Insurer held liable to pay farm owner millions in damages following fire outbreak

During May 2015, a fire broke out on farm owned by Normandien Farms (Pty) Ltd (“Normandien”), causing extensive damage to a plantation which was insured by Safire Crop Protection Co-operative Limited (“Safire”).

Normandien subsequently lodged a claim with Safire who in turn rejected the claim. The reason for their rejection was twofold; firstly, Safire believed that Normandien misrepresented that the fire originated on a certain section of the farm whereas it in fact originated in a sawdust and timber waste area and secondly, Safire felt that Normandien ought to have made it aware of the existence of the waste area because it significantly increased the risk of a fire occurring on the farm.

Following the rejection, Normandien instituted action against Safire of out the High Court of South Africa, Kwa-Zulu Natal Division, Pietermaritzburg. Safire defended the action and the matter eventually proceeded to trial.

A major bone of contention during the trial was where the fire had originated. Several of Normandien’s employees testified that the fire did not originate in the waste area whereas experts on behalf of Safire testified that it did. After consideration of the evidence, the trial judge ultimately ruled in Safire’s favour as to the origin of the fire.

Whilst being a major setback, the judge’s ruling by no means represented the end of the road for Normandien. Safire still had to prove that Normandien’s misrepresentation was material. To do so, they had to convince the judge that a reasonable person, in the position of Normandien, would have considered it necessary to inform their insurer of the waste site. It was submitted on behalf of Normandien that they had been dumping at the waste site, without a fire incident, for approximately 12 years. This was enough evidence to convince the judge that a reasonable person, in similar circumstances, would not have found it necessary to inform their insurer.

The judge accordingly found that Safire had failed to prove that Normandien’s misrepresentation induced it in concluding the contract. As a result, the misrepresentation could not be regarded as material.

To the victor belongs the spoils – Safire was ordered to pay Normandien in excess of R14,000,000.00 in damages and was held liable for their legal costs.

Jean-Paul Rudd

Partner | Attorney

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