Tebe Trading (Proprietary) Limited v Mediterranean Shipping Company (Proprietary) Limited (AR947/03) [2005] ZAKZHC 17; 2006 (4) SA 495 (N) (10 November 2005)

REPORTABLE CASE NO AR 947/2003

DCLD CASE NO A 01/2003

IN

THE HIGH COURT OF SOUTH AFRICA

NATAL

PROVINCIAL DIVISION

NAME OF SHIP : mv “MSC SPAIN”

In matter between

TEBE TRADING (PROPRIETARY) LIMITED Appellant

(Plaintiff in the Court a

quo)

and

MEDITERRANEAN SHIPING COMPANY Respondent

(PROPRIETARY) LIMITED (Defendant in the Court a

______________

Delivered :

10 November 2005

J

U D G M E N T

_______________

LEVINSOHN J :

For ease of reference I shall refer to the parties to this appeal by their respective designations in the Court a quo.

The plaintiff instituted an action against the defendant claiming payment of an amount of US$27 164,16 and US$29 705,40 respectively as and by way of damages alleged to have arisen from the defendant’s breach of a contract, alternatively in breach of a duty of care owed by the defendant to the plaintiff.

After joinder of issue the matter came before P. C. Combrinck J on trial. The parties requested the learned judge to separate certain of the issues in terms of rule 33(4). An appropriate order was made. The following were those issues : -

“A. The following issues shall be separated out and decided before the remaining issues are decided:

Does the plaintiff have locus standi to sue, whether in contract or in delict, for any loss or damage which may have occurred to the consignments of litchis referred to in the pleadings?

In concluding a contract or contracts with the plaintiff in respect of the consignments of litchis in question, did the defendant contract as principal or as agent for Mediterranean Shipping Company SA of Geneva?

If a contract was concluded between the plaintiff and the defendant, principal to principal :

(a) What were the terms of the contract? This includes whether or not the provisions of the Hague-Visby Rules as pleaded by the defendant in paragraph 6(c) of the plea applied to that contract.

(b) Did the defendant breach the contract?

4. Did the defendant owe the plaintiff a duty of care to advise the plaintiff if :

(a) the estimated date of departure of the mv ”MSC Spain” on voyage 21A from Durban to Jebel Ali was delayed; and

(b) the route of the vessel from Durban to Jebel Ali was changed?

5. If such a duty of care did exist, did the defendant breach that duty with fault so as to incur liability to the plaintiff?

6. Can the defendant rely on the Himalaya Clause in the bills of lading, as pleaded in paragraph 3(e)(iv) of the plea, and, if so :

(a) Is the defendant excused all liability that it might otherwise have been found to have to the plaintiff?

(b) If not excused all liability, can the defendant rely on the provisions of the Hague-Visby Rules as pleaded in paragraph 6(c) of the plea?”

After hearing evidence the learned judge held that the plaintiff had not established the necessary locus standi to sue in either contract or delict. Accordingly he absolved the defendant from the instance with costs. In the event the learned judge found it unnecessary to consider any of the remaining issues that were before him.

Before getting to grips with the issues that arise in this appeal it is at this stage convenient to set forth the salient background facts.

The plaintiff is an exporter of both commodities and fresh fruit. These are exported to the Middle East. On 26th November 2001 one Pienaar of forwarding agents WSS Africa concluded an agreement with the defendant represented by one Premchand in terms of which the plaintiff made a booking for the carriage by sea on board the vessel mv “MSC SPAIN” of two forty-foot high refrigerated containers of litchis to Jebel Ali in the United Arab Emirates. The plaintiff had been told by Premchand that the “MSC SPAIN” was due to depart on 6th December 2001 and its anticipated transit time to Jebel Ali was fourteen days, its route being Durban - Pointe des Galets (Reunion) - Jebel Ali (UAE). The transit time was of particular importance to the plaintiff since the actual shelf life of litchis is approximately thirty days. Thus it was vital for the litchis to arrive fresh at their destination where they could be sold on the various market places in the Middle East. The litchis were grown and supplied to the plaintiff by “Laughing Waters” in Malelane, Mpumalanga Province. The litchis were dispatched by “Laughing Waters” on 2nd and 3rd December 2001 respectively. One of these containers was destined for Jebel Ali itself and the other for Dammam in Saudi Arabia.

The vessel did not depart on 6th December which was the estimated date of departure. On 10th December the plaintiff amended its booking. One of the containers would now be on carried from Jebel Ali to Dammam in Saudi Arabia. The litchis were duly loaded and packed into the respective containers. These were loaded on to the vessel on 11th December 2001 and 13th December 2001 respectively. On 13th December 2001 the vessel sailed to the outer anchorage. On the same date the vessel was instructed to re-enter the port of Durban and to discharge all its cargo intended for Pointes des Galets. It came back to port on 14th December and discharged 171 containers. It sailed again for Maputo on 15th December 2001. It became clear that the vessel planners in Geneva decided to instruct the vessel to take on board containers which had been on board the mv “MSC CAMILLE” which had been towed into the port of Maputo. The vessel sailed from Maputo on 20th December 2001 and called at various ports, namely Dar-es-Salaam, Mombasa, Karachi and finally Jebel Ali. It arrived at the latter destination on 10th January 2002 where the two containers were discharged. The Dammam containers was then transhipped and arrived at its destination on 14th January 2002.

Arising from the late delivery the plaintiff alleges that the fruit could not in fact be sold in the Middle Eastern markets. In those circumstances it has suffered the damages claimed in the particulars of claim.

At the outset the defendant challenged the plaintiff’s entitlement to sue for these damages. It argued before the Court a quo and also before us on appeal that quite simply the plaintiff did not properly establish that it had concluded a valid contract of sale of these litchis. That meant that when the litchis were delivered they were delivered pursuant to an inchoate contract. Ownership and the risk of damage to the consignment did not pass to the plaintiff. In reality ownership and the risk remained with “Laughing Waters”. The learned judge in the Court a quo after analysing the evidence of the plaintiff’s witness Jangda upheld the defendant’s contention. The gravamen of the Court a quo’s reasoning was that the evidence of Jangda does not establish on a balance of probability an essential element of a sale, namely agreement as to the price.

Counsel for the plaintiff has submitted that the learned judge a quo incorrectly assessed Jangda’s evidence on this part of the case.

The issue was canvassed for the first time in cross-examination. Jangda was asked why in his evidence in chief he had described the plaintiff as the “marketing agent of the producers”. He answered that “they sold fruit to us to ship to a specific destination, in a nutshell that’s what I would say .” When asked by the learned judge whether it was sending on behalf of the growers or for their own account, he answered that the plaintiff would buy and then re-sell at a mark-up. When asked on what terms they bought this fruit from “Laughing Waters” Jangda said the following :

“Well, again I think it needs a bit of background because fruit is really sold on a – there are no written contracts nine times out of ten, fruit is sold on an estimated price and that’s basically how most fruit is traded. On this instance Laughing Waters would have sold to us at a price of about R35,00, that’s what they would have liked and that’s what they would have liked to recover because the exchange rates were at 11,50, it depends on the exchange rates, the supplies from other parts of the world, how full the market is, how empty it is, whether you are the first in the market, the last in the market or in the middle of the season, so as … (intervention)

COMBRINCK J Were you paying COD or … (intervention) --- No, no, we were not paying COD, they supplied us in good faith and we paid them at a later stage.

But when would you agree the price? --- The price is when the final recovery comes back from the market, it’s when it arrives it’s in sound condition and the market is healthy then you have got a good deal and then when the dollars come in, if you catch the right price on the dollar exchange rate you would also pass the benefit back through to them.

Sorry, do I understand that price is only determined once it arrives in the United Arab Emirates? --- That is correct, M’Lord.

Then whatever price is reached there you then agree with … (intervention) --- That’s right.

… the grower? --- Correct.

But don’t you before shipment agree a price with the consignee? --- We agree an estimate price, we would tell them that this is what we would like, and all things being equal that’s what they will try and achieve, but once the containers arrive it’s unpacked and if you – in a market that’s short of fruit you would even get more than what you have on your invoice or what you verbally or in writing … (intervention)

So, the price between you and the grower and you and the consignee is only fixed once the market determines in the Middle East what price … (intervention) --- Correct.”

At page 160 the following exchange takes place between counsel for the defendant and the witness Jangda : -

“So let’s take the case of Ibsons, for example, that was in Jebel Ali if I … (intervention) --- Yes.

That was your buyer in Jebel Ali, so before these lychees were shipped what was your arrangement with Ibsons? --- My arrangement would have been that Laughing Waters would have wanted R35,00 paid back to them then we would add on the land side costs … (intervention)

Sorry, just before you carry on, let’s just get that, is that R35,00 per pallet or per KG? --- Per case, per carton.

Per carton, those are 2 kilogram cartons? --- That’s correct.

R35,00 per carton, so, sorry, I interrupted you. --- Then we would add on land side costs, which is forwarding charges, pre-cooling charges … (intervention)

COMBRINCK J Would add? --- Sorry, add on the land side charges which is your forwarding charges.

Yes. --- And your pre-cooling charges, which is the cold rooms for them to handle it, pre-cool it, and we would add on our forwarding agent’s charge as well, an estimate really, we have a thumb-suck, we have a formula on which we work.

And freight charges? --- And then we would, yes, add on our margin and add on the freight.

So, you would say … (intervention) --- And all of this would have been – sorry, M’Lord, it would have been done in rands then we would take a position on the dollar and we would say the dollar is at 11,50, okay, let’s cost at 11,50, so that would give us a dollar price which we would quote the consignees.

So, you would say the growers want so much, we want so much … (intervention) --- And these are the costs.”

Jangda’s evidence clearly established that “Laughing Waters” were in fact paid R35,00 per carton, that notwithstanding that the fruit arrived in a damaged condition.

It is true to say that Jangda’s evidence is not a model of clarity when it comes to describing with precision what the relationship between the plaintiff and “Laughing Waters” was. The Court a quo had difficulty in spelling out from this evidence that a price had in fact been agreed upon. While it is true to say that Jangda’s evidence at face value may give rise to the conclusion that the relationship between the plaintiff and its grower was an inchoate one which did not result in enforceable contractual obligations or indeed transfer of ownership, this Court ought to strive to uphold agreements between businessmen and not render them nugatory. If I think my way through Jangda’s evidence as a whole, he was saying in essence that the plaintiff buys the fruit from “Laughing Waters”. A base price is agreed. “Laughing Waters” stipulates that it would at least wish to recover R35,00 per carton. This however is not the final price because when the fruit arrives overseas it may encounter very favourable market conditions which would result in the plaintiff after deduction its disbursements such as freight and forwarding charges, coupled with its profit mark up, pay “Laughing Waters” an amount in excess of R35,00 per carton. Given the adverse circumstances that prevailed in this case Jangda ended up paying the R35,00 per carton to “Laughing Waters” which seems

to me to be perfectly in accordance with what they had agreed. In other words, the base price would now prevail because the overseas recovery fell far short of R35,00 per carton. In the final analysis when Jangda says that this was a “commercial arrangement” he means that men of business execute this export transaction in good faith in accordance with a well established business custom and on the basis that the ultimate recovery is dependent upon a market price in the Middle East. Thus the two factors, namely, the base price, alternatively the final price realised overseas determines what the grower is to be paid.

Pothier in his work on the law of sale (“Vente”) 28 writes : -

“It is a mode of sale much used in our province of Orleans for a man to sell the wine of his next harvest at the price which his neighbours may sell theirs. This contract is valid for although the price is uncertain at the time of the contract it will be made certain by that which the neighbours may sell for and it will not be the less certain, if they sell it at different prices, for the parties in that case, will be considered as having agreed upon the average price.”

The facts in the present case show a final determination of price is made according to the market conditions at the place of sale. This is not dissimilar to Pothier’s example. In these circumstances I find that the price is capable of determination and that the delivery of the fruit was made in accordance with an enforceable contract. Accordingly I differ with respect from the conclusion reached by the learned judge in the Court a quo.

I now turn to the second issue which falls to be determined in terms of Rule 33(4). That is whether the defendant contracted as a principal or as an agent for Mediterranean Shipping Company SA of Geneva.

In its particulars of claim it was alleged that the plaintiff and the defendant had concluded an oral agreement at Durban in terms of which the defendant would arrange the shipment of the containers in question. The particulars of claim then went on to allege the specific terms of this agreement. The case made out in the particulars of claim was that the defendant had breached its obligations in regard to when the containers would be discharged at Jebel Ali and consequently damages were suffered. Manifestly the case that is made out is that the defendant promised the plaintiff that it would ship the cargo on its behalf and that that cargo would arrive by a certain date at its destination.

It was common cause that the contract of carriage was concluded by one Pienaar (employed by WSS Africa) and one Premchand representing the defendant.

The circumstances surrounding this contract are traversed in the evidence of Premchand. He said that he telephoned Jangda of the plaintiff on or about 26th November 2001. He phoned him because his job was to book cargo on the vessel “MSC SPAIN”. He told Jangda that the ‘MSC SPAIN” was going to Jebel Ali with a quicker transit time of approximately fourteen days. Subsequently Premchand received a phone call from Chris Pienaar of WSS Africa who acted on behalf the plaintiff. Premchand then made a booking which was recorded on a booking sheet. Premchand said that MSC Durban acted as an agent for MSC Geneva, the ship owners.

Chris Pienaar was called to testify and he said that he usually handled the plaintiff’s shipping business. His task was to make a booking on behalf of his client with a specific shipping line. According to Pienaar the shipping line is requested by the client concerned. Following upon the telephonic booking made a written instruction is given to the shipping line. The shipping line in turn sends a booking confirmation. This document appears at page 334 of the record. Importantly paragraph 2 of the booking confirmation records : -

“2. BILLS OF LADING MUST BE PRESENTED TO M.S.C. AT LEAST FOUR (4) DAYS PRIOR SAILING DATE. MSC REQUIRE FOUR (4) COPIES.”

Pienaar said that his company prepared the bills of lading and used standard documentation for that purpose. Prior to the submission of the bills of lading to MSC these were given to the plaintiff.

Salvatore Sarno testified that he is the managing director and chairman of the board of directors of the defendant. He said that he is also the director of the Geneva company, Mediterranean Shipping Company SA of Geneva. He testified that there is a contract between the Geneva company and the defendant. He said that the defendant is remunerated for the work it does as an agent by way of commissions. It is precluded in terms of the agency agreement from acting for any other shipping line. The commission is calculated on the basis of a fixed amount for every container which is either imported into or exported from the country. Sarno made it clear that they act as agents for their principal. Clearly the defendant does not operate any ships. Sarno said and I quote : -

“No, we are just the agents, we do – we are not in charge – we are in charge only to accept the booking of our clients and to – to make advertising, to have our sales people visiting the client and marketing our product. Our product is a worldwide service that our principal, they are – they’re having.”

Some of the vessels that are operated are owned by MSC Geneva and some are chartered on a time basis.

In terms of clause 2.0.1 of the agency agreement referred to the defendant was given authority to issue, sign and stamp on behalf of the principals and/or the master, bills of lading and all other shipping documents as may be required by shippers.

There is clear authority in admiralty law that the contract of carriage is concluded prior to the issue of the bills of lading. The bills are evidence of the contract of carriage. Devlin J (as he then was) in Pyrene Company, Ltd v Scindia Steam Navigation Company, Ltd [1954] l Lloyd’s Law Reports 321 said the following : -

“The use of the word ‘covered’ recognizes the fact that the contract of carriage is always concluded before the bill of lading, which evidences its terms, is actually issued. When parties enter into a contract of carriage in the expectation that a bill of lading will be issued to cover it, they enter into it upon those terms which they know or expect the bill of lading to contain. Those terms must be in force from the inception of the contract; if it were otherwise the bill of lading would not evidence the contract but would be a variation of it. Moreover, it would be absurd to suppose that the parties intend the terms of the contract to be changed when the bill of lading is issued : for the issue of the bill of lading does not necessarily mark any stage in the development of the contract; often it is not issued until after the ship has sailed, and if there is pressure of office work on the ship’s agent it may be delayed several days. In my judgment, whenever a contract of carriage is concluded and it is contemplated that a bill of lading will in due course be issued in respect of it, that contract is from its creation ‘covered’ by a bill of lading and is therefore from its inception a contract of carriage within the meaning of the Rules and to which the Rules apply.”

In the instant case the cumulative effect of the evidence on the issue demonstrates quite clearly that the forwarding agent Pienaar made a booking on behalf of his client, the plaintiff. In due course Pienaar issued bills of lading. The course of events that unfolded in this particular case reveals that what happened was no different to that envisaged by Devlin J in the Pyrene case (supra). A contract of carriage in accordance with the usual terms set forth in the bill of lading was concluded at the stage when Pienaar made the booking. The principals to that contract were the plaintiff and the carrier of the goods, namely the shipping line MSC Geneva or the charterers of the vessel. In my judgment the plaintiff has failed to prove that he concluded a contract of carriage with defendant. Therefore with respect to the second issue set forth in the draft order, I answer the question posed in favour of the defendant.

Insofar as the question posed in paragraph 3 of the draft order, that falls away in the light of the finding made in respect of the second question.

That brings me to the fourth question whether the defendant in any event owed the plaintiff a duty of care to advise the plaintiff that the departure of the vessel ‘MSC SPAIN” from Durban to Jebel Ali was delayed and that the route of the vessel from Durban to that port was changed. On this part of the case the plaintiff has pleaded as follows: -

“6. Alternatively to the foregoing and in the event of it being held that the Defendant did not breach the agreement as alleged in paragraph 5 thereof then the Plaintiff claims as set out hereunder.

7. The Defendant was at all material times aware that :

(a) Each container contained a consignment of litchi fruit;

(b) Any delay in the completion of the voyage could result in the litchis deteriorating with the result that the market value thereof at the discharge ports would be adversely affected;

(c) If the containers were not shipped from Durban by 7 December 2001 and the containers were not discharged at the discharge ports within the period specified in the agreement the plaintiff would suffer damage as a result.

8. The Defendant accordingly owed the Plaintiff a duty of care to advise the Defendant (sic) if it became aware prior to the commencement of the voyage of :

(a) Any delay in the commencement of the voyage and;

(b) Any change in plans regarding the route of the vessel to the discharge ports.”

The case is then pleaded that the defendant became aware of a delay in the commencement of the voyage and a change in the routing of the vessel to the discharge points inasmuch as the vessel was no longer to travel via Reunion but would travel up the east coast of Africa stopping at various ports en route. It is claimed in paragraph 10 that the defendant breached its duty to advise the plaintiff and the plaintiff could not in the circumstances make alternative arrangements. This resulted in the damage suffered.

The factual background relevant to the decision on this issue is in brief outline the following. The defendant had solicited the plaintiff’s business on the clear representation that the MSC vessel would depart on or about 7th December and more importantly, there would be a short transit time to the destination port. We know however that the vessel did not leave the Durban harbour until 13th December. Jangda admitted that he was in constant communication with the defendant’s representatives enquiring as to when the vessel would be departing. It follows that the plaintiff was fully apprised and was kept abreast of the vessel’s delayed schedule.

The plaintiff in my view has failed on this part of the case to prove that the defendant was guilty of any culpable omission.

It is common cause that after the vessel departed on 13th December it was recalled to Durban and discharged its Reunion cargo. At this juncture the shipping line had decided to change the routing of the vessel and thus extended substantially the transit time to the port of Jebel Ali. The crisp question that arises is whether the defendant in its capacity as an agent ought to have informed the plaintiff that the transit time would be significantly extended so that the plaintiff could then decide whether it elected to remove the containers from the vessel and make other arrangements for the disposal of the cargo. Jangda said that if the plaintiff had been told it would have weighed up its options, one of which was to dispose of the cargo on the local Durban fresh produce market.

We know that the plaintiff was not given this information on 14th December. The question that arises is whether the defendant was under a duty to inform the plaintiff during this short space of 24 hours.

It is common cause that Premchand and Naidoo were aware that the plaintiff required the shortest possible transit time. Indeed, they had obtained his business on a representation to him that this would be the position. The first question to be answered is what did the servants’ of the defendant know on 14th December 2001?

Naidoo said that on Friday 14th December the vessel came back into port. He was asked whether he knew what her intended routing was. He answered as follows : -

“No, I cannot confirm a hundred percent whether it was that particular day or maybe the following Monday that we were aware of what the situation was, but I’m not – when did the “Spain” sail?

It sailed on the early morning of the 15th, the Saturday the 15th. --- Then we would have known on the 14th.

That she was in port? --- Yes – no, we would have known what was the intentions. We knew she was coming back, but then we had to make some changes, some amendments to documents to discharge containers from the “Spain”, so we would have known on the 14th or sorry, the 13th, I think is a Friday.

No, the Friday was the 14th. --- Then we would have known on the 14th.”

Naidoo said his department would be involved in amending various items of documentation to accommodate the discharge of containers from the vessel. He then went on to say : -

“Now I understand a decision to change the routing of a vessel is a decision made in Geneva. Is that right? --- Yes.

And communicated then insofar as the Durban office needs to know to the Operations Department, is that right? --- Ja, they would – well, ideally they would inform the – both of us simultaneously either by e-mail, but if it’s telephonic, it would be done with the Operations first to – to take some action immediately, but we are certainly informed immediately afterwards. In most cases that is the way it works.

Well, informed of what? In this case that the vessel is returning to port and is going to discharge Reunion cargo? --- Well, we were informed that, I think, when the vessel had already arrived in Durban, but what cargo was coming off, either at the time, whether Geneva informed us or whether the Operations told us this is the instruction that had come from Geneva, this is what we had to do, but in most cases we would verify it was well, you know … [intervention]”

At another passage Naidoo confirmed his knowledge in regard to the changed transit time : -

“On the 14th, assuming that on the 14th you got to learn that she had returned and that she was discharging Reunion cargo, would you have known from that what her anticipated transit time to Jebel Ali would be? --- Yes, because as I said earlier, the transit time on the normal route that the vessels perform is about 25 days to Jebel Ali. If the changes are going according to – if the “Spain” was to replace the “Camille”, then yes, we would know that the transit time would be about that.”

In re-examination Naidoo said : -

“As at say Friday, the 14th of December, what would the officials of the defendant have known about the route of the vessel? --- Sorry, can you repeat the question.

As at the 14th of December, Friday, the 14th of December, what would the officials of the defendant have known about the route of that vessel? --- Of which vessel? The … [intervention]

The “Spain”. --- Well, what we could see from the correspondence is that the vessel had come back to port to discharge the Reunion cargo and that she was no longer going to Reunion. That’s there to be seen, but as we discussed earlier, the actual rotation was discussed much later.

COMBRINCK J But you also would know that it was going to Maputo from A.82, not so? --- Yes.”

Having regard to the above quoted passages from the evidence and the inherent probabilities of the matter I am of the view that the following findings of fact can be made. When the vessel returned to Durban on the 14th the defendant through its operating department knew that it was returning to offload the containers destined for Reunion. It also knew that the reason for that was that the vessel was going to be routed to Maputo where it would take on board containers from the vessel “CAMILLE”. There is an overwhelming probability that the defendant knew that the “MSC SPAIN” would now be re-routed to the various ports of call that the ‘CAMILLE” was scheduled to call at. In my opinion it is overwhelmingly probable that the defendant must have known on the 14th that the transit times were going to be significantly longer than originally contemplated. Both the operations department and the marketing department would have known these facts. Naidoo said that his department would have been called upon to alter the documentation relating to the Reunion containers. They would also have known that the vessel was to call at Maputo to load the ”CAMILLE” containers as well. Even if I am wrong in the latter finding, it is nevertheless overwhelmingly probable that the operations section of the defendant was aware of the situation. The defendant cannot contend that because its

servants in one department had the knowledge and the other department which dealt with the plaintiff on a day-to-day basis did not possess that knowledge it is exonerated from responsibility. A large corporation such as the defendant must arrange its affairs so that mechanisms are in place to share important facts that come to its knowledge. In the result I find as a fact that the defendant knew on 14th December prior to the departure of the vessel that the transit time of this vessel in all probability was to be significantly lengthened.

That brings me to the question as to whether the defendant had a duty to inform the plaintiff and if it did whether its failure to do so was actionable.

Generally where a defendant’s conduct amounts to a mere omission that conduct is prima facie lawful.

The Law of South Africa by Joubert, Volume 8, Part 1, page 65.

The conduct in question can only be regarded as unlawful if there was a duty to act to avoid harm to the plaintiff.

McCann v Goodall Group Operations (Pty) Ltd 1995 (2) SA 718 C at 722.

The appropriate test for wrongfulness was set forth in Minister van Polisie v Ewels 1975 (3) SA 590 AD and reaffirmed in Minister of Law and Order v Kadir [1994] ZASCA 138; 1995 (1) SA 303 AD at 320 B as follows : -

“It needs to be emphasised that such a duty arises, as appears from the dictum in the Ewels case cited earlier, when the circumstances are such, not only that the omission evokes moral indignation, but also that the legal convictions of the community demand that it be regarded as wrongful and that the loss should be compensated by the person who failed to act positively.”

In Silva’s Fishing Corporation (Pty) Ltd v Maweza 1957 (2) 256 (AD) 263 Schreiner JA in relation to a duty of a ship owner to rescue members of the ship’s crew, said the following :

“A duty to rescue is not special or subject to peculiarly restrictive rules. It is simply a duty to act reasonably and such a duty may arise out of the circumstances of the case. It will be for the Court to decide in each case whether the circumstances are such as to give rise to a legal duty (cf. LORD WRIGHT in Bourhill v Young, 1943 A.C. 92 at p. 110)/

In the American Restatement of the Law of Torts there is a section (321) which seems to apply very closely to cases of this kind. It reads,

‘If the actor does an act, which at the time he has no reason to believe will involve an unreasonable risk of causing bodily harm to another but which because of a change of circumstances or fuller knowledge acquired by the actor, he subsequently realises or should realise as involving such a risk, the actor is under a duty to use reasonable care to prevent the risk from taking effect.’

An illustration given reads : -

‘A, reasonably believing his automobile to be in good order, lends it to B to use on the following day. The same night A’s chauffeur tells him that the steering gear is in dangerously bad condition. A could readily telephone B and warn him of the defective steering gear but neglects to do so. B drives the car the following day and the car gets out of control causing a collision with the car of C in which B and C are hurt. A is liable to B and C.’”

The question that arises in the instant case is whether the defendant had a duty of care towards the plaintiff. I have already found that the defendant in this instance procured the plaintiff’s business on the clear understanding as to the duration of the voyage. On any version that was the selling point. We also know that the plaintiff’s representative from time to time was in communication with the defendant in regard to the date of departure of the vessel. The defendant’s servants would have known that the plaintiff was exporting fruit which is a commodity whose shelf life is very limited. On 14th December the defendant became privy to information which was of vital importance to the plaintiff and that was, as I have found, the extended transit time of this voyage. Given the existence of the relationship between agent and customer the legal convictions of the community (especially the business community) would demand that this omission be branded as wrongful and that any loss sustained as a result of that should be compensated by the person who failed to act. In my view all it would have taken was one phone call to the plaintiff to apprise it of the situation – clearly no inconvenience or expense would have been suffered by the defendant if it had done so. If it had done so, the plaintiff in all probability would have elected to take the containers off the vessel and sell the fruit on the local market.

To sum up then I am of the opinion that the defendant knew on 14th December 2001 that there would be an extended transit time. It failed to inform the plaintiff thereof in circumstances where it had a duty to do so and would have foreseen that a failure to do so would result in harm to the plaintiff. It was therefore negligent. The fourth and fifth questions are answered in favour of the plaintiff.

Finally, that brings me to the sixth question. On the footing that the defendant negligently breached its duty to the plaintiff, is the defendant excused from all liability by virtue of the so-called “Himalaya Clause” contained in the bills of lading? This particular defence is pleaded as follows : -

“12. If the Plaintiff establishes a delictual cause of action against the defendant as pleaded, the defendant will in any event be excused from liability in reliance on the defences pleaded in paragraph 6 hereof read with clause 18 of the bills of lading as pleaded above in that :

(a) the said clause was intended to benefit, inter alia, the defendant; and

(b) in concluding the contracts of carriage incorporating the said clause the carrier had the defendant’s authority to contract on the defendant’s behalf and to the defendant’s benefit, alternatively the defendant had accepted, or hereby accepts the benefit of the said clause.”

Clause 18 reads as follows and I set it out in full :

“LIABILITY OF SERVANTS AND SUB-CONTRACTORS. It is hereby expressly agreed that no servant or agent of the Carrier, including any independent sub-contractor employed by the Carrier in any circumstance whatsoever be under any liability whatsoever to the Merchant for any loss or damage or delay of whatsoever kind arising or resulting directly or indirectly from any act neglect or default on his part while acting in the course of, or in connection with his employment and, without prejudice to the generality of the foregoing provisions in this clause every exception, limitation, condition and liberty herein contained and every right exception from liability, defence and immunity of whatever nature applicable to the Carrier or to which the Carrier is entitled hereunder shall also be available and shall extend to protect every such servant or agent of the Carrier (including any stevedore, terminal operator or any other independent contractor) acting as the aforesaid and for the purpose of the foregoing provisions of this clause the Carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servant or agent (including all independent contractors, as aforesaid) and all such persons shall to this extent be or be deemed to be party to this Bill of Lading.”

The bill of lading was signed by the defendant (“Mediterranean Shipping Company (Pty) Ltd”) as agents for the carrier. In terms of the bill of lading “carrier shall mean the vessel and her owner or demised charterer for whom the master has entered into this contract”. It is also said

that “MSC shall act as agent of the owner or demise charterer in arranging the transport covered by this bill of lading”.

Clause 18 is a contractual stipulation which has come to be known as “a Himalaya Clause”. In essence this type of clause seeks to extend the contractual protection conferred on the carrier in terms of the bill of lading to other persons who are not parties to the contract of carriage but who perform services in connection with that contract which would otherwise be performed by the carrier.

The Himalaya Clauses have been enforced by the Courts both in South Africa, England and elsewhere. The Courts have recognised that these clauses give commercial efficacy to the contract of carriage.

See Santam Insurance Co Ltd v SA Stevedores Ltd 1989 (1) SA 182 D.

LTA Construction Ltd v Mediterranean Shipping Co Depots (Pty) Ltd, unreported (surprisingly!) judgment of Hurt J in the Durban and Coast Local Division, under Case No 3542/2002, delivered on 21st April 2004.

In his speech in the “Mahkutai”, Lloyds Reports, [1996], Volume 2, page 9, Lord Goff said :-

“Their Lordships draw support for this view from the function of the Himalaya Clause. That function is, as revealed by the authorities, to prevent cargo owners from avoiding the effect of contractual defences available to the carrier (typically the exceptions and limitations in the Hague-Visby Rules) by suing in tort persons who perform the contractual services on the carrier’s behalf”.

(My emphasis).

See also Port Jackson Stevedoring (Pty) Ltd v Salmond and Spraggon (Australia) Pty Ltd : “The New York Star” [1980] 3 AER 257.

See also LTA Construction Ltd, supra, at page 14 of the unreported judgment.

I have already found that the defendant was negligent in failing to inform the plaintiff of the extended transit time as a result of the decision to send the vessel to Maputo. The question is whether this negligence occurred “while acting in the course of, or in connection with (the defendant’s) employment” as the carrier’s agent. The contract in terms of which the Defendant was thus employed by MSC SA of Geneva appears at pages 401 to 407 of the Appeal Record. It was referred to evidence by Captain Sarno. Clause 2.01 states that the agreement “covers the following duties: -

Sales and Marketing

Bookings

Documentation

Equipment Control

Inland Transportation

Operations Cost Control

Vessel Operations/Husbandry

Disbursements

Systems/IT”.

There is an undertaking to act exclusively as the agent for MSC SA of Geneva. Clause 3, which is headed “General Duties of the Agent” is to the following effect: -

“3.01 To represent the Principals in the Region, and to undertake all activities necessary for discharging their duties under this agreement, while complying all the time with the specific instructions, which the Principals may give.

3.02 If so required, and by agreement of the Principals, and on their behalf, to recommend and/or appoint Stevedores, Watchmen, Tallymen, Terminal Operators, Hauliers, Sub-Agents and Depots.

3.03 The Agents guarantee and undertake not to accept any discounts, brokerage or commission, from anybody for themselves, but to credit to the Principals all discounts, commissions, brokerage and all other sums whatsoever received by them in respect o the Principals’ business other than those sums properly payable to them or agreed to by the Principals.”

It is clear that some of the duties of the defendant towards its principal fall within the category of those which the Principal would be required to discharge in the course of a contract of carriage. Others do not. For instance, the duty to market the services offered by MSC SA Geneva could not be considered to fall within the defined category. Those relating to the signing of the bill of lading, the management of vessels and the transportation of cargo, on the other hand, would probably fall squarely within the description of “duties performed in terms of the contract of carriage”. The basis upon which the Himalaya Clause has been held, in shipping law in general, to constitute an effective stipulation in favour of parties other than the carrier, is one of commercial efficacy as is clearly indicated in the judgments to which I have referred. Wide wording in a clause containing such stipulations must needs be construed narrowly to achieve this object within the context of the contract of carriage and not beyond it. Thus, in the clause in question, where the expression “while acting in the course of ….. his employment” is used, it must be understood to confine the particular “course of employment” to the acts which are required to assist in the performance of the contract of carriage. It could, in my view, hardly be contended by the defendant that if, in

the course of marketing the services of MSC SA Geneva, the defendant somehow negligently caused the plaintiff to suffer loss, the defendant could invoke the Himalaya stipulation in the bill of lading as a defence. This is because the bill of lading covers a specific contract of carriage and stipulations in it which limit liability are necessarily confined to stipulations concerning that specific contract. In my view the words “in connection with”, although objectively capable of a wide construction, must, for the purpose of ascertaining their meaning in the Himalaya Clause, be restrictively construed to limit their application to the contract of carriage.

The conduct which I have found to be negligent in this case was an omission to give a customer of the carrier information which would, in all probability, have resulted in that customer cancelling his contract with the defendant’s principal. The imparting of such information could plainly not be regarded as conduct assisting the carrier with the performance of its obligations. And although the knowledge which the defendant had about the plan to change the route and extend the transit time of the voyage was clearly knowledge acquired “in connection with” the defendant’s employment, the duty which was generated by the particular circumstances of the defendant’s dealings with the plaintiff was not a duty “in connection with (the Defendant’s) employment to perform acts which the carrier was obliged to perform in terms of the contract of carriage”. I am unable to agree with counsel for the defendant’s submission that the omission was in connection with the defendant’s employment to issue bills of lading.

In the circumstances I consider that the defendant’s neglect, in this case, was not neglect for which the carrier stipulated protection in the Himalaya Clause.

It follows that the appellant has been successful on issues 1, 4, 5 and 6 identified above. In the result the appeal must succeed. The judgment in the Court a quo is set aside and the action is remitted to the Court a quo for decision on the remaining issues. The respondent is ordered to pay the costs of the appeal and of the hearing, in the Court a quo, of the separate issues.

HURT J : I agree.

SWAIN J : I agree.

DATE OF HEARING 1 AUGUST 2005

DATE OF JUDGMENT 10 NOVEMBER 2005

APPELLANT’S COUNSEL MR G. LOPES SC

APPELLANT’S ATTORNEYS ABBAS, LATIB & COMPANY, DURBAN

AYOOB ATTORNEYS, PIETERMARITZBURG

RESPONDENT’S COUNSEL MR A. M. STEWART

RESPONDENT’S ATTORNEYS ROUTLEDGE MODISE MOSS MORRIS, DURBAN

VON KLEMPERERS, PIETERMARITZBURG