ms Schlusche’s evidence that plaintiff
    would have had to undergo a substantial fall in her income. It would
    be artificial to argue that plaintiff could be taken up in an
    administrative position in a tour operator or travel agency in the
    face of what I consider to be objective evidence of Ms Schlusche
    pointing to the lack of administrative and computer skills on the
    part of plaintiff. Given her age and outdoor outlook as well as her
    disability it cannot reasonably be expected of plaintiff to acquire
    the requisite administrative skills so as to be able to look for an
    administrative position in a tour operator’s office or travel
    agency.









  1. For all those
    reasons I find that plaintiff has discharged the onus on a balance
    of probabilities that she is
    totally
    and permanently unable to engage in an occupation similar to a tour
    guide/bus driver.









  1. Mr Frank raised
    other points of criticism
    ,
    including specific instances that he argues point to the lack of
    credibility on the part of plaintiff. Likewise Mr Coleman raised a
    number of specific points. I mean no disrespect to counsel if I do
    not deal with those points individually. I must point out though
    that in coming to the conclusions I have arrived at in this case, I
    considered all of them. The need to avoid prolixity and to curtail
    the already overburdened judgment necessitated that not every
    conceivable point raised, be it factual or legal, be dealt with
    individually.








Conclusion
and costs




  1. In the result I
    have found that
    defendant
    did not discharge the onus of proving on the balance of
    probabilities that the allegations that plaintiff failed to disclose
    materially affected the risk seen from a point of view of a
    reasonable man and prudent person so as to be entitled to reject the
    claim and repudiate the agreement. Plaintiff, on the other hand,
    discharged the onus on a balance of probabilities of proving that
    she was disabled for a similar occupation and that it was entitled
    to the judgment in the sum agreed upon in the agreement entered into
    between the parties.









  1. Mr Coleman
    submitted
    ,
    based on the evidence when defendant would have paid plaintiff had
    the claim been admitted that should plaintiff be successful,
    interest should run from a period about ten days from the date
    defendant addressed the first letter to plaintiff advising her of
    the repudiation of liability. This is justified.









  1. Mr Coleman
    furthermore urged for
    a
    special costs order on the basis of the argument, if I understand it
    correctly, that the way defendant presented its case by shifting the
    goal posts as the evidence emerged amounted to an abuse of the court
    process. Moreover, so the argument ran and again if I understand it
    correctly, defendant should in effect be penalised for failing to
    call its expert witness that it had announced it would call. I do
    not consider that such an order would be justified in the
    circumstances of this case. There has been a shifting of positions
    on both sides and while an inference may be drawn from the failure
    to call the expert witness, that in itself is hardly a ground for a
    punitive costs order. I would accordingly decline to make such an
    order.







Order




  1. In the result I
    make the
    following
    order:








1. Judgment
is entered in favour of the plaintiff in the amount of N$500
000,00 plus interest on the aforesaid amount at the rate of 20% per
annum

calculated
from 11 September 2001.







2. Defendant is
directed to pay plaintiff's costs.







3. In view of
plaintiff’s insolvency and in terms of the agreement entered
into between counsel representing the respective parties payments are
to be made to plaintiff’s trustees, Messrs Investment Trust.



























________________________



SHIVUTE, JP











































COUNSEL FOR THE PLAINTIFF:



INSTRUCTED BY:







COUNSEL FOR THE DEFENDANT:



INSTRUCTED BY:




MR. G.B. COLEMAN



METCALFE LEGAL PRACTITIONERS







MR. T.J. FRANK



VANDER MERWE-GREEFF INC












1
See, for example, De Polo and Another v Dreyer
and Others 1991 (2) SA 164 (W) at 171G; Smith v Kwanonqubela Town
Council 1999 (4) SA 947 (SCA); Voget and Others v Kleynhans 2003 (2)
SA 148 (C) para. [22] and the cases cited therein.




2
Paragraph 6 thereof




3
Fine v The General Accident, Fire & Life Assurance Corporation
1915 AD 213; Beyers Estate v Southern Life Association 1938 CPD 8.




4
2000 (4) SA 359 (D&CLD) at 366 B – C. See also Wilke NO v
Swabou Life Assurance Company Limited 2000 NR 23 at 44F - H




5
Gordon & Getz: The South African Law of Insurance, 4th


Edition, page 113




6
Wilke NO v Swabou Life case (supra) at 45A




7
At 45G




8
See Joubert v ABSA Life Ltd 2001 (2) SA 322 (W) where the subjective
test as propounded in Qilingele v South African Mutual Life
Assurance Society 1993 (1) SA 69 (A) was preferred and Clifford v
Commercial Union Insurance Co of SA 1998 (4) SA 150 (SCA) for
apparently obiter dicta remarks in the judgment of Schutz JA
criticizing the Qilingele approach. See also the incisive remarks of
Nienaber JA at 161C-E in reaction to criticism leveled at the
Qilingele approach.




9
See, for example, Middleton v Carr 1949 (2) SA
374 (A) at 386 where Schreiner JA stated: “Generally speaking
the issues in civil cases should be raised on the pleadings and if
an issue arises which does not appear from the pleadings in their
original form an appropriate amendment should be sought. Parties
should not be unduly encouraged to rely, in the hope, perhaps, of
obtaining some tactical advantage or of avoiding a special order as
to costs , on the court’s readiness at the argument stage or
on appeal to treat unpleaded issues as having been fully
investigated”.


The difficulty for
defendant, of course and as already noted, is that it based its
pleadings on the information that turned out at the trial stage to
be wrong.




10
1991 NR 342




11
1958 (2) SA 465 at 472




12
At 20




13
At 74B-C




14
At 367J










15
Steyn v AA Onderlinge Assuransie Assosiasie Bpk
1985 (4) SA 7 (T); Munns and Another v Santam Ltd (supra)




16
Fransba Vervoer (Edm) Bpk v Incorporated General
Insurances Ltd 1976 (4) SA 970 (W)




17
Fouche v The Corporation of London Assurance 1931
WLD 145




18
Richards v Guardian Assurance Co 1907 TH 24




19
Israel Bros. v Northern Assurance Co and the Union Assurance Co
(1892) 4 SAR 175




20
Munns and Another v Santam Ltd (supra)




21
1990 (3) SA 966




22At
968E-G