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[2013] ZAECPEHC 61
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Hilane Limited v MV Silver Star and Others (A2282/2013) [2013] ZAECPEHC 61; 2014 (2) SA 392 (ECP) (3 December 2013)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE, PORT ELIZABETH
Case No.: A2282/2013
Date Heard: 14 November 2013
Date Delivered: 3 December 2013
In
the matter between:
HILANE
LIMITED
..............................................................................................
Applicant
And
MV
“SILVER
STAR”
...........................................................................
First
Respondent
ACTION
PARTNER
LIMITED
.....................................................
Second
Respondent
THE
SHERIFF OF THE HIGH COURT
PORT
ELIZABETH
SOUTH
...........................................................
Third
Respondent
EMIRATES
NBD BANK (PJSC) First Intervening Party
OLDENDORFF
CARRIERS GMBH CO. KG
.................
Second
Intervening Party
JUDGMENT
EKSTEEN
J:
[1]
This is an application in terms of the provisions of section 9 of the
Admiralty Jurisdiction Regulation Act, 105 of 1983 (herein
referred
to as “the Act”) for an order authorising the sale,
pendente lite, of the first respondent (herein referred
to as “the
vessel”).
[2]
The vessel is a bulk carrier with a Panamanian flag and the second
respondent is the registered owner thereof. (I have, however,
previously held that the true ownership of the vessel vests in
Stellar Shipping LLC (herein referred to as “Stellar
Shipping”).)
The applicant issued a summons in rem against the
vessel as an associated ship to the “Sheng Mu” following
an arbitration
award in London in favour of the applicant. The
applicant’s claim, it is alleged, arises in respect of the
charter of the
Sheng Mu by Phiniqia International Shipping LLC
(herein referred to as “Phiniqia”) and the breach by
Phiniqia of its
obligations, inter alia, in terms of certain letters
of indemnity issued by Phiniqia to the applicant in respect of
certain bills
of lading. This dispute was referred to arbitration in
London which resulted in a final award in favour of the applicant in
an
amount of USD3 843 927,10. In these circumstances the first
respondent was arrested pursuant to the provisions of section 3(6)
and (7) of the Act as an associated ship to the Sheng Mu, in the port
of Port Elizabeth by order of this Court. She remains under
arrest.
[3]
The order for the arrest of the vessel was obtained ex parte. This
was followed by an application by the first respondent for
the
release of the vessel from arrest. The first respondent contended
that the provisions of section 3(6) and (7) of the Act can
find no
application to the facts of the present matter and, even if they
could, the first respondent denied, on the facts, that
it was an
associated ship to the Sheng Mu. The first argument is a legal one
whilst the second concerns a factual dispute relating
to the
ownership of the vessel. The application for the release of the ship
was dismissed. This was followed by an application
for leave to
appeal which was similarly dismissed. I have been advised from the
Bar by Mr Gordon SC, who appears on behalf of
the first and second
respondents, that the first respondent intends to petition the
Supreme Court of Appeal for leave to appeal
against the dismissal of
the application for the release of the vessel. The petition has not
yet been delivered and the time for
the delivery thereof had not
expired at the time of argument. Nothing turns on this issue and it
is accepted by the parties that
a petition for leave to appeal is
pending
[4]
After the application for the release of the vessel was dismissed the
third respondent (herein referred to as “the Sheriff”)
who is charged with the custody and care of the vessel in terms of
the provisions of Rule 21 of the Rules Regulating the Conduct
of the
Admiralty Proceedings (herein referred to as “the Rules”)
advised that the vessel was running short of water
and that its agent
was no longer instructed to attend to the husbandry matters of the
ship. The crew had at that stage not been
paid their wages for
August 2013. On enquiry, Attorneys Edward Nathan Sonnenbergs (ENS),
representing the first and second respondents,
advised that on their
advice the owners have effectively ceased all payments in respect of
the vessel, it being the responsibility
of the Sheriff to preserve
and maintain the ship while she is under arrest. This prompted the
present application.
[5]
A rule nisi was issued on 11 September 2013 calling upon interested
persons to show cause why an order in terms of the provisions
of
section 9 of the Act should not be made in respect of the vessel.
The rule has in the interim been extended.
[6]
On 11 September 2013 the first intervening party (herein referred to
as “the Bank”) was granted leave to intervene.
The
vessel is mortgaged in favour of the Bank as security for a loan
extended to Stellar Shipping and an amount of USD43 183 444,33
is
currently owing to the Bank while interest is accumulating at a rate
of USD7 944,33 per day. In an affidavit filed on behalf
of the Bank
it contends that Stellar Shipping and the second respondent defaulted
on their commitments under the bond on 19 November
2012. The second
respondent acknowledges the default and states that due to the poor
market conditions it has not been possible
to manage the first
respondent profitably. For these reasons it was unable to pay the
instalment due on 19 November 2012. During
March 2013 it was able to
pay an amount of USD500 000,00, but it remains in default of its
obligations under the mortgage. The
estimated value of the vessel on
a judicial sale is estimated by the parties at varying amounts
between USD22million and USD24million.
[7]
At the time of its intervention the Bank did not actively oppose the
order for the sale of the vessel but raised opposition
to the form of
the order. In a subsequent affidavit filed shortly before the
matter was argued they remained equivocal about
their stance on the
proposed sale. I shall revert to the attitude of the Bank below.
[8]
On 20 September 2013 the second intervening party (herein referred to
as “Oldendorff”) was granted leave to intervene.
Oldendorff was the time charterer operator of the vessel at the time
of the arrest. Its intervention too was not aimed at opposing
the
sale of the vessel but rather at protecting its own interests in
respect of the cargo which was on the vessel at the time.
More
recently, however, at the eleventh hour, a further affidavit was
filed on behalf of Oldendorff. Oldendorff now contends
that it has
suffered damages as a result of the second respondent’s breach
of the charterparty in consequence of the arrest
of the vessel which
include, but are not limited, to the costs of the transhipment
operation in respect of the cargo and the additional
costs of having
to charter two substitute vessels to carry the cargo which ought to
have been carried on the vessel. Oldendorff
contends that it is
still calculating the extent of its losses and can only give an
indication thereof at this stage. It estimates
its total loss would
ultimately run to somewhere in the region of USD1million. It
contends that in the view of the admitted inability
of the second
respondent to secure the claim of the applicant, despite its relative
modesty, to settle the USD43million owed to
the Bank, to preserve the
vessel or even to pay its crew, it is clear that the second
respondent is insolvent and will be unable
to pay the damages for
which it is liable to Oldendorff. In these circumstances Oldendorff
supports the applicant’s claim
for the sale of the vessel.
Neither Oldendorff nor the Bank have proceeded to arrest the vessel
nor has either of them taken any
steps to enforce their claims
against the vessel or the second respondent.
[9]
On the papers and in argument the first and second respondents have
sought to challenge the constitutional validity of section
9 of the
Act. By virtue of the conclusion to which I have come on the facts
of the matter it is not necessary to decide this issue.
[10]
Section 9 of the Act confers upon the Court a wide and largely
unfettered discretion to order the sale of the vessel at any
time in
circumstances where such a step is justified. The discretion is, of
course, to be exercised judicially. Given the breadth
of the
discretion conferred on the Court by section 9 of the Act, it is not
possible to list all the factors which may be relevant
to the
judicial exercise of the discretion. A number of the considerations
which should ordinarily be considered emerge from the
judgment in MT
Tigr v Bouygues Offshore and Another
1998 (4) SA 206
(C). I shall
revert to these later herein. The weight which is to be attached to
each of these considerations will depend on
the peculiar facts of
each case.
[11]
In the matter of Sheriff of Cape Town v MT Argun, Her Owners and All
Persons Interested in Her and Others; Sheriff of Cape
Town and
Another v MT Argun, Her Owners and All Persons interested in Her and
Another
2001 (3) SA 1230
(SCA) at 1245 para [34] Scott JA stated:
“
[34]
The relief sought, as I have indicated, was an order for the sale of
the vessel. Section 9 of the Act affords the Court a wide
discretion
to order 'at any time' that property arrested in terms of the Act be
sold. Nonetheless, that discretion will be sparingly
exercised
pendente lite and, where a claim is contested, the Court will be
reluctant to order the sale of the arrested property
if there is a
reasonable prospect that the owner will be able to show that the
ground for the arrest is not a good cause of action.
Indeed, an order
in such circumstances has rightly been described as 'Draconian'.”
[12]
The reasons for this view are obvious and they were aptly described
by King J in MT Tigr supra at 208F-H where he stated:
“
We
are dealing here with the sale of a property pendente lite, a
so-called interlocutory sale, despite the opposition of the owner
thereto. In the words of Hugo J in Unicorn Lines (Pty) Ltd v MV
Michalis S
1990 (3) SA 817
(D) at 822B,
'.
. . a Court must have due regard to the fact that it is depriving an
owner of its property before any judgment has been given
against it'.
There
is general recognition of the principle which this dictum enunciates;
it is apparent that the Courts will more readily grant
an order for a
pendente lite sale where the owner is either agreeable thereto or is
in default of appearance.”
[13]
Leaving aside the constitutional issue to which I have referred
earlier, it is settled that the sale of a vessel may be ordered
pendente lite (see The Argun supra). The point of departure must be
that court will exercise its discretion to order a sale pendente
lite
sparingly, unless the owner consents to the sale or is in default of
appearance. In the present instance the registered owner,
who claims
to be the true owner, is vehemently opposed to the sale. It has
sought to set aside the arrest and has indicated its
firm intention
to seek leave to appeal from the Supreme Court of Appeal against the
dismissal of the application for the release
of the vessel.
[14]
On behalf of the applicant it is argued that the respondents have no
bona fide defence to the merits of the claim nor do they
have
reasonable prospects of success in an appeal against the dismissal of
the application for the release of the vessel from arrest.
I am
reminded by Mr Fitzgerald SC, on behalf of the applicant, that I have
previously declined an application for leave to appeal
precisely
because I held the view that the first respondent did not have
reasonable prospects of success.
[15]
I have also previously recognised that it is neither unprecedented
nor uncommon for leave to appeal to be granted on petition.
I think
that the conduct of this matter has illustrated clearly that the
defences raised by the first and second respondents against
the
arrest are seriously made. Moreover, in this instance it is the
ownership of the ship itself which is in issue in the proposed
appeal. This, I think is a consideration which militates against the
sale of the ship at this stage. (See Gys Hofmeyr: Admiralty
Jurisdiction Law and Practice, (2006) p. 172 fn 19.) I think that it
would be wrong for me to fall back on my own earlier finding
as
authority for the proposition that the defences hold no reasonable
prospect of success and thereby to close the door on the
second
respondent to endeavour to establish that it is in fact the true
owner of the vessel. The filing of a petition for leave
to appeal
suspends my earlier finding and it must accordingly be recognised
that the issue has not been finally decided.
[16]
The object of an arrest of a vessel is, inter alia, to give to a
maritime claimant a form of security in advance of the adjudication
of his claim. It is for this reason that a Court will in appropriate
cases authorise the sale of the vessel pendente lite in order
to
preserve the security where the prolonged arrest serves to deplete
such security. (See Unicorn Lines (Pty) Ltd v M V Michalis
S
1990
(3) SA 817
(D) at 821G-H. See also Admiralty Jurisdiction Law and
Practice supra p. 171.)
[17]
In the MT Tigr supra at 210E-F King J considered that the continuing
deterioration of the vessel and, accordingly, of the plaintiff’s
security, was a factor which would weigh heavily with the Court. The
applicant contends that the vessel is a wasting asset and
continues
to diminish in value. It states that neither the second respondent
nor any of the other parties who have an interest
in the vessel
intend maintaining the vessel whilst it is under arrest and have left
it to the Sheriff to conduct this function.
It emphasises too that
both Stellar Shipping and the second respondent have defaulted on
their obligations under the mortgage
and are unable to cure their
default. For this reason the applicant recognises that the Bank will
at some time in the future obtain
the legal right to proceed against
the vessel and to sell her. To wait for the Bank to exercise its
rights, so it is contended,
will mean that:
1.
Substantial claims against the vessel will arise in relation to her
maintenance and preservation;
2.
the vessel may be placed at risk as the result of there being
insufficient stores, bunkers, supplies etc on board;
3.
the crew will incur further claims against the vessel thereby
depreciating the ultimate value of the proceeds of the sale;
4.
the crew, not having any certainty in relation to their wages will
become disgruntled and their performance on board the vessel
may be
impaired.
[18]
I shall consider these particular expenses below in weighing up the
costs of maintaining the vessel in the context of the anticipated
duration of the arrest. Reverting to the alleged deterioration of
the vessel it is argued that whilst the Sheriff is compelled
to
preserve the vessel no maintenance is done in respect of the vessel
and accordingly the inevitable consequence is that the vessel
will
deteriorate significantly in value.
[19]
I do not think that the distinction between preservation and
maintenance is justified. In The MV Avalon: Curnow Shipping Limited
v
Brooks NO and Another
1996 (4) SA 989
(D) Thirion J had occasion to
consider the provisions of Rule 19(1) of the Rules, as they then
were. Rule 19 published in 1986
read in virtually identical terms to
the current Rule 21. It is true that the Rule is cast in permissive
terms and that it authorises
the Sheriff to take such step as he
deems appropriate for the “custody and preservation” of
the property. It makes
no reference to maintenance. Thirion J held
at p. 1000G-I, in respect of the then Rule 19:
“
However,
here the power is conferred on a public official, the sheriff, for
the purpose of being exercised for the benefit of those
persons who
have an interest in the preservation of the arrested vessel. In my
view the word 'may' in Rule 19(1) connotes the conferment
of a right
on the sheriff, coupled with a duty to exercise that right whenever
it appears to him to be appropriate to do so. …
It
does not appear to me that Rule 19 was intended to state exhaustively
the powers and duties of the sheriff in relation to property
which he
has arrested. The Rule should be interpreted against the background
of the powers and duties of the sheriff which are
derived from the
common law and which the Rule was not intended to abrogate.”
[20]
Thirion J then proceeded to analyse the common law with reference to
numerous authorities. At p. 1003B-C he concluded as follows:
“
It
would appear to me from what has been said on the subject of arrest
that it is the duty of the sheriff, after he has arrested
a vessel,
to keep it in safe custody and to take all reasonable steps necessary
for the preservation of the vessel so as to prevent
a deterioration
in its condition. He may incur such expenses as are reasonably
necessary for that purpose and may hold the person
who has procured
the arrest responsible for reimbursing him those expenses.”
[21]
On a consideration of authorities considered by Thirion J, I think
that it is correct that it is the duty of the Sheriff to
prevent a
deterioration in the condition of the vessel. This is, of course,
not always possible. There will, of necessity, always
be a measure
of deterioration due to ordinary wear and tear which occurs with the
passage of time and there may be deterioration
due to the vagaries of
the elements, particularly where the vessel lies on outer anchorage,
as is the case in this instance. No
evidence has, however, been
placed before Court to demonstrate a probability of any extraordinary
deterioration whether in nature
or extent. In these circumstances
the prospect of material deterioration must be considered to be
slight.
[22]
I turn to the preservation of the applicant’s security. What
emerges from the factual background which I have set out
above is
that the applicant has a claim arising from an arbitration award in
the amount of USD3 843 927.10. The vessel is bonded
in favour of the
Bank. There is an amount of USD43 183 444.33 owing in respect of the
bond and Oldendorff contends that it has
a claim against the vessel
in the amount of approximately USD1million. Neither of these parties
have arrested the vessel nor has
either of them taken legal steps to
enforce their claim against the first or second respondents. The
vessel is valued in the current
market, which is plagued by
unfavourable trading conditions, at approximately USD22million to
USD24million. The vessel was, however,
purchased from a shipyard in
China and delivered during June 2011 at a purchase price of USD49 800
000,00.
[23]
I have recorded earlier that the purpose of a sale pendente lite is
to preserve the security which the applicant holds. Sometimes,
however, a plaintiff may seek to preserve his judgment security not
only for himself but also for the benefit of other creditors.
In the
MT Tigr supra at 208I-J King J referred with approval to the passage
in Roscoe as follows:
“
So,
too, Roscoe in his great work The Admiralty Jurisdiction and Practice
of the High Court of Justice 5th ed (1931, 1987 reprint)
comments (at
351) that under the appropriate rule
'the
Court will order the sale of a vessel which remains under arrest . .
. if in the interests of all parties a speedy sale would
appear to be
desirable'.”
[24]
In Unicorn Lines supra Hugo J set out the approach to this issue
where he stated at 821H-822A:
“
If
therefore the claims are equal to, or in excess of the value of the
ship and the costs of maintaining the ship under arrest,
and the
deterioration caused by the arrest are such as to materially reduce
the security held by the claimants, that would be a
valid and indeed
weighty consideration in favour of a sale. In such a case the wishes
of the owner may well have to yield to the
policy underlying the Act.
On
the other hand, where the claims are materially less than the value
of the ship, and the costs and deterioration are not such
as to
materially diminish the value of the security, then the views of the
owners must, it seems to me, be given greater weight.
What would then
happen is that such costs and deterioration would reduce the owner's
equity in the ship while not detrimentally
affecting the position of
the claimants. If the owners therefore are prepared to take that
risk, one must assume that they are
the best judges of their own
position and one must afford their wishes great, if not overriding,
weight.”
[25]
At present the only claim which has been made against the vessel is
that of the applicant. It is a relatively modest claim
as compared
to the value of the vessel. Even if the preservation costs are
substantial and the arrest were to persist for a considerable
period
the applicant’s claim, standing alone, remains firmly secured
by virtue of its modesty as compared to the value of
the vessel.
Even if Oldendorff’s claim is added to that of the applicant,
the position of the claimants would not be detrimentally
affected if
the vessel were not sold.
[26]
If, on the other hand, I am to have regard to the claim of the Bank
the total claims would then far exceed the estimated current
value of
the vessel. If all these claims are taken into account for purposes
of the present debate, then it seems to me that the
applicant, in any
event enjoys no security whatsoever in respect of its claim. This, I
think, is so for the following reasons:
(i) In terms of the
provisions of section 11 of the Act the preservation and maintenance
costs of the vessel would rank first
against the fund created upon
the sale of the vessel. Those are not determinable at present,
although I revert to the known extent
of these costs below. (ii)
When regard is had to the ranking of the claim of Oldendorff, which
had possession of the vessel at
the time of the arrest, and that of
the Bank, which is secured by a mortgage, both rank above the claim
of the applicant. If these
claims are to be considered, as argued on
behalf of the applicant, then, on the overwhelming probability,
Oldendorff would be
paid in full and the remainder of any fund which
could result from the sale of the vessel would be absorbed in full by
the claim
of the Bank. The sale of the vessel will accordingly not
serve to preserve anything to the benefit of the applicant.
[27]
Thus, if only the claim of applicant is considered, or both its claim
and that of Oldendorff, then the aggregate of the claims
constitute
less than 25% of the likely proceeds of the sale. Adopting the
approach set out in Unicorn Lines to which I have referred
above, the
views of the owners must in these circumstances be afforded greater
weight in such circumstances.
[28]
If, however, the claim of the Bank is considered then it seems to me
that it is immaterial to the applicant whether the vessel
is sold or
not. It would by virtue of section 11 of the Act receive nothing
from the sale of the vessel which could serve as security
for its
claim.
[29]
Oldendorff, as I have indicated earlier, support the sale of the
vessel. By virtue of that which I have set out above, I think
that
the attitude of the Bank is of decisive importance. Mr Fitzgerald
argues that the Bank supports the sale. Indeed there are
passages in
some of the affidavits filed on behalf of the Bank which do create
that impression. In the final analysis, however,
I do not think that
is the attitude of the Bank. The Bank has, throughout, been
equivocal in its stance. In the final affidavit
filed the deponent
Wood states:
“
It
will be appreciated that, being owed in excess of US$43million,
secured by a first preferred mortgage over the vessel, the question
as to how best to secure its position and whether a forced judicial
sale in the current market is ultimately in its interests,
is a
matter which is not easily answered. Heretofore the First
Intervening Party has not taken a firm stand one way or the other
with regard to the judicial sale of the vessel. However, if the
court is otherwise persuaded the sale should proceed, …”
[30]
Later in the affidavit after recording the default on the bond
obligations by Stellar Shipping and the second respondent, the
deponent proceeds to state:
“…
the
First Intervening Party has been investigating various alternative
options of enforcing its security in terms of the powers
afforded to
it in terms of the mortgage to both maximise the return from a
disposal of the vessel, itself possibly entering into
possession and
trading the ship, or allowing the vessel to be sold by order of this
Honourable Court by public auction.”
[31]
The affidavit then concludes as follows:
“
I
therefore respectfully pray for an order that, should this Honourable
Court confirm the Rule Nisi issued on 11 September 2013,
it does so
with the above variations to the terms of the order for the sale.”
[32]
What emerges from this affidavit, as I understand it, is that the
Bank does not actively support the sale of the vessel but
takes the
position, in the event that I am persuaded to grant an order for the
sale of the vessel that the terms of the order should
be varied as
proposed by the Bank. At the hearing Mr Mullins SC appeared on
behalf of the Bank. His address accords with my understanding
of the
affidavit. He recorded that the Bank was most concerned about the
possibility of a forced sale in the current economic
climate but
urged, in the event that the Court should order the sale of the
vessel that regard should be had to the amended proposed
terms as set
out in the affidavit. Their concern about the prospect of a judicial
sale accounts for the fact that the Bank has
taken no legal steps to
seek to enforce its claim pursuant to the default under the mortgage.
In summary the Bank’s position
is that it does not support the
judicial sale of the vessel, however, in the event of it being
ordered that the vessel be sold
it intends to make a claim against
the fund. That, as alluded to earlier, would entirely eradicate the
applicant’s security.
The Bank retains the right to proceed to
secure an arrest of the vessel if it so chooses. I think that the
Bank, like the owners,
are the best judges of how to protect their
own security. In these circumstances I think that the claim of the
Bank should be
disregarded for purposes of this application.
[33]
The costs of maintaining the vessel whilst under arrest are clearly
substantial. A prior application was made by the applicant
for
security for the costs of the preservation of the vessel which it is
required to reimburse to the Sheriff pendente lite. It
emerges from
the application that the wages of the crew, if the Sheriff should
retain the full compliment, amount to USD2040 per
day. In addition,
in an affidavit deposed to approximately five weeks after the arrest
of the vessel Attorney Downes of the firm
Bowman Gilfillan
Incorporated declared that on the information conveyed to her the
following costs have or may need to be incurred
as soon as possible
to ensure the preservation of the vessel:
1.
R108 350,00 for provisions and supplies;
2.
R6 440,00 for 280 MT fresh water; and
3.
USD225 000,00 for 360 MT bunkers to last approximately three months.
[34]
Whilst there is no clearer indication of the likely costs of the
preservation of the vessel it is apparent from these consideration
that the costs will be substantial. This is particularly so if the
vessel were to be retained under arrest for an extended period.
In
the event that the applicant is successful in its action against the
first respondent these costs would be for the first and
second
respondents. In view of the value of the ship as it appears from the
papers before me these costs are fully secured. In
the event of the
applicant not being successful in its claim it would in any event be
required to bear these costs as costs in
the litigation. In view of
my earlier finding that any claim by Oldendorff would comfortably be
covered by the value of the vessel,
that the Bank has remained
non-committal and that, on the facts of the matter, the applicant
would derive no security at all in
respect of its claim from the sale
of the vessel, I think that the costs of the preservation of the
vessel should be considered
to be a neutral factor in the present
case.
[35]
Mr Fitzgerald places reliance on the judgment in the Supreme Court of
Appeal in MV Spirit of Namibia: Big Red One Inc and
Another v Marco
Fishing (Pty) Ltd
2006 (6) SA 309
(SCA) at 316D-F where Scott JA
stated:
“
Nonetheless,
the length of time a vessel is likely to be detained and the costs
involved in maintaining the vessel are often decisive
in determining
whether a sale pendente lite should be ordered. Thus in The Myrto
[1977] 2 Lloyd's Rep 243 (QB Adm Ct) Brandon J
at 260 considered that
an anticipated delay of a further 18 months (the vessel had already
been under arrest for three months)
and the costs involved in
maintaining the vessel during that period justified a sale pendente
lite. The learned Judge characterised
an argument resisting the sale
in such circumstances as lacking reality. A similar approach was
adopted in The Gulf Venture [1985]
1 Lloyd's Rep 131 (QB Adm Ct).”
[36]
In The Myrto at p. 260 Brandon J stated:
“
I
accept that the Court should not make an order for the appraisement
and sale of a ship pendente lite except for good reason, and
this
whether the action is defended or not. I accept further that, where
the action is defended and the defendants oppose the making
of such
an order, the Court should examine more critically than it would
normally do in a default action the question whether good
reason for
the making of an order exists or not. I do not accept, however, the
contention put forward for the owners, that the
circumstance that,
unless a sale is ordered, heavy and continuing costs of maintaining
the arrest will be incurred over a long
period, with consequence
substantial diminution in the value of the plaintiff’s security
for their claim, cannot, as a matter
of law, constitute a good reason
for ordering a sale. On the contrary, I am of the opinion that it
can and often will do so.”
[37]
I do not think that Scott JA in MV Spirit of Namibia supra, reliant
on this dictum by Brandon J, intended to state that every
lengthy
delay coupled with considerable costs of preservation would
necessarily justify the sale of the vessel. In MV Spirit of
Namibia
supra the delay had persisted for years and the costs had exceeded
the value of the vessel. In The Myrto, to which reference
is made
above, what weighed heavily with Brandon J was the consequent
substantial diminution in the value of the plaintiff’s
security
for their claim. This issue I have considered earlier herein. On
the facts of the present matter I think that it does
not arise.
[38]
The potential prejudice to the owner of the vessel is a factor. The
second respondent is a special purpose vehicle owning
only a single
vessel which was commissioned to be built in what was no doubt better
commercial trading conditions. It was delivered
in June 2011 and, as
earlier recorded, at a cost of USD49 800 000,00. The vessel is
virtually brand new. Currently, in prevailing
commercial conditions,
it is estimated that it may reach between USD22million and
USD24million if sold at auction. In the event
that the petition for
leave to appeal to which I have referred earlier should be granted
and the appeal should succeed the second
respondent, as the alleged
owner of the ship, would suffer enormous and irrecoverable prejudice
from the premature and untimely
sale of the vessel. This is also the
basis for the Banks non-committal attitude. This feature, I think,
militates strongly against
the authorisation of the sale of the ship
at this stage.
[39]
In all the circumstances I do not consider that sufficient reason for
the pendente lite sale of the “Silver Star”
has been
shown to exist.
[40]
In the result I make the following order:
1.
The rule nisi is discharged.
2.
The application is dismissed with costs such costs to include the
costs of two counsel.
J
W EKSTEEN
JUDGE
OF THE HIGH COURT
Appearances:
For
Applicant: Adv M J Fitzgerald SC instructed by Bowman Gilfillan Inc
c/o Chris Baker Attorneys, Port Elizabeth
For
Respondent: Adv D A Gordon SC and Adv S F Pudifin-Jones
instructed by Edward Nathan Sonnenbergs c/o Pagdens Attorneys,
Port
Elizabeth
For
1st Intervening Party: Adv Mullins SC instructed by Shepstone &
Wylie c/o Van Wyk Attorneys, Port Elizabeth