An application by Discovery Life for leave to appeal a High Court judgment ordering it to pay a former stockbroker more than R25 million after it previously repudiated his permanent disability claim has been dismissed with costs.
Judge Stuart Wilson said on Monday that Discovery’s arguments stand no prospect of success on appeal and there are no other compelling reasons to grant it leave to appeal.
Read: Discovery Life loses case; is ordered to pay client over R25m
He also varied the cost order in his trial judgment against Discovery to include “the qualifying and attendance fees and expenses” for the former stockbroker’s two expert witnesses.
The former stockbroker, who was charged and acquitted of murdering his girlfriend, claimed he became totally and permanently unable to carry on that work at some point between 28 December 2014 and 30 November 2015.
This followed his suffering a string of deeply traumatic events during that time that left him with a combination of post-traumatic stress disorder and unspecified bipolar mood disorder.
Read: Discovery Life appeals high court order to pay R25m disability claim
These events were the drowning of his girlfriend on 28 December 2014 in a swimming pool at a resort in Mauritius where he owned a villa and his arrest on 2 January 2015 on suspicion of murdering his girlfriend and being detained pending the trial.
He was eventually acquitted of his girlfriend’s murder and returned to South Africa in March 2016, where he was hospitalised in Pietermaritzburg and diagnosed with post-traumatic stress disorder and major depression.
Discovery listed three grounds for its application for leave to appeal the judgment.
They were that:
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Judge Wilson had misconstrued the meaning and application of the former stockbroker’s policy;
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Even if Judge Wilson’s interpretation of the former stockbroker’s policy with Discovery is correct, then he was wrong to find that Discovery had acted unreasonably when it repudiated the claim;
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If Judge Wilson’s judgment is correct, then the former stockbroker’s cause of action was not complete when he launched his claim in May 2017.
Judge Wilson said the issue at the outset of the trial appeared to be whether the former stockbroker’s incapacity was in fact permanent on or before 30 November 2015.
He said once the evidence showed that the former stockbroker’s incapacity was permanent by that date, Discovery changed tack and argued that what mattered was not the former stockbroker’s objective incapacity, but the reasonableness of Discovery’s subjective assessment of that incapacity.
“In the face of my conclusion that this argument was incompatible with the text of the policy, Discovery sought, in an argument on leave to appeal, to advance a novel interpretation of the policy purportedly based on ‘the Miller principle’, but in fact going further than anything that was said in Miller.
“That interpretation is untenable.
“The fact that Discovery’s case has pivoted at every critical stage of the proceedings before me does not of course mean that the arguments it has advanced are necessarily wrong.
“But I do not think that the inherent weakness of Discovery’s case can be entirely divorced from its apparently improvised nature,” he said.
Regarding “the Miller principle”, Judge Wilson said Discovery accepted that its version of this principle in effect meant that the former stockbroker could have become permanently incapable of acting as a stockbroker before the policy lapsed but he would nonetheless have been disentitled to the benefits he bargained for under it “merely because Discovery could not have been satisfied of his permanent incapacity until after the policy lapsed”.
Judge Wilson said the problem with this argument is that the application of “the Miller principle” was entirely dependent on the text of the policy in that case, which specifically provided that the insurer’s liability would only arise if and when the insurer was reasonably satisfied that the insured in that case was permanently incapacitated.
He said the text of the former stockbroker’s policy with Discovery is different.
Judge Wilson added that the former stockbroker’s policy must be read as a whole in light of the circumstances under which it was taken out, which means that all the provisions of the policy that bear on the Discovery’s liability must be read together to characterise the insured event.
He said this meant he had to consider the language in clause 6.1.1 of the policy, in which it was promised that the Capital Disability Benefit envisaged under Category D of clause 6.3 “pay[s] a capital amount in the event of you being medically impaired to a degree that you are unlikely to be able to generate an income. This medical impairment may be permanent or temporary”.
Judge Wilson said the crisp question then is how the promise of a Capital Disability Benefit “in the event” of permanent medical impairment in clause 6.1.1 is to be read with the promise that the Benefit “pays out” once Discovery is satisfied that the permanent incapacity exists.
Discovery argued that all that matters is that it is satisfied with the incapacity.
Judge Wilson said this would mean he would have to ignore the promise in clause 6.1.1 that the benefit accrues “in the event” of that incapacity and he refused to take that approach in his trial judgment.
He said to find that the insured event is Discovery being satisfied with the incapacity not only ignores the primary undertaking made in the policy – that the benefit is paid “in the event” of permanent incapacity – it also deprives the policy of much of its usefulness.
“It is inconceivable that anyone would take out a policy in circumstances where they could be denied benefits under it simply because they could not pay their premiums between the onset of the incapacity and Discovery satisfying itself that the incapacity was permanent.
“In these circumstances, I cannot say that there is a reasonable prospect that a court of appeal might accept the interpretation that Discovery now urges – especially in circumstances where that interpretation was not spelt out in Discovery’s pleadings,” he said.
Discovery further requested Judge Wilson to accept that leave to appeal should be granted because his trial judgment will have a wide-ranging impact on the insurance industry.
Judge Wilson said this seems to be based on the proposition that he had departed from “the Miller principle”, thereby interfering with the basis on which Discovery, and other insurers, have arranged to underwrite their policies.
He said Discovery accepted that there was no evidence before him that would allow him to assess that proposition.
“In any event, if, as I have found, the Miller principle does not apply to this case, then I have not departed from it.
“What has instead happened is that Discovery has conducted itself in a manner inconsistent with the objective meaning of its policy,” he said.
Judge Wilson said that if this is so, then the impact of his judgment is only on Discovery, and only on claims made under the former stockbroker’s policy and broadly of the nature the former stockbroker made.
“I cannot accept that this unspecified impact on Discovery is compelling enough to ask the Supreme Court of Appeal or a Full Bench of this Court to entertain an appeal that otherwise lacks prospects of success,” he said.
Discovery Life said on Tuesday it respects and is studying the judgment that was handed down on Monday and is considering the options available to it.
