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[1986] ZASCA 127
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Incorporated General Insurance Ltd v Fisheries (133/86) [1986] ZASCA 127 (20 November 1986)
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter of:
INCORPORATED GENERAL INSURANCES LTD
....appellant
and
A.R. SHOOTER t/a SHOOTER'S
FISHERIES
....respondent
Coram
: RABIE CJ,
JANSEN, VILJOEN, VAN HEERDEN JJA,
et
GALGUT AJA.
Date of Hearing
: 15 August 1986.
Date of Judgment
: 20 November
1986
JUDGMENT
GALGUT
AJA:
This is an appeal from a judgment of FRIEDMAN J sitting in the Durban and
Coast Local Division in which he gave judgment in favour
of the respondent
(plaintiff in that Court) in the sum of R300 000 plus interest and
/ costs
2
costs of suit. That judgment is reported as
Shooter tradin
g
as
Shooter's Pisheries v Incorporated General Insurances Ltd
1984 (4) SA 269
(D). I shall refer to it as the reported judgment. The facts pursuant to which
the action was instituted are set out at p 271 D to
272 H. The legal issues
canvassed in that Court are fully set out in the judgment. I will, therefore,
set out only so much as is
necessary to facilitate the reading of this judgment
and will confine myself to the submissions made in this Court.
I shall refer to the appellant as the defendant and the respondent as the
plaintiff. The plaintiff was the owner of a fishing trawler,
the "Morning Star".
On 12 April 1983 whilst it was trawling for fish near Maputo harbour it was
intercepted by two trawlers of the
People's Republic of Mozambique (Mozambican
Government) and taken in-to Maputo harbour. The skipper and engineer were
there-after
brought before a tribunal. They were prosecuted on
/ a
3 a charge of illegal fishing. It is not clear whether the charge
was that they had fished illegally within Mozambican territorial
waters, ie,
within 12 nautical miles from the Mozambican coast or fished illegally within
the declared Mozambican exclusive economic
zone, ie, within 200 nautical miles
off the Mozambican coast. They were found guilty and fined the equivalent of
R167 000. They were
advised that if the fine was not paid within 15 days the
trawler would be confiscated.
There were in existence at the time two insurance policies, each for R300
000, issued by the defendant as insurer. These policies
were referred to as the
"Hull" policy and the "War Risks" policy in the Court
a quo
.
Neither the skipper nor the engineer was able to pay the fine. The plaintiff
also was unable to pay it. He endéavoured to persuade
the defendant to
pay it and thereby obtain the release of the vessel. This the
/ defendant
4 defendant refused to do alleging that it was under no
obligation to do so and also that in any event no lia-bility attached to it
in
respect of the seizure of the trawler under either policy. In the result the
fine was not paid and the trawler was confiscated.
It was sold, so the evidence
indicates, to "the Spaniards".
Plaintiff sued the defendant and obtained judg-ment for R300 000 being the
insured value of the trawler.
The appeal is against the whole of the judgment.
The Admiralty Jurisdiction Regulation Act No 105
of 1983 ("the Act") provides for "the vesting of the powers
of the
Admiralty Courts of the Republic in the provincial
and local divisions of the
Supreme Court of South Africa".
Sec. 2 provides that these courts have
jurisdiction to
hear and determine any maritime claim. A claim relating
to
marine insurance is a maritime claim - see sec. l(r).
Hence the Court
a
quo
had jurisdiction to deal with the
/ matter
5
matter.
The two policies with which we are concerned
follow
the standard wording of the Lloyds S-G policy which
until recently had been
used in the United Kingdom and
internationally for over 200 years. The
wording is in
many respects archaic. The defendant carries on business
and
has its registered office in Johannesburg. The plain-
tiff carries on his
business in Durban, In terms of sec.
6(1)(b) of the Act, the law to be
applied by a Court in
the exercise of its admiralty jurisdiction is the
Roman-
Dutch law applicable in the Republic. Sec 63(1) of the
Insurance
Act No 27 of 1943 reads:
"(1) The owner of a domestic policyissued after the first day of January,
1924, shall, notwithstanding any contrary provision in the
policy or in any
agreement relating thereto, be entitled to enforce his rights under the policy
against the insurer concerned in
any court of competent jurisdiction in the
Re-public, and any question of law arising from any such policy shall be decided
accord-ing
to the law of the Republic:
/ Provided
6
Provided that such a policy may validly provide that the amount of any
liability under the policy shall be determined by arbitration
in the Republic,
if the insurer demands that the said amount be so determined."
The two policies in this case are domestic policies - see the definition in
sec. 1 of the said Act. In
Black-shaws (Pty) Ltd v Constantia Insurance Co
Ltd
1983 (1) SA 120
(A) at p 126 F it was said that the interpretation of
the clauses in an insurance policy is, generally speaking a question of law.
It
follows that in interpreting the policies the law to be applied is the Roman
Dutch law but that English decisions as to the meaning
of expressions used in
the policies is of assistance and is persuasive authority -cf. the
Blackshaws
case
sup
.
cit
. at p 126 F-H.
At pages 273 and
274 of the reported judgment the learned Judge a
quo
sets out the terms
of two clauses which
/ are
6(a)
are referred to as the "risk" clause and the "f c and s"
clause. These
appear in both policies. He also refers
to a schedule and certain "Institute
war and strikes"clauses
annexed to the War Risks policy and concludes that it
is
this policy which applies to plaintiff's claim. That, in
fact, was
common cause in the Court a
quo
and still is in
this Court. The
relevant clause is the risk clause. It
is set out in full on page 273 of the
reported judgment.
The portion thereof which is relevant to the peril
insured
against reads:
"And touching the Adventures and Perils which the said Company is contented
to bear and does take upon itself in the Voyage so insured
as aforesaid they
are
Takings at Sea Arrests Res-
traints and Detainment of all Kings
Princes
and People of what Nation Condi-
tion or Quality soever "
It is convenient at this stage also to mention
two
further provisions contained in the policies. The
first is that the trawler was insured only "against the
risk of Actual Total Loss and/or Constructive Total Loss
/ of
7
of the vessel". The second is what is commonly called
the "sue and labour" clause. This reads:
"
And
in the case of any Loss or Misfortune it shall be lawful to the
Insured their Factors Servants and Assigns to sue labour and travel
for in and
about the Defence Safeguard and Recovery of the aforesaid subject matter of this
Insurance or any part thereof without
prejudice to this Insurance the charges
whereof the said Company will bear in proportion to the sum hereby insured".
I turn now to discuss the effect of the above passages in the War Risks
policy.
Ad Arrests, Restraints and Detainments of all Kings, Princes and People of
what Nation, Condition or Quality soever
.
In England, Schedule 1 to the Marine Insurance Act of 1906 ("the 1906 Act")
is headed "Rules for Con-struction of Policy". These Rules
are in effect a
codification of what had been decided in the English courts over the years. As
stated earlier, what has been said
in those courts is persuasive authority. Rule
10
/ declares
8
declares the above words to refer to "political or execu-
tive acts" and
does not include a "loss by riot or judi-
cial process". Ivamy in his
Marine Insurance
3rd ed.,
("Ivamy") states (and quotes authority) at p 171 that —
"Whenever the ruling power in a State prevents the owner or his agents from
en-joying the lawful right of user of the property insured,
by an act which is
not — as against the State of which the assured is a subject —an act
of war, the assured is entitled
to recover any loss occasioned thereby from the
insurer under those words.
The clause imports an
unusual
interference by the ruling authority, and
does not apply to an arrest by the order or judgment of any judicial authority
in the ordinary
course of
litigation."
Arnould in
Law of Marine Insurance and
Average
l6th ed. Vol. 2 at para. 886 ("Arnould")
states (and
quotes authority) that by the word "people" is meant
the
ruling power of the country. The learned author
goes on to say in para.
886:
/ "The
9
"The words 'ordinary judicial process' relate to the administration of justice
in civil proceedings. The arrest or detention of a
ship by judicial process for
the purpose of enforcing the public or criminal law of a country is not
ex-cluded under rule 10, and
the fact that a judicial process is in operation
does not deprive the restraint of its charac-ter as a political or executive
act."
The author relies for this latter statement
on
dicta
by MOCATTA J in
Panamanian
Oriental S.S. Corporation
v Wright
(1970) 2 Lloyds Rep. 365 ("the
Anita
case").
The defendant, as will be seen later, did not accept
in
the Court a
quo
and still does not accept that the
words
"ordinary judicial process" refer only to civil proceedings.
In the Republic the rule of interpretation in
regard
to insurance policies was clearly stated by KOTZE
JA in
West Rand Estates
Ltd v New Zealand Insurance Co Ltd
.
1925 AD 245
at p 261. He said:
"The parties by entering into the contract of insurance must be taken to have
intended that they were to be bound by the terms
/
contained
10
contained therein. The mere use.....of words, which in their strict and
grammatical meaning sound strange and novel in our country,
can and does not
render them meaningless. The parties must be regarded as having meant a business
transaction; and it is the duty
of the Court to construe their language in
keeping with the purpose and object which they had in view, and so render that
language
effectual. Such is the clear principle of our
law."
Due regard being had to the above I have no
doubt that "detainments of all kings, princes and people" would, in the
Republic, be interpreted
to mean the ruling power of the country.
Ad Insurance against Actual Total Loss and/or Constructive Total Loss
only
.
This phrase limits the liability of the insurer.
He
is not liable to the insured for any partial loss sus-
tained.
"Actual total loss" and "constructive total loss" have been defined in secs.
56(3) and sec. 60(1) of the 1906 Act. These definitions
are helpful but
/ I
11
I do not find it necessary to set them out. It is suf-ficient to say that
prior to the expiry of the 15 days there was no actual total
loss. The fine was
not paid and the trawler was confiscated and sold to the "Spaniards". It thus
became an actual total loss.
In England, where there has been a constructive total loss, the assured is
entitled to abandon the subject-matter to the insurer and
claim for a total
loss. See Ivamy, p 410 and secs. 62(1) and 62(7) of the 1906 Act. In England the
question in what cases the law
requires notice of abandonment to be given has
been much debated. See Ivamy, p 414. There is no statutory requirement in the
Republic
requiring notice of abandonment when the insured claims for a total
loss.
/
The Sue and
12
The Sue and Labour Clause
The wording of this clause is as it appears
in the
standard form of the English marine policy, as to
which see Arnould at para.
909. The clause, it is to
be noted, does not compel the insured (here the
plain-
tiff) to "sue and labour". It permits him to incur ex-
penses for
the purpose of averting the loss covered by
the policy and thereafter to
recover such expenses from
the insurer. Despite the permissive wording of
the
clause, sec. 78(4) of the 1906 Act, in relation to con-
tracts
containing this clause, reads:
"it is the duty of the assured
to take such measures as may
be reasonable for the purpose of avert-ing or minimising a loss".
Arnould,
sup
.
cit
. at para 770 states:
"It has, however, long been recognised, both in England and in the United
States, that the assured is under a duty to sue and labour".
/ There
13
There is no statutory provision nor have we been referred to any case in the
Republic dealing with the effect of a sue an labour clause.
In the Republic an
insured is under an implied duty to minimize his loss.
Mozambican legislation relevant to the issues
.
The extracts from
this legislation set out here-under are English translations.
In a Government Gazette of the People's Republic
of
Mozambique dated 19 August 1976 Decree-Law No 3l/76
was proclaimed. The
opening paragraph reads:
"It has became imperious to define the rights of the People's Republic of
Mozambique with respect to the economic resources of the
sea adjacent to the
coast."
There is no need
to set out all the details of the
proclamation. It is sufficient to say that "the Council
of Ministers"
decreed
inter alia
that Mozambique's ter-
ritorial waters would extend for 12 nautical miles and
its exclusive economic zone for 200 nautical miles.
/ Thereafter
14
Thereafter Act 8 of 1978 was proclaimed by
the
Mozambican Government in a Government Gazette of
24 April
1978. This Act contained the following articles
and
provisions:
"Article 1. For the purposes of the pro-visions of this Act:
(a) 'jurisdictional waters' means the zone comprising the territorial waters
and the exclusive economic zone, as they are defined
in the Decree-Law No 31/76
of 19 August;
Article 3 (1). As from the date when this Act comes into effect, the Minister
of Industry and Energy will be competent to determine
which foreign vessels or
crafts shall be authorized to fish in the jurisdictional waters, and he will
further determine, according
to the circumstances, the appropriate conditions
for the conduct of such an activity."
Articles 5 to 8 provide for inspection and im-pounding of foreign vessels
found fishing in the prohibited
/ jurisdictional
15
jurisdictional waters and the penalties and fines which can be imposed.
Articles 12 to 15 provide that a "court consisting of" a Judge, nominated by
the Provincial Court, and two as-sessors is to be established
by the "maritime
authority" to try an. alleged fishing offence.
Article 17(b) reads:
"If the accused is convicted
and if the fine imposed is not paid within fifteen days counting from the date
of the passing of the
sentence, the vessel or craft involved in the offence
shall be confiscated."
The above provisions are not unusual. In the Republic,
save for the
constitution of the court, there are similar
statutory provisions relating to illegal fishing in terri-
torial waters
(12 nautical miles) and in a prohibited
fishing zone of 200 nautical miles from the coast.
/ In
16
In the Court a
quo
and in the heads of argument filed in this Court
counsel for the defendant sought to rely on a clause in the policy in terms of
which
plaintiff had warranted that the trawler would not fish within Mozam-bican
territorial waters. He further submitted, in the alternative,
that if it was not
shown that the warranty had been breached, it was not disputed that the trawler
had fished illegally in the Mozambican
exclusive economic zone. In either event,
so he urged, the plaintiff's claim had to be dismissed. The warranty, counsel's
submissions
and the Court a
quo
's ruling thereanent are fully set out at
p 279 C to p 284 A of the reported judgment. It is not necessary to repeat what
is there
said. Counsel (he did not draw the heads of argument) who appeared in
this Court stated, wisely in my view, that he was not urging
the above
submissions. He then went on to submit that the appeal should be allowed on
either of the following two grounds:
/ A. That
17
A. That the plaintiff had not discharged the
onus of showing that the events
which resul-
ted in the loss of the trawler were covered
by one or other
of the risks enumerated in
the "Risks Clause"; or
B. That plaintiff's claim could not succeed be-
cause, despite the fact that
there was no such
requirement in the contract of insurance, no
notice of
abandonment had been given by plain-
tiff to
defendants.
Ad A above
:
It must be
accepted, having regard to the Mozam-bican legislation, that the trawler was not
wrongly inter-cepted and impounded by
officials acting on behalf of the
Mozambican Government. It was not suggested that this "arrest and detainment"
did not fall within
the risks covered
/ by
18
by the Risk Clause. Counsel for defendant urged that the loss of the trawler
did not result from that arrest and detainment but followed
from the decision of
the Mozam-bican tribunal; that the loss was pursuant to "judicial process" and
not to the original arrest and
the detention of the vessel. He relied on the
aforementioned Rule 10: see also pp 274 D to 276 G of the reported judgment. He
submitted
that the words "ordinary judicial process" should not be limited to
civil proceedings, that the statement by Arnould at para. 886
was wrong and that
the decision on this point in the
Anita
case should not be followed. The
reasoning in the
Anita
case appealed to the learned Judge a
quo
(see p 276 G) and he accordingly rejected this submission. He went on to hold,
as I read his judgment at p 276 H, that when a court
in criminal pro-ceedings
has found that the precedent arrest and deten-tion were justified and then
makes, as in this case, a
/ confiscatory...
19
confiscatory order, the State "is asserting and enforcing its own authority",
in short that the loss results be-cause the court has
confirmed the arrest.
The Court a
quo
(at p 276 I - p 277 A) found as a fact that the
tribunal which made the order for confis-cation was not an independent tribunal
and
not staffed by judicial officers and that "in these circumstances there is
probably much to be said for the view that the continued
detention and
confiscation of the vessel was not the result of ordinary judicial process at
all but rather the result of the actions
of officials forming part of the
Mozambican Government. I have examined the evidence considered by the learned
Judge a
quo
, viz, that of the skipper and of a Mr Dreyer who attended the
trial. I, with respect to the learned Judge a
quo
, am unable to agree
that the evidence shows that the tribunal was not constituted in terms of the
Mozambican legislation. A fine
was
/ imposed
20
imposed. Had it been paid the vessel would not have been confiscated.
Counsel recognized that the plaintiff could not have claimed and could not
now claim the R1Ó7 000 as a partial loss. He did,
however, urge that the
plaintiff in terms of the policy was permitted to sue and labour; that in the
circumstances of this case it
was his duty to have done so, ie to have incurred
the expense; that had he done so and paid the R167 000 he could, under the sue
and labour clause, have claimed a refund of the said expense. The defendant did
not, in the Court a
quo
, rely on the sue and labour clause. We thus do
not have the be-nefit of the views of the learned Judge on this aspect. We were
not
referred to any case in our courts in which a sue and labour clause and its
effects were considered. Nor do
/ I know
21
I know of one. It will be seen from p 277 D that in
the Court a
quo
counsel for the defendant argued that the
proximate cause of the loss of the
trawler was not the
arrest of the vessel; that the loss, ie the
confiscation,
was due to the failure of the plaintiff to pay the fine.
If
this argument is correct there is no need to discuss
the effect of the sue
and labour clause. The learned
Judge a
quo
rejected the argument. At p
277 B he said:
"The confiscation order was one made in respect of the plaintiff's vessel by
reason of the failure of the skipper and engineer to
pay the fine imposed upon
them. But in any event it seems to me that the initial arrest and subsequent
restraint and detainment of
the vessel was an act of "kings princes and people
of what nation condition or quality soever" within the meaning of the risk
clause;
it was a continuous process commencing with the initial arrest of the
vessel and resulting in its ultimate confiscation and loss
and it would be
artificial to regard it in any other manner. The interposition of the de-cision
of the court between its initial
arrest and its subsequent loss does not, in my
view, alter the position".
/Counsel
22
Counsel for plaintiff accepted that for the plaintiff to recover under the
policy the occurrence of the insured peril must be the
proximate cause of the
loss. He urged that the Court a
quo
was correct in holding that the
interception and arrest of the vessel and its continued detention by the
Mozambican Government until
its confis-cation and sale by that Government was a
single cohtinuous process. He then went on to submit that if the plaintiff was
not obliged to sue and labour that obligation cannot be reimposed indirectly in
the guise of a contention that the failure to pay
the fine was the proximate
cause of the loss. The submission loses sight of the concession which counsel
made at the outset, viz,
that in order to succeed plaintiff must show that the
loss was proximately caused by the peril insured against. In
Becker, Gray and
Com-pany v London Assurance Corporation
[1918] AC 101
at p 11] Lord SUMNER
put it as follows:
/ "In
23
"In a contract of indemnity
the insurer promises to pay in a cer-
tain event and in no other,
namely,
in case of loss caused in a certain
way, and the question is
whether the
loss was caused in that way,
"
No difficulty arises when one cause only has to
be
considered. The difficulty arises when there are two
or more possible causes.
In such a case the proximate
or actual or effective cause (it matters not
which term
is used) must be ascertained, and that is a factual issue.
I
cannot put it better than is done by Ivamy at p 255,
where it is said that an
earlier event may be a dominant
cause in producing the damage or loss; it may
be the
causa sine qua non
but the issue is, is it the
causa
causans
? Ivamy at the above page, Arnould at p 773
and Gordon and Getz at p 383] all stress that the rule
to be applied is c
ausa
p
roxima non remota spectatur
.
Counsel for plaintiff does not dispute what is
/
said
24
said by the learned authors. He contends that the loss
was the
result of the continuous process set out above
and that one cannot single out
any one event as being the
proximate cause - the
causa causans
. He
sought to rely
on the following statement by BAILLACHE J in
Fooks v
Smith
(1924) 2 KB 508
at p 514:
" if in the ordinary course of an
unbroken sequence of events following upon the peril insured against the
constructive total loss becomes an actual total loss - as,
for instance, if
there is a capture followed by confiscation - the underwriter is liable in
respect of the total loss. If, however,
the ultimate total loss is not the
result of a sequence of events following in the ordinary course upon the peril
insured against,
but is the result of some supervening cause, the underwriter is
not liable."
That case does not support
his contention. It is in fact
against him. There the Austrian Govcrnment, because of bhe
immincnce of war, ordered all Austrian ships to put their
/ ships
25
ships in safety. The ship in issue in the above case put into Trieste and did
not complete its journey. The goods on board were landed
there. That was held to
be a constructive loss. No notice of abandonment was given. A year later the
Austrian Government requisitioned
the goods and sold them. This resulted in a
total loss. It was held that the confiscation was not an event which in the
ordinary
course of events followed the restraints of princes and the underwriter
was not liable.
I am, with respect, unable to agree with the find-ing of the Court a
quo
that the loss of the trawler was due to a continuous process. The
Mozambican tribunal imposed a fine. Had that fine been paid the
loss would not
have resulted. In my view the confiscation did not result from the arrest of the
trawler, it resulted from the fai-lure
to pay the fine. That failure was
therefore the proximate cause of the confiscation of the trawler. The fact that
the plaintiff was
unable to pay the fine is
/ irrevelant
26
irrelevant. The issue is not his ability to pay the fine. The issue is what
caused the confiscation. That, as we have seen, was the
fact that the fine was
not paid. That was not a peril covered by the Risk Clause. Because of the above
finding it is not necessary
to discuss the abandonment issue raised in B
above.
In the result the appeal must succeed. The order made is:
1. The appeal succeeds with costs;
5. The order of the Court a
quo
is set
aside
and there is substituted an order
which
reads: "Plaintiff's claim is
dismissed
with costs."
O. GALGUT.
RABIE CJ)
JANSEN JA) CONCUR. VAN HEERDEN JA)