St Paul Insurance Co SA Ltd v Eagle Ink System (Cape) (Pty) Ltd

Eagle Ink System (Cape) (Pty) Ltd, a manufacturer and supplier of printing inks, supplied ink to Nampak Polyfoil for the manufacture of plastic shopping bags for WalMart in the USA. The bags had to be free of heavy metals, including lead. Eagle Ink gave a written assurance that the inks supplied were heavy metal free. Due to the negligence of an Eagle Ink employee, ink containing lead was mixed with lead-free ink, contaminating the final product. Bunzl, the purchaser, rejected the bags and claimed damages from Polyfoil, which in turn claimed from Eagle Ink. Eagle Ink sought indemnity under its public liability insurance policy with St Paul Insurance Co SA Ltd. The insurer repudiated the claim, relying inter alia on an exclusion for liability arising from contamination. After the trial judge died before delivering judgment, the matter was decided on the record by another judge, who found for Eagle Ink. The insurer appealed.

The appeal was upheld with costs. The order of the Cape High Court was set aside and replaced with an order dismissing Eagle Ink’s claim with costs, including the costs of two counsel and the earlier proceedings.

The case is important for South African insurance law as it clarifies the interpretation of contamination exclusions in liability insurance policies and affirms that extensions do not override general exclusions unless they do so expressly. It also confirms the permissibility of continuing a trial on the written record where a presiding judge dies before delivering judgment.