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[2010] ZAWCHC 653
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Cameron-Dow v The MFV '''Julietter''', Laubscher and Another v The MFV '''Julietter''' and Others (AC 70/2010, AC 85/2010) [2010] ZAWCHC 653 (18 November 2010)
IN THE
HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)
NAME OF
VESSEL: MFV "'JULIETTE'
In the
matters between:
AC
70/2010
MICHAEL
CHRISTOPHER CAMERON-DOW
Applicant
and
THE MFV
"'JULIETTE'"
First
Respondent
C-CRAFT
CC
Second
Respondent
RAYMOND
COOPER
Third
Respondent
PIERRE
JAN LAUBSCHER
Fourth
Respondent
BASIC
BLUE TRADING 232 CC
Fifth
Respondent
AC 85/2010
PIERRE JAN
LAUBSCHER
First
Applicant
In his capacity as sole proprietor of
WICKED
LADY FISHING
BASIC BLUE
TRADING 232 CC
Second
Applicant
v
THE
MFV "'JULIETTE'"
First
Respondent
MICHAEL
CHRISTOPHER CAMERON DOW
Second
Respondent
C-CRAFT
CC
Third
Respondent
RAYMOND
COOPER
Fourth
Respondent
JUDGMENT
HANDED DOWN THIS THURSDAY, 18 NOVEMBER 2010
CLEAVER J
[1] All the
cases referred to in this judgment are before this court in the
exercise of its admiralty jurisdiction.
[2] In August
2009 under case no AC 75/2009 Mr Michael Christopher Cameron-Dow
("Cameron-Dow") caused the fishing vessel
MFV '"Juliette"'
to be arrested and thereby instituted an action
in
rem
against
the vessel and an action
in
personam
against
Petrus Jan Laubscher ("Laubscher") who is cited as the
second defendant. The first defendant is cited as the
en
commandite
partnership
between Cameron-Dow and Laubscher. The action concerns the ownership
of 'Juliette' a fishing vessel which Cameron-Dow
says was acquired by
the partnership between him and Laubscher. The fourth defendant is a
close corporation owned by Laubscher
which had been utilised to
conduct fishing operations off the 'Juliette'. In the action
Cameron-Dow claims an order directing Laubscher
to render to him an
account of the partnership transactions; debatement of that account;
for payment by the partnership and the
'Juliette' of some R1,7
million and finally, as against the partnership Laubscher and the
'Juliette', payment of any amount found
to be owing to the plaintiff.
The action is defended by Laubscher and the 'Juliette'. Laubscher
denies that he was a member of
the partnership and contends that he
is the owner of the 'Juliette'. The pleadings in the action have been
closed.
[3] In June
of 2009, case no AC 70/2010, Laubscher applied to this court for an
order in terms of section 9 of the Admiralty Jurisdiction
Regulation
Act No 105 of 1983 ("the Admiralty Act") for an order that
the 'Juliette' be sold by public auction. The order
sought provided
for the fund which was to be established from the proceeds of the
sale to be dealt with in the following manner.
A referee (a member of
the local Bar was suggested) was to be appointed to receive, examine
and report on the validity and ranking
of all claims described in
section 11(4)(a) of the Admiralty Act (i.e. all claims relating to
the maintenance and preservation
of the vessel whilst it had been
under arrest and all costs in relation to the sale). After payment of
the claims described in
section 11(4)(a) as admitted by the referee,
the balance of the fund was to be held by the Registrar of this court
as this court
"shall
otherwise order"
i.e.
as determined by the High Court in the action
in
rem.
[4]
In
August 2009 in case no AC85/2010 Cameron-Dow lodged a similar
application for an order that the ship be sold. The terms sought
in
the order in respect of the sale and distribution of the fund
resulting from the sale differ from that in the application brought
by Laubscher in that Cameron-Dow seeks an order directing that not
only his claim for preservation costs be paid first out of the
fund,
but that the following amounts also be paid out of the fund before
the balance is paid over to the Registrar: -
Secondly
payment of the auctioneer's charges;
Thirdly in
settlement of advertising expenses incurred by the auctioneer, an
amount not exceeding R30 000;
Fourthly an
amount of R70 000 to cover the applicant's costs of arresting the
vessel and the costs of the application;
That
the balance up to an amount of R1 750 000 be distributed to
Cameron-Dow as to 85% thereof and 15% thereof to C-Craft CC, the
builder of the 'Juliette' who is cited as the second respondent.
Any
balance remaining is to be paid to the Registrar pending
determination of the main action.
[5] In
January 2010 and under case no AC 08/2010 C-Craft CC and Another
instituted an action
in
persona
against
Cameron-Dow in which payment of the sum of R497 860 is claimed which
is said to be the balance owing in respect of the purchase
price for
the construction of the 'Juliette' which was effected by the
plaintiffs for Cameron-Dow. The pleadings in that matter
are not yet
closed.
[6] The
parties are agreed that both the applications for the sale of the
'Juliette' should be heard together.
[7] The case
for Laubscher is, as is usual in applications of this nature,
relatively simple. It is brought on the basis that he
is the owner of
the 'Juliette' which is under arrest and moored in the Hout Bay
harbour, having been detained there since its arrest
in August 2009.
The vessel is said to be in extremely poor condition and to continue
to deteriorate. It is pointed out that since
the vessel has been
under arrest it has been in the custody of the sheriff of Wynberg
North who has been paying harbour dues and
incurring other expenses
related to the maintenance on and preservation of the vessel whilst
under arrest. It is said that these
expenses will continue to mount
with the resultant decrease in the size of fund available to the
parties in these actions which
have been instituted. Laubscher
submits that as usual it would be appropriate for the vessel to be
sold by public auction and that
the sheriff of Wynberg who has been
approached about the matter is prepared to conduct the sale in
respect of which he will levy
a commission of 5% on the sale price. I
have already in para [4] referred to the terms of the order sought
relating to the appointment
of a referee to deal with the
preservation costs.
[8] Both
applicants are in agreement that the vessel should be sold.
[9] In his
founding affidavit Laubscher, in sketching the background to his
application, records the arrest of the 'Juliette' by
Cameron-Dow in
August 2009 and encloses a copy of the writ of summons as well as a
copy of his plea in the action. He states that
is evident from the
pleadings that there are significant disputes of fact between
Cameron-Dow and himself particularly regarding
the ownership and
operation of the vessel. His contention is that he is the owner of
the vessel and refers to the Local General
Safety certificate issued
by the Department of Transport in which he, under his trading style
"Wicked
Lady Fishing"
is
recorded as being the owner. He denies that he was ever a member of a
partnership as alleged by Cameron-Dow and that he has any
duty to
render an account to him and to debate that account. He also denies
that he or the vessel are indebted to Cameron-Dow in
any amount. He
records that as the dispute between Cameron-Dow and himself will be
fully ventilated at the trial, he has been advised
that it is not
necessary to furnish further details of his defence to the claim
against him, but will do so when it becomes necessary.
[10]
Cameron-Dow takes up a different attitude. Both in his answering
affidavit to Laubscher's application and in his founding and
replying
affidavits in his application, he makes out a case to show that
Laubscher is not the owner of the 'Juliette' and that
the true owner
is a partnership between himself and Laubscher. He also avers that
Laubscher has unlawfully appropriated monies
due to the partnership,
the amounts of which are accordingly to be deducted from any claim
which Laubscher may have for repayment
of his capital contribution to
the partnership, with the result that having regard to his capital
contribution he will end up being
the only creditor entitled to claim
against the fund. Counsel for Cameron-Dow invited me to make a
finding on the papers that Laubscher's
version should be rejected as
being untrue and that I should make a positive finding that
Cameron-Dow is the owner and that he
is entitled to be paid the
amount claimed in the summons. On the basis it was submitted that
Cameron-Dow's view as to the manner
in which the vessel was to be
sold should prevail.
[11] There
are two reasons why, in my view, the approach adopted by Cameron-Dow
cannot be entertained. To start with, there are
clearly serious
disputes of fact which would best be resolved by the hearing of oral
evidence at the trial. This was recognised
at the outset by Laubscher
who has taken up the attitude that the disputes must be dealt with at
the trial and has therefore refrained
from answering various
allegations and averments on which Cameron-Dow seeks to rely.
Cameron-Dow also asks me to adopt a robust
approach and to find on
the strength of certain correspondence and unsigned financial
statements that Laubscher's version that
he is the owner of the
'Juliette' cannot possibly be true. While on the face of it certain
of the correspondence referred to by
Cameron-Dow supports his view,
Laubscher contends that the arrangements which had previously existed
were terminated in July 2007
and were replaced by another arrangement
which resulted in him becoming the owner. The order sought is for the
sale of the 'Juliette'
pendent
lite
and
we are thus at an interlocutory stage of the action. The purpose of
the order is simply to convert the deteriorating asset into
a money
fund which will be utilised to satisfy the claims of the creditors
once the court has pronounced on the validity of those
claims.
Cameron-Dow wants me to go much further for he is asking me to make a
finding in motion proceedings on the very issues
which are to be
determined in the pending action. I am asked to do so by deciding the
issue on the probabilities having regard
to certain correspondence
and documentation put up by him. The unwillingness of a court to
embark on the exercise proposed by counsel
for Cameron-Dow is well
known. Although the judgment in one of the 7/gr
1
matters is not directly on point, the issue in that matter being the
importance of the agreement of the owner of the attached vessel
when
deciding an application in terms of section 9 of the Admiralty Act,
the court remarked on its inability at the interlocutory
stage to
assess even
prima
facie
the
merits of the contending cases before it. In my view there is no
reason in the matters before me to depart from this view.
[12]
The second reason is that strictly speaking I do not need to decide
that which Cameron-Dow wishes me to decide in order to
arrive at a
decision as to which of the applicants should be granted an order
authorising the sale of the 'Juliette'. Without having
regard to the
issues in dispute in the main action, I can, merely by assessing the
content of the two applications, make a decision.
The fact that
Laubscher's application was lodged some two months before that of
Cameron-Dow can also be taken into account, for
even on Cameron-Dow's
version, the vessel must be sold. At the conclusion of argument, I
asked counsel for Cameron-Dow to indicate
why I should have to make a
finding on the disputed issues if I could decide which of the two
applications I should grant without
reference to the disputes. His
answer that I should do so because
"you
can"
brought
to mind the approach of a well-known North American political figure,
but was not persuasive in law. He also submitted that
I should make
the findings because it would be for the benefit of the parties
inasmuch as their dispute would be resolved sooner
at a reduced cost.
Disposing of the matter now would also be in the interest of the
court, he submitted. These are not persuasive
legal arguments,
particularly if one bears in mind that the opposing party wishes the
issues to be properly ventilated during the
course of a trial.
[13] The only
difference between the two applications is the auctioneer chosen by
the applicants and the method of sale which is
proposed. Laubscher's
application is for the vessel to be sold by public auction and for
the sale to be conducted by the sheriff
for the district of Wynberg
North who currently has custody of the 'Juliette'. The sheriff is an
officer of this court and has
experience in judicial sales of this
nature. The proposal is that the sale should take place according to
conditions of sale which
are frequently used in judicial sale for
vessels of all sizes and types including fishing vessels. I have
already referred to the
proposed method of distributing the proceeds
of the fund which is to be created. It is clear from the answering
affidavit filed
by Cameron-Dow that he misunderstood the nature of
the relief sought in the draft order in that he construed the order
as having
the effect of giving the referee the authority to
distribute the whole of the fund comprising the proceeds of the sale.
His counsel
has conceded that the function of the referee proposed by
Laubscher was simply to deal with the claims filed in accordance with
section 11(4) of the Admiralty Act.
[14]
Cameron-Dow did not give any reason as to why the sheriff might not
be suitable to act as auctioneer, but indicated that he
would ask for
an auctioneer of his choice to be appointed. Filed with Laubscher's
replying affidavit is a valuation of the 'Juliette'
foreshadowed in
his founding papers by a marine surveyor. He values the vessel at
R1,55 million excluding VAT, fuel and lubes,
but warns that a forced
sale of the vessel may realise only between R300 000 and R400 000
excluding VAT, fuel and lubes. Cameron-Dow
proposes that the sale be
conducted by an auctioneer of his choice, namely one Ian William
Small. Cameron-Dow says that Small is
a semi-retired
"vastly
experienced senior auctioneer" who
ran
the Cape Province arm of Aucor Auctioneers for approximately 20
years. He is said to have extensive knowledge of boating and
fishing,
but has no experience in selling maritime vessels. Small and
Cameron-Dow propose a different method of sale from that
proposed by
Laubscher. In short, the intention is that Small will conduct an
extensive advertising campaign amongst prospective
purchasers in
order to ensure a good price. The conditions of sale contained in a
document entitled 'Proposal for Judicial Sale'
provide for
advertising costs which are not expected to exceed R30 000 and for
Small to be authorised to conclude a sale by private
treaty for not
less than the reserve price of R1 200 000, for each bidder to pay a
deposit of R20 000 to be held in the trust account
of Cameron-Dow's
attorneys. Cameron-Dow is in fact an attorney of this court and a
director of the firm which represents him. The
balance of the
purchase price is to be paid within such further period not exceeding
90 days as may be agreed with Small. The method
of sale proposed by
Cameron-Dow is to be found in the
"Proposal
of Judicial Sale"
to
which I have referred and a draft deed of sale which contains the
provisions relating to the payment of the deposit and the possible
extension of time within which to pay the purchase price to which I
have referred. It is by no means clear how these two documents
hang
together and they have been justifiably criticised by Laubscher in
his answering affidavit in the following manner:
* I
have the following comments to make in regard to the sale proposal:
Paragraph
A3.3.1 of the draft order provides that the sale be conducted by the
auctioneer 'on the basis of the proposal'. It is
not evident from
the order whether the auctioneer is required to comply strictly with
the terms of the sale proposal, whether
he may depart from its terms
and, if so, in what respect he may depart from the terms of the
proposal.
No
indication is given in the papers as to how the cost of advertising
ofR30 000,00 is arrived at.
Paragraph
B of the proposal provides that bidders shall be required 'to offer a
deposit or guarantee' to Mr Cameron-Dow's attorneys
of record (Mr
Cameron-Dow is a partner in the practice in question) of R50 000,00
24 hours prior to the sale.
There is
no provision in the proposal or conditions of sale as to what will
be done with the deposits paid by unsuccessful bidders.
The
deposit appears to be the same as that referred to in paragraph 7.1
of the conditions of sale, save that the amount of the
deposit
provided for in the conditions of sale is R20 000,00. No provision
is made in the conditions of sale as to what will
be done with the
deposits paid by unsuccessful bidders.
I
respectfully submit that it is entirely inappropriate that any
amounts be paid to Mr Cameron-Dow's firm. Any amount paid should
be
held by the Registrar as a fund held in court as described in
section 9(2) of the Admiralty Act.
I have
been advised that it is not the practice in sales concluded in
terms of section 9 of the Admiralty Act to require bidders
to pay a
deposit before bidding as this will simply discourage bidders. The
fact that the proposal includes such a provision
provides an
indication that Mr Small has no experience in selling fishing
vessels such as the 'Juliette'.
In terms
of clause C of the proposal the successful bidder is required to
pay the sum of R127 118,94 in addition to the purchase
price. This
amount, being the total of the expenses listed on Annexure 'C to
the draft order, is not vouched and includes amounts
which appear
to be unrelated to the preservation of the 'Juliette' and other
amounts which are clearly approximations. Depending
upon the terms
of the insurance policy, this may not constitute a preservation
cost either. These amounts are not dealt with
in Mr Cameron-Dow's
affidavit and no grounds exist for obliging a successful bidder to
pay the sum of R127 118,94 in addition
to the purchase price.
It
is not clear what the difference is (if any) between 'sale price'
and the 'purchase price' in clause C, and whether the auctioneer's
commission is payable on the amount bid inclusive or exclusive of
the preservation costs.
Clause
E provides for payment of the 'balance of the funds after payment of
preservation costs, advertising costs and commission'
to Mr
Cameron-Dow's firm. I have dealt with the amount claimed as
preservation costs above. I respectfully submit that it is
entirely
inappropriate that Mr Cameron-Dow's firm be left with the sole
discretion to decide what amount should be paid to Mr
Cameron-Dow
and to the auctioneer, a friend of Mr Cameron-Dow. The order sought
in the first sale application places the distribution
of the fund
wholly within the power of this honourable court.
There
is no indication in Mr Cameron-Dow's affidavit as to how the reserve
price in clause F is arrived at. In clause 19 of the
conditions of
sale forming part of the order sought in the first sale application
the reserve is described as being 75% of the
appraisal value. The
auctioneer is authorised to obtain a valuation of the vessel in
paragraph 1.2.2(b) of the draft order.
In
clause D the auctioneer is authorised to conclude a sale by private
treaty before or after the auction date for no less than
the
reserve price with the agreement of Mr Cameron-Dow and Mr Cooper. I
am advised that this provision is highly unusual, if
not unique, in
a sale order made in terms of section 9 of the Admiralty Act. It
entitles the auctioneer to sell the vessel
for R1,2 million before
the auction takes place without my consent as a registered owner. I
respectfully submit that it is
entirely inappropriate that the
auctioneer be given this power."
[15] After
hearing argument counsel for Cameron-Dow asked to be permitted to
submit a revised draft order in order to deal with
what he perceived
to be technical objections to the form of the order which he
proposed. An improved order was thereafter submitted,
but the basis
of it remains that a major portion of the sale proceeds (this time
R1 million) is to be paid out as to 85% thereof
to Cameron-Dow and
15% thereof to Laubscher. In light of the view which I take of the
matter it is not necessary to deal further
with the amended proposed
order.
[16] In
terms of Admiralty Rule 21(4) the court has an unfettered discretion
as to the appointment of the person who is to conduct
a sale.
[17] There
are two reasons why I am of the view that the successful applicant
should be Laubscher. Having regard to the fact that
the reward which
will flow to the auctioneer appointed to attend to the sale will be
influenced by the amount fetched on the
sale, there is no reason to
expect that the sheriff will not actively advertise the sale. He
records in the Laubscher application
that
1. He is
better placed to be the auctioneer as he is based in Cape Town and
is the custodian of the vessel.
2.
He has a website on which vessels are advertised and in addition is
in a position to scan the internet for buyers.
3.
He is able to obtain special advertising rates from the local
newspapers due to the longstanding relationship with them.
4. He is
available 24 hours per day in Cape Town and can facilitate
ad
hoc
inspections
of the vessel at short notice.
5. He has an
excellent infrastructure in Cape Town which will assist in all
aspects of the sale and auctioneering of the vessel.
6.
The sheriff's office has auctioned various vessels in the past, the
most recent being MFV "Omadino Star", MT "Argun",
MFV "Highlander" and the Yacht "Betelgeuse"
which he says achieved excellent sale prices, being more than
was
expected.
I
am also influenced by the fact that Cameron-Dow's application, while
brought in the form that it was for an order authorising
the sale of
the ship, was palpably brought with the motive of having the
principal disputes determined on motion.
[18] This
brings me to the question of costs. Both parties asked that a
punitive costs award be made against the other. Counsel
for
Laubscher submitted that Cameron-Dow and his legal advisor knew full
well the risk they were taking in seeking to have the
dispute with
Laubscher settled in motion proceedings rather than in the action
and on behalf of Cameron-Dow it was submitted
that Laubscher's
conduct justified such an order. Neither party gave notice in the
papers of its intention to seek a punitive
costs order and while
this is not necessarily fatal, I have decided not to make such an
order. The order which I will make will
however provide for
Cameron-Dow to pay the costs brought about by his opposition to
Laubscher's application.
[19] In
the result, the following orders will issue:
1.
In
case no AC 70/2010
i)
An
order is granted in terms of the draft order marked "X"
attached to the notice
of motion, incorporating the conditions of
sale marked "Annexure A" and the abbreviated
order
marked "Annexure B".
ii)
The
costs referred to in
B
of
the order exclude all costs incurred by opposition to
the
application, including the hearing thereof, which shall be paid by
Cameron-Dow.
2.
In
case no AC 85/2010
the application is dismissed with costs.
R
B CLEAVER
1
M/T Tigr v Bouygues Offshore and Another
1998
(4) SA 206
(C) at 210D (Full Bench).