Central Bridge Trading 333 CC v Extreme Motion Marketing CC; In re: Extreme Motion Marketing CC v Central Bridge Trading 333 CC (A18075/16) [2017] ZAGPJHC 334 (17 June 2017)

80 Reportability

Maritime Law

Brief Summary

Admiralty Law — Arrest of property — Definition of 'cargo' — Application for setting aside arrest of chrome concentrate — Arrest effected to institute action in rem under s 3(4) and s 3(5) of the Admiralty Jurisdiction Regulation Act No. 105 of 1983 — Goods described as 'cargo' only once brought onto the ship, not merely earmarked for shipment — Arrest set aside as the chrome concentrate was not 'cargo' amenable to arrest.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings were an urgent application brought in the High Court of South Africa, Gauteng Local Division, Johannesburg, exercising admiralty jurisdiction, in which the applicant sought the setting aside of the arrest of its goods. The matter concerned the use of the Admiralty Jurisdiction Regulation Act 105 of 1983 to arrest property for the purpose of instituting an action in rem.

The parties were Central Bridge Trading 333 CC (Central Bridge), as applicant in the setting-aside application and as respondent in the associated in rem proceedings, and Xtreme Motion Marketing CC (Xtreme Motion), as respondent in the setting-aside application and as the party that procured the arrest in order to institute the in rem action.

Procedurally, Xtreme Motion procured the arrest of approximately 884.995 metric tons of chrome concentrate (some containerised and the larger portion stockpiled) at premises in City Deep, Johannesburg, in two stages, being arrests executed on 27 May 2016 and 1 June 2016. Central Bridge then launched an urgent application to have those arrests set aside. The judgment addressed the validity of the arrests and, in particular, whether the arrested goods were property amenable to arrest under the relevant statutory provisions.

The general subject matter of the dispute was shipping and admiralty law, specifically whether goods that were intended to be shipped, but had not been loaded aboard a vessel, could be arrested as “cargo” under section 3(5)(c) of the Admiralty Jurisdiction Regulation Act in order to found an action in rem for an alleged maritime claim arising from clearing and forwarding services.

Material Facts

Central Bridge’s core business was the production of chrome concentrate at its wash plant in the Mooinooi area. The chrome concentrate was sold and exported to China via the harbours of Maputo and Durban. The goods that were arrested consisted of chrome concentrate located at the premises of Ingwe Shipping (Pty) Ltd in City Deep, Johannesburg, where some had been containerised and the greater portion remained stockpiled.

Xtreme Motion had been appointed (on terms that were in dispute) to act as Central Bridge’s clearing and forwarding agent and, in executing its obligations, arranged inter alia for the containerisation of chrome concentrate, road transportation, and arrangements for shipment on board the MV Ever Dynamic from Durban to Shanghai. The MV Ever Dynamic was due to depart Durban on 25 May 2016, but the shipment of the chrome concentrate on board that vessel never took place.

Central Bridge terminated Xtreme Motion’s mandate on 20 May 2016. The circumstances leading to termination were disputed on the papers. It was common cause that, at that stage, 31 containers had been filled with chrome concentrate and that 27 containers had already been dispatched to Durban by road. Xtreme Motion contended that its claim had accrued and became payable immediately upon termination, but the alleged indebtedness was also disputed on the papers.

The arrests were obtained under sections 3(4) and 3(5) of the Admiralty Jurisdiction Regulation Act, on the basis (as alleged by Xtreme Motion) that Central Bridge, as owner of the goods, would be liable in personam if Xtreme Motion’s claim succeeded. The critical factual feature for the determination of the arrest’s validity was that the chrome concentrate had not been brought onto the ship, and the consignment had not been loaded aboard the MV Ever Dynamic.

There was controversy on the papers as to whether all of the arrested chrome concentrate had been identified and earmarked as destined to be shipped as part of a single consignment on board the MV Ever Dynamic. However, the court’s decisive reasoning proceeded on the interpretation of “cargo” in the Act, rather than on resolving that controversy.

Legal Issues

The central legal question was whether the chrome concentrate arrested at Ingwe’s premises in Johannesburg constituted “cargo” (and thus “property” amenable to arrest) within the meaning of section 3(5)(c) of the Admiralty Jurisdiction Regulation Act 105 of 1983, where the goods were intended for shipment but had not been loaded aboard the vessel.

A related question, addressed as part of the arrest requirements, was whether Xtreme Motion had discharged the burden of proving the statutory elements justifying an arrest under sections 3(4) and 3(5), including that the property arrested was maritime property capable of arrest under the Act.

The dispute was primarily a matter of law (statutory interpretation of the word “cargo” in context), applied to largely common-cause features about the status of the goods (not loaded aboard a ship). Although there were disputes of fact about the contract and indebtedness, the judgment identified the “real bone of contention” as the meaning of “cargo” and whether the goods were arrestable under section 3(5)(c).

Court’s Reasoning

The court approached the matter on the basis that, for arrests procured under sections 3(4) and 3(5), the onus rests on the arresting party to establish the elements justifying arrest. This included proving that there was a maritime claim, that the court had (or would have) jurisdiction to try the merits upon arrest, that there was a basis for in rem proceedings through in personam liability (or a maritime lien), and that the property arrested was property that the Act permits to be arrested.

Although Xtreme Motion contended that its claim fell within the statutory definition of “maritime claim” (relying on section 1(p)(i), covering claims relating to remuneration and disbursements by clearing and forwarding agents in respect of goods “carried or to be carried” in a ship), the court proceeded by accepting without deciding that Xtreme Motion had proved, on a balance of probabilities, both that its claim was a maritime claim and that it would lie against Central Bridge in personam if proved. The analysis therefore concentrated on whether the arrested chrome concentrate was the kind of property that could be arrested under section 3(5).

Xtreme Motion relied on section 3(5)(c), which permits arrest of “property in respect of which the claim lies” and defines property to include “the whole or any part of the cargo.” Xtreme Motion argued for an interpretation under which goods become “cargo” once they are identified and earmarked for shipment as part of a consignment, contending that physical loading onto the vessel is not necessarily determinative. Central Bridge contended that goods could only be “cargo” once they had passed the rail of the ship, and therefore goods not loaded could not be arrested as cargo.

In interpreting section 3(5)(c), the court applied the contextual approach to statutory interpretation, considering the ordinary meaning of the language in its context. The term “cargo” was not defined in the Act. The court accepted that decided cases demonstrated it would be incorrect to treat goods as ceasing to be “cargo” immediately upon being taken over the ship’s side after arrival, noting an example where shipped goods stored at a harbour could still be treated as cargo for purposes of arrest.

The court then focused on the point in time at which goods can first be described as “cargo” for purposes of section 3(5)(c). It concluded that, in ordinary meaning and in context, goods can only be described as cargo once brought onto the ship or vessel. Until that point, even if identified and earmarked for shipment, such goods remain “potential” or “prospective” cargo. The court considered dictionary meanings of “cargo” as goods carried by a ship (or a load) and reasoned that including goods merely intended to be carried would depart from that ordinary meaning without contextual justification.

The court found support for this interpretation in the reasoning quoted from National Dock Labour Board v John Bland & Co Ltd and others [1971] 2 All ER 779, which distinguished between goods that may remain describable as cargo for a period after discharge, and goods that are merely intended to be carried (“prospective cargo”), which are not naturally described as cargo unless legislation expressly expands the meaning. The court held that section 3(5)(c) did not provide such an express expansion to include prospective cargo.

On that basis, the court held that Xtreme Motion had failed to prove that the arrested chrome concentrate was maritime property amenable to arrest under section 3(5). Because this requirement was not established, the arrest could not stand and had to be set aside.

Outcome and Relief

The court ordered that the matter be heard as an urgent application under Uniform Rule 6(12)(a), dispensing with the ordinary forms and service.

The court set aside both warrants of arrest, namely the warrant dated 26 May 2016 executed on 27 May 2016, and the warrant dated 1 June 2016 executed on the same date.

The Sheriff of Johannesburg was directed to release the chrome concentrate that had been arrested pursuant to those warrants.

Xtreme Motion was ordered to pay the costs of the application.

Cases Cited

Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A).

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA).

Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA).

Golden Meats & Seafood Supplies v Best Seafood Import 2011 (2) SA 491 (KZD).

National Dock Labour Board v John Bland & Co Ltd and others [1971] 2 All ER 779.

Legislation Cited

Admiralty Jurisdiction Regulation Act 105 of 1983, including section 1(p)(i), section 3(4), section 3(5), and section 3(5)(c).

Rules of Court Cited

Admiralty Rule 4(3).

Uniform Rules of Court, Rule 6(12)(a).

Held

The court held that goods can only be described as “cargo” for purposes of section 3(5)(c) of the Admiralty Jurisdiction Regulation Act 105 of 1983 once they have been brought onto the ship or vessel. Goods merely intended for shipment, even if identified and earmarked for carriage, constitute prospective or potential cargo and are not “cargo” within the ordinary meaning of that term as used in section 3(5)(c).

Accordingly, Xtreme Motion failed to discharge the onus of proving that the arrested chrome concentrate was property amenable to arrest under section 3(5). The arrests were therefore invalid and were set aside, with consequential orders for release of the goods and costs against Xtreme Motion.

LEGAL PRINCIPLES

The party who procures an arrest under sections 3(4) and 3(5) of the Admiralty Jurisdiction Regulation Act bears the onus of proving all the statutory and procedural elements justifying the arrest, including that the property arrested is property that is amenable to arrest under the Act.

In construing statutory language in the Admiralty Jurisdiction Regulation Act, the court applies a contextual approach grounded in the ordinary meaning of the words used, read in light of the provision’s setting and purpose, without extending a term’s meaning beyond its ordinary sense absent contextual warrant.

For purposes of section 3(5)(c), “property” includes “the whole or any part of the cargo,” but “cargo” is not naturally understood to include goods merely intended to be carried by sea. Goods may remain describable as cargo after discharge depending on how they are dealt with, but goods that are merely prospective cargo (to be carried, but not yet loaded aboard a ship) are not “cargo” within the ordinary meaning applied by the court in this case, and are therefore not arrestable as cargo under section 3(5)(c) in the absence of express statutory extension.