De Beers Marine (Pty) Ltd v Harry Dilley (Pty) Ltd
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Schippers JA, Gorven JA, Hughes JA, Mabindla-Boqwana JA and Weiner JA |
| Judgment Date | 19 July 2023 |
| Citation | 2023 JDR 2637 (SCA) |
| Hearing Date | 16 May 2023 |
| Docket Number | 413/2022 |
| Court | Supreme Court of Appeal |
Schippers JA (Gorven, Hughes, Mabindla-Boqwana and Weiner JJA concurring):
The appellant, De Beers Marine (Pty) Ltd (De Beers), is the owner of an autonomous underwater vehicle (AUV), a robotic submarine which it uses to map the seabed in its mining operations off the coast of Namibia. In September 2017 De Beers concluded an agreement with the respondent, Harry Dilley (Pty) Ltd (HD), for the charter of a work boat to assist De Beers in conducting sea trials in
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False Bay, Western Cape, to commission new equipment installed on the AUV (the sea trials). In what follows, I refer to that agreement as ‘the 2017 contract’. The work boat, MV Nkwaza (the Nkwaza), is owned and skippered by Mr Harry Dilley, the sole director of HD.
During the sea trials on 27 October 2017, the AUV suffered a communication breakdown and ended up washed ashore on the rocks near Simon’s Town. The AUV was re-floated and towed by the Nkwaza to Simon’s Town harbour. HD subsequently instituted action against De Beers in the Western Cape Division of the High Court, Cape Town (the high court), claiming R10 million as a salvage reward. That amount was later reduced to R7 647 231.54, alternatively R5 525 288.23.
The high court (La Grange J) held that HD was entitled to a salvage reward of R 5 525 288.23, assessed at 10% of the replacement cost of the AUV in 2017 – US $3.5 million or R55 252 882.20. The reward was said to have been determined with reference to article 13(1) of the International Convention on Salvage, 1989 (the Salvage Convention), which forms part of our law by virtue of s 2(1) of the Wreck and Salvage Act 94 of 1996. The high court granted De Beers leave to appeal to this Court.
The factual background
The basic facts are uncontroversial and can be shortly stated. HD had assisted De Beers in carrying out sea trials to test equipment on its two AUVs in False Bay, for several years. On 15 October 2015 De Beers and HD concluded a written contract in terms of which HD agreed to charter its vessels, namely the MV Zest II and the Nkwaza, to De Beers to support the latter in carrying out research and development of its survey equipment (the 2015 charter agreement). That agreement came to an end on 31 August 2017.
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The 2017 contract was concluded after HD provided De Beers with a quotation for the charter of the Nkwaza for the sea trials. The quotation was for an eight-hour day (R9 850 excluding VAT) and an hourly rate of R1 250 excluding VAT, for any additional time. It was common ground that the terms of the 2015 charter agreement were tacitly incorporated into the 2017 contract. Clause 9 of the 2015 charter agreement provided:
PERFORMANCE OF THE CHARTER AGREEMENT
The Charter shall be conducted in accordance with the Charter Agreement. Dilley shall be responsible for aspects of the operation of the Workboats subject to DBM’s [De Beers Marine’s] direction as to the nature of the support services to be provided by Workboats during the test work.
In the event that Dilley’s representatives deeming the conditions as being unsafe for the test work, he shall immediately notify DBM’s representative. This decision is final and not subject to negotiation. As soon as the test work is capable of being carried out, Dilley shall advise DBM of this fact and advise that length of time that the Workboats was not able to operate. For this period, the Workboat shall be regarded as being off hire and no hire shall be payable by DBM.’
It was further common ground that the sea trials were carried out in accordance with De Beers’ standard Operational Procedures for AUV Sea Trials, dated 24 April 2009 (the Operational Procedures). These procedures include an ‘emergency AUV recovery procedure’ set out in clause 3.3.1, which provides:
‘Loss of Communication while on the Surface:
In the event that communication is lost to the AUV, while the vehicle is on the surface, as a result of rough seas or equipment failure, a towing line is then attached on the AUV and the rubber duck will tow the AUV back to the harbour or the towing line passed on to the workboat.’
On the morning of 27 October 2017, the AUV was launched for sea trials without any difficulty. At Mr Dilley’s instance, the area in which the trials were being conducted was moved north and east, because the wind was too close to the rocks at the Lower North Battery (where the AUV ran aground later). Mr Dilley
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was not willing to operate his vessel near the rocky area. A short test dive was conducted at that site and no problem was encountered.
The AUV then commenced a long dive of some three hours. Everything seemed to be in order until approximately 13h30 on 27 October 2017, when Mr Esterhuizen, a geo-technician employed by De Beers and its Contract Manager nominated in the 2015 charter agreement, was informed that the AUV had been washed ashore on the rocks at the Lower North Battery near Simon’s Town. Mr Esterhuizen contacted Mr Makholiso, De Beers’ representative on board the Nkwaza and reported the grounding and position of the AUV to him.
The Nkwaza returned to Simon’s Town harbour and Mr Dilley and Mr Makholiso drove to the North Battery site of the grounded AUV. It was not disputed that the AUV had to be recovered from that position as soon as possible to prevent any further damage. At the site Mr Dilley met with Mr Esterhuizen and two commercial divers, Mr Stephen Garthoff and his business partner, Mr Robin Day. In the ensuing discussion the divers offered to assist De Beers in re-floating the AUV. Mr Dilley suggested that Mr Garthoff and Mr Day should discuss a fee for their services, which they did. It was R10 000, which Mr Esterhuizen accepted after obtaining authority from De Beers.
There was no discussion about the use of the Nkwaza in the re-floating of the AUV. Mr Dilley testified that he thought that Mr Esterhuizen might have assumed that De Beers had a contract with HD and therefore that the Nkwaza would be used to tow the AUV to Simon’s Town harbour. Mr Esterhuizen in fact made that assumption. During the discussion Mr Dilley did not indicate that HD was no longer fulfilling its obligations under the 2017 contract, nor that the recovery of the AUV would be a salvage operation. It was agreed that the divers would collect their equipment and meet Mr Dilley at the harbour.
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Mr Dilley returned to Simon’s Town harbour and met the divers. The Nkwaza left the harbour around 16h15 with the divers on board, and proceeded to a location some 150 metres off-shore where its echo sounder showed a depth of eight metres. At that location, just before Mr Garthoff left the Nkwaza to start his swim, Mr Dilley decided that he was embarking on a salvage operation. It was around 16h30 on 27 October 2017. He did not inform Mr Makholiso, who was on board the Nkwaza, of that decision.
Mr Garthoff left the Nkwaza and with a tow rope, swam to the AUV in a wetsuit, using dive-fins, a mask and a snorkel. After he commenced his swim, the Nkwaza took up a position 250 to 300 metres off-shore. When he reached the AUV, Mr Garthoff manoeuvred it in order to set it afloat. As he put it, ‘all it needed was just a tiny little push from me to spin it around and she was already floating’. He secured the rope from the Nkwaza to the front of the AUV. The AUV was re-floated at approximately 16h58. Mr Garthoff then attached himself to the AUV with a rigging-sling. He remained on the AUV as it was being towed by the Nkwaza into Simon’s Town harbour, as he thought it was the safest place to be through the surf, and he had some concern about sharks. The Nkwaza brought the AUV alongside in the harbour. The entire recovery operation lasted just over an hour.
The high court held that HD had rendered voluntary services which exceeded what could reasonably be considered as due performance of the 2017 contract. The sea trials came to an end when the AUV had run aground on the rocks and the Nkwaza had returned to the harbour. The court concluded that the evidence, the express terms of the charter agreement and the surrounding circumstances, did not justify the inference that HD had rendered towage services under the contract. This meant that instead of a contract fee, HD was entitled to a salvage reward.
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In determining the salvage reward, the high court took into account the following factors. The replacement value of the AUV was R55 252 882.80. The salvage service was rendered promptly. HD had all the necessary equipment for the salvage operation. Mr Dilley’s skills as a mariner and experienced salvor were essential to the successful recovery of the AUV, and to prevent it from sustaining further damage. Given the weather conditions during the salvage operation, the Nkwaza was exposed to ‘a fair degree of danger’.
Against this background there are two questions which this Court must consider. The first is whether the services by HD were rendered voluntarily or in accordance with its obligations under the 2017 contract. If the services were rendered voluntarily, the second issue is whether the salvage reward of R5 525 288.23 is justified, having regard the criteria for fixing the reward set out in article 13(1) of the Salvage Convention.
Were the services rendered voluntarily?
It is a settled principle that a claimant’s entitlement to a salvage reward depends on whether it rendered the services in respect of which it claims ‘voluntarily’, ie without any pre-existing contractual or other legal duty. [1] As stated in Kennedy & Rose, [2] the adjective ‘voluntary’ has acquired a specific meaning in the law of salvage, namely, ‘that the service was not rendered by virtue of a pre-existing legal obligation, in particular a contractual or public...
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