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[2017] ZAWCHC 111
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MS Mare Traveller Schiffahrts GmbH and Co KG v The "MV Hanjin Rome" and Another (AC40/2016; AC41/2016) [2017] ZAWCHC 111 (29 September 2017)
Republic
of South Africa
IN THE HIGH COURT OF
SOUTH AFRICA
[WESTERN
CAPE DIVISION, CAPE TOWN]
Case No:
AC40/2016
AC41/2016
In
the matter between:
MS MARE TRAVELLER
SCHIFFAHRTS GMBH
&
CO
KG
First
Applicant
MS MARE TRACER
SCHIFFAHRTS GMBH
&
CO
KG
Second
Applicant
and
THE
MV “HANJIN
ROME”
First
Respondent
AND THE OTHER
ASSOCIATED SHIPS SET
FORTH IN THE SCHEDULE
ANNEXED HERETO
MARKED
“X”
Second
Respondent
JUDGMENT DATED: 29
SEPTEMBER 2017
LE
GRANGE, J
:
Introduction:
[1]
The Applicants (“MTS”)
under case numbers
AC40/2016 and AC41/2016 caused two writs of summons
in rem
to
be issued
on 2
September 2016 in which 72
vessels were cited as Defendants.
[2]
In the present instance, the application only relates to 64 vessels
(“Defendants”.) According to the papers
filed of
the record certain of the original Defendants have either been broken
up or are about to be broken up. One of the original
Defendants was
also not cited in this application as it appears that the vessel was
sold prior to the writs being issued. The MV
“Hanjin Green”
was also cited twice in writs of summons, and the duplication has
since been rectified.
[3]
In March 2017 the erstwhile owner Tebtale Marine Inc. (“Tebtale”)
of the 24
th
Defendant, the MV "Hanjin Cape Lambert" (renamed the MV
“Mount Meru” now the MV "Songa Mountain"),
launched certain applications in this Division seeking,
inter
alia
, an order that the reference to
the vessel as a defendant in the actions
in
rem
be removed immediately. The
applications by Tebtale were opposed by MTS.
[4]
Judgment was delivered on 21 July 2017 in what is now commonly
referred to as the Tebtale judgment. In that judgment, part of
the
relief granted by Burger AJ, was the following:
"The
reference to the MV Mount Meru, formerly the MV Hanjin Cape Lambert,
IMO no 9444039, in the summons in rem issued under
case number
AC40/2016 is deleted."
[5] MTS has since
launched an application for leave to appeal against the order and
judgment of Burger AJ, such leave having been
granted to the Supreme
Court of Appeal.
Present Application:
[6]
In the present instance, MTS seeks an extension of the one year
period of validity of the writs of summons issued under case
numbers
AC40/2015 and AC41/2015, in terms of section 5(2)(dA) of the
Admiralty Jurisdiction Regulation Act, 105 of 1983 as amended
("the
Admiralty Act") read together with Admiralty Rule 6(1)(a) of the
Admiralty Rules
[1]
, and that the
period within which the writs of summons and warrants of arrest may
be served be extended to 3 September 2018.
[7] The relevant
provision of s 5(2)(dA) of the Admiralty Act provides as follows:
“
5
Powers of court
(1)
…
(2)
A court may in the exercise of its admiralty jurisdiction-
…
(dA)
on application made before the expiry of any period contemplated in
section 1 (2) (b) or 3 (10) (a) (ii), or any extension
thereof, from
time to time grant an extension of any such period;…”
[8] Rule 6(1)(a) of the
Admiralty Rules states:
“
6.
Service in rem
(1)(a)
No summons or warrant shall be served if more than one year has
expired since the date when it was issued unless
the court has,
before the expiry of the period of one year, on application, granted
leave for the summons or warrant to be served
within such further
period as the court may deem fit.”
[9]
According to MTS, the application is necessitated by the provisions
of section 1(2)(b)(iii) of the Admiralty Act and Admiralty
Rule 6(1).
The section provides that an action
in
rem
commenced shall lapse and be of no
force and effect if the process contemplated in paragraph
1(2)(a)(iii) is not served within
12 months of the date of issue
thereof. The rule, as stated above, limits the service of a summons
or warrant, unless a court on
application has extended the period.
[10]
The owners of six of the Defendants, namely the 24
th
,
32
nd
,
34
th
,
38
th
,
41
st
and 42
nd
Defendants are opposing the relief sought by MTS. This opposition is
also applicable to the 8
th
and 9
th
Defendants who relates to the SM Lines. For ease of reference I
will refer to them collectively as “the Defendants”.
[11]
The main grounds raised by the Defendants in opposing the relief
sought are the following. Firstly, the Tebtale judgment should
be
regarded as binding authority, to the extent that where a writ has
been issued against a vessel and that vessel is sold at arm’s
length pursuant to a legitimate sale transaction, following the
issuance of the writ but prior to the actual arrest of the vessel,
that vessel can no longer be arrested and falls to be deleted from
such a writ. Secondly, the fact that MTS has obtained the necessary
leave to appeal the said judgment or part thereof does not suspend
the operation of that judgment. Thirdly, in respect of all of
the
vessels a legitimate and arm’s length sale and transfer of
ownership had occurred prior to any service of the writ.
In
this regard the following information regarding the Defendants are
not in dispute namely, the 24
th
Defendant the MV "Hanjin
Cape Lambert", is now named the MV “Songa Mountain”
and is owned by Songa Mountain
AS. The 32
nd
Defendant, the
MV "Hanjin Buchanan", is now named the MV “Horizon
II” and is owned by Hotdoc Enterprises
Ltd. The 34
th
Defendant, the MV "Hanjin Esperance", is now named the MV
"True Endurance" and is owned by Defender 6 Ltd.
The 38
th
Defendant, the MV "Hanjin Paradip", is now named the MV
"Peak Proteus” and is owned by Defender 14 Ltd. The
41
st
Defendant, the MV "Hanjin Newcastle", is now named the MV
"True Navigator" and is owned by Constitution 2 Ltd.
The
42
nd
Defendant, the MV "Hanjin Port Walcott", is
now named the MV "True Windsor" and is owned by
Constitution 1
Ltd.
[12]
According to the papers filed of record, the 8
th
and 9
th
Defendants were sold with clean title pursuant to a judicial sale in
Gibraltar and the Bahamas, respectively.
[13]
MTS does not dispute that the owners of the Defendants opposing the
relief sought, acquired the respective Defendants on a
legitimate
arm’s length basis. Furthermore, the said Defendants are
precluded from undertaking any business and or visiting
South Africa
even for operational purposes, as long as the threat by MTS to arrest
the Defendants remains.
[14]
MTS contented, amongst others, that consideration should be given to
the possible prejudice it may suffer if such an extension
will not be
granted. Moreover, according to MTS, the ship watch facility operated
by them indicated that none of the Defendants
have called at a South
African port since the writs of summons were issued as they trade
past South Africa, but a reasonable prospect
remain that one or more
of the Defendants will call at a South African port, if not to work
cargo, then at least to bunker, change
crew, or procure parts, or for
repairs.
[16]
It was further contended by MTS that the judgment and order in the
Tebtale matter is final in nature and that by reason of
the common
law and
section 18(1)
of the
Superior Courts Act, 10 of 2013
, the
operation and execution of that decision is suspended pending the
determination of the appeal itself.
[2]
To this end it was contended that there can be no prejudice to the
Defendants should the period of validity of the writ of summons
in
rem
and the period within which the writs of summons and warrants may be
served be extended, as MTS has undertaken not to effect an
arrest of
the opposing Defendants pending the outcome of the appeal.
[17] It was further
contended that if the writs of summons and warrants of arrest that
may be served was not extended, it would
cause irreparable prejudice
to MTS as any appeal that it may be permitted to prosecute will in
all probability be moot.
The
extension of the period within which the writs of summons
in rem
may be served
[18]
The provisions of
section 5(2)(dA)
and Admiralty
Rule 6(1)
clearly
allows a court discretionary powers to order the extension of time
for the service of a writ of summons and warrant of
arrest.
[19]
In my view, in matters of this nature regard must be had in each case
to all relevant circumstances. Ordinarily a court may
grant an
extension of time for the service of a writ of summons and warrant of
arrest that may be issued, unless there are circumstances
by reason
of which justice and equity demands a different outcome.
[20]
In the present instance, the Defendants grounds of opposition are not
without merit.
Although the order issued in
respect of the Tebtale judgment was confined to the 24th Defendant,
the ultimate reasoning and finding
by Burger AJ, that where a vessel
is legitimately sold pursuant to an arm’s length transaction
prior to its physical arrest,
it can no longer be arrested, as the
commencement of proceedings for the purpose of enforcement of a claim
arose only upon actual
service of the writ of summons and not upon
the mere issue of a protective writ, cannot be regarded as a clearly
incorrect decision.
In any event, there is no good reason in law to
differ and to depart from the reasoning and finding of Burger AJ.
[21]
In fact, the reasoning by Burger AJ in the Tebtale judgment is
supported by two authors on Admiralty in South Africa, namely,
Gys
Hofmeyr
[3]
and Malcolm
Wallis
[4]
.
[22]
The question now is whether under these circumstances it is just and
equitable to grant an extension of the protective writs
that had been
issued but not yet served as the Tebtale judgment has the effect that
the writs MTS now sought to be extended have
no legal effect pursuant
to a subsequent bona fide sale and prior to service thereof.
[23]
In the present instance, it is not in dispute that the Defendants are
precluded from undertaking any business in South Africa
or even
visiting South Africa for operational purposes, for as long as the
threat by MTS to arrest the vessels remains (despite
the
undertaking not to effect an arrest of the Defendants pending the
outcome of the appeal).
Indeed, should any
of the vessels be forced to call at a South African port due to
emergency operational requirements, it suffers
the risk of arrest.
[24]
The complaint by the Defendants that in the present economically
depressed shipping market, this is an unreasonable barrier
to trade
and will result in serious financial impediment and loss
particularily to South Africa, cannot be ignored. Moreover, it
appears on the papers filed of record that where vessels are likely
to trade to South Africa, owners and operators have been warned
of
the potential for arrest. As a result, the Defendants avoid trade to
South Africa whilst the protective writs are operative.
[25]
In considering the prejudice that the parties may suffer, the Tebtale
judgment is rather clear in its effect. The issue now
is whether as a
result of the pending appeal to the Supreme Court of Appeal, the
Tebtale judgment has been rendered inoperative
and deprived of its
effect.
[26]
In terms of
the common law and
section
18(1)
of the
Superior Courts Act, the
operation and execution of a
decision is suspended pending the determination of the appeal itself.
These proceedings are also applicable
to Admirality
Rule 24.
[27]
On this issue, counsel for the Defendants, Mr. M J Fitzgerald, SC
relied on the matter of
MV
Snow Delta: Serva Ship Ltd v Discount Tonnage Ltd
[5]
for the proposition that a litigant, who on an
ex
parte
basis obtains an order from the Registrar and issues a protective
writ without notice to a targeted vessel is by its very nature
provisional and interim and cannot be in a better position when the
order is reconsidered by the Court. Accordingly, it was argued
that a
dismissal of a claim or application is not suspended pending an
appeal as there is nothing that can operate or upon which
execution
can be levied
[6]
. It was
further contended that the undertaking by MTS not to arrest any of
the Defendants pending the appeal is cold comfort,
as such an
undertaking cannot detract from the invalidity of the protective writ
already issued.
[28]
Counsel for MTS, Mr. M Wragge contended that the present matter is
distinguishable from the
Snow Delta
matter, in that the status of the actions
in
rem
commenced by MTS
pursuant to the difference is not equivalent to that of an interim
order conditional upon confirmation
by the same court, as
the issue of a writ of summons is a procedural step taken to bring
the action before the court.
Furthermore, it was argued
the writs of summons issued in this case were all valid and it was
only as a result of the sale
which occurred sometime there after,
that it can no longer be enforced, as held in the Tebtale judgment.
[29]
In
Snow
Delta
[7]
,
the Supreme Court of Appeal was concerned with an interim order for
the attachment of property to found jurisdiction. Having considered
the issue, the Court held that:
“
dismissal
of the claim or application is not suspended pending an appeal,
simply because there is nothing that can operate or upon
which
execution can be levied. Where an interim order is not confirmed,
irrespective of the wording used, the application is effectively
dismissed and there is likewise nothing that can be suspended. An
interim order has no independent existence but is conditional
upon
confirmation by the same Court… in the same proceedings after
having heard the other side…”
[8]
[30]
The ultimate question now is whether, in the present instance,
similar considerations apply to an arrest
in
rem
pursuant to an order for arrest
made by the Registrar, which is subsequently challenged and set aside
by the Court.
[31]
The author Gys Hofmeyr
supra
[9]
expressed the view that ‘[w]hilst the Registrar’s order
is not an adjunct to another order in the same way as an interim
order of attachment, which is only intended to operate until the
return day of the rule
nisi
,
it may be contended that it is implicit in the Registrar’s
order that it is provisional in the sense that it was only intended
to continue to operate unless and until challenged. On that basis, if
the challenge succeeds, the case for arrest is effectively
dismissed
and there is no order having operation which can be suspended..’.
[32]
This approach by Hofmeyr is in my view eminently sound and convincing
and is there no good reason not to accept it. It
speaks for
itself that where the Registrar’s order is confirmed there
would be an order that can be suspended pending an
appeal.
[33]
Taking into account the prejudice that MTS may suffer and the fact
that they have had approximately 12 months to seek the arrest
of the
Defendants, justice and equity in these circumstances dictate that it
would not be commercially sound and in the interest
of justice to
extend the writ of summons and order for arrest of the Defendants.
Moreover, the remarks made by Harms AJ in
Snow
Delta
,
is to an extent pertinent in this instance where the following was
said:
[10]
”…
it
has often been said that our Courts should not easily assume
jurisdiction in favour of peregrini against
peregrini
in
relation to litigation which has no connection to this country. Such
an assumption of jurisdiction may prevent potential peregrini
defendants from trading here and put them to unnecessary
inconvenience and expense in requiring them to litigate here. There
is
also no reason why our limited public and judicial resources
should be expended in respect of disputes which are unconnected to
and between persons who have no relationship with our country.”
(Although the issue related to an attachment of a vessel to
confirm jurisdiction, an equally important consideration was
the fact
that
peregrine
Defendants are mostly prevented from trading to South Africa.)
[34]
For these reasons the application in respect of the Defendants,
namely the 8
th
,
9
th
,
24
th
,
32
nd
,
34
th
,
38
th
,
41
st
and 42
nd
falls to be dismissed with costs.
[35] In the result the
following orders is made:
1. The
application in respect of the Defendants, namely the 8
th
,
9
th
,
24
th
,
32
nd
,
34
th
,
38
th
,
41
st
and 42
nd
under case numbers AC40/2016 and AC41/2016, where the period in which
writs of summons in rem and warrant of arrest may be served,
are
sought to be extended for a further period of 12 months, is dismissed
with costs.
2. In
respect of the remaining vessels the period of validity of the
summons in rem issued under case numbers AC40/2016 and AC41/2016
and
the period in which writs of summons
in
rem
and warrant of arrest may be
served, is extended for a further period of 12 months being from 2
September 2017 to 3 September 2018,
16h30 with no order as to
costs.
________________
LE GRANGE, J
[1]
Rules
Regulating the Conduct of the Admiralty Proceedings of the Several
Provincial and Local Divisions of the Supreme Court of
South Africa
(“Admiralty Rules”) published in GN R571 in Government
Gazette 17926 of 18 April 1997 (as corrected
by GN R655 in
Government Gazette 17968 of 2 May 1997).
[2]
Prior
to the commencement of this section the common law prevailed. This
was encapsulated in Rule 49(11), since been repealed,
which stated:
“
Where
an appeal has been noted or an application for leave to appeal
against or to rescind, correct, review or vary an order of
court has
made, the operation and execution of the order in question shall be
suspended, pending the decision of such appeal
or application,
unless the court which gave such order, on the application of a
party, otherwise directs.”
[3]
Admiralty
Jurisdiction Law and Practice in South Africa, 2006.
[4]
The
Associated Ship and South African Admiralty Jurisdiction, 2010.
[5]
2000
(4) SA 746 (SCA).
[6]
ibid
at para [6].
[7]
ibid
[8]
at
752 A-B; see also NDPP v Rautenbach
2005 (4) SA 603
at para [12].
[9]
Ibid
at 171.
[10]
ibid
para [14].