IN THE COURT OF APPEAL OF LESOTHO
C OF A (CIV) NO. 9 OF 2010
In the matter between:
LESOTHO NATIONAL GENERAL INSURANCE CO. LTD …APPELLANT
EVER UNISON GARMENTS LESOTHO (PTY) LTD …........RESPONDENT
HEARD : 13 OCTOBER 2010
DELIVERED : 22 OCTOBER 2010
Appeal against dismissal of special plea – claim for loss under an insurance policy – special plea alleging non-compliance with a clause in the policy – whether defendant was notified of the event giving rise to plaintiffs’ claim – onus on defendant – one party to the alleged notification deceased – evidence of only other party to be scrutinised with caution – evidence analysed – held defendant failed to discharge onus – appeal dismissed.
 This is an appeal against an order of the High Court (Lyons AJ) dismissing, with costs, a special plea filed by the appellant (as defendant) to a claim against it by the respondent (as plaintiff) for loss suffered in the sum of M1 969 000.90 and certain ancillary relief. For convenience I shall refer to the parties as in the court below.
 It is common cause that in July 2002 the plaintiff (a manufacturer of garments) and the defendant (an insurance company) entered into a written contract of insurance (“the policy”) in terms of which the defendant undertook to indemnify the plaintiff for certain loss or damage to property at the plaintiff’s insured premises. A claim by the plaintiff for loss sustained under the policy was rejected by the defendant on the grounds of late notification of the event giving rise to the claim.
 In the result the plaintiff instituted action against the defendant. In its particulars of claim the plaintiff alleged that the policy had been extended to cover riot, strike and malicious damage to its property; that the defendant had further indemnified it against any business interruption; that during September 2003, while the policy was in force, the plaintiff suffered a loss in an amount of M1 969 000.90 as a result of labour unrest; that its loss fell within the scope of the policy; that the plaintiff duly notified the defendant of its claim and had otherwise complied with its obligations under the policy; and that the defendant was obliged to compensate it for its loss but had repudiated its claim.
 Apart from pleading over to the claims made by the plaintiff, the defendant filed the following special plea:
“1.1. According to the Particulars of Claim, the labour unrest which allegedly caused the damages suffered by the Plaintiff, took place on 17 September 2003.
1.2 In terms of the General Conditions to the insurance policy in question, the Plaintiff is required to give notice to the Defendant of the occurrence of the specific event as soon as reasonably possible and to submit to the Defendant full details of the claim in writing as soon as practicable after the event.
1.3 The Plaintiff only notified the Defendant of the occurrence of the event on 2 September 2004, that is almost 12 months after the event, thereby causing the Defendant prejudice.
1.4 The Plaintiff failed and/or neglected to submit full details of the claim in writing to the Defendant, thereby causing the Defendant prejudice.
1.5 As a consequence, the Plaintiff is in breach of contract insofar as it failed to notify the Defendant within a reasonable period of time of the occurrence of the event, and insofar as it failed to submit full details of the claim in writing as soon as practicable after the event.
1.6 In the premises, the Defendant is not liable for payment under the policy in question, and it is prayed that the Plaintiff’s claim be dismissed with costs on this basis alone.”
 At their pre-trial conference the parties agreed that the trial court would be requested to order, in terms of High Court Rule 32 (7), that the special plea be heard separately and that all other issues stand over for later decision. The trial judge duly acceded to their request and ordered accordingly.
 Clause 6 of the policy under the heading “Claims” provides, to the extent relevant, as follows:
“(a) On the happening of any event which may result in a claim under this policy the insured shall, at their own expense
give notice thereof to the company as soon as reasonably possible and provide particulars of any other insurance covering such events as are hereby insured.
as soon as practicable after the event submit to the company full details in writing of any claim.
 From the provisions of clause 6 (a) it is apparent that what was required in the first instance from, or on behalf of, the plaintiff, as the insured, was notification to the defendant as soon as reasonably possible of the happening of any event that might result in a claim under the policy. There is no requirement that the notification should be in writing. A verbal communication of the occurrence of such event would therefore suffice to satisfy clause 6 (a) (i) of the policy provided it was made “as soon as reasonably possible”. By contrast, in terms of clause 6 (a) (iii), any claim arising from the event had to be submitted to the defendant with full details in writing as soon as practicable after the event. No fixed period is laid down within which the claim is to be submitted; instead provision is made for a flexible period dependent upon the circumstances of each particular case.
 It is common cause that the onus to establish its special plea rested on the defendant, not only in the evidentiary sense of requiring the defendant to first adduce evidence which, if a prima facie case was established, called for rebuttal by the plaintiff, but also the primary or substantive onus of proving, on the requisite balance of probabilities, that the required notice in terms of clause 6 (a) (i) had not been given by the plaintiff see Resisto Dairy (Pty) Ltd v Auto Protection Insurance Co. Ltd. 1963 (1) SA 632 (A.D.) at 645 A-B; Eagle Star Insurance Co. Ltd. v Willey 1956 (1) SA 330 (A.D.). The question of whether the required notice was given was the only issue in the court below and on appeal.
 The only witness to testify was Mr. Letsie who was the defendant’s claims manager at the relevant time. By consent five letters that passed between Mr. Letsie and Mr. Maling, an insurance broker who acted on behalf of the plaintiff, over the period 31 August 2004 to 22 November 2004 were admitted into the record for what they purported to be without any admission as to the truth of their contents. It is common cause that Mr. Maling died prior to the trial. The plaintiff was therefore in the unfortunate position of not being able to produce evidence directly contradicting that of Mr. Letsie.
 It does not follow that because Mr. Letsie’s evidence stands uncontradicted it has to be accepted in all respects. It needs to be scrutinised with caution with a view to ultimately determining whether it is sufficiently trustworthy to discharge the onus resting on the defendant. The correct approach to his evidence is as set out in Borcherds v Estate Naidoo 1955 (3) SA 78 (A.D.) at 79 A-B as follows:
“If the facts in issue are particularly within the knowledge of only one of the parties to a suit, that is a circumstance which the Court must take into consideration in weighing the probative effect of the evidence adduced. Here the one party to the alleged transaction of repayment is dead. The Court must therefore scrutinise with caution the evidence given by, and led on behalf of, the surviving party. This attitude has been adopted by the Court in a number of cases in which a claim was preferred against a deceased estate, or a defence was set up to a claim by the estate.”
 The letters written by Mr. Maling are only evidence of the fact that they were written by him and that he said what the letters contain. They do not constitute evidence that what he said in the letters is true. In that respect the letters amount to inadmissible hearsay. There is in my view substance in the argument of Mr. Viljoen, who appeared for the defendant, that the learned trial judge, in his treatment of the letters, appears to have afforded them an impermissible measure of evidential weight. In doing so he misdirected himself. However, having regard to the circumstances pertaining to the present matter, this Court is essentially in as good a position to come to a decision on the merits as the trial judge. In doing so we bear in mind that he made no adverse comments with regard to Mr. Letsie’s demeanour or general truthfulness.
 The most striking aspect of Mr. Letsie’s letters and evidence is that it appears clearly that, from the outset, he was firmly of the view that notification of the event (in terms of clause 6 (a)(i) of the policy) had to be in writing or, if verbal, had to be confirmed in writing to comply with clause 6 (a)(i). He persisted with this attitude until well into his cross-examination. In the third paragraph of his letter to Mr. Maling dated 3 November 2004 he states categorically (and with emphasis) “You know very well why notification of claims MUST be done in writing. As far as I am concerned this claim was never reported to me, and as such we cannot entertain an allegation that this claim was verbally notified to me.” (Although the reference above is to claims, in the context of the letter it relates to notification of the event.)
 In this regard the following passage from his evidence close to the start of his cross-examination is of particular significance:
“Am I correct to say that your view is, that the notification of the event must be in writing? The insured must give you in writing, notification of the event that has taken place?---- That is the cardinal rule.
Now I want to put it to you that you are wrong. Your clause 6 (a)(i) does not say that notification must be in writing, do you want to see the clause? Must I give it to you? --- I don’t agree with you. When I say the cardinal rule is that the notification must be advised to the Company as soon as possible, because and that must be supported further in writing. It must be followed up in writing, so when I say the cardinal rule is that, even if you notify verbally, that would not be enough, it must be supported, or it must be followed up, in writing. So the standard rule is that the notification of a claim must be applied in writing, if you advised otherwise, than in writing, it is not sufficient.”
Further on in his evidence the following exchange appears:
“Now, what about the person that gives you notification orally, verbally? ---- I’ve already indicated that it must be followed up in writing. I am not expelling (sic) the fact that you can notify verbally, but it must be in terms of the policy conditions, followed up in writing.”
 Mr. Letsie’s misunderstanding of the import of clause 6 (a)(i) must inevitably have influenced his state of mind and, in turn, have impinged upon his memory of the relevant events. On the probabilities it is likely to have induced a state of mind that notification of an event did not justify a response, or justify any action being taken, unless such notification was in writing, or confirmed in writing, because otherwise there would not have been compliance with clause 6(a)(i). That frame of mind created a situation where a verbal notification without more might readily be disregarded, or even forgotten, particularly after an appreciable lapse of time.
 Notification of the event was first alluded to in Mr. Maling’s letter of 31 August 2004 where, in the opening paragraph, he wrote:
“Further to our original notification that there had been a labour disturbance at the insured’s premises in Maputsoe we have at last been able to put together documentation to enable you to process the claim.”
Up to then the question of whether the defendant had been notified of the event was not an issue. Mr. Viljoen submitted that it was probable that Mr. Maling wrote the letter because he realized, at that late stage, that notification of the event had not previously been given. I doubt if that was the case. The letter was written at an appropriate time and had a legitimate purpose, providing as it did details of the claim. The opening sentence is simply a reference to the preceding history. If it was intended falsely and misleadingly to assert an event which had never occurred one would, in my view, have expected it to be couched in more compelling and convincing language, rather than be given no more than a passing mention.
 According to Mr. Letsie, the defendant first became aware of the incident giving rise to the plaintiff’s claim when it received Mr. Maling’s letter of 31 August 2004. Mr. Daffue, for the plaintiff, submitted if that were the case, Mr. Letsie’s response in his letter of 8 September 2004 was strangely inappropriate. There is substance in that contention. The letter commences:
“Yours of the 31st August instant is under response.
As you are aware, this claim was never advised to us, because if it had been, you would have as usual received our letter of acknowledgement of claim with our claim number as well.”
In the first place, one might have expected a specific denial of any “original notification”, or any knowledge of, a labour disturbance at the plaintiff’s premises, as well as an expression of surprise at having been told about it for the first time so long after the event. Secondly, the second sentence of Mr. Letsie’s letter refers to a claim (as opposed to a notification of the event) and in the context, and bearing in mind the misconception under which Mr. Letsie laboured at the time, amounts to a complaint that the claim was never advised in writing. Nowhere does it specifically refute a verbal communication.
 In reply to Mr. Letsie’s letter of 8 September 2004, Mr. Maling, in a letter dated 29 October 2004, stated that “[t]he writer personally advised you of the claim after visiting the premises the day after the incident took place.” Mr. Letsie’s response is referred to in paragraph  above. Once more the reply is premised on a denial of any notification in writing. There is no outright denial that Mr. Maling informed him of the claim (event). The words “[a]s far as I am concerned this claim was never reported to me, and as such we cannot entertain an allegation that this claim was verbally notified to me” suggests that as the event was not notified in writing an allegation that it was verbally notified could not be entertained as it would not comply with Mr. Letsie’s firmly held interpretation of clause 6(a)(i). In a later letter Mr. Maling again repeated that the defendant had been given “immediate notification of this loss.”
 Mr. Letsie further testified that had he been notified of the event he would immediately have appointed a loss adjuster to investigate any loss suffered. While this evidence has a certain ring of truth about it, and it would have been reasonable to follow such a course at some stage, Mr. Letsie is not likely to have done so before receiving a written notification, which he would have regarded as a necessary pre-requisite to any such steps being taken.
 Mr. Letsie did not dispute that Mr. Maling was an experienced broker. The plaintiff’s claim was potentially a large one. It could reasonably have been expected of Mr. Maling that he would notify the defendant of the event giving rise to the claim. Mr. Maling in his letters steadfastly claimed that he had done so, although his letters do not amount to evidence of such fact. It is certainly not improbable that he would have given the required notice.
 What is at issue in the present appeal is not Mr. Letsie’s veracity as such, but the trustworthiness of his recollection and consequent denial that he was verbally notified of the event. There is no reason to believe that he may deliberately be lying. But, in the circumstances of the present matter, there is a real and present danger that his recollection of the material facts was imperfect because of the misconception under which he laboured, virtually throughout, that notice of an event covered by clause 6(a)(i) of the policy (no doubt a typical provision in policies issued by the defendant) had to be in writing or, if verbal, confirmed in writing. That being so, there would have been no reason for him to respond to, or take action on, a verbal notification until written confirmation was received. By the same token he is less likely to have remembered any verbal notification not followed by a written confirmation (the situation in the present matter.) Given the lapse of time between the event (17 September 2005) and Mr. Maling’s letter of 31 August 2004 it is not improbable that Mr. Letsie could have forgotten, or overlooked, any unconfirmed verbal communication made to him.
His inappropriate responses to Mr. Maling’s letters tend to suggest someone not entirely sure of his facts and unable positively to refute Mr. Maling’s persistent refrain that notice had been given verbally. It is perhaps not without significance that in his evidence in chief he never specifically denied the fact that he might have been verbally notified of the event. On the contrary he was at pains to point out that all incoming correspondence pertaining to claims would have come to him.
 On a proper evaluation of Mr. Letsie’s evidence and all relevant considerations having a bearing on such evidence and its trustworthiness, I am unpersuaded that the defendant succeeded in proving, on the requisite balance of probabilities, that it was not verbally notified of the event on which the plaintiff’s claim is based as soon as reasonably possible after it occurred. In the result the appeal falls to be dismissed.
 The following order is made:
“The appeal is dismissed, with costs.”
JUSTICE OF APPEAL
I agree: ________________
JUSTICE OF APPEAL
JUSTICE OF APPEAL
FOR APPELLANT : ADV H.P VILJOEN SC
FOR RESPONDENT : ADV J.P. DAFFUE SC