What is the legal position of a panel beater who affected repairs to an insured’s vehicle and subsequently discovers that the Insured’s claim was actually repudiated?
This is exactly what transpired in the matter of McCarthy Retail Ltd v Shortdistance Carriers CC. In this matter the court had to decide whether a panel beater had any claim for the repairs mistakenly effected to a truck of an insured after the truck was damaged in an accident. After the insured submitted a claim, the insurance loss-adjuster inspected the truck at the premises of the panelbeater. During the trial proceedings the court found that the loss adjuster never gave any instruction to the panelbeater to proceed with the repairs but that the panelbeater laboured under the bona fide but mistaken belief that he had. In believing that it had a contract with the insurer, the panelbeater submitted its invoice. Shortly thereafter, the insurer repudiated the insured’s claim. However, before the insurer repudiated the claim, the panelbeater returned the truck to the insured.
The court was faced with a typical instance of necessary and useful improvements made to an owner’s vehicle without a contract between the panelbeater and owner. Although the panel beater has given up possession of the vehicle voluntarily it could still institute legal proceedings. By voluntarily releasing the vehicle back to the owner, the panel beater only lost the right to retain the vehicle as security for the payment of the amounts expended on the truck.
The court found that the panelbeater was a lawful occupier of the vehicle in that the insured placed it in his possession in the contemplation that the vehicle should be repaired, even though the insured did not itself instruct those repairs. The fact that the panelbeater made a bona fides mistake in believing that the insurer had instructed it to repair the vehicle does not affect that position.
In comparing the facts of the case with the general requirements for an enrichment action, the court found that the insured was impoverished when his truck was damaged in an accident and had he not been insured he would have had to bear the cost of repair. Had the panelbeater been contracted for the repairs, the insured would not have been enriched when the repaired truck was returned to him and he would have had to pay the agreed contract price. The insured was enriched by the receipt of the repaired truck without having had to make any counter performance connected to that enrichment.
The court found it irrelevant that the owner of the vehicle was a policyholder with the insurer because it was not the fact of the insured holding an insurance policy which gave rise to the repairs. Instead the repairs were done as a result of the misunderstanding between the panelbeater and the insurer.
The court found that the insured could be held directly liable for the amount with which he was so enriched. Furthermore, despite the panel beater having in good faith abandoned his right of retention, he could still recover his damages through an enrichment claim.
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Andries Stander is a director in the litigation department at Barnard Incorporated in Centurion.
Legalex (Pty) Ltd, registration number 2003/003715/07, is an authorized Financial Services Provider (FSP 5277) and underwritten by Guardrisk Insurance Company Limited (FSP 26/10/75)