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[2013] ZAWCHC 163
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Viking Inshore Fishing (Pty) Ltd v Mutual & Federal Insurance Company Ltd (AC22/2007) [2013] ZAWCHC 163 (30 October 2013)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
(Exercising its admiralty
jurisdiction)
REPORTABLE
CASE NO: AC22/2007
In the matter between:
VIKING INSHORE FISHING
(PTY) LTD
............................................................
Applicant
(The Plaintiff in the
action)
and
MUTUAL &
FEDERALINSURANCE COMPANY LTD
.................................
Respondent
(The Defendant in the
action)
Admiralty action
in
personam
Heard 12 September 2013
Delivered 30 October 2013
JUDGMENT
DAVIS AJ
:
This is an interlocutory
application for a separation of issues in terms of rule 33(4) of the
Uniform Rules of Court and Admiralty
Rule 25. The applicant,
(“Viking”), and the respondent, (“Mutual”),
are the plaintiff and defendant respectively
in a pending admiralty
action in which Viking seeks an indemnity from Mutual in respect of
loss sustained on the sinking of its
vessel, the MFV Lindsay (“the
Lindsay”), which was insured under a written Marine Hull
Policy issued by Mutual in
favour of Viking (“the policy”).
Viking’s claim
arises out of a collision alleged to have occurred on 8 May 2005
between the Lindsay and MV “Ouro do
Brasil” (“the
Brasil”) and to have resulted in the sinking of the Lindsay
off the South African coast in the
proximity of Cape St. Francis.
In terms of the policy
the hull, machinery and equipment of Viking’s fleet, which
included the Lindsay, was insured against
loss, damage, liability or
expense in the manner provided for in the policy. Schedule B to the
policy, which is attached to and
expressly included as part of the
policy, contains a number of terms and conditions of cover. Of
particular relevance for present
purposes are:
3.1.
the stipulation that all sections of the policy are subject to the
South African Merchant Shipping Act Warranty (“the
MSA
warranty”);
1
and
3.2.
the MSA warranty clause,
2
which
provides that:
“
Warranted
that the provisions of the South African Merchant Shipping Act and
the regulations appertaining thereto shall be complied
with at all
times during the currency of this policy, provided that this warranty
shall be effective only to the extent of those
regulations which are
promulgated for the safety and/or seaworthiness of the vessel(s).
It is understood and agreed that
this warranty shall in no way be construed to nullify the ‘Inchmaree’
Clause, or any
part thereof in the Institute Clauses attached to this
Policy
.”
3
(Emphasis
added.)
Three schedules
containing Institute Clauses are attached to and form part of the
policy, namely the Institute Fishing Vessel
Clauses (“the
Vessel Clauses”), the Institute Additional Perils Clauses –
Hulls (“the Perils Clauses”)
and the Institute Time
Clauses – Hulls Disbursements and Increased Value (“the
Time Clauses”). The significant
clauses, for present purposes,
are clauses 1.2 read with clause 3 of the Perils Clauses, and clause
6.2 of the Vessel Clauses,
the relevant portions whereof read as
follows:
Perils Clauses
“
1. In
consideration of an additional premium this insurance is extended to
cover
…
1.2. loss of or damage to the
Vessel caused by any accident or by negligence, incompetence or error
of judgment of any person whatsoever.
...
3. The cover
provided in Clause 1 is subject to all other terms, conditions and
exclusions contained in this insurance and
subject
to the proviso that the loss or damage has not resulted from a want
of due diligence by the Assured, Owners or Managers
.
…”
(Emphasis
added.)
Vessel Clauses
“
6.2 This
insurance covers loss of or damage to the subject-matter insured
caused by
…
6.2.3 negligence of the Master
Officers Crew or Pilots
…
provided that such loss or
damage has not resulted from want of due diligence by the Assured,
Owners or Managers
.”
(Emphasis Added.)
Viking bases its claim
on clauses 1.2 of the Perils Clauses and on clause 6.2.3 of the
Vessel Clauses. It alleges in its particulars
of claim that the loss
of the Lindsay was caused by:
5.1.
an accident, being the collision between the Lindsay and the
Brasil;and/or
5.2.
the negligence, incompetence and/or error of judgment of the persons
on the bridge of the Brasil at the time when the collision
occurred;
and/or
5.3.
the negligence of the master, officers and/or crew of the Lindsay.
In paragraphs 18 to 25
of its plea Mutual denies that a collision occurred which caused the
Lindsay to sink. Alternatively, and
in the event of Viking proving
the fact of the collision and the causal
nexus
between the
collision and the sinking of the Lindsay, Mutual denies that the
collision was an accident within the meaning of
clause 1.2 of the
Perils Clauses. Further alternatively, Mutual pleads that it is
incumbent upon Viking to show that any accident,
and any consequent
loss, did not result from a want of due diligence on the part of the
assured, owners or managers of the Lindsay.
Mutual further denies
that the persons on the bridge of the Brasil were negligent,
incompetent and/or made an error of judgment,
or that the master,
officers and/or crew of the Lindsay were negligent, alternatively
that any negligence of the master, officers
and/or crew of the
Lindsay was a cause of the incident.
In paragraphs 26 to 35
of its plea, Mutual sets up a special defence based on an alleged
breach of the MSA warranty and regulations
appertaining thereto said
to have been promulgated for the safety and /or seaworthiness of a
vessel. On this basis it disputes
liability under the policy and
contends that it was entitled to reject Viking’s claim.
In
the further alternative, Mutual pleads that, in the event of it
being held that Mutual bears the onus of proving that there
was a
want of due diligence on the part of Viking or its managers, in that
event it alleges such a want of due diligence based
on a number of
particulars set forth in its plea.
The effect of the
denials contained in paragraphs 18 to 25 of Mutual’s plea is
that Viking, who bears the overall onus of
proving that its claim
arises out of an insured event covered under the policy, is obliged
to lead evidence in this regard. It
is common cause that Viking has
the duty to begin. A dispute exists, however, in relation to the
question of who bears the onus
of proving a want of due diligenceon
the part of Viking or its managers, which would entitle Mutual to
avoid liability under
the policy. It is not disputed that Mutual
bears the onus of proof in regard to its defence based on breach of
the MSA warranty.
Viking asks in this
application that the following four questions be decided separately
and before evidence is led, i.e., in a
separate hearing in advance
of the trial in the action.
9.1.
What constitutes the Inchmaree Clause referred to in the second
paragraph of the MSA warranty clause contained in the policy?
9.2.
Does the MSA warranty have application in this matter?
9.3.
Should clauses 26 to 35 of the Defendant’s Plea be struck from
the Defendant’s Plea?
9.4.
Who bears the onus to prove that the loss or damage claimed by the
plaintiff has not resulted from a want of due diligence
by the
Assured, Owners or Managers of the vessel?
The relevant
principles governing separation of issues
Rules 33(4)of the
Uniform Rules provides that:
“
If, in
any pending action, it appears to the court meromotu that there is a
question of law or fact which may conveniently be decided
either
before any evidence is led or separately from any other question, the
court may make an order directing the disposal of
such question in
such manner as it may deem fit and may order that all further
proceedings be stayed until such question has been
disposed of,
and
the court shall on the application of any party make such order
unless it appears that the questions cannot conveniently be
decided
separately
.”
(Emphasis
added.)
Rule 33(4) enjoins the
Court seized with an application for a separation of issues to make
the necessary order “
unless it appears that the questions
cannot conveniently be decided separately”
. Where the
application is opposed, it is incumbent upon the party resisting the
separation to satisfy the Court that the application
should not be
granted. (See
Braaf v Fedgen
1995 (3) SA 938
(C) at 939 G –
H.)
Notwithstanding the
imperative wording of the rule, it remains axiomatic that the
interests of expedition and finality of litigation
are ordinarily
best served by the disposal of the whole matter in one hearing.
(
Braaf v Fedgen supra
at 941 D; see, too,
Minister of
Agriculture v Tongaat Group Ltd
1976 (2) SA 357
(D) at 362 G –
H;
Sharp v Victoria West Municipality
1979 (3) SA 510
(N) at
511 H.)
Convenience in the sense
used in Rule 33(4) has been held to mean not only “facility”,
“ease” or “expedience”
but includes the
notion of “appropriateness” and “fairness”.(See
Van Loggerenberg
et al ErasmusSuperior Court Practice
Commentary on Rule 33(4) at p B1-235 and authorities cited at
footnote 7.) The convenience of all concerned, and of the Court,
must be taken into account, and there should be substantial grounds
to justify the exercise of the power. (
Minister of Agriculture v
Tongaat Group Ltd supra
at 362 F – G.) In arriving at the
decision whether or not it is appropriate to order a separation of
issues, the Court will
take into account factors such as the
possible curtailment of proceedings through the elimination of
issues or evidence, the
possible delay in finalisation of the matter
caused by a separate hearing before the trial proper, and the merits
of the point
sought to be determined prior to trial. (See
Minister
of Agriculture v Tongaat Group Ltd supra
at 363 E – 364
D.) The Court is required to weigh the
pros
and
cons
of the order sought and to decide, as best it can, where the balance
of convenience lies.
The Supreme Court of
Appeal has commented on a number of occasions on the proper
application of Rule 33(4), in each case sounding
a warning against
the ill-considered separation of issues. In
Denel (Edms) Bpk v
Vorster
2004 (4) SA 481(SCA)
Nugent JA observed (at para [3])
that:
“
Rule
33(4) of the Uniform Rules – which entitled a Court to try
issues separately in appropriate circumstances – is
aimed at
facilitating the convenient and expeditious disposal of litigation.
It should not be assumed that that result is always
achieved by
separating the issues. In many cases, once properly considered, the
issues will be found to be inextricably interlinked,
even though, at
first sight, they might appear to
be discrete. And even where the
issues are discrete, the expeditious disposal of the litigation is
often best served by ventilating
all the issues at one hearing,
particularly where there is more there one issue that might readily
be dispositive of the matter.
It is only after careful thought has
been given to the anticipated course of the litigation as a whole
that it will be possible
properly to determine whether it is
convenient to try an issue separately.”
In
Privest Employee
Solutions (Pty) Ltd v Vital Distribution Solutions (Pty) Ltd
2005
(5) SA 276
(SCA), Mlambo JA remarked (at para [26]) that the
objective of Rule 33(4) is “
to facilitate the convenient
and expeditious disposal of litigation”
and that, “
A
courtapproached to sanction this course has a duty to satisfy itself
that the separation will achieve the desired purpose”.
The
learned Judge went on to sound the following warning (at para [27])
against the undesirable separation of issues:
“
In the
present case, in spite of the separation of the issues as sanctioned
by the trial Court in terms of Rule 33(4), almost all
causes of
action and defence are still open to the parties. The underlying
dispute (between the parties) has yet to be determined.
For example,
the defence of estoppel raised by the appellant, and which was
foreshadowed in the pleadings, still awaits its day
in court. Neither
counsel could deny that all the litigation has thus far not resulted
in the expeditious disposal thereof despite
the fact that it has now
gone through three Courts at monumental cost, no doubt, to the
litigants. I refer to this scenario simply
to voice our disquiet at
yet another manifestation of a failure to ensure that a separation of
issues in terms of Rule 33(4) has
the potential to curtail litigation
expeditiously. Courts should not shirk their duty to ensure that at
all times, when approached
to separate issues, there is a realistic
prospect that the separation will result in the curtailment and
expeditious disposal of
the litigation.”
In
Consolidated News
Agencies (Pty) Ltd (in liquidation) v Mobile Telephone Networks
(Pty) Ltd and Another
2010 (3) SA 382
(SCA) Navsa JA and Hurt
AJA commented (at para [89] – [90]) that:
“
Piecemeal
litigation is not to be encouraged. Sometimes it is desirable to have
a single issue decided separately, either by way
of a stated case or
otherwise. If a decision on a discrete issue disposes of a major part
of a case, or will in some way lead to
expedition, it might well be
desirable to have that issue decided first.
This court has warned that in many
cases, once properly considered, issues initially thought to be
discrete are found to be inextricably
linked. And even where the
issues are discrete, the expeditious disposal of the litigation is
often best served by ventilating
all the issues at one hearing. A
trial court must be satisfied that it is convenient and proper to try
an issue separately.”
With these principles in
mind, I turn to consider whether it would be convenient for the four
questions posed by Viking to be
decided in a separate hearing held
in advance of the trial in the action. Before doing so, however, it
is necessary to deal with
Viking’s complaint regarding the
tactical denial put up by Mutual.
The complaint
regarding the tactical denial
As I have indicated,
Mutual has, in its plea, denied that a collision took place between
the Lindsay and the Brasil, and that
any collision found to be
proved was an accident within the meaning of the policy, or that it
was caused by the negligence or
incompetence of any person or by the
negligence of the master, officers and /or crew of the Lindsay, as
contemplated in the policy.
Viking objects to Mutual’s denial
of the collision, and of the allegation that the Lindsay sank as a
result of an accident
on the basis that there is no factual basis
for the denials since “
it is well known and highly
publicised that there was a collision between the two vessels and
that the ‘Lindsay’ sank
shortly thereafter with the loss
of the lives of 14 of her crew members.”
Mutual has candidly
admitted that its denial of the collision is tactical one, made with
the objective of forcing the plaintiff
to call certain witnesses for
purposes of cross-examination. Viking argues that this approach is
improper and that I should disregard
this denial for the purposes of
deciding whether or not to order the separation of issues sought by
Viking. It contends that
the requested separation will, if granted,
defeat the tactical denial.
I am not persuaded that
there is anything improper in the tactical denial put up by Mutual.
It is important, I think, to distinguish
between the
positive
assertion
in a pleading of a fact which is
not believed to be
true
by the party making the assertion, and the denial of a fact
known or believed to be true by the party making the denial. (See
ELewis
Legal Ethics
p134.) The former situation involves a
misrepresentation on the part of the pleader, whereas the latter
does not, serving only
to convey that the denied fact is placed in
issue.
It seems to me that it
is fundamental to our adversarial system of procedure that the
defendant is entitled to put the plaintiff
to the proof of its
claim, and that there is no obligation on a defendant to “fall
on its sword” in the pleadings
and make admissions adverse to
its case. I consider that there is nothing improper about a
defendant denying a fact of which
it may be aware, thereby
signalling to the plaintiff that it will have to prove that fact at
trial. In doing so it is merely
invoking its procedural rights and
is not thereby guilty of any misrepresentation or concealment of the
truth. I agree with the
view expressed by Dowling J in
Williams v
Tunstall
1949 (3) SA (T) 835 at p 839 – 840, where he
stated that:
“
Denials
which are not sworn statements may in certain cases and for tactical
reasons be, without impropriety, pleaded, where the
defendant is
aware that the denial is unfounded. Such a method of pleading might
be adopted, for example, to force the plaintiff
or other witnesses
into the witness box for purposes of cross-examination.”
Viking’s counsel
referred me to the cases of
Joseph v Black and Others
1930
(WLD) 327 (“
Joseph”
) and
Niewoudt v
Joubert
1988 (3) SA 84
(SE) (“
Niewoudt”
) in
support of the contention that the tactical denial in Mutual’s
plea is improper. It seems to me that neither case provides
authority for this assertion.
The objection expressed
by the Court in
Joseph
was not to the fact that the defendant
in a defamation case made a tactical denial in an attempt to force
the plaintiff to testify,
but to the fact that, when the ploy failed
and the plaintiff proved his case by other means, defendant’s
counsel stated
from the bar, without having adduced any evidence of
bad character on the part of the plaintiff, that the plaintiff had
not dared
to face the witness box, thereby insinuating that the
plaintiff had something in his past which he could not submit to
scrutiny.
The Court criticised this conduct on the part of counsel,
which was held to be a factor in aggravation of the damages suffered
by the plaintiff.
In
Niewoudt
Mullins
J criticised the tendency of practitioners to “play their
cards close to their chests” and not to be frank
and open the
opposing partyprior to summons and during the course of pleadings.
He also remarked (at 91 B – C) that a litigant
is not entitled
to conceal material allegations in order to obtain the advantage of
placing the onus on his opponent, and that:
“
The onus
must be determined on genuine and not artificial allegations in the
pleadings, and if the onus should be on a particular
party, he must
accept it. Litigation is not a game where one party may seek tactical
advantages by concealing facts from his opponents
and thereby
occasioning unnecessary costs.
Nor
in my view is a party entitled to plead in such a manner as to place
the onus on his opponent, if the facts as known to such
party place
the onus on him
.
If he has to bear the onus of proof, he must accept it, and not seek
by devious pleadings to obtain an advantage to which he is
not
entitled.”
The remarks of Mullins J
must be understood within the context in which they were made,
namely a situation where the plaintiff
had deliberately concealed
material facts of which he had knowledge so as not to attract an
onus on the pleadings, as a result
of which the defendant was
misled
as to the true nature of the issues, and the litigation
unnecessarily protracted.
There is no question, in
this case, of Mutual concealing material facts or attempting to
alter the incidence of the onus. The
parties are
ad idem
that
the overall onus rests upon Viking to prove its claim within the
four corners of the policy. That requires proof not only
that a
collision occurred which caused the loss of the Lindsay, but also
that it was an accident or caused by negligence or incompetence
as
contemplated in the policy. Mutual has been entirely candid about
the reason for its tactical denial, namely to force Viking
to call
witnesses to testify as to the conditions prevailing on the bridge
of the Lindsay immediately before the alleged collision,
in order to
cross examine them in regard to the issues of breach of the MSA
warranty and want of due diligence. This is not an
improper
procedural advantage. It is perfectly legitimate, in my view, for
Mutual to put Viking to the proof of its claim and, during
cross
examination of plaintiff’s witnesses, to cross examine on any
issues in dispute, including those on which it bears
the onus –
indeed this is expressly permitted in Rule 39(15).The necessity for
this course is readily apparent, to my mind,
in circumstances where
Viking by and large controls access to the material witnesses who
were employed as its Masters, Officers
and crew members.
I am therefore of the
view that Viking’s complaint regarding Mutual’s tactical
denial is unfounded, and that it has
no bearing on this application.
The application falls to be decided with reference to the pleadings
as they stand, in accordance
with the legal principles referred to
above.
The first question:
the identity of the Inchmaree Clause referred to in the proviso to
the MSA warranty clause.
Viking relies for its
claim on clause 1.2 of the Perils Clauses and clause 6.2.3 of the
Vessel Clauses (“the relevant clauses”).
It appears from
the founding affidavit that the relief sought in respect of the
first question was prompted by the fact that
Mutual refused, when
asked in pre-trial proceedings, to admit that the relevant
clauses“
constitute the Inchmaree Clause, or any part
thereof in the Institute Clauses attached to the Policy.”
Mutual’s
response in this regard was that, “…
the Defendant
maintains the stance set out in its plea.”
If one has regard to the
particulars of claim, it is apparent that Viking did not allege that
the relevant clauses are Inchmaree
clauses as contemplated in the
MSA warranty clause. Mutual was therefore not called upon to admit
or deny in its plea that this
was the case, and it made no such
denial in its plea. Questions of whether or not the relevant clauses
constitute Inchmaree clauses
as contemplated in the MSA warranty
clause, and the relationship between the Inchmaree clause and theMSA
warranty clause, only
arose once Mutual filed its plea relying on a
breach of the MSA warranty. That reliance gave rise to the question
of how to interpret
the proviso to the MSA warranty, which states
that the MSA warranty “
shall in no way be construed to
nullify the ‘Inchmaree’ Clause, or any part thereof in
the Institute Clauses attached
to this Policy
” (“the
proviso”).
Viking’s
stanceappears from paragraph 14 of the founding affidavit, which
reads as follows:
“
It is
clear from the Defendant’s Plea that a significant part of its
defence to the Plaintiff’s action is constituted
by its
reliance on the MSA Warranty and the alleged breach thereof. If,
however, the MSA Warranty does not apply to the Plaintiff’s
cause of action by virtue of the express provisions contained in the
second paragraph thereof, namely that the relevant clauses
are not
‘nullified’ by the MSA Warranty, an important defence
raised in the Defendant’s Plea will fall away and
the trial of
the matter will be substantially shortened.”
Viking contends that the
effect of the proviso is that the MSA warranty does not apply where
reliance is placed on an Inchmaree
clause, or part thereof. It
consequently contends that, once the identity of the Inchmaree
clause referred to in the MSA warranty
is ascertained, the
applicability of the MSA warranty will be resolved.
Mutual disputes Viking’s
interpretation of the meaning and effect of the proviso, arguing
that it would be incorrect to
interpret the policy in such a way
that the MSA warranty does not apply simply because the MSA warranty
does not “nullify”
the clauses identified by Viking as
Inchmaree clauses.It contends that a proper interpretation of the
proviso requires that the
MSA warranty clause and the Inchmaree
clauses be read together, and that meaning be given to the policy
terms having regard to
both. It seems to me that there is much to be
said for this view.
During the course of the
hearing it appeared to me that Mutual did not, in fact, dispute that
the relevant clauses form part of
the Inchmaree Clause referred to
in the proviso. My understanding in this regard was subsequently
confirmed in a note furnished
by Mutual’s counsel in response
to a number of written questions which I posed to the parties’
counsel following
the hearing.
Given that there is no
dispute that the relevant clauses are part of the Inchmaree Clause
referred to in the proviso, it follows,
in my view, that the relief
sought by Viking in regard to the first question is superfluous.
There is simply no issue to decide.
Counsel for Viking
argued that the concession made by Mutual (at the hearing and in the
written note) that the relevant clauses
were Inchmaree Clauses,
represented a
volte-face,
and that it was Mutual’s
refusal to make this very concession which gave rise to this
application in the first place.The
suggestion is that Mutual was
unreasonable in refusing to make the admission, and that Mutual
should on that basis ordered to
pay the costs of this application.
Mutual, on the other hand, complains that the question posed by
Viking in the pre-trial proceedings
was too broadly framed as it
ignored the fact that the Inchmaree clause includes other clauses in
addition to the relevant clauses.
Although there is some merit in
this complaint, I think it not unfair to say that Mutual was
somewhat obstructive in refusing
to make the admission where it was
quite clear what Viking was really getting at, namely whether the
relevant clauses qualify
as part of the Inchmaree clause, as
contemplated in the proviso to the MSA warranty.
But even were I to
assume, for purposes of argument, that Mutual’s refusal to
make this particular admission was unreasonable,
I am not convinced
that such unreasonableness would serve to justify Viking’s
approach to court for the relief sought in
this application. It
seems to me that it would have been more appropriate to take this
issue up with the Judge who presided over
the pre-trial conference
held on 12 February 2013 as part of the system of case-management
implemented by this Court.I have little
doubt that, had the
complaint been timeously aired in that
forum
, a judicial
nudge would have ensured that clarity and common sense prevailed.
The second question:
whether or not the MSA warranty applies in this matter
.
As I have already
indicated, there is a dispute between the parties regarding the
correct interpretation to be placed on the wording
of the MSA
warranty clause, in particular the proviso.
Viking argues that this
issue should be determined separately and prior to the trial on the
merits on the basis that, if its interpretation
of the proviso is
correct, Mutual’s reliance on a breach of the MSA warranty
will be precluded and the trial therefore
curtailed by the exclusion
of the evidence which would otherwise have to be led by Mutual to
establish a breach of the MSA warranty.
I have a number of
difficulties with this argument.
First, it is clear that
a decision on the interpretation of the MSA warranty clause would
not be dispositive of the entire action
as other issues would remain
for determination.Viking is required,
ante omnia
, to put up
sufficient evidence to establish its claim in terms of the policy.
Thereafter, even were Viking’s interpretation
of the MSA
warranty clause to prevail to the exclusion of the defence based on
the MSA warranty, evidence would still have to
be heard and a
decision made in regard to Mutual’s defence based on due
diligence.
Second, having regard to
the pleadings it seems to me that theissues of breach of the MSA
warranty and want of due diligence are
closely related and that
there will be a substantial overlap between the evidence in these
regards.
4
The same witnesses
would, in all likelihood, be called to testify in respect of both
issues. Thus it cannot be said, in my view,
that the elimination of
Mutual’s defence based on the MSA warranty will curtail the
evidence in the action. In
Hotels,Inns
and Resorts SA (Pty) Ltd v Underwriters at Lloyds and Others
1998
(4) SA 466
(C) at para [10], Hlophe J, as he then was, held that it
was not appropriate to grant an order for separation of issues where
the evidence was such that it would substantially overlap since no
purpose would be served by the order and the proceedings could
be
unduly protracted thereby.
Third, the Court seized
with the task of interpreting the MSA warranty clause will be called
upon to hear evidence pertaining
to the context of the policy and
the factual matrix within which it was designed to operate.
5
Viking’s
counsel argued that the sort of evidence which is admissible to
contextualise the contract is discrete from the
evidence pertaining
to the merits of the action, and that such evidence could
conveniently be heard as part of a separate hearing
on the
interpretation of the MSA warranty clause. This argument, to my
mind, works against one of the main purposes of a separation
of
issues, which is to shorten the proceedings. It seems to me that,
far from curtailing proceedings and costs, a separate hearing
on the
interpretational issue, complete with evidence, will have quite the
opposite effect.
In short, it seems to me
the course proposed by Viking in regard to the second question
entails the prospect of a full blown hearing
on the interpretational
issue, with attendant costs, for a decision on a single issue, which
could give rise to an appeal
6
with yet further costs
and delays, while the logically prior question of whether Viking has
established a claim under the policy
in the first instance, and the
defence based on due diligence, still remain to be determined. Such
a state of affairs seems to
me to be wholly undesirable.
For these reasons I am
not satisfied that it would be convenient or appropriate to order
that the second question posed by Viking
should be determined
separately in advance of the trial proper in the action.Allthings
considered, I am of the view that the
balance of convenience favours
dealing with the matter in a single hearing.
The third question:
whether or not paragraphs 26 to 35 of Mutual’s plea should be
struck out
.
This relief is sought on
the basis that it would flow consequentially from a determination
that the MSA warranty does not find
application in respect of
Viking’s claims in the action. Given my conclusion that it
would not be convenient hold a separate
hearing for the purposes of
deciding the interpretation and application of the MSA warranty
clause, the basis for this relief
falls away and the question
requires no further consideration.
The fourth question:
which party bears the onus of proof in regard to due diligence?
There is a dispute on
the pleadings as to which party bears the onus of proof in relation
to the question of due diligence. Mutual
asserts that the onus is on
Viking to show that any loss or damage did not result from a want of
due diligence on the part of
Viking or its managers. Viking asserts,
to the contrary, that Mutual bears the onus of establishing that the
loss or damage resulted
from a want of due diligence.
Mutual’s counsel
conceded that the bulk of authority by way of foreign case law and
academic authority favours the proposition
that the due diligence
proviso in respect of an Inchmaree clause is treated as an
exception, so that the onus lies upon the insurer
to prove a want of
due diligence on the part of the assured. In
Shipping
Law and Admiralty Jurisdiction in South Africa
Professor
Hare, citing foreign precedent, writes that:
7
“
The
proviso is treated, both in the marine insurance industry and by the
courts generally, as an exception. As an exception, the
onus lies
upon the insurer to prove a want of due diligence on the part of the
assured or other party named by the Clause.”
Mutual’s counsel
argues that considerations of fairness require that the onus to
prove due diligence should rest on the
insured given that the
insurer does not have ready access to the means to prove a want of
due diligence, since, in the nature
of things, the relevant
documents and witnesses are under the control of the insured.
Counsel were
ad
idem
that this question has not been pertinently decided by a
South African court. It therefore constitutes
res nova
, which
will require full argument with reference, no doubt, to a wide array
of international precedents and authorities on the
subject.
The question which I
have to ask in this case is whether it would be convenient, or
appropriate, for thelegal question on the
incidence of the onus on
the issue of due diligence to be decided in a separate hearing in
advance of the trial on the merits.
In
Groenewald v
Minister van Justisie
1972 (4) SA 223
(O) (“
Groenewald”
)
Kumleben AJ, as he then was, was seized with an application in terms
of rule 33(4) brought by the defendant (after an unsuccessful
application for absolution from the instance at the close of the
plaintiff’s case) for the separate determination of a
question
of law regarding the incidence of the onus in respect of one of the
issues in the case.He stated in this regard (at
p225 D – F)
that:
“
Prinsipieelval
’n regsvraagoorbewyslasbinne die omvang van die sub-reël
maar ditkom my voordat ’n Hof in die uitoefening
van
sydiskresieditselde, indienooit, virhierdiedoelsalgebruik. Die
vernaamstedoel van hierdie sub-reël is om ’n
regsvraagtebesliswatuitsluitsel
op die helesaak mag gee of andersins
’n besparing van tyd en gedingskoste tot gevolgsalhê. …
Selfsindien die
kwessie van bewyslas op die gepastetydstip, d.w.s.
heel aan die begin van die saak, virbeslissinggeopper word,
salhierdieoogmerkniebereik
word nie. Die gedingvorder, watvolgens die
Hof se beslissing die bewyslasdra, saldan die nodigegetuienisaanvoer.
Geengeskilpunt
of onkoste word daardeuruitgeskakelnie.”
The learned Judge was of
the view that the question of onus falls to be decided at the end,
and not the beginning, of a case.
He noted, however, that that the
Cape Courts were accustomed to granting rulings on the incidence of
the onus at the commencement
of a trial in order to determine which
party had the duty to begin.He observed in this regard that Rule
39(11) of the Uniform
Rules of Court (“the Uniform Rules”)
makes specific provision for a Court to make a ruling at the
commencement of
the trial on the duty to begin, and he opined that
it is therefore unnecessary for a Court, at the beginning of a case,
to make
a finding regarding onus for that purpose. In the exercise
of his discretion Kumleben AJ refused the relief sought on the
grounds
, inter alia
, that it would lead to a delay in
finalisation of the proceedings and that the issue in regard to
which the declaration was sought
might never arise (see p. 226 E and
p 227 C – E).
In
Intramed (Pty) Ltd
v Standard Bank of South Africa Ltd
2004 (6) SA 252
(W)
(“
Intramed”
), Claassen J was asked, at the
commencement of a trial, to make a ruling in terms of Rule 39(11) of
the Uniform Rules regarding
which party had the duty to begin as
well as a ruling regarding which party bore the onus of proof on
various issues raised in
the pleadings. Rule 39(11) provides that:
“
Either
party may apply at the opening of the trial
for
a ruling by the court upon the onus of adducing evidence, and the
court after hearing argument may give a ruling as to the party
upon
whom such onus lies:
Provided
that such ruling may thereafter be altered to prevent
injustice
.”
(Emphasis
added.)
Claassen J referred to
the remarks of Kumleben AJ in
Groenewald
(
supra
at
p 226 C) to the effect that that Rule 39(11) renders it unnecessary
to make a ruling as regards onus and observed, correctly
in my view,
that the views of the learned Judge regarding rule 39(11)
8
were
obiter
.
Having considered the meaning of rule 39(11) as read with rules
39(13), 39(14) and 39(15), Claassen J concluded that rule 39(11)
permits a Court to make rulings regarding both the duty to begin
and
the incidence of the
onus of proof. He reasoning in this regard (at 256 G – 257 C)
was as follows:
“
In my
view, the express inclusion of the proviso in subrule (11),
(which
permits the Court to revisit and alter its initial ruling)
indicates
that the Legislature intended to opt for a more liberal approach,
such as that adopted by the Cape Provincial Courts,
ie to allow a
Court to rule at the commencement of the trial on both the duty to
begin as well as the initial onus of proof on
the various issues
which might arise from the pleadings as they stand at that point in
time. I find support for this interpretation
of subrule 39(11) in the
contents of subrule 39(13). Subrule 13 does not refer to the concept
of the ‘onus of adducing evidence’
in the abstract (as is
found in subrule (11)) but expressly links such concept to ‘the
issues’. Thus the sequence in
which evidence is called is
expressly linked to the onus of proof derived from the pleaded
issues. In like fashion, subrule (14)
also links the sequence of
evidence to the incidence of the burden of proof. The plaintiff’s
right to call rebutting evidence
after defendant has closed its case,
is expressly linked to ‘issues in respect of which the onus was
on the defendant’.
Subrule (14) provides for a caveat which
restricts the plaintiff’s right to call rebutting evidence to
only those issues
in respect of which the onus was on the defendant.
Where the initial ruling burdened the plaintiff with the duty to
begin adducing
evidence and the plaintiff elected to call evidence on
any matter on which the defendant bears the burden of proof, the
plaintiff
will be precluded from calling any rebutting evidence
concerning such issue after defendant has closed his case. The risk
is extenuated
by the provisions of subrule (15) which specifically
provides that the plaintiff will not run the aforesaid risk provided
the evidence
in chief is restricted to such issues upon which the
onus of proof rested with the plaintiff. Of course, under cross
examination
by the defendant, the ambit of the enquiry can be
enlarged to matters which have to be proved by the defendant. That
will, however,
not deny the plaintiff his right to call rebutting
evidence after the defendant has closed his case.
In
my view the general scheme of these subrules expands the scope and
meaning of subrule (11) to include a ruling on the incidence
of the
burden of proof
.”
(Emphasis
added.)
The learned Judge went
on to say, at 257 G – H, that:
“
In my
view it makes good sense that the onus of adducing evidence should
also include a ruling regarding the incidence of the burden
of proof.
Trials such as this where enormous amounts of money are at stake, are
not to be regarded as a tactical game.
In
my view it would be in the interests of justice that a litigant
should be entitled to apply for a ruling pursuant to the express
provisions of Rule 39(11) regarding both the order in which evidence
is to be adduced as well as a provisional ruling regarding
the onus
of proof on various issues
.
The parties need to know where they stand on these issues. Trials
should be run, as far as possible, in an atmosphere of certainty.
Trials by ambush are not conducive to inexpensive and expeditious
judicial proceedings.”
(Emphasis
added.)
Counsel for Viking
relied on these remarks of Claassen J in support of the relief
sought in this application for a determination
regarding the
incidence of the onus on due diligence. In my view the decision in
Intramed
cannot be regarded as authority for a separate
determination, prior to the trial, of a question of onus under the
rubric of Rule
33(4). In
Intramed
Claassen J was dealing not
with Rule 33(4) but with an application in terms of Rule 39(11)
brought at the commencement of a trial.
Central to his reasoning was
the fact that the ruling as to onus would be provisional in nature,
and capable of being altered
thereafter so as to prevent injustice.
He observed in this regard (at 256 E – F) that developments
during a trial could
have “
a radical effect on the
incidence of proof
” and give rise to a need to revisit
initial rulings issued at the commencement of the trial regarding
the onus of proof.
By contrast what is
sought in this application is the prior determination of a question
of law regarding the incidence of the
onus in terms of Rule 33(4).
Such a decision would, in my view, be final in effect, unlike the
provisional ruling as to onus
contemplated in Rule 39(11). For this
reason I share the doubts expressed by Kumleben AJ as to whether it
would ever be appropriate
to decide questions of onus under Rule
33(4).To my mind the fact that such a determination would be final
in effect, and therefore
appealable, lends itself to the possibility
of piecemeal adjudication, which is inherently undesirable and the
antithesis of
the main objective of the rule, namely to save time
and costs by dealing with issues which are dispositive of the case
as a whole,
or at least of a major part thereof. It is also
undesirable, in my view, to make piecemeal decisions regarding
matters - such
as onus- which would bind the trial judge and
trespass on his or her discretion regarding the trial proceedings.
While I appreciate that,
where the onus of proof on different issues falls on different
parties, a ruling as to the incidence
of the onus on the different
issues may be necessary or desirable in order to determine the
sequence of the evidence and the
respective procedural rights of the
parties in terms of Rules 39(13), 39(14) and 39(15), this is
expressly catered for in Rule
39(11), which provides for a ruling to
be given
at the opening of the trial
regarding the incidence
of the onus and the duty to begin.
It seems to me that, it
is for the very reason given by Claassen J, namely that developments
during a trial might give rise to
a need to revisit initial rulings
as to onus,the Uniform Rules provide for determinations regarding
onus to be made by the trial
judge as a
provisional ruling at the
commencement of the trial
in terms of Rule 39(11), and not as a
final decision on a question of law in terms of Rule 33(4).
I therefore consider
that the specific remedy created in terms of Rule 39(11) would
generally serve to preclude reliance on Rule
33(4) for a
determination as to onus. In my view Viking has misconceived its
remedy as regards the fourth question, and that
the correct course
of action would be for Viking to apply in terms of Rule 39(11) at
the commencement of the trial for a (provisional)
ruling by the
trial judge as to the incidence of the onus on the issue of due
diligence.I am accordingly not satisfied that it
would be convenient
or appropriate to have the fourth question posed by Viking decided
as a discrete issue in a separate hearing
prior to the trial.
Conclusion
It follows that, in my
view, the application cannot succeed. I see no reason in all the
circumstances to depart from the ordinary
rule as to costs. In the
result the application is dismissed, with costs, such to include the
costs occasioned by the employment
of two counsel.
_______________________
D.M. DAVIS
Acting High Court Judge
For
the Applicant : Adv R
MacWilliam
SC
Instructed
by : Webber Wentzel Bowens (A Bowley)
For the Respondent : Adv
D A
Gordon
SC (from Durban)
Instructed by : Cox Yates
(A Clark)
Date of hearing : 12
September 2013
Date of judgment :30
October 2013
1
Schedule B,
under
the heading “Applicable to All Sections”, Pleadings
Bundle p 15.
2
Schedule
B, under the heading “Merchant Shipping Act Warranty”,
Pleadings Bundle p 16. The Act referred to is the
Merchant Shipping
Act 57 of 1951.
3
An
Inchmaree clause is a clause extending the cover in standard marine
insurance policies. The clause takes its name from the
case of
Thames & Mersey Mar Ins Co v Hamilton Fraser & Co (The
Inchmaree)
(1887) 12 App Cas 484
, in which the House of Lords
ruled that the explosion of a donkey engine due to negligence on the
part of a ship engineer, which
caused the vessel to sink, was not a
‘peril of the sea’ covered under the relevant policy.
The marine insurance industry
reversed the effect of the decision by
inserting what became known as ‘the Inchmaree Clause’ in
hulls insurance policies
to cover additional perils. (See John Hare
Shipping Law & Admiralty Jurisdiction in South Africa
para
20-2.2, p 931 – 932.)
4
Mutual
alleges that Viking breached the MSA warranty by failing to have an
adequate system of management control to ensure the
Merchant
Shipping (Safe Manning) regulations 1999 were complied with or to
have a certified Ships’ Officer in control of
the navigational
watch at all relevant times. It alleges, as regards due diligence,
that Viking did not act with due diligence
in that it failed to
ensure the employment of a competent Master and / or Officer(s) and
that it failed to have in place practices
or procedures to ensure
that there was a duly certified or any Officer in charge of the
navigational watch.
5
Evidence
of background, context or factual matrix is always admissible in
order to put the Court ‘in the armchair of the
author(s)’
of the document. See
Engelbrecht v Senwes Ltd
2007 (3) SA 29
(SCA) at para [7].
6
The
decision would be final in effect and possibly appealable. See, in
this regard, the remarks made by Miller J in
Minister of
Agriculture v Tongaat Group Ltd
1976(2) SA 357 (D) at 363 H –
364 B.
7
John
Hare
Shipping Law and Admiralty Jurisdiction in South Africa
2
ed at p 932.
8
As
opposed to Rule 33(4).