Government of the Republic of South Africa v Fibre Spinners & Weavers (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Wessels ACJ, Trollip JA, Hofmeyr JA, Miller JA and Trengove AJA
• Judgment Date: 21 March 1978
• Hearing Date: 15 February 1978
• Court: Appellate Division

Wessels ACJ:

Appellant appeals against the judgment of DIDCOT J,

Wessels ACJ

sitting in the Durban and Coast Local Division, allowing with costs an exception taken by respondent to particulars of claim filed by the former in the action instituted by it in which it claimed an order for the A payment of damages by the latter in the sum of R207 843 and further ancillary relief. I shall hereinafter refer to appellant as plaintiff and to respondent as defendant.

In substantiation of its claim, plaintiff averred, inter alia, as follows in its particulars of claim:

B 1. Prior to the year 1971, plaintiff and defendant entered into an agreement in terms of which defendant undertook, for reward,

(a)

to manufacture jute grainbags for plaintiff;

(b)

to store the manufactured grainbags in defendant's warehouse at Benoni, Transvaal, and

(c)

to deliver on demand to plaintiff such quantities of the aforesaid grainbags as it might require from time to time.

C 2. Pursuant to the aforesaid agreement defendant manufactured jute grainbags, which it stored in the above-mentioned warehouse.

3. On 14 November 1969, a date subsequent to the conclusion of the agreement referred to in para I hereof, the parties entered into a further D agreement, the terms of which appear from a letter of that date addressed to defendant's manager by the Secretary for Industries on plaintiff's behalf. In so far as it is relevant hereto, the letter reads as follows:

"1.

With reference to the various discussions between your Mr Robertson and the writer this serves to replace my letter of 1 October 1969.

2.

In consideration of Messrs Fibre Spinners and Weavers arranging, and E keeping in force, insurance as detailed in para 3 hereunder, you are hereby absolved from all responsibility for loss of or damage howsoever arising in respect of this Department's stocks of raw jute and phormium and finished jute and phormium products whilst in the care of your company and in or upon any premises owned or used by your company and/or any of its associated or subsidiary companies, but

3.

it shall be your company's responsibility to maintain, with my Department's interest properly noted in F the policies, insurance in the following forms.

(i)

Grain bags

Cover as reflected in all risks policy BAR 0512000280 (or any policy issued in replacement). Every year this policy is renewed the Department must be advised of its renewal stating (a) that none of the conditions contained in the original policy has been changed and (b) furnishing the Department with a photostat or certified copy of the renewal receipt.

(ii)

Raw jute G and phormium

Cover as reflected in the following extensions to policy 67DC010 (or any policy issued in replacement):

Spontaneous combustion,

Explosion,

Riot,

Storm and special perils,

Except insofar as these H extensions cover fire arising from these perils.

4.

Premiums payable by yourselves in respect of the insurance cover under para 3 (i) above shall continue to be borne by yourselves, but the Department shall be responsible for reimbursing you in respect of premiums paid under 3 (ii) above.

5.

The premiums to be reimbursed to your company, referred to in para 4 above, shall only be in respect of the insured value of the stocks held on behalf of the Government; furthermore, it shall be the duty of your company to ensure that the Department is at all times fully covered by insurance in respect of its stocks held by you."

Wessels ACJ

4. During the period 7 March 1971 to January 1972, 477 800 of the above mentioned grainbags were stolen from the aforesaid warehouse.

5. The theft was committed by three persons, namely J A van Wyk. Robert Milburn and the late R F Milburn, The last-mentioned (R F Milburn) was at A all material times employed by defendant as its chief security officer. In his capacity as such, he was responsible for the safe custody of the grainbags in question. He was also in direct control of access to the above-mentioned warehouse where the grainbags were stored. The theft was carried out with the late R F Milburn's assistance who facilitated entry B into the warehouse by Van Wyk and Robert Milburn and the removal by them of the grainbags referred to in para 4. At all material times the late Milburn was acting in the course, and within the scope, of his employment as defendant's chief security officer.

6. By reason of the agreement referred to in para 1 (b) above, defendant C was under a duty to exercise reasonable care in regard to the safe custody of the grainbags in question whilst they were stored in its warehouse. In breach of this duty, defendant was guilty of cross negligence or, alternatively, negligence in exercising control over the grainbags whilst these were stored in its warehouse.

7. In the result, plaintiff has suffered damage, and defendant is in law D responsible to compensate it in respect thereof on one or other of the following grounds:

(a)

by reason of its breach of the contract between the parties in E failing, upon demand, to deliver to plaintiff the grainbags in question; alternatively,

(b)

by reason of defendant's gross negligence, alternatively,

(c)

by reason of defendant's negligence; alternatively,

(d)

by reason of defendant's vicarious responsibility for the theft committed by its servant, the late R F Milburn, in the circumstances set out above.

The defendant excepted to plaintiff's particulars of claim, as amplified F by certain further particulars furnished by it at defendant's request on the ground that "the averments therein are insufficient to sustain the action on any of the bases therein set forth".

The substantial issue which arose for determination by the Court a quo involved the interpretation of the second paragraph of the agreement set G out in the letter dated 14 November 1969 which is referred to in para 3 above. It was and still is common cause between counsel that evidence could not shed any light on the meaning of the letter in question, and that it was appropriate to construe it in exception proceedings.

After dealing with certain common law principles relevant to a contract of bailment. DIDCOTT J Stated the following in the judgment:

H "The effect of the letter, it therefore seems to me, was this. The defendant's duty to arrange for the specified insurance, and to maintain it, to keep it in force and to pay for it, was substituted for the ordinary liability of a bailee in the event of the property's loss or damage to it. The liability may have been replaced in its entirety; or perhaps it was replaced, as at the least it must have been, only to the extent of loss or damage from a risk which was covered by the policy actually referred to in the letter. Whichever the case it was contemplated that in the event of loss or damage resulting from the development of any such risk, the defendant would have recourse to the insurer. No doubt it was also envisaged that if it were successful in that direction, the defendant would account in turn to the

Wessels ACJ

plaintiff, not for the loss or damage, but for what it had got from the insurer in respect of the loss or damage. An alternative source of recompense, at least as far as the insurance cover went, was thereby provided. The plaintiff has not alleged that the defendant failed to arrange for, maintain, keep in force or pay for the...