Rugby, intentional conduct, insurance and insolvency – all in one?

Among other issues considered by the court was the delictual ground of intent: whether Roux junior, if he had in fact executed the manoeuvre which injured Hattingh, acted negligently or intentionally in doing so.

At the time of the rugby match when the manoeuvre took place, Roux junior’s father had an insurance policy in place that, among other things, included public liability cover that covered him for losses incurred due to actions of his son. In terms of this cover Roux junior was insured against risks caused by his negligent conduct during the rugby match.

Clause 8 of the policy’s general conditions read as follows:

Fraud

If any claim under this policy is in any respect fraudulent or …if any event is occasioned by the wilful act …of the insured, the benefit afforded under this policy in respect of any such claim shall be forfeited.

On Roux junior’s version of the incident he was not negligent and certainly did not intend to perform the manoeuvre he was accused of executing. Based on this version, the insurer agreed to defend Hattingh’s claim against Roux junior.

In the Western Cape High Court, Fourie J rejected Roux junior’s evidence and found that Roux junior executed the manoeuvre intentionally.

Roux junior appealed to the Supreme Court of Appeal (SCA) against Fourie J’s finding. However, in Roux v Hattingh 2012 (6) SA 428 (SCA), the SCA confirmed the judgment of the Western Cape High Court.

During the course of 2013 Roux junior’s estate was sequestrated. Hattingh thus had a judgment in his favour against Roux junior, but could not recover anything from him.

Seeking some recourse, Hattingh then instituted an action against Roux senior’s insurer in terms of s156 of the Insolvency Act, No 24 of 1936. This section permits a third party to hold an insurer liable for a liability incurred by the insured towards the third party which falls within the ambit of the insolvent insured’s policy of insurance.

What Hattingh did not reckon with was that the insurer was discharged from any liability under the policy of insurance in view of general condition 8, since Roux junior had been found by two courts to have acted intentionally. In other words, insofar as the insurer was concerned, s156 of the Insolvency Act did not apply in view of the findings of the Western Cape High Court and SCA.

The dispute between Hattingh and Roux senior’s insurer – as to whether Roux junior’s actions are covered by the policy of insurance in view of the two court decisions – has since proceeded on the question of whether general condition 8 excluded cover for intentional conduct.

The insurer argued that general condition 8 of the policy must be interpreted on the basis of the legal and factual findings of the Western Cape High Court and the SCA. The insurer argued that, because the general principle is that insurance for personal legal liability does not cover an insured’s intentional conduct, general condition 8 is not limited to fraud but applies to any intentional act of the insured.

Judgment has been reserved.

A decision in favour of Hattingh will be contrary to well-established judicial precedent concerning insurance disputes involving intentional conduct and an insurer’s right to repudiate should the policy conditions – however strict – not be met.

The outcome, either way, will be noted.