S Schoeman v Constantia Insurance Co Ltd

The appellant insured her household contents with the respondent under a burglary insurance policy which did not contain an express forfeiture clause for fraudulent claims. After a burglary in May 1998, she submitted a claim that was provisional and incomplete in nature. The insurer alleged that the appellant had fraudulently inflated her claim by approximately 10%, particularly in relation to clothing and footwear, and contended that this partial fraud resulted in forfeiture of the entire claim. The trial court upheld this defence, finding both that a forfeiture term was implied by law and that fraud had been proved. The appellant appealed against both findings.

The appeal succeeded. The finding that the appellant had forfeited her entire claim due to an implied forfeiture term was set aside, and the matter was remitted for continuation of the trial on the merits of the claim without application of a forfeiture doctrine.

This case authoritatively rejects the English-law rule of automatic forfeiture of an entire insurance claim where part of the claim is fraudulent, unless an express forfeiture clause exists. It clarifies South African insurance law by affirming the anti-penal nature of the common law and limits insurers to contractual and other existing remedies against fraud.