Euroshipping Corporation of Monrovia v Minister of Agricultural Economics and Marketing and Others

• Jurisdiction: South Africa
• Judge: Friedman J
• Judgment Date: 14 November 1978
• Court: Cape Provincial Division

Friedman J:

On 31 October 1978 the Court made the order set out at the end of this judgment and indicated that the reasons would be handed in later. These are the reasons.

E This is an application by the defendants in a damages action for an order compelling the plaintiff to make available for inspection the documents referred to in a schedule to plaintiff's discovery affidavit, in respect of which plaintiff claims privilege. Plaintiff is the owner of a motor F vessel called the Atticon. On 7 December 1972 the vessel was chartered to a company called European Grain and Shipping Ltd of London ("European Grain") to load a cargo of bulk maize at Cape Town and to carry it to Mexico. It was a term of the charter party that the notice of readiness to G receive the cargo, to be given by the master to the charterer, would be accompanied by a certificate from a government surveyor approved by the charterer or its agents, together with a pass from the special grain inspectors, certifying the vessel's readiness in all cargo spaces. Pursuant to the charter party, second defendant, a firm called Fox & Eastman (Pty) Ltd, which carries on business as marine surveyors, was appointed by plaintiff as marine surveyor approved by the charterer or its agents to furnish the necessary certificate.

H The vessel arrived in Cape Town on 6 January 1973 and was boarded by second defendant's representatives, Capt Eastman, and by one Finn, the senior grain inspector in the Department of Agricultural Economics and Marketing. On inspection of the cargo spaces of the vessel they found insect infestation which required fumigation. Plaintiff, acting through the captain of the vessel, one Poulos, and Freight Services (Pty) Ltd, plaintiff's ship's agent at Cape Town, engaged the services of third defendant to fumigate the cargo spaces of the vessel against insect infestation.

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Third defendant is a firm called Rentokil Laboratories (Pty) Ltd which carries on business as pest exterminators at Cape Town.

On 8 January 1973 third defendant carried out fumigation in the vessel's A cargo spaces and on 9 January 1973 advised that the fumigation had been completed. Thereupon and on 9 January 1973, Eastman and Finn carried out a further examination of the cargo spaces and, having satisfied themselves that the holds were visibly free from insect infestation, furnished the necessary certificates enabling the cargo of maize to be loaded. 9 535,635 B metric tons of maize was then loaded into the cargo spaces of the vessel on 22, 23 and 24 January 1973 and on 24 January 1973 the vessel sailed for Mexico.

The Atticon arrived at Tampico harbour in Mexico on 21 February 1973. On 22 February 1973 an examination carried out there revealed the presence of live Khapra Beetle in the cargo spaces. On 1 March 1973 as a result of the C presence of Khapra Beetle the Mexican Government ordered the vessel to leave Tampico harbour and on 2 March 1973 the vessel was ordered to leave the territorial waters of Mexico. Plaintiff was accordingly unable to deliver the cargo of maize to the consignee, a Mexican company called Compania Nacional De Subsistencies Populares ("Conasupa"). A new buyer was D eventually found for the maize in West Germany and the Atticon accordingly proceeded to Emden harbour, West Germany, arriving there on 30 March 1973. Between 30 March 1973 and 2 April 1973 the cargo of maize was discharged.

By reason of plaintiff's inability to discharge the maize at Tampico, plaintiff was in breach of the bill of lading held by Conasupa. Conasupa E instituted legal proceedings against plaintiff in London for the recovery of £229 455, 65, being damages allegedly suffered by it as a result of plaintiff's breach of the bill of lading. The main portion of this amount represented the difference between what Conasupa alleged was the market value of "sound maize" at Tampico, and the considerably reduced price realised from the sale of the maize in West Germany.

F In July 1975 plaintiff arrived at a compromise with Conasupa in terms of which the action in London was settled by plaintiff paying Conasupa 400 000 US dollars plus an amount of £4 507,10 in respect of its costs, which G compromise plaintiff alleges was reasonable. Plaintiff alleges that the fact that the vessel was found to be infested with Khapra Beetle on arrival at Tampico was due to breaches of contract and/or negligence on the part of the first and/or second defendants and/or negligence on the part of third defendant, and plaintiff now seeks to recover the losses it suffered, as a consequence of its being unable to discharge the cargo of maize at Tampico, from the defendants. Plaintiff's claim includes the H amount which it paid to Conasupa in terms of the compromise. Shortly after the commencement of the trial, a settlement was arrived at between plaintiff and second defendant, in terms of which the proceedings against second defendant have been withdrawn. The action is, however, continuing against first and third defendants.

On 11 August 1977 plaintiff filed its discovery affidavit. Subsequently a supplementary discovery affidavit was filed by plaintiff. The supplementary discovery affidavit contains two schedules. The first is called schedule C and this schedule itemises roughly 500 additional documents which plaintiff

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contends are relevant and which it is accordingly prepared to disclose. The second is called schedule Z and this schedule contains a list of 145 documents which plaintiff objects to producing on the grounds that they are privileged in that they are:

"(a)

Documents A prepared or obtained for the purpose of obtaining professional legal advice in regard to contemplated or anticipated or pending litigation; and/or

(b)

communications between a principal and an agent made in respect of pending, contemplated or anticipated litigation and which relate to evidence likely to be produced at the trial by plaintiff; and/or

(c)

documents which would have the effect of disclosing the evidence of plaintiff."

B Both the remaining defendants dispute that these documents are privileged and they have each brought an application wherein they seek an order that the documents be produced and be made available for inspection by them. During the course of the argument on this application it became apparent that it was not possible to determine, either by reference to the C documents themselves or by the affidavits filed in the application, on which of the three grounds on which privilege was claimed any particular document was alleged to be privileged. It was accordingly agreed that plaintiff's legal advisers would draw up a fresh schedule setting out the grounds on which privilege was claimed in respect of each document. D Defendants' counsel agreed to accept such schedule as one emanating from the plaintiff's director, M J Livanos, who deposed to the supplementary discovery affidavit, and who resides in England.

Plaintiff's attorneys have now filed a statement, called "Statement E regarding privilege", which sets out, firstly, who the persons and parties are who are referred to in schedule Z, and, secondly, the circumstances under which the documents came into existence. All the documents listed in schedule Z are then broken up into 18 separate categories which are set out in an annexure to the statement. In the statement it is explained that plaintiff objects to producing all the documents

(a)

on the ground of legal professional privilege;

(b)

F alternatively, in respect of classes (i) to (xvi), on the ground that they are witnesses' statements;

(c)

alternatively, in respect of class (xvii), on the ground that the document was a note of legal advice obtained in connection with G the actions;

(d)

alternatively, as to class (xviii), on the ground that the documents are confidential communications between plaintiff and its insurer in regard to contemplated or pending litigation.

(The document referred to in class (xvii) has in fact been disclosed, and it will not be necessary to deal with (c) above.)

H Legal professional privilege attaches to information obtained by or for a professional legal adviser for the purpose of advising his client as to the prosecution or defence of an action, or advising him as to whether a claim should be made or defended. The foundation of the rule is that a litigant should be able to obtain legal advice freely by laying all the facts before his legal adviser without fear that these facts will be disclosed to his opponent. For privilege to operate within this rule two things must occur:

(a)

the information must be obtained for the purpose of obtaining professional legal advice;

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(b)

it must be obtained for the purpose of obtaining that advice with reference to actually pending or contemplated litigation.

See General Accident, Fire & Life Assurance Corporation Ltd v Goldberg A 1912 TPD 494 at 500 - 1, 506; United Tobacco Companies (South) Ltd v International Tobacco Co of SA Ltd 1953 (1) SA 66 (T) at 70D.

It is stated in para 10 of plaintiff's "Statement regarding privilege" that all the documents, save those in class (xviii), were brought into existence for the purpose of gathering information and evidence in regard to the Conasupa action and - with the possible exception of classes (i) B and (ii) - in regard to litigation with the South African defendants. A great deal of argument was addressed to the Court on the question whether documents that were privileged in the Conasupa action, retained their privileges in the present action. It will therefore be convenient to deal C with this issue first as it covers a number of important matters of principle that arise in this application.

The first question I propose to deal with is: when was litigation with Conasupa contemplated? Litigation will be said to...