Liberty Life Association of Africa Limited v De Waal NO and Roux NO

On 2 July 1991 Liberty Life Association of Africa Limited issued a life insurance policy for R200 000 to the late C J Roux, based on an application form completed by him. After Roux’s death, Liberty Life refused to pay the policy benefit claimed by his estate. The respondents, acting as executors of the estate, sued for payment in the Free State Provincial Division. Liberty Life relied on a defence that Roux had furnished materially incorrect information in the application form, specifically that his most recent life insurance application since 1 April 1986 had been accepted on the basis of a full medical declaration and without minimum life cover. In truth, the prior policy issued by Old Mutual was based on a limited set of medical questions and included minimum life cover. The trial court rejected Liberty Life’s defences and ordered payment of the policy amount. Liberty Life appealed to the Supreme Court of Appeal.

The appeal was upheld. The order of the trial court was set aside and replaced with an order dismissing the plaintiffs’ action with costs, subject to specific cost orders relating to interlocutory procedures and the exclusion of certain record costs from the appeal costs.

The case is significant for clarifying the test for material misrepresentation in South African insurance law under section 63(3) of the Insurance Act 27 of 1943. It reaffirms that materiality is assessed objectively with reference to whether the true facts would influence a reasonable insurer’s assessment of risk, not whether the risk itself would necessarily change.