That sinking feeling

Recently there was an important court case, from an insurance point of view, involving a marine accident. This provides a useful opportunity to discuss the position of workmen’s compensation for seamen

The case is Viking Inshore Fishing versus Mutual & Federal ZASCA 2016 021. Viking owned a small fishing vessel, the Lindsay, which was valued at R4 million. In the early hours of the morning on May 8, 2005, it was sailing in an easterly direction off the Cape coast near Cape St Francis.

On the starboard side (the right-hand side of the vessel, facing forward) of the Lindsay was another ship, the Umgeni. It was bigger and faster and was overtaking the Lindsay. Sailing in a westerly direction – coming towards the Lindsay – was a very much bigger ship, the Ouro do Brasil.

It was essentially between the two approaching vessels, the Lindsay and the Umgeni. The sea was choppy with four- to six-metre swells. For reasons that are not clear, the navigational equipment on board of the Ouro do Brasil did not show the presence of the Lindsay.

The equipment had, however, detected the bigger ship, the Umgeni. In terms of the maritime Collision Regulations, the duty of the Ouro do Brasil was to change course to put more distance between itself and the Umgeni (and presumably the Lindsay) by veering to its starboard. In doing so, it would cross the bows of the Lindsay.

It changed direction placing it on a collision course with the Lindsay. In terms of the Collision Regulations, the Ouro do Brasil was supposed to give way as the Umgeni and the Lindsay were stand-on vessels. They were obliged to maintain their direction and speed as the Ouro do Brasil took the necessary evasive action.

Probably because the presence of the Lindsay had not been detected, the evasive action was too gentle, and, instead of crossing the bows of the Lindsay, it collided with it; resulting in the loss of 14 lives. The captain, who was asleep in his cabin at the time, and a spare hand were the only survivors.

As a result of the death of people on board the Lindsay, and the fact that the captain was asleep at the time, it was difficult to get a clear picture of what happened aboard the Lindsay before the collision.

The vessel’s first mate was in charge of the bridge at the time of the collision, but it appears he was not actually on the bridge. For this and other reasons, the insurer, Mutual & Federal, came to the conclusion that the marine safety regulations had not been complied with at the time of the collision, and the insurance policy required the insured to warrant it would comply with the regulations.

Mutual & Federal concluded the insured had breached the warranty and repudiated the claim. The Supreme Court of Appeal carefully analysed the policy and concluded that the warranty had not been breached and ruled in favour of the insured.

It should be noted it took 11 years to resolve the case, which is surely a matter of concern as one of the main reasons for taking out insurance is to be efficiently indemnified.

We are more concerned here with the workmen’s compensation position, which presumably was settled efficiently. The reason why this can be considered is that the legislation contains specific provisions dealing with seamen. Section 24 is a relevant section which reads:

This Act shall apply to a seaman or airman:

(a) while employed on a South African ship or aircraft;

(b) while, subject to section 23(3), employed in the Republic on any other ship or aircraft.

One can wonder why this section is necessary. An obvious reason is that it is generally accepted that the laws of a country apply only within the territorial limits of the country, unless the law is specifically extended to operate outside of the territory.

So, if the ship is on the high seas and a seaman is injured, some may argue that the injured seaman, an employee, is not covered. Take the case of an employee who is injured in a foreign port, say an English harbour; it could be argued it is the laws of that country which are applicable. Section 24 removes this doubt.

A South African ship is also defined, and means a vessel used in navigation which–

(a) is registered in the Republic in terms of any law/governing the registration of ships and is not registered in any other state in terms of a similar law; or

(b) is owned or chartered by a person whose head office or place of business is in the Republic, or by a person who resides in the Republic.

As indicated, the real issue is not the ship, but the fact the injured person may not be working within South Africa at the time of the injury, and hence Section 23(3) needs to be taken into account. It reads as follows:

23 Accidents outside the Republic

(1) …

(2) …

(3)
(a) If an employer carries on business chiefly outside the Republic and an employee of his ordinarily employed outside the Republic, meets with an accident while temporarily employed in the Republic, such employee shall not be entitled to compensation unless the employer has previously agreed with the Director-General that such employee shall be entitled to compensation and, where applicable, has paid the necessary assessments in respect of him.

(b) An employee, referred to in paragraph (a), who is temporarily employed in the Republic for a continuous period of more than 12 months, shall be deemed to be ordinarily employed by such employer in the Republic.

In terms of Section 23, if a seaman of a foreign ship is injured in South Africa he is unlikely to receive workmen’s compensation in South Africa, as would be the position of a person employed on a South African ship injured in a foreign port. As indicated, the person employed on a South African ship will receive compensation via the South African system.

So, in an accident such as the one involving the Lindsay, the dependants of the seamen should receive compensation – hopefully in less than ten years. Survivors may also be entitled to compensation depending on the injuries suffered.

It should be noted that, historically, the fishing industry has the highest accident rates of all categories. This could be because the fishing industry trends to operate under different rules.

The arrangement is often that the boat owner engages a captain to do the fishing and they share the catch. The captain then appoints the crew and shares his portion of the catch with them. The crew are thus not employed full time and so their safety training may not be in line with that which could be gained in a factory, for example.

One of South Africa’s leading cases involves fishing. This is the case of Silva’s Fishing Corporation versus Maweza 1957 (2) SA 256 A. At the time, liability was based on positive acts – there was no liability for omissions.

In this case, the fishing vessel went missing and no steps were initiated to find out what had happened to it, or to launch a rescue operation. The question was whether or not this omission could lead to a legal claim. The court set a precedent by ruling it was possible.

Legally Speaking is a regular column by Albert Mushai from the school of Economics and Business Sciences, University of the Witwatersrand. Mushai holds a master’s degree from the City University, London, and was the head of the insurance department at the National University of Science and Technology in Zimbabwe before joining the University of the Witwatersrand as a lecturer in insurance.