Werner Menges
22 August 2008
Close to seven years of efforts by long-term insurance company Channel Life Namibia to escape from the obligations of a disability insurance policy taken out by a professional tour guide in 1999 has finally paid off in the Supreme Court.
In a judgement delivered on Friday last week, the Supreme Court has produced a cautionary tale demonstrating the high price that an untrue answer on an insurance application form can have for a supposedly insured person just when that person is most in need of assistance from a company that has agreed to provide insurance cover to him or her.
The diagnosis of a painful and debilitating back condition in June 2001 spelled the end of the career of tour guide Gudrun Otto.
She was earning between N$10 000 and N$15 000 per month as a tour guide and tourist bus driver until the worsening back problems that she was diagnosed with brought her career to an end in her early fifties.
Having concluded a disability benefit and life insurance contract with Channel Life Namibia in May 1999, Otto submitted a claim for the payment of a disability benefit of N$500 000 to the insurance company in August 2001.
Channel Life Namibia informed her the next month, on September 10 2001, that her claim was not successful.
After Otto had tried to persuade the company to change its decision, Channel Life Namibia finally informed her in December 2001 that her claim was repudiated.
Otto responded by instituting legal action against the company.
So started a marathon journey through Namibia's High Court and Supreme Court that would only reach its final destination almost seven years later.
Otto's case against Channel Life Namibia was heard in the High Court by then Judge President Peter Shivute in October and November 2003.
After a wait of more than three and a half years, the High Court's judgement was eventually delivered in May last year, when the court ruled in Otto's favour and ordered Channel Life Namibia to pay her N$500 000 plus interest at a rate of 20 per cent a year, calculated from September 11 2001.
Channel Life Namibia appealed against that judgement, however.
Its appeal was heard in the Supreme Court in March, and on Friday Acting Judge of Appeal Johan Strydom ruled against Otto, allowing the appeal with costs and setting aside the High Court's earlier decision.
Judge of Appeal Gerhard Maritz and Acting Judge of Appeal Fred Chomba backed the decision of Acting Judge of Appeal Strydom.
Channel Life Namibia's decision to repudiate the claim was prompted by two answers that Otto gave on the application form that she completed before the insurance agreement with the company was concluded.
In the first question, Otto replied "no" when asked if she was suffering, or had ever suffered, from any nervous or mental complaint, including for example anxiety or depression.
She gave the same answer to a question whether she was taking, or had ever taken, "drugs, tranquilisers or any other medicines".
According to Channel Life Namibia, these answers constituted "material non-disclosures" by Otto.
The true situation in fact was that a medical doctor had prescribed Alzam, which is medication used for anxiety, to Otto in early 1997 and again on several occasions thereafter.
According to Otto, she obtained the first prescription to enable her to sleep.
She gave the tablets she obtained with subsequent prescriptions to her brother, who used the medication to help him deal with a stressful time he was going through because of financial problems.
The doctor who prescribed the tablets to Otto denied that he had diagnosed her with anxiety or depression, as notes he had made in her medical file indicated.
The doctor also stated in the High Court that he did not inform Otto of such findings of anxiety or depression.
If Otto did not know what her doctor had written down in his notes, and also was not informed of such a claimed diagnosis, she could not be faulted for having stated that she had not been suffering from any nervous or mental complaints, Judge Strydom found.
This was not the situation with her answer to the question whether she was or had been on medication.
According to a medical doctor who testified in the High Court on behalf of the insurance company, it is standard for the insurance industry to decline insurance or disability benefits whenever a Schedule 5 drug, such as Alzam, had been used by a insurance applicant, Judge Strydom noted in his judgement.
Otto's failure to disclose that such medication had been prescribed to her was a material non-disclosure that entitled the company to repudiate her claim, even though it had nothing to do with the disability that was subsequently diagnosed, the court ruled.
Judge Strydom stated: "The duty remains that of the proponent for insurance to answer questions correctly and truthfully and to disclose all material information."
Channel Life Namibia was represented by Raymond Heathcote, on instructions from Francois Erasmus of law firm Van der Merwe-Greeff Inc., with the Supreme Court appeal.
George Coleman, instructed by Elise Angula of LorentzAngula Inc., represented Otto.
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