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Theron v AA Life Assurance Association Ltd. (218/93) [1995] ZASCA 61; 1995 (4) SA 361 (AD); [1995] 2 All SA 581 (A) (25 May 1995)

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Case No 218/93 /MC

IN THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE DIVISION)
In die matter between
VINCENT CHARLES THERON APPELLANT

and

A A LIFE ASSURANCE
ASSOCIATION LIMITED RESPONDENT

CORAM: HEFER, VIVIER et SCHUTZ JJA.

HEARD: 3 MAY 1995.

DELIVERED: 25 MAY 1995.

JUDGMENT

VIVIER JA/

2

VIVIER JA:

The appellant is the nominated beneficiary under a life

insurance policy issued by the respondent on the life of one Robert

Geoffrey Fortuin ("the insured"). The policy provided, inter
alia, for basic life cover of R100 000,00 and an additional
accidental death benefit of R100 000,00. On 21 July 1985 the

insured died as a result of multiple injuries sustained when he was

run over by a motor vehicle, and after the respondent had

repudiated liability the appellant instituted action in the Cape

Provincial Division for payment of the beneficiary's benefit of

R200 000,00 in terms of the said policy. In its plea the

respondent repudiated liability on the ground, firstly, that the

proposal form contained certain material misrepresentations; secondly, that the insured failed to disclose a material fact viz that he was severely mentally retarded; and thirdly, that the insured

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lacked the necessary mental capacity to conclude the contract of insurance. The Court a quo (Press AJ) upheld the repudiation based on the third ground and, without dealing with the first two grounds, dismissed the action with costs. Leave to appeal to this Court was granted pursuant to a petition to the Chief Justice.
I must deal first with an application for condonation of the late lodging of the notice of appeal as well as the requisite number of copies of the record. The application was opposed by the respondent. Leave for appeal having been granted on 23 February 1993 the appellant had to lodge the notice of appeal by 23 March 1993; instead of which it was only lodged on 14 May 1993 ie just short of two months late (AD Rule 5 (1) (d)). The record had to be lodged by 22 May 1993; instead of which it was lodged on 22 June 1993 ie one month late (AD Rule 5 (4) (c)). The explanation for the delays furnished by the appellant's attorney in an

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affidavit filed in support of the application is the following. As far as the late filing of the notice of appeal is concerned he states that he was under the mistaken impression that the petition for leave to appeal, once granted, constituted the notice of appeal, and that no further notice of appeal was required. On 6 May 1993 he discovered that a notice of appeal was necessary and he immediately took steps to have one prepared and lodged. With regard to the late lodging of the record the explanation consist of nothing more than vague references to obtaining the approval of the Legal Aid Board and difficulties encountered with the preparation of the record. I find the explanation unconvincing and unacceptable. So, for example, it took the appellant's attorney nearly a month to make two telephone calls to the Legal Aid Board before the contractors, Sneller Recordings, were instructed to proceed with the preparation of the record. This lack of diligence

5

must further be seen against the background, stressed by counsel for the respondent, that the petition for leave to appeal had also been late.
This Court has often warned that there is a limit beyond which a litigant cannot escape the results of his attorney's remissness and ineptitude or the insufficiency of the explanation tendered and that condonation may be refused whatever the merits of the appeal. (See Finbro Furnishers (Pty) Ltd v Registrar of Deeds, Bloemfontein, and Others 1985 (4) SA 773 (A) at 787 G H; Ferreira v Ntshingila 1990 (4) SA 271 (A) at 281 D-H; Tshivhase Royal Council and Another v Tshivhase and Another [1992] ZASCA 185; 1992 (4) SA 852 (A) at 859 E-F.) The question is whether the present is such a case. In favour of the application it can be said that the delays in complying with the Rules were not excessive; the application for condonation was made as soon as the appellant's

6

attorney realised that the Rules had not been complied with; and
the administration of justice has not been delayed. (See
Federated Employers Fire and General Insurance Co Ltd and
Another v McKenzie 1969 (3) SA 360 (A) at 362 F-G). In all
the circumstances it cannot be said, in my view, that this is a case
in which the Court should refuse the application irrespective of the

prospects of success (see Blumenthal and Another v Thomson

NO and Another [1993] ZASCA 190; 1994 (2) SA 118 (A) at 121 I - 122 B). I

accordingly proceed to consider the merits of the appeal.

The insurance policy concerned was issued on 20 March

1985 pursuant to and on the basis of a proposal form signed by the

insured on 26 February 1985. The background facts which are

relevant for a consideration of the issues raised in the appeal may be summarised as follows. The insured was born on 8 February 1961. He first attended school at the age of seven years in the

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beginning of 1969 and when he left the Lotus River Primary
School at the age of 15 years at the end of 1976 he had not
progressed beyond the level of Std 2. By then he had reached the
level of Std 2 in certain subjects while in others he was still at the
Sub B or Std 1 levels. He thereafter attended the Bridgetown
Primary School until he finally left school on 17 January 1979.
Little is known about his life from the time he left the Lotus River
Primary School until he came to stay with Mrs Marlene Christina
Williams ("Williams") in Mitchell's Plain as a boarder during

about January 1985. He stayed there until his death in July 1985.

The respondent's case that he lacked the required mental capacity to

contract rested mainly on his scholastic performance and the

evidence of two of his school teachers; the evidence of Mr

Mogamat Yusef Adams ("Adams") a bricklayer who lived opposite

Williams and who tried to convert the insured to the Muslim faith;


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and that of Dr Fenster, a psychiatrist who never met the insured.
After twice failing the substandard at school, an intellectual and scholastic assessment by a psychologist employed by the Department of Education revealed an intelligence quotient ("IQ") of 61, which resulted in the insured being placed in a socalled adaptation class for mentally handicapped children in the Lotus River Primary School. On 19 August 1974 a second assessment indicated an IQ of 51. At the trial the expert witnesses, Dr Fenster for the respondent and Mr Loebenstein for the appellant, were agreed that according to the authoritative manual on the classification of mental retardation compiled by the American Psychiatric Association, the Diagnostic and Statistical Manual of Mental Disorders ("DSM III"), this placed the insured in the category of the mildly mentally retarded.

Two of the insured's school teachers while he was at the

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Lotus River Primary School from about September 1973 to the end
of 1976 testified on behalf of the respondent. Both Mrs Schilder
and Mr Holmes expressed the view that the insured was severely
mentally retarded and both painted a picture of the insured as an
open-mouthed idiot with severe motor function problems.
Schilder did, however, say that the insured made slow but steady
progress while he was at school, that he was not ineducable and
that, with proper supervision by someone taking an interest in him
he could well have improved further to the level where he was able

to live an independent life. Holmes initially said that the insured

could never have understood the full implications of taking out an

insurance policy, but later conceded that he may well have been

able to do so had it been explained to him in simple language. He

also conceded that he could not say whether the insured might in

later years have developed sufficiently to be able to operate on his

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own. Neither of these two witnesses ever saw the insured again after he left their school.
No information of any kind was placed before the trial Court concerning the insured's performance when he attended the Bridgetown Primary School during the years 1977 and 1978. Nor is anything known about him from the time he left school until the beginning of 1985, except that it was common cause that he first worked for a flooring contractor and thereafter for a considerable time as a sweeper on the Railways.

William's evidence as to how the insured came to board with her was not disputed. She told the trial Court that during about January 1985 she decided to take in a boarder as she was divorced with small children and in need of money. She placed an advertisement in an English language newspaper and the insured came to see her personally. She told him that she would provide

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full board and lodging but that he would have to do his own washing and ironing. The rent would be R25,00 per week, payable in advance. He agreed and moved in the same day. He stayed with her until the day he died. He always paid the rent on time and did his own washing and ironing. He was able to operate her washing machine and to use the electric iron. Sometimes he made his own meals using the kitchen equipment for that purpose.
Williams testified that the insured did not appear to her to be mentally retarded. He was Afrikaans-speaking but could also speak English to her children although his English was not very good. He liked to watch television, particularly the news. He seemed to understand what he was watching and sometimes commented on it. He bought the Argus newspaper every day and read it. Sometimes she sent him to the shops to buy bread or

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milk and he always gave her the correct change. He used to carry a case with him and on occasion she saw that it was rilled with ladies' underwear. He also used to carry a little black notebook in which she saw names recorded. She understood that
he had his own business of selling ladies' underwear.
The learned trial Judge said in his judgment that in the initial stages of her evidence he was considerably impressed with Williams. Three aspects of her evidence, however, gave him "cause for consternation". The first two aspects mentioned by the learned Judge both concern the fact that she knew very little about the insured's business. I have difficulty in understanding why Williams's ignorance of the insured's business activities could in any way reflect on her credibility as a witness, as the learned Judge has suggested. He was no more than a boarder in her home and there is no reason why he should have told her more about his

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business. I cannot see how her lack of more detailed knowledge of his business could serve as any indication that she was not a
truthful witness. The third aspect which gave the learned trial
Judge cause for concern has more substance. It relates to an
affidavit Williams made to the police in connection with the
investigation into the deceased's death. The relevant portion of
the affidavit reads as follows :

"Ek ken die oorledene Robert Fortuin. Hy het by my
geloseer tot en met die botsing wanneer hy dan noodlottig
beseer was. Tydens die tydperk dat hy by my gewoon het,
het hy baie gedrink en was ook baie onbeskof maar omdat hy
my gesê het dat hy geen ouers het nie, het ek hom jammer
gekry en dus het hy by my gebly.
Ek kan ook sê dat die oorledene vir homself gewerk het,
maar waar hy gewerk het en wat se soort werk hy gedoen
het, dit weet ek nie.
Ek het vir die oorledene die Vrydag voor die botsing nog
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gesien en nie weer nie totdat die polisie my kom sê het dat
hy in 'n botsing betrokke was en dat hy oorlede is. Ek ken
die oorledene goed want hy het lank by ons gebly en dus het
ek horn so goed leer ken. Hy was kortgespanne en het altyd
moeilikheid gesoek. Hy het ook dikwels geryloop na plekke.
Ek het ook nie geweet dat hy 'n polis het nie. Ek het eintlik
niks van hom geweet nie."

Williams testified that she was required to go to the Atlantis charge office from her home in Mitchell's Plain late one evening to give the statement; that the charge office was very busy; that she spoke in English to the policeman who took her statement; and that she was in a hurry to get home and did not read her statement
before signing it. Regarding the nature of the insured's work

Williams testified that she told the policeman that he worked for

himself by selling ladies' underwear, but that she could not say

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where he worked or to whom he sold these articles.

The trial Court found that Williams's statement conflicted

with her evidence, which was to the effect that the insured was not
a heavy drinker; that he was generally well-behaved and on the odd
occasion when he was rude to her he always apologised; and that
he sold ladies underwear. Williams's explanation for these
differences was described as unconvincing and unsatisfactory. In
my view the trial Court erred in finding that Williams had made a

contradictory statement. If her evidence was attacked on the
ground that she had made a conflicting statement that should have
been proved by calling the policeman to whom she had made the
statement. That was not done and in view of her evidence about
what she told the policeman, coupled with her evidence (which the

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trial Court accepted) that she did not read the statement before

signing it, it has not been shown that Williams made a

contradictory statement to the police. Furthermore, for reasons

of the case he was investigating, the policeman who took her

statement had good reason to emphasise the insured's drinking

habits and unacceptable conduct. This could easily account for

the differences relating to these aspects. Williams's evidence as
to what she told the policeman about the insured's work is
corroborated by the fact that he wrote down that the insured
worked for himself. In my view the learned trial Judge's criticism
of Williams's evidence was not justified and resulted in his attaching
insufficient weight to material evidence given by her on the issue
of the insured's mental capacity.

17
Williams's uncontradicted evidence that the insured answered

her advertisement for a boarder and contracted with her on the

terms testified to by her, is significant in two respects. In the

absence of any suggestion that he learned about the advertisement

from another source, it must be accepted that he read it himself.

This supports Williams's evidence that the insured used to read the
Argus. It also raises a doubt about the reliability of the evidence

given by Holmes and Fenster that the insured would not have been
able to read and understand an English newspaper. Secondly, the
insured would appear to have progressed to the stage where he lived
an independent, self-sufficient life by the time he came to live in her house. It was common cause at the trial that the insured never received any disability grant from any source. There was further

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no suggestion that he was being supported by anyone. In the absence of any indication to the contrary it must be accepted, in my view, that he was earning a living on the open market. Furthermore, Williams's uncontradicted evidence that he did his own washing and ironing and cooked his own meals on occasion showed that there was no longer anything amiss with his motor functions. In my view a totally different picture of the insured emerges from her evidence from the one painted by Holmes and Schilder.
The trial Court did not outright reject Williams's evidence. No doubt because he realised the significance of those portions of her evidence which were not disputed at the trial, counsel for the appellant submitted that her evidence should have been rejected

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in toto on the basis that she had been part of a conspiracy to murder the insured. It was suggested that a conspiracy had been formed between, amongst others, Williams, Mr Spencer James Whiting ("Whiting"), who was the insurance agent who sold the policy in question to the insured and the appellant. The suggested plot entailed putting the insured in Williams's house and paying his rent, taking out the policy in his name, murdering him and claiming the benefits due under the policy on the basis of fraudulent evidence that there was nothing wrong with him. In my view there is no factual basis whatsoever for the submission. There was no evidence to that effect, nor was it ever suggested to any of the witnesses.

The trial Court relied heavily on the evidence of Adams who

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lived in a house opposite that of Williams and who had been at the Lotus River Primary School with the insured. Although Adams himself failed Sub A and Std 4 he eventually passed Std 8. After they left school Adams lost contact with the insured and only met him again during May 1985 in Mitchell's Plain. Adams was a bricklayer and a lay teacher in the Islamic religion. The insured expressed a desire to know more about this religion and Adams started teaching him, seeing him virtually every night for that purpose. Adams said that the insured was slow of learning and could not be taught with his other pupils. His level of understanding and reading was that of a child in the substandards. Adams had to use simple words to teach him anything and even then it took a long time and much repetition for him to remember

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what he had been taught. He tried to teach the insured a verse in the Arabic language which every Muslim must know but he only managed to memorise four or five words after two months. According to Adams the insured had not changed from the time he was at school. He said that the insured could neither speak nor understand English. His Afrikaans was very poor and was like that of someone in Std 1. He never saw the insured with a newspaper and when the news on the television came on he immediately lost interest because he could not understand it. Adams considered that the insured would not have understood "what insurance is all about". Adams said that the insured told him that he did not have his own business but that he helped a certain Rashad carry his bags. The insured also told him that Rashad had opened a bank account

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for him and paid his rent and that he never had money of his own. Adam's evidence as to the content of the insured's statements to him falls within the definition of "hearsay evidence" in sec 3(4) of the Law of Evidence Amendment Act 45 of 1988 ("the Act"). The evidence was not objected to and seems to have been admitted without the fact that it was hearsay evidence ever having been considered. It was not contended on appeal that it was admissible in terms of sec 3 (1) (a) of the Act and in my view, had the learned trial Judge applied his mind to the question and exercised his discretion whether to allow the evidence "in the interests of justice" in terms of sec 3 (1) (c) of the Act, he would not have admitted the evidence. In my view the evidence was by its nature unreliable. This is clearly shown by the fact that the insured,

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according to Williams, told her quite the opposite from what he

told Adams. For the same reason her hearsay evidence in this

regard should have been excluded. There was no suggestion that

Rashad was not available to testify and it would have been a simple

matter for him to tell the trial Court whether the insured had worked

for him or not. He was not called as a witness.

Adams's evidence is in stark contrast to the evidence of

Reginald Glenville Richter ("Richter") who was the respondent's

branch manager in Cape Town during 1985. Richter testified that

a man who identified himself as the insured came into the branch

one day during the relevant time to pay an insurance premium in

cash. The person explained that his premiums were paid by way

of debit orders but that he was late in depositing sufficient money

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in his bank account to meet the current debit order and that he wanted to pay the premium in cash. The person had no documentation with him but supplied his full names and date of birth from which it was possible to ascertain the policy number.

He then paid in cash and was issued with a receipt. Richter asked

him whether he wanted to continue to pay by way of debit order in

future but he stated that he was undecided. He then left. Richter

said that the person acted quite normally. The trial Judge said in

his judgment that Richter made a good impression upon him and

that there was no reason to doubt his evidence. He went on to

say, however, that in the absence of evidence to confirm that the

man Richter spoke to was indeed the insured, or, if he were the

insured, that he was not being assisted, the validity of Richter's

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evidence was doubtful. I cannot agree with the learned Judge. There was no evidence to suggest that the person Richter spoke to was an impostor or that the insured was accompanied by another who did the talking. Neither was this ever expressly put to Richter by counsel for the respondent. Surely an impostor would have gone there armed with the policy number which this person did not have. On the probabilities the trial Court should have found that it was indeed the insured to whom Richter spoke. The learned trial Judge also said that even if it is accepted that Richter spoke to the insured who was unassisted, his evidence does not take the matter any further. Again I cannot agree. In my view Richter's evidence is significant in that it shows that the insured understood the necessity for timeous payment of the premiums as

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well as how to operate a bank account.
Whiting was the final witness to give evidence of a contemporaneous nature. His evidence was that during 1985 he was employed by the respondent as an insurance consultant. He met the insured in the bar of an hotel and told him that he was an insurance agent. When the insured told him that he had his own business he mentioned that he could take out an insurance policy as an investment. The insured expressed an interest and they made an appointment to meet at the latter's home. On 26 February 1985 he went to the given address where he met the insured. He completed the proposal form in the presence of the insured who signed the form on the same occasion. They spoke in Afrikaans

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and he recorded the answers on the proposal form in English. He explained to the insured that the policy would provide for basic life cover as well as additional accident and investment benefits. The insured made it clear that his real interest was in the investment benefits and the fact that he could raise a loan on the policy. When they came to section S of the form which provides for authorisation for the payment of premiums by way of stop orders, the insured handed him a card containing details of a bank transmission account. Whiting was able to complete this section from the information appearing on the card and this section was signed by the insured the same day. Whiting's evidence was to the effect that the insured appeared to him to be a perfectly normal person in possession of all his faculties who fully understood the

28

various aspects of the proposal form.
Whiting's evidence was severely criticised by the trial Judge in a number of respects. Apart from saying that he made "a singularly bad impression" while giving evidence the learned Judge refers to five portions of his evidence which he either finds unacceptable or which he regards as an indication that the insured did not understand the transaction. I shall deal with each in turn.
Firstly, the learned Judge did not believe Whiting's evidence that
he had never met the appellant. Whiting admitted that he once

completed a proposal form in the name of the appellant without

ever meeting him. I find Whiting's explanation a perfectly

reasonable one and in my view there was insufficient reason to

reject his evidence in this regard as false.

29
Secondly, the learned Judge says in his judgment that, in

view of the nature of the policy, he doubted whether any
investment benefits were payable under the policy. He could,
accordingly, not accept Whiting's evidence that he had explained
such benefits to the insured. Elsewhere in the judgment the
learned Judge simply assumes that no such benefits were payable.

In my view the learned Judge erred in adopting this attitude.

According to section E of the application form the monthly

Vitamagna R 57-80
Accidental death or injury benefit 18-90
Waiver of premium benefit 1-54
R 80-24

According to the policy the Vitamagna benefit would seem to be one of the "Vitaseries linked and reinforced endowments". Clauses 2 and 9 of the policy provide that upon the insured surviving to the maturity date the maturity benefits set out in the

30

schedules will be paid to him. What exactly the benefits were to which the insured would have become entitled was never dealt with at the trial, nor were the schedules placed before the trial Court. Without that information the learned Judge erred in rejecting Whiting's evidence on this aspect.

The next part of Whiting's evidence which was criticised by

the learned trial Judge is the following. Whiting was asked in

cross-examination whether the following sentence in section Q of

the application form was explained to the insured "Ek stem in om

die standaard polisbewoording van die A A Mutual Lewens vir die

soort versekering waarom aansoek gedoen is te aanvaar". He

replied that he told the insured that the standard form of contract

would be issued to him and that the insured understood what he was

saying. In his judgment the learned trial Judge says that he was

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"thoroughly unconvinced" that Whiting understood what was being referred to, and that he has "little doubt that what was being imparted to the insured was other than was intended by the statement in the proposal form". A careful reading of the record shows that when Whiting was first asked whether he had explained the sentence in issue to the insured he misunderstood the question as referring to the standard rates. The question was repeated and the cross-examiner made it clear that he was not referring to the rates but to the actual contract itself. The question, in the end, was a simple one and the answer, as I have said, was in the affirmative. There does not appear to be any basis for saying that Whiting did not understand what the question referred to nor that he conveyed something else to the insured than what was required by

32

the proposal form.
Fourthly, the learned trial Judge said that Whiting's evidence that arrangements for the payment of the premiums were made before the date upon which the proposal form was signed ie 26 February 1985 and that he did not open an account afterwards did not ring true. In the first place Whiting did not say that arrangements for the payment of the premiums had already been made. He merely said that the insured gave him a card containing details of a bank account with the S A Perm. This information was then used to complete the authority for the payment of premiums by way of stop orders. Furthermore, there is no evidence to suggest that the bank account, details of which Whiting said appeared on the card which the insured handed to him on 26

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February 1985, did not then exist. There was therefore insufficient reason not to accept Whiting's explicit evidence in this regard.
Finally, the learned trial Judge found Whiting's evidence that he used colloquial language to explain the questions in the proposal form either not true or an indication that Whiting was not dealing

with the normal or average person. These findings are, in my

view, totally unjustified. Why Whiting would lie in saying that

he used simple language is not clear. I find it quite natural and realized that he was dealing with someone from a sub-economic area. And the mere fact that a proposal form is explained in simple language is no indication, in my view, that the client is not a person of average, normal intelligence.


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I proceed to deal with the expert evidence relating to the insured's mental capacity. In his evidence in chief Fenster first expressed the view that the insured's IQ of 51 placed him in the category of severely mentally retarded, but he soon qualified that by saying that the insured was severely mentally retarded "within the range of mild". In cross-examination he conceded that his original assessment was based on an out-dated classification which was no longer accepted and that according to the current classification by the DSM III (which he appeared to accept as correct) a person with an IQ of between 50 and 70 was classified as mildly mentally retarded. It is not clear why he used an outdated classification in the first place.

According to the DSM III mild mental retardation is defined

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as "strongly equivalent to the education category 'educable'". Dr Fenster, however, expressed the firm opinion that the insured was ineducable. He further stated categorically that the insured was permanently and totally unfit for employment on the open labour market; that he had no doubt whatsoever that his mental retardation was such that any observant layman would have noticed it and that it was "scientific and definite" that he did not have contractual capacity. Other firmly expressed views were, infer alia, that Williams's evidence that the insured could read a newspaper was "impossible"; that when he left school he was "unable to read Afrikaans"; and that he would not have been able to pay the premiums on time.

It is quite clear from Dr Fenster's evidence that the basic

36

premise for all these views was that the insured had at the age of 17-18 years not progressed beyond the level of Sub B at school, and that it was therefore impossible for him to have improved afterwards. This was repeatedly stated by him under cross-examination, and he then readily conceded that if this fundamental premise was wrong his opinions would be wrong too.
Dr Fenster's basic premise turned out to be incorrect. When the insured left Lotus River Primary School at the end of 1976 at the age of fifteen years he had, as I have already indicated, reached the level of Std 2 in certain subjects while in others he was still at Std 1 or Sub B levels. So, for example, Holmes testified that the insured's reading level was "between say late Std 1 and the beginning of Std 2". Nothing is known about his

37

progress during 1977 and 1978 and Dr Fenster was not entitled to assume that he made no further progress during that time. In the circumstances his view that the insured was ineducable can carry little weight. It will further be recalled that Schilder said that the insured was not ineducable and that her view is supported by the DSM III manual. For these reasons the respondent, on whom the onus rests, has not shown that the insured was ineducable.

Dr Fenster was also probably wrong when he said that the

insured was unable to obtain work on the open market. As I have

earlier shown, it is likely that the insured in fact obtained such
employment after leaving school and that he was so employed at the
time of his death. Dr Fenster's sweeping statement that any
perceptive observer would have noticed his mental retardation is

38

contradicted by Richter, Williams and Whiting who all met the insured. His statement that the insured would not have been able to meet the payments under the policy was shown to be wrong. So was his statement that the insured could not read Afrikaans when he left school. In view of Holmes's evidence as to the insured's reading ability it would seem that Dr Fenster was wrong also when he said that the insured could not read a newspaper.

The emphatic manner in which Dr Fenster expressed his opinions apparently impressed the learned trial Judge, who, in accepting his evidence, said in his judgment: "The opinion of Dr Fenster was emphatic: it was scientific and definite that the insured could not have had the contractual ability to conclude the agreement." For the reasons I have given the learned Judge erred

39

in accepting Dr Fenster's evidence. As for his opinion concerning the insured's lack of contractual capacity being "scientific", Dr Fenster's original "scientific" labelling of the insured was indeed wrong in that the insured was not severely mentally retarded. Furthermore, adopting an inaccurate factual basis for views so dogmatically expressed, can hardly be described as "scientific".
Loebenstein, a clinical psychologist, expressed the view that the insured was only mildly mentally retarded. He based this view on the insured's IQ of 51 which followed an earlier test result of 61; the fact that the insured was placed in an adaptation class at school where he made progress and was not ineducable in the view of his teachers; and the fact that in later life he was self-supporting

40

and lived independently, having obviously acquired sufficient skills to be employed on the open market. Loebenstein said that the insured came from a greatly deprived socio-economic background and was materially and socially disadvantaged in his early life. He was placed in the care of foster parents at a young age and his relationship with them was very poor. His deprived background and home environment had a deleterious effect on his progress at school and on his IQ tests but his performance would have improved once he was placed in a more stimulating environment. Loebenstein emphasised that "mild mental retardation must always be examined in a particular context at a particular time" in order to determine the degree to which a person has improved. In the case of the insured there was no information available as to the

41

"intervening factors and circumstances" in his life from the time
he left school until the beginning of 1985. In the absence of such
data it was not possible to assess his intellectual functioning at the
time he took out the insurance policy. The trial Judge did not
reject Loebenstein's evidence but attached little weight to it on the
ground that there was no intervening factor. He said in this regard:

"There is no evidence to indicate any intervening factor that contributed substantially to his mental development. I am bound to accept that there was a measure of improvement, even if this is limited to his ability to write his name, but I do not accept that any material advancement of intellect occurred between the age of 18 and 24."
The trial Judge concluded by assessing the insured's mental

capacity at the time he entered into the contract of insurance on the

same basis as Dr Fenster had done ie as that of someone who had

42

at the age of 17-18 years not progressed beyond Sub B. For the reasons I have given the learned Judge erred in doing so. Moreover, in saying that he does not accept that the insured's intellectual level improved materially since he left school because there was no evidence to that effect, the learned Judge would seem to have wrongly placed the onus of proving contractual capacity on the plaintiff. It was common cause that the onus of proving that the insured lacked the required contractual capacity at the relevant time rested throughout on the respondent, so that it was for the respondent to prove that at the time of contracting the insured's intellect had not improved from that described by his school teachers. For all we know his mental state may well have improved since then. (Cf Mitchell v Mitchell and Others 1930

43

AD 217 at 224.) Indeed, the evidence of the school teachers and Loebenstein was that that was to be expected.
There are other passages in the trial Court's judgment from which it would appear that the onus was wrongly applied. The trial Court found that the policy held out no benefit at all for the insured. That finding, as I have indicated, was not justified. It further pointed out that no evidence whatsoever was led as to why the plaintiff was named as the beneficiary, as if it was for the appellant to give a reason for the policy, and concluded that the insured had been "manoeuvred" into taking out the policy. This finding was totally unjustified. The trial Court then proceeded as follows :

"[T]he most compelling reason for rejecting an understanding

44

on an appropriate level on the part of the insured, is that there seems to be no reason whatsoever for him to have concluded the agreement."

What the learned Judge is saying in effect is that the appellant bore

the onus of giving a reason for the policy and that in the absence of
such explanation an inference of lack of contractual capacity arises.

In the present case the onus is, in my view, all-important.

An enquiry into the state of a man's mind is, from the nature of
things, a very difficult and delicate one, as was pointed out by
Innes CJ in Pheasant v Warne 1922 AD 481 at 489 and
by Tindall JA in Lange v Lange 1945 AD 332 at 344.
In the present case it is particularly so because, firstly, nothing is
known about the insured during the crucial period of his life just

45

before the contract in question was concluded, and secondly, the
evidence adduced at the trial was so contradictory.

The test for contractual capacity which is of application in the

present case is that which has been laid down in cases such as
Prinsloo's Curators Bonis v Crafford and Prinsloo 1905 TS
669
and the two cases referred to in the preceding paragraph. In
Prinsloo's case, supra, Solomon J stated at p 673 that the test
was whether the person concerned

"was of sufficiently sound mind and understanding to realise the nature of the obligation into which he was entering, and to appreciate the duties and responsibilities created by that contract."

In Pheasant v Warne, supra, Innes CJ stated at p 488 :

"And a court of law called upon to decide a question of contractual liability depending upon mental capacity must

46

determine whether the person concerned was or was not at the time capable of managing the particular affair in question - that is to say whether his mind was such that he could understand and appreciate the transaction into which he purported to enter."

See also Lange v Lange, supra, at 341 - 342.
In my view the contract of insurance in question was a fairly simple one and it did not require a high degree of intelligence to understand the nature of the contract and the nature of the obligations created thereby. It was not in issue that by the time of the insured's death no premiums were outstanding and in view further of Richter's evidence it must be accepted that the insured at least understood his responsibility for paying the premiums.
I have already referred in some detail to the conflicting evidence relating to the insured's mental state at the relevant time.

47

There is an irreconcilable difference between the lay evidence of Adams, on the one hand, and that of Williams, Richter and Whiting on the other. I have pointed out that the trial Court did not reject the evidence of Williams and Richter and merely
criticised certain aspects of their evidence. That criticism, as I

have indicated, was not justified. I have also pointed out that

the trial Court's rejection of Whiting's evidence was unwarranted.

As for the expert witnesses Fenster's evidence was, as I have

indicated, fundamentally flawed and can carry very little weight.

Loebenstein, on the other hand, emphasised the insured's potential

for mental improvement resulting from a changed environment after

leaving school. On a proper assessment of all the evidence and on

a correct application of the onus the trial Court should have held

48

that the respondent had not proved that the insured lacked the
required mental capacity to conclude the contract in question.

I proceed to deal with the defence that the proposal form

contained the following misrepresentations which grounded
repudiation of liability.

"1. There were no circumstances not disclosed in the proposal form relating to the insured's health which may affect the risk of assurance on his life;
2. He was self-employed and was in receipt of earnings exceeding R650-00 per month;
3.He had attained a Std 8 qualification;
4.He had one brother who was in good health."

It was alleged in the pleadings that these statements were false in that, firstly, there were circumstances relating to his health which may affect the risk namely that he was severely mentally

49

retarded; secondly, he was unemployed and not in receipt of
earnings exceeding R650-00 per month; thirdly, he had not
attained a Std 8 qualification; and fourthly, his brother,
although in good health, was also mentally retarded. Section Q

of the proposal form contains a warranty, over the insured's

signature, of the truth of the statements in the proposal form and

his agreement that they form the basis of the insurance contract.

An insurer's contractual right to repudiate liability on the

ground of misrepresentation made to it, whether elevated to a

warranty or not, was curtailed by sec 63 (3) of the Insurance Act

27 of 1943, which, insofar as here relevant, provides as follows:

"Notwithstanding anything to the contrary contained in any ... document relating to (a domestic) policy, any such policy ... shall not be invalidated and the obligation of an insurer

50

thereunder shall not be excluded ... on account of any representation made to the insurer which is not true, whether or not such representation has been warranted to be true, unless the incorrectness of such representation is of such a nature as to be likely to have materially affected the assessment of the risk under the said policy at the time of issue ... thereof."
This sub-section was fully considered in a recent decision of

this Court in Qilingele v South African Mutual Life
Assurance Society [1992] ZASCA 189; 1993 (1) SA 69 (A). In delivering the judgment of the Court Kriegler AJA distinguished between the test for materiality in cases where the ground for repudiation is a

failure of the common law duty to disclose material facts, and the test in those cases where the insured expressly vouched for the truth of his representations founding the contract of insurance and moreover did so by way of warranty (at 73 A-F and 74 F-G),

51

The learned Judge stated the test in the latter type of case as
follows, irrespective of whether the misrepresentations have been
warranted to be true or not (at 75 B-E).

"The enquiry as to the materiality of the misrepresentation is consequently not conducted in abstracto but is focused on the particular assessment. From that it follows that the evidence of the underwriter who attended to the assessment is not only relevant but may prove crucial. So, too, evidence that the insurer had a particular approach to risks of the kind in question would be relevant and could be cogent. Obviously general considerations affecting the assessment of the kind of risk in issue will bear on the probabilities and will be taken into account. But, and this serves to be emphasised, the enquiry is aimed at determining whether the specific assessment was probably materially affected by the specific misrepresentation in contention."

The learned Judge went on to say (at 75 G-H) that applying this

test involved a simple comparison between two assessments of the

risk undertaken. The first is done on the basis of the facts as

52

misrepresented by the insured. The second determines what the assessment would have been on the facts truly stated. If there is a significant disparity between the two, then the materiality requirement in sec 63 (3) is satisfied.
Returning to the misrepresentations alleged in the present case, it was common cause that the first misrepresentation alleged on the pleadings was not proved as the insured was not severely mentally retarded. Counsel for the respondent contended in the alternative that the statement was false in that the insured had attended a special class at school. This was clearly an afterthought and was never canvassed at the trial. It is not possible to say what effect this might have had on the assessment of the risk.

53

The second and fourth statements have not been shown to be false. Apart from Williams's evidence that she had formed the impression that the insured worked for himself, there was no other admissible evidence of what the insured did or what he earned. With regard to the insured's brother, there was no evidence that he was mentally retarded at the time the proposal form was signed. The evidence of Mr Heugh, the foreman at Atomic Steel where he had been employed on the open market for more than six years, whose evidence was not contested, was to the effect that he is a normal, average person and that there is nothing the matter with his mental ability.

That leaves the statement that the insured had passed Std 8 at school which the parties agreed was false. Richter, the

54

respondent's branch manager, was the man who assessed the risk
under the policy on behalf of the respondent. His evidence was
to the effect that even had the insured indicated that he had only
passed Std 2 or that he had had no schooling at all, it would not
have affected the assessment of the risk. Richter's evidence was
that, on the respondent's approach to this type of insurance, a

person's academic qualifications were not regarded as material.

There was no other evidence on this issue and the respondent has,

in my view, clearly failed to discharge the onus of proving that this

specific misrepresentation materially affected the assessment of the

risk. For these reasons the respondent has failed to show that it

was entitled to repudiate the contract on the ground of

misrepresentation.

55

I deal finally with the defence based on the failure of the duty to disclose material facts. The respondent's allegation on the pleadings was that the insured had failed to disclose that he was severely mentally retarded. I have already said that the insured was not proved to be severely mentally retarded. As in the case of the first of the alleged misrepresentations, counsel for the respondent contended in the alternative that the insured should have disclosed that he had been placed in a special class at school. In President Versekeringsmaatskappy Bpk v Trust Bank van Afrika Bpk en 'n Ander 1989 (1) SA 208 at 216 D-G this Court held that the test of whether information should be disclosed was whether the reasonable man (not the reasonable insurer or insured) would appreciate that the information should be conveyed

56

to the prospective insurer so that the insurer itself could decide whether to accept the risk or to charge a higher premium than usual.

On the facts of the present case I am unable to find that the

reasonable man would have considered that he should inform the

insurer of the fact that he had been placed in a special class at

school. In my view the reasonable man would have considered

the information entirely irrelevant. In his mind the information

could not have influenced the risk in any way or his ability to

comply with his obligations under the policy. I cannot therefore

find that the insured ought to have disclosed the fact that he had

attended a special class at school to the respondent.

For these reasons the defences raised by the respondent failed

and the Court a quo erred in granting judgment with costs in its

57

favour. As far as the costs of counsel are concerned Mr Laubscher appeared alone for the appellant at the hearing of the
appeal although he had appeared with a senior at the trial. He
asked for the trial costs of two counsel. I am satisfied that,
having regard to the amount involved in the action and the nature
of the issues in dispite between the parties, the matter warranted
the employment of two counsel and that the costs of two counsel

should be allowed to the extent to which two counsel have in fact

been employed.

In the result the appeal succeeds with costs and the following

orders are made:

1. Condonation is granted. The appellant is ordered to
pay the costs of the application for condonation.
58
2. The order of the Court a quo is set aside and it is
replaced by the following order:
(a) Judgment is granted for the plaintiff in the
amount of R200 000-00 with interest a tempore morae from 25 July 1988 to date of payment.
(b) Defendant is further ordered to pay interest at
the rate of 12% per annum on the plaintiffs
taxed bill of costs from a date 15 days after the
allocatur of the Taxing Master.
(c) Defendant is ordered to pay the costs of the
action, such costs to include the costs of two
counsel.
3. The respondent is ordered to pay the costs of the
appeal, including the costs of the application for leave
to appeal but excluding the costs of counsel for the
appellant's supplementary heads of argument.

W. VIVIER JA.

HEFER JA) concurred.

SCHUTZ JA:

I find myself in disagreement with my two brethren as I take
2

a view of the facts as a whole that differs fundamentally from theirs.
Robert Geoffrey Fortuin ("the deceased") was born on 8 February 1961. His education was that given to the mentally retarded. He left school on 17 January 1979 when he was nearly 18 and still in a special class. The record is silent as to his activities during the next five or six years. On 26 February 1985, when he was 24, he signed a proposal form for life cover addressed to the A A Life Assurance Association Limited (the respondent, formerly the defendant). The insurance agent was one Whiting, who was obliged to leave the respondent's employ not long after, and who made a "singularly bad impression" on the trial judge. According to him the deceased presented himself as a perfectly normal person. The proposal provided for life

3

cover of R100 000 which was to be doubled to R200 000 if death were to be accidentally caused. The beneficiary was the plaintiff, Vincent Charles Theron, who was described in the proposal as "friend." The record tells practically nothing about him. Although he was available to give evidence he did not do so, and we do not have his version as to why he should have been so preferred or as to the mental condition of the deceased at the time. The deceased's parents had cast him away at an early age, and his only relation was a younger brother Jonathan, also mentally retarded when at school. In due course a policy was issued. On 21 July 1985 the deceased was struck by a motor vehicle while walking. Upon his death the appellant claimed the accident benefit.

The pre-conditions to liability having been established the
4

onus rested on the respondent to prove its defences of misrepresentation or non-disclosure in the first instance, or of lack of mental capacity to enter into the insurance contract in the second. The court a quo found that lack of mental capacity had been proved, and made no finding on misrepresentation or non-disclosure.

The evidence fell into three categories. Mrs Schilder and Mr Holmes, both remedial teachers, gave evidence for the respondent concerning a limited period of the deceased's school career during the mid-seventies. With an IQ of 51 he only just qualified for education. Had his score been a couple of points lower he would have qualified only for training, not education. Their evidence was accepted.

There is a chasm, not only in time, between their evidence
5

and that of three witnesses called by the appellant concerning the deceased's mental condition in 1985, Whiting aforesaid, the deceased's landlady Mrs Marlene Williams, and one Richter. According to them the deceased was quite normal. The judge rejected the evidence of Whiting, commented adversely on that of Williams, and while not rejecting that of Richter, found that it was not proved that the man he had dealt with was the deceased. A very different picture of the deceased at this time was painted by a witness called by the respondent, one Yusef Adams. It was that of the old Robert Fortuin. The judge accepted his evidence. Two experts gave evidence, Dr Fenster, a psychiatrist, for the respondent, and Mr Loebenstein, a psychologist, for the appellant. Neither of them had ever seen the deceased, so that their conclusions

6

were much dependent upon which of the witnesses were telling the truth.

When weighing both the expert and the lay witnesses, the question as to the deceased's mental condition in 1985 is one of fact.

The legal principles applicable are clear and are set out in the judgment of my brother Vivien

My view of the evidence leads me to disagree with my brethren on whether the respondent discharged the onus of proving mental incapacity in 1985. I shall set out the reasons for my differing briefly. However, before doing so I find it necessary to comment that despite a record of more than 1600 pages, by the end of the trial remarkably few facts had been proved. This did not bode well for the onus-bearer. This state of affairs may to some extent be explained by

7

the many interventions by the trial judge, which at times tended to hinder and even obstruct the flow of presentation.

The main thrust of the appellant's argument is that whatever had been proved about the deceased's mental state in the mid seventies, it had not bridged the gap extending to 1985, and that there was no sufficient basis for preferring the evidence of Adams about that latter time to that of Williams, Whiting and one Richter.

The one solid plank in this case is the evidence of Schilder and Holmes who taught at Lotus Primary School. Whatever difficulty they may have had in recalling two pupils of many years before, I consider that they were reliable witnesses and also skilled and sympathetic. The details of their evidence are set out in the judgment of

8

my brother Vivier and I do not propose repeating them. What it amounts to is that by the end of 1976 when he was nearly 16 the deceased had an IQ of 51 and had reached a level of somewhere between sub B and early Standard 2, depending upon the subject, but this in a special class where promotion was as much a matter of encouragement as achievement. He did not have the retentive capacity to perform even simple tasks, was gullible and easily led, and did not advance much. Neither Schilder nor Holmes thought that he would be able to cope with the import of a life policy. As against this it should be noted that he was dragged down by a tragic home background which probably affected his achievement and may have reduced his IQ score by a few points. Nothing has been proved about his last two school years at Bridgetown save, as already stated, that

9

he left in January 1979 when he was still in a special class. It seems to

me unlikely that he would have progressed much further during those

two years.

What was his prognosis? Under cross-examination Holmes

expressed some astonishment at the facts to which he was told Mrs

Williams would depose. Having said that his projection was based on

his knowledge of the deceased's performance at school, he proceeded:

"And I would think it was a professional type of projection in my case and I think the wealth of experience behind me, dealing with handicapped children, I found it incompatible that children who leave school who couldn't do things will just dramatically when they leave school, be able to cope with that, M'Lord. I just couldn't concede that. I must have scientific evidence that it is actually so, but my perception as a professional trainman (sic on the record) I feel I just couldn't project that kind of thing as a reality."

10

That is an opinion evidence to which I attach weight.

Much of the opposed evidence of Dr. Fenster and Mr Loebenstein was concerned with how reliably the school evidence could be projected forward. Dr. Fernster was emphatic that the deceased would not have improved appreciably, that he would not have been able to hold his own in the open labour market and that he would not have had the capacity to understand the inwardness of a contract of insurance. Mr Loebenstein, on the other hand, was of the view that one had to be much more cautious, that some intervening event may have occurred and that the unhappy home background may have been removed. There was always hope.

I disagree with my brethren on their assessment of both
11

experts.

Dr. Fenster was criticized as being dogmatic. He was dogmatic. But dogmatism is sometimes the product of long experience and deep understanding. Advancing age may increase it manifestation. I do not consider that the fact that Dr. Fenster stuck to his guns is in itself a matter for criticism. There are other grounds for criticism. It appeared that he was using definitions of classes of mental disorder or retardation which do not always accord with the more muted language that has come to be accepted in our time, sometimes I think with the loss of the hard edge of old English words. The other main criticism was that he kept re-iterating in response to much that was put to him, that the deceased was still in sub B at the age of 18. There were slight variants.

12

In fairness to him I think that it should be remembered that at the stage when he gave evidence no-one in court seemed to know quite when the deceased had left school or what standard he had attained. However, whatever criticisms of him go home I regard the essential core of his evidence as valid, and in conformity with that of Mr. Holmes and ones own experience of life.

Mr. Loebenstein's evidence, on the other hand, does not impress me. He tended to stick to the plus points for the plaintiff, and had great difficulty in accepting that Mrs. Williams's version might be false although he did concede after much pushing that if Adams's version were to be accepted, deceased may have been much as he had been at school. Unlike Dr. Fenster he was not prepared at all to express an

13

opinion on the deceased's contractual capacity. There was no dogma here, so that one had only Dr. Fenster's opinion opposed not by a contrary opinion, but only doubts as to its correctness. Mr. Loebenstein's lack of dogma was put forward as a virtue showing what a scientific approach he adopted when faced by a paucity of facts. I do not think so. To my mind he was evasive at times, particularly in his refusal (supported by the trial judge) to say what he actually thought about the deceased. To say that one cannot give a considered expert opinion for lack of facts is one thing. To refuse to say what one thinks about such facts as are available is another.

From what I have said so far it is apparent that I would have expected the deceased of 1985 to be not much different from the

14

deceased of 1979. And this is exactly what Adams says. I shall not repeat his evidence, which is set out in my brother's judgment. Suffice it to say that I regard him as an impressive witness.

When I turn to the three witnesses for the plaintiff, Williams, Whiting and Richter, I have a serious difficulty. Each would have it that the deceased appeared to be quite normal. This I find very difficult to accept. It they had described a somewhat improved person it might have been otherwise, But they would have him, between them, a man of affairs, a reader and a savourer of current affairs. It was as if he had been reborn. This I find not only implausible but suspicious.

Indeed I find the facts surrounding this claim to be generally suspicious. The suspicion in short is that a gullible moron was prevailed

15

upon to take out insurance on his life appointing a "friend" as the beneficiary, and was thereafter murdered. That was not pleaded. No doubt if it could have been proved, a plea equivalent to de bloedige hand erft niet would have been raised. But the suspicion remains. Once one suspects fraud one must be on one's guard against wholesale fabrication, something one does not encounter with the great majority of witnesses. To my mind the most suspicious aspect of the case is that the plaintiff himself did not give evidence. It is true that he bore no onus. But for the reasons already given he had a substantial case to meet, and I rind it surprising, if he was innocent, that he did not go into the witness box in support of his witnesses, all three of whom had suffered various degrees of damage. It would have been so easy for him to have explained why

18

The fact that a witness cannot be faulted does not necessarily mean that she is telling the truth. In the result I consider that the weight of the case presented by the defendant is such as to outweigh the fact that Mrs Williams's evidence has not been proved false, given also the suspicion that in my opinion attaches to any evidence put forward by the plaintiff, particularly created by his own failure to give evidence.

I would add that whatever unfortunate phrases he may have used I do not think that the trial judge lost sight of the elementary principle that the onus lay on the defendant, just as I have not done in expressing surprise that the plaintiff failed to give evidence.

I am therefore of the opinion that the defence has discharged the onus of proving the deceased's lack of mental capacity.

19

In the circumstances I do not consider it necessary to deal with the further defences raised. I would, however, express my respectful agreement with what my brother Vivier has said about the admission of evidence under s 3 of the Law of Evidence Amendment Act 45 of 1988: about condonation and the costs the thereanent: and about the employment of two counsel.

In the result I would dismiss the appeal with costs.

W P SCHUTZ JUDGE OF APPEAL