THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable
Case No: 41/2015

In the matter between:
VIKING INSHORE FISHING (PTY) LTD

Appellant
and
MUTUAL AND FEDERAL INSURANCE CO LTD         Respondent

Neutral citation: Viking Inshore Fishing (Pty) Ltd v Mutual and
Federal Insurance Co Ltd (41/2015) [2016] ZASCA 21 (18 March 2016)
Coram:
MAYA AP, WALLIS, SALDULKER and SWAIN JJA and
VICTOR AJA
Heard:
8 March 2016
Delivered: 18  March 2016
Summary: Marine Insurance – hull policy – Inchmaree clauses – vessel
lost in collision as a result of negligence – whether claim for indemnity
barred by virtue of a breach of a Merchant Shipping Act warranty –
application of warranty – whether collision resulting from a want of due
diligence by the owner.

ORDER

On appeal from: Western Cape Division of the High Court, Cape Town
(Yekiso J sitting as court of first instance):
The appeal is upheld with costs and the judgment of the court below is set
aside and replaced with the following:
„There will be judgment for the Plaintiff for:
1 Payment of the sum of R3 990 000, together with interest on the
sum of R3.5 million at a rate of 15.5% per annum from
8 October 2005 to date of payment.
2 Costs of suit, such costs to include the qualifying expenses of
Captain Cox.‟

JUDGMENT

Wallis JA (Maya AP, Saldulker and Swain JJA and Victor AJA
concurring)
[1] Shortly after midnight on 8 May 2005 a few miles off the coast
near Cape St Francis the fishing vessel Lindsay collided with the Ouro do
Brasil, a bulk juice carrier on a voyage from Singapore to Santos, Brazil.
Given the disparity in size of the two vessels1 the outcome was virtually
inevitable and tragic. The Lindsay capsized and sank soon after the
collision and 14 crew members were drowned. Only the master, Captain
Landers, who was off duty and asleep in his cabin near the bridge, and Mr

1 The Lindsay had a gross registered tonnage (GRT) of 174.24 tons and overall length of 31.22 metres.
The Ouro Do Brasil had a GRT of 15 218 tons and a length overall of 172 metres.

John Ehlers, a sparehand2 who had been on watch at the time survived.
Captain Landers nearly died as a result of the ingestion of diesel oil and
has as a result of post-traumatic stress disorder been forced to give up his
life on the sea.

[2] The respondent in this appeal, Mutual & Federal Insurance Co Ltd
(Mutual & Federal), insured the Lindsay in terms of a marine hull
insurance policy. The owner of the Lindsay, Viking Inshore Fishing (Pty)
Ltd (Viking), claimed an indemnity under the policy for the agreed value
of the vessel, namely R3.5 million plus VAT. Mutual & Federal rejected
the claim and Yekiso J in the Western Cape Division of the High Court,
Cape Town dismissed Viking‟s action in which it sought to recover that
sum. This appeal is with his leave.3

The policy
[3] Three provisions of the policy are relevant to Viking‟s claim and
Mutual & Federal‟s defence to that claim. First, there are the two clauses
under which Viking contends that it is entitled to an indemnity. The
policy incorporated the Institute Fishing Vessel Clauses and the relevant
perils insured against were set out in clause 6.2, which reads as follows:
„This insurance covers loss of or damage to the subject-matter insured caused by
6.2.1 accidents in loading discharging or shifting catch fuel or stores
6.2.2 bursting of boilers breakage of shafts or any latent defect in the machinery or
hull
6.2.3 negligence of Master Officers Crew or Pilots

2 The term describes a seaman with only basic training whose principal role on a fishing vessel is to
assist with the fishing operations and provide manual labour.
3 There was some confusion about the terms upon which Yekiso J granted leave to appeal, but that was
clarified on application to this Court, when Brand JA and Schoeman AJA gave unrestricted leave to
appeal.

6.2.4 negligence of repairers or charterers provided such repairer or charterers are
not an Assured hereunder
6.2.5 barratry of Master Officers or Crew,
provided such loss or damage has not resulted from want of due diligence by the
Assured, Owners or Managers.‟

[4] Further cover was provided by the inclusion in the policy of the
Institute Additional Perils Clauses – Hulls, specifically devised for use
with the Institute Fishing Vessel Clauses, which provided the following
additional cover:
„1.
In consideration of an additional premium this insurance is extended to cover
–
1.1
…
1.2
loss of or damage to Vessel caused by any accident or by negligence,
incompetence or error of judgement of any person whatsoever.
2.
…
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 want of due diligence by the Assured, Owners or
Managers.‟

[5] These two clauses are of the type commonly described as
Inchmaree clauses,4 because they extend the indemnity under the policy
to situations beyond perils of the sea. This description was important
because of the terms of the Merchant Shipping Act5 warranty (the MSA
warranty), which provided the principal line of defence for Mutual &
Federal. The warranty read as follows:

4 After the vessel involved in Thames & Mersey Marine Insurance Co Limited v Hamilton, Fraser &
Co (1887) 12 AC 484.
5 Merchant Shipping Act 57 of 1951 (the MSA).

„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.‟
We were informed that this is a standard clause in marine hull policies
issued by South African underwriters in relation to South African vessels.

[6] The parties were at odds over the meaning and effect of the second
proviso to the MSA warranty. Viking said that its effect was to render the
warranty irrelevant to the assessment of its claim as that claim arose
under the two Inchmaree clauses. Mutual & Federal said that the
operation of the warranty could be reconciled with the Inchmaree clauses
and therefore breaches of the warranty could properly be raised as a
defence to Viking‟s claim. This was the primary issue in the appeal.

[7] In the alternative to its defence based on the MSA warranty Mutual
& Federal argued that the loss of the Lindsay resulted from a want of due
diligence on the part of Viking as the owners of the vessel. Assuming that
was the case, by virtue of the provisions of the two Inchmaree clauses
there was no liability to indemnify Viking for its loss.

The facts
[8] There is no real dispute about the circumstances in which the
Lindsay sank, and it is helpful to describe them briefly in order to set the
stage for considering Mutual & Federal‟s defences. Before doing so it is
appropriate to mention that Mutual & Federal denied both the fact of the

sinking and that it had been occasioned by negligence on the part of
either the persons on the bridge of the Ouro do Brasil or the master,
officers and crew of the Lindsay or a combination of the two. They freely
admitted that they did so for tactical reasons. In preliminary proceedings
Davis AJ, relying on Williams v Tunstall, accepted that there was nothing
inappropriate in this.6 She was wrong to do so. Since 1965, when the
Uniform Rules of Court were first promulgated, Rule 18(5) has provided
in regard to denials that:
„When in any pleading a party denies an allegation of fact in the previous pleading of
the opposite party, he shall not do so evasively but shall answer the point of
substance.‟
A tactical denial does not do that. Rule 9(3)(b) of the Admiralty Court
Rules follows rule 22(2) of the Uniform Rules and rule 18 is excluded
(Admiralty Rule 24), but I see no reason to construe those rules to permit
the tactical denial of factual matter that the pleader knows is not in
dispute. And Williams v Tunstall has been rejected by this Court. Harms
DP said in relation to an attempt to rely on it that:
„The other objection, namely that motion proceedings give the applicant a procedural
advantage because the respondent is not entitled to rely on a bald denial, as is possible
in trial proceedings, and that it would be unfair to deprive the respondent of this
advantage, no longer holds water. Litigation is not a game.‟7
I agree. This case illustrates the abuse that arises from tactical denials,
where a case that had already been the subject of extensive investigation
in the course of a Court of Marine Enquiry was traversed afresh in
circumstances where it was apparent that the insurer had no fresh
evidence on which to base its case and where the principal witness on

6 Williams v Tunstall 1949 (3) SA 835 (T) at 838-839.
7 Cadac (Pty) Ltd v Weber-Stephen Products Co and Others 2011 (3) SA 570 (SCA) para 10.

whom it wished to rely was unavailable. This involved a waste of time
and costs.

[9] The principal facts emerge from the evidence of Captain Cox, who
gave evidence at both the Court of Marine Enquiry that followed upon the
sinking and the trial in the High Court. He analysed the information
available from the Ouro do Brasil’s navigational equipment and
information from Marine and Coastal Management in relation to the
position of the Lindsay. Using that he was able to plot the course taken by
the two vessels over the period of about 45 minutes before the collision.
In turn this enabled him to express a view on the cause of the collision.

[10] The Lindsay had finished fishing operations for the day and was
sailing in a broadly easterly direction. Its aim was to be in position the
following morning to commence fishing at a different fishing ground
selected by the master, Captain Landers. She was approximately 18
nautical miles from the coast. Another, much larger vessel, the Umgeni
was following a similar course a mile8 or so further from shore and
overtaking the Lindsay. The Ouro do Brasil was travelling down the coast
in a westerly direction.

[11]   Captain Cox tracked the two vessels over the period from about
midnight on 7 May 2005 until the collision at about 00.45 am on
8 May 2005. At the beginning they were over 30 miles apart. The vessels‟
initial courses would have taken the Ouro do Brasil across the bows of
the Lindsay, but at a safe distance in front of it. According to Captain
Cox, given the distance between them and allowing for their relative

8 References to a mile here and elsewhere in this judgment is to a nautical mile.

speeds and courses, would, if their courses had remained unchanged,
have meant that the Ouro do Brasil would have safely passed to port of
the Lindsay. This remained the position until about 00:30 am on 8 May
2005. Captain Cox‟s opinion to this effect was not challenged. Things
changed when, at about 00.30 am, the Ouro do Brasil gradually altered
course to starboard. At the time the vessels were between 6 and 7 miles
apart. But the change in course, if not addressed, would have led to a
close quarters situation between the two vessels. It was not a situation
that the Lindsay could avoid by itself turning to starboard because that
would have risked bringing it into a collision situation in relation to the
Umgeni, which was overtaking her on the starboard side.

[12] According to Captain Cox the starboard turn effected by the Ouro
do Brasil was insufficiently bold to enable the Ouro do Brasil, as the
give-way vessel,9 to avoid a collision. Had its turn been bolder the Ouro
do Brasil could have passed to port of the Lindsay. Instead the turn was
too gentle and created the risk of collision. There is no explanation in the
record for the Ouro do Brasil doing this, but as its own navigational
equipment was not at that time showing the presence of the Lindsay it
may not have realised the dangers involved in the manoeuvre. According
to its supplemental deck log book it was trying to ensure that there was
adequate room between it and the Umgeni for the two to pass safely. No-
one from the Ouro de Brasil gave evidence at the trial so we are left in
the dark as to the reasons for it adopting the course it did.

9 As the name implies this is the vessel that under the Collision Regulations must take avoiding action
to prevent a collision.

[13] From the perspective of the Lindsay it was the stand-on vessel10
and therefore obliged in terms of the collision regulations to maintain its
course and speed. Furthermore, because of the gentle nature of the
movement to starboard by the Ouro do Brasil, it would have been
difficult for those on the bridge of the Lindsay to appreciate that a
dangerous situation with a risk of collision had been created. There was a
wind blowing at force 6 on the Beaufort Scale (approximately 25 knots)
and a south-westerly swell ranging from 4 to 6 metres in height. As the
Lindsay rode up the swells and sank into the troughs it would not have
been easy to control and the bow would have yawed back and forth.
Those on board a small fishing vessel would have found it difficult to
appreciate from a distance at night the relatively minor and slow change
in course of the much larger Ouro do Brasil. At a late stage, and
presumably because they realised the danger of a collision, they turned to
port with a view to crossing in front of the Ouro do Brasil. However,
their turn was insufficiently bold and merely created a situation where the
starboard side of the Lindsay collided with the port bow of the Ouro do
Brasil, with the catastrophic consequences already adverted to.

[14] All of this was relatively common cause at the trial, which is hardly
surprising in view of the fact that a lengthy Court of Marine Enquiry had
sat to investigate the cause of the loss of the Lindsay. What was not
common cause were the circumstances on board the Lindsay that night
and who constituted the navigational watch immediately before and at the
time of the collision. The officer of the watch was the first mate, Mr
Levendal. The first and principal point of dispute was whether he was in

10 In terms of the Collision Regulations this is the vessel that must maintain its course or station when
faced with a potential collision situation.

fact attending to the watch at the material time. Mutual & Federal‟s case
was that he was not. It argued that the vessel was on auto pilot and the
watch consisted only of Mr Koeries, a deckhand, and Mr Ehlers, neither
of whom was entitled, so it said, even to form part of a navigational
watch, much less be the only members of it. It argued that Mr Levendal‟s
alleged absence from the bridge and the fact that Mr Koeries and Mr
Ehlers were not certificated to form part of the navigational watch were in
breach of the Safe Manning Regulations,11 and hence the MSA warranty.

[15] In advancing these contentions Mutual & Federal did not rely on
any direct oral evidence from a witness. Instead it placed reliance on a
statement by Mr Ehlers, recorded shortly after the incident, to the effect
that only he and Mr Koeries were on the bridge as the navigational watch
immediately prior to and at the time of the collision. Viking adopted a
two-pronged approach to these statements. It contended that although
potentially admissible as hearsay evidence in terms of s 6(3) of the
Admiralty Jurisdiction Regulation Act (the Act) it should not have been
admitted. If admitted, it submitted that no weight should have been
attached to it in the exercise of the court‟s powers under s 6(4) of the Act.
But even if it was admitted and established a breach of the MSA warranty
that was irrelevant because such a breach could not be relied on by
Mutual & Federal to negate its liability under the Inchmaree clauses.

Liability under the Inchmaree clauses
[16] There can be no doubt that the collision would not have occurred
and the Lindsay would not have sunk were it not for negligence on the

11 Merchant Shipping (Safe Manning) Regulations, 1999 published in Government Notice R1548 in
Government Gazette 20772 of 30 December 1999 as amended. Hereafter the Safe Manning
Regulations.

part of either or both of the crews of the two vessels. Captain Cox‟s
evidence demonstrated that there was ample sea room available to them
to pass each other safely and without risk of a collision. The unexplained
alteration in direction of the Ouro de Brasil created the risk of collision
and neither vessel thereafter took appropriate steps to avoid the collision.

[17] Clearly the risk that materialised was a risk covered by the policy
in terms of the Inchmaree clauses. Counsel for Mutual and Federal
explained in the course of his reply that his client‟s attitude was that
Captain Cox‟s evidence established negligence on the part of those
responsible for the navigation of the Lindsay and it accordingly accepted
that the risk that eventuated was one covered by these clauses and there
was no need to differentiate between them. We can accept that concession
without making any binding findings of fact on issues that may arise in
further proceedings. That negligence gave rise to an obligation by Mutual
& Federal to indemnify Viking for its loss, unless it was entitled to rely
on a breach of the MSA warranty to avoid that liability or could show that
the loss of the Lindsay was due to a want of due diligence by Viking in
terms of the proviso to each of the Inchmaree clauses.

The MSA warranty
[18] Viking adopted a straightforward approach to the construction of
the MSA warranty. It said that once it was claiming in respect of a risk
insured under the Inchmaree clauses there was no scope for Mutual &
Federal to rely on the warranty as a ground for avoiding liability. To hold
otherwise would be to permit that which the proviso to the warranty did
not allow, namely, nullifying the liability imposed on Mutual & Federal
by the Inchmaree clauses.

[19] Mutual & Federal apparently argued in the High Court that the
effect of this would be to draw a line through the first part of the warranty
and that instead the two must be read together. This approach was
accepted by Yekiso J. The effect instead was to draw a line through the
proviso because it said explicitly that the MSA warranty should in no way
be construed so as to nullify the liability arising under the Inchmaree
clauses.

[20] In its heads of argument Mutual & Federal sought to harmonise the
warranty and the Inchmaree clauses by saying that Viking would be
provided with an indemnity for the loss of the Lindsay caused by an
accident or by negligence, incompetence or error of judgment of any
person, provided that the loss did not result from want of due diligence
„but there would be no indemnity if the owner of the “Lindsay” did not
ensure‟ compliance with the warranty. This formulation was no more
satisfactory in reconciling the warranty‟s application in this case with the
express provision that excluded its application to nullify liability under
the Inchmaree clauses.

[21] It is not as if the straightforward construction of the warranty and
the proviso rendered the warranty of no application. It continued to have
full application to claims arising under the policy other than those arising
under the Inchmaree clauses. These included under clause 6.1 of the
Institute Fishing Clauses, liability for perils of the sea, where the
warranty‟s requirement of compliance with safety and seaworthiness
regulations might be thought to have particular relevance. Several
examples spring to mind. An insured vessel setting out without the charts
or navigation equipment required by regulations and running aground
provided a perfect example of a situation where a claim for an indemnity

in respect of an insured peril could be resisted on the grounds of a breach
of the MSA warranty. A claim arising from a fire on board the vessel
could be resisted if the regulations in regard to fire-fighting equipment
had been breached. So there was ample scope for the warranty to apply
within the limits defined by the policy and the belief that Viking‟s
contentions drew a line through it was misplaced.

[22] That renders it unnecessary to explore Mutual & Federal‟s grounds
for contending that the warranty was breached. Had that been necessary it
would also have been necessary to analyse the scope of the warranty in
far greater detail. Mutual & Federal adopted the approach that at every
moment of every day during the period of cover Viking was obliged to
comply with every regulation promulgated under the MSA for the safety
and seaworthiness of the vessel. It contended that any departure from this
rigorous degree of compliance entitled it to avoid liability under the
policy, citing the classic statement by Innes CJ on the nature of a
warranty in Lewis Ltd v Norwich Union Fire Insurance Co Ltd.12

[23] Those contentions adopted an extreme view of what was required
from the insured in order to comply with the warranty. I am by no means
satisfied that it was a correct view. Such warranties are to be construed
favourably towards the insured because of their impact upon the liability
of the insurer.13 In other words they are to be given a practical and
businesslike construction in the light of the purpose of the clause and the

12 Lewis Ltd v Norwich Union Fire Insurance Co Ltd 1916 AD 509 at 514-515; Parsons Transport
(Pty) Ltd v Global Insurance Co Ltd 2006 (1) SA 488 (SCA) para 6.
13 Kliptown Clothing Industries (Pty) Ltd v Marine & Trade Insurance Co of SA Ltd 1961 (1) SA 103
(A) at 106H-108D.

insurance policy.14 They are therefore not lightly to be construed as
invalidating cover on grounds unrelated to the loss.

[24] Looking at the MSA warranty in this light, it is plainly intended to
require the insured to comply with those regulations promulgated under
the MSA that have to do with safety and seaworthiness. But it is less
plain that Mutual & Federal‟s liability under the policy is always
contingent upon such compliance. Where that liability arises from an
insured peril having nothing to do with the safety or seaworthiness of the
vessel, such as for example, violent theft by persons from outside the
vessel, piracy, breakdown of or accidents to nuclear installations or
reactors, contact with aircraft or similar objects, or earthquake, volcanic
eruption or lightning,15 it can hardly be thought that the identity and
qualifications of the crew on board or the absence of fire fighting
equipment or life jackets, should affect Mutual & Federal‟s liability to
make good a loss under the policy. That points towards a construction of
the warranty that it applies when the breach of regulations is materially
connected to the loss that has occurred.

[25] Then account must be taken of the ordinary eventualities that may
accompany a sea voyage. A life jacket may be lost overboard or be
damaged. A fire extinguisher used to stop a small fire from spreading
may be exhausted. Various items of the vessel‟s equipment may
malfunction, be broken or lost. Is it to be thought that the vessel must in
every such instance return immediately to port to remedy the deficiency
spurred on no doubt by the thought that until it did so it would have no

14 Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593
(SCA) para 18.
15 All perils covered by clause 6.1 of the Institute Fishing Vessel Clauses.

marine hull cover under the policy? I doubt it. And what is to happen if,
while the vessel is returning to port for that very purpose, it is lost for
reasons unrelated to the deficiency? It seems a very harsh construction of
the warranty to say that there is no cover in such circumstances. That
suggests that there may be a time qualification arising under the warranty.
Properly interpreted it may possibly only require compliance with the
regulations when the vessel sets out on a voyage, and cover is not lost if
during the voyage it ceases to be compliant.

[26] These and other difficult issues of construction would have arisen
had a breach of the MSA warranty been available to Mutual & Federal to
resist Viking‟s claim for an indemnification under the policy. As in my
view it is not available for that purpose because the claim arises under the
cover provided by the Inchmaree clauses, it is not necessary to develop
this enquiry any further. The next issue is whether the loss of the Lindsay
resulted from want of due diligence on the part of Viking.

Due diligence
[27]  There appears not to be any extensive authority on the question of
the requirement in the proviso to Inchmaree clauses that the cause of the
loss should not be want of due diligence on the part of the insured or the
owners or managers of the insured vessel. It is of course an expression
that is used in other contexts in the area of maritime law. Under the
Hague-Visby rules the carrier is required before and at the beginning of
the voyage to exercise due diligence to make the ship seaworthy; properly
to man, equip and supply the ship; and to make the holds refrigerating
and cool chambers, and all other parts of the ship in which goods are
carried, fit and safe for their reception, carriage and preservation. But
exercising due diligence to equip a vessel to carry cargo safely, which is a

positive obligation resting on the carrier, is not necessarily the same thing
as demonstrating that loss or damage to an insured vessel was caused by a
want of due diligence. I agree, however, with Professor Rose that, just as
in the former case it is necessary for the carrier to show the exercise of
reasonable care, in the latter instance a failure to exercise reasonable care
that is causally related to the loss will operate to exclude the insurer‟s
liability under the proviso to the Inchmaree clause.16 I also agree that the
need to adduce proof of due diligence only arises when the insurer has
advanced some evidence that the cause of the loss or damage was a want
of due diligence.17 It is unnecessary to express a firm view in regard to
the onus of proof on this issue and whether it rests on the insurer to show
a causal want of due diligence or on the insured to show that there was no
want of due diligence. My inclination, however, in accordance with the
practice of underwriters,18 and the view in Arnould,19would be to say that
it is for the insurer to show a want of due diligence. That is in accordance
with the ordinary construction of such clauses.

[28] Mutual & Federal‟s arguments under this head were not always
clear, but as I understand them they sought to raise two related points.
The first was that the mate, who was supposed to be on duty at the time
of the collision, was not present on the bridge, and that the Lindsay was
effectively in the hands of Mr Koeries, assisted by Mr Ehlers. The second
was that neither of these two was certificated to undertake a navigational
watch.

16 Francis D Rose Marine Insurance: Law and Practice 2ed (2012) para 13.12 at 259.
17 Ibid para 13.13.
18 Julian Hill (ed) O’May on Marine Insurance (1993) 137.
19 Jonathan Gilman QC et al Arnould’s Law of Marine Insurance and Average 17 ed (2008) para 23-
62.

[29] Even if both those propositions were correct, a matter to which I
will revert, that does not seem to be decisive of the issue. What must be
established is a want of due diligence on the part of the insured, the
owner or the manager – in this case Viking – causing the loss. And that
does not depend on the conduct of the crew but on the conduct of those
responsible at a higher level of management in the company. It must, as
Arnould expresses it, „be personal failure of the assured, owners or
managers, or their alter ego in the case of corporate bodies, rather than a
failure by a subordinate‟. Want of due diligence is concerned with
equipping the vessel for the voyage and not with seagoing or operational
negligence, which is one of the perils insured against.20 That is illustrated
by the Canadian case of the Brentwood to which we were referred.21

[30] In the Brentwood the master of a converted ferry carrying goods in
coastal trade caused her to be loaded with only an 18 inch freeboard at the
stem, aggravated by a rake of one foot down by the stem. When travelling
at 7½ knots the vessel generated a bow wave of two feet in a flat calm.
This broke over the bow so that water entered the hold via the ventilators
causing the vessel to capsize. The master was plainly negligent in loading
the vessel in this fashion bringing the claim within the Inchmaree clause.
But the owner had commissioned inclination tests that demonstrated the
safe limits of loading and the proper distribution of cargo. It had been
advised in a written report that a minimum safe freeboard midships was
18 inches at even trim, which meant a freeboard at the stem of 2½ to 3
feet. But the insured failed to inform the master of the contents of the
inclination tests or the advice given by the naval architect who undertook

20 Arnould fn 17 supra.
21 Coast Ferries Ltd v Century Insurance Co of Canada and others [1975] 2 SCR 477.

the tests and failed to give loading instructions in accordance with that
information. There were no draft marks on the vessel and it had on a
number of occasions gone to sea more heavily laden than recommended
by the naval architect. The court held that this amounted to a want of due
diligence on the part of the owner. It said:
„The duty of due diligence imposed upon the owner is not satisfied if for years he
closes his eyes and does nothing.‟22

[31]     There were at least two officers on board the Lindsay who held
appropriate qualifications in regard to navigation and watchkeeping,
namely Captain Landers, the skipper, and Mr Levendal, the mate.23 The
evidence showed that they shared the watches, with Captain Landers on
duty during the day when they were fishing and Mr Levendal taking the
night watch. There was no evidence that this was an unsatisfactory
arrangement or that it was departed from in practice. In fact in regard to
the night when the tragedy occurred Captain Landers said that he handed
the watch over to Mr Levendal at about 21.00 hours before retiring to his
cabin to sleep. Mr Bacon‟s evidence was that Mr Levendal was an
experienced, skilled and meticulous mate, who Viking had encouraged to
sit for his master‟s ticket, but who preferred to continue as mate on board
its vessels. Even if it were established by Mutual & Federal that on this
night there was a departure from the path of rectitude and Mr Levendal
inexplicably neglected his duties that would not be the result of a want of
due diligence on Viking‟s part.

[32] But it is as well to deal with the suggestion that Mr Levendal was
neglecting his duties that evening. In my view there was no evidence that

22 At 483.
23 The bosun may also have had such qualfications.

this was the case. Captain Landers testified that Mr Levendal took over
the watch at about 21.00 hours. Before the incident the Lindsay had been
operating on auto pilot. That was not, one would expect, a decision that
Mr Koeries, a deckhand not even qualified as an able seaman, would have
made of his own volition, particularly given the weather and sea
conditions and the fact that the Lindsay was making its way to new
fishing grounds. Only Mr Levendal could have set the course to do that.
Equally, the attempt to avoid the imminent collision by turning to port
and trying to cross in front of the Ouro do Brasil, rather than taking the
instinctive step of trying to turn away to starboard, is indicative of the
person in charge being an experienced seaman and realising that a
starboard turn would likely bring the Lindsay into collision with the
Umgeni. One of the interesting features of the interviews with Mr Ehlers
is that he never mentioned the presence of two large vessels, only the
„skuit‟ (boat) with which they collided. It is plain that the ship he talked
about was the Ouro do Brasil, which collided with the Lindsay.

[33] Yekiso J accepted that Mr Levendal was not on the bridge at the
time of the incident on the basis of an interview conducted eight days
after the collision by Captain Campbell with Mr Ehlers, who did not give
evidence. In that interview Mr Ehlers was asked some questions arising
from a statement that he attested before Captain Campbell. To put his
later answers in context it is appropriate to set out the material portion of
his statement. In doing so it is appropriate to record that Mr Ehlers was
unable to write his own statement and while the document is largely in
English it is apparent that he was Afrikaans speaking. The material
portion of the statement read:
„I went to the bridge at 23h30. I saw this “Skuit” as soon as I was on the bridge.

I told the deckhand on watch that “hy moet oppas die skuit kom vinnig nader …” The
reply was “moenie worry nie die skuit gaan verby ons”.24
I then went outside to phone my wife and have a smoke. The next moment we were
struck by the other vessel.
Our vessel capsized and I swam to the life raft.‟
At the foot of the statement it is recorded that “Mr Reddell has read this
statement back to me and I agree to that this is my full statement at this
time.‟ How skilled Mr Reddell was in acting as an interpreter we do not
know.

[34] Captain Campbell then asked a number of follow-up questions. But
there were many important areas that he left untouched. For example
there was a significant problem with the times given by Mr Ehlers in this
statement. He suggested that the collision occurred fairly soon after he
reported for duty on the bridge because the „skuit‟ was visible and closing
fast. But at that time the Lindsay and the Ouro de Brasil were some 30
miles apart and certainly not visible to one another. The collision
occurred nearly an hour and a quarter later during which time he had
thought it appropriate to leave his post for a cigarette and conversation
with his wife. The statement‟s reliability was immediately suspect.

[35] Captain Campbell asked what Mr Ehlers saw when he saw a „skuit‟
and was told that he saw a red light. In the context of this collision that
would have been the port light of the Ouro do Brasil, which he said was
showing on the Lindsay‟s port side. At the time he said he was standing
near the steering wheel of the Lindsay on the bridge. When asked whether
there was an officer on the bridge with them he said there was not and

24 In translation these passages would read „he must look out, the ship is rapidly coming closer‟ and
„Don‟t worry. The ship is going past us.‟

indicated that the skipper and the bosun were sleeping and the mate (Mr
Levendal) was in his cabin. He was not asked why the mate was in his
cabin, or what he was doing there. He did not know what turn the Lindsay
took before the collision but said that when the collision occurred he was
on the starboard landing, that is, outside the bridge, and that the collision
was on the starboard side in the vicinity of the stocker pond near the stern
of the vessel. It caused the Lindsay to capsize to starboard.

[36]    All of this might seem reasonably clear were it not for a curious
passage at the end of the question and answer session. Mr Ehlers was
asked whether everything he had told Captain Campbell was true which
he answered affirmatively. He was asked whether he was sure and again
answered affirmatively. But then the transcript goes on as follows:
„Statement. The Mate made a turn by us.25
At what time?

I have no idea.
When the Mate came on the bridge, could you see the big ship?
The Mate came to the bridge, Royden mentioned the other vessel, the Mate
said he was going to the toilet and was coming back quickly, and then the
accident happened.‟

[37] For some reason Captain Campbell did not think it necessary to
explore this with Mr Ehlers. But it cast doubt on everything that had gone
before. It placed the mate on the bridge and aware of the presence of the
Ouro do Brasil. But it did not explore when this happened or what
happened then. This was important given the problems with the times
given in his statement. According to his answers Mr Ehlers was outside
the bridge on the starboard landing at the top of the ladder leading up to

25 This must be an English translation of the idiomatic Afrikaans expression “Die Maat het ŉ draai by
ons gemaak‟ meaning that the mate came there and engaged with them.

the bridge smoking. Presumably if he thought a collision was imminent
he would not have been having a cigarette and phoning his wife to wish
her well for Mothers‟ Day. He knew nothing of the manoeuvres
undertaken in order to avoid a collision, yet the collision occurred astern
of where he was standing and on the same side – the starboard side – of
the vessel. Even the obvious question whether the mate in fact left the
bridge to go to the toilet, which was situated off the bridge down a short
flight of stairs, was not asked.

[38] This interview with Mr Ehlers was not particularly illuminating in
regard to the conduct of Mr Levendal on the night in question. Such light
as it did cast on that was effectively doused when, at the Court of Marine
Enquiry, Mr Ehlers repudiated it. He then added to his original statement
that the mate had been on the bridge when he came on duty. When he
(Ehlers) mentioned the presence of the „skuit‟, the mate said that it was
far away from them. Mr Ehlers then attributed the comment that the
„skuit‟ would pass them to the mate and not Mr Koeries. He accepted that
he had not told the truth to Captain Campbell.

[39] Yekiso J admitted all this evidence and then decided that the
statements made by Mr Ehlers at his interview with Captain Campbell
were to be preferred to those he made at the Court of Marine Enquiry. In
doing so he indicated that he was adopting the approach to be adopted
when a court is confronted by irreconcilable versions of the facts set out
by Nienaber JA in Stellenbosch Farmers’ Winery.26 But that approach
relates to irreconcilable versions emanating from different witnesses. In

26 Stellenbosch Farmers' Winery Group Ltd and Another v Martell et Cie and Others 2003 (1) SA 11
(SCA) para 5.

this case they emanated from the same witness and different
considerations must apply. That is not to say that there may not be
circumstances in which a court may accept some aspects of a witness‟
evidence and reject other aspects – even possibly where they are
diametrically opposed – but it cannot arrive at that decision on a
conventional weighing of the probabilities. The reason why the witness‟
version has changed necessarily intrudes and assumes central importance.
This highlights the problem with the approach of the trial court. Nienaber
JA listed a number of factors such as the witness‟ candour and demeanour
when giving evidence; any possible bias; internal and external
contradictions and the calibre and cogency of the witness‟ performance
when giving evidence. Testing the reliability of the evidence is vital and
that could not be done in this case because Mr Ehlers did not give
evidence.

[40] Leaving these difficulties aside the trial court did not pay regard to
a warning about the quality of Mr Ehlers as a witness contained in the
loss adjuster‟s report prepared by Mr Arnold on behalf of Mutual &
Federal. Mr Arnold also interviewed Mr Ehlers, in the presence of Mr
Hattingh, the shore manager for Viking. He noted in his report that Mr
Hattingh said that the version of events given to him by Mr Ehlers was
the fifth or sixth differing version he had heard from him. Mr Arnold‟s
conclusion was blunt. He said that „Ehlers is endeavouring to hide the
truth or alternatively advising persons what he believes they want to
hear.‟ In some respects he regarded his evidence as nonsensical.

[41] The judge was faced with two issues. The first was whether to
admit as evidence the statements by Mr Ehlers and the second, if he did
so, was to determine the weight to be attached to them.  Section 6(3) of

the Act permits the admission of hearsay evidence in admiralty
proceedings subject to such directions and conditions as the court thinks
fit. The general approach to the admission of such evidence is generous.27
Once admitted the principal issue under s 6(4) is the weight to be attached
to the evidence. It is unnecessary to have regard, as did the trial court and
as submitted by Mutual & Federal in its heads of argument, to s 3 of the
Law of Evidence Amendment Act 45 of 1988. The power of a court
exercising its admiralty jurisdiction to admit hearsay evidence is not
constrained by the requirements of that Act.

[42] Although the approach to the admission of hearsay evidence in
admiralty is a generous one there will be cases where the court must draw
the line and refuse to admit the evidence. In my view this was one such
case. The statements made by Mr Ehlers were tenuous and conflicting.
They failed to explain why Mr Levendal, a competent and meticulous
seaman, would neglect his duties in the manner suggested. There was
information via Mr Arnold that Mr Ehlers was not reliable. The attempts
to find him and bring him to court to give evidence were limited and
ineffective. As a result the various statements could not be tested under
cross-examination. And there were no other witnesses to provide
corroboration of what he said. Even a generous approach to the admission
of hearsay in admiralty, which I do not in any way decry, must have its
limits in the interests of a fair trial. In this case those limits were in my
view exceeded. But even if I am wrong in that the question of the weight
to be attached to those statements remained. In my view it was impossible

27 Cargo laden and lately laden on board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A)
at 841D – 842H.

for the court to attach any weight to them. They were thoroughly
unreliable.

[43] In those circumstances the main evidential plank of Mutual &
Federal‟s case was removed. It is not possible to determine on the
evidence presented in this case where Mr Levendal was when the
collision occurred and what he was doing. I am careful to say that this is
the conclusion to be reached on the evidence tendered in this case.
Whether in other litigation – and Mr Arnold‟s report referred to other
cases having been instituted – additional and better evidence can be
produced is a matter on which it would be inappropriate for this court to
express a view.

[44] The other basis upon which Mutual & Federal relied for saying that
the loss of the Lindsay was due to a want of due diligence on the part of
Viking related to the qualifications of Mr Koeries and Mr Ehlers to act as
members of the watch. It said that in terms of regulation 4(1)(ii) of the
Safe Manning Regulations it was the responsibility of Viking to ensure
that no rating formed part of a navigational watch „unless he or she holds
appropriate valid certification entitling him or her to do so‟. Neither Mr
Koeries nor Mr Ehlers held any such certification and so it was said that
there was a want of due diligence by Viking.

[45] Once again there is a problem with the issue of causation. The
proviso to the Inchmaree clauses operates when the want of due diligence
caused the loss or damage. It is not clear on what basis the absence of
certification would have that causative effect. Presumably it would need
to be joined with some evidence that an incompetent watch was kept and

that this meant that the Lindsay did not avoid a collision when it could
have done so. There is no such evidence.

[46] But in any event it is not apparent that there was a breach of the
regulations in this respect. The Lindsay was crewed in a manner
compliant with the requirements of regulation 18 of the Safe Manning
Regulations as appeared from a certificate issued by the South African
Maritime Safety Authority (SAMSA), which in terms of s 2(1) of the
MSA is the Authority in regard to safety matters. Captain Louw of
SAMSA pointed out that on a fishing vessel such as the Lindsay only one
certificated rating is required to be on board in terms of regulation 18. As
it is not practical for that rating to be on duty 24 hours a day „other crew
on board must be used to keep a lookout‟.

[47] There is a difficulty in ascertaining what is meant by the reference
to a rating being „certificated‟ to form part of a navigational watch.
Mutual & Federal stressed the importance from a safety perspective of
the watchkeeping role especially at night when travelling in a busy sea
lane. It suggested therefore that some form of special certification is
required. But it was unable to point to a provision in which any such
certification was identified. The word „certificated‟ is defined in
regulation 1(1) as meaning:
„… duly certificated under the Act or deemed under the Act to be so certificated …‟
That requires one to go to the MSA in order to ascertain what is meant by
this expression. Chapter III of the MSA deals with „certificates of
competency, service and qualification‟ without making any provision for
a certificate enabling a seaman to participate in a navigational watch.
Certification is dealt with in s 73(1) which provides that:

„Subject to the provisions of this section, the owner and the master of every South
African ship operating at a port in the Republic or going to sea from any port
whatsoever shall ensure that there is employed on board that ship, in their appropriate
capacities, the number of officers and other persons, duly certificated as prescribed by
regulation, or deemed to be so certificated.‟
That takes us back to SAMSA‟s certification of what crew and officers
the Lindsay required in terms of the Safe Manning Regulations. The
evidence showed that it was properly crewed.

[48] I have been unable to find any provision of the MSA or any
regulation under the MSA that provides for a special certification for
crew to be qualified to participate in a navigational watch. It may be that
regulation 4(1)(ii) overlooked this. Or it may be that it is resolved by
having regard to s 85 of the MSA, which provides that:
„Notwithstanding the provisions of section 73 the Authority may, in its discretion and
for such periods and under such conditions as it may specify if it is satisfied that no
suitable holder of a certificate of the required grade and granted under this Act or
referred to in section 83 or 84 is available, permit a South African ship to go to sea
from any port whatsoever … without the prescribed number of certificated officers or
other persons, and whilst such permission remains in force any person who acts in
terms thereof shall not, if the conditions under which it was granted are complied
with, be deemed to have contravened the provisions of section 73.‟
SAMSA‟s attitude appears to be as expressed by Captain Louw. He made
it clear that the use of other crew on board to keep a lookout is
permissible, in view of the fact that there would only be one able seaman
on board. That may constitute a permission in terms of the provisions of
s 85. In any event it is clear that there is no proper foundation for Mutual
& Federal‟s complaint under this heading.

[49] It follows that the contention that the loss of the Lindsay was due to
a want of due diligence on the part of Viking must fail. That means that

the appeal must succeed and Viking is entitled to an indemnity under the
marine hull policy. There was some argument in this court, albeit not
raised in the pleadings or canvassed at the trial, about the proper quantum
of that indemnity. It is to that issue that I now turn on the assumption that
these were questions of law that could properly be raised for the first time
on appeal.

Quantum
[50] The policy was a valued policy. The subject matter of the insurance
was dealt with under two headings, namely, hull, machinery and
equipment and everything connected therewith and increased value of
hull and/or disbursements. An amount of R2.8 million was the value
under the first head and R700 000 under the second. The cover to the
policy said that the amount insured was for “100% of values and amounts
herein‟. On that basis Viking claimed R3.5 million plus VAT of
R490 000 and interest at a rate of 15.5% per annum from 8 October 2005,
being the date when Mutual & Federal repudiated liability under the
policy. Neither the amount of the claim nor the rate of interest was
disputed during the trial, but arguments were raised in respect of both
before us.

[51] In regard to the portion of the claim relating to hull, machinery and
equipment counsel drew attention to the following provision:
„Deductibles as per Clause 12.1 of 5% of Hull and Machinery Sum Insured (such
deductible to be applied before the addition of VAT)
In addition all claims are subject to an Annual Aggregate Deductible of R1 000 000
incorporating a Stop Loss of R400 000.‟
On the basis of this provision counsel submitted that the amount of
R2.8 million fell to be reduced by the stop loss amount of R400 000.

[52] There is no merit in this argument. Clause 12.1 made provision for
deductibles and the statement of an amount that would be deductible from
the aggregate of all claims arising out of each separate accident or
occurrence. The amount was left blank. But the clause went on to say that
it did not apply to a claim for an actual or constructive total loss, such as
the loss of the Lindsay. Counsel accepted this but said that the sentence
that followed made provision for such a deductible. That is incorrect.
What it did was put an annual aggregate maximum on the deductibles as
well as a stop loss on the amount of the deductible in respect of any
single claim in circumstances where the policy made provision under
clause 12.1 for a deductible. As clause 12.1 did not make such a
provision, which is hardly surprising in relation to a valued policy, these
provisions did not affect Viking‟s claim.

[53] The second argument raised by counsel related to the interest rate
of 15.5% claimed by Viking. Under s 5(2)(f) of the Act the court is
empowered to make „such order as to interest, the rate of interest in
respect of any sum awarded by it and the date from which interest is to
accrue, whether before or after the date of commencement of the action,
as to it appears just‟. The effect of this was to free a court sitting in an
admiralty case from the provisions of the Prescribed Rate of Interest Act
55 of 1975 (the Interest Act). No doubt that was deliberate as it enabled
the court, which will frequently be seized of matters involving disputes
arising in other countries and currencies where interest rates may bear
little or no relation to the rates current in South Africa or the interest rate

prescribed under the Interest Act, to exercise a discretion based on the
justice of the case as to the appropriate order in regard to interest.28

[54] Viking claimed interest on the capital sum due to it less VAT at a
rate of 15.5% per annum from the date upon which Mutual & Federal
repudiated liability under the policy. It was submitted that the appropriate
date was the date of issue of summons. I do not agree. An indemnity
should have been furnished by 8 October 2005. Instead Mutual & Federal
repudiated liability and have kept Viking out of the money to which they
were entitled for over ten years. I can see no reason why they should not
pay interest from that date.

[55] As regards the rate of interest that is more debatable. The world has
been experiencing record low interest rates for a number of years since
the financial crisis of 2007 and 2008. But it was only in 2014 shortly
before the commencement of the trial that the rate prescribed under the
Interest Act was reduced to nine per cent. Mutual & Federal submitted
that it would be more appropriate for interest to be levied at this rate. In
doing so it submitted that this would also mean that the interest accrued
on the debt would not exceed the amount of the capital and hence would
not exceed what is permissible under the in duplum rule. Counsel referred
us to the recent decision of the Constitutional Court in Paulsen,29 which
overturned the decision of this court in Oneanate30 that had held that the
operation of the in duplum rule was suspended once litigation

28 This appears to have been overlooked in The MV Sea Joy: Owners of the Cargo lately laden on
board the mv Sea Joy v The MV Sea Joy 1998 (1) SA 487 (C) at 508E-I. In MT Argun: MT Argun v
Master and Crew of the MT Argun and Others 2004 (1) SA 1 (SCA) para 38, Farlam JA correctly said
that s 5(2)(f) confers a wide and unfettered discretion. The underlying reasons for this are set out in
Shaw Admiralty Jurisdiction and Practice in South Africa  83-84.
29 Paulsen v Slip Knot Investments 777 (Pty) Ltd [2015] ZACC 5; 2015 (3) SA 479 (CC).
30 Standard Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in Liquidation) [1997] ZASCA
94; 1998 (1) SA 811 (SCA).

commenced.31 In a curious argument he submitted that we should award
Viking a lower rate of interest because then the duplum would not be
reached. Why that would be relevant escapes me. If the duplum has been
reached then Mutual & Federal‟s liability is frozen at double the capital
sum it is obliged to pay Viking. Any saving accruing to it in consequence
of that would be minor given the lengthy period during which it has
withheld payment from Viking.

[56] Viking‟s claim is a South African claim against a South African
insurer where the loss has been felt in South Africa currency. It was
reasonable therefore for it to claim interest at the rate generally payable
on judgment debts in South Africa. This was not challenged and no
evidence was led by Mutual & Federal to show that this was an
inappropriate rate of interest. Had that been done it would have been open
to Viking to lead evidence to show that it would be just for it to recover
interest at that rate. Because it was not questioned at the trial it was
deprived of the ability to lead such evidence, for example, evidence that it
had to borrow money to replace the Lindsay, or evidence of financial loss
it suffered in consequence of Mutual & Federal refusing to pay the
indemnity for which it had contracted. In those circumstances it seems to
me inappropriate to depart from the conventional rate of interest. The
consequences of that insofar as the in duplum rule is concerned will have
to be worked out when payment is made.

31 The manifestly unfair consequence of the Paulsen judgment for Viking is that it has through not
particular fault on its part taken over ten years for it to enforce its right to an indemnity and nine years
since the commencement of action, yet it will not be able to recover interest for the entire period of
delay because of the operation of the rule.

Order
[57] I make the following order:
The appeal is upheld with costs and the judgment of the court below is set
aside and replaced with the following:
„There will be judgment for the Plaintiff for:
1 Payment of the sum of R3 990 000 together with interest on the
sum of R3.5 million at a rate of 15.5% per annum from 8
October 2005 to date of payment.
2 Costs of suit, such costs to include the qualifying expenses of
Captain Cox.‟

M J D WALLIS
JUDGE OF APPEAL

[46] Appearances

For appellant:
R W F Macwilliam SC
Instructed by:
Webber Wentzel, Cape Town and
Webbers, Bloemfontein.

For respondent:
D A Gordon SC (with him A V Voormolen SC)

Instructed by:
Cox Yeats Attorneys, Durban and
McIntyre & Van der Post, Bloemfontein.

Supreme Court of Appeal of South Africa

MEDIA SUMMARY– JUDGMENT DELIVERED IN THE SUPREME
COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
18 March 2016
Status:
Immediate
Please note that the media summary is intended for the benefit of the
media and does not form part of the judgment of the Supreme Court of
Appeal.
Viking Inshore Fishing (Pty) Ltd v Mutual and Federal Insurance Co
Ltd

The SCA today upheld an appeal by the owners of the fishing
vessel Lindsay against Mutual and Federal Insurance Ltd for payment of
R3.99 million under a marine insurance hull policy. The claim arose from
the sinking of the Lindsay at about 12.45am on 8 May 2005 after a
collision with the Ouro de Brasil a large juice carrier sailing from
Singapore to Santos in Brazil. Mutual and Federal repudiated liability for
the claim on the grounds that the owners of the Lindsay breached a
warranty that they would at all times comply with the provisions of the
Merchant Shipping Act, 1951 and regulations under that Act relating to
the safety and seaworthiness of the vessel.

The Court held that the operation of the warranty would have had
the effect of nullifying the insurer’s liability in terms of two clauses in the
policy, known as Inchmaree clauses, that provided cover against loss of
the Lindsay due to negligence on the part of any person, including the
master and crew of the Lindsay. The warranty expressly said that it would
not be construed in a way that nullified the insurer’s liability under these

two clauses. Accordingly the High Court’s rejection of the claim on the
grounds of the warranty was incorrect.

As to an alternative defence by the insurer that the loss of the
Lindsay was due to a want of due diligence on the part of the vessel’s
owners the Court held that there was no evidence that this was the cause
of her sinking. It accordingly upheld the appeal and altered the order of
the High Court to one of judgment in favour of Viking Inshore Fishing,
together with interest and costs.