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[2021] ZAWCHC 82
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Nadella Corporation v Motor Vessel 'Falcon Confidence' and Another (AC5/19) [2021] ZAWCHC 82 (28 April 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
[WESTERN
CAPE DIVISION, CAPE TOWN]
Exercising
its Admiralty Jurisdiction
Case
no.
AC5/19
Name of ship:
mv
‘FALCON CONFIDENCE’
In the matter
between:
NADELLA
CORPORATION
Applicant
and
THE
MOTOR VESSEL ‘FALCON CONFIDENCE’
First
Respondent
FALCON
CONFIDENCE SHIPPING LTD
Second
Respondent
Heard
on: 8 December 2020, 21 January 2021, 14 April 2021
JUDGMENT
DELIVERED (VIA EMAIL) ON 28 APRIL 2021
SHER,
J:
1.
I am required to rule
on 2 interlocutory applications in this long-running matter, which
concerns an application for the arrest
of a ship known as the MV
Falcon Confidence,
which was effected at the instance of the applicant corporation
(‘Nadella’) on 17 January 2019 by means of an
ex
parte
Order of this
Court in the exercise of its admiralty jurisdiction, and a
counter-application by the respondents for an Order setting
aside the
arrest and directing Nadella to furnish security for costs and for a
damages claim, and certain relief ancillary thereto.
2.
The interlocutory
applications are 1) for an Order compelling the respondents, in terms
of (Uniform) Rule 35(7), to make further
and better discovery and 2)
for the broadening of the scope and terms of an Order which I made on
19 June 2019, whereby I referred
an issue in the main application for
the hearing of oral evidence, in terms of (Uniform) Rule 6(5)(g). I
am also required to determine
who is to be liable for 1) the costs of
an application which Nadella launched in terms of Admiralty Rule 20
to set aside a notice
which the respondents filed in terms of
(Uniform) Rule 7, whereby they challenged the authority of Nadella’s
attorneys to
act for it, which notice was withdrawn on 19 June 2020
and 2) the costs of an application which the respondents brought for
an
interdict, which Nadella opposed and which the respondents did not
proceed with.
3.
There have been
numerous skirmishes between the parties in relation to this
litigation, both in this Court and in the High Court
in Durban. It is
not feasible to set out a comprehensive account of what has
transpired and I will endeavour to confine myself
to dealing only
with the facts which are relevant to a determination of the
applications and issues which are before me. What follows
is simply a
truncated account of some of the background facts which I consider to
be relevant to the aspects I am required to decide.
The
background
4.
The stated purpose of
the arrest of the MV
Falcon
Confidence
was to
obtain security for a claim which Nadella intended to advance against
Falcon Carrier Shipping Ltd in arbitration proceedings
in Singapore,
for payment of the sum of USD 3.947 million. This amount represents
the damages which were allegedly suffered by
Nadella as a result of
the breach of a warranty provision in an agreement of sale in terms
of which another ship, the MV
Falcon
Carrier,
was sold
to it by Falcon Carrier Shipping Ltd, in November 2013.
5.
The
basis for the arrest of the MV
Falcon
Confidence
was that it was an ‘associated ship’ within the meaning
of ss 3(6) and (7) of the Admiralty Jurisdiction Regulation
Act
[1]
in that it was beneficially owned by, or fell under the control of,
the same person which owned the MV
Falcon
Carrier,
one
Nico Poons, via a complex web of off-shore companies and trusts
.
Whether the MV
Falcon
Confidence
did fall under Poons’ ultimate control at the relevant time is
an aspect which is heavily contested in the principal application
and
the counter-application.
6.
These applications came
before me on 5 June 2019. After lengthy argument I indicated that
inasmuch as I was
prima
facie
of the view
that they could not be determined on the papers given the disputes of
fact in relation to the question of control,
the issue of whether or
not the MV
Falcon
Confidence
was an
associated ship should be referred for oral evidence. The matter
accordingly stood down and on 19 June 2019 the parties
presented me
with a draft Order which set out the agreed terms of a referral to
evidence to be heard between 7 and 18 October 2019,
to which I
acceded.
7.
Paragraph 1(d) thereof
provided that the parties were to make discovery in terms of
(Uniform) Rule 35 of all documents relating
to the issue which was
the subject of oral evidence ie the issue of whether or not the MV
Falcon Confidence
was an associated ship, by 15 August 2019. Paragraph 1(e) provided
that it would not be necessary to discover documents which had
been
annexed to the affidavits which were filed of record in the
application for the arrest of the vessel and the counter-application
to set such arrest aside, and paragraph 1(f) provided that the
provisions of rule 35 would ‘otherwise apply’ to the
proceedings.
8.
A discovery affidavit
was deposed to on behalf of the respondents on 16 August 2019 by one
Roland Golterman, a director of 3 related
entities which feature in
this matter to wit Falcon Confidence Shipping Ltd, its sole
shareholder the Newbrook Shipping Corporation
Ltd (‘Newbrook’),
and J Bekkers Co. BV the commercial operator of the MV
Falcon
Confidence.
However, apart from discovering documents which formed part of the
papers in a number of other, related applications in the Durban
High
Court (under case no. A74/2015), and documents which had already been
annexed to the papers in the applications in this Court,
as well as
the correspondence that was exchanged between the parties in relation
thereto, the respondents did not make discovery
of any other
documents pertaining to the issue which has been referred to
evidence.
9.
On 28 August 2019 the
applicant’s attorneys accordingly served a notice in terms of
(Uniform) Rules 35(3) and 35(6) on the
respondents, requiring them to
make available for inspection an extensive list of documents which
the applicant believed were in
their possession and which were
relevant to the issue in question, and in the event that any of such
documents were not in their
possession, to state their whereabouts
under oath within 10 days, if known to them.
10.
The respondents did not
comply with the notice. They adopted the position that the
applicant’s attorneys did not have the
authority to issue it,
and it could be disregarded. In this regard they pointed out that
they had caused the Sheriff to attach
Nadella’s right, title
and interest in the main application ie the proceedings for the
arrest of the MV
Falcon
Confidence,
as well
as to the security which was held by it in the form of a letter of
undertaking which had been furnished by the respondents
in January
2019, in order to obtain the vessel’s release.
11.
The attachments were
effected on the strength of writs which had been issued in respect of
two as yet unsatisfied costs orders which
were obtained by Newbrook
in the Durban High Court pursuant to a previous, unsuccessful arrest
by Nadella of a vessel known as
the MV
Falcon
Traveller
, which
arrest had been set aside. Inasmuch as the judgments granting these
orders were obtained by Newbrook (in whose name the
MV
Falcon
Traveller
was
registered) and not by Falcon Confidence Shipping Ltd (the second
respondent), the purpose of the attachments was clearly to
prevent
the main application in this matter from proceeding to trial pursuant
to the Order of 15 June 2019, and not to execute
on the judgments to
satisfy the costs orders, which were in favour of Newbrook, a party
which is not before this Court.
12.
Pursuant to the
attachments the respondents served a Rule 7 notice in terms of which
they challenged the applicant’s attorneys’
authority.
They contended that by virtue of the attachments Nadella no longer
had any rights in respect of the pending main application,
which now
vested in the Sheriff, and its attorneys consequently no longer had
any right to act on its behalf.
13.
This prompted the
applicant to launch proceedings in the High Court in Durban to have
the writs set aside, which succeeded, on 17
September 2019. An
application for leave to appeal was dismissed. The respondents then
launched interdict proceedings in this court
in which they sought an
order restraining the applicant from proceeding with the hearing of
oral evidence in terms of the Order
which was made on 15 June 2019,
pending the outcome of a petition for leave to appeal to the SCA. The
petition was unsuccessful
and the respondents subsequently withdrew
their Rule 7 notice and indicated that they were no longer proceeding
with the interdict
they sought.
The
application to compel
14.
In the absence of any
response to its further request that the Rule 35(3) notice be
complied with, the applicant launched an application
to compel on 25
September 2019. In its founding affidavit it averred that the
documents which had been listed in the notice were
all relevant and
material to a determination of the issue which had been referred to
evidence ie the question of who controlled
the MV
Falcon
Confidence
at the
time of its arrest, as they contained information pertaining to the
management and the operational and financial control
of the ship and
the second respondent, in whose name it was registered.
15.
In response, the
respondents’ attorney contended that the application was
fatally defective and frivolous and vexatious. It
was defective
because the applicant had failed to allege that the documents it
sought in fact existed and were in Nadella’s
possession, nor
had it indicated how they were relevant, and the application
constituted little more than a ‘fishing expedition’
which
was aimed at trawling for a wide range of documents which had been
described in general and ‘vague’ terms; and
Nadella had
not provided any explanation as to why this wide range of
documentation was required.
16.
The respondents’
attorney pointed out that courts were generally reluctant to go
behind a discovery affidavit, which was ordinarily
regarded as
conclusive. He declared that the documents which were sought were
either not in the possession of the respondents,
or they were not
relevant, ‘or both’ (sic), and as such they did not fall
to be discovered.
17.
During the hearing of
the application on 8 December 2020 I debated the terms of the
proposed Order which the applicant sought, with
its counsel. I
pointed out that in some instances these appeared
prima
facie
to be
slightly over-broad, in that what was sought exceeded what could
reasonably be requested in terms of their relevance to the
issue
which had been referred to evidence, and I made tentative proposals
as to how some of these requests could be pruned down
to what would
be permissible. Applicant’s counsel fairly conceded that in
certain instances the terms of the Rule 35(3) notice
and the proposed
draft Order which had been handed up on the basis thereof were
broader than was necessary, and sought, helpfully,
to assist the
court in arriving at an acceptable re-formulation of what could
permissibly be sought in terms of the draft Order.
18.
When it was time for
the respondents to present argument their counsel adopted the stance
that inasmuch as the applicant was now
seeking to make application
for an amended Order, the application should be dismissed, as the
respondents had not been brought
to Court on that basis. Despite
repeated attempts on my part to point out that the proposed
amendments to the draft Order had originated
at the Court’s
instance (in the exercise of its constitutional and common-law powers
to regulate its own process), the respondents’
counsel
continued to persist with this line of argument and insisted that, at
the very least, were the Court not to be inclined
to dismiss the
application out of hand it should afford the respondents an
opportunity to file a supplementary affidavit in response
thereto and
an opportunity to supplement their submissions orally, at a further
hearing in due course. In order that the respondents
should have
every opportunity to put their case before the Court I acceded to the
request, albeit somewhat reluctantly. The matter
was accordingly
postponed for further argument to 21 January 2021 and the respondents
duly filed a supplementary affidavit. I note
that although they were
granted leave to do so only in order to respond to the changes which
were proposed by the Court to the
original Order which was sought,
they utilized this as an opportunity to reargue the matter, as a
whole.
19.
Much of what is
contained in this affidavit is a repetition of the arguments that
were previously advanced in the initial answering
affidavit and again
at the hearings, albeit in the form of a detailed tabular response to
each of the listed categories of documents
which are set out in the
proposed revised draft Order. In summary, the grounds of objection
which are raised therein are that the
applicant failed to say why the
documents sought were relevant and did not state that they in fact
existed, or there was ‘nothing
to show’ (sic) that they
existed or that they were relevant, or that they would be in the
possession of the respondents,
particularly where they appeared to
originate from 3
rd
parties. In addition, the respondents contended that insofar as
certain of the documents which were sought related to admitted
or
common cause facts there was no reason why they should be discovered.
20.
In my view the grounds
on which the respondents contend that they are not to be compelled to
make further and better discovery are
spurious and fall to be
rejected.
21.
It
is important to remember, by way of a restatement of trite
principles, that a party is required to discover
any
documents in its possession which
may
(not must) contain information which will either directly or
indirectly enable it to advance its case or damage that of its
opponent.
It is accepted that such a document includes one which may
‘fairly lead to a train of enquiry which may have either of
these
consequences’
[2]
and thus the proposition that documents which pertain to facts which
are common cause need not be discovered is startling, to say
the
least. Parties are required to discover all documents which may be
relevant to the dispute at hand.
22.
Secondly,
whilst it is so that a court will generally not go behind a party’s
discovery affidavit, the contents thereof are
not conclusive. A court
may well decide, upon a consideration of the pleadings and papers
which are before it and the nature of
the dispute it has to
adjudicate, that the party who has made discovery in all probability
has other relevant and disclosable documents
in its possession or
control which it has failed to produce, and may order it to do so.
[3]
23.
In my view, this is
precisely such a case. In this regard, what sticks out like the
proverbial sore thumb in this matter is the
abject failure on the
part of the respondents to produce
any
documents of real substance pertaining to the management and control
of the MV
Falcon
Confidence
, via
Falcon Confidence Shipping Ltd, the company in whose name it is
registered, not even documents which support their contention
that
the vessel was not one controlled by anyone other than the company
itself. It beggars belief that documents pertaining to
the
operational control and management of the vessel via the company and
those who in turn control it, many of which feature amongst
the
documents which the applicant has sought to have the respondents
discover in terms of its notice and proposed draft order,
do not
exist, or that the applicant should be required to show that they
exist or that they are in fact in the respondents’
possession,
before it is entitled to issue or to seek to rely on a notice in
terms of the rule.
24.
In this regard, it is
not, and has never been necessary for a party who invokes the
provisions of Rule 35(3), in terms of which
it calls upon its
opponent to make further and better discovery, to prove (or even
state) that the documents which it seeks in
terms of the notice
actually exist, or that they are in fact in the possession of its
opponent, nor is there an ‘onus’
(in the sense of a
burden of proof) on it to explain how and why such documents are
relevant, or that they in fact are relevant;
before
it can attempt to rely on the rule. The rule does not pertinently
require any of this to be stated in any notice issued in terms
thereof, and there are obvious reasons why these requirements were
not included in the rule, when it was drafted. None of the cases
to
which I was referred by the respondents’ counsel support such
an interpretation.
25.
All that the rule
requires is that the notice should state that the party seeking
further and better discovery ‘believes’
that there are
documents which
may
be relevant to an issue in the proceedings, in the possession of its
opponent. The ball then passes to the opponent, and it is
then
required either to produce the documents requested or to resist their
production on permissible grounds, such as that they
do not exist or
are not relevant (in which case it will have to substantiate such an
averment) or are not in its possession, in
which event it is,
understandably, required to confirm this and to disclose where they
may be found, under oath. The rationale
for the rule as it is
formulated is easy to discern.
26.
A party requiring
further and better discovery from its opponent will in many/most
instances only suspect that it is in possession
of the documents it
seeks, and will in many/most instances not be able to positively
state that as a fact the documents exist and
that they are in its
opponent’s possession. To my mind, it would defeat the
underlying purpose of the rule and the remedy
it provides were such
requirements to be read into it and it would neuter most, if not all,
litigants from ever obtaining the relief
which the rule seeks to
provide, given its wide ambit in relation to the purpose of discovery
ie to provide a remedy whereby a
litigant may succeed either in
compelling its opponent to produce a wide range of documents, which
may advance its case or damage
that of its opponent or, in the event
that such documents are not in its opponent’s possession, to
disclose in whose possession
they may be found, thereby enabling the
applicant to pursue its ‘line of enquiry’ elsewhere..
27.
It is important, when
considering the documents which are sought and their relevance in
relation to the issue which has been referred
to evidence ie the
issue of the control of the MV
Falcon
Confidence
at the
time of its arrest, to do so in the context of the averments which
are made in the papers in the main application and the
counter-application, in this regard.
28.
The respondents deny
that the vessel was ever controlled by Nico Poons. They aver that it
was controlled by his father Ronald via
Falcon Confidence Shipping
Ltd (‘FCS’) until he passed away, after which messrs
Volbeda and Overklift, as directors
of an entity known as Delta
Carrier Management (Private Trust Company), controlled it via FCS.
According to the applicant’s
enquiries Delta Carrier Management
in turn controls the trust property of the Atlantic Ocean Trust,
which in turn holds all the
shares in Newbrook, which it is common
cause, is the sole shareholder in FCS. However, as the applicant
points out, despite the
respondents’ averments in relation to
the control of the MV
Falcon
Confidence
they
have not discovered a single document which demonstrates that messrs
Volbeda and Overklift were responsible for the management
or
administration of either Delta Carrier Management or the vessel, via
FCS, at the time of its arrest.
29.
In support of its
contention that real control over the MV
Falcon
Confidence
lay with
Nico Poons and not with FCS ( in whose name it was registered), the
applicant pointed out that the vessel was subject to
a ‘cross’
marine mortgage, which constituted security for a loan facility of
USD 125 million which had been extended
by an entity known as Condor
Financial Services (which it avers was similarly controlled or
beneficially owned by Nico Poons),
to a related group of other
companies in whose names a number of other vessels were registered ie
Delta Carriers, Falcon Carrier
Shipping Ltd (a company also
controlled by Nico Poons), Falcon Cape Shipping, Newbrook and World
Reach Shipping. The applicant
contends that a ship owner would hardly
mortgage a ship as security for debts owed by other ship-owning
entities unless he had
a common beneficial interest in all of them,
and controlled all of them.
30.
The documents which the
applicant seeks in terms of its Rule 35 (3) notice pertain to 1) the
incorporation and business of FCS and
the purchase, financing and
mortgaging of the MV
Falcon
Confidence,
and its
management, operation and alleged control by the company and/or by
Ronald and/or Nico Poons; and 2) various corporate entities
or trusts
such as those referred to in the preceding paragraph, which the
applicant alleges form the structure in terms of which
control of the
vessel ultimately vested in Nico Poons. In my view, subject to some
pruning, all of the documents sought are clearly
relevant and
material to the issue which has been referred to evidence, and one
would expect not only that they exist, but that
they would, or could,
be in the possession of the respondents.
31.
To my mind the
requirements which are postulated in and envisaged by the Rule have
therefore been met and the applicant is accordingly
entitled to an
Order in terms of the draft which is annexed hereto marked ‘X’,
together with an Order for costs. In
this regard, in my view, and for
the reasons that follow a special costs order is warranted as a mark
of the Court’s displeasure,
even though the applicant has only
asked for costs on the party-party scale.
32.
In the first place, in
defiance of the peremptory requirement in subrule (3) that, in
the event they had reason not to comply
with the Rule 35 notice the
respondents were required to justify this by setting out their
grounds for doing so, under oath,
within 10 days, they failed to do
so, even after the attachments on which they sought to rely in order
to issue their notice in
terms of Rule 7 challenging the applicant’s
attorneys authority to issue the Rule 35(3) notice were set aside in
September
2019 and all attempts to appeal had been unsuccessful, and
notwithstanding numerous requests that they should comply with the
rule.
No acceptable explanation for adopting such an attitude, in
contempt of the requirements of the rule, was ever provided.
33.
When they finally did
respond it was in the form of a perfunctory answering affidavit in
the application to compel which was deposed
to by their attorney, and
not by someone such as Golterman, who as a director of the second
respondent and of some of the other
entities which feature
prominently in the papers and who deposed to the respondents’
discovery affidavit, was the appropriate
person to respond under
oath.
34.
Already
in 1983 the Natal Provincial Division pointed out
[4]
that it has ‘long been held’ that, as in the case of a
discovery affidavit, an affidavit made in response to a notice
in
terms of Rule 35(3) should be deposed to by a party and not by its
attorney, save in special circumstances and then only if
the attorney
was in a position of his own to depose to the facts contained
therein.
35.
To my mind these
remarks are equally apposite to an affidavit which is made in answer
to an application to compel in terms of Rule
35(7), which is launched
pursuant to an alleged failure to comply with a notice in terms of
Rule 35(3). The rationale for the requirement
that a party should
depose to discovery affidavits or to affidavits in terms of which it
is sought to resist discovery, is self-evident.
Not only would its
attorney ordinarily not have the necessary personal knowledge to
depose to such affidavits and whatever he/she
said in this regard
would almost inevitably amount to hearsay, but the duty to make
discovery by way of the necessary affidavits
falls on the parties in
order to ensure that they can be held responsible for the process, so
that the dispute in which they are
embroiled can be properly brought
to trial and the court has before it the evidence which is necessary
for it to arrive at the
correct result, and justice can accordingly
be done.
36.
On what basis the
respondents’ attorney deposed to the facts and contentions
which are set out in the answering affidavits
which he deposed to on
behalf of the respondents in this matter, was not explained. In the
introductory paragraph of each of his
affidavits he simply alleged
that the facts which were contained therein were ‘save where
the context indicated the contrary’,
within his personal
knowledge and true and correct. How he could have any personal
knowledge of the essential facts to which the
respondents were
required to respond ie what documents were or were not in their
possession is not apparent. Perhaps because of
this difficulty he
proceeded immediately thereafter to state that where ‘such’
facts were not within his personal knowledge
and belief, they were
based on information which had been provided to him by Golterman as a
director of the second respondent and
J Bekkers Co. BV, the technical
and operational manager of the vessel. At this juncture one would
have expected some explanation
to have been proffered as to why
Golterman had not deposed to the affidavit, but none was forthcoming.
37.
If
one then proceeds to consider the contents of the affidavits it is
nowhere indicated which of the facts or contentions which
are set out
in them emanated from Golterman and which emanated from the
respondents’ attorney’s own font of personal
knowledge.
In the circumstances, how the respondents’ attorney was in a
position to state
[5]
that ‘as
far as the respondents understand’ the documents sought were
‘either not in their possession or not
relevant or both’
(sic) is not apparent, and was also not explained. The statement was
in any event not a proper or acceptable
response to the allegation by
the applicant that the extensive list of documents which it sought in
terms of the notice, were in
the respondents’ possession. Only
in the supplementary affidavit was an attempt made to deal with each
individual category
of documents which had been listed.
38.
But, even if one were
to overlook all of this and to accept the affidavits as they stand
one cannot get away from the fact that
the respondents’
attitude both to the notice and to the application to compel amounts,
in essence, to a blanket refusal to
discover any documents other than
those it has already discovered, in circumstances where even the
documents which it has discovered
clearly fall short. In this regard
I have already pointed out that the respondents failed even to
produce a single document which
they must have in their possession,
which would support their averment that the MV
Falcon
Confidence
was
controlled by the second respondent and not by anyone else. The
respondents did not at any stage even tender to produce any
of the
apparently innocuous documents which were sought in terms of the Rule
35(3) notice, such as the certificate of incorporation
and share
register of the second respondent. Instead, they forced the applicant
to engage in an unnecessary and expensive application
to obtain an
Order for the production of crucial documents which it needed for the
hearing which was to have taken place in October
2019, and which had
to be postponed.
39.
The net result of all
of this is that almost two years after I made the Order directing
that the matter should proceed to evidence
on the issue concerned,
the hearing has yet to take place. In the circumstances, and seen
against the backdrop of the other tactics
which were adopted to delay
the proceedings (I refer in this regard to the attachments which were
effected) one is constrained
to come to the conclusion that the
respondents’ initial failure to make proper discovery and their
refusal to comply with
the notice and not to produce any of the
documents which have been sought in terms thereof, is part of their
overall strategy of
obstruction and delay. I point out that in
setting aside the attachments in the Durban High Court, Olsen J found
that the process
of that Court had been misused and had been employed
in a manner which was aimed at obstructing the conduct of the
proceedings
in this Court, where oral evidence was due to be heard in
October 2019.
40.
In the result, I
believe it is necessary to make a punitive costs order, directing
that the respondents are to be held liable jointly
and severally for
the costs of the application on the attorney-client scale, and that
such costs should include the costs of two
counsel, where so
employed.
The
application for an Order referring the ‘dirty hands’
issue for oral evidence
41.
On 2 December 2020,
shortly before the application to compel was due to be heard, the
respondents filed an application in which
they sought an Order that
the issue of whether Nadella had ‘dirty hands’, thereby
breaching the ‘clean hands
doctrine’ (sic), be referred
for oral evidence to be heard at the same time as the oral evidence
which was to be heard in
terms of the Order dated 19 June 2019, and
that the applicant be directed to make discovery in respect of the
aforesaid issue within
20 days of the Order for such referral being
granted.
42.
The ‘dirty hands’
issue is a reference to the respondents’ recurrent refrain (in
the main application and the
counter application as well as in the
application to compel) that the applicant’s applications for
relief should not be entertained,
as it has ‘dirty hands’,
in that it has approached the court for relief at the time when there
are unsatisfied judgments
against it in the KwaZulu-Natal High Court.
43.
These are the judgments
to which I have already referred, which were granted in respect of
the previous, unsuccessful arrest by
the applicant of the MV
Falcon
Traveller
, a ship
which was registered at the time in the name of Newbrook, and which
the applicant had also claimed was an associated ship.
Pursuant to
the arrest of the MV
Falcon
Traveller,
Newbrook
obtained an order that Nadella provide security for a claim which
Newbrook intended to institute against it for wrongful
arrest.
Following the setting aside of the arrest in April 2016, Newbrook
duly instituted a claim for damages in the
KwaZulu-Natal High
Court, which is pending. It is common cause that Nadella has as yet
not satisfied the order for security and
the various costs orders
which were obtained by Newbrook, pursuant to this round of litigation
in Durban, some 5 years ago. Its
explanation for not doing so is that
it is not in possession of the necessary funds and has to rely on the
largesse of its shareholders
in order to conduct its business.
44.
As the papers stood at
the time when the matter was heard in May 2019 there was accordingly
no dispute of fact in relation to the
factual basis upon which the
respondents had put up their reliance on the so-called doctrine of
‘dirty hands’, and
no reason why this aspect could not be
determined on the papers. There was accordingly in my view no basis
for a referral of this
aspect to oral evidence and the matter fell to
be decided on the papers.
45.
In this regard Rule
6(5)(g) pertinently provides that only
where
an application cannot be decided on affidavit
does
the court have the power, if it does not dismiss the application, to
make such order in regard to it as to it ‘seems
meet’,
with a view to ensuring a just and expeditious decision. To this end
it may direct that oral evidence be heard on
a specific issue
with
a view to resolving any dispute of fact which may exist
,
and may order any deponent to appear personally or may grant leave
for him or her to be subpoenaed in order to be examined as
a witness,
or it may refer the matter as a whole to trial, with appropriate
directions as to pleadings and the definition of issues.
46.
The rule therefore does
not purport to grant a court a general and unfettered power to refer
a matter which has come before it in
the form of an application ie.
by way of affidavits, and which can be decided on the affidavits, to
oral evidence, simply because
one or other of the parties directs a
request to it in this regard. Interpreting the Rule in such a manner
would be antithetical
to the very purpose of determining applications
on the basis of the affidavits in terms of which they are presented,
and would
do violence to the distinction between applications and
actions. On this ground alone the application must fail.
47.
The basis on which the
application was brought was that FCS had not previously realized the
relevance of the contents of an investigative
report by an entity
known as Crossroads Investigation Services, which it had obtained in
2016
,
from Wanchoo Law Offices LLP, an American firm of attorneys. The
report was produced pursuant to a request for an investigation
into
the relationship between a company located in Cumberland USA, known
as Global Marketing Systems and Nadella, which was apparently
registered in St Kitts-Nevis, West Indies in September 2011. The
unidentified authors of the report were of the view that Nadella
had
been set up as a nominee company by GMS, for the purpose of acting as
a ‘straw buyer’ (sic) in order to purchase
ships for
recycling. Nadella did not have a physical address or office presence
in any location in the world and was controlled
by Morningstar
Holdings of Nevis, an entity which acted as a discreet registrar for
offshore companies and trusts which were desirous
of concealing the
identity of their corporate officers and their ownership.
48.
On the strength of this
report the respondents contend that Nadella is merely a shelf company
with no discernible assets, which
is used for commercial dealings,
with no potential loss to it should such dealings go awry. As a
result, they suspect that Nadella’s
purchase of the MV
Falcon
Carrier
was
‘speculative’ and that any losses which had been
sustained by it have been considerably exaggerated, if they have
been
suffered at all. In the circumstances the respondents contend that
the additional information in the Wanchoo report adds impetus
and
weight to their ‘dirty hands defence’ (sic) and opens up
potential lines of discovery which they could fruitfully
follow up.
49.
In
response, the applicant points out that the setting up and use of
nominee companies for commercial purposes in the shipping industry,
is a perfectly acceptable and legitimate practice, world-wide,
[6]
and nothing in the Wanchoo report, even were it to be accepted as it
stands, some 5 years after it was commissioned, serves in
any way to
justify a referral to evidence and an Order that discovery should be
made in respect thereto. The applicant emphasized
that it was not in
dispute that it had not as yet satisfied the costs orders and the
order for security which Newbrook had obtained
against it some 5
years ago, in the Kwazulu-Natal division, and even if it were to be
accepted that it was a nominee company with
little or no assets, this
did not in any way serve to disqualify it from pursuing a legitimate
claim for damages in Singapore against
another company and arresting
an associated ship as security for such claim. It also did not
entitle the respondents to obtain
the Order which they sought,
broadening the scope and ambit of the referral to evidence.
50.
Whether
the respondents’ reliance on the so-called doctrine of ‘dirty
hands’ can serve as a bar to the applicant
obtaining any relief
in the main proceedings is a question which will have to be
determined in due course, once oral evidence on
the issue of whether
or not the MV
Falcon
Confidence
was an associated ship has been heard and the matter has been fully
argued, and in the circumstances I refrain from expressing
any view
thereon, other than to point out that the cases
[7]
on which the respondents seek to rely in this regard predate the
enactment of the Constitution which, in terms of s 34 thereof,
guarantees a right of access to our courts and to justice as a
fundamental right. In a number of cases
[8]
the Constitutional Court has held that the rights in the bill of
rights are not only available to citizens and
peregrini
are
thus equally entitled to the protection afforded by them, in
appropriate instances.
51.
In
my view the respondents have failed to make out a factual or legal
basis for an Order broadening the referral to evidence, which
was
previously made. Although it was recognized in
Wevell,
[9]
a decision on which they seek to rely, that not only an applicant but
a respondent too might in certain instances be entitled to
obtain an
order referring an issue to evidence, the Supreme Court of Appeal
warned
[10]
that this will only
occur in rare instances, and courts should be astute to prevent an
abuse of process by litigants who
seek such an order for the
purpose of delaying the resolution of a matter, or so that they might
engage in a ‘fishing expedition’
with a view to
ascertaining whether there might be a possible defence available to
them. In my view, this is such an instance.
52.
As I have previously
pointed out, the respondents’ contention that the applicant has
‘dirty hands’ and should
as a result not be permitted to
obtain any relief from the Court is an aspect which has been squarely
raised on the papers and
is before the Court for determination. The
fact that the respondents neglected to substantiate their contentions
in regard to this
aspect, by making reference to the Wanchoo report
in their affidavits in the main and the counter application, cannot
serve as
a basis for the Court to now make an Order referring the
‘dirty hands’ aspect to oral evidence. The applicant will
surely be entitled to ventilate this aspect in argument, in due
course. It might even possibly be able to request the admission
of the Wanchoo report in the main or counter application (by way of a
supplementary affidavit to which the applicant will have
the right to
respond), and its inclusion thereby as part of the evidence which the
Court will ultimately have to consider when
the applications are
finally heard and decided, but in my view a referral to oral evidence
in this regard is not permissible.
53.
In the circumstances
the application falls to be dismissed. As far as costs are concerned,
I do not believe that a punitive attorney-client
order is warranted.
In my view the application was certainly ill-conceived but I am
unable to find, on a balance of probabilities,
that it constituted a
deliberate attempt to abuse the process of this court or to obstruct
or delay the hearing of oral evidence
on the referral. It may well
have simply been a misguided attempt to obtain evidence in order to
bolster the respondents’
reliance on the ‘dirty hands’
argument.
Ad
the (Admiralty) Rule 20 application and the interdict
54.
All that remains is the
question of who should be liable for the costs of the application by
the applicant in terms of Admiralty
Rule 20, and the interdict
application which was launched by the respondents.
55.
Given the unequivocal
finding by the Durban High Court that the process of that Court was
deliberately employed, by way of judicial
attachments, to obstruct
the hearing of oral evidence in this Court, a finding with which I
must respectfully concur in the light
of the comments which I
previously made in regard to the application to compel, it is in my
view inevitable and fair and just that
the respondents should be held
liable for the costs of both the application which the applicant
launched in terms of Admiralty
Rule 20, which was directed at setting
aside the notice in terms of Rule 7, and the costs which were
incurred by the applicant
in opposing the interdict application,
which was aimed at preventing the applicant from proceeding to trial
in respect of the referral
to oral evidence.
56.
I am also of the view
that in respect of these applications a punitive costs order is
warranted, as the issuing of the Rule 7 notice
and the interdict
application formed an integral part of the strategy of obstruction
and delay which the respondents adopted in
order to prevent the
hearing of oral evidence on the referral.
Conclusion:
57.
In the result, I make
the following Order:
A)
Ad the application
to compel
57.1
The application to compel compliance with the applicant’s Rule
35(3) notice dated 28 August 2019, is
upheld.
57.2
The respondents shall make the documents which are listed in the
schedule which is annexed hereto marked
annexure ‘X’,
available for inspection in terms of Uniform Rule 35(6), save
that in the event that any of such
documents are not in their
possession they shall state under oath, within 10 days from date
hereof, their whereabouts ie where
such documents may be found, if
known to them.
57.2
The respondents shall be liable jointly and severally, the one paying
the other to be absolved, for
the costs of the application
(including the costs of two counsel where so
employed), on the attorney-client
scale.
B)
Ad the application
by the respondents to refer the ‘dirty hands issue’ to
evidence
57.3
The application is dismissed.
57.4
The respondents shall be liable jointly and severally, the one paying
the other to be absolved, for the costs
of the application (including
the costs of two counsel where so employed).
C)
Ad the costs
in respect of the applicant’s application in terms of
(Admiralty) Rule 20 and the respondents’ interdict
application
57.4
The respondents shall be liable jointly and severally, the one paying
the other to be absolved, for the costs
of these applications
(including the costs of two counsel where so employed), on the
attorney-client scale.
M
SHER
Judge
of the High Court
ANNEXURE ‘X’:
LIST OF DOCUMENTS
1.
The certificate of
incorporation and share register
of Falcon
Confidence Shipping Ltd
.
2.
Copies of the minutes
of all meetings of the shareholders of
Falcon
Confidence Shipping Ltd,
or
their proxies.
3.
Copies of all
resolutions passed by the directors of
Falcon
Confidence Shipping Ltd
, in
connection with or pertaining to the MV
Falcon
Confidence.
4.
Copies of all returns
pertaining to the MV
Falcon
Confidence
submitted by
Falcon Confidence Shipping
Ltd
to the Liberian (company
and revenue) authorities.
5.
Copies of all communications
in
connection with or pertaining to the MV
Falcon
Confidence,
between Falcon Confidence
Shipping Ltd and the entity/entities responsible for the registration
and taxation affairs of Falcon Confidence
Shipping Ltd, from its
incorporation to date.
6.
The bank statements of
Falcon Confidence Shipping Ltd
from
the date of its incorporation to date.
7.
The declarations in respect of Beneficial
Ownership forms (
pertaining to
the MV
Falcon
Confidence
and any other ships), as
deposited with Hollandsche Bank-Unie N.V. and HSH Nordbank A.G.
8.
The contract(s)
pursuant to which
Falcon Confidence
Shipping Ltd
purchased the MV
Falcon Confidence
.
9.
Resolutions of the
board of directors of
Falcon Confidence
Shipping Ltd
and its
shareholders, pertaining to the purchase of the MV
Falcon
Confidence.
10.
Copies of documents evidencing payment of the
purchase price of the
MV
Falcon Confidence
.
11.
Copies of all correspondence exchanged between
Falcon Confidence Shipping Ltd and its shareholder Newbrook, and its
representatives,
and the erstwhile owners of the
MV
Falcon Confidence
,
being Harmonious Navigation Incorporated, alternatively Teh-hu
Cargocean Management Company Limited, regarding the purchase of
the
MV
Falcon
Confidence
IMO 9308871 (formerly known
as mv Fortune Confidence and previously known as Harmonious).
12.
All contracts concluded
between J Bekkers Co BV and any other company, person or entity
relating to the commercial management, technical
management, manning
and operation of the MV
Falcon
Confidence
from the
date that
Falcon Confidence Shipping Ltd
became the owner of the vessel,
to
date.
13.
All invoices rendered by companies, entities or
persons pertaining
to the
commercial management, technical management, manning and operation of
the MV
Falcon
Confidence;
and
documentation evidencing payment of the invoiced amounts,
from
the date that
Falcon Confidence Shipping
Ltd became the owner of the
MV
Falcon Confidence
,
to date
.
14.
All correspondence, memoranda and documents in
the possession of Falcon Confidence Shipping Ltd and its agents, sent
or received
by Ronald Poons.
15.
All correspondence, memoranda and documents in
the possession of Falcon Confidence Shipping Ltd and its agents, sent
or received
by Nico Poons.
16.
All contracts concluded
between
Falcon Confidence Shipping Ltd and
its agents
and Bert-Jan
Volbeda relating to Mr Volbeda’s appointment and employment as
a director of
Falcon Confidence Shipping
Ltd.
17.
All contracts concluded between Falcon Confidence
Shipping Ltd and its agents and its sole shareholder, Newbrook
Shipping Corporation
Ltd, and Bert-Jan Volbeda relating to Mr
Volbeda’s appointment and employment as a director of Newbrook
Shipping Corporation
Ltd.
18.
All contracts concluded between Falcon Confidence
Shipping Ltd and its agents and Marnix van Overklift relating to Mr
van Overklift’s
appointment and employment as a director,
office holder or employee of Falcon Confidence Shipping Ltd.
19.
All contracts concluded between Falcon Confidence
Shipping Ltd’s sole shareholder, Newbrook Shipping Corporation
Ltd and/or
its agents, and Marnix van Overklift relating to Mr van
Overklift’s appointment and employment as a director, office
holder
or employee of Newbrook Shipping Corporation Ltd.
20.
All documents evidencing payments, directly or
indirectly, of salaries, directors’ fees or other remunerative
payments by
Falcon Confidence Shipping Ltd and/or its agents to Mr
Volbeda and/or Mr van Overklift.
21.
All correspondence, memoranda or agreements sent,
received or concluded by Mr Volbeda and/or Mr van Overklift for or on
behalf of
the Falcon Confidence Shipping Ltd and/or its agents,
pertaining to the management, operation and control of Falcon
Confidence
Shipping Ltd and the
MV
Falcon Confidence
.
22.
All documents pertaining to the purchase and
financing of the
MV
Falcon
Confidence,
including senior credit
lending facilities (with Hollandsche Bank-Unie N.V. and HSH Nordbank
A.G.) concluded in relation to the
financing of the vessel, and:
22.1
All documents
evidencing a loan agreement to which
Falcon
Confidence Shipping Ltd
was or
became a party and in respect of which a first preferred Liberian
mortgage over the MV
Falcon
Confidence
in
favour of Condor Financial Services Limited was registered on or
about 20 October 2011;
22.2
All correspondence and
documents exchanged between
Falcon
Confidence Shipping Ltd
and
its agents and Condor Financial Services Limited relating to the
registration of a first preferred Liberian mortgage over the
MV
Falcon Confidence
in favour of Condor Financial Services Limited;
22.3
Records of any or all payments made by Falcon
Confidence Shipping Ltd
and
its agents
to Condor Financial Services
Limited towards settlement of the loan secured by the first preferred
Liberian mortgage registered
over the
MV
Falcon Confidence
in favour of Condor Financial Services Limited;
22.4
A copy of the Power of
Attorney concluded or provided by Condor Financial Services Limited
in respect of the First Preferred Liberian
Mortgage agreement
concluded between it and
Falcon Confidence
Shipping Ltd
on or about 20
October 2011;
22.5
A copy of the duly signed Memorandum of
Particulars of the Mortgage Registration over the
MV
Falcon Confidence
.
23.
The company registration documents of Condor
Financial Services Limited, including but not limited to a register
of its directors
and shareholders from inception to date.
24.
The company records of Delta Carriers Management
Private Trust Company reflecting the names of its current and
erstwhile directors,
as well as the records reflecting the
appointment and resignation dates of the said directors.
25.
The deed of settlement and/or the trust deed
and/or founding documentation of the Delta Carriers Private Trust
Company.
26.
The deed of settlement and/or trust deed of the
Delta Carriers Purpose Trust.
27.
The records of the
Delta Carriers Purpose Trust reflecting the appointment of its
current and erstwhile enforcers.
28.
Subject to legal professional or litigation
privilege, all correspondence between Roland Golterman, Ronald Poons
and Nico Poons,
in terms of which Ronald Poons provided Roland
Golterman with instructions and/or authority and/or information in
order to depose
to affidavits in the
Falcon
Traveller
proceedings under Case number
A74/2015 in the Durban High Court.
[1]
No. 105 of 1983.
[2]
Compagnie Financiere
et Commerciale du Pacifique v Peruvian Guano Co
(1882) 11 QBD 55
, cited with approval in
Rellams
(Pty) Ltd v James Brown & Hamer
1983 (1) SA 556
(NPD) at 564A-B.
[3]
Rellams
at 560F-G;
Lenz
Townships (Pty) Ltd v Munnick & Ors
1959 (4) SA 567 (T).
[4]
Id
,
at 558C-H.
[5]
In para [17] of the answering affidavit.
[6]
Vide
DJ Shaw QC
Admiralty
Jurisdiction and Practice in SA
(1987) p 36;
The
Maritime Trader
[1981] 2 Lloyd’s Rep 153 (QB) p 157.
[7]
Mulligan v Mulligan
1925 WLD 164
;
Chetty v
Law Society, Transvaal
1983 (1) SA 777
;
Eskom
v Rademeyer
1985 (2)
SA 654 (T).
[8]
Lawyers
for Human Rights v Minister of Home Affairs
[2004] ZACC 12
;
2004
(4) SA 125
(CC);
Minister
of Home Affairs and Ors v Watchenuka and Ano
2004
(4) SA 326
(SCA);
Minister
of Home Affairs & Ors v Emmanuel Tsebe & Ors; Minister of
Justice & Constitutional Development & Ano
v Emmanuel Tsebe
& Ors
2012 (5) SA
467 (CC).
[9]
Minister of Land
Affairs & Agriculture v D&F Wevell Trust
2008 (2) SA 184
(SCA) para 56.
[10]
Id.