Steeped in Blood

by David Klatzow

  ‘Yes,’ he retorted, ‘but I am going to do so now.’

  I replied, ‘But I have a letter from a few months ago where you said that you were going to do so then. It appears that you have not done so. I suggest the following to you: run down as fast as your little legs will take you and lay the charges. I will phone you for a police reference number. Following this, I can assure you that the following will occur. Firstly, I will charge you in your personal capacity with extortion. Secondly, I will assist Mr Joffe in bringing a civil claim against you in your personal capacity for defamation. Thirdly, I will involve your entire company in this activity. Go quickly,’ I added, ‘I need the money.’

  Well, this caused an uproar at this insurance company, to put it mildly. Joffe phoned me to tell me that the insurer’s legal advisor had called him, and that he had referred him to me. The legal advisor then phoned me and I questioned him as to how he, as an attorney, could contact a client directly when he knew that the client was being represented. He backed down immediately, and another meeting was arranged. This time, all parties attended. Bizarrely, they insisted that the meeting be held at a noisy restaurant in a nearby shopping centre. They obviously felt uncomfortable in my office. The childishness of the ‘captains of industry’ is truly astounding.

  The end result was that Joffe received a cheque in the post, as well as a letter of apology from his insurer.

  One may have thought that this insurance company would have learnt their lesson from all of this. Not so.

  Michael Collison was asleep with his girlfriend one night when they were awakened by the sound of breaking glass. They cowered in their locked bedroom and, eventually, when the noises subsided, they ventured out. They were immediately met with a blast of hot air and smoke coming from the stairwell. They ran back into their bedroom and headed out to the balcony, but it was too high for them to jump. Back inside, they skirted the stairwell and managed to find a loft ladder, which they used to reach the safety of the ground. It was a highly traumatic experience.

  Collison approached his insurers and submitted a claim. The insurers enlisted the services of the Council for Scientific and Industrial Research (CSIR) to investigate the fire, who submitted a report shortly afterwards. Collison received a call from the insurers, and was asked if he would come in to see them. Sitting in their plush offices in Pretoria, Collison was shocked by what he was told.

  ‘Look, we know what went on in this fire,’ the claims adjuster said. ‘You must realise how seriously the courts view arson. You are not going to be the only one who suffers here: I prosecuted a man with young children and he was sent to jail. You do not want to go the full fifteen rounds with us. I will do a deal with you, withdraw your claim and I will not prosecute you.’

  Collison was outraged and came to see me. I approached the insurer on his behalf and met with the legal advisor and the claims manager. I warned them about the flimsiness of their case, but my cautioning fell on deaf ears. I was sent away, and departed with their statement ringing in my ears: ‘We are quite confident about our case and we will be happy to see you in court.’ My reply to them had been, ‘So be it, but when you hit problems in the court case, don’t cry. You are big boys.’

  The insurers seemed to try their level best to make this case as difficult as possible. The first hurdle we had to overcome was their denial that Collison was insured with them – they claimed that they had not been receiving premiums! This was purely a tactical move, and in any other situation it would clearly be called dishonest. They were quite capable of checking their records to see that Collison had been paying premiums. However, to the dismay of the insurance company, Collison was made of sterner stuff than they had anticipated, and he emerged from the gruelling cross-examination on the first day having proved that he was, in fact, a client of theirs.

  That afternoon, at close of play, the insurers again took us by surprise. They had sent out their expert to gather more evidence, and he arrived back at court and presented us with a new bundle of photographs that we would have to consider before the case resumed the next morning. This was not proper in terms of the rules of evidence, which expressly forbids this type of ambush tactic.

  Collison was running his case on a shoestring budget. Although he was well within his rights to insist on a postponement at the insurer’s cost, both he and they knew that we did not have the funds to pay for an entire rerun of the proceedings at some later date. We elected to continue.

  I looked at the photographs in court when they were given to us that afternoon, and then, in a voice loud enough to be heard by the insurance company’s representatives and their lawyers, I said to Collison’s legal counsel, ‘John, please thank them. They have unwittingly provided me with more evidence that refutes their case and they have saved me a trip back to the scene.’ There was wide-eyed silence from the opposing team.

  The next morning, the advocate acting for the insurers came sidling up to our lawyers and asked for a second experts meeting. I readily agreed, insisting that no lawyers be present.

  Their expert had made a complete hash of his investigation. He asked me if we could work this out, and in the spirit of proper expert cooperation – noticeably lacking from the insurers up to that point – their expert and I drew up a new expert minute that put their case in an entirely different light. Their expert backed down completely from the view that was contained in the court papers. We went into court and recorded that the insurers had conceded the merits of the case.

  After emerging from the courtroom, the insurer’s legal advisor was standing outside, and there was some tension between us. In later years, we mellowed and we can be quite civil to each other. In fact, on the rare occcasion he even recommends my services to various people, as long as they are not clients of his insurance company!

  This case is just another shameful example of the behaviour of industry leaders. One would have expected them to show some remorse. Not so. This insurance company proceeded to offer Collison R750 000 in full and final settlement, despite the fact that they had valued the property at R2.2 million. They were banking on the fact that Collison would be unable to fight a protracted and unfair court battle to get what was rightfully his. No amount of correspondence and discussion by Collison’s attorney would move them.

  Finally, in desperation, Collison turned to me again, and I called the overconfident claims manager once more. The conversation went roughly along the following lines: ‘I have,’ I said, ‘a tape recording of a conversation between a member of your staff and Mr Collison. I am not a lawyer, so I called my friend, the Deputy Attorney-General, and he tells me that this attempt to get Collison to withdraw amounts to extortion. I am giving you an opportunity to persuade me why I should not discuss this live on radio.’

  There was a prolonged silence, followed by the plaintive response, ‘Well, it would be very bad for the company.’

  A meeting was set up between us for early the following week, and a much more equitable settlement was reached.

  To date, I have dealt with about 1 800 cases, and the experience has done little to diminish my cynicism regarding the so-called ‘captains of industry’.

  The insurance industry is organised on a number of levels. There is the central managerial section, under which falls the underwriting department, whose function is to evaluate the risk to be insured and to assess a fair value for the premium. The underwriters are supposed to take into account all the risk factors and problems at the onset of the insurance contract.

  Then there is the claims department, which deals with and processes all the claims that are lodged with the company. Claims and underwriting should function as a harmonious whole. When a claim is lodged, the company appoints a loss adjuster to investigate the claim. These loss adjusters claim to be independent and to act fairly to adjudicate the claim, but this does not happen in practice. The loss-adjusting fraternity – like many forensic investigators – is critically dependent on the goodwill of the insurance companies, whi
ch leads to the loss adjusters grovelling at the feet of the insurers to retain their goodwill. This often results in the insured being short-changed. I have been embarrassed to see the abject servility exhibited by some of these loss adjusters when dealing with their principals, the insurance companies. There are some loss adjusters, of course, who do not exhibit such servile behaviour, but they are not in the majority.

  I realised this fairly early on in my dealings with the insurance giants. When I started my consulting career, there were approximately forty different short-term insurance companies doing business in South Africa. This number has dwindled over the years; there are now only about five large players. The effect on customer choice, support and, above all, equity, has been devastating. Although difficult to prove, I believe that there is collusion between the large role players and, at the end of the day, the client is the one who suffers.

  I have tried to bring this to the attention of the large insurance companies. I have given numerous talks at their congresses and also at several high-placed meetings, such as the Thursday Club, a monthly gathering of senior managers from the industry at which they discuss relevant issues. All of this has been to no avail. Money and power, as I have mentioned, are an evil combination.

  In the early hours of the morning of 21 October 1994, a fire gutted a small family business in Brakpan – Brakpan Superette – leaving severe fire and smoke damage in its wake. The owners, two Greek brothers, had worked late the previous evening and, some time before leaving the shop at about 10 p.m., they had deep-fried some potato chips.

  I was called to the fire the very next day by Commercial Union Insurance. Peter Evans, the former claims manager, would use no one but me. Peter was a straightforward person and wonderfully fair, who always said to me, ‘Give me a reason to pay the claim.’ He liked the way I worked. I would present him with a full exposé on what I had found, a report with all the details – both the good and the bad. By this stage, Peter had retired and been replaced with Hugh Gardiner.

  I found a typical single-source fire that had started in the region of the chip fryer and had spread to the adjacent aisle. The rest of the damage to the shop was purely smoke damage.

  In any fire investigation, if the cause is claimed to be innocent, that must be taken seriously until other compelling evidence emerges. There was no evidence to the contrary in my view: my report reflected that the fire had been caused by the chip fryer, which had been left switched on.

  About two weeks later, I received a phone call from Commercial Union’s new claims manager, Hugh Gardiner, to say that he had obtained two other expert reports that disagreed with mine. He sent these reports to me, and I spent an entire Saturday perusing them and writing a report on them. I disagreed with the two other experts, and motivated my reasons in the report. All the role players were called to a meeting at Commercial Union, where the matter was discussed. Certain observations of mine were challenged by a loss adjuster called Basil Pahl. The upshot of the meeting was that we all reconvened at the burnt-out premises, where we established that my observations were correct.

  After another two weeks, I received a phone call from the claims manager to say that it was a case of ‘two against one’ and that they were going with the numbers. I replied that I was naturally disappointed, but asked if they would release me from the case, seeing as they thought I was wrong. I gave them an undertaking that I would not approach the insured, but we agreed that if I were to be approached, I would take the case. My words to Gardiner were, ‘Let us all get into the ring and box and see who will win.’

  My wife was outraged by the behaviour of the insurers, and urged me to proactively fight the case. I resisted the temptation and waited. I was eventually approached by the insured, and two years later, the matter came to trial. The crux of the matter was now whether there had been a single fire or two fires. Two fires would have meant that it was a deliberate burning. In court, my expert opponent from the CSIR claimed that the fire could not have spread across the aisle.

  Anyone who has been in a supermarket would know that the aisles are often festooned with brightly coloured bunting that hangs across the ceiling. My view was that the bunting over the chip fryer had caught alight and burnt across until it had burnt through and fallen into the second aisle, causing the fire to spread (see photo). I had several photographs of the burnt bunting in the appropriate places across the aisle and, to make doubly certain, I purchased two rolls of the bunting from Koo products in Midrand.

  I took my son, James, who was four at the time, to the Brixton Fire Brigade, where we tested my theory. He had dressed up in fireman boots and a helmet, and was very excited about the visit!

  At the fire brigade’s premises, I festooned the firehouse with the bunting, set a fire under it and sat back to photograph it as it caught alight. The streamers behaved exactly as I had predicted. Armed with this evidence, I returned to my laboratory to write the report for the court proceedings.

  The counsel for the supermarket owner was Bernard Ancer. He and I were having a drink in chambers the night before the court case when in walked Johann Strauss, who was acting for the insurance company. Their expert had scorned my explanation of how the fire could have spread across the aisle. He had reasoned that the bunting was made of plastic and would have melted at temperatures well below those needed to ignite them. It was a good theory, but completely wrong.

  Strauss joined us, and I felt it perhaps appropriate to spare him some humiliation the next day. I happened to have some bunting flags with me, and in a spirit of mischievousness, I suggested to Strauss that he tear one of them in half. He did so, and to his dismay he discovered that they were not made of plastic, but of paper. That was the end of the case. He could not go into court with an ‘expert witness’ who had failed to notice such a basic thing, and he advised his client to settle the matter immediately. It was settled that evening, and Commercial Union ultimately paid about twice as much money for costs as they would have paid had they settled the case in the first place.

  I always believe in going the extra mile – putting in that little bit more effort, digging that extra area or taking additional samples. This story illustrates perfectly the dangers of theory over practical experiment, and also demonstrates the nature of insurance company thinking. I had believed that the insurers in this matter would have learnt their lesson, yet they chose to ignore my advice and made utter fools of themselves. They never briefed me again. I was hurt at the time, but as time passed, I realised that it was good riddance.

  I learnt afterwards that Peter Evans, when he heard that Hugh Gardiner had gone with the other experts against me, took him on before the court case and bet him ten rand that he would lose against me!

  In all fairness, evidence left by a fire can be misinterpreted if one does not have enough experience in this field. Low burns, for example, do not always indicate foul play. In other instances, traces of certain substances found at the scene that seem to be the source of a fire may have been introduced only afterwards: firemen may have traipsed through a fire scene carrying flammable substances on their boots; or the water they used to douse the flames could have carried flammable substances. One has to be very cautious about approaching the evidence at a fire scene, as it is easy to make mistakes or become confused.

  This kind of confusion was well illustrated in the case of the Buccaneer Shoes factory fire. The factory is based in Maitland, Cape Town, and, as the name suggests, it manufactures shoes. On 5 May 2003, the factory burnt down, and it was alleged that the managing director had paid two of his employees to set the place alight. Three sets of experts ended up investigating the scene – one from the police, one from the insurance company, Mutual & Federal, and me. I was acting on behalf of the managing director.

  Each expert had his or her own interpretation of the fire scene. Theresa Bester from the police said that there had been five separate fires. The insurance expert said that there had been four fires in completely different places, whic
h did not correspond with the police findings. A so-called ‘arsonist’ had made a statement containing much of what the insurance investigators wanted. This statement had been made under duress, but, even so, the place where he had admitted to setting the fire did not correspond to where the police and CSIR expert alleged it had been found. In the end, the prosecutor did not rely on the state forensic expert. This is rare, as generally the state would go to great lengths to protect their own expert.

  The truth was that the Buccaneer factory blaze had been a single-source fire. Advocate William King, who was representing the managing director of Buccaneer, brought me in to investigate. It could be shown quite clearly that there had been only one fire. There was clear evidence of the so-called ‘arsonist’.

  It eventually came out that one of the workers on the factory floor had started the fire. He, in fact, was never prosecuted, as he turned state witness. He admitted to deliberately starting the fire, and another arsonist who was not a state witness said that they had started the fire to cover their tracks: they had been stealing components of shoes – soles and uppers – and would take them home, glue them together and sell them to craft markets and other outlets. In no instance did they involve the head of the factory. The managing director was acquitted. Mutual & Federal, in trying to avoid paying the claim, had alleged that Buccaneer was on the brink of financial ruin. At the end of the day, the full claim was not paid out, yet the business is still in operation today.

  A fire in which the rage of controversy is almost as hot as the flames is that of the Paarl Print factory. Just before 8 a.m. on 17 April 2009, a devastating fire broke out at Paarl Print in the Western Cape. Employees felt and heard a shock wave and then saw a wall of flame spread across the entire roof of the 300-metre building in a matter of seconds.

  The building housed offices, printing equipment, a bindery and a storage area, and of the 300 employees, around 150 were on the premises at the time of the fire. Many were trapped inside: thirteen people died as a result of smoke inhalation, and many more were injured. Firefighters battled the blaze for hours, and by 1 p.m. it was under control. The entire building had been gutted.