FROM The Registrar, Supreme Court of Appeal

Please note that the media summary is for the benefit of the media and does not form part of the judgment.

CASES: AMANCOR LTD v MUTUAL & FEDERAL INSURANCE COMPANY LTDAND OTHERS

(Case No 565 / 03)

The Supreme Court of Appeal to-day delivered judgment in an appeal where an alternator belonging to the appellant was insured at the same time by a group of insurers, the respondents, and also by Westchester Insurance Co (Pty) Ltd. When the alternator was damaged because its oil supply failed, Westchester Insurance paid the appellant’s full claim. It then, in the name of the appellant, sought to recover from the respondents the amount it had paid to the appellant on the basis that the respondents were liable for all claims up to R135m. It contended that the claim (which was for only R5m and had been repudiated by the respondents) was really the respondents’ responsibility and that Westchester Insurance should therefore, by way of a subrogation action, be able to recover from the respondents what it had paid to the appellant.

This Court held that the terms of the policies issued by the two insurers did not make the respondents a primary indemnifier who might by way of a subrogation action be made to account in full for the amount paid out to the appellant by Westchester Insurance. In terms of their contracts of insurance the respondents and Westchester Insurance were secondary and co-ordinate debtors. Westchester Insurance’s proper remedy was therefore a contribution action against the respondents in its own name, an action by which it might well in the circumstances of the case have recovered the full amount paid out to the appellant. .

The decision of the judge in the Witwatersrand Local Division that Westchester Insurance had sought to recover from the respondents on the wrong basis and could therefore not succeed in its claim was confirmed.