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1986
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[1986] ZASCA 76
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Malilang and Others v MV Houda Pearl (84/86) [1986] ZASCA 76; [1986] 2 All SA 579 (A) (19 June 1986)
I
N THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE DIVISION)
In the matter between:
ROBERTO R MALILANG
1st appellant,
RODOLFO B VALDECANTOS
2nd appellant,
ANTON A ASAULA
3rd appellant
and
MV "HOUDA PEARL"
respondent
Coram
; CORBETT, MILLER, BOTHA et HEFER JJA, et NICHOLAS
AJA.
Date of Hearing
: 12 November
Date of Judgment:
19-6-1986
JUDGMENT CORBETT JA
In this matter the proceedings in the Court a
quo (the Natal Provincial Division, sitting as a Court of Admiralty in terms of
the
Colonial Courts of Admiralty Act, 1890 (32 and 54 Vict. Ch 27) ) took the
form of a
/ consolidated
2
consolidated action in
rem,
in which a number of seamen,
including the three appellants, claimed wages due to them
by the owner of the MV
Houda Pearl
. The trial Judge gave
judgment for the defendant with costs. Leave having been granted, the
appellants appealed to this Court. On 27 February 1986 this
Court gave judgment
("the main judgment" ) allowing the appeal with costs and setting aside the
order of the Court a
quo
. Difficulty was encountered, however, with
regard to the order to be substituted for that of the Court a
quo
,
inasmuch as appellants claims, as formulated in their joint petition, were
expressed in US dollars. This raised the following points:
(a) Whether it was competent and proper for this Court, sitting as a court of
appeal in an admiralty action i
n
rem
, to make an order for the
payment of the amounts due in US dollars or whether the order should be
expressed in rand;
/ (b)
2 (a)
(b) If the latter be the proper form of the order.
(i) with reference to what date or dates
the conversion of the claims expressed in US dollars into rand should be
made; and
(ii) who should undertake the conversion,
bearing in
mind that this entails ascertaining the rate of exchange (or mean rate of
exchange) on the relevant date or dates.
Since these matters had not been canvassed at
the
hearing of the appeal, the order of the Court of 2 7 February 1986 made
provision, in the event of the parties failing to reach
a written agreement (to
be filed) as to the form and content of the order to be substituted for that of
the Court
a
quo,
for the filing of written submissions on these
points. The order further provided that after having received the written
agreement
or written submissions, as they case may be, this Court would
formulate and pronounce the order to be substituted for that of the
Court a
quo
.
/ In
3
In the event no such agreement was reached and written submissions have been
submitted. Appellants contend that the judgment in their
favour should be
expressed in US dollars; that they should be entitled to recover the equivalent
in rand as at the date of payment;
and that this equivalent as at the date of
payment should be determined by the Registrar (presumably the Registrar of the
Natal Provincial
Division). Respondent,
on the other hand., contends that the
judgment should be
expressed in rand and that appellants' claims should be
converted into rand as at the date upon which they arose. No submission is
made
as to who. should be responsible for making the conversions.
As pointed out in the main judgment
,
the
law
to be applied by the Court a quo and this Court
is English admiralty law as administered by the English High Court exercising
admiralty
jurisdiction in 1890. It was
/ further
4
further stated in the main judgment:
"In the judgment a
quo
(at p 426 A) it was stated that the court does
have regard to decisions of the English Courts subsequent to 1890 which expound
the
common law with restrospective effect. On appeal this was accepted by
counsel as a correct statement of the legal position. As regards
subsequent
decisions which clearly expound or clarify the common law and show it as it
always has been the statement is unexceptionable.
But occasionally decisions in
reality change the law and I would prefer at this stage to leave open the
approach to such a decision
where it deals, after 1890, with admiralty
law."
This brings me to the decision of the House of
Lords
in
Miliangos v George Frank (Textiles) Ltd
1976 AC 443
Prior to this
decision the established rules of English law, entrenched by at least two
earlier decisions of the House of Lords (see
SS Celia v SS Volturno
[l92l]
2 AC 544
;
In re United Railways of Havana and Regla Warehouses Ltd
[1961 ] AC 1007 ) , were (i) that an English court could not give judgment
for the payment of an amount in foreign currency and for
the purpose of
litigation in England a
/ debt
5
debt expressed in a foreign currency had to be converted into sterling
(sometimes termed "the sterling-judgment rule"), and (ii) that
such conversion
had to be made with reference to the rate of exchange prevailing on the day when
the debt was payable (sometimes
termed "the breach-date rule"). These rules were
ancient in origin - in the
Havana
case (at pp 1043-4) Viscount SIMONDS
referred to a decision dating back to 1626 - and had been consistently observed.
They were settled
rules which bound all courts (see H
avana
case,
supra
, at pp 1048-9). In the
Miliangos case
supra
, the
House of Lords, by a majority (Lord SIMON of GLAISDALE dissenting) held that
where a plaintiff brought an action for a sum of
money due under a contract he
was entitled to. claim and obtain judgment for the amount of the debt expressed
in the currency of
a foreign country if the proper law of the contract was the
law of that country and the money of account and payment was that of
the same
country. It was further held that, if it was
/ necessary
6
necessary to enforce the judgment
,
the amount in foreign currency
was to be converted into sterling at the date when leave was given to enforce
the judgment.. In coming
to this decision the House, in the exercise of the
power to depart from its previous decisions affirmed in 1966 (prior to that the
practice was to adhere to previous decisions), decided not to follow the
decision in the
Havana
case.
In the speeches of the Law Lords who formed the majority in the
Miliangos
case various reasons were given for departing from the ruling
in the Havana case and the long-standing principles upon which it was
based. One
of these related to currency stability. As Lord WILBER-
FORCE put it (at p
463 F-G) —
"The situation as regards currency stability has substantially changed even
since 1961. Instead of the main world currencies being
fixed and fairly stable
in value, subject to the risk of periodic re- or devaluations, many of them are
now 'floating', i.e.they
have no fixed exchange value from day to day. This is
true of sterling. This means that,
/
instead
7
instead of a situation in which changes of relative value occurred between the
'breach date' and the date of judgment or payment
being the exception, so that a
rule which did not provide for this case could be generally fair, this situation
is now the rule.
So the search for a formula to deal with it becomes urgent in
the interest of justice."
The same
point was made by Lord CROSS of CHELSEA (at p 497 E-F), Lord EDMUND-DAVIES (at p
501 D-E) and Lord FRASER of TULLYBELTON
(at p 502 B-D). Both Lord CROSS and Lord
EDMUND DAVIES emphasized the change which had come over the foreign exchange
situation generally
and the position of sterling in particular in the 15 years
since the decision in the
Havana
case.
In his powerfully worded dissent Lord SIMON argued that (at p 482 B)
—
" it was a most unsuitable case
for a revolutionary change in the law to be undertaken by judges."
He stated that his reasons for not agreeing with his
/ colleagues
8
colleagues could be summarized in two sentences (see p 480 B):
"First, I do not think that this is a 'law reform' which should or can properly
be imposed by judges; it is, on the contrary, essentially
a decision which
demands a far wider range of review than is available to courts following our
traditional and valuable adversary
system — the sort of review compassed
by an interdepartmental committee. Secondly, your Lordships' predecessors have
wisely
set limits on the use of the power to overrule previous decisions of your
Lordships' House; and no sufficient reason has, in my view,
been shown for
overruling the
Havana
decision."
In his speech he referred to
the decision of the majority as amounting to "radical law reform" and likened it
to legislation. He said
(at p 481 A-B) —
"The instant appeal raises questions the answer to which imperatively demands
the contribution of expertise from far out-
/side
8
side the law — on monetary theory, public finance, international finance,
commerce, industry, economics — for which judges
have no training and no
special qualification merely by their aptitude for judicial office. All such
experience as I have had of
decision-making within and without the law convinces
me that the resolution of this issue demands a far greater range of advice and
a
far more generally based knowledge than is available to a court of law —
even one assisted, as we have been, by the most
meticulous, cogent and profound
argument of counsel. Law is too serious a matter to be left exclusively to
judges."
The merits and demerits of the
majority decision in the
Miliangos
case do not, of course, concern us.
What has to be decided is whether a South African Court of Admiralty, exercising
jurisdiction
in terms of the Colonial Courts of Admiralty Act 1890, which
requires that the court should apply English admiralty law as administered
by
the English High Court exercising jurisdiction in 1890, should
/ follow
10
follow the long-standing rules spelt out in the
Havana
decision or the
new rules laid down in the
Miliangos
case.
In my opinion, a South African Court of Admiralty should follow the rules in
the
Havana
decision, suitably adapted by the substitution of South
African currency for sterling. Although in an "afterword" to his speech in
the
Miliangos
case Lord SIMON stated that the overruling of
Havana
(see p 490 D) —
" involves that the law must be
deemed always to have been as my noble and learned friends now declare
it".
I think it would be wholly unrealistic to regard the
Miliangos
decision, which relates essentially to matters of a procedural nature, as
representing the law and practice
current in the English Court of Admiralty in the year
1890. It is clear from the speeches in the
Miliangos
case that the decision represented a radical (perhaps
"revolutionary") departure from well-established rules of practice and that
the decision (regarded by Lord SIMON
/ as
11
as going beyond the legitimate scope of law reform by the judiciary) was
dictated largely by changed conditions in the realm of exchange
rates and
international currency stability, even since 1961, when the
Havana
case
was decided.
Accordingly, I hold that in the present
case
judgment should be expressed in rand. The
application of the breach-date rule, however, poses problems. The case of each
of the appellants
is that over the period 1 February 1979 to 15 March 1980 he
received less than was his due in terms of his ITF contract. In the petition
there is a calculation in respect of each of the appellants showing the total
amounts due in respect of wages, overtime, Saturday
and Sunday work, holiday
pay, leave pay and subsistence and the amounts actually received by way of
wages, overtime pay, subsistence
and leave pay, the difference representing the
appellants'
/ claim.
11a
as going beyond the legitimate scope of law reform by the judiciary) was
dictated largely by changed conditions in the realm of exchange
rates and
international currency stability, even since 1961, when the
Havana
case
was decided.
Accordingly, I hold that in the present case judgment should be expressed in
rand. The application
of the breach-date rule, however, poses problems. The
case of each of the appellants is that over the period 1 February 1979 to 15
March 1980 he received less than was his due in terms
of his 1TF contract. In
the petition there is a calculation in respect of each of the appellants showing
the total amounts due in
respect of wages, overtime, Saturday and Sunday work,
holiday pay, leave pay and subsistence and the amounts actually received by
way
of wages, overtime pay, subsistence and leave pay, the difference representing
the appellants'
/ claim
12
claim. The amounts claimed by the individual appellants, in terms of the
petition were:
First appellant US $22 626,70 Second appellant US $22 724,8l Third appellant US
$30
656,15
As appears from the
judgment of the trial Court (see reported judgment
1983 (3) SA 421
(N), at p 422
E-F), by the time the matter came to trial the quantum of the claims had been
agreed as follows:
First appellant US $19 633,20 Second appellant US $21 289,20 Third appellant US
$29 331,00
In terms of their contracts
the appellants were paid monthly . Consequently in order to apply the
breach-date rule it would be necessary
to know the shortfall in wages paid at
the end of each month. While it might be possible to calculate the monthly
shortfall in respect
of some of the items, I have difficulty in correlating
other figures. Moreover, the agreed claims are in
toto
substantially less
/ than
13
than the claims as put forward in the petition and there is no way of
ascertaining where the reductions should be made on a monthly
basis. In
addition, even if the exact monthly shortfall figures had been established, the
procedure of ascertaining and applying
a separate dollar/ rand conversion rate
for each monthly amount would be a complicated and cumbersome one. Though
normally the breach-date
rule should be adhered to in cases of this nature, in
the particular circumstances of this case it is not possible on the information
available to the Court to do so. Consequently,
an alternative ad
hoc
basis of calculation must be devised. Having considered all aspects
of the matter, I am of the view that the claim of each appellant
should be
regarded as a single globular amount, as quantified by the above-mentioned
agreement; and that the date of conversion should
be 15 March 1980
,
the
last day of the period which formed the basis of the appellants' claims.
And
;
in my opinion, the conversion
/ should