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Last Updated: 7 December 2004
THE SUPREME COURT OF APPEAL
OF SOUTH
AFRICA
Reportable
Case no: 369/03
In the matter between:
SWIRE PACIFIC OFFSHORE SERVICES (PTE)
LTD Appellant
and
MV ‘ROXANA BANK’
First Respondent
THE CARGO PRESENTLY ON BOARD THE
MV
‘ROXANA BANK’ Second
Respondent
_____________________________________________________
Coram : SCOTT,
FARLAM, NUGENT, CONRADIE
et CLOETE JJA
Date of
Hearing : 20 AUGUST 2004
Date of delivery : 16 SEPTEMBER
2004
Summary: Salvage – no closed list of categories of persons
entitled to salvage reward – persons entitled to reward in
respect of
services rendered by a salving vessel not limited to the owner or demise
charterer.
___________________________________________________
JUDGMENT
_____________________________________________________
SCOTT
JA/...
SCOTT JA:
[1] On the morning of 25 January 2002 the
MV Roxana Bank experienced mechanical problems with her main engine while
lying at anchor off the town of Mossel Bay on the east coast of South Africa.
The prevailing weather conditions caused her to drag her anchor and drift in a
north-westerly direction close to a submarine oil
pipeline which runs from a
single buoy mooring to the oil terminal at Mossel Bay. A pilot who had boarded
the Roxana Bank requested assistance from the MV Pacific Lance
which was anchored nearby. In response, the latter took the Roxana
Bank under tow out to sea. Arising from this incident, the appellant
subsequently commenced proceedings in rem in the Cape High Court against
the Roxana Bank, as first defendant, and against her cargo, as second
defendant, (now the respondents) in which it claimed a salvage reward totalling
R1 000 000 together with interest and costs. The claim is a maritime claim
within the meaning of para (k) in the definition of ‘maritime
claim’
in s 1(1) of the Admiralty Jurisdiction Regulation Act 105 of 1983.
[2] The appellant alleged in its particulars of claim that it was
‘the operator’ of the Pacific Lance and that her master and
crew in rendering the salvage services had acted in the course and scope of
their employment with the appellant
or ‘alternatively in terms of their
duties, having been seconded by Swire Pacific Ship Management Ltd to the
[appellant].’
The evidence adduced by the appellant at the trial revealed
that while it had effective control over the disposition of the vessel,
it was
neither the owner nor the charterer of the vessel in terms of a demise
charterparty; nor was it the employer of her master
and crew. At the end of the
appellant’s case the respondents applied for and were granted absolution
from the instance by the
court a quo on the ground that the appellant had
failed to make out a prima facie case that it had the necessary locus
standi to claim a salvage reward based on the services rendered by the
Pacific Lance. The appeal is with the leave of the court a
quo.
[3] The respondents concede that the evidence adduced at the
trial, although disputed, was sufficient to establish prima facie that
the
services rendered by the Pacific Lance were such as to render the owners
of the Roxana Bank liable for the payment of a salvage reward. For the
purpose of the appeal, therefore, this may be assumed. The question in issue
is
whether the evidence adduced was of such a nature as to establish a relationship
between the appellant and the Pacific Lance which in law would justify a
salvage award being made to the appellant.
[4] The appellant is a member
of a group of companies known as the Swire group, as are the companies that
respectively own the Pacific Lance and employ her master and crew. At the
head of the group is Swire Pacific Ltd, a public company registered in Hong
Kong. The group
is divided into five divisions. One is the shipping division
which comprises about six companies. What was referred to as the ‘holding
company’ of this division is a Bermudan company, Swire Pacific Offshore
Holdings Ltd. (This company is itself a wholly owned
subsidiary of another
Bermudan company which in turn is a wholly owned subsidiary of Swire Pacific Ltd
of Hong Kong.) One of its
subsidiaries is Swire Pacific Offshore Ltd, also of
Bermuda, which in turn holds all the shares in the appellant. The latter is
registered
in Singapore. The Pacific Lance is owned by a Panamanian
registered company, Swire Marine Corporation Ltd, which is another wholly owned
subsidiary of Swire Pacific
Offshore Holdings Ltd. Her master and crew are, or
were at the relevant time, employed by a Hong Kong company, Swire Pacific Ship
Management Ltd, which is a wholly owned subsidiary of the company at the head of
the group, Swire Pacific Ltd.
[5] The appellant’s business is the
provision of marine services to the offshore industry. This involves providing
support for
offshore oil rigs, oil platforms, drilling barges and the like. For
this purpose the appellant employs a number of ships, one of
which is the
Pacific Lance. Mr Brian Townsley, who is a director of the appellant as
well as other companies in the shipping division of the group, testified
that
the appellant is, as he put it, ‘the head office’ of the shipping
division of the group and carries on its business
with the support of other
companies in that division. He explained that Swire Marine Corporation Ltd was
established to do no more
than own the Pacific Lance and other ships, and
that it had no employees in Panama where it was registered. In summary, his
evidence was to the effect that
although there was no written agreement between
the appellant and Swire Marine Corporation Ltd regarding the employment of the
Pacific Lance, the former, with the concurrence of the latter,
effectively controlled the disposition of the vessel in every respect as if it
were
the owner.
[6] At the time the salvage services were rendered, the
Pacific Lance was under charter to Soekor E and P (Pty) Ltd
(‘Soekor’). The agreement, called a ‘service agreement’,
was
concluded between the appellant and Soekor and commenced in September 1999.
Its terms largely reflect the relationship between the
vessel and the appellant
described by Townsley. The appellant is styled ‘the owner’. The
vessel is defined as meaning
‘the MV Pacific Lance owned,
chartered or leased by [the] owner [ie appellant] . . .’. The hire
is payable to the appellant as ‘owner’,
who is to deliver the vessel
at Mossel Bay Harbour on the commencement date and provide a master and crew
‘in numbers and classifications
as set out in [an] appendix’. There
are detailed provisions relating to the suspension of ‘the services’
by the
‘owners’ for the purpose of engaging in a salvage operation
and for the sharing with Soekor of any salvage reward paid
to the
‘owners’ after deducting various specified expenses. Finally, the
‘owners’ are obliged to procure
at their own cost various insurances
for the duration of the agreement, including ‘workmen’s compensation
insurance’,
‘hull and machinery insurance for the full value of the
vessel’, ‘P & I risks as covered by a full entry of
the vessel
in a recognised P & I club . . .’ and ‘insurance to the full
value of the bunkers on board the vessel’.
[7] As indicated above,
the master and crew of the Pacific Lance are employed not by the company
that owns the vessel, but by Swire Pacific Ship Management Ltd. According to
Townsley, their wages
are paid by the latter with funds transferred to it by the
appellant expressly for that purpose. Furthermore, the master acts on
the
instructions of the appellant, not Swire Pacific Ship Management Ltd. Townsley
explained that these were conveyed on a day to
day basis to the vessel via
regional ‘out ports’ which had one or two managers. Similarly, when
instructions were sought
by the master they were obtained from the appellant by
the same means. The evidence of the master, Captain Stephen Holden, was to
the
same effect. It appears that in 1993 Swire Pacific Offshore Ltd, being the
company that owns the shares in the appellant, entered
into a written agreement
with Swire Pacific Ship Management Ltd in terms of which the latter undertook to
recruit and provide the
former with crew for the vessels entrusted to it by
their owners. Townsley explained, however, that by reason of a subsequent
restructuring
of the group’s activities this agreement no longer correctly
reflected the position as Swire Pacific Offshore Ltd had ceased
to be actively
involved and Swire Pacific Ship Management Ltd reported directly to the
appellant.
[8] In the court a quo Davis J correctly held that the
law to be applied was the English law as it existed on 1 November 1983. A South
African court of
admiralty immediately before the commencement of the Admiralty
Jurisdiction Regulation Act 105 of 1983 (‘the Act’) would
have had
jurisdiction to entertain a claim for salvage by virtue of s 6 of the Admiralty
Court Act of 1840 (3 & 4 Vict.Cap.65).
Accordingly, and in terms of s 6(1)
of the Act, the law to be applied is the law which ‘the High Court of
Justice of the United
Kingdom’ would have applied on the date on which the
Act commenced. (The reference to the ‘High Court of Justice’
must be
understood as a reference to the Supreme Court of England and Wales. See MV
Stella Tingas: Transnet Ltd v Owners of the MV Stella Tingas and another
2003 (2) SA 473 (SCA) at 479G-H.) However, by reason of s 6(2) of the Act, the
application of that law is subject to the provisions
of any law of the Republic
applicable to salvage. It follows that in the event of a conflict between
English law and the Wrecks and
Salvage Act 94 of 1996, incorporating as it does
the International Convention on Salvage 1989, the latter must prevail. As far as
the present case is concerned, there would appear to be no such conflict. In
this regard it is to be observed that the Pacific Lance is not a South
African ship within the meaning of the definition of such a ship in s 1 of the
Wrecks and Salvage Act.
[9] Having held English law to be applicable, the
learned judge appears to have accepted or proceeded on the assumption that there
was a numerus clausus of categories of persons entitled to recover a
salvage reward. He concluded his discussion on the issue thus:
‘To
summarise: the position in terms of English law (which is to be applied in this
case as South African law) is that the master,
crew, owner or demise charterer
represent the categories of persons to whom a salvage reward may be
due.’
Thereafter, in response to counsel’s invitation to do so,
he considered whether there was any justification for lifting the
corporate veil
to enable the appellant ‘to locate [itself] within the existing categories
by use of a peep through the corporate
structure of the Swire Group’ and
decided there was none. The judge was also not prepared on the facts of the case
‘to
extend’ the categories of persons entitled to a salvage reward
to ‘an operator’. He accordingly granted absolution
from the
instance.
[10] In this court counsel were in agreement that there was no
closed list of categories of persons entitled to claim a salvage reward.
This is
undoubtedly so. Brice on the Maritime Law of Salvage 3 ed at para 1-177
says this:
‘There is no arbitrary limitation upon the class of persons
or bodies who are entitled to recover salvage remuneration provided,
however,
that the same are recognised in law as volunteers and they render salvage
services.’
In The Sava Star [1995] 2 Lloyds Rep 134 (Adm Ct) Mr
Justice Clarke, after quoting with approval the above passage (in the second
edition at para
1-154), concluded at 141:
‘There are no rigid
categories of salvor. They include any volunteer who renders services of a
salvage nature.’
Although ‘salvor’ is not defined in the
Salvage Convention 1989 it is clear that the above approach is consistent with
its terms. See Kennedy and Rose Law of Salvage 6 ed para 444. In the
present case, however, we are concerned not with a situation where the salvor
personally rendered the salvage
services, but with a situation where a ship was
the means by which those services were rendered. The question that arises is
whether
in such circumstances a person other than the owner or demise charterer
can become entitled to a salvage reward.
[11] It is well established that
the owner of a salving vessel is entitled to a salvage reward due in respect of
the services rendered
by the vessel. This is so even if the vessel is subject to
a time charter. It is the owner who has the power to control the disposition
of
the ship and whose property or interests are placed at risk. But the element of
risk, if a requirement in the past, is no longer
one; it is relevant only to the
quantum of the claim. See Kennedy and Rose paras 454-458.
[12] It has
also long been recognised that where the salving vessel is subject to a charter
amounting to a demise, it is the charterer
who is entitled to the reward. Such a
charterer, it is said, becomes pro hac vice the owner for the duration of
the charter. In Elliot Steam Tug Company Ltd v Admiralty Commissioners; Page
and others v Admiralty Commissioners [1921] 1 AC 137 the House of Lords
accepted that the demise charterer was so entitled, but without an in depth
analysis and seemingly
on no more than the assumption of a rule that it is the
demise charterer who acquires the right to the salvage reward. Kennedy and
Rose
contend that what really underlies the entitlement of the demise charterer to
the reward is the power that he (or she) has to
direct the salving vessel to
render the services and to bear the risk of her loss. They say at para
473:
‘Demise charterparties are commonly regarded as putting the
charterer in the position of the owner for the duration of the charterparty,
so
that he automatically assumes both the liabilities and rights of the owner. In
fact, of course, there is merely a transfer of
possession and what really
provides the charterer with the right to salvage is the power given to him
(additionally to the rights
he would normally have under the employment and
indemnity clause in a time charterparty) to order the ship to provide salvage
services
and to bear the risk of any loss to the vessel – for which he
must indemnify the owner – during salvage. He has the right
to decide on
the employment of the ship, so he is able to contribute its services, and it is
he who bears the risk.’
They add at para 474:
'It is for those
reasons, and not simply because he acquires the appearance of ownership, that
the demise charterer can claim salvage.
The owner foregoes the services of and
risk to the vessel during the demise and can be said to contribute nothing to
salvage.’
This analysis strikes me as correct and I readily endorse
it. The question is whether there is any reason why some person other than
the
owner or demise charterer who similarly has the power to provide the services of
a salving vessel and who will bear the loss
of the vessel (or possibly other
financial loss) should not be entitled to a salvage reward. In principle, once
one accepts, as I
do, that there is no closed list of categories of persons who
may claim salvage, I can think of no such reason; nor was counsel able
to
advance one in argument. In my judgment, therefore, it must be accepted that
such a person is entitled to a salvage reward.
[13] To return to the
facts of the present case, what is apparent from Townsley’s evidence is
that the power to control the
disposition of the vessel was vested in the
appellant. Although the employment contracts of the master and crew were
concluded with
Swire Pacific Ship Management Ltd, the inference is that the
appellant was pro hac vice their employer. It was the appellant who
instructed the master and it was the appellant to whom the master turned when he
sought
instructions. In this way the appellant effectively exercised the day to
day control over the vessel. Townsley’s evidence that
the appellant
controlled the disposition of the vessel in every respect is moreover supported
by the existence of the Soekor agreement
which the appellant entered into in its
own name as ‘owner, charterer or lessee’ of the Pacific
Lance. Counsel for the respondent submitted that the inference arising from
the evidence was that the appellant was no more than an agent
and that it had
entered into the Soekor agreement as agent for and on behalf of an undisclosed
principal, being Swire Pacific Ship
Management Ltd. Such an inference is not
only inconsistent with the terms of the Soekor agreement, it is also not in
accord with
the direct evidence of Townsley; nor was it put to him in
cross-examination. A more likely inference is that there existed, at the
least,
a tacit agreement between the owner and the appellant to the effect that the
latter was to possess and exercise full control
over the disposition of the
Pacific Lance. Indeed, it is clear from the evidence that the
appellant’s possession and control of the vessel was with the concurrence
of
the owner. The appellant’s counsel sought to categorize the agreement
as being ‘akin to a demise charterparty’,
but no purpose is served
by attempting to give it a tag.
[14] As far as the element of risk is
concerned, it is apparent even from the terms of the Soekor agreement that the
appellant would
suffer financial loss through a failure to perform in the event
of the vessel’s being lost or damaged in the course of a salvage
operation. But apart from that, the appellant’s possession of the vessel
of another gives rise, in the absence of evidence
to the contrary, to the
natural inference that the appellant will ultimately be obliged to return the
vessel to the owner or indemnify
the owner for its loss. Some support for this
is to be found in the appellant’s undertaking in the Soekor agreement to
procure
amongst others hull and machinery insurance to the full value of the
vessel.
[15] In order to survive absolution, the appellant was obliged,
as far as inferences are concerned, to show no more than that the
inference on
which it relied was one which was reasonable. See Gordon Lloyd Page &
Associates v Rivera and another 2001 (1) SA 88 (SCA) at 92H-I. In my view
the appellant succeeded in the circumstances in establishing prima facie that it
bore
the risk of the loss of the vessel. It follows from what I have said above
that on these facts the relationship between the appellant
and Pacific Lance
was such as to entitle the appellant in law to a salvage reward in respect
of the services rendered by the vessel.
[16] It was contended on behalf
of the respondent that the case the appellant ultimately sought to establish was
not the case made
out in its particulars of claim and that the appellant was
therefore precluded from relying on the former. The case pleaded, said
counsel,
was that the appellant was entitled to a salvage reward as employer of the
master and crew who were acting in the course
and scope of their employment with
the appellant or had been seconded to it, while the case sought to be
established was that the
appellant was effectively in control of the disposition
of the vessel which in turn was the means by which the salvage was effected.
The
distinction between the two is, of course, a valid one, but I do not think that
the particulars of claim must be construed as
precluding the latter. It is clear
from the allegations made in the particulars of claim that the appellant’s
case was always
that it was the services rendered by the vessel that effected
the salvage and not simply the services of the master and crew acting
in the
course and scope of their employment. But the allegation that they were so
employed or were seconded to the appellant makes
it clear that the appellant was
in a position to control the disposition of the salving vessel. The argument,
therefore, cannot succeed.
[17] It follows that in my view the appeal
must be upheld.
The following order is made:
(1) The appeal is upheld
with costs, such costs to include the costs occasioned by the employment
of two counsel;
(2) The order of the court a quo granting
absolution from the instance is set aside and the following is
substituted in its place –
‘The application for absolution
from the instance is dismissed with costs including the costs occasioned by
the employment
of two counsel.’
D G
SCOTT
JUDGE OF APPEAL
CONCUR:
FARLAM J
NUGENT
J
CONRADIE J
CLOETE
J
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