Acts

Author : Millers Attorneys

THE CONSTITUTION ACT OF 1996 …
‘It’s Time for Change…’

Insurance contracts are frequently seen to have a clause that if a claim is repudiated, the insured has 90 days to institute action, failing which the insurer is released from any liability. This stringent requirement is quite a drastic change from the Prescription Act of 1969, which allows a person three years after an incident, to institute a claim. There is nothing in that Act, which says that contracting parties cannot, by agreement, reduce the time frame – however – enter THE CONSTITUTION ACT OF 1996 …

In the Transvaal Provincial Division, Mr X, after receiving notice that his claim had been repudiated, proceeded to institute action against his insurer outside the 90 prescribed day period. The insurer relied on this clause. Mr X raised the argument that such a short “prescription” period unjustifiably and unreasonably limited his right of access to court, as is afforded by section 34 of the Constitution Act. The court reflected on recent Constitutional Court judgments, when the Ministers of Safety and Security, and of Defence, faced judgments where the statutory prescriptive periods of 2 years and 6 months governing their departments, respectively, were also found to be unconstitutional. Although the Constitution is primarily there to protect the citizen from oppressive acts of Government and legislation created by it, section 8(2) also provides courts with the discretion to apply the Constitution “horizontally”, i.e. to actually take the provisions of the Bill of Rights into account when deciding on issues between citizens alone, and not only between citizens and the state.

The court specifically took into account that the insured did not provide any evidence as to what the restrictive 90-day period was meant to achieve, and as such, it had no basis for making a decision on the importance or purpose of the restriction. Accordingly, by weighing up the interests of the insured with that of the insurer, as the court was obliged to do, it held that the clause was in violation of section 34 of the Constitution Act, as being unreasonable and unjustifiable, and therefore unenforceable.
Insurance contracts are frequently seen to have a clause that if a claim is repudiated, the insured has 90 days to institute action, failing which the insurer is released from any liability. This stringent requirement is quite a drastic change from the Prescription Act of 1969, which allows a person three years after an incident, to institute a claim. There is nothing in that Act, which says that contracting parties cannot, by agreement, reduce the time frame – however – enter THE CONSTITUTION ACT OF 1996 …

In the Transvaal Provincial Division, Mr X, after receiving notice that his claim had been repudiated, proceeded to institute action against his insurer outside the 90 prescribed day period. The insurer relied on this clause. Mr X raised the argument that such a short “prescription” period unjustifiably and unreasonably limited his right of access to court, as is afforded by section 34 of the Constitution Act. The court reflected on recent Constitutional Court judgments, when the Ministers of Safety and Security, and of Defence, faced judgments where the statutory prescriptive periods of 2 years and 6 months governing their departments, respectively, were also found to be unconstitutional. Although the Constitution is primarily there to protect the citizen from oppressive acts of Government and legislation created by it, section 8(2) also provides courts with the discretion to apply the Constitution “horizontally”, i.e. to actually take the provisions of the Bill of Rights into account when deciding on issues between citizens alone, and not only between citizens and the state.

The court specifically took into account that the insured did not provide any evidence as to what the restrictive 90-day period was meant to achieve, and as such, it had no basis for making a decision on the importance or purpose of the restriction. Accordingly, by weighing up the interests of the insured with that of the insurer, as the court was obliged to do, it held that the clause was in violation of section 34 of the Constitution Act, as being unreasonable and unjustifiable, and therefore unenforceable.