CR342 Overpayment by insurer

CR342
Overpayment by insurer

Amounts paid in error by the insurer were claimed back on the ground of unjust enrichment and were fully refunded – in a subsequent complaint to the Ombudsman the complainant claimed return of the monies that he had paid back to the insurer.

Background

The matter related to a five year policy referred to as an “Investment Plan”. In terms of the contract gross monthly payments were payable to the policyholder over a period of sixty months, made up of a monthly income directly payable to the policyholder and the remainder to be applied to purchase units in a unit trust connected to the insurer.

In each of the sixty months the insurer also paid, however, an additional amount into the complainant’s unit trust account which was in fact due to another person’s investment, transaction records clearly indicating monthly double payments to the complainant over the total period. The insurer only became aware of the duplication when the other investor enquired about his investment, at a stage when the complainant’s investment had already been fully withdrawn. The complainant agreed to repay the amount concerned over a period of nine years. After having repaid the amount the complainant unsuccessfully approached the insurer’s Internal Dispute Resolutions Officials, and subsequently submitted a complaint to the Ombudsman.

In submissions in support of his complaint the complainant inter alia contended that the insurer had acted as a credit provider and had done so without a credit agreement and without sending statements required by the relative legislation. The office’s view was, however, that the overpayments having been made in error, and the complainant having by agreement repaid the amount concerned, it was clear that the insurer had not acted as credit provider and that there had been no intention by either party that credit be provided.

Determination
The overpayments made by the insurer during the period concerned were clearly made in error and amounted to payment of monies not owing. The remedy called the condictio indebiti was the means whereby such unpaid amounts were recoverable if the receiver has been enriched at the expense of the payer. The office recognised that cases such as Rahim vs Minister of Justice 1964 (4) SA 630 (A) at 634, Rane Finance Pty Ltd vs Queenstown Municipality 1988 (4) SA 193 (E) at 199 and First Rand Bank Limited (formerly FNB of SALTD) vs ABSA Bank Limited 2001 (1) SA 803 (W) at 815, show that even if a party is entitled to repayment under the condictio indebiti, a court will not come to his assistance if the mistake by which payment was made of the undue monies was the result of a particularly serious degree of negligence. This approach does not mean, however, that the claimant loses the right to repayment. On the contrary, all that these cases say is that the court will not assist him in a claim for recovery of the monies. The courts’ abovesaid approach does not in other words clothe the party who received the undue monies with any right at all.

Even if it were to be assumed that the insurer’s negligence was of a severe enough degree to otherwise have warranted the court in refusing to help it in a claim for repayment, in this case the complainant actually repaid the monies. In the circumstances the claimant does not have the right to recover the repaid monies, firstly because it was by agreement that he repaid as he did, and one cannot of course go back on an agreement; and secondly, and in any event, because what he paid back had lawfully been owing to the insurer. The court’s approach referred to in the three cases above would not therefore avail the complainant.

The final determination in this matter was that we could not assist the complainant.

EdeB
February 2013

CR342
Enrichment

Amounts paid in error by the insurer were claimed back on the ground of unjust enrichment and were fully refunded – in a subsequent complaint to the Ombudsman the complainant claimed return of the monies that he had paid back to the insurer.

Background

The matter related to a five year policy referred to as an “Investment Plan”. In terms of the contract gross monthly payments were payable to the policyholder over a period of sixty months, made up of a monthly income directly payable to the policyholder and the remainder to be applied to purchase units in a unit trust connected to the insurer.

In each of the sixty months the insurer also paid, however, an additional amount into the complainant’s unit trust account which was in fact due to another person’s investment, transaction records clearly indicating monthly double payments to the complainant over the total period. The insurer only became aware of the duplication when the other investor enquired about his investment, at a stage when the complainant’s investment had already been fully withdrawn. The complainant agreed to repay the amount concerned over a period of nine years. After having repaid the amount the complainant unsuccessfully approached the insurer’s Internal Dispute Resolutions Officials, and subsequently submitted a complaint to the Ombudsman.

In submissions in support of his complaint the complainant inter alia contended that the insurer had acted as a credit provider and had done so without a credit agreement and without sending statements required by the relative legislation. The office’s view was, however, that the overpayments having been made in error, and the complainant having by agreement repaid the amount concerned, it was clear that the insurer had not acted as credit provider and that there had been no intention by either party that credit be provided.

Determination

The overpayments made by the insurer during the period concerned were clearly made in error and amounted to payment of monies not owing. The remedy called the condictio indebiti was the means whereby such unpaid amounts were recoverable if the receiver has been enriched at the expense of the payer. The office recognised that cases such as Rahim vs Minister of Justice 1964 (4) SA 630 (A) at 634, Rane Finance Pty Ltd vs Queenstown Municipality 1988 (4) SA 193 (E) at 199 and First Rand Bank Limited (formerly FNB of SALTD) vs ABSA Bank Limited 2001 (1) SA 803 (W) at 815, show that even if a party is entitled to repayment under the condictio indebiti, a court will not come to his assistance if the mistake by which payment was made of the undue monies was the result of a particularly serious degree of negligence. This approach does not mean, however, that the claimant loses the right to repayment. On the contrary, all that these cases say is that the court will not assist him in a claim for recovery of the monies. The courts’ abovesaid approach does not in other words clothe the party who received the undue monies with any right at all.

Even if it were to be assumed that the insurer’s negligence was of a severe enough degree to otherwise have warranted the court in refusing to help it in a claim for repayment, in this case the complainant actually repaid the monies. In the circumstances the claimant does not have the right to recover the repaid monies, firstly because it was by agreement that he repaid as he did, and one cannot of course go back on an agreement; and secondly, and in any event, because what he paid back had lawfully been owing to the insurer. The court’s approach referred to in the three cases above would not therefore avail the complainant.

The final determination in this matter was that we could not assist the complainant.

EdeB
February 2013

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