RADAR HOLDINGS LTD & ANOR v EAGLE INSURANCE CO LTD 1999 (2) ZLR 246 (S)

Flynote

Contract — consumer contract — what is — supply of services — includes insurance contract — clause entitling insurer to reject claim if not made "as soon as possible" — whether exercise of such power "unfair" — onus on insured to show that exercise of power by insurer was unreasonably oppressive

Headnote

On 25 April 1995 a fire occurred at the premises at a foundry operated by the second appellant and caused considerable damage. The respondent insurance company was notified of the fire on 3 May, but repudiated the claim on the grounds that the appellant did not notify it "as soon as possible" as required by the general conditions of the policy. The appellants' claim against the insurer was dismissed on the High Court, which held that the insurer had not been informed as soon as was reasonably practicable in the circumstances. On appeal, this point was not pursued. It was argued for the appellants that the contract was a "consumer contract" in terms of the Consumer Contracts Act [Chapter 8:03] and that the exercise of the power to repudiate was "unfair" for the purposes of the Act. A consumer contract is defined as one for the sale or supply of services or goods or both, where the seller or supplier was dealing in the course of business and the buyer or user was not. The Act provides that a court may grant relief to a consumer if satisfied that, among other things, the exercise or non-exercise of a power, right or discretion given under the contract is "unfair", as defined by s 6 of the Act.

Held, that in entering into the contract of insurance the respondent was dealing in the course of business and the appellants were not. The word "services" was one of a very wide meaning, broader than work or labour alone. A contract for the supply of services is one in which a party thereto is obliged to do something for the other's benefit or protection. This is inherent in an insurance contract.

Held, further, that it was the intention of the lawmaker to place the onus of proof on the party seeking to show that the exercise of the power to repudiate was "unfair" in terms of s 6 of the Act. This the appellants failed to do: the exercise of the right was reasonably necessary to protect the insurer's interests and it was not unreasonably oppressive to deprive the insured of the entitlement to recover.