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[2020] ZAWCHC 26
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Destinar Limited v NTS Shipping PTE Limited and Others (AC07/2020) [2020] ZAWCHC 26 (28 April 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
(EXERCISING
ITS ADMIRALTY JURISDICTION)
REPORTABLE
Case
No: AC07/2020
In
the matter between:
DESTINAR
LIMITED APPLICANT
and
NTS
SHIPPING PTE
LIMITED
FIRST RESPONDENT
THE
MOTOR VESSEL
“EKARMA” SECOND
RESPONDENT
RS
BULK
LIMITED THIRD
RESPONDENT
JUDGMENT
DELIVERED ON 28 APRIL 2020
FRANCIS,
AJ
[1]
The motor vessel
Ekarma
,
the second respondent, is
fully laden and was engaged in a voyage around the Cape, bound for
three discharge ports in West Africa,
in Lagos (Apapa) in Nigeria,
Kamsar in the Republic of Guinea, and Abidjan in the Ivory Coast. The
vessel called at the port of
Cape Town to take on bunkers and other
provisions and was arrested
in rem
pursuant to a warrant of
arrest issued out of this court on 13 March 2020 at the instance of
the first respondent, NTS Shipping
PTE Limited (“NTS
Shipping”). Summons in respect of the
in rem
action was
also issued out of this court on 13 March 2020 in which NTS Shipping
claims payment of the sum of USD 2,039,628, interest
on the aforesaid
amount, and costs.
[2]
NTS Shipping’s primary claim is for the enforcement of a
partial final arbitration award handed down on 22 April 2019
and
subsequent subsidiary awards handed down during June, August, and
September 2019. The awards were made by Mr Ian Gaunt who
was
appointed as sole arbitrator in terms of a Memorandum of Agreement
concluded on 30 June 2016 pursuant to which Erushi Offshore
Limited
(“Erushi”) sold the motor vessel named the
Sam Purpose
to FFS 16 Hylie AS, later named Sam Purpose AS. The award was made in
favour of NTS Shipping as the assignee of the claims of Sam
Purpose
AS.
[3]
NTS Shipping also advanced a claim, in the alternative, based on the
original cause of action that gave rise to the arbitration
awards.
[4]
The
Ekarma
was arrested and the action
in rem
instituted against this vessel as an associated ship of the
Sam
Purpose
.
[5]
Pursuant to the arrest of the
Ekarma
,
Destinar launched the present proceedings as matter of urgency,
seeking an order setting aside the arrest of the motor vessel.
The
Ekarma
is owned by R S Bulk Limited (“RSB”), the third
respondent, which had entered into a charterparty with Destinar.
However,
Destinar is unrelated to Erushi or to RSB and brings this
application by reason of Destinar’s “interest” in
the
vessel, relying on Admiralty Rule
[1]
8(2) which provides that where summons has been issued in an action
in rem
,
any person having an interest in the property concerned may give
notice of intention to defend and may defend the action as a
party.
[6]
The application is being opposed by NTS Shipping. Notice of these
proceedings were served on RSB but it has not entered the
fray.
[7]
The urgency of the present application is not in issue. It is not in
dispute that the
Ekarma
has
been detained at the port of Cape Town since at least 14 March
2020
[2]
. Destinar demanded the
release of the vessel on 17 March 2020 and the demand was rejected on
the same day by NTS Shipping. This
application was then brought and
the matter set down for hearing on 7 April 2020. Subsequent to this
application being set down,
the Covid-19 lockdown
[3]
ensued and the parties were then informed by the Senior Judge on duty
that the matter was not of such urgency that it required
to be heard
before the anticipated ending of the lockdown on 17 April 2020. The
parties then agreed that the matter be postponed
for hearing to 20
April 2020. However, the lockdown was extended to 30 April 2020.
Nonetheless, I decided to hear this matter in
interests of justice as
the facts made out a case for urgency, both parties were
ad
idem
that
the matter was urgent, and the matter was in all respects ripe for
hearing.
[8]
Mr P Van Eeden SC (with Mr J Mackenzie) represented Destinar whilst
Mr Wragge SC represented NTS Shipping. I am indebted to
counsel for
their extensive heads of argument which I found very helpful.
RELEVANT
FACTUAL BACKGROUND
[9]
The arbitration award, and the alternative claim advanced in the
summons which is the subject of the arbitration award, arises
out of
an indemnity contained in a Memorandum of Agreement (“MOA”)
pursuant to which Erushi sold and delivered the
Sam Purpose
to
Sam Purpose AS during 2016. The MOA was concluded on 30 June 2016 and
the
Sam Purpose
was delivered to Sam Purpose AS on 1 July
2016. The
Sam Purpose
was arrested in Lagos by Ancomarine on
or about 25 October 2016 and subsequently by Noah Marine on or about
5 January 2017. Sam
Purpose AS suffered losses as a result of the
arrest of the vessel and sought indemnification from Erushi in terms
of clause 9
of the MOA. The relevant part of clause 9 of the MOA for
the purposes of the arbitration award and the alternative claim in
the
summons
in rem
issued out of this court, reads as follows:
“
(Erushi) hereby
undertake to indemnify (Sam Purpose AS) against all consequences of
claims made against (the Sam Purpose) which
have been incurred prior
to the time of delivery”.
[10]
When that indemnification was not forthcoming, the arbitration
proceedings commenced. The arbitrator found NTS Shipping (as
an
assignee of Sam Purpose AS) to be entitled to indemnification by
Erushi. This was by reason of the fact that the respective
claims had
arisen before the delivery of the vessel to Sam Purpose AS.
[11]
As stated above, NTS Shipping arrested the Ekarma on an associated
ship basis. It contends that the vessel is an associated
ship of the
Sam Purpose
, being the
Ekarma
in respect of which NTS
Shipping’s claim arose.
[12]
Sub-sections 3(4) to 3(7) of the
Admiralty Jurisdiction Regulation
Act, 105 of 1983
(“the Admiralty Act”), being the
relevant provisions for present purposes, provide as follows:
“
3(4) Without
prejudice to any other remedy that may be available to a claimant or
to the rules to the joinder of causes of action
a maritime claim may
be enforced by an action in rem-
(a)
if the claimant has a maritime lien over the property to be
arrested; or
(b)
if the owner of the property to be arrested would be liable to
the claimant in an action in personam in respect of the cause of
action concerned.
3(5) An action in rem
shall be instituted by the arrest within the area of jurisdiction of
the court concerned of property of one
or more of the following
categories against or in respect of which the claim lies:
(a)
The ship with or without its equipment, furniture,
stores
or bunkers;
(b)
The whole or any part of the equipment, furniture, stores, or
bunkers;
(c)
The whole or any part of the cargo;
(d)
The freight;
(e)
Any container, if the claim arises out of or relates to the
use of that container in or on a ship or the carriage of goods by sea
or by water otherwise in that container;
(f)
A fund.
3(6) An action in rem,
other than an action in respect of a maritime claim referred to in
paragraph (d) of the definition of ‘maritime
claim’, may
be brought by the arrest of an associated ship instead of the ship in
respect of which the maritime claim arose.
3(7)(a)
For the purposes of subsection (6) an associated ship means a ship,
other than the ship in respect of which maritime claim
arose –
(i)
owned,
at the time when the action is commenced, by the person who was the
owner of the ship concerned
at the time when the maritime
claim arose:
or
(ii)
owned,
at the time when the action is commenced, by a person who controlled
the company which owned the ship concerned
when the
maritime claim arose:
or
(iii)
Owned,
at the time when the action is commenced, by a company which is
controlled by a person who owned the ship concerned, or controlled
the company which owned the ship concerned,
when the
maritime claim arose.
” (own underlining).
[13]
In summary, sub-sections 3(6) and 3(7) are to the effect that in
order to qualify as associated ships, there must be common
control of
the associated ship (the
Ekarma
) and the ship concerned (the
Sam Purpose
) by the same person when the relevant maritime
claim arose. In addition, the requisite control must, in the case of
the associated
ship (the
Ekarma
), be shown to exist at the
time of the arrest, and in the case of the ship concerned (the
Sam
Purpose
), be shown to exist at the time the claim arose.
[14]
NTS Shipping bears the onus to demonstrate the association on a
balance of probabilities and this onus is retained even in
the face
of a challenge to the arrest of the associated ship in these
proceedings (
Transol Bunker BV v The Andrico Unity
1987 (3) SA
794
(C)
. See also,
The Silver Star
2015 (2) SA 331
(SCA)
).
[15]
According to NTS Shipping, the arrest of the
Ekarma
and the
action
in rem
against the vessel as an associated ship, are
based on the following:
[15.1] At the time that
NTS Shipping’s claim arose, the
Sam Purpose
was owned by
Erushi and Mr Rakesh Tulshyan controlled or had the power to control
Erushi; and
[15.2] At the time of her
arrest, the
Ekarma
was owned by RSB and Mr Rakesh Tulshyan
also controlled or had the power to control RSB.
[16]
NTS Shipping also denies that Destinar has the requisite
locus
standi
to bring this application to set aside the arrest.
[17]
Destinar disputes that the
Ekarma
is an associated ship of the
Sam Purpose
, within the meaning of sub-sections 3(6) and 3(7)
of the Admiralty Act. In this regard, Destinar avers that:
[17.1] NTS Shipping has
not demonstrated that at the time that its claim arose, the
Sam
Purpose
was controlled by Mr Rakesh Tulshyan and that;
[17.2] By the time that
NTS Shipping’s claim arose, which was based on the indemnity
provided in clause 9 of the MOA, as a
matter of law and fact Erushi
had already sold and delivered the
Sam Purpose
to its new
owner, Sam Purpose AS.
[18]
In so far as the attack on its
locus standi
is concerned,
Destinar submits that it has a significant interest in the vessel as
it is still operating the
Ekarma
as a “
de facto”
demise charterer even though the charter period has lapsed, and
that Destinar has an obligation to purchase the
Ekarma
in
terms of what it refers to as a “hire-purchase”
agreement. Thus, according to Destinar, it has the requisite
locus
standi
to defend the action
in rem
as an interested party
and to bring this application to set aside the arrest of the
Ekarma
.
ISSUES
[19]
The parties are in agreement that there are two issues for
determination by this court with regard to this application:
[19.1] whether Destinar
has
locus standi
to bring this application to set aside the
arrest; and
[19.2] whether the claims
advanced in the writ or summons
in rem
“arose” in
the context of sub-section 3(7) of the Admiralty Act before or after
1 July 2016, being the date that the
Sam Purpose
was delivered
to Sam Purpose AS.
LOCUS
STANDI
[20]
In order to appreciate the grounds upon which the challenge relating
to
locus standi
are based, it is necessary to make some
reference to how Destinar came to be in possession of the
Ekarma
as well as the relationship between Destinar and RSB. Much of the
factual background relating to the issue of
locus standi
was
either common cause or not seriously placed in dispute by the
parties.
[21]
RSB concluded an agreement with Destinar on 12 December 2014 pursuant
to which RSB (as buyer) purchased the
Ekarma
from Destinar (as
seller).
[22]
On the same day, 12 December 2014, a charterparty was concluded
between RSB (as owner) and Destinar (as charterer) in respect
of the
Ekarma
, using an amended Bimco Standard Bareboat Charter Code
Name: “Barecon 2001” form (“the bareboat charter”).
A copy of the bareboat charter, including additional clauses 32 to 57
of Part II thereof, was attached to Destinar’s founding
affidavit. From this agreement, it is apparent that:
[22.1] the duration of
the charter period was 60 months, terminating on 16 January 2020;
[22.2] the hire charge
payable for the
Ekarma
was USD 4,479 per day, payable in 60
monthly instalments;
[22.3] the bareboat
charter included a purchase component. Additional clause 35 states
that on expiration of the charter period,
Destinar was obliged to
purchase the vessel at the amount of USD 4,200,000 (defined as “the
Purchase Obligation Price”)
- the Purchase Obligation Price was
subsequently changed in a supplementary agreement to an amount of USD
2,123,449.
[22.4] Part IV of the
bareboat charter also provides that on payment of the final payment
of hire, Destinar was obliged to purchase
the
Ekarma
on an “as
is where is” basis and states that the vessel shall be
delivered by RSB and taken over by Destinar on payment
of the
Purchase Obligation Price;
[22.5] Part IV of the
bareboat charter provides further that RSB guarantees that the
Ekarma
, at the time of delivery, would be free of all
encumbrances and maritime loans or any debts whatsoever other than
those existing
from anything done or not done by Destinar or any
existing mortgage agreed not to be paid by the time of delivery. It
is not disputed
that no agreement was reached between the parties
relating to any existing mortgages which did not need to be paid off.
[23]
The
Ekarma
was delivered to Destinar under the bareboat
charter and Destinar operated the vessel for a period of 60 months
until the charter
period ended on 16 January 2020.
[24]
According to Destinar, it was ready in all respects to take delivery
of the
Ekarma
from RSB upon termination of the charter period,
including paying the Purchase Obligation Price. However, RSB failed
to secure
the release of the current mortgages registered over the
vessel and was, accordingly, not in a position to comply with its
obligations
arising in terms of Part IV of the bareboat charter.
[25]
Given the fact that RSB is unable to procure the release of the
current mortgages registered over the vehicle, Destinar refuses
to
pay the Purchase Obligation Price, and to take delivery of the vessel
as purchaser, until RSB complies with its obligation to
deliver an
unencumbered vessel. However, Destinar has not re-delivered the
Ekarma
to RSB and nor has it agreed to an extension of the
charter period. In this regard, Ms A Whelan, the deponent to
Destinar’s
founding affidavit, states as follows:
“
22.
The
applicant’s commercial managers have been in discussions with
the owner’s representatives. The owner wanted an extension
of
the charter period, but the applicant requires the owner to comply
with its obligations, and to deliver an encumbered vessel
against
payment of the Purchase Obligation Price. There has thus far been no
resolution of the matter.”
[26]
Destinar, nonetheless, continues to possess and operate the
Ekarma
as if it is still the bareboat charterer. In this regard, Ms Whelan
states as follows:
“
23.
The
applicant has, in the time since 16 January 2020, continued to
manage, operate and exploit the vessel as a de facto bareboat
charterer, although it has, in light of the dispute with the owner,
not paid any further hire. The applicant is operating and managing
the vessel in all respects, including, for example: maintaining the
vessel’s class (including the periodical dry-docks) and
flag
documents; paying and providing for protection and indemnity, and
hull and machinery insurance; employing the crew and dealing
with the
International Transport Federation etc; securing the vessel’s
compliance in respect of ISM/ISPS requirements etc.
The owner does
not operate the vessel nor does it derive any income from the
operation thereof under present conditions.”
[27]
Destinar has concluded various contracts with sub-charterers and/or
cargo interests relating to the voyage on which the vessel
is
presently engaged.
[28]
In summary, then, Destinar entered into a bareboat charter which came
to an end on 16 January 2020. This bareboat charter has
not been
extended beyond 16 January 2020. Destinar retains possession of the
vessel on the basis that it has a right to purchase
the
Ekarma
and has tendered performance but the owner, RSB, is unable to deliver
the vessel unencumbered which it is obliged to do in terms
of the
agreement of purchase and sale entered into between the parties.
Destinar continues to operate the
Ekarma
as “
de
facto”
demise charterer entirely at its (Destinar’s)
own cost and for its sole benefit and intends doing so until such
time as RSB
complies with its obligation to free the vessel from any
encumbrances.
BRIEF
SURVEY OF APPLICABLE LEGAL PRINCIPLES AND DISCUSSION
[29]
Destinar has brought this application to set aside the arrest of the
Ekarma
. Accordingly, it bears the onus to prove that it has
legal standing to bring the application. In this regard, it has to
establish
that it has an “interest” in the
Ekarma.
The
question whether a litigant’s interest is sufficient to clothe
it with
locus standi
must, of course, be determined in light
of the factual and legal circumstances of the case (see,
City
Capital SA Property Holdings Ltd v Chavonnes Badenhorst St Clair
Cooper
2018 (4) SA 71
(SCA)
).
[30]
The issue that has to be determined is what is the nature of the
“interest” that has to be established for standing
in
admiralty matters and whether this interest has been established on
the facts of this case.
[31]
Mr Van Eeden submitted that the interest required is something other
than what is usually required in civil actions under the
Uniform
Rules regulating proceedings in the High Court, which would be a
direct and substantial interest in the action between
NTS Shipping
and RSB. He argued that in admiralty legal proceedings, such as the
matter in hand, one is dealing with a ship as
opposed to the
consequences of any suit between a possible claimant and an owner. It
is the litigant’s “interest”
in the ship that is
paramount. This argument, however, does not take the matter much
further because it still does not shed light
on the nature of the
interest in the ship that would be necessary to clothe a litigant
with standing. In any event, it is somewhat
artificial in this case
to draw a distinction between the
Ekarma
and the underlying
action which gave rise to its attachment for the attachment is merely
part of a process which commenced with
the initiation of an action
based on a claim, the adjudication of that claim, and the enforcement
of an arbitration award arising
from the adjudication of the claim.
It certainly appears that South African courts have tendered not to
draw such a distinction
when determining the issue of
locus standi
(see, for example,
United Watch & Diamond Co (Pty) Ltd And
Others v Disa Hotels Ltd And Another
1972 (4) SA 409
(C)
, and
Gross & Others v Pentz
[1996] ZASCA 78
;
1996 (4) SA 617
(A)
). Mr Van
Eeden was unable to point me to any authority for his contention that
the “interest” required is something
other than what is
normally required in civil actions under the Uniform Rules.
[32]
Mr Wragge cited a number of authorities in support of his contention
that the common law rule relating to
locus standi
in civil
matters applied equally to proceedings brought under the Admiralty
Act. He was likewise unable to draw my attention to
any South African
case specifically on point on the issue of the
locus standi
of
an interested party - other than a creditor, bareboat charterer, or
an owner- to bring an application for the setting aside of
the arrest
of a ship. He did cite the case of
MT Fotiy Krylov v Owners of
the MT Ruby Deliverer
[2008] ZAWCHC 3
;
2008 (5) SA 434
(C)
in support of his
view that a direct and substantial interest is required but this case
only dealt tangentially with the issue.
In
MT Fotiy Krylov MT
,
the issue of
locus standi
was raised but Davis J did not have
to make a finding on this issue as the parties eventually agreed that
the applicant, a bareboat
charterer, did, in the circumstances of
that case, have standing to set aside the arrest.
[33]
In the limited time at my disposal, I have not been able to find
authority on the nature of the interest required of a party,
such as
Destinar, to clothe it with the necessary standing to bring an
application for the setting aside of the arrest of a ship.
Nonetheless, it appears to me that what is required is an interest
similar to what is required under civil actions in terms of
the
Uniform Rules.
[34]
Rule 8 of the Admiralty Rules deals with the entering of an
appearance to defend. The relevant provisions of rule 8 provides
as
follows:
“
(1)
The
provisions of rule 19 of the Uniform Rules, other than the proviso to
rule 19(1) of the Uniform Rules, shall…. mutatis
mutandis
apply to a notice of intention to defend an action in admiralty
proceedings.
(2) Where summons has
been issued in an action in rem, any person having an interest in the
property concerned may, at any time
before the expiry of 10 days from
the service of the summons, give notice of intention to defend and
may defend the action as a
party.
”
[35]
Rule 8(1) of the Admiralty Rules makes express reference to rule 19
of the Uniform Rules which deals with the entering of an
appearance
to defend by defendants in civil actions and it seems to me that
there is no good reason why the common law rules relating
to an
“interest” in civil actions should not be equally
applicable to admiralty proceedings. Indeed, as Mr Wragge submitted,
if the legislature had intended that some other type of interest was
applicable, it could have made this quite apparent when the
Admiralty
Rules were drafted. In any event, at the very least, it cannot be
reasonably argued that the type of interest that is
required to be
shown by a party wishing to partake in admiralty proceedings is not a
legal
interest but some other interest such as a moral,
commercial, or purely financial interest.
[36]
In civil proceedings, a party could
inter alia
join a matter
as a defendant or apply to intervene in such proceedings.
Intervention is closely linked to the issue of joinder
and
intervention proceedings are often treated as a particular facet of
joinder (see,
United Watch & Diamond Co (Pty) Ltd And
Others
,
supra,
at 415C). Whichever avenue is utilised
to participate in proceedings, the requirement of
locus standi
is
the same: a direct and substantial interest in the subject matter of
proceedings (see,
Amalgamated Engineering Union v Minister of
Labour
1949 (3) SA 637
(AD)
and
SA Riding for Disabled
Association v Regional Lands Claims Commissioner & Others
2017
(5) SA 1
(CC)
). As to what constitutes a direct and substantial
interest has been aptly summarised by Corbett J (as he then was) in
United Watch & Diamond Co (Pty) Ltd
,
supra
,
at 415H, where the learned judge states as follows:
“
This view of
what constitutes a direct and substantial interest has been referred
to and adopted in a number of subsequent decisions,
including two in
this division (see
Brauer v Cape Liquor Licensing Board,
1953 (3) SA 752
(C)
–
a Full Bench decision which is
binding upon me – and
Abrahamse and Others v Cape
Town City Council,
1953 (3) SA 855
(C)
), and it is
generally accepted that what is required is a legal interest in the
subject-matter of the action which could be prejudicially
affected by
the judgement of the Court.”
[37]
It is also settled law that to qualify as an interest for the purpose
of
locus standi
, the interest must not be purely financial, or
too remote, and must be a current interest and not a hypothetical one
(see,
Erasmus:
Superior Court Practice (2
nd
edition)
D1-186
).
[38]
In this case, it is common cause that the bareboat charter came to an
end on 16 January 2020. Accordingly, Destinar is no longer
a
charterer. I, therefore, agree with Mr Wragge that no reliance can be
placed by Destinar on the bareboat charter
per se
to claim a
legal interest in the
Ekarma
. The issue that then arises is
whether Destinar, as purchaser, has a sufficiently direct and
substantial interest in the
Ekarma
to clothe it (Destinar)
with legal standing to challenge the arrest of the
Ekarma
initiated by NTS Shipping.
[39]
Mr Van Eeden submitted that the agreement entered into between
Destinar and RSB is in the nature of a hire-purchase agreement
and is
similar to what in common parlance is known as an instalment or
credit-sale agreement. Destinar thus sought to rely on
Smit v
Saipem
1974 (4) SA 918
(A)
where the then Appellate Division
held that a person who possesses immovable property as purchaser in
terms of a credit-sale agreement
or lease agreement will generally
have a right to sue a wrongdoer who has caused damage to such
property. However, it appears to
me that the agreement between
Destinar and RSB is not an instalment or credit-sale agreement as
commonly understood. RSB does not
feature as a credit grantor and the
hire charges paid were for the hire of the
Ekarma
and were not
paid towards the liquidation of the Purchase Obligation Price. In my
view, Destinar and RSB in fact entered into two
discreet agreements
which, although dealing with the same subject matter, are governed by
distinct terms. The bareboat charter
is an agreement for the hire of
the
Ekarma
for a fixed period, at a fixed hire charge, and on
fixed terms and conditions regulating the hire of the
Ekarma
.
The second contract is one of purchase and sale which regulates what
is to happen with the
Ekarma
after the charter hire period has
ended.
[40]
Even if the agreement between Destinar and RSB could be construed as
an instalment or credit-sale type agreement, this would
still not
assist Destinar. The expansion of the remedy to institute actions for
damages by claimants who are not owners of property
is premised on
the dual requirement of the claimant being in possession of the
property and bearing the risk in respect of the
property in question
(see,
Refrigerated Transport (Edms) Bpk v Mainline Carriers
(Edms) Bpk
1983 (3) SA 121
(A)
at 125 B-C). In this case,
Destinar is in possession of the property but the bareboat charter
has come to an end. Thus, Destinar
has no risk-bearing responsibility
in terms of the bareboat charter. Furthermore, it has no risk-bearing
responsibility in terms
of the purchase and sale agreement because
the sale is not yet
perfecta
(see,
Commercial Union
Insurance Co of SA Limited v Lotter
[1998] ZASCA 103
;
1999 (2) SA 147
(SCA)
AT
155F). Destinar cannot thus assume any risk in the absence of an
express or implied agreement regulating this aspect after the
termination of the bareboat charter; no evidence of such an agreement
appears from the facts before me.
[41]
For sure, Destinar may be said to bear some “risk” as
long as the
Ekarma
is in its possession. However, this “risk”
is merely an obligation to maintain and preserve the
Ekarma
whilst it is in Destinar’s possession. This obligation does not
extend to act on behalf of the owner in defence of the vessel.
In my
view, the position of Destinar, as submitted by Mr Wragge, is similar
to that of a gratuitous bailee who is in possession
of the vessel
pending physical repossession by the owner. The role of the bailee,
or erstwhile charterer, is simply to keep the
vessel safe and does
not extend to taking action on behalf of an owner in respect of
damage caused to the vessel by third parties
(see,
M Davis:
Bareboat Charters (2
nd
edition
(2005)
at 29.2 and 29.3, page 166). In any event, an action
for damages caused to a ship is very different from an action to
protect the
owner against third parties wishing to enforce a debt
against the owner by attaching the vessel.
[42]
Destinar is not the owner of the
Ekarma
and may never become
its owner. This much was acknowledged by Mr Van Eeden. Whilst
Destinar has tendered the purchase price, RSB
has not removed the
encumbrances against the vessel and may never do so. There is
certainly no indication on the papers before
me that RSB will, in the
foreseeable future, do so and, given its supine approach to these
proceedings, its anyone’s guess
if it ever will. It would be an
insensible and unbusinesslike interpretation of the purchase and sale
agreement to interpret it
in such a manner that allows Destinar to
continue to possess the vessel, to operate it as if it were the
owner, and to participate
in proceedings in order to protect rights
of, or to, ownership which it does not have and may never have (cf.
the comments of Wallis
JA in
Natal Joint Municipal Pension Fund v
Endumeni Municipality
2012 (4) SA 593
(SCA) at 603E to 608E)
. In
my view, Destinar’s submission that it is a potential or future
owner of the
Ekarma
postulates an interest that is too remote
to satisfy the requirements of standing as its interest in becoming
owner may well be
hypothetical at best; certainly, there is no
factual evidence before me to suggest otherwise. The fact that
Destinar is able, without
any contractual right, to continue to
exploit the
Ekarma
albeit
with the apparent knowledge
of RSB, does not confer on Destinar the right to intervene in
proceedings on behalf of the owner or
to intervene in proceedings on
the basis that it may eventually become the owner.
[43]
It is not disputed that Destinar is in possession of the ship and has
been in such possession since the termination of the
bareboat
charter. It was argued on behalf of Destinar that it should be
regarded as a
bona fide
possessor which would then give it the
right to intervene in proceedings. However, this argument does not
assist Destinar for the
simple fact that it is not a “
bona
fide”
possessor. To qualify as a
bona fide
possessor,
a person should in good faith believe that he or she is the owner of
the thing in his or her control (see,
Lydenburg Properties v
Minister of Community Development
1963 (1) SA 167
(T) 172C-D
).
In this case, Destinar knows that it is not the owner.
[44]
Destinar clearly has a financial interest in the continued operation
of the
Ekarma
. It has contracts of carriage and various
contractual commitments to cargo interests. However, Destinar’s
contractual commitments
to third parties, including its crew, is not
sufficient to qualify as a legal interest for the purpose of
establishing
locus standi
in these application proceedings.
[45]
For the foregoing reasons, I have come to the conclusion that
Destinar has no direct and substantial interest in the application
for the relief sought by it and has, accordingly, failed to establish
the
locus standi
necessary to bring the present application.
This conclusion precludes me from considering the grounds advanced by
Destinar to consider
setting aside the arrest of the Ekarma.
ORDER
[46]
Accordingly, I make the following order:
[46j.1] The application
is dismissed with costs.
__________________________
FRANCIS,
AJ
[1]
Admiralty Proceedings Rules Regulating the Conduct of the Admiralty
Proceedings of the Several Provincial and Local Divisions of
the
Supreme Court of South Africa.
[2]
Destinar states that the vessel was arrested on 13 March 2020 and
NTS Shipping states that the vessel was arrested on 14 March
2020 –
this discrepancy is of no consequence in this application.
[3]
In light of the global Covid-19 pandemic, a national disaster was
declared in South Africa and one of the consequences was that
only
applications that were urgent and essential could be set down for
hearing during the lockdown period.