Prescription And Insurance Claims – A Case Summary and Commentary Of The Supreme Court Judgment in Thomas Kanjere V Old Mutual Life Assurance Company Sc31-24.

by Webmaster | Jun 18, 2024 | 0 comments

FACTUAL BACKGROUND
Thomas Kanjere took an insurance policy with Old Mutual Life Assuarance sometime in 1989 known as the Independence Maker Insurance Policy (“insurance policy”). The insurance policy was for 24 years maturing on the 1^st of July 2013. Old Mutual promised to pay Mr Kanjere US$34 856.75 on the date of maturity of the policy. The guaranteed minimum annuity rate was set at ZWL $65.23 (or USD $31.50) per month per ZWL$ 1000 (or US$ 4 825.00) of the capital sum payable monthly in arrears, during the Life Assured’s lifetime with a minimum of 120 instalments.

Mr Kanjere filed a claim against Old Mutual to the High Court on the 15^th of April 2016 seeking payment of US$34 856.75 being the cumulative benefits arising from the maturation of the insurance policy. Old Mutual raised the plea of prescription stating that the cause of action had arisen on 1 July 2013 and Mr Kanjere had instituted proceedings on 15 April 2016, after the three years for ordinary debts in terms of the Prescription Act had elapsed. High Court upheld the special plea of prescription stating that the claim by Mr Kanjere had arisen on the date of maturity of the policy, in 2013.

Aggrieved by the decision of the High Court, Mr Kanjere instituted an appeal to the Supreme Court challenging the decision.

ISSUES BEFORE THE SUPREME COURT
On appeal the Supreme Court was called upon to determine the sole issue of whether or not the High Court had erred by holding that the claim had prescribed.

COURT’S DECISION AND REASONING
The court noted that while the insurance policy was an annuity insurance contract which generally creates a continuous obligation, the parties had chosen to enter into specified terms regarding the sum to be paid at maturation of the policy. Old Mutual had elected to pay a once off payment as benefits and the parties agreed that the policy would mature on 1 July 2013. Further, Mr Kanjere had claimed the cumulative benefits arising from the maturation of the policy hence the relief sought was not continuous in nature. Because of this, the Court did not find merit in the argument made on behalf of Mr Kanjere that prescription would not apply in the ordinary sense since the obligation was continuous in nature.

The Court interpreted the claim in terms of the Prescription Act as an ordinary debt which prescribes after three years. It found that the debt became due on the 1^st of July 2013. The claim was only served on the 18^th of July 2016 which is outside the three years provided for in the Prescription Act. The Court held that because Mr Kanjere did not take any action during the three years until they lapsed the prescription plea had to succeed.

The appeal was therefore held to have no merit and was dismissed with costs.

SIGNIFICANCE OF THE DECISION BY THE SUPREME COURT

(a) Prescription of Insurance Claims
The Judgment confirms that insurance claims can prescribe if they are not claimed within three years as they may be classified as ordinary debts. This has an impact on benefits accruing from such policies as life insurances which may have a cumulative benefit upon the death of the insured. The failure by the beneficiaries to claim same will result in the claim prescribing.

(b) Principle of Continuing Cause
The Court also confirmed the operation of the doctrine of continuing cause or continuing wrong in our jurisdiction as a defence to the plea of prescription. The parties had entered into an annuity insurance contract and the Court stated that such a policy generally creates a continuous obligation which begins to run from a fixed date and continues to do so monthly through the insured’s lifetime. Such a continuous obligation to pay therefore does not prescribe. See Shamili v City of Windhoek 1610/2016 (2017) NANCMD 288, at p 7, Barnett and Others v Minister of Land Affairs and Others 2007 (6) SA 313 (SCA).

However, the Court held that since the parties had agreed that Old Mutual would pay a cumulative amount in benefits and the parties agreed that the policy would mature after 24 years, the claim therefore was not of a continuous nature.