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[2016] ZASCA 89
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Northern Endeavour Shipping Pte Ltd v Owners of NYK Isabel and Another (972/2015) [2016] ZASCA 89; [2016] 3 All SA 418 (SCA); 2017(1) SA 25 (SCA) (1 June 2016)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 972/2015
Name
of Ship:
MV ‘NYK ISABEL’
In
the matter between:
NORTHERN
ENDEAVOUR SHIPPING PTE
LTD
APPELLANT
and
THE
OWNERS OF THE ‘NYK ISABEL’
FIRST RESPONDENT
NIPPON
YUSEN KABUSHIKI KAISHA
(‘NYK
LINE’)
SECOND
RESPONDENT
Neutral
citation:
Northern Endeavour
Shipping Pte Ltd v Owners of MV NYK Isabel
(972/2015)
2016 ZASCA 89
(1 June 2016)
Coram:
LEACH, THERON, SERITI and WALLIS JJA and
KATHREE-SETILOANE AJA.
Heard
:
25 May 2016
Delivered
:
1 June 2016
Summary:
Maritime law – associated ship arrest
relying on deeming provision in s 3(7)
(c)
of the Admiralty Jurisdiction
Regulation Act 105 of 1983 (the Act) – charterer deemed to be
owner of ship concerned –
charterer includes a slot charterer –
application for security in terms of s 5(2)
(c)
of the Act – requirements for –
prima facie claim – reasonable and genuine need for security –
factors relevant
to exercise of discretion.
ORDER
On
appeal from:
KwaZulu-Natal Local
Division, Durban (Mnguni J, sitting as court of first instance):
1
The order of the high court is amended in
the following respects:
(a)
The deletion of paragraph 1 and the
renumbering of the remaining paragraphs accordingly.
(b)
The deletion in the original
paragraph 4.2.3 of the words:
‘
the
Respondent’s
in rem
action
will be dismissed with costs,
alternatively’
2
Subject to those amendments the
appeal is dismissed with costs, such costs to include those
consequent upon the employment of two
counsel.
JUDGMENT
Wallis
JA (Leach, Theron and Seriti JJA and Kathree-Setiloane AJA
concurring)
[1]
This appeal involves a claim for security
by the second respondent, Nippon Yusen Kabushiki Kaisha trading as
NYK Line (NYK), against
the appellant, Northern Endeavour Shipping
Pte Ltd (NES). Mnguni J sitting in the KwaZulu-Natal Local Division,
Durban, exercising
its admiralty jurisdiction, upheld the claim and
ordered NES to provide the security demanded by NYK in an amount of
nearly $10
million within ten days of the court’s order. The
penalty for it failing to do so was that the deemed arrest of the
NYK
Isabel
, which it had obtained in order
to pursue an action
in rem
against that vessel in respect of a claim against NYK, would fall
away and become of no force and effect. In addition the order
provided that the action would either lapse automatically, or that
NYK could approach the court for an order dismissing the action.
In
practical terms the effect of the order was that NES would be unable
to continue with its action. The high court granted leave
to appeal
to this court against that order. The circumstances in which the
claim for security was made were unusual and it is necessary
at the
outset therefore to set out the factual background in some detail.
The
background facts
[2]
By a time charter party dated 2
November 2000, Kien Hung Shipping Co Ltd (Kien Hung) chartered the
Andhika Loreto
from
its owners, Lady Loreto Shipping Inc
.
On
20 November 2001, by way of an addendum, NES assumed the rights and
obligations of the owners under the charter party. At some
stage,
although the date is unclear, the vessel was renamed
Northern
Enterprise
and it is by that name that
I will refer to it.
[3]
In the latter stages of 2002 Kien
Hung, NYK and another shipping line, referred to as CSAV, which
played no part in these events,
concluded a slot exchange agreement
for the operation of a regular container service from the Far East to
the East Coast of South
America, via South Africa. The service was to
be known as Supergex and would operate a weekly round-trip service
using vessels
provided by each of the participants. Each line would
nominate vessels for the service and would in respect of those
vessels be
the ship operator. The lines, other than the ship operator
in relation to each vessel, would charter slots on the vessels so
nominated
in agreed proportions. These charters would be governed by
the terms of a standard slot charter agreement. Each line would,
however,
issue its own bills of lading in respect of cargo booked on
a vessel and would be the principal carrier in respect of such cargo.
[4]
On 22 February 2003 Kien Hung nominated the
Northern Endeavour
to undertake this service for a voyage from Pusan, South Korea to
Santos, Brazil via various ports including Singapore and Durban.
At
Singapore NYK loaded a number of containers on board the vessel in
bay 22. When the vessel arrived in Durban there was a request,
the
nature of which was disputed, that these containers be re-stowed. It
is alleged by NES that NYK refused that request, a dispute
we do not
have to address. The vessel then sailed for Brazil. Off the
Cape of Good Hope it encountered a fierce storm with
force 10 or 11
winds, heavy seas and waves of up to 9 metres in height. In that
storm the container stack in bay 22 collapsed.
Eleven containers were
washed overboard and lost and the cargo in a number of other
containers in that bay was damaged.
[5]
Cargo underwriters, acting under rights of
subrogation, instituted action against NYK in Brazil to recover the
losses suffered as
a result of these events. They relied upon the
fact that NYK had issued the bills of lading under which the cargo
was carried and
was the carrier of the cargo under those bills of
lading. NYK joined NES to the proceedings, claiming an indemnity from
it in the
event of it being held liable to the cargo underwriters.
The Brazilian court upheld both the cargo underwriters’ claim
and
NYK’s claim against NES for an indemnity in the same amount
as it had been held liable to pay to the underwriters. An appeal
against that judgment failed. There is apparently a further appeal
pending before the highest court in Brazil, but the volume of
cases
awaiting a hearing is such that it is improbable that the appeal will
be heard in the near future.
[6]
NES was aggrieved by this result as it
holds NYK entirely liable for the losses that were suffered on this
voyage. It alleged that
the reason for the collapse of the containers
stacked in bay 22 was the improper manner in which NYK caused them to
be stowed.
It levelled three complaints against NYK. The first was
that it caused 24 containers to be stowed on the port side of bay 22
and
another 24 on the starboard side with only a single container in
the central portion of the stow, thereby depriving the outside
containers of necessary support and the stow of stability. Second, it
contended that the upper containers in the stow were loaded
with
heavier cargo than the lower containers, and this also affected the
stow’s stability. Third, it claimed that, when the
vessel
arrived in Durban, NYK was requested to re-stow these containers in a
more satisfactory manner and that it refused to do
so. It alleged
that the defects in the stow were caused by this improper method of
stowing the containers and pointed to the fact
that, notwithstanding
the magnitude of the storm that the
Northern
Endeavour
encountered, no other
containers were lost and no other cargo was damaged.
[7]
NES contended that any amount that it is
obliged in due course to pay NYK pursuant to the Brazilian judgment
will constitute damages
suffered by it in consequence of NYK’s
actions in causing the improper stowage of containers in bay 22 on
the
Northern Endeavour
.
It alleged that it was entitled to recover these damages from NYK in
an action in tort or delict, based on negligence. To that
end it
caused the
NYK Isabel
,
a vessel owned by Mercurius Shipping Pte Ltd (Mercurius), but
controlled by its parent NYK, to be arrested as an associated ship
on
23 January 2013, when it called at Durban. Security was furnished on
25 January 2103 to secure the release of the vessel and
there is now
a deemed arrest in place in terms of s 3(10) of the Admiralty
Jurisdiction Regulation Act 105 of 1983 (the Act).
[8]
A writ of summons was served in the action
and an appearance to defend delivered on behalf of both Mercurius and
NYK. Particulars
of claim were delivered as was a plea embodying a
number of special pleas. There is a replication in response to the
plea. The
litigation over the claim threatens to be protracted unless
it is forestalled by the present application.
The
application
[9]
On 26 November 2013 NYK and Mercurius
brought an application against NES claiming the following relief:
‘
1.
NIPPON YUSEN KABUSHIKI KAISHA (“NYK Line”) is granted
leave to be joined
to these proceedings as an intervening applicant;
and
2.
In terms of section 5(2)(b) of the Admiralty Jurisdiction Regulation
105 of 1983
(“the Act”) the Respondent is ordered to
provide security to the Intervening Applicant for its claim against
the Respondent
advanced in proceedings (number 1.242/04) before the
Court of Santos, Brazil and which has resulted in a judgment in
favour of
NYK Line against the Respondent currently subject to a
challenge by special appeal.
3.
The Respondent is directed to provide said security:
3.1
in the sum of US$11,428,277.00;
3.2
within 10 days of the date of this order;
3.3
in a form to the satisfaction of the Applicants’ attorneys or,
failing that, to the
satisfaction of the Registrar of this Court.
4.
In terms of section 5(2)
(c)
of the Act, it is ordered that:
4.1
the deemed arrest of MV “NYK Isabel” at the instance of
the Respondent (as Plaintiff)
in the action under case number A7/2013
is made subject to the Respondent providing the security as set forth
in paragraphs 2 and
3 of this Order;
4.2
in the event that the Respondent does not provide the security in
compliance with paragraphs
2 and 3 of this Order:
4.2.1
the aforesaid deemed arrest of the MV “NYK Isabel” will
fall away and be of no force or effect;
4.2.2
the letter of undertaking provided by the First Applicant to the
Respondent to secure the release of the
MV “NYK Isabel”
from arrest (and of which a copy is annexure “SMSD1” to
the founding affidavit of Mr Dwyer
in this application) shall be null
and void and returned for destruction; and
4.2.3
the Respondent’s
in rem
action will be dismissed with
costs,
alternatively,
the Applicants shall have leave, on the
same papers supplemented in so far as may be necessary, to make
application to this Court
for an order that the Respondents claim in
the
in rem
action is dismissed with costs.
5.
The Respondent is ordered to pay the Applicants’ costs of the
application.’
[10]
The security sought by NYK was not security
for a counter-claim in the existing
in
rem
action. Instead it was security for
the indemnity claim advanced by NYK against NES in Brazil, for which
it had already been granted
judgment. The high court held that it was
incumbent on it to order security ‘in order to render the
court’s judgment
effective if it finds against’ NES.
Other than a reduction in the amount of the security, the relief that
the high court
granted was in accordance with the prayer.
[11]
In the founding affidavit it was said that
‘arguably’ NYK was already a party to the pending
litigation, but to place
matters beyond doubt it sought an order that
it be granted leave to ‘join in the proceedings as the second
intervening applicant
in this application’. There was a
considerable amount of ambiguity in this to which I will need to
refer in due course. Beyond
that the deponent, Mr Dwyer, a senior and
very experienced attorney in maritime matters, set out the history of
the voyage giving
rise to the dispute and the history of the
litigation in Brazil.
[12]
In dealing with the claim for security, Mr
Dwyer said that, notwithstanding the further pending appeal, the
cargo underwriters were
now in a position to enforce their judgment
against NYK, against the provision of security in the event of the
judgment being overturned
on appeal. At the time he deposed to his
affidavit the amount of the judgment, after taking account of the
provision in Brazilian
law for a monetary adjustment, presumably
related to inflation, and interest, was in excess of US$ 11
million. NYK had obtained
security from NES by way of a P & I
Club letter of undertaking in an amount of US$ 1,8 million.
He accordingly said
that his client required security for its claim
in an amount of some US$ 9.6 million.
[13]
In support of this claim, Mr Dwyer
submitted that his clients had a prima facie case against NES as
evidenced by the judgment it
had obtained against it. As regards the
need for security he said that NES had disposed of the
Northern
Endeavour
and was now a dormant
non-trading shell without assets or income. In view of the fact that,
as a result of its arrest of the
NYK
Isabel
, NES was fully secured for its
claim against NYK he submitted that it would be just and equitable
for NYK in its turn to be fully
secured for its claim against NES.
Lastly he submitted that in order to compel NES to comply with an
order to provide security
the order should provide that if it failed
to do so within a specified time the deemed arrest would be set
aside; the security
provided by NYK would be declared null and void
and returned; and either the action against the
NYK
Isabel
would be dismissed, or NYK
should be given leave to apply for it to be dismissed.
[14]
Mr Cunningham who represented NES, also a
senior and experienced maritime attorney, did not seriously challenge
the facts deposed
to by Mr Dwyer in the opposing affidavit. He
contended that NYK was not a party to the South African action and
that unless it
became a party it could not ask the court to order
that NES provide it with security. In any event he contended that
security could
not be ordered for NYK’s claim against NES under
the Brazilian judgment, but only for a claim pending or contemplated
before
a South African court. If these legal arguments were not
upheld he contended that no sufficient case had been made for
security
to be ordered. If all this failed he contended that the
sanctions proposed by Mr Dwyer were inappropriate.
The
arrest of the NYK Isabel
[15]
The
NYK
Isabel
was arrested as an associated ship. The basis for such an arrest was
set out in the
Silver
Star
.
[1]
The first element of such an arrest is the identification of the
owner of the ship in respect of which the claim arose (the ship
concerned) at the time that claim arose. Section 3(7)
(c)
of
the Act provides that the charterer or subcharterer of the ship
concerned is deemed to be the owner of the vessel for the purposes
of
effecting an associated ship arrest, where the charterer or
subcharterer and not the owner is liable in respect of the claim.
NYK
was the slot charterer of a defined number of slots on board the
Northern
Endeavour
on this particular voyage. NES accordingly alleged that in terms of
s 3(7)
(c)
of
the Act it was deemed to have been the owner of that vessel at the
time that the claims by the cargo underwriters arose, as these
were
claims for which it, and not NES, was liable. That satisfied the
first requirement for an associated ship arrest. At the time
of the
arrest of the
NYK
Isabel
,
it was owned by a company (Mercurius) controlled by NYK. That
satisfied the second requirement. The
NYK
Isabel
was
accordingly an associated ship in relation to the
Northern
Endeavour
,
the ship in respect of which NES’s claim had arisen.
[16]
The premise upon which this rested was that
a slot charterer was a charterer for the purposes of s 3(7)
(c)
of the Act. If that premise was
incorrect, then the arrest of the
NYK
Isabel
should not have been effected
and could have been set aside on application to the high court
exercising its admiralty jurisdiction.
That would have been a simple
and direct way of NYK disposing of NES’s claim and it would not
have been necessary for it
to invoke the complicated process of
obtaining and enforcing an order for security.
[17]
Were that the position, it would have
affected the question whether it was appropriate for the high court
to order NES to provide
security. NYK would have had a remedy near to
hand and, if it eschewed reliance on it without good reason, that
would be a strong
factor weighing against the court coming to its
assistance by ordering NES to provide security. Accordingly,
this court called
upon the parties to file written argument on this
point and the issues flowing from it. Both sides filed succinct and
helpful supplementary
written arguments and we were provided with
copies of the relevant authorities. Counsel were at one in submitting
that a slot charterer
fell within the concept of a charterer in terms
of s 3(7)
(c)
of
the Act. For the reasons that follow I think they were correct.
[18]
When the Act was first passed s 3(7)
(c)
read as follows:
‘
If
a charterer or subcharterer by demise, and not the owner thereof, is
alleged to be liable in respect of a maritime claim, the
charterer or
subcharterer, as the case may be, shall for the purposes of
subsection (6) and this subsection be deemed to be the
owner.’
This
wording was drawn from Article 3.4 of the Arrest Convention,
[2]
providing for sister ship arrests, the relevant portion of which
reads:
‘
When
in the case of a charter by demise of a ship the charterer and not
the registered owner is liable in respect of a maritime
claim
relating to that ship the claimant may arrest such ship or any other
ship in the ownership of the charterer by demise …’
[19]
The
underlying purpose of s 3(7)
(c)
was
to enable a claimant having a claim against a demise charterer to
pursue that claim by way of an action commenced by an associated
ship
arrest. Absent the deeming provision, it was debatable whether a debt
incurred by a demise charterer could be pursued in that
way.
[3]
The effect of the presumption was to make it clear that it could, so
that where the claim lay against the demise charterer and
not the
owner, as would probably be the case in regard to claims under bills
of lading issued by the demise charterer as carrier,
or claims for
the price of goods supplied to the vessel at the instance of the
demise charterer,
[4]
the claim could be pursued by way of an action commenced by an
associated ship arrest.
[20]
The
existence of the deeming provision reinforced the purpose of the
associated ship arrest provisions, which was to impose liability
for
maritime claims where it belonged by virtue of common ownership or
common control of vessels.
[5]
But its reach was restricted to the case of the demise charterer,
which is a less common form of charter party than time or voyage
charter parties. It also meant that, in the case of claims arising in
respect of time or voyage chartered vessels, where the claim
arose
against the charterer and not the owner, the associated ship arrest
provisions were not available to assist the claimant.
Where a time or
voyage charterer issued its own bills of lading as carrier or was
responsible for the supply of bunkers or provisions
to the vessel,
creditors would not be able to arrest an associated ship to pursue
their claims. Nor could the owner of the vessel
subject to the
charter make use of the associated ship provisions to enforce a claim
against the charterer arising under the charter
party.
[21]
These problems were addressed by way of the
1992 amendment to s 3(7)
(c)
.
The reference to demise charterer was deleted and the section now
reads:
‘
If
at any time a ship was the subject of a charter-party the charterer
or subcharterer, as the case may be, shall for the purposes
of
subsection (6) and this subsection be deemed to be the owner of
the ship concerned in respect of any relevant maritime
claim for
which the charterer or subcharterer, and not the owner, is alleged to
be liable.’
This
was a substantial extension of the scope of the associated ship
arrest provisions in the Act. There can be no doubt that it
extended
to both time and voyage charters notwithstanding the limited power of
a voyage charterer to give directions to the owner
in regard to the
operation of the ship. The question is whether it extended to other
forms of charter party.
[22]
The
origin of slot charter parties lies in the expansion of
containerisation in international shipping. According to a special
circular issued by the Baltic and International Maritime Council
(BIMCO):
[6]
‘
Slot
charter parties, or space charter agreements, as they are also
called, were first introduced in the very late 1960’s
by major
container operators in consortia on the basis of exchanging slots on
each other’s vessels. Usually, each operator’s
entitlement to space on other operators’ vessels would be in
relation to the tonnage entered into the consortia by that particular
vessel operator. Even though financial adjustments were made to match
the number of slots being exchanged, the essence of the arrangement
was exchange rather than sale. Therefore, terms and conditions
reflecting this form of slot chartering were often provided in what
could be referred to as a Cross Charter Party.
…
The
main characteristic of a Cross Charter party, in particular, when
used in consortia operation, is that it is rarely used as
a free
standing document. On the contrary it is usually attached to an
operating agreement which contains the essential details
of the slot
charter arrangement, such as number of slots to be exchanged,
financial arrangements, the specified voyages, and other
operating
details, leaving the Cross Charter Party primarily as the liability
document.’
[23]
A
slot charter party has been defined
[7]
as:
‘
A
time or voyage charter under which the slot charterer has the right
to use only a specified amount of the ship’s container
carrying
capacity. In container liner trades, such charters may be reciprocal
(“cross slot charters”) between operators/carriers,
in
order to share capacity.’
By
contrast with this, the BIMCO circular says that:
‘
The
feature of a slot charter party as a contract of carriage is unique
in the sense that, whereas the slot charter party is not
a time
charter party nor a voyage charter party, it bears some similarity to
both types of contract. As such, a slot charter party
can be said to
be a ‘hybrid’ type of contract. It may be mentioned that,
as distinct from a time charter party when
the entire vessel is being
chartered, the slot charterers are only hiring space on a vessel and
they are therefore not acting as
operators as under a time charter
party and usually have no control over the operation of the vessel.’
To
similar effect, Christopher Hancock QC expresses the view that a slot
charter is a unique form of charter with some elements
analogous to a
time charter and some analogous to a voyage charter.
[8]
[24]
When
courts have considered the status of slot charters they appear to
have concluded that they are a novel form of charter party,
that has
evolved in response to changes in the manner in which sea transport
operates and is designed to meet the commercial contingencies
of new
and changing circumstances. Thus in
The
“Tychy”
[9]
the court was concerned with the question whether a slot charterer
was a charterer for the purposes of s 21(4)
of
the
Supreme
Court Act, 1981. After a careful consideration of the authorities on
the question whether this term in the Act was confined
to a demise
charterer, Clarke LJ held that it included both a time and a voyage
charterer. He went on to consider the position
of a slot charterer
and held that there was in principle no difference between that and a
voyage charter of part of a ship. He
said:
They
are both in a sense charterers of space in a ship. A slot charter is
simply an example of a voyage charter of part of a ship.’
[25]
Other
courts seem to be similarly inclined to accept that a slot charterer
is a charterer, although they have not necessarily endorsed
the idea
that a slot charter is a form of voyage charter. When the High Court
of Australia was dealing with the meaning of the
word ‘charterer’
in s 19(a) of the Admiralty Act 1988 (Cth), Toohey J expressly
included slot charterers in the
category of charterer.
[10]
In the United States the US District Court for the Southern District
of New York said that a slot charter is a ‘more
specific type
of sub-charter’.
[11]
In Canada a slot charter has been described as a type of time
charter,
[12]
thereby emphasising its hybrid character.
[26]
In
the field of limitation the right to limit under the Limitation
Convention 1976
[13]
is given to a charterer of the vessel. In the
MSC
Napoli
[14]
the court had to consider whether that right extended to slot
charterers. The court concluded that it did. In para 17 of the
judgment
Teare J said:
‘
Indeed
the ordinary meaning of the word charterer is apt to include any type
of charterer, whether demise, time or voyage charterer.
There is no
reason why it should not also include a slot charterer. Standard
textbooks refer to slot charters when discussing types
of charters …
There is a good reason for a slot charterer to be within the
definition. Were slot charterers not within the
definition, slot
chartering, which is an established and, to judge by its growth, an
efficient way of organising the carriage of
goods would or might fall
into disuse. A slot charterer’s inability to limit liability
would not encourage international
trade by way of sea carriage, which
was the object and purpose of the convention.’
This
conclusion has been accepted in textbooks on the subject of
limitation.
[15]
[27]
I do
not think it desirable to approach a statute such as the Act, which
is concerned with events in the dynamic field of international
trade
and shipping, on the basis that the meaning of expressions used in
the statute are fixed in stone at a point in time, and
are incapable
of being adapted to accommodate new developments.
[16]
When the Act speaks of charter parties it is concerned to refer to
contracts of a type developed by and familiar to those engaged
in
maritime trade. It is not concerned to restrict the category of such
contracts. In other words it requires a court to give a
construction
to the expression that is, so far as possible, consistent with the
commercial understanding of its meaning.
[28]
Slot charters have evolved as the container
revolution in maritime transport has evolved. They meet a perceived
commercial need
and their terms are largely adapted from the
established time and voyage charters that are in daily use in
maritime trade. The
objection to treating them as charters appears to
be based principally on the fact that the slot charterer does not
charter the
entire vessel, but only a part thereof. But I can
perceive nothing in that fact that should operate to preclude slot
charterers
from being characterised as charterers.
[29]
A final point that seems to me relevant is
the purpose of s 3(7)
(c)
.
It is to enable claims to be pursued by way of proceedings against an
associated ship in circumstances where no claim lies against
the ship
concerned and its owner. The deeming provision simply enables the
first requirement for an associated ship arrest to be
satisfied
without affecting the commercial relationships underpinning the slot
charter. If the owner of the ship concerned is liable
on the claim
the deeming provision cannot be invoked. A construction of the word
‘charterer’ that includes a slot charterer
will serve the
purpose of promoting the ability of creditors to recover maritime
claims. That is the underlying purpose of permitting
proceedings to
be instituted by the arrest of an associated ship. So that
construction is consistent with the statutory purpose.
[30]
For all these reasons I am satisfied that
NYK was a charterer of the
Northern
Endeavour
for the purposes of the
deeming provision in s 3(7)
(c)
of
the Act. It follows that it was not open to NYK on this ground to set
aside the arrest of the
NYK Isabel
as defective. I turn then to deal with the other issues raised by the
application for security.
Was
NYK a party to the action?
[31]
The primary issue argued on behalf of NES
was that NYK was not a party to the action instituted by NES against
the
NYK Isabel
.
The mere fact that it had entered an appearance to defend that action
did not, so it was submitted, make it a party as such. It
was
submitted that in order for it to become a party it had to take a
further procedural step and seek its joinder.
[32]
The crisp answer to this argument is that
it is contrary to the provisions of rule 8(2) of the Admiralty Court
Rules, which provides
that:
‘
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
.’
(Emphasis added.)
The
rule states expressly that the person giving notice of intention to
defend thereafter defends the proceedings as a party. It
imposes no
further obligation that must be discharged in order to become a
party. And if confirmation is needed that they are a
party, one need
only look at rules 9 and 10. In terms of rule 9(2)
(c)
a party is entitled to deliver pleadings. There is no suggestion that
NYK would have had to do any more from a procedural perspective
to
invoke this rule. In fact an examination of the plea delivered in the
case shows that it was pleading specifically in relation
to the claim
against it. For example, it raised a defence of
res
judicata
.
But that defence is ordinarily only available to a party that was a
party to the judgment relied on as constituting
res
judicata
.
[17]
[33]
The provisions of rule 10 dispose of any
residual doubt. That reads:
‘
A
defendant and any person giving notice of intention to defend in an
action
in rem
may
claim in reconvention against the plaintiff, either alone or with any
other person.’
Acceptance
of the proposition that a person does not become a party to an action
in rem
merely
as a result of giving a notice of intention to defend the action,
would have the remarkable result that, albeit that they
were not a
party, they would be entitled to bring a claim in reconvention.
Counsel sought to escape this absurdity by contending
that the effect
of bringing a claim in reconvention would necessarily be that the
person bringing that claim would have to make
themselves a party to
the action. But there is nothing in the rules to suggest that any
additional procedural step needs to be
taken before delivering the
claim in reconvention. The only sensible construction of rule 8(2) is
that such a person is already
a party to the action.
[34]
Mr Mullins SC, for NYK, drew our attention
to the background to rules 8(2) and 10. When they were originally
promulgated these two
rules were rules 6(2) and 8 respectively. There
were, however, two significant differences. In rule 6(2) (now rule
8(2)) the words
‘as a party’ did not appear. In rule 8
(now rule 10) the words ‘and any person giving notice of
intention to
defend in an action
in rem’
were not included.
[35]
Those
words were inserted in consequence of the judgment of Scott J in
The
Lady Rose.
[18]
In that case, after delivering a notice of intention to defend an
action
in
rem,
the
owner of the boat filed a plea and a claim in reconvention. An
exception was taken to the claim in reconvention on the grounds
that
such a procedure was impermissible. The exception was dismissed and
Scott J said:
[19]
‘
For
the present purpose, however, it is unnecessary to have to decide
upon the true nature of the action
in
rem
. Whatever that
may be, it is at least clear that the action cannot be regarded as
simply an action against a
res
without reference to the owner or person having an interest therein.
This is particularly so where, as in the present case, the
action is
dependent upon the existence of a claim
in
personam
against
the owner (s 3(4)(b) of the Act). Even where the claim is
founded upon a maritime lien, the owner, of course, remains
involved
to the extent that he is compelled, in the absence of payment, to
defend the action or lose his ship or other maritime
res
.
In these circumstances, to regard him, for the purpose of Admiralty
Rule 8, as being someone entirely different from the defendant,
viz
the maritime
res
,
and therefore unable to counterclaim, would be to adopt an approach
which, in my view, is unnecessarily technical and could not
have been
what was intended. Indeed, to require the owner to formally apply to
be joined as a co-defendant with the
res
before being able to counterclaim, or to bring a separate action, it
seems to me, would serve no purpose other than to increase
the costs
of litigation. In my judgment, therefore, the word “defendant”
in Admiralty Rule 8 is to be construed as
including the owner of a
maritime
res
who appears to defend an action
in
rem
against the
res
.’
[36]
There can be no doubt that the amendments
effected to rules 8(2) and 10 in 1997, were directed at incorporating
the conclusion by
Scott J in
The Lady
Rose.
They involved an express
acceptance that the effect of entering an appearance to defend an
action
in rem
is
to make the person so doing a party to that action.
[37]
Counsel
for NES sought to call in aid a passage from my judgment in the
Alina
II,
[20]
where I dealt with the fact that in English admiralty proceedings the
mode of citation is such that, if the person entering appearance
to
defend is personally liable under the claim, that person has been
properly cited and any judgment thereafter will be enforceable
as a
judgment
in
personam
against them. I went on to say:
‘
Under
the present admiralty rules in South Africa the second of these
consequences would not flow from the entry of appearance to
defend
and the defence of the
in
rem
action. The
reason is that in terms of admiralty rule 2(4), read with form 1 to
the admiralty rules, the summons
in
rem
is not
addressed to and does not cite the owner or other persons having an
interest in the vessel or other
res
arrested in order to commence the action. In this our rules have
departed from the forms that applied in England, as referred to
by
Lord Wright in
The
Cristina
supra, and
the forms previously applicable in South Africa, both when our courts
sat as Colonial Courts of Admiralty and in the
first three years of
operation of the Act. One may therefore have a submission to
the court's jurisdiction by a person not
cited as a party. However,
the problem, if it be one, is readily overcome by amending the
summons to join that person and to reflect,
as rule 22(5)
contemplates, that the action will proceed as an action both
in
rem
against the
vessel and
in
personam
against
that person, with such consequential amendments as the circumstances
may require. Alternatively a separate action
in
personam
can be
commenced on the basis of the submission to the court's jurisdiction.
Some such procedural step seems to be necessary in
this country in
order that the action (and ultimately any judgment) reflects the
party entering appearance as a party to the judgment.’
[38]
It
was not my intention in that passage to suggest that a person
entering an appearance to defend an action
in
rem
did
not thereby become a party to the action. I was concerned to deal
with a different proposition. It was that, until such person
was
expressly cited, a judgment
in
rem
against
the vessel would not be executable against them
in
personam
without some procedural step being taken to make it clear that the
judgment lay against them personally. I postulated that the
procedural step might be to cite them as a defendant by way of
amendment as contemplated by rule 22(5). Alternatively a
separate action
in
personam
could be instituted and the proceedings consolidated. The sole
purpose of these suggestions was to indicate how a judgment granted
in
rem
could
be pursued and executed upon
in
personam
.
These procedural mechanisms may not be exclusive. In the case of a
judgment against a partnership it has been held that it is
permissible, after judgment, to approach the court for an order
naming the individual partners so that the judgment may be enforced
against them.
[21]
Perhaps it would be permissible for the claimant to seek an order
declaring that the
in
rem
judgment should also operate
in
personam
.
That process would bear some similarity to the procedure adopted in
England in
The
Dictator.
[22]
Be that as it may, that procedural problem is not germane to the
present issue, which is simply whether NYK became a party to the
action
in
rem
against the
NYK
Isabel
when
it entered an appearance to defend that action. The answer to that
question must be in the affirmative.
[39]
It follows from that conclusion that
paragraph 1 of the order granted by the high court was unnecessary.
It should be set aside.
The next issue is whether NYK was entitled to
invoke the provisions of ss 5(2)(b) and (c) of the Act in order
to obtain the
security it sought.
Applications
for security in terms of s 5(2)
(b)
[40]
The application for security was brought in
terms of ss 5(2)
(b)
and
(c)
of the
Act. Those sections provide that:
‘
A
court may in the exercise of its admiralty jurisdiction –
(a)
…
(b)
order any person to
give security for costs or any claim;
(c)
order that any
arrest or attachment made or to be made or that anything done or to
be done in terms of the Act or any order of the
court be subject to
such conditions as to the court appears just, whether as to the
furnishing of security or the liability for
costs, expenses, loss or
damage caused or likely to be caused, or otherwise.’
[41]
It is
not easy to comprehend precisely what is meant by the words ‘in
the exercise of its admiralty jurisdiction’ in
the preamble to
this section. The admiralty jurisdiction of the high court is defined
in s 2 of the Act as being a jurisdiction
to hear and determine
any maritime claim and s 1(1) of the Act contains a list of
maritime claims, which includes in para
(ff)
‘the
giving or release of any security’. But the mere fact that a
claim is made for the provision of security against
‘any
person’ in terms of s 5(2)
(b)
cannot
on its own vest the court with jurisdiction to deal with that claim.
If the demand for security is unrelated to any maritime
claim and
unrelated to any matter having a connection to proceedings before the
court, s 5(2)
(b)
could
surely not be construed as empowering the court to make such an
order.
[23]
[42]
Section
5 of the Act deals generally with the powers of the court in
admiralty matters. It is true that some of these are powers
that may
be exercised without any pre-existing need for the court to be seised
with a matter falling within its admiralty jurisdiction.
In those
instances, it is the application for the exercise of the power that
gives rise to the court’s jurisdiction. The
powers in
ss 5(3)
(a)
and,
in some instances s 5(5)
(a)
(i),
read with s 5(5)
(a)
(iv),
fall in that category. This is not, however, the case with the powers
in s 5(2), save for sub-section
(dA)
,
which was inserted in 1992 and does not fit comfortably with the
remaining matters dealt with in the sub-section. Leaving aside
the
special instances mentioned above, it seems to me in general that s 5
is directed at conferring on courts powers to be
exercised in matters
where their admiralty jurisdiction has already been established by
arrest, attachment, submission or otherwise.
That is undoubtedly so
in regard to the powers in sub-sections
(a)
,
(c)
,
(d)
,
(e)
,
(f)
and
(g)
of
s 5(2). In my view the sensible construction of the words ‘in
the exercise of its admiralty jurisdiction’ in
the context of
an application under s 5(2)
(b)
is that they limit the application of the sub-section to
circumstances in which the court is already vested with admiralty
jurisdiction
in relation to the person against whom such an order is
sought.
[24]
This should not hamper a litigant wishing to obtain an order that
security be provided in the light of the extensive powers of
the
court to order joinder in terms of s 5(1).
[43]
Differing
views have been expressed in regard to the scope of the power given
to the court in terms of s 5(2)
(b)
.
[25]
In the context of applications for security for counterclaims brought
by the owners of vessels arrested in actions
in
rem
in South Africa or arrested under s 5(3)
(a)
,
there are judgments that suggest that it should be sparingly
exercised.
[26]
These cases have also tended to view the proper approach to its
exercise through the prism of the common law in regard to compelling
peregrini
to
provide security. Others have disagreed.
[27]
In my view the language of the section does not restrict the manner
in which the power to order security is to be exercised. It
is
undesirable in that situation for the discretion to be unduly
circumscribed.
[28]
A better approach is that adopted by Friedman J in
The
Paz
.
[29]
In dealing with the similarly unqualified discretion in s 5(3)
of the Act, he said:
‘
(T)he
discretion is an unfettered judicial discretion which falls to be
exercised upon a consideration of all relevant facts and
circumstances. To endeavour to categorise or catalogue those facts or
circumstances, as has on occasions been done in the past
when
questions of discretion were involved, is not only undesirable but is
fraught with obvious dangers. This does not mean, however,
that
general guidelines as to the Court's approach to the powers conferred
upon it by s 5(3) should not, if possible, be sought
and stated.’
[44]
It is
unhelpful to have regard to common law rules on the furnishing of
security for costs in determining the scope of the power
to order
security under this section. These are not only restrictive, but are
directed at different situations to those that arise
under the
Act.
[30]
The Act is a special statute dealing with maritime matters and it is
directed at meeting the needs of the shipping industry in
enforcing
maritime claims. It provides the court with very extensive powers to
deal with maritime cases. In regard to the breadth
of these powers I
draw attention to s 5(1), which empowers the court, to join a
person as a party ‘notwithstanding the
fact that he is not
otherwise amenable to the jurisdiction of the court’, and to
s 5(2)
(a),
which
provides that a court may decide any matter arising in connection
with a maritime claim ‘notwithstanding that any such
matter may
not be one which would give rise to a maritime claim’. These
powers take account of the reality that maritime
defendants are
mobile and transitory in their presence in any particular
jurisdiction. Perforce they compel maritime claimants
to become
‘wandering litigants of the world’, in the colourful
expression of Didcott J recorded in
The
Paz
,
[31]
but without the pejorative overtones with which he used it. In order
to address this problem the Act provides wide-ranging powers
of
arrest, both for the purpose of instituting actions in South
Africa
[32]
and to enable claimants to obtain security for proceedings in other
jurisdictions.
[33]
[45]
It
follows in my view that the provisions of the Act should be given a
generous interpretation consistent with its manifest purpose
of
assisting maritime claimants to enforce maritime claims. That
construction is also consistent with the right of access to courts
afforded to everyone in terms of s 34 of the Constitution. There
is, however, a need for balance when the courts exercise
the
expansive powers of arrest and attachment of vessels embodied in the
Act. Sections 5(2)
(b)
and
(c)
give
courts the means to balance the interests of claimant and defendant
by ordering counter-security in appropriate cases and attaching
conditions to orders of arrest or attachment. Thus it is commonplace
for an arrest to be subject to the provision of security for
the
costs of an application to set the arrest aside, or for any loss
suffered in consequence of that arrest if it is subsequently
set
aside.
[34]
[46]
Turning
then to general matters applicable to the exercise of a court’s
discretion under s 5(2)
(b)
two requirements are well established. The first flows from the
language of the section, namely that security is to be given for
costs or a claim. An applicant for security under this section must
establish that they may be entitled in due course to an order
for
costs, or that they have a claim against the party from whom security
is sought. The existence of a claim need only be established
prima
facie, that is by producing evidence that, if accepted, shows the
existence of a cause of action.
[35]
As the claim must be one that is enforceable it is for the applicant
also to show on a prima facie basis that it will be enforceable
in
the forum in respect of which security is sought. The second is that
the applicant must show a genuine and reasonable need for
security.
After some debate at the level of the high court, this court held
that to be a requirement in the
Wisdom
C
.
[36]
[47]
NES
contended that the security sought by NYK was unrelated to the
subject matter of the litigation in South Africa. It is not clear
to
me whether it was intended by this submission to contend that it was
impermissible for the court to grant the application for
security.
[37]
To the extent that this was its purpose, I disagree. The section
refers to ‘any claim’ and NYK has a claim for an
indemnity against NES that is reinforced by the judgment in its
favour granted by the Brazilian court. It would be entitled to pursue
a counterclaim in the present action based on that judgment. Such a
claim is a maritime claim in terms of paragraph
(aa)
of
the definition of maritime claim. I understood counsel to accept
that, if NYK had brought a counterclaim on that basis, NES could
not
have objected to the application for security on this ground. That
concession was in my view destructive of the argument. There
can be
no practical difference between security for a counterclaim in South
Africa based on the Brazilian judgment and security
for payment of
that judgment in its country of origin, if it is not set aside on
appeal.
[48]
An
alternative submission was that while NES had submitted to the
jurisdiction of the South African court for the purposes of its
action and matters relating thereto or arising therefrom, it had not
submitted to the jurisdiction in relation to a claim for security
to
be provided in Brazil. That appeared to be based upon a passage in
the judgment in the
Rizcun
Trader (4)
,
[38]
where it was said that while jurisdiction to make such an order was
inevitably present when the claim was to be pursued in reconvention
in the South African proceedings, that was not necessarily so in
relation to a claim to be pursued in a foreign tribunal. In that
case
the initial arrest of the vessel as an associated ship by an entity
referred to as MAS, had been for the purpose of obtaining
security
for arbitration proceedings in London. The owner of the arrested
vessel brought an application against MAS for security
for a claim
for damages for wrongful arrest that it wished to pursue in South
Africa. Van Reenen J dismissed the application
inter
alia
on
the footing that in bringing the initial application MAS had only
submitted to the jurisdiction of the South African court in
respect
of matters relevant to its original claim for security and not in
respect of the proposed claim for damages.
[49]
That
conclusion was incorrect. In
Mediterranean
Shipping Co v Speedwell Shipping Co Ltd
[39]
Van Heerden J said:
‘
It
was the defendants who had initially sought the assistance of this
Court against the plaintiff for relief under the Act. The
present
claim is for loss flowing from that relief. … The plaintiff's
present cause of action arose under and by virtue
of the Act and
within the jurisdiction of this Court. Anyone who invokes the
jurisdiction of this Court for relief under the Act
must be taken -
and can hardly be heard to contend otherwise - to have submitted to
that jurisdiction for the recovery, in terms
of a remedy under the
Act, of any loss or damage flowing from his very action in coming to
this Court.’
[50]
In this case NES has invoked the
jurisdiction of the South African court with a view to nullifying the
effect of the judgment granted
against it and in favour of NYK in
Brazil. NYK, for its part, is defending that action and, by
inference, defending the Brazilian
judgment insofar as it holds NES
liable to indemnify it for any amount it may have to pay to
underwriters under the same judgment.
In invoking the jurisdiction of
the South African court NES subjected itself to the exercise of the
powers of that court to grant
relief under the provisions of the Act.
Those powers include those set out in ss 5(2)
(b)
and
(c)
of
the Act. I can see no basis for the view that the scope of those
powers is in some way circumscribed by the nature of the claim
brought by NES. It makes no sense to say that NYK could ask for
security for its claim, provided it brought a counterclaim in South
Africa based on the Brazilian judgment, but not if it wanted that
security for payment of the judgment in Brazil.
[51]
Beyond
the two requirements referred to above, I do not find it helpful to
try and establish further guidelines for the exercise
of the court’s
discretion under ss 5(2)
(b)
and
(c)
.
Each situation will be different. The court should not be constrained
by a formulaic approach to the exercise of its discretion.
[40]
All relevant factors must be weighed and a conclusion reached
that is in accordance with the interests of justice. How should
that
exercise be undertaken in this case?
The
exercise of the court’s discretion.
[52]
It is
unclear on what grounds the high court exercised its discretion in
favour of NYK. Having set out the facts it summarised the
issues and
concluded that there were five questions that needed to be addressed.
The third of these was whether the court had jurisdiction
in respect
of NES to order it to furnish security for a claim advanced in Brazil
and the fourth was whether the court should exercise
its discretion
to make such an order. It then said that the fifth issue was whether
NYK had established a genuine and reasonable
need for such security.
That inverted the enquiry because proof of a genuine and reasonable
need for security is a prerequisite
for the exercise of the
discretion. Proof of that need is essential.
[41]
[53]
This may explain why in the latter part of
the judgment the fourth and fifth issues were dealt with together.
But having set out
the arguments by NYK in favour of security being
ordered, the judgment digressed to deal with the quantum of security.
It concluded
simply:
‘
I
agree with counsel for applicants that fairness would, in the
circumstances, dictate that the respondent actually pay (and secure)
its liability to the intervening applicant and in that way, if the
respondent is correct, it will have met its obligation in terms
of
the binding judgment and will have recovered that which it claims to
be entitled to recover in the South African action
in
rem
. Conversely, if
the intervening applicant is correct, and the respondent’s
claim
in rem
is bad, the respondent will have met its obligations. Obviously in
those circumstances the South African court will ultimately
decide
where the losses will lie.’
The
following paragraph added the conclusion that the application for
‘additional’ security was genuine and reasonable.
[54]
It
seems to me that this approach conflated the question whether NYK’s
need for security was reasonable and genuine with the
exercise of the
court’s discretion and led in the end result to the court not
dealing with the latter question. It falls
to be emphasised that
these are separate issues. Whether there is a reasonable and genuine
need for security is a prior question
concerned with the likelihood
that the applicant for security will be paid if it is successful in
obtaining an order for costs
or in pursuing its claim.
[42]
In
The
Paz
[43]
it
was said that an applicant for a security arrest should say why it
needed security; that it had not already obtained security;
and that
it could not obtain security in the other actual or contemplated
proceedings. I would add the following glosses. If some
security has
been obtained there should be an explanation of the need for further
security, for example, by explaining that it
is insufficient or of no
real value. If it would be feasible to obtain security elsewhere, or
in the other or contemplated proceedings,
there needs to be an
explanation for invoking the jurisdiction of a South African court
for that purpose. In other words, as Didcott
J said in
The
Paz
[44]
the applicant must explain:
‘
no
alternative and less disruptive opportunity for obtaining such has
been or is likely to become available to him and, if one has
already
been lost, that this was not his fault or, I should rather say, not
his fault to such a degree as to be fairly held against
him.’
Whether
security should be ordered when a reasonable and genuine need
therefor has been established will depend upon the circumstances
of
the particular case.
[55]
It will usually be convenient in
considering an application for security to address these questions
sequentially. Starting then
with the question whether NYK
demonstrated that it had a claim against NES, it is clear that it
did. The claim arose under the
slot exchange agreement, read with the
particular slot charterparty applicable to the voyage. A court of
competent jurisdiction
in Brazil adjudicated upon it and it is in
that court that NYK seeks to enforce it. It was therefore prima facie
established and
the first requirement was satisfied.
[56]
Some
argument was addressed to us on the basis that if NYK sought to
enforce the judgment in South Africa it would need to make
further
allegations and establish them on a prima facie basis.
[45]
Stress was laid on the need for a South African court to be satisfied
that the foreign court had international jurisdiction or
competence.
The short answer to this is that NYK was not seeking to enforce its
Brazilian judgment in South Africa, but in Brazil.
It would only be
if it were contrary to South African public policy for our court to
lend its aid to the enforcement of that judgment
by compelling NES to
provide security, that the issue of the Brazilian court’s
exercise of its jurisdiction might arise.
In this case there is no
suggestion that it exercised jurisdiction on an exorbitant basis.
Given the breadth of the admiralty jurisdiction
vested in our courts
under the Act, it would only be in extreme circumstances that our
courts would refuse to recognise the admiralty
jurisdiction of a
foreign court on public policy grounds.
[57]
On the question of NYK’s genuine and
reasonable need for security its case was simple. NES has disposed of
the
Northern Endeavour
and
the company is dormant, with neither assets nor income. In the
absence of security there seems little prospect of NYK obtaining
payment of its claim if the judgment it has is not disturbed on
appeal. It has obtained some security in Brazil in the form of
a P &
I Club letter of undertaking, in an amount equivalent to the package
limitation applicable to the lost and damaged cargo,
and it reduced
its claim for security by the amount of that guarantee. It also
caused a claim made by NES against ships’
agents in South
Africa to be arrested. But, if NYK succeeds in its claim against NES,
it is difficult to see that any value can
attach to that claim.
Accordingly in my view NYK clearly established a genuine and
reasonable need for security for its claim against
NES.
[58]
The final issue is the exercise of the
discretion vested in the court under s 5(2)
(b)
.
There was very little argument directed at suggesting that this
should not be exercised in favour of NYK. It seems to have been
accepted that once the pre-requisites for the exercise of the
discretion had been established an order for security should follow.
Accordingly I confine myself to the following observations that point
in favour of an order for security. First, in doing so we
are
assisting a court in one of our close trading partners and a fellow
member of the BRICS group of trading nations to enforce
its judgment.
So we are dealing with the judgment of a court in a friendly nation.
Judicial comity points in favour of assisting
in its enforcement.
Second, NES invoked the jurisdiction of the South African court in
order to obtain security for its claim against
NYK and it cannot
complain if NYK makes use of the same jurisdiction for the same
purpose. Third, where the merits of a claim and
counterclaim are on
the face of it reasonably balanced, considerations of fairness
suggest that either both parties should have
security or neither.
Fourth, NES did not point to any policy or equity reasons to suggest
that it would be unjust for it to be
required to provide such
security. The present litigation is being supported by its P & I
Club. Its decision to provide or
withhold security will be a business
decision in the light of its underwriting experience and its
assessment of the value of pursuing
the claim.
[59]
While a court will ordinarily not explore
the merits of the claim for which security is sought, it would in my
view be a relevant
consideration in the exercise of the discretion if
it appeared that it was largely speculative or had limited prospects
of success.
In this case the position appears to be that NYK has a
strong claim and conversely NES a weak claim. I have read both the
first
instance and the appellate judgments of the Brazilian courts.
Contrary to the allegation in papers in this court that its finding
that NES should indemnify NYK flowed from a special provision of the
Brazilian Commercial Code that imposed strict liability on
NES, there
is no mention in either judgment of reliance on such a provision.
Instead it appears that NES largely ran the same defences
against NYK
as NYK ran against the underwriters, namely, defences of heavy
weather and Act of God, as well as package limitation.
In the
appellate judgment it is recorded that NES argued that NYK was
exclusively liable ‘due to the improper cargo stowage’,
but this defence was rejected.
[60]
The provisions of the slot exchange
agreement and the slot charter party also favour NYK’s case.
Clause 5.5(a) of the former
provides that:
‘
The
Ship Operator [NES] takes responsibility of the container from the
time the spreader is disconnected at the port of loading
until the
spreader is reconnected at the port of discharge’.
While
clause 8.1 makes each line responsible for the proper and careful
stowing of containers, that is in turn subject to the provisions
of
clause 8.2 of the slot charter, which provides that:
‘
The
Charterer shall comply with the directions of the Master or other
persons responsible for the stowage on behalf of the owners
as to
when and where containers are to be stowed.’
It
is no doubt in the light of that provision that the ship operator –
in this case NES – undertook in clause 10.2 of
the slot charter
to be:
‘
responsible
for the proper and careful carriage, custody and care of the
containers and goods whilst on board the Vessel …’
In
clause 10.4 the possibility of the slot charterer pursuing a claim
for an indemnity against the owner (NES) arising out of claims
made
against it by cargo interests, was expressly recognised.
[61]
I do
not say that these provisions were necessarily decisive of NES’s
liability to NYK. They do, however, furnish powerful
support for the
proposition that the Brazilian court’s decision was supported
by the terms of the relevant contracts. Furthermore
NES does not seek
in the South African proceedings to rely upon the contracts for its
claim against NYK. Instead it pursues the
claim in delict or tort,
always a problematic course of action when the parties’
relationship is governed by detailed contracts.
[46]
[62]
Weighing all these factors it seems to me
that this is a clear case in which the overall interests of justice
pointed in favour
of the grant of an order that NES provide security
to NYK for its claim in Brazil. It was but faintly argued that if
security was
not provided the penalty should be that the amount of
security NES held should be reduced to correspond with the security
NYK holds
in Brazil under the P & I Club letter of undertaking. I
can see no justification for that. Subject only to two minor
amendments
to the order of the high court the appeal must be
dismissed with costs. The first of these is the deletion of the
unnecessary order
for NYK’s admission as an applicant. The
second is the inadvertent grant of relief in para 4.2.3 of the
court’s order
of relief in the alternative. The parties were at
one that the costs of two counsel were warranted.
[63]
I make the following order:
1
The order of the high court is amended in the following respects:
(a)
The deletion of paragraph 1 and the renumbering of the remaining
paragraphs.
(b)
The deletion in the original paragraph 4.2.3 of the words:
‘
the
Respondent’s
in rem
action
will be dismissed with costs,
alternatively’
2
Subject to those amendments the appeal is dismissed with costs, such
costs to include those consequent upon the employment of
two counsel.
M J D Wallis
JUDGE
OF APPEAL
Appearances
For
appellant: M Wragge SC (with him J D
McKenzie)
Instructed
by: Bowman Gilfillan, Cape Town,
Matsepes Inc,
Bloemfontein.
For
respondent: S R Mullins SC (with him Ms S Linscott)
Instructed
by: Shepstone & Wylie,
Durban,
McIntyre & Van der Post,
Bloemfontein.
[1]
MV Silver Star: Owners of
the MV Silver Star v Hilane Ltd
[2014] ZASCA 195
;
2015 (2) SA 331
(SCA) paras 14 and 16. (
Silver
Star
).
[2]
International
Convention for the Arrest of Sea-Going Ships concluded in Brussels
on 10 May 1952. See D J Shaw
Admiralty
Jurisdiction and Practice in South Africa
at
40.
[3]
There was some authority in England to the effect that a demise
charterer was to be equated with the owner of the vessel. See
Shaw
supra at 32-33
[4]
See for example the facts in
Transol
Bunker BV v MV Andrico Unity and Others; Grecian-Mar SRL v MV
Andrico Unity and Others
[1989]
ZASCA 30; 1989 (4) SA 325 (A)
[5]
Silver Star
para
5.
[6]
Circular No 7, 10 November 1993. The circular explains the thinking
underlying BIMCO’s drafting of the SLOTHIRE charter
party.
[7]
In Annex 2 (Glossary of Legal Definitions) to the
Legal
and Economic Analysis of Tramp Maritime Services
February
2007 (EU Report COMP/2006/D2/002).
[8]
Christopher Hancock QC
Containerisation,
slot charters, and the law
.
Chapter 14 in D Rhiddian Thomas (ed)
Legal
Issues Relating to Time Charters
(2008)
247-256.
[9]
The “Tychy”
[1999] 2 Lloyd’s Rep
11 (CA) at 18-22.
[10]
Laemthong International
Lines Co Ltd v BPS Shipping
[1997]
HCA 55
;
(1997) 190 CLR 181
;
149 ALR 675
at 681.
[11]
International Marine
Underwriters v M V Patricia S
06
Civ 6273 (19 January 2007); (2007) 713 LMLN 1.
[12]
Canada Moon Shipping Co Ltd
and Another v Companhia Siderurgica Paulista-Cosipa and Another
2012
FCA 284
para 53.
[13]
Convention on Limitation of Liability for Maritime Claims 1976. See
also s 263(2) of the Merchant Shipping Act 57 of 1951.
[14]
Metvale Ltd and Others v
Monsanto International SARL and Others (the “MSC Napoli”)
[2009] 1 Lloyds’ Rep
246 [QBD (Admlty Ct)].
[15]
Griggs, Williams and Farr
Limitation
of Liability for Maritime Claims
(4
ed) at 11;
Norman
A Martínez Gutiérrez
Limitation
of Liability in International Maritime Conventions
(IMLI
Studies in International Maritime Law, 2011) at 25-27.
[16]
Malcolm v Premier, Western
Cape Government
[2014]
ZASCA 9
;
2014 (3) SA 177
(SCA) paras 10 and 11.
[17]
Caesarstone
Sdot-Yam Ltd v World of Marble and Granite CC & others
[2013]
ZASCA 129
;
2013 (6) SA 499
(SCA);
[2013] 4 All SA 509
(SCA) paras 3
and 4.
[18]
SA
Boatyards CC (t/a Hout Bay Boatyard) v The
Lady
Rose
(formerly
known as the
Shiza
)
1991 (3) SA 711 (C).
[19]
At 716B-E.
[20]
MV Alina
II (No 2): Transnet Ltd v Owner of MV Alina II
[2011]
ZASCA 129
;
2011 (6) SA 206
(SCA) para 30.
[21]
M Rauff
(Pty) Ltd v Petersburg Cole Agency
1974
(1) SA 811
(T) at 812E.
[22]
The
Dictator
[1892]
P 304; [1891-4] All ER Rep 360.
[23]
MV
Zlatni Piasatzi: Frozen Foods International Ltd v Kudu Holdings
(Pty) Ltd and Others
1997
(2) SA 569
(C) at 574A-B, although the problem does not so much lie
with the wide wording of the sub-section, but with the
interpretation
of the preamble to it.
[24]
In view of the point discussed earlier in this judgment that a
person that has entered an appearance to defend in an action
in
rem
thereby becomes a
party to the action, the conclusion in
MV
Rizcun Trader (3): Manley Appledore Shipping Ltd v MV Rizcun Trader
1999 (3) SA 966
(C) at 973
B-C that an order for security could not be made against such a
person because the only party to the proceedings was
the ship was
incorrect.
[25]
Gys Hofmeyr
Admiralty
Jurisdiction Law and Practice in South Africa
(2
ed, 2012) para IV.8, p 225.
[26]
Sunnyface
Marine Ltd v Hitoroy Ltd (Trans Orient Steel Ltd and Another
Intervening); Sunnyface Marine Ltd v Great River Shipping
Inc
1992
(2) SA 653
(C) at 657;
The
Catamaran TNT: Deans Catamarans CC v Slupinski (No 1)
1997
(2) SA 383
(C) and
The
MV Leresti: Afris Shipping International Corporation v MV Leresti
(DMD Maritime Intervening)
1997
(2) SA 681
(D) at 689E-H.
[27]
The Yu
Long Shan: Guangzhou Maritime Group v Dry Bulk SA
1997
(2) SA 454
(D);
MV
Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD
2000
(1) SA 286
(C) (
Heav
y
Metal
)
at 298 D-H;
MV
Akkerman: Fullwood Shipping SA and Another v Magna Hella Shipping SA
2000
(4) SA 584
(C) at 592B-F;
The
Millenium Amanda
SCOSA
B141 at B151G-H and
MV
Gladiator: Samsun Corp t/a Samsun Line Corp v Silver Cape Shipping
Ltd Malta
[2007] ZASCA 92
;
2007
(2) SA 401
(D) at 411 I-J and 413D-E.
[28]
Heavy
Metal
at
298 F-H;
MV
Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v
Deiulemar Compagnia Di Navigazione Spa
[2011]
ZASCA 131
;
2012 (1) SA 58
(SCA) (
Pasquale
Della Gatta
)
para 57.
[29]
Katagum
Wholesale Commodities Co Ltd v The MV Paz
1984
(3) SA 261
(N) at 264 A-C.
[30]
Devonia
Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd intervening)
1994
(2) SA 363
(C) at 371 E-F. Hofmeyr, supra para IV.14, p 227.
[31]
At 263G-H.
[32]
These are commonly and compendiously referred to as associated ship
arrests in terms of s 3(7) of the Act.
[33]
Commonly referred to as security arrests in terms of s 5(3) of
the Act.
[34]
Yu Long Shan
at
462I-J.
[35]
Pasquale
Della Gatta
paras 19 and 20.
[36]
MV
Wisdom C: United Enterprises Corp v STX Pan Ocean Co Ltd
[2008]
ZASCA 21
;
2008 (3) SA 585
(SCA) para 26.
[37]
If it was, it was inconsistent with judgments such as
MV
Leresti: Afris Shipping International Corporation v MV Leresti (DMD
Maritime intervening)
1997
(2) SA 681
(D) at 686B-H and the
Pasquale
Della Gatta
supra.
[38]
MV Rizcun Trader (4): MV
Rizcun Trader v Manley Appledore Shipping Ltd
2000
(3) SA 776
(C) at 803G-804E.
[39]
Mediterranean
Shipping Co v Speedwell Shipping Co Ltd
1986
(4) SA 329
(D) at 333J-334B.
[40]
Pasquale
Della Gatta
para
57.
[41]
Ibid.
[42]
MV Orient Stride: Asiatic
Shipping Services Inc v Elgina Marine Co Ltd
[2008]
ZASCA 111
;
2009 (1) SA 246
(SCA) para 7.
[43]
At 268B-C.
[44]
At 270A-B.
[45]
Jones v
Krok
[1994]
ZASCA 177
;
1995 (1) SA 677
(A) at 685A-C.
[46]
Trustees,
Two Oceans Aquarium Trust v Kantey & Templer (Pty) Ltd
[2005]
ZASCA 109
;
2006 (3) SA 138
(SCA);
[2007] 1 All SA 240
para 25;
Country
Cloud Trading CC v MEC, Department of Infrastructure Development
[2014]
ZACC 28
;
2015 (1) SA 1
(CC) para 64.