The Eastern Cape High Court’s recent ruling in the case of Mbuyiseli Ngqeleni v Outsurance Insurance Company Limited has set a significant precedent in insurance law.
The dispute centred around an insurance claim filed by Ngqeleni, whose property suffered damage due to a wall collapse. The court found that the incident qualified as an insured event under the terms of the policy, which had been active since 5 August 2021. This conclusion was drawn from the acknowledgment that the damage stemmed from defective and poor workmanship that predates Ngqeleni’s ownership of the property.
It was agreed that the wall’s collapse was caused by alterations conducted prior to Ngqeleni purchasing the property—workmanship that he had no prior knowledge of. Despite this, the insurer attempted to refute the claim, arguing that Ngqeleni should have foreseen the possibility of poor workmanship and consequently, should have disclosed it when engaging the insurance policy.
However, the expert testimony presented in court played a pivotal role in the judge’s decision. Architect Peter John Maker, with over 40 years of experience, confirmed that it was impossible for Ngqeleni to have been aware of the hidden structural issues. According to Maker, Ngqeleni “would have had no knowledge of the impending collapse”. This bolstered Ngqeleni’s argument and highlighted a significant gap in the assumptions made by the insurance company.
The judge’s ruling examined the exclusions outlined in the insurance policy, particularly those pertaining to defects in construction and materials. One of the key findings was that Outsurance failed to effectively demonstrate that Ngqeleni bore any prior knowledge of the potential damages due to poor workmanship. As such, the court ruled that the exclusions were applicable only when the policyholder is aware of such defects before the agreement is made—something the court determined did not apply in this instance.
Acting Judge B B Brody stated categorically that insured events must be comprehensively understood and addressed by both parties involved in the contractual agreement. In light of this, the court ordered the Outsurance to pay Ngqeleni’s costs.
