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[2013] ZASCA 18
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Lykes Lines Ltd, LCC v Vereeniging Meat Packers (Pty) Ltd (279/2012) [2013] ZASCA 18 (20 March 2013)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 279/2012
Not Reportable
In the matter between:
LYKES LINES LIMITED, LLC
..............................................
APPELLANT
and
VEREENIGING MEAT PACKERS (PTY)
LTD
................
RESPONDENT
Neutral citation:
Lykes
Lines Ltd v Vereeniging Meat Packers
(279/2012)
[2013] ZASCA 18
(20 March 2013)
Coram:
Mthiyane DP, Brand,
Petse JJA, Schoeman and Erasmus AJJA
Heard: 25 February 2013
Delivered: 20 March 2013
Summary:
Breach of
Contract ─ Shipping line claiming damages for non-return of
container ─ Shipping line failing to prove that
it suffered
damages ─ appeal dismissed with costs.
_____________________________________________________________________
ORDER
On appeal from:
KwaZulu-Natal
High Court, Pietermaritzburg (Balton, Sishi JJ and Moodley AJ sitting
as court of appeal):
The appeal is dismissed with
costs.
___________________________________________________________
JUDGMENT
MTHIYANE DP (BRAND, PETSE JJA,
SCHOEMAN AND ERASMUS AJJA CONCURRING)
[1] This is an appeal against a
judgment of the full court of the KwaZulu-Natal High Court (Balton J,
with Sishi J and Moodley AJ
concurring) allowing an appeal from the
decision of a single judge, Swain J in favour of the appellant. The
appeal is concerned
with a claim by the appellant for damages against
the respondent arising out of the loss of a reefer container which
was being
conveyed by the appellant from Montreal, Canada to the port
of Durban in terms of a contract of carriage, more fully described in
the Bill of Lading.
[2] The appellant is a registered
company based in the United States of America where it carries on
business as an ocean carrier.
The respondent, Vereeniging Meat
Packers (Pty) Ltd, is a South African company which produces
processed meats of which turkey skins
are an ingredient. At the time
the reefer container was full of frozen turkey skins. The respondent
located some of these turkey
skins in Canada and arranged for their
transportation to the City Deep Cold Storage, in City Deep,
Johannesburg.
[3] In terms of the parties’
contract of carriage the appellant received a reefer container for
ocean carriage from Montreal,
Canada, on board the
MV Lykes Runner
to the port of Durban. The terms of the carriage were subject to the
carrier’s conditions printed on the reverse of the Bill
of
Lading. In terms of clause 6(b)(1) thereof:
‘─
If
Containers supplied by or for the Carrier are unpacked at the
Merchant’s premises, the Merchant is responsible for returning
the empty Container in working condition with interiors brushed and
cleaned. The Containers must be returned to the point or place
designated by the Carrier within the time prescribed failing which
the Merchant will be liable for all resulting direct, incidental
and
consequential damages including demurrage, detention and per diem
charges, however designated.’
[4] On discharge of the container
in the port of Durban, the respondent’s clearing agent, Impson
Freight (Pty) Ltd (Impson),
presented the original Bill of Lading to
the appellant, took delivery of the container, arranged for its
transportation to the
respondent’s premises, at the City Deep
Cold Storage. On the respondent’s instructions Impson arranged
for the container
to be conveyed by merchant haulage, that is by a
road haulier which had to uplift it from the port and deliver it to
the respondent,
as the importer. Impson outsourced the transportation
of the container to Pascal Logistics, which arranged for a truck to
convey
the container to the respondent’s premises. In terms of
the contract the respondent ‘undertook to turn the empty
container
into the [appellant’s] depot for empty containers’.
The container was unfortunately not returned to the appellant. It
transpired that the truck transporting the container was hi-jacked en
route from Durban to the respondent’s premises and
the
container was stolen.
[5] The appellant was not the
owner or lessee of the container. In reply to the respondent’s
request for further particulars
for trial as to the identity of the
owner of the reefer container the appellant averred that GE SeaCo was
the owner and that it
was ‘the person in whom the risk in the
container was vested’. The container had been leased by CP
Ships (UK) Limited
(CP Ships) from its owner, GE SeaCo Services
Limited (GE SeaCo). The appellant is a subsidiary of CP Ships. CP
Ships reimbursed
GE SeaCo for the loss by payment of the sum of US$21
601.25. In terms of a certain internal arrangement involving certain
book
entries CP Ships debited the appellant with the amount of the
loss, on the basis that it was the shipping line within its group
that had carried the container immediately prior to its loss.
[6] The question which is before
this court, with its special leave, is whether the appellant has
proved that it has suffered loss
as a result of the loss or theft of
the container. Put differently, the question is whether the
allocation of the loss in terms
of the aforesaid internal arrangement
vested the appellant with the right to recover from the respondent,
the loss it claims to
have suffered as a result of the non-return of
the container. At the trial in the high court Swain J found for the
appellant and
granted judgment against the respondent in the sum of
US$21 601.25 being the replacement value of the container. The
respondent
successfully appealed to the full court which substituted
the trial court’s judgment with an order dismissing the
appellants
claim with costs.
[7] The appellant’s claim
was based on clause 6(b)(1) of the Bill of Lading. It sued for breach
of contract arising out of
the respondent’s failure to return
the container and for the value of the container in the sum of US$21
601.25. The respondent
disputed the claim primarily on the basis that
the appellant did not have locus standi to sue and that the appellant
had not proved
that it was the entity that bore the risk of loss in
respect of the container.
[8] In the appeal before us the
question is still whether the appellant proved that it suffered
damages consequent upon the loss
of or the non-return of the
container and whether the evidence led by the appellant of the
so-called internal arrangement was sufficient
to indicate that the
appellant bore the risk of loss of the container at the time of its
loss or theft in the hi-jacking incident.
[9] At the trial Swain J
identified two issues as material to the determination of the dispute
between the parties. The first was
whether the appellant had
established locus standi (standing) and the second was whether on a
correct interpretation of clause
6(b)(1) of the Bill of Lading the
respondent was liable to compensate the appellant for the financial
loss it suffered as a result
of the non-return of the container. The
court noted that the real issue in the case was whether the appellant
has established that
it suffered the financial loss, occasioned by
the loss of the container in terms of the ‘internal
arrangement’ between
CP Ships, Container Equipment Leasing
(CEL) and the appellant. As already indicated the appellant was
neither the owner nor the
lessee of the reefer container but relied
for its right to claim solely on a certain ‘internal
arrangement’ in terms
of which the loss of the container was
allocated to it by CP Ships.
[10] The internal arrangement
testified to by the appellant’s witness Mr TJ Phillips insofar
as it related to the leasing
of the container in question was to the
following effect. GE SeaCo was the owner of the container. It
concluded a lease agreement
with CEL, which was a leasing entity for
CP Ships. All containers leased to CP Ships were done through CEL.
CEL, a subsidiary of
CP Ships was set up in order to source all the
containers needed for CP Ships and all the other various lines within
its group.
If a leased container was lost or damaged CP Ships would
pay the leasing company (in this case GE SeaCo) on behalf of CEL and
then
the individual line in this case, the appellant, Lykes Lines,
would be debited by CP Ships internally. In terms of this internal
arrangement CP Ships allocated the loss of the container to the line
that was in fact carrying the container at the time.
[11] During cross-examination by
the counsel for the respondent, Mr Shepstone, Mr Phillips was asked
whether the appellant was in
possession of any document that
‘evidences or records such an internal arrangement’. He
initially said that there would
be one but later positively asserted:
‘yes there is’. The document was never produced. In
response to a question by
Swain J whether the container was to be
understood as having been leased by CEL to the appellant, Mr Phillips
merely reiterated
that the arrangement ‘was part of the
operating procedures between the various companies’.
[12] The question still remains
whether there was any legal basis for the holding company, CP Ships
to atrribute to the appellant,
the loss accruing initially to CEL,
namely the US$21 601.25 incurred as a result of the loss of the
container. The appellant bore
the onus of showing that it it bore the
risk of loss at the relevant time and that it had ‘suffered
damages pursuant to a
legally binding agreement’. The full
court noted that for there to have been an enforceable contract, the
appellant was burdened
with the onus to prove that the parties had
intended that their consensus should give rise to legally enforceable
obligations,
that is, that the parties should have had animus
contrahendi (intention to contract). (See
Minister of Home Affairs
& another v American Ninja TV Partnership & another
[1992] ZASCA 164
;
1993
(1) SA 257
(A). An agreement will constitute a contract only if the
parties intend to create an obligation or obligations. If this
intention
is present the agreement is said to be valid in the eyes of
the law. (See Van der Merwe et al
Contract: General Principles
4 ed p 7) The evidence of Mr Phillips as to the internal arrangement
indicates how the loss was distributed by CEL amongst its
subsidiaries and ultimately to the end entity, in this cases the
appellant. There is however no proof that this was done in terms
of a
binding contract between CEL and the appellant. On the evidence the
internal arrangement appears to be no more than inter-corporate
mutual dealings not in themselves creating legal liability but
resulting rather in no more than a non-binding agreement often
described as a ‘gentlemen’s agreement’. (See
Christies
The Law of Contract in South Africa
6 ed p 94) To
illustrate the point, when Mr Phillips was questioned by the
respondent’s counsel, Mr Shepstone, as to whether
there was any
separate lease agreement between CP Ships or CEL and the appellant,
he simply said ‘it was merely this internal
understanding.’
He further stated that none of the subsidiaries could, through this
internal arrangement, dictate as to who
would bear the loss. He said:
‘there was no dictating. It was per operating procedures.’
Clearly under these circumstances
it cannot be said that there was a
legally enforceable agreement in place entitling the appellant to
claim for the loss of the
container.
[13] I conclude therefore that
the appellant has not proved on a balance of probability that it
suffered any loss as a result of
the loss or theft of the container.
The evidence of Mr Phillips, which was presented on the appellant’s
behalf in respect
of the ‘internal arrangement’ was
insufficient to discharge the onus resting on the appellant as it
does not amount
to evidence of a legally binding obligation on the
part of the appellant to pay for the loss of the container.
[14] The above finding renders it
unnecessary to traverse other issues arising in this appeal. As to
costs, the respondent was represented
by two counsel on appeal and
had asked for costs of two counsel in its heads. But on appeal it was
conceded, correctly, in my view,
that the employment of two counsel
was not warranted.
[15] In the result the following
order is made.
The appeal is dismissed with
costs.
______________________
K K MTHIYANE
DEPUTY PRESIDENT
APPEARANCES
For Appellant: SR Mullins SC
Instructed by:
Shepstone & Wylie Attorneys,
Durban
Matsepes, Bloemfontein
For Respondent: PF Louw SC (with
him HA van der Merwe)
Instructed by:
Senekal Simmonds, Johannesburg
Schoeman Maree Inc, Bloemfontein