Credit Europe Bank N.V v Fund Comprising the proceeds of the sale of the MV Tarik III and Others (A 80/2014) [2021] ZAKZDHC 17 (6 May 2021)

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[2021] ZAKZDHC 17
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Credit Europe Bank N.V v Fund Comprising the proceeds of the sale of the MV Tarik III and Others (A 80/2014) [2021] ZAKZDHC 17 (6 May 2021)

IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
(Exercising
is Admiralty Jurisdiction)
Reportable
Case
No. A 80/2014
Name
of Ship:
MV “TARIK III”
In
the matter between:
CREDIT
EUROPE BANK
N.V
APPLICANT
and
THE
FUND COMPRISING THE PROCEEDS OF THE
SALE
OF THE MV “TARIK
III”
FIRST RESPONDENT
SEVEN
SEAS SHIP CHANDLERS L.L.C
SECOND RESPONDENT
JUPITER
SHIPPING AND TRADING LTD
THIRD RESPONDENT
BILGE
GIDA KUMANYACILIK SAN. VE TIC.
FOURTH RESPONDENT
ARKAS
PETROL URUNLERI VE TICARET A.S.
FIFTH RESPONDENT
DAMEN
SCHELDE MARINE SERVICES B.V.
SIXTH RESPONDENT MARICHEM MARIGASES
LIMITED
SEVENTH RESPONDENT
KPI
BRIDGE OIL
LIMITED
EIGHTH RESPONDENT
BRYVAL
CO LTD TRADING AS ZEBA MARINE
NINTH RESPONDENT
MONJASA
DMCC
TENTH RESPONDENT WORLDWIDE ENERGY SERVICES LTD

ELEVENTH RESPONDENT
NOBLE
RESOURCES SRL

TWELFTH RESPONDENT
BUNKERNET
LTD
THIRTEENTH RESPONDENT
TALL
SHIPS (PTY) LTD T/A
LBH
FOURTEENTH RESPONDENT
TRANSNET
NATIONAL PORTS AUTHORITY
FIFTEENTH RESPONDENT
STURROCK
GRINDROD SHIPS AGENCIES
SIXTEENTH RESPONDENT GARANTI FINANSAL KIRALAMA
A.S
SEVENTEENTH RESPONDENT
ZEOS
SHIPPING AGENCY SERVICES AND
PETROLEUM
TRANSPORT TRADING LTD
EIGHTEENTH RESPONDENT
Application
for the partial confirmation of the Referee’s Report and related
directions
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email. It has been released
to
SAFLII. The date and time for hand-down is deemed to be 15h00 on 06
May 2021.
ORDER
Moodley J
1.
The Report of the Referee dated 10 September 2015 is confirmed.
2.
The Applicant is directed to pay the costs of this application
taxed
or agreed, such costs to include the costs of the Fifth, Eighth and
Tenth Respondents in respect of:
2.1
Mr
MacWilliam SC
;
2.2
Mr Bowley;
2.3
Turkish attorneys
Yalcin Toyager & Tufekci Law office;
2.4
The expert witnesses
Prof/Dr Topuz and Prof Yavuz.
3.
The Fifth, Eighth and Tenth Respondents are given leave
to defend the
costs claims of Credit Europe against the Fund on taxation and/or to
agree the reasonable quantum of those costs claims.
4.
The counter-application by the Seventeenth Respondent is
dismissed
with costs, such costs to include the costs consequent upon the
employment of two counsel, where so employed.
JUDGMENT
Delivered
6 May 2021
Moodley J
Introduction
[1]
This is an application in terms of s 10A(1) of the Admiralty
Jurisdiction Regulation Act 105 of 1983 (‘AJRA’)
[1]
for an order with regard to the payment out of the fund (‘the
Fund’)
[2]
constituted by the
proceeds of the judicial sale of the motor vessel ‘Tarik III’
(‘the Vessel’). The order sought entails
a partial confirmation
of the report by Advocate Darryl Cooke, as referee (‘the
Referee’).
[3]
[2]
The Vessel was sold and the Fund was constituted pursuant to
an order
of this Court granted on 5 December 2014 (‘the Sale Order’). The
Sale Order provided further for the appointment of
the Referee with
the authority to receive and examine claims lodged against the Fund
and objections thereto, and to report thereafter
to the Court on the
validity and the ranking of claims submitted against the Fund.
[3]
The Vessel was sold by public auction on 4 February 2015. Credit
Europe Bank
N.V.
(‘Credit Europe’), who is the applicant herein, and the second to
eighteenth respondents (and the master and crew of the
Vessel) lodged
claims against the Fund with the Referee. On 10 September 2015 the
Referee delivered his final report to this Court
(‘the Report’)
setting out his recommendations as directed in respect of the
validity and ranking of the claims of the second
to eighteenth
respondents for payment out of the Fund, the value of which on that
date was USD1 823 044,44.
The Referee’s
Report
[4]
It is common cause that the majority of the claimants did not
arrest
the Vessel
in rem
prior to her sale. However, as their claims
are based on the underlying
in personam
liability of Caliskan
Ic Ve Dis Ticaret Sanayi A.S (‘Caliskan’), who was the charterer
of a demise charter in respect of the Vessel,
the second to twelfth
respondents (collectively referred to as ‘the disputed
claimants/suppliers’) relied further on the deeming
provision in s
1(3) of AJRA which stipulates that: ‘For the purposes of an action
in rem
, a charterer by demise shall be deemed to be, or to
have been, the owner of the ship for the period of the charter by
demise.’
As explained in Hare
Shipping Law and Admiralty
Jurisdiction in South Africa
:
‘
Liabilities
of the vessel
in
rem
which
depend upon the underlying personal liability of her owner, will not
generally be incurred as a result of acts of the demise
charterer and
or its master and crew. But s 1(3) of the Admiralty Jurisdiction
Regulation Act deems the demise charterer to be the
owner “for the
purposes of an action
in
rem
,
for the period of the charter by demise.”
[4]
The
learned author further states:
‘
Now
the vessel stands for the debts of the demise charterer, but only for
the duration of the charter.’
[5]
[5]
Consequently the primary areas of contention in the claims process
were:
(a)
The extent to which the respective claimants were entitled to rely on
the deeming provision in s 1(3), if at all. This involved the
consideration of whether the leasing agreement/demise charter (‘the
demise charter’)
[6]
had
terminated, and if so when the termination occurred.
(b)
The validity of the claims by the seventeenth respondent, Garanti
Finansal Kiralama A.S (‘Garanti’), which was the registered
owner
of the Vessel prior to her judicial sale, and which had concluded the
demise charter with Caliskan. Garanti’s claims included
claims for
‘outstanding hire’ and for costs incurred by Garanti in relation
to the Vessel whilst she was under arrest.
[6]
In his Report to the Court, the Referee recommended payment
of Credit
Europe’s damages claim, ranked as contemplated in s 11(4)(
f
)
of AJRA, and its preservation claim, ranked as contemplated in s
11(4)(
a
). The Referee, being of the view that the demise
charter was still extant at the time of the sale, concluded that all
the claimants
(save for Garanti) were entitled to rely on the deeming
provision in lodging their claims against the Fund. He therefore
recommended,
inter alia, the payment of the claims of the second to
sixteenth respondents but rejected Garanti’s claims.
[7]
Credit Europe’s claims and the ranking as aforesaid are not
in
dispute. With the exception of two claims,
[7]
all of the other claims which the Referee recommended be paid, rank
above Credit Europe’s damages claim as they are all necessaries
claims, and fall to be ranked in accordance with s 11(4)(
c
)(v)
of AJRA.
[8]
I am mindful that the Referee’s report is a recommendation
which
does not bind the Court. In
Associated
Marine Engineers (Pty) Ltd v Foroya Banki PF
[8]
it was held that while a court is not bound by recommendations made
by the referee, it will in given circumstances give effect to
the
recommendations of the referee. Nevertheless, I am indebted to Mr
Cooke for his thorough investigation and comprehensive report
which
has been of invaluable assistance in determining the issues referred
to this Court.
Credit Europe’s
application
[9]
This application was commenced by Credit Europe on or about
16
October 2015. Initially Credit Europe sought relief in two parts:
(a)
The relief sought in Part A related to confirmation of the Referee’s
Report in respect of the claims of Credit Europe and the thirteenth
to sixteenth respondents, and the payment out of the Fund of those
claims ranking in terms of s 11(4)(
a
)
[9]
(the preservation claims) and s 11(4)(
b
)
of AJRA, and the payment of legal costs.
(b)
The relief sought in Part B was
inter alia
for:
(i)
The immediate payment of the residual funds in the Fund to Credit
Europe, subject to the retention of sufficient funds to satisfy
the
payment of any legal costs outstanding pursuant to Part A of the
order;
(ii)
Alternatively, that the second to twelfth respondents be directed to
commence actions
in rem
against the Fund to so as to prove
their claims, and that Credit Europe be given leave to defend those
claims on behalf of the Fund.
(iii)
Payment
to Credit Europe of the costs of this application on an
attorney and own client scale from the Fund with the costs to be
ranked in
accordance with s 11(4)(
a
) of AJRA.
[10]
On 12 January 2016 the Court granted a consent order in respect of
certain of the relief
sought in Part A. The Court ordered the payment
of the relevant claims (which have been paid), and directed that the
balance of the
funds be retained in the Fund pending the
determination of the opposed application in respect of the remaining
relief. At that stage
the second to the twelfth and seventeenth
respondents had filed notices of opposition.
[11]
Before this Court, Credit Europe filed an amended draft order setting
out the relief
it seeks. In effect, Credit Europe seeks partial
confirmation of the Referee’s report as it requires this Court to
refuse the payment
of higher ranked necessaries claims as recommended
by the Referee. Such an order will ensure that Credit Europe’s
claim for costs
and as residual creditor, will be paid. The relief
sought also includes the confirmation of the Report in respect of the
recommendation
that Garanti’s claims not be paid, as clarified by
Mr
Mullins SC
who with Mr
Mackenzie
, represented Credit
Europe in this application.
[12]
At the hearing of this matter, Arkas Petrol Urunleri VE Ticaret A.S
(‘Arkas’),
KPI Bridge Oil Limited (‘KPS’) and Monjasa DMCC
(‘Monjasa’), the fifth, eighth and tenth respondents respectively
(collectively
referred to as ‘the Opposing Suppliers’), who were
represented by Mr
MacWilliam SC
assisted by Mr Bowley,
persisted in their opposition. They seek confirmation of the
Referee’s report in its entirety which would
ensure the payment of
their claims, and the costs of their opposition to this application.
[13]
Garanti, which was represented by Mr
Gordon SC
, who appeared
with Ms
Pudifin-Jones
, also persisted with its opposition to
the relief sought by Credit Europe. Garanti further filed a
counter-application comprising
a main and alternative claim, in which
it seeks payment of its claim for preservation costs contrary to the
recommendation by the
Referee.
[14]
Although Credit Europe requested two days for the hearing of this
matter and the days
of 8 and 9 May 2017 were allocated, a further day
was necessary for the completion of argument by the respondents
together with Credit
Europe’s response. At the next hearing on 7
September 2017, towards the end of his substantial reply, Mr
Mullins
referred to the amended draft order sought by Credit Europe. He
made further submissions in respect of the costs sought by Credit
Europe in the amended draft order and undertook to file a further
amended order, specifically in respect of the costs order sought
in
respect of this application. The reason therefor was that the parties
were in agreement that the costs of this application should
not be
paid out of the Fund but be borne by the unsuccessful party/parties.
[15]
Subsequently, on 29 September 2017, Credit Europe’s attorneys filed
a written note
which tendered ‘an explanation of the orders sought
by the Applicant’. In response thereto counsel for the Opposing
Suppliers
delivered ‘Fifth, Eighth and Tenth Respondent’s
Objection and reply to the Applicant’s written note of 29 September
2017’.
In the response, Mr
MacWilliam
expressed his disquiet
that the written note was not a revised draft order but constituted
‘an improper attempt by the Applicant,
long after the conclusion of
oral argument, and without leave of the Court, to further argue its
case under the guise of a note.’
Mr
MacWilliam
stated
further that Credit Europe had sought to make amendments to the
relief it sought which had not been sought in the documents
filed of
record or at the hearing. Thereafter Mr
Mullins
submitted a
response on behalf of Credit Europe to the objections raised by the
Opposing Suppliers.
[16]
As recorded above, Mr
Mullins’
submissions on the issue of
costs sought by Credit Europe necessitated amendments to the amended
draft order, and I requested Mr
Mullins
to provide me with a
draft order duly amended in accordance with his submissions. Mr
Mullins
undertook to do so. There is accordingly no need to
consider any further ‘explanatory’ submissions by any of the
parties, especially
as all parties were accorded a fair opportunity
to complete their substantial submissions in Court, and no consent
was sought to
file any further or explanatory submissions.
The dispute
[17]
In brief, Credit Europe submits that the Referee erred:
(a)
in concluding that the demise charter had not terminated and was
still extant at the time of the sale;
(b)
in concluding that the disputed claimants could rely on the deeming
provision in lodging their claims against the Fund; and
(c)
in recommending the payment of those claims.
[18]
Credit Europe does not challenge the merits or ranking of the claims
of the disputed
claimants on any basis other than that a claimant
cannot rely on the deeming provision contained in s 1(3) of AJRA to
lodge a claim
against the Fund, if it has not arrested the Vessel
in
rem
prior to the sale and while the demise charter was still
extant. Mr
Mullins
therefore argued that s 1(3) does not
afford the right to participate in a ship fund where no action
in
rem
has been timeously brought against the ship, and that the
Opposing Suppliers must at the very least demonstrate on a balance of
probabilities
that the demise charter was extant at the time of the
sale of the Vessel.
[19]
It is common cause that of the disputed claimants, only Arkas and KPI
Bridge actually
arrested the Vessel
in rem
; Arkas on 19
November 2014, and KPI Bridge on 17 December 2014. Credit Europe
submits that neither Arkas nor KPI Bridge has demonstrated
on a
balance of probabilities that the demise charter was extant on the
respective dates of arrest. Credit Europe further relies
on a
statement made by Garanti’s South African attorney, Mr Clark, on
the legal advice of Garanti’s Turkish attorney, Mr Senol,
to the
effect that the demise charter had terminated on 15 June 2014
pursuant to a notice dated 15 April 2014. It therefore contends
that
the demise charter:
‘…
terminated on 15
June 2014, or thereafter, and some considerable time before the Court
ordered the sale of the vessel on 5 December
2014, and in any event
some considerable time before 5 January 2015 when Garanti and
Caliskan purported to conclude the Debt Liquidation
Agreement, and in
any event before the sale of the vessel on 4 February 2015.’
[20]
Mr
Mullins
submitted that while Credit Europe’s claim and
ranking are not in dispute, there is no basis upon which this Court
could conclude,
on the affidavits, that the disputed claimants are
entitled to have their claims recognised as valid against the Fund.
Therefore,
it would be appropriate to order payment to Credit Europe
unless the Court were to find that there remains some prospect that
the
disputed claimants can establish their claims in trial actions.
In that event, they should be given the opportunity to institute
proceedings against the Fund, with Credit Europe being given leave to
defend those actions on behalf of the Fund.
[21]
The Opposing Suppliers and Garanti dispute both the arguments
advanced on behalf Credit
Europe in respect of the termination of the
demise charter. Garanti and Caliskan, the parties to the demise
charter, allege that
the demise charter was at all relevant times,
valid and binding and reflected in the Turkish International Ship
Registry. Garanti
has not only denied that the demise charter was
terminated by the parties, but has also provided an explanation for
the misconception
relied on by Credit Europe in its argument that
there is written correspondence confirming the termination of the
demise charter
on 15 June 2014.
[22]
Mr
MacWilliam
contended that Credit Europe’s reliance on the
statement by Garanti’s attorney that the demise charter had been
terminated was
misplaced. He pointed out that not only was this an
incorrect hearsay statement but the legal advice which precipitated
the statement
was also wrong. He emphasised that the incorrect advice
was recanted shortly after it was given and Garanti has repeatedly
and unequivocally
disavowed the incorrect legal advice, and persisted
that the demise charter was not terminated.
[23]
Mr
MacWilliam
also advanced extensive and detailed argument to
counter the assertion by Credit Europe that the demise charter was
terminated at
the very latest before the judicial sale of the Vessel.
He pertinently pointed out that when the Sale Order was granted on 5
December
2015 directing that all claims be submitted to the Referee,
there was no suggestion by Credit Europe or any other party that such
claims should first be preceded by the arrest of the Vessel. Further
even until after the sale of the Vessel and the creation of
the Fund,
Credit Europe and the other claimants accepted without qualification
that Caliskan had been the demise charterer of the
Vessel. He
therefore contended that the Opposing Suppliers were entitled to rely
on s 1(3) of AJRA to substantiate their claims against
the Fund
without arresting the Vessel or commencing an action
in rem
.
[24]
As noted by the author Hofmeyr ‘[w]here a claim is disallowed by
the referee or disputed,
the onus is on the claimant to prove its
claim’.
[10]
In
The
Kingston
Bristowe
J stated that ‘implicit in the order referring all the claims to
the referee that, in the event of dissatisfaction with
the referee’s
recommendations, the claimant whose claim is rejected or challenged
should have to establish it.’
[11]
Bristowe J further stated that ‘where a claim is disputed . . .
each such claim must be established by the claimant who has advanced
it and adopt the normal approach that “he who asserts must
prove”.
[12]
Given that the
disputed claims were lodged in terms of s 1(3) of AJRA, the issues
that lie for determination are threefold:
(a)
Is the reliance of the Opposing Suppliers on s 1(3) to lodge claims
against the Fund sustainable if, as creditors of the demise
charterer,
they have not arrested the Vessel or commenced proceedings
in rem
?
(b)
Was the demise charter terminated by Garanti and Caliskan?
(c)
If it was terminated, what is the relevant date that the demise
charter has to be extant in order for the claims of the Opposing
Suppliers to be properly allowed by the Referee/and the Court?
Does a claim lodged
in terms of s 1(3) of AJRA require an arrest or action
in rem
by
the claimant?
[25]
It is common cause that at all material times, specifically when the
Vessel was arrested,
the Sale Order issued and Vessel was sold,
Garanti was the owner of the Vessel. However, the Vessel was
susceptible to arrest
in
rem
in
respect of the claims of Credit Europe against Caliskan, the demise
charterer, pursuant to the provisions of s 1(3) of AJRA. Therefore,
when the Vessel was first arrested on 26 May 2014 in this
jurisdiction by Credit Europe pursuant to an action
in
rem
,
that action was based on the alleged
in
personam
liability
of Caliskan, the demise charterer, not Garanti. Once arrested, the
Vessel was susceptible to being sold in execution to
satisfy the
liability of Caliskan, although the liability was not that of
Garanti. As stated by Ploos van Amstel J in
CH
Offshore Ltd v PDV Marina SA
,
s 1(3) of AJRA allows a ship to be ‘sold in execution to satisfy a
debt for which the shipowner was not liable’.
[13]
[26]
The Sale Order was made in term of s 9(1) of AJRA, which pertains to
the sale of arrested
property and provides that: ‘A court may in
the exercise of its admiralty jurisdiction at any time order that any
property which
has been arrested in terms of this Act be sold.’ In
paragraph 4 of the Sale Order, it was ordered ‘[t]hat a Fund be
established
from the proceeds of the Sale which shall be dealt with
as follows: . . . ’. This is consistent with s 9(2) of AJRA which
stipulates
that: ‘The proceeds of any property so sold shall
constitute a fund to be held in court or to be otherwise dealt with,
as may be
provided by the rules or by any order of court.’ The
order is also consistent with s 3(11)(
a
)(ii) of AJRA which
provides that: ‘There shall in any particular case be a fund
consisting of- … (ii) the proceeds of the sale
of any property
mentioned in subsection (5)(a) to (e), either in terms of any order
made in terms of section 9, or in execution or
otherwise.’ Section
3(11)(
b
) of AJRA stipulates that: ‘A fund shall,
for all
purposes, be deemed to be the property sold
or the property in
respect of which the security or an undertaking has been given’
(emphasis added).
[27]
Consequently, as properly submitted by Mr
MacWilliam
, when a
ship is sold in terms of s 9(1) of AJRA, based on an arrest founded
on the deemed ownership of the demise charterer in terms
of s 1(3),
the fund that is created in terms of ss 9(2) and 3(11)(
a
)(ii)
is a fund that is deemed to be the property of the demise charterer
in terms of s 3(11)(
b
) read with s 1(3). Importantly, the fund
is deemed to be the property of the demise charterer for all
purposes, not only for the
purposes of the party that made
application for the order in terms of s 9(1). This includes the
satisfaction of claims by other claimants
founded on the
in
personam
liability of the demise charterer.
[28]
I am therefore in agreement with Mr
MacWilliam
’s submission
that:
‘
.
. . the provision in s 3(11)(
a
)(ii) that deems the fund to be
the property that was sold, constitutes an important link in the
process that allows claimants to
obtain payment of their claims from
the fund. Absent the fund being deemed to be owned by the charterer
by demise there would be
no basis for parties with claims based on
the
in personam
liability of the demise charterer (such as
Credit Europe) to receive payment from the fund.’
[29]
However the action
in rem
that provided the jurisdictional
foundation for the order for the sale of the Vessel and the creation
of the Fund, is stayed by the
Sale Order. This is because the Sale
Order, which was made in terms of s 10A(1) of AJRA, is an order with
regard to ‘the distribution
of a fund . . . or proof of claims
against a fund, including the referring of any of or all such claims
to a referee in terms of
section 5(2)(e)’, and it is, accordingly,
an order which is subject to the provision of s 10A(2) of AJRA which
provides:
‘
(a)
If an order is made referring all such claims to a referee or if the
court so orders, all proceedings in respect of claims which
are
capable of proof for participation in the distribution of the fund
shall be stayed and any such claim shall be proved only in
accordance
with such order.
(b)
The costs of any proceedings already instituted but which have been
stayed in terms of paragraph (a) shall be added to any relevant
claim
proved in accordance with any such order.’
[30]
Therefore the Sale Order had the legal effect of staying all
proceedings in respect
of claims capable of proof for participation
in the distribution of the fund (pursuant to s 10A(2)(
a
)). It
is because the actions
in rem
were stayed by the Sale Order,
that Credit Europe was obliged to deliver a fresh notice of its
claims and supporting affidavits to
the Referee as provided for in
the Sale Order. Similarly, the Opposing Suppliers and all other
claimants were required to deliver
fresh notices of claim and
supporting affidavits to the Referee. Effectively the claims
procedure as set out in the Sale Order superseded
proceedings
previously commenced.
[31]
This reasoning supports the contention of the Opposing Suppliers that
they did not
need to institute an action
in rem
or arrest the
Vessel in order to lodge claims legitimately with the Referee, nor
were their claims precluded from payment as asserted
by Credit
Europe. Authority for this reasoning is found in the following
excerpt from Hofmeyr
Admiralty Jurisdiction Law and Practice in
South Africa
:
‘
It
is not necessary for a claimant to have instituted an action or,
where the property has been sold, to proceed against the fund
or to
proceed to judgment before being entitled to have its claim taken
into account in the distribution of a fund’.
[14]
[32]
In
Continental
Illinois National Bank and Trust Co. of Chicago v Greek Seaman’s
Pension Fund
,
Thirion J was required to determine ‘whether or not the respondent
has a claim against the fund in the light of the fact that
it did not
cause the vessel to be arrested prior to its sale’.
[15]
He rejected the argument that s 3(5) of AJRA required a claimant
against a fund to have effected an arrest of the property and to
have
instituted action in respect of its claim, holding:
‘
While
the ship is under arrest in the Court's jurisdiction the Court has
control over it and exercises jurisdiction over it . . .
while the
Court is exercising jurisdiction over the ship by virtue of an arrest
no further arrest would be required in respect of
the institution of
other proceedings against it. In
The Africano
[1894] P 141
at
149 it was said:
“
The
arrest enables the Court to keep the property as security to answer
the judgment. This does not at all imply that the Court holds
the
property only for that plaintiff, or for that plaintiff in priority
to others of the same class. The true view is, I think, that
the
Court holds the property, not only for the first plaintiff, but also
for at least all creditors of the same class who assert
their claims
before any unconditional decree is announced.”
Be
that as it may, once the stage has been reached that the arrested
res
has
been sold in terms of s 9 and the proceeds are being held as a fund
in Court, there can surely be no need for a further arrest.
The Court
then has full control over the proceeds and the proceeds can only be
paid out on an order of the Court. Furthermore, a
requirement that a
claimant, in order to be entitled to share in the distribution of a
fund in respect of his claim, would have to
have instituted an
action, when he is not required to obtain a judgment on it, would be
a purposeless formality in a statute which
eschews formalism and
technicality and which aims at the expeditious and efficacious
determination of claims.’
[16]
Thirion
J held further that:
‘
The
purpose of an arrest of the property in an action
in
rem
is
to give the plaintiff security in respect of his claim and to
establish the Court's jurisdiction in respect of the property. Where
as happened in this case there had been an arrest of property, albeit
by another claimant, and the property has, pursuant to such
arrest,
been sold in terms of s 9 of the Act and the proceeds are being held
in terms of s 11 as a fund in Court, then the Court's
control over
the proceeds is complete. The proceeds can only be paid out on an
order of Court and the Court would only authorise
a payment out of
the fund when it is satisfied that all persons who have claims with
regard to the fund have had an opportunity to
lodge their claims and
when it is satisfied that the order of priority laid down in s 11 has
been observed. When the stage has been
reached that the proceeds of
the sale are being held as a fund, any need for an arrest as a
prerequisite to a further party's introduction
to the proceedings
must surely have fallen away in respect of proceedings for the
distribution of the fund.’
[17]
[33]
In my view, this judgment provides comprehensive reasoning which
negates the assertions
of Credit Europe that the claims of the
claimants which did not arrest the ship or institute actions
in
rem
should have been rejected by the Referee and that payment
thereof should not be allowed by this Court.
Was the demise
charter terminated?
[34]
Credit Europe arrested the Vessel on 26 May 2014 in this jurisdiction
pursuant to an
action
in rem
, based on the
in personam
liability of Caliskan, the demise charterer. Therefore, it is not
in dispute that the demise charter was in existence at that date.
It
is also significant to note, as pointed out by Mr
MacWilliam
,
that, at all material times prior to the sale of the Vessel on 5
February 2015, there was never any suggestion by Garanti, Caliskan,
Credit Europe, or any other party, that the demise charter was not
still in existence. Credit Europe itself brought the sale application
on 2 October 2014 on the basis that the demise charter remained in
existence, and Garanti expressly opposed the sale application
‘on
the basis that the bareboat charterparty remained in place, valid and
binding between the parties’.
[35]
Nevertheless Credit Europe in this application avers that the demise
charter was not
extant at the time of the judicial sale or even when
the Vessel was arrested by the fifth and eighth respondents on 19
November 2014
and 17 December 2014, respectively. It avers that the
fifth and eighth respondents have failed to establish that the demise
charter
was extant when the Vessel was arrested by them, although the
existence or otherwise of the demise charter was not in issue when
these arrests were effected. Mr
Mullins
therefore argued that
the Opposing Suppliers bore the onus to prove that the demise charter
was extant at all relevant times.
[36]
This submission was, in my view, properly refuted by Mr
MacWilliam
,
who submitted that it was Credit Europe who bore the onus. Referring
to the cases of
Chetty
v Naidoo
[18]
and
Naik
v Panday
[19]
as analogous authority, Mr
MacWilliam
relied
on the principle that where it is common cause that the parties had
entered into a lease, the plaintiff bears the onus to prove
the
termination. In
Naik
v Panday
the
court held that the plaintiff bore the onus, irrespective of whether
the plaintiff relies on the termination in his founding papers
or
whether the defendant pleads that there is a lease, and the plaintiff
replicates that the lease was terminated. This principle
was approved
in
Chetty
v Naidoo.
[37]
In my view, although the onus to prove their disputed claims lie on
the Opposing Suppliers,
Credit Europe who relied on the demise
charter in establishing its own claim, and is now the only party who
alleges that the demise
charter was terminated, must establish that
allegation on a preponderance of probabilities. However, Credit
Europe is clearly uncertain
as to when the alleged termination
occurred, pegging the alleged termination date between 15 June 2014
and prior to the sale on 5
February 2015. It raises alternate
arguments in support of the possibility that the demise charter
terminated at one of a number
of alternate times. In any event, in
the light of the finding by this Court that a claimant with an
in
personam
claim against the charterer does not have to arrest the
vessel to rely on s 1(3) of AJRA once the vessel has already been
arrested,
the dates of the arrest by the fifth and eighth respondents
have no significance, and require no attention.
[38]
The Opposing Suppliers contend that the demise charter was extant at
the time of the
sale, but in order to be able to rely on the deeming
provision in lodging a claim against a fund a claimant need only
demonstrate
that the demise charter was extant at the date of the
Sale Order and the appointment of a Referee. This argument is
consistent with
the reasoning in paragraphs 29 and 30
supra
.
Factual Matrix prior
to the judicial sale of the Vessel
[39]
Because of the dispute as to whether the demise charter had been
terminated or was
extant at the time when the Fund was constituted,
it is appropriate to set out the relevant facts leading up to the
judicial sale
of the Vessel:
(a)
At all relevant times prior to the judicial sale of the Vessel,
Garanti, a financial leasing company incorporated in Turkey, was
the
registered owner of the Vessel from 1 January 2008 being the date of
delivery of the Vessel, or at least by 28 January 2008.
[20]
(b)
On 31 October 2007, Garanti and Hazar Denizcilik Ic Ve Dis Ticaret
(‘Hazar’) concluded a demise charter in respect of the Vessel
for
a period of 50 months up to 8 November 2011. Under the terms of the
demise charter, Garanti was to remain the owner of the Vessel
until
the end of the period of the demise charter and until payment of the
final amount due under the demise charter was made. On
14 February
2011, Garanti and Hazar extended the demise charter to 15 December
2015.
(c)
However when the business of Hazar was taken over by Caliskan with
effect from 1 January 2014, by agreement between Caliskan and
Garanti, Caliskan was substituted for Hazar as the demise charterer
of the Vessel and assumed Hazar’s rights and obligations from
the
effective date. Therefore, the demise charter was to continue in the
same form. Prior to the arrest of the Vessel, Caliskan employed
the
master and crew of the Vessel and was responsible for the day-to-day
management and commercial activities of the Vessel.
(d)
Caliskan subsequently experienced financial difficulties. On 17 March
2014, the Eleventh Commercial Court, Anadolu, Istanbul granted
a
preliminary injunction order in terms of the Turkish Enforcement and
Bankruptcy Code, in terms of which enforcement proceedings
against
Caliskan were postponed for a period of one year, to 17 March 2015.
(e)
On 17 April 2014, Garanti served a notice dated 15 April 2014 on
Caliskan and the individual guarantors calling upon Caliskan to
make
payment of arrears for hire in the sum of USD 789,790.68 and default
interest of USD 2,028.34 within 60 days of service of the
notice
(‘the alleged termination notice’).
(f)
On 24 April 2014, Garanti and Caliskan agreed to extend the demise
charter by way of an amended payment plan (‘the amended payment
plan’), by increasing the capitalised debt to USD 11,763,010 and
agreeing on a new repayment plan. Caliskan’s trustees did not
authorise or ratify the amended payment plan.
(g)
On 26 May 2014, by way of an action
in rem
commenced by Credit
Europe under case number A31/2014, Credit Europe arrested the Vessel
in Richards Bay. In effecting the arrest
Credit Europe relied on s
1(3) of AJRA pursuant to which Caliskan was, for purposes of the
action
in rem
, deemed to be the owner of the Vessel for the
duration of the demise charter.
(h)
On 23 June 2014, Caliskan brought an application to set aside Credit
Europe’s arrest seeking an order that the Court should decline
to
determine the matter in terms of s 7(1) of AJRA. However, Caliskan’s
attorneys, Shepstone and Wylie, withdrew as attorneys of
record on 8
July 2014 and the application to set aside the arrest was not
pursued.
(i)
On 2 October 2014, Credit Europe launched an urgent application for
the sale of the Vessel in terms of s 9 of AJRA, which Garanti
opposed
unsuccessfully.
(j)
On 5 December 2014 the Court granted an order for the judicial sale
of the Vessel. The Vessel was subsequently sold by way of a judicial
public auction on 8 February 2015, whereafter the Fund was
established under the control of the Registrar and the Referee was
appointed
to deal with claims against the Vessel and the Fund.
(k)
On 5 January 2015, Garanti and Caliskan purported to enter into a
Debt Liquidation Agreement (‘Debt Liquidation Agreement’),
but
the Debt Liquidation Agreement was not signed by a representative of
Caliskan or approved or ratified by its trustees or the
bankruptcy
Administrator of Caliskan.
Argument
[40]
Mr
Mullins
submitted that the Opposing Suppliers’ reliance
on the evidence of Mr Ilker Tasliyurt, the head of the Risk
Monitoring Department
of Garanti, in support of their contention that
the demise charter was still extant at the time of the sale was
unsustainable. He
contended that Mr Tasliyurt’s personal knowledge
was limited and he did not identify the persons who provided him with
the specific
information on which he relies in his various
affidavits. Mr
Mullins
therefore argued that the averments
made on behalf of Garanti, particularly by Mr Tasliyurt, were
fundamentally unreliable and fall
to be rejected. He pointed out that
even the Referee was dissatisfied with the reliability of the
submissions made by Garanti in
support of the claim for outstanding
hire. However, the Referee erred by nevertheless accepting Garanti’s
self-serving averments
to the effect that the demise charter had not
been terminated and remained extant at the time of the sale. Mr
Mullins
contended that the Referee ought not to have accepted
any of Garanti’s evidence regarding the termination of the demise
charter.
He submitted that the Court should rely on the expert
opinions furnished by Credit Europe, alternatively refer the matter
to trial
so that the experts may be interrogated on their opinions.
[41]
Mr
MacWilliam
contended in response that there is direct
evidence that the demise charter was indeed in force and was never
terminated. Therefore,
Credit Europe is obliged to put up the facts
to prove the allegations upon which it relies, and not to rely on
surmise. Instead Credit
Europe seized upon incorrect hearsay advice
in the affidavit of Garanti’s South African attorney, Mr Clark,
that he had been advised
that the demise charter had been cancelled
with effect from June 2014. It then used this incorrect statement as
the basis of its
opposition to the claims of the Opposing Suppliers
and other necessary suppliers whose claims rank ahead of Credit
Europe. Mr
MacWilliam
pointed out that the ‘legal advice’
ran contrary to numerous prior statements regarding the continued
existence of the demise
charter, and contrary to the conduct of both
Caliskan and Garanti.
[42]
Further, on 10 June 2015 Garanti itself stated that the hearsay
advice by Mr Senol,
who is Garanti’s Turkish legal representative,
was wrong, and thereafter reaffirmed several times that the demise
charter remained
of full force and effect until the sale of the
Vessel. Mr
MacWilliam
therefore submitted that the opinion of
the Turkish experts should not take precedence over the averments on
oath by the parties to
the demise charter, which are consistent with
the conduct of the parties subsequent to the delivery of the alleged
termination notice.
He nevertheless offered a detailed analysis of
the opinions of the experts respectively employed by Credit Europe
and the Opposing
Suppliers.
Discussion
[43]
It is common cause that as neither the Opposing Suppliers nor Credit
Europe are parties
to the demise charter, they have no personal
knowledge of the dealing between Caliskan and Garanti insofar as the
demise charter
is concerned. Nor are they able to challenge on a
factual basis the persistence of both Caliskan and Garanti, that the
demise charter
which was to have ended in December 2015, remained
valid and binding as it was never terminated until the sale of the
Vessel. Caliskan
and Garanti do not dispute the validity of the
alleged termination notice served by Garanti on Caliskan. However,
they assert that
there was no intention to proceed with the
termination because the parties agreed on the amended payment plan
and supplementary agreement.
[44]
In Garanti’s answering affidavit, Mr Tasliyurt states: ‘The
effect of the parties
signing the payment plan referred to above was,
by agreement between Garanti and Caliskan, to suspend the operation
of the Notice
dated 15 April 2014.’ Therefore, there was consensus
between the parties as to the status of the notice and termination.
By way
of analogy, the following excerpt from
Kerr’s
Law of Sale and Lease
[21]
provides the apposite legal principle in respect of a notice of
termination: ‘Notice is a unilateral act and once given it is final
- it cannot be withdrawn, except with the consent of the other
party…’. Even though the notice was ‘suspended’, it was
effectively
ignored by the parties after the signing of the amended
payment plan. This is indicative that the intention of the parties
was that
the amended payment plan superseded the notice. Further the
existing demise charter was amended to the extent of the
supplementary
agreement,
a further indication that the original demise charter remained
extant.
[45]
It is also common cause that, until the sale of the Vessel, all the
parties, including
Credit Europe, accepted without qualification that
Caliskan was at all material times the demise charterer of the
Vessel. This is
not unexpected as the Turkish International Ship
Registry reflects Caliskan as the demise charterer of the Vessel
pursuant to the
demise charter up until the judicial sale of the
Vessel in execution on 4 February 2015. On 23 June 2014 Caliskan
brought an application
in this jurisdiction to set aside the arrest
of the Vessel. Had the demise charter been terminated by the alleged
termination notice
served by Garanti in April 2014, Caliskan would
not have had the
locus standi
to bring that application.
Caliskan’s attorney stated under oath in the founding affidavit in
that application that Caliskan as
‘the current bareboat charterer
of the vessel’ was ‘required to redeliver the vessel to her
Owners at the end of the charter.’
The Vessel’s insurance was
endorsed on 30 June 2014 and the ‘Managing Owner’ was recorded as
‘Caliskan’.
[46]
There is also no record of Garanti demanding redelivery of the Vessel
from Caliskan
or attempting to take possession thereof, as provided
in clause 6.3/article 42 of the demise charter. If the demise charter
were
terminated, the Vessel would have to have been restored to
Garanti. Instead Garanti and Caliskan entered into an amended payment
plan for payment until December 2018, which is consistent with the
assertion by the Opposing Suppliers that the amended payment plan
superseded Garanti’s alleged termination notice delivered in April
2014. In effect there was a tacit withdrawal of the notice by
Garanti
with the consent of Caliskan.
[47]
Mr
Mullins
however submitted that Caliskan took no part in the
judicial proceedings after August 2014 and had effectively abandoned
the Vessel,
from which it could be further inferred that the demise
charter had been terminated prior to that date by way of Garanti’s
alleged
termination notice. Mr
MacWilliam
however, correctly
in my view, pointed out that while Caliskan could do little after the
arrest by Credit Europe, it did not abandon
the Vessel. Calsikan’s
crew remained on the Vessel until October 2014, when at Credit
Europe’s instance, the master was removed
by the Sheriff. Caliskan
then repatriated the crew. Caliskan would not have retained its crew
on the Vessel if in fact the demise
charter had terminated in June
2014, nor would Horizon (Caliskan’s agent) have continued to act as
the Vessel’s manager on behalf
of Caliskan after the alleged date
of termination. It was also once the Sheriff assumed responsibility
for the preservation of the
Vessel that Caliskan stopped payment of
the P & I insurance. It is also relevant that Caliskan/Horizon
made arrangements for
the bunker supply in September 2014. In my
view, nothing in the conduct of Caliskan sustains the inference that
it abandoned the
Vessel, and more importantly, that the demise
charter was terminated.
[48]
Further Credit Europe acknowledged in its Practice Note in the urgent
sale application
it launched on 2 October 2014 that it was common
cause that: ‘(c) the owner of the respondent is Garanti, a Turkish
financial leasing
company; (d)
the
bareboat charterer of the vessel is Caliskan
,
a Turkish company. . .’
[22]
Therefore, even on Credit Europe’s own version the demise charter
was extant months after it was allegedly terminated by Garanti’s
notice.
[49]
The doubt that the demise charter may have terminated prior to the
sale of the Vessel
first arose on 18 February 2015, when Garanti’s
South African attorney, Mr Clark, deposed to an affidavit in support
of Garanti’s
claims against the Fund in which he stated that he
‘was recently advised by Mr Senol that [Garanti] cancelled the
bareboat charter
with effect from 15 June 2014.’
[50]
Garanti, which does not rely on the deeming provision for its claim
in this Court,
persists that the demise charter was extant at the
time of the sale. Through Mr Tasliyurt, it has stated that ‘[t]he
bareboat charter
was
not
terminated at any point prior to the judicial sale of the vessel on 5
February 2015’, and provided a substantial explanation for
this
statement and why the confusion about the status of the demise
charter arose. Mr Tasliyurt’s version
[23]
is as follows: The alleged termination notice, which is a valid
notice, was not furnished to Garanti’s attorneys until shortly
before Garanti’s claim against the Fund was filed on 18 February
2015. Although the notice was served on Caliskan, Garanti and
Caliskan agreed to extend the demise charter with an amended payment
plan on 24 April 2014. The effect of the signing of the payment
plan
was to suspend the alleged termination notice. Therefore, the demise
charter between Garanti and Caliskan was never terminated
and
remained extant and binding on the parties until the judicial sale of
the Vessel.
[51]
Mr Tasliyurt further confirmed that the instructions given to Mr
Senol were that ‘the
bareboat charter remained in place at all
material times and that it was accordingly the responsibility of
Caliskan to deal with
the daily operational issues relating to the
vessel.’ The alleged termination notice was not sent to Garanti’s
attorneys because
it was not relevant to its challenge to sell the
Vessel. However, in the course of preparation of Garanti’s claim, a
copy of the
alleged termination notice was sent to Mr Senol.
[52]
Mr Senol inadvertently overlooked the payment plan agreement of 24
April 2014 and concluded
that the effect of the notice under Turkish
law was the termination of the demise charter on 15 June 2014 because
the outstanding
hire had not been paid by that date. Mr Senol
conveyed his incorrect conclusion to Mr Clark who then made the same
incorrect averment
in his supporting affidavit filed with Garanti’s
claim against the Fund. Nevertheless, the alleged termination notice
had been
superseded by the payment plan agreement of 24 April 2014.
Mr Tasliyurt also furnished a second notice dated 8 May 2014, which
was
sent to the guarantors of the demise charter and not Caliskan. He
avers that in terms of the second notice the operation of the alleged
termination notice was suspended and no longer valid as a matter of
Turkish law.
[53]
Mr Senol confirmed this explanation
[24]
and also expressed his view that:
‘
.
. . as a matter of Turkish law the payment plan agreement between
Garanti and Caliskan had the effect of suspending the Notice dated
15
April 2014 with the effect that the bareboat charter was
not
terminated on 15 June 2014. I confirm that this accords with
Garanti’s instructions to me and the instructions that I was given
in regard to this issue on 2014.’
Mr
Senol further confirmed that he inadvertently overlooked the payment
plan agreement which led to his mistaken conclusion that the
demise
charter had been terminated by way of the alleged termination notice.
[54]
In a further affidavit delivered to the Referee on 10 June 2015, Mr
Senol again affirmed
that the instructions that he received from
Garanti during the course of their opposition to the sale
application, and which were
passed on to Mr Clark, ‘were that the
Bareboat Charter remained in existence, valid and binding between the
parties, and had not
been terminated’. Mr
MacWilliam
submitted
that this is consistent with Garanti’s conduct in opposition to the
sale application, which Mr Senol records was ‘premised
on the basis
that the bareboat charterparty remained in place, valid and binding
between the parties’. Mr Senol again admitted
that the hearsay
statement by Mr Clark that the demise charter was cancelled was made
on the strength of his incorrect legal conclusion
in February 2015,
based on his own interpretation of Garanti’s notice 15 April 2014
and apologised for the resultant confusion.
[55]
Although Credit Europe has submitted that Garanti’s
volte face
was suspicious, Garanti’s persistence that the demise charter
was not terminated is consistent with the fact that the demise
charter
remained registered in the Turkish Shipping Registry, which
in fact delayed the judicial sale. Had the demise charter been
terminated
because of Caliskan’s default, and whether Garanti took
back its Vessel or not, it would have been expedient for Garanti to
deregister
and cancel the public record of the demise charter. By the
deregistration Garanti would have avoided the risk of any other debts
of Caliskan attaching to the Vessel. However, the Vessel was sold and
the proceeds on the sale have been utilised to defray the debts
of
Caliskan.
[56]
Credit Europe also relies on the fact that Caliskan’s
trustees/administrators did
not authorise or ratify the amended
payment plan entered into by Caliskan and Garanti on 24 April 2014 to
aver that the supplementary
agreement was not valid and could not
disturb the termination procedure commenced by Garanti. However, the
legality or otherwise
of the amended payment plan does not impinge on
the intention of Garanti not to give effect to the alleged
termination notice and
not to terminate the demise charter. Caliskan
too accepted the benefit of the amended payment plan.
[57]
Further, as stated by Credit Europe’s own Turkish expert, Pro
Akkanat, albeit in
relation to the Debt Liquidation Agreement, the
invalidity of an agreement ‘does not preclude reliance on the
statements in an
invalid agreement which records the acceptance of
particular legal facts.’ The parties must have accepted that there
was an existing
demise charter in order to rearrange the payment and
supplement the existing demise charter. As already held, the fact
that Caliskan
brought the application to set aside the arrest of the
Vessel indicates that the parties thereafter conducted themselves as
though
the demise charter was not cancelled by the notice.
[58]
To sustain its alternative averment that the demise charter must have
been terminated
by 5 January 2015, Credit Europe relied on the
purported Debt Liquidation Agreement dated 5 January 2015 and the
fact that the outstanding
indebtedness of Caliskan to Garanti was
reduced to US$500,988 by 5 January 2015 (having been US$ 11,763,010
as at 15 April 2014).
Credit Europe’s argument that the Debt
Liquidation Agreement establishes that the demise charter was
terminated is premised on
its terminology. The preamble to the Debt
Liquidation Agreement provides that:
‘
This
Agreement has been arranged. . . to determine the principles and
procedures of evaluation and liquidation of the debts payable
to
creditor
due to the termination of the leasing
agreement
executed between the Debtors and the Creditor stated herein.’
(Emphasis added by Credit Europe).
There
are no less than eight further references to the termination of the
‘leasing agreement’ (demise charter) or to the terminated
agreement(s).
[59]
The Opposing Suppliers contend that there is no proper basis for
Credit Europe’s
inference, particularly not in the face of
unequivocal statements by Garanti representatives confirming that the
demise charter was
not terminated. To the contrary, the fact that on
5 January 2015 the parties were still attempting to conclude a Debt
Liquidation
Agreement, appears to be an indication that the demise
charter had not been terminated.
[60]
Credit Europe’s argument is undermined firstly by the fact that the
draft Debt Liquidation
Agreement was unsigned and therefore there is
no valid agreement between Garanti and Caliskan. Secondly, Credit
Europe asserted that
there is no evidence that Caliskan made any
further payments to Garanti under the demise charter or amended
payment plan after April
2014. Credit Europe averred that this
non-performance by Caliskan indicated that the amended payment plan
was of no force or effect
and that the demise charter had been
terminated by Garanti’s notice in June 2014. However, it now relies
on the fact that the outstanding
indebtedness of Caliskan to Garanti
was reduced to argue that this establishes that the demise charter
was terminated. In my view,
the reduction in its indebtedness
establishes that there was payment by or on behalf of Caliskan,
although it is not clear whether
it was strictly in accordance with
the amended payment plan.
[61]
Thirdly the references in the Debt Liquidation Agreement to the
‘termination of the
leasing agreement’ appear to be a recordal of
the fact that upon signature thereof, the demise charter would
terminate. As recorded
in the Referee’s report, Garanti itself
clarified that the purpose of the Debt Liquidation Agreement was get
payment from Caliskan
but ‘should not be regarded as indicating
that at the time of the preparation of the documents, Garanti was of
the view that the
charter was terminated’. The Referee issued
directions on 12 June 2015 to Garanti to explain the apparent
contradiction in Mr Talisyurt’s
affidavit in support of its claim:
Mr Tasliyurt stated that the demise charter was not terminated
although the Debt Liquidation Agreement
referred to the ‘Terminated
Leasing Agreement’. The Referee subsequently accepted the
explanation offered through Mr Tasliyurt
that standard terminology
was utilised in the drafting of Debt Liquidation Agreement and ‘the
terminated agreement’ should not
be interpreted to mean that the
demise charter had been terminated.
[62]
There is in any event no factual evidence which would lend probative
value to Credit
Europe’s assertion that the demise charter must at
the least have been terminated by the time Debt Liquidation Agreement
was drawn
up. What the Debt Liquidation Agreement does do is to
sustain Garanti’s stance that it did not terminate the demise
charter pursuant
to the alleged termination notice it served on
Caliskan in April 2014.
[63]
The conspectus of the facts and the conduct of Caliskan and Garanti
weigh the probabilities
in favour of a finding that the demise
charter was not terminated as alleged by Credit Europe. Before this
Court, Garanti abandoned
its claim for outstanding hire. It could
therefore no longer be alleged that its persistence that the demise
charter had not been
terminated was in any way self-serving. On the
contrary, Credit Europe’s sweeping proposition that the Referee
ought to have rejected
all Garanti’s averments because he was
dissatisfied with some of its submissions (relating to Garanti’s
claims), is self-serving
because Credit Europe has not provided a
sound basis therefor. The Referee, in my view, dealt with the issue
of the termination of
the demise charter comprehensively and
thoroughly.
The Referee’s
interrogation of the alleged termination of the demise charter
[64]
In his Report, the Referee dealt with the termination of the charter
as a preliminary
issue to the determination of the claims and their
ranking. He investigated the issue not only through a consideration
of the objections,
replies and rejoinder by the claimants, but he
also requested further information from three parties, two of whom
were Credit Europe
and Garanti. The Referee also gave directions to
Garanti, as referred to above and considered supplementary
submissions by Credit
Europe and the eighth and ninth respondents.
His final report on the termination of the demise charter is
therefore comprehensive.
[65]
Credit Europe lodged a uniform objection to the claims of several
parties with the
Referee, the basis of which was the same as raised
in this application: the claimants whose claims were founded on the
deeming provision
in s 1(3) of AJRA were precluded from enforcing
their claims against the Fund after the termination of the demise
charter. The submissions
of the eighth and ninth respondents in reply
closely align with paragraphs 43 to 61 of the aforegoing discussion.
In addition the
respondents, relying on the Turkish legal authority
of Dr M Topuz
[25]
, submitted
that under Turkish Law, even when a demand is served on the
defaulting lessee, a leasing agreement such as the demise
charter is
not terminated automatically when the lessee defaults with payment.
In order to terminate the lease, a separate notice
of termination
must be given following the failure to perform in the period stated
in the original demand. Further, under Turkish
law, Calsikan was
under a duty to re-deliver the Vessel to Garanti in order for there
to be a proper termination of the demise charter.
The respondents
pointed out that Garanti had not demanded delivery or taken any steps
to take possession of the Vessel.
[66]
In its rejoinder, Credit Europe furnished the legal opinion of its
Turkish lawyer,
Mr Cavus, to the effect that there was no requirement
to serve a second notice in the termination process on the defaulting
party.
The termination declaration is contained in the payment notice
and such termination notice is irrevocable. Mr Cavus opined further
inter alia, that the payment plan agreement of 24 April 2014 did not
novate the demise charter and the vested rights of Garanti as
lessor
under the termination notice of 15 April 2014 were not prejudiced.
[67]
Mr Cavus’ further opinion related to the right of an innocent party
to terminate
a lease if a material breach by one of the contracting
parties renders the lease intolerable. This advice is not relevant as
Garanti
has denied that it terminated the demise charter. Mr Cavus
also suggested that the termination was evident from the abandonment
of
the Vessel on 17 October 2014 when the crew disembarked, the
statement in the Debt Liquidation agreement that the lease had been
terminated and the allegation by Mr Clark in the claims affidavit
that the demise charter had been terminated pursuant to the notice
served by Garanti. These very points were subsequently advanced in
argument on behalf of Credit Europe in this Court.
[68]
The Referee thereafter addressed questions to each of the three
parties interrogating
their submissions, specifically in relation to
the respective Turkish legal opinion each party relied on. I do not
intend to traverse
the Referee’s questions and the responses noted
under clause ‘2.3.4 Request for further information’ in his
report. I note
however that the pertinent and detailed questions
interrogated the issue of termination of the demise charter
thoroughly and should
be read as if incorporated herein. The outcome
was that the eighth and ninth respondents submitted to the Referee an
opinion from
Dr Topuz in which he confirmed and elaborated on the
principles of Turkish law relied on by the eighth and ninth
respondents in their
initial submissions.
[69]
Dr Topuz maintained that the demise charter had not been terminated.
With reference
to the supplementary agreement, he pointed out that
the words ‘the agreement is terminated’ in Article 2 indicated
that the demise
charter was still effective; the new payment schedule
only ended on 11 December 2018 (Article 3); and that Article 7 stated
that
the provisions of the charter shall continue to have effect. He
stated that ‘[t]he fact that the parties agreed with their mutual
will and decided that the agreement between them was still in effect
invalidates all termination claims based on the old warning
letter.’
[70]
He therefore furnished reasons based specifically on the terms of the
new payment plan
and supplementary agreement entered into by Garanti
and Caliskan, for concluding that the payment period stipulated in
the ‘warning
letter’ or termination notice was renounced and the
termination notice and procedure were revoked before the expiration
of the
termination period. In doing so, Dr Topuz disagreed with the
view of Mr Cavus that because the rescheduled payment plan stated
that
it would not be a novation of the demise charter, the default
position of Caliskan continued and the vested rights of Garanti were
not prejudiced. Dr Topuz also found that Garanti’s alleged
termination notice did not comply with article 68/b of the Turkish
Bankruptcy
and Enforcement Law and was not a valid termination
letter.
[71]
Credit Europe submitted the opinion of Mr Cavus that as matter of
Turkish Law, the
Caliskan bankruptcy protection order of 17 March
2014 did not prevent a creditor from exercising its rights to
terminate a contract
with the bankrupt company.
[72]
The Referee asked Garanti detailed questions relating to its claim
and the demise charter,
many of which arose from the averment in its
claims affidavit that the demise charter had been cancelled. In
response, Garanti filed
the aforementioned affidavits of Mr Talisyurt
and Mr Senol, in which they explained the error about the termination
of the lease
agreement and confirmed that the demise charter had
remained in place until the judicial sale in February 2015.
Consequently, the
Referee issued further directions to the parties to
obtain clarification on the changed circumstances. Garanti was, inter
alia, specifically
requested to explain the discrepancy between
Garanti’s confirmation that the demise charter was not terminated
and the references
to the ‘terminated’ lease agreement in the
Debt Liquidation Agreement.
[73]
In response Mr Tasliyurt reported that the Debt Liquidation
Agreement, which was intended
to make Caliskan agree to the payment
plan, was prepared using the ‘standard form wording that Garanti
uses in documents of this
nature’ and ‘should not be regarded as
indicating that at the time of preparation of the document, Garanti
was of the view that
the Financial Leasing Agreement (charter) was
terminated’. He also stated that Caliskan and not Garanti, had
employed the crew
at all relevant times, specifically between 15 June
2014 and October 2014, and that the Vessel had remained in Caliskan’s
control.
Caliskan and/or its agent Horizon had paid for the
repatriation of the crew. Horizon had also attended to various
operational matters
on behalf of Caliskan.
[74]
Credit Europe who had premised its objection largely on the retracted
or disavowed
allegation of termination of the demise charter, was
also permitted to file supplementary submissions. The central point
then made
by Credit Europe was that when Caliskan relinquished
physical possession and control of the Vessel in October 2014 by
removing the
master and crew and had no further involvement with the
Vessel, it ceased to be the charterer of the Vessel by demise for the
purposes
of s 1(3) of AJRA. This is clearly the reason why Credit
Europe offered October 2014 as an alternative termination date in
this Court.
It also expressed grave reservations about the form and
content of the affidavits of Messers Tasliyurt and Senol.
[75]
In their supplementary submissions the eighth and ninth respondents
denied that there
was any factual or legal basis for Credit Europe’s
contention that the demise charter was terminated by Calsikan’s
repatriation
of the crew in October 2014, or that Caliskan had
abandoned the Vessel when the responsibility for its preservation had
been placed
on the Sheriff.
[76]
The Referee was, in effect, faced with the same arguments and
submissions that were
made in this Court, except for the additional
expert opinions of Professor Akkanat obtained by Credit Europe to
counter that of Dr
Topuz, which found favour with the Referee.
However, the Referee had the advantage of obtaining directed
clarification from the parties
themselves, on affidavit where so
required, on the focal and crisp issue of whether or not the demise
charter was terminated. Through
that fair process, the Referee
compiled a substantial body of facts and submissions for his analysis
and assessment of ‘the status
of the contractual relationship
between Caliskan and Garanti, and what legal interest did Caliskan
have in the vessel at material
times’.
[77]
The Referee concluded that:
‘
.
. . once the parties to the charter concluded the amendment to the
payment plan on 24 April 2014, it did not remain open to Garanti
to
terminate the charter upon the expiry of the 60 day period, nor could
there have been any automatic termination upon this date.
Article
41(a) of the charter gave Garanti the right to terminate the charter
upon default of the payment plan. Upon the payment plan
being
amended, Caliskan was no longer in breach of the payment plan and any
right which may have accrued to Garanti in this regard
must have
lapsed.’
[78]
The Referee favoured the view of Dr Topuz in reaching this
conclusion. I also find
the opinions of Dr Topuz logical and
well-reasoned and consequently more
persuasive than that
of Mr Cavus. Dr Topuz was also an independent party, unlike Mr Cavus
who was Credit Europe’s legal counsel
and his opinion preceded the
correction of Mr Clark’s erroneous statement by Garanti in the
affidavits of Mr Tasliyurt and Senol.
There is cogent authority that
expert evidence from a source that is not neutral is undesirable.
[26]
I further share the Referee’s view that Caliskan’s lack of
involvement in the operations of the Vessel after August 2014 is not
a reliable yardstick to measure its deemed ownership, a point that
Credit Europe persisted with before this Court.
[79]
Having considered Garanti’s explanation in respect of the Debt
Liquidation Agreement,
the Referee found that the document did not
afford any support for the argument that the demise charter was
terminated. No further
cogent reason was offered by Credit Europe in
this Court. I am satisfied that this argument may properly be
disposed of without further
consideration. This then also negates 5
January 2015 as the alternative date of termination offered by Credit
Europe.
[80]
Finally, I am also in agreement with the Referee that, faced with the
confirmation
by Caliskan and Garanti that the demise charter was
never terminated, and the concomitant conduct of the parties, the
circumstantial
evidence relied on by Credit Europe was insufficient
to establish such termination. It is clear that the Referee was
mindful that
there was also circumstantial evidence which neutralised
the evidence pointing towards termination. He also factored in his
view
that Garanti’s submissions had certain ‘unsatisfactory
features’. I am in the premises unable to find any reason to fault
or
find error in the Referee’s reasoning or recommendation that the
demise charter was never terminated.
The Turkish legal
opinions on the termination of the demise charter
[81]
In this application Credit Europe and the Opposing Suppliers have
furnished further
opinions of Turkish legal experts. Their respective
submissions on the validity of the opinions to the pertinent issues
in dispute
and how this Court should deal with the differing opinions
are polarised. Credit Europe submits that the Court should rely on
the
opinions of its experts Mr Cavus and Prof Akkanat. If, however
the Court is unable to resolve the dispute between the experts, the
matter should be referred to trial so that the experts may present
oral testimony in those proceedings. The Opposing Suppliers contend
that this Court does not even have to consider the opinions of the
Turkish law experts unless Credit Europe successfully defeats
the
other defences raised by the Opposing Suppliers. They submit that the
direct evidence of Garanti, Caliskan and the public record
of the
continuation of the demise charter in the Turkish International Ship
Registry demonstrate that the demise charter was not
terminated
pursuant to the April 2014 termination notice.
[82]
Mr
MacWilliam
argued
further that the opinions of Mr Cavus and Prof Akkanat do not deal
with this direct evidence nor do their opinions to the contrary
create a genuine dispute of fact. He referred the Court to
The
Asphalt Venture
,
[27]
in which there was a dispute in relation to foreign law, as in this
case. The opposing parties in
The
Asphalt Venture
placed
expert opinions on Indian Law before the court a quo. On appeal, the
Supreme Court of Appeal criticised the court a quo for
‘accepting
the plausibility of the opinion of Bergshav’s experts, without
analysing that evidence’, and pointed out that a
court ‘is not
bound to accept the view of experts and it may, for cogent reasons,
accept the testimony of one as against that of
another where they are
at odds.’
[28]
On this
authority, the plausibility of its Turkish law experts must first be
analysed by the Court. Mr
MacWillam
submitted
that aforesaid comments in
The
Asphalt Venture
sustained
the Opposing Suppliers’ argument that Credit Europe’s contention
that the dispute between the Turkish Law experts should
be resolved
by way of oral evidence is without merit.
[83]
I have considered the detailed arguments of Mr
Mullins
and
Mr
MacWilliams
on
the opinions of the experts. I have already expressed my reservation
about the independence of Mr Cavus and the relevance of his
opinion.
The Referee also preferred Dr Topuz’s opinion to that of Mr Cavus.
It is also relevant that Mr Cavus’s legal opinion
which was given
on 17 April 2015, preceded the correction by Mr Tasliyurt and Mr
Senol of Mr Clark’s error and their unequivocal
statement that
there had in fact been no termination,
[29]
and was therefore based on the incorrect hearsay allegation of Mr
Clark that the demise charter had been terminated. As espoused
by the
court in
Imperial
Marine
,
unless the underlying facts relied on by an expert witness have been
established, the expert opinion is worthless and should be
disregarded, because it is purely hypothetical.
[30]
[84]
The same principle applies to both opinions of Prof Akkanat. In
Credit Europe’s replying
affidavit deposed to by its attorney, Mr
Prain, it is clear that Prof Akkanat based his first opinion on his
understanding of the
facts based on translated ‘instructions from
Credit Europe’s local attorneys’. Further, both opinions were
based on copies
of ‘certain documents presented to the High Court.’
Prof Akkanat does not specify which documents he considered.
Specifically,
there is no indication that he considered the crucial
answering affidavit of Mr Tasliyurt or any other evidence of Garanti,
including
that placed before the Referee, intended to establish that
the demise charter was not terminated. As pointed out by Mr
MacWilliam
, Prof Akkanat does not mention any of Mr
Tasliyurt’s unequivocal statements made under oath that the demise
charter was never terminated
and that Garanti’s alleged termination
notice of April 2014 was superseded by the payment plan. Nor does
Prof Akkanat attach any
significance to Mr Tasliyurt’s evidence
that Garanti did not accelerate the payment obligations of Caliskan.
[85]
In my view Prof Akkanat’s opinions are therefore hypothetical as he
has failed to
establish the underlying facts on which he based his
opinions, and therefore his opinions fall to be disregarded.
Consequently, there
is no need to consider any of the Turkish legal
opinions further, or Credit Europe’s submission that oral evidence
is the appropriate
means to resolve the disputes on Turkish Law.
[86]
I have already found that Credit Europe has advanced no persuasive
argument or furnished
substantive evidence that the demise charter
was terminated on the other dates it refers to in its wide ranging
surmise about the
termination. There is therefore no legal or factual
basis on which to find that the demise charter was terminated
consequent to Garanti’s
notice on 15 June 2014 or on any of the
alternative dates suggested by Credit Europe. I am satisfied that the
Referee’s recommendation
that the demise charter had never been
terminated at any time prior to the judicial sale of the Vessel is in
no way undermined by
the additional arguments presented by Credit
Europe in this Court.
[87]
In the premises, I am satisfied that Credit Europe has failed to
discharge its onus to prove on a balance
of probabilities that the
Referee erred in concluding that the demise charter was extant at the
time of the judicial sale and that
the disputed claimants could
therefore rely on the deeming provision. I am also satisfied that the
Opposing Suppliers have discharged
their onus to prove their claims
which are disputed by Credit Europe before this Court. Consequently
there is no reason to refuse
the confirmation of the Referee’s
report insofar as it relates to the recommendation of the payment of
the Opposing Suppliers claims.
[88]
In terms of the relief set out in its amended draft order, Credit
Europe sought costs
on an attorney and own client scale ranked in
terms of s11(4)(
a
) if it were successful in defeating the
claims of the Opposing Suppliers and Garanti. However, at the hearing
of the matter the parties
were
ad idem
that the costs of this
application should be borne by the unsuccessful party, and should not
be paid out of the Fund. Consequently,
Credit Europe must bear the
costs of the parties who opposed this application. The Opposing
Suppliers have submitted that costs should
be awarded on a party and
party scale. I am in favour of this submission as I am of the view
that costs on a higher or punitive scale
are not warranted.
Garanti’s claims
before the Referee and its counter-claim in this application
[89]
Garanti opposes Credit Europe’s application insofar as it relates
to Garanti’s
claim for preservation costs, because the Referee has
not recommended payment of its claim. It is common cause that while
the Vessel
was under arrest in Richards Bay and Durban at the
instance of Credit Europe, Garanti paid various amounts for bunkers
delivered
and provisions supplied to the Vessel, the Vessel agent’s
fees, insurance, outstanding hire and made payments to the master and
crew of the Vessel. As Garanti abandoned its claim for outstanding
hire under the demise charter and premium payments for Protection
&
Indemnity (P&I) and Hull and Machinery (H&M) Insurance before
this Court, those claims are not relevant to this discussion
or
judgment.
The Referee’s
Report
[90]
In asserting the relevant claims before the Referee, Garanti
contended its payments
had the effect of preserving the Vessel for
the benefit of the arresting parties and other creditors of the
Vessel and the Fund,
and ought to rank as preservation costs:
(a)
In terms of s 11(4)(
a
) of AJRA which provides:
‘
(4)
The claims mentioned in subsection (2) are the following, namely—
(a)
a claim in respect of costs and expenses incurred to preserve the
property in question or to procure its sale and in respect of the
distribution of the proceeds of the sale;’
(b)
alternatively in terms of s 11(4)(
c
)(i), (v) or (viii), ‘as
a result of Garanti having stepped into the shoes of the relevant
supplier’ in terms of s 11(8) of AJRA
which provides:
‘
(8)
Any person who has, at any time, paid any claim or any part thereof
which, if not paid, would have ranked under this section,
shall be
entitled to all the rights, privileges and preferences to which the
person paid would have been entitled if the claim had
not been paid.’
[91]
Several objections were raised against Garanti’s claim by Credit
Europe and the respondents
in this application. The main objections
were that:
(a)
Garanti was the owner of the Vessel at all relevant times when it
incurred the expenditure to preserve the Vessel and in doing so
acted
as owner preserving its own property. The intention of the
legislature could not have been to permit an owner of a vessel to
recover from a fund costs incurred in respect of its own property to
the prejudice of third party creditors. Garanti’s expenditure
did
not give rise to a maritime claim enforceable against the Vessel
in
rem
or a maritime claim against the Fund based on the
in
personam
liability of Garanti itself.
(b)
Section 11(4)(
a
) of AJRA does not establish a basis for a
claim against the Fund. It deals only with the ranking of claims
which have been proved.
(c)
An owner cannot acquire claims under s 11(8) of AJRA where it is
itself the debtor. Payment of the supplier’s claim extinguishes
the
debt.
[92]
In its response to the objections Garanti stated
inter alia
that:
(a)
In respect of the preservation claim, it is not relevant to consider
the identity of the party which made the payment or whether
there
would have been a claim enforceable against the Vessel in terms of
either s 3(4) or s 5(3) of AJRA.
(b)
Section 11(4)(
a
) should be purposively interpreted. By virtue
of the wording of s 11(4)(
a
) the legislature created a
sui
generis
category of claims which are entitled to be ranked under
s 11(4)(
a
) if there is a sufficiently close connection between
the costs and expenses incurred and the preservation of the Vessel.
Therefore
the relevant costs and expenses must have been incurred to
preserve the Vessel, which preservation is in the interests of the
general
body of creditors against the Fund. The fact that the payment
was made by the owner is irrelevant.
(c)
Provisions are supplied for the
benefit of the master and crew and
therefore for the Vessel itself and accordingly fall within the ambit
of preservation costs and
expenses. Garanti has furnished sufficient
proof of its claim. Garanti also provided a schedule of payments to
the master and crew
who had to necessarily remain on board the Vessel
while under arrest to preserve the Vessel. Had the Sherriff paid the
master and
crew, he would have been able to recover these payments as
preservation costs. There is no reason why Garanti should not be
entitled
to do so.
[93]
In their rejoinder the Eighth, Ninth and Tenth Respondents (referred
to as Zeba et
al in the Report) disputed that s 11(4)(
a
)
establishes a
sui generis
basis for payment out of a Fund
without an underlying enforceable claim and contended that there is
no wording in the subsection or
the statutory framework as a whole
that permits such an interpretation. Garanti has admitted that it
does not have a claim that would
be enforceable under either s 3(4)
or s 5(3)(
a
), and cannot identify any party against which it
enjoys a claim in law. Therefore it has no legal basis for its claim.
[94]
In his analysis of Garanti’s claim the Referee noted that ‘[i]n
advancing a claim
against the Fund, Garanti seeks to share in the
proceeds of the sale of its own property. This is a novel
proposition.’ The Referee
then identified three issues he
considered relevant to the resolution of Garanti’s claim:
‘
(1)
Does it matter that Garanti would not have been able to enforce its
claim against the vessel under the Act?
(2)
If it does matter, is Garanti saved by section 11(8) of the
Act?
(3)
In any event, insofar as some of the claims lie against Caliskan,
is
Garanti entitled to rely upon the provisions of section 1(3) of the
Act?’
[95]
In his consideration of the first issue the Referee found authority
in
The
Kingston
[31]
to conclude that:
‘
Garanti
would have to show that it has a maritime claim which it would have
been entitled to enforce against the vessel under the
Act. Save
insofar as the claims lie against Caliskan . . ., there is no
suggestion that Garanti would have been able to advance its
claims by
arresting or attaching the vessel.’
Thus,
an enforceable maritime claim would have to be established before a
ranking under s 11 could be considered.
[96]
The Referee then considered whether the principle established in
The
Kingston
applied to preservation claims. Garanti had submitted
that the auctioneer and Sheriff were entitled to proceed against the
Fund although
they would not have been entitled to proceed against
the Vessel under AJRA. The Referee found that the auctioneer and
Sheriff’s
claims were clearly distinguishable: the Sale Order
provides for the payment of their claims from the Fund, and the
Sheriff may in
any event proceed against the Fund for fees not
covered in the Sale Order under s 11(8) of AJRA. He also found it
relevant that while
other parties who incur preservation costs
generally do so in order to maintain the value of the asset for the
benefit of all creditors,
an owner who incurs preservation costs
usually does so to protect his own interests. The Referee pointed out
that Garanti opposed
the sale application and ceased contributing to
the preservation of the vessel after about September 2014.
[97]
The Referee also agreed with Zeba et al that s 11(4) deals with the
manner in which
claims ought to be ranked for purposes of the Fund’s
preferential distribution and does not create a legal basis upon
which a maritime
claim is founded, finding authority in the comments
of Ploos van Amstel J in
MV
Da Qing Xia
.
[32]
In rejecting Garanti’s submission the Referee stated:
‘
Garanti’s
argument that the only relevant consideration is whether there is a
sufficiently close connection between the expenses
and/or costs
incurred and the preservation of the vessel is accordingly, in our
view, not correct. There is simply no warrant for
this in the Act.
Even in respect of preservation costs, it is necessary that the
claimant first demonstrate that it enjoys a claim
which is
enforceable against the vessel under the Act. This entitlement must
be located outside of section 11(4)(a) of the Act, whether
that be in
contract, delict, enrichment, or with reference to the sale order or
section 11(8) of the Act.’
[98]
In respect of the second issue viz Garanti’s reliance on s 11(8),
the Referee was
not persuaded by the submissions of Credit Europe and
Zeba et al that the payment by Garanti extinguished the claims.
Examining the
provenance and historical context of s 11(8), the
Referee concluded that s 11(8) obviated the need for a person who
voluntarily paid
the claim of a lienee to obtain the leave of the
Court before he could step into the shoes of the lienee,
[33]
and that the beneficiary of s 11(8) is a ‘Samaritan’ who pays a
maritime claimant.
[34]
[99]
He accordingly rejected the submission that s 11(8) encompasses
claims by an owner
who pays its own debt for which it is
contractually liable. He considered further that when an owner pays
the debt of a demise charterer
such payments should be treated as
payments by the owner of its own debts. He reasoned that:
‘
Although
the claim lies against the demise charterer, it is enforceable, in
South Africa at least, against the owner’s property,
ie the vessel.
In this sense, it is also a claim which burdens the owner, and the
owner discharges the claim in order to protect
its own property.
Viewed thus, the payment of such a claim by the owner is not entirely
voluntary, nor is the owner acting purely
altruistically.
If
an owner were entitled to employ section 11(8) to claim against a
fund, it would be able to use this mechanism to avoid the
consequences
of the rule in
The Kingston
. This is another
ground for confining the import of section 11(8) to third parties.’
The
Referee therefore concluded that Garanti was not entitled to employ s
11(8) to found a claim against the Fund.
[100]
On the third issue of whether Garanti was entitled to rely on the
provisions of s 1(3) of AJRA, the
Referee considered the following
excerpt from the judgment of Ploos van Amstel J in which he issued
the Sale Order:
’
The
commercial connection between the owner and the demise charterer is a
close one. The owner allows the charterer to use the ship
for the
duration of the charter as if it is the owner. .
.
Ship owners know that the ship can be arrested for certain
liabilities of the demise charterer, who indemnifies the owner
against
this eventuality. The provisions in the (Act) in the regard
are aimed at assisting creditors to obtain payment of what is due to
them without difficulties relating to jurisdiction and security for
their claims.’
[35]
The
Referee was satisfied that Ploos van Amstel J had in mind the
difficulties of third party creditors and not the owner. He also
considered it relevant that Garanti had secured the obligations of
Caliskan to it through guarantors and had recovered substantial
amounts from them.
[101]
The Referee pointed out that s 1(3) is designed to assist claimants
who contracted with a demise charterer
under the impression that they
were dealing with the owner. Clearly this excludes the owner itself.
Similarly in
The
Chenebourg
[36]
the court was satisfied that it was unlikely that s 1(3) was intended
to give the real owner a moratorium in respect of claims
in
rem
against
the ship for which the owner was personally liable.
[37]
Therefore a creditor of either the owner or the demise charterer may
proceed against the vessel. Creditors of Garanti and creditors
of
Caliskan were entitled to arrest the Vessel and both sets of
creditors may claim against the Fund. The Referee reasoned that if
Garanti were permitted to employ s 1(3) to claim against the Fund, it
would potentially be competing against its own creditors and
further,
reduce payment to similarly or lower-ranked creditors of itself and
Caliskan. The Referee concluded that s 1(3) should not
be construed
to allow Garanti’s claim against the Fund.
[102]
The Referee consequently recommended that none of Garanti’s claims
should be allowed against the Fund.
He nevertheless added a rider in
which he provided a synopsis of his views on Garanti’s claims in
the event this Court were to
hold that Garanti is entitled to proceed
against the Fund.
Garanti’s
counter-application
[103]
In February 2016, Garanti filed a counter-application to this
application for payment of its claim for
preservation costs together
with interest and enforcement costs from the Fund.
[38]
In its main claim in the counter-application, Garanti seeks an order
for the ranking of its preservation costs in terms of s 11(4)(
a
)
of the Act. In its alternative claims in terms of s 11(4)(
c
),
Garanti alleges that it was entitled to step into the shoes of those
who ought to have paid the preservation costs in terms of
s 11(8) of
the Act. The counter-application is opposed by Credit Europe and the
Opposing Suppliers. The crisp issue before this Court,
as it was
before the Referee, is whether Garanti’s claim against the Fund
falls within the provisions of s 11(4)(
c
)
in that it was ‘a claim in respect of costs and expenses incurred
to preserve the property in question’
,
or
whether Garanti is excluded from claiming the preservation costs it
incurred from the Fund because it was the owner of the vessel.
[104]
In this Court, Garanti took issue with the Referee’s views and
recommendation in respect of its claim
and contended that the Referee
erred in rejecting Garanti’s main claim on the mistaken assumption
that an owner was precluded from
claiming preservation costs against
the Fund although s 11(4)(
a
) contains no such preclusion. Mr
Gordon
confirmed that Garanti’s case is that the legislature
has created a
sui generis
category of claims which should be
ranked under this section provided that there is a sufficiently close
connection between the costs
and expenses incurred and the
preservation of the vessel.
[105]
Mr
Gordon
submitted
that there is no basis in law or fact to exclude Garanti’s claim
based only on Garanti’s identity as owner of the vessel.
Further
there is nothing in the wording of s11(4)(a) which suggests that a
particular party, including the owner, is not entitled
to recover
such costs or that the rights of other parties such as creditors of
the vessel, should be regarded as greater than that
of its owner. Mr
Gordon
argued
further the fact that a claim could be ranked under a different
subsection under s 11 does not preclude it from constituting
a
preservation cost under s 11(4)(
a
).
[39]
[106]
Garanti’s alternative claim for preservation costs is based on s
11(8) of AJRA and is dependent upon
this Court finding that, as a
matter of Turkish law, the demise charter with Caliskan was not
terminated but remained in place until
January 2015, alternatively to
the point of the judicial sale of the Vessel. Garanti submitted that
it would, in these circumstances,
have an underlying claim against
the Fund by virtue of the deeming provision contained in s 1(3) of
AJRA in terms of which Caliskan
is deemed to have been the owner of
the Vessel for the period of the demise charter for purposes of an
in
rem
action. Mr
Gordon
noted that this submission did not
constitute an admission that in order to recover preservation costs
there must be some underlying
claim against the vessel and/or the
Fund. He submitted that there was no rational basis to hold that the
owner of a vessel is entitled
to recover preservation costs in
circumstances where there is an extant demise charter over the vessel
but not in circumstances where
no such demise charter exists.
Opposition to the
counter-claim
[107]
Credit Europe has opposed Garanti’s claims for preservation costs
on two bases:
(a)
the costs claimed cannot fall to be determined as preservation costs
if paid by the owner. Credit Europe adopted the reasoning of
the
Referee’s reasons as to why, even if Garanti could prove its
payments and non-recovery of the various expenses, it does not
as a
matter of law have a claim against the Fund which may be ranking in
terms of s 11 of AJRA. However if the Court rejects the
s 11(4)(
a
)
claim and considers Garanti’s 11(4)(
c
) claim, the factual
disputes about the termination of the demise charter will be relevant
and the claim should be referred to oral
evidence.
(b)
Credit Europe speculates that these costs have already been recovered
by Garanti through Caliskan and its guarantors.
[108]
Mr
Mullins
emphasized the onus on Garanti to prove the legal
basis of its claims. In
The Stainless Kobe (No 2)
Galgut J
held:
‘
.
. . an application is an ordinary process of the law, one whereby the
party concerned should prove its case in the usual way. .
. the
procedure being an application rather than a trial, and the relief
sought being final in nature, an order cannot be granted.
. . if
there are reasonable grounds for doubting the correctness of the . .
. (applicant’s) factual allegations.’
[40]
On
this authority, Mr
Mullins
submitted that even if the Court
were to find some legal basis upon which Garanti can recover expenses
incurred against the Fund,
the Court cannot recognise the claim on
the application papers alone.
[109]
The Opposing Suppliers also contend that there is no legal basis for
Garanti’s claim. Mr
MacWilliam
argued that before s 11 can
have application, there must be an underlying claim that would be
capable of being enforced in terms of
either s 3(4) or s 5(3)(
a
)
of AJRA. He submitted that a claimant who is not entitled to proceed
against admiralty property such as a ship, is not entitled
to share
in the fund which took its place. He contended that Garanti had
failed to satisfy either of the requirements of s 3(4) of
AJRA,
namely:
(a)
Garanti must either have had a maritime lien over the Vessel; or
(b)
the owner of the Vessel must have been liable to Garanti in an action
in personam
in respect of the cause of action concerned.
Instead Garanti relies on s 11 of AJRA which only sets out a
statutory scheme for the
ranking of claims. Specifically s11(4)(
a
)
does not establish a basis for a claim against the Fund; it only
deals with the ranking of claims which have been proved.
[110]
It is apparent that much of the same arguments were advanced in this
Court as were in respect of Garanti’s
claim before the Referee.
These submissions were comprehensively analysed by the Referee. I
shall therefore restrict myself to a
consideration of the issues
pertinent to Garanti’s claim only to the extent I find it necessary
to supplement, or distinguish from,
the Referee’s analysis.
Preservation claims
and the assessment thereof
[111]
In terms of s 1(1)(
m
)
of AJRA, a maritime claim means ‘any claim for, arising out of or
relating to . . . the supplying of goods or the rendering of
services
for the employment, maintenance, protection or preservation of a
ship.’ Section 11 of AJRA provides for the ranking of
maritime
claims established against a fund. Section 11(4)(
a
)
and s 11(4)(
c
)(v)
mention preservation claims and costs. While a claim may be
classified as a maritime claim under more than one category of
maritime
‘topic’ set out the definition of ‘maritime claim’,
in terms of s 11, which is peremptory: maritime claims ‘shall be
paid
in the order prescribed in subsections (5) and (11)’.
[41]
Further where there is an inconsistency between the definition of
maritime claim in s 1(1) and the description of claims in s 11,
s 11
should prevail.
[42]
[112]
In
The
Avalon,
Thirion
J described preservation costs as costs which ‘are reasonably and
necessarily incurred to prevent any material deterioration
in the
condition of the property.’
[43]
The costs and expenses arising from the arrest of a ship and its
subsequent detention, preservation and management and its ultimate
appraisement and sale constitute a first charge against the fund.
[44]
Section 11(4)(
a
)
provides that a first-ranking claim against the Fund includes ‘a
claim in respect of costs and expenses incurred to preserve the
property in question or to procure its sale and in respect of the
distribution of the proceeds of the sale’ after the vessel’s
arrest, generally referred to as a preservation claim.
[113]
As correctly stated by the Referee, the enquiry in the test for
preservation claims concerns the nature
of the claim rather than the
identity of the claimant. Although preservation costs are usually
incurred by the Sheriff as he is under
a statutory duty to take all
steps to keep the vessel in custody and to ensure the preservation of
the vessel, first-charge preservation
costs may be incurred by other
creditors. The Referee noted as pertinent the view of Hofmeyr AJ in
Petjalis Engineering
that:
‘
.
. . there may well be circumstances where such costs and expenses are
incurred by someone other than the marshall [the Sheriff in
current
practice] and, in this event, such costs and expenses would. . . fall
within the scope of s 11(1)(
a
)
[the predecessor to section 11(4)(
a
)]
and would rank accordingly.
[45]
[114]
A broader interpretation of preservation costs was endorsed by Hugo J
in
The
Maharani
[46]
and Gauntlett AJ in
The
Argos.
[47]
It is on this basis of this authority that the author Hare states:
‘
Ranking
against a fund therefore should be based upon the premise that any
claimant who has rendered services in the interests of
preserving the
vessel while she is under arrest and pending sale, may, in
appropriate circumstances be accorded the ranking status
of
first-charge s (11)(4)(a) “preservation” costs.’
[48]
Section
11(4)(
c
)(v) of AJRA covers claims ‘in respect of the repair
of the ship, or the supply of goods or the rendering of services to
or in relation
to a ship for the . . . maintenance, protection or
preservation thereof,’ which are ranked on a different level to
preservation
claims ranked under s 11(4)(
a
).
[115]
A prerequisite for claims under s 11(4)(
a
)
is that the costs and expenses must be incurred while the ship was
under arrest up until the judicial sale, if any. Claims under
s
11(4)(
c
)(v)
‘encompass all other claims relating to “the act of keeping . . .
(the vessel) from injury or destruction”’ and must
have arisen no
more than one year before they are brought against the vessel or the
fund.
[49]
The Referee
recognised that the fact that a claimant is entitled to be ranked at
a lesser category, does not mean that it is not
also entitled to a
preservation ranking. Finally, it is not necessary that there be a
direct connection between the preservation
expense and the ultimate
sale of the vessel.
[50]
Discussion
[116]
It is not in dispute that claims for bunkers, provisions supplied,
vessel agent’s fees and payments
to master and crew are maritime
claims in terms of s 1(1)(
m
)
of AJRA and are in the nature of preservation claims. Mr
Gordon
confirmed
that he was in agreement with the legal framework set out by the
Referee in terms of which preservation claims are to be
assessed and
that the Referee correctly dealt with Garanti’s s 11(4)(
a
)
and s 11(4)(
c
)
claims separately. However, he took issue with the Referee’s
conclusion that it was relevant that Garanti would not have been
able
to enforce its claim against the Vessel under AJRA and Garanti had
not cited any authority where an owner has lodged a claim
against a
fund, whether successfully or not. He also contended that the Referee
erred in his interpretation and application of the
legal principles
set out in
The
Kingston,
[51]
The
Maharani
[52]
and
The
DA Qing Xia.
[53]
Section (11)(4)(
a
)
of AJRA
[117]
Section (11)(4)(
a
) provides:
‘
The
claims mentioned in subsection (2) are the following, namely –
(a)
a claim in respect of costs and expenses incurred to preserve the
property in question or to procure its sale and in respect of
the
distribution of the proceeds of the sale.’
Mr
Gordon
submitted
that the principles of contextual and purposive interpretation as set
out by Wallis JA in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[54]
should be applied to s 11(4)(
a
).
It would be unduly restrictive to interpret s11(4)(
a
)
to exclude the recovery of preservation costs simply because they
were paid by the owner of the vessel, as opposed to another creditor
or the Sheriff. He contended that the Referee erred in his assessment
of Garanti’s main claim on the mistaken assumption that an
owner
was precluded from claiming preservation costs against the Fund when
s 11(4)(
a
)
contains no such preclusion.
[118]
However in my view if the principles of contextual and purposive
interpretation are applied to s 11(4)(
a
), then the section
cannot not be considered in isolation. Firstly, it must be considered
within the broad context of AJRA as a whole,
and secondly, within the
context of s 11 of AJRA in particular.
[119]
Section 11(4)(
a
)
contains a reference to the claims mentioned in subsection 11(2),
which states: ‘The claims contemplated in subsection (1)(
a
)
are claims mentioned in subsection (4) and confirmed by a judgment of
a court in the Republic or proved in the ordinary manner.’
Section
11(1)(
a
)
provides: ‘If property mentioned in section 3(5)(
a
)
to (
e
)
is sold in execution or constitutes a fund contemplated in section
3(11), the
relevant
maritime claims
mentioned
in subsection (2) shall be paid in the order prescribed by
subsections (5) and (11).
[55]
Section 11(5) states: ‘The claims mentioned in paragraphs (
b
)
to (
f
)
of subsection (4) shall rank after any claim referred to in paragraph
(
a
)
of that subsection. . . ’. This subsection stipulates that any
claim referred to in section 11(4)(a) shall rank ahead of all other
claims.
[120]
Therefore, reading s 11(4)(
a
)
in the proper context, it is clear that in order for s 11 to apply,
there must, in the first place, be a ‘maritime claim’ ‘confirmed
by a judgment of a court in the Republic or proved in the ordinary
manner’. ‘The fund’ referred to in s 11(1)(
a
)
is a fund contemplated by s 3(11)(
a
)(ii)
of AJRA and is deemed for all purposes to be the property sold in
terms of s 3(11)(
b
).
A maritime claim can only be pursued in an action
in
rem
against
the Vessel (or the Fund), or in an action
in
personam
against
the party that was the owner (or deemed owner) of the Vessel at the
time of the order pursuant to which the Fund was constituted.
Only
such maritime claims, once established, can be ranked in terms of s
11(1). As Bristowe J observed in
The
Kingston
,
s 11(1) ‘deals with the ranking of claims, not the recognition of
them’.
[56]
[121]
The learned judge’s further comments are pertinent to the issue of
whether an owner may legitimately
claim preservation costs against a
Fund:
‘
Finally
I find it hard to believe that the legislature intended that a claim
which could not be enforced under the Act should share
in the
preferential distribution of a fund created under the Act, especially
having regard to the jealous provisions of section 10.
It is plain,
in my view, that it is only a maritime claim which would be
enforceable under the Act which is entitled to rank in terms
of
section 11(1)(a)-(e).’
[57]
A
similar pertinent comment was made by Ploos Van Amstel J in
MV
Da Qing Xia
:
[58]
‘Section 3(11)(b) in turn provides that a fund shall, for all
purposes, be deemed to be the property sold or the property in
respect
of which the security or an undertaking has been given. The
fund in other words takes the place of the property which had been
attached
or arrested.
The
question then arises why a claimant who was not entitled to proceed
against such property in admiralty should be entitled to share
in the
fund which took its place.’
[122]
The same question may properly be asked of Garanti in respect of its
preservation claims. It is apparent
that s 11(4)(
a
) must be
read and interpreted in the context of all the related provisions,
and not in isolation. It is only when s 11(4)(
a
) is not read
in that proper context or a purposeful interpretation applied, that
one can argue that s 11(4)(
a
) establishes a
sui generis
claim, which does not preclude the owner on the basis that the
owner is not mentioned in the provision.
A sufficiently close
connection?
[123]
Mr
Gordon
submitted that the relevant test in regard to the
expenses incurred by a claimant to preserve a vessel is whether there
is a sufficiently
close connection between the expense in issue and
the preservation of the vessel. As authority for his argument Mr
Gordon
referred to
The Argos
in which the court held
that:
‘
Evident
considerations of policy, commercial expediency and equity would
suggest that costs or expenses incurred while the vessel
is thus
in
custodia legis
,
and which are sufficiently related to the execution of this process,
should form a first charge on the fund.’
[59]
The
court in
The
Argos
also
acknowledged that s 11(4)(
a
)
is ‘directed at the accomplishment of a sale in the interests of
all recognised creditors’.
[60]
[124]
However, as stated in paragraph 120 above, before a ranking in terms
of s 11(4)(
a
) may be determined, there must, in terms of s
11(2), be a ‘maritime claim’, ‘confirmed by a judgment of a
court in the Republic
or proved in the ordinary manner’. Garanti
cannot simply aver that it has a preservation claim because the act
of providing bunkers
or supplying provisions or paying vessel agent’s
fees was intended to and did have the effect of preserving the
vessel. In order
to share in the Fund a claim has to be a maritime
claim in its own right and it is incumbent upon Garanti to establish
all the requirements
for a maritime claim. Claims against the Fund
must contain full details of when the claim arose and how it is made
up. As stated
by Hofmeyr:
‘
a
claim cannot be said to have arisen until it comes into existence,
that is, until all its constituent elements have arisen. . .
The
proposition that a legal claim comes into existence only when all the
elements making up the claim have come into existence is
undeniably
correct.’
[61]
[125]
The general principle is that to claim under s 11 against a Fund
established from the proceeds of the
sale of a vessel, a claimant
must establish a ‘claim’ in contract, delict or unjustified
enrichment. The comments in the following
excerpt, although made in a
context which is different from this matter, reinforces the
requirement that there has to be a legally
enforceable claim. It also
fortifies the conclusion that it is not enough to show that the
expense claimed related to the preservation
of the Vessel, as
contended for by Garanti. There has to be an underlying obligation.
[126]
In
Transol
Bunker BV v MV Andrico Unity
[62]
the court stated:
‘
In
the present case Grecian-Mar and Transol instituted their respective
actions
in rem
by causing the
Andrico Unity
to be
arrested by order of the Court
a quo
on the basis of their
respective claims for the price of stores and provisions and bunkers
supplied to the vessel in Argentina. Their
claims for the price of
the goods supplied undoubtedly constituted maritime claims within the
definition in sec 1(1) of the Act.
This is not in dispute. The
question, however, is whether these claims gave rise to maritime
liens,
thus grounding the claim by each of the appellants to be
entitled to institute an action
in rem
against the vessel in
terms of sec 3(4)(
a
)
of the Act
.’ (emphasis
added)
Therefore,
the mere fact that the goods and services paid for by Garanti fall
within the ambit of the definition of a maritime claim
in s (1)(1)(
m
)
is insufficient to establish either that Garanti itself has an
enforceable maritime claim in respect of the Vessel, or that it has
a
right to be ranked under s 11(4)(
a
). The aforesaid comments
are also consistent with the argument advanced by Mr
MacWilliam
there must be an underlying claim that would be capable of being
enforced in terms of either s 3(4) or s 5(3)(
a
) of AJRA before
s 11 can have application. He pointed out further that Garanti has
not been able to identify the alleged debtor
in personam
in
respect of its various claims.
The
Constitutional Argument
[127]
Mr
Gordon
’s
constitutional argument was premised on ss 25(1)
[63]
and
39(2) of the Constitution
of
South Africa 1998,
which
respectively entrench the right to property and require a statutory
interpretation that promotes the spirit, purport and objects
of the
Bill of Rights. He submitted that it was unconstitutional to arrest
ships for debts that are not owed by the true or registered
owner as
it constituted an arbitrary deprivation of property. However, there
was no application for an order declaring the deeming
provision in s
1(3) or the sale of a vessel under s 9 or any other specific section
or sections of AJRA to be unconstitutional. Mr
Gordon
contended
rather for a constitutional interpretation of AJRA which protected
the property rights of ship owners like Garanti.
[128]
However as acknowledged by Mr
Gordon
himself, the charter of ships
including demise charters, are instruments of commercial expediency.
Garanti although the registered
owner of the ship, is a financial
leasing company. It generates income through the lease of its
vessels. It does not have resources
to conduct the business and
industrial activity related to ships. Therefore these activities are
undertaken by the demise charterer.
While this is a mutually
beneficial arrangement, the demise charterer would not be able to
conduct its business without incurring
debts and acquiring creditors.
It is improbable that creditors would provide the demise charterer
with the requisite services and
supplies to conduct its business
without security. Consequently security is furnished to creditors of
the demise charterer through
its deemed ownership of the chartered
vessel.
[129]
In the circumstances of the present matter, Garanti leased its Vessel
but retained its ownership while
the demise charterer Caliskan became
the deemed owner of the vessel which furnished security for the debts
of Caliskan. Mr
Gordon
emphasised
that the word ‘deeming’, with its connotations of ‘unbreakable’
and ‘untouchable’ indicated that the demise
charterer is deemed
to be the owner for as long as the demise charter is in existence.
[130]
In
Credit
Europe Bank NV v MV Tarik II & another
[64]
Ploos
van Amstel J
noted
arrests under deeming provisions are incorporated in national laws
worldwide and have been a feature of international maritime
law for
some time. Therefore it was not unexpected or unknown to Garanti that
the chartered vessel may be arrested for the debts
of Caliskan. This
was a risk that Garanti voluntarily assumed in the course of its
leasing business. Furthermore, i
n
AJRA the deeming provisions are aimed at assisting creditors to
obtain payment of debts with difficulties relating to jurisdiction
and security of their claims.
Therefore
the arrest and consequences of such arrest such as the judicial sale
of the Vessel and the distribution of the proceeds/Fund
to creditors,
can hardly be described as arbitrary deprivation of property. To the
contrary, it is because Garanti is the owner of
the vessel (and
subsequently the Fund) that it is precluded from claiming against its
own property for its preservation.
[131]
A similar argument was advanced before Ploos van Amstel J in
Garanti’s opposition to the sale of the
vessel.
[65]
Garanti submitted that the sale of the owner’s vessel in terms of s
9 of AJRA to satisfy the claims against the charterer by demise
pursuant to the deeming provision in s 1(3) of AJRA cannot be
justified and amounts to ‘arbitrary deprivation of property’ as
intended in s 25(1) of the Constitution. Garanti did not contend that
s 3(4)(
b
)
or s 1(3) or s 9 of AJRA were unconstitutional. It contended for an
interpretation of the sections which did not offend against
the
Constitution. Ploos van Amstel J held that:
‘
.
. . the interpretation contended for by Garanti is irreconcilable
with the wording of the sections under consideration. The deeming
provision in s 1(3) is expressly stated to be for the purposes of an
action
in
rem
.
In this context a charterer by demise is deemed to be the owner of
the ship. The effect of this section, read with sections 3(4)(b)
and
(5) is that a maritime claim may be enforced by an action
in
rem
if
the demise charterer of the property to be arrested would be liable
to the claimant in an action
in
personam
,
and the action shall be instituted by the arrest of the ship or the
other property specified in sub-section (5). An interpretation
of
section 9(1) that a court may not order that a ship which has been
arrested in an action
in
rem
be
sold unless the claim
in
personam
lies
against its owner is inconsistent with these provisions. It will
negate the deeming provision in section 1(3). And what is the
point
in allowing an action
in
rem
against
the ship based on a claim
in
personam
against
the demise charterer if the ship cannot be sold?’
[66]
[132]
The learned judge therefore found that the interpretation contended
for was not a reasonable one and
would amount to an amending of AJRA
which is impermissible absent a constitutional challenge against the
relevant sections. He noted
that M J D Wallis in The Associated Ship
and South African Admiralty Jurisdiction
[67]
expressed the view that s 1(3) will pass constitutional muster,
provided it is not applied to associated ships. I find no cause to
disagree with the reasoning of Ploos van Amstel J which is pertinent
to Garanti’s argument in its counter-claim in this Court.
In the
premises, I remain unpersuaded that Garanti’s claims should be
permitted on constitutional grounds.
Are
preservation claims
sui generis
?
[133]
Mr
Gordon
submitted that the notion of a
sui generis
claim
he was advancing, is further sustained because the auctioneer, the
Sheriff and the Referee have been found to have ‘preservation’
claims under s 11(4)(
a
) against the Fund, although they do not
have an underlying claim against the Vessel. He submitted further
that it would be unduly
restrictive to interpret s 11(4)(
a
) to
exclude the recovery of preservation costs simply because they were
paid by the owner of the Vessel, as opposed to another creditor
or
the Sheriff.
[134]
While a vessel is under arrest, the Sheriff (and the arresting
creditor) are liable for the preservation
expenses for the ship.
[68]
The Sheriff or a third party creditor has a claim against a ship in
respect of which it has incurred preservation expenses because
the
ship is not owned by them. They incur the costs and expenses to
preserve the vessel because it is in the interest of the creditor/s
of the owner or deemed owner. And they are paid out of the Fund only
because there is an underlying liability by the owner to pay
those
costs. Like the Sheriff, the auctioneer and the Referee fulfil roles
that are specifically mentioned in s 11(4)(
a
)
as their costs are incurred ‘to procure’ the sale of the ship and
are ‘in respect of the distribution of the proceeds of the
sale’
respectively. They also do not own the Vessel and there is an
underlying liability by the owner to pay their costs.
[135]
In the course of his argument, Mr
Gordon
submitted that had
Garanti not paid the bunker and other costs the Vessel would not have
been able to sail from Durban to Richards
Bay – and that in doing
so it acted not in its own interests but in that of the creditors of
Caliskan. However when asked what
was Garanti’s ‘special
interest’ in paying preservation costs which were usually paid by
parties other than the owner, eg the
party who arrested the ship or
the Sheriff, he responded that:
‘
You
don’t have to have any bigger interest or any more special interest
than to be the owner of the ship. You want to save your
ship. You
want to preserve your ship. Your ship is the thing which can be hired
out and you can get income from. So it’s not self-serving.
It won’t
be paying ourselves if we were to recover these amounts.’
[136]
With respect, this argument is contradictory because it confirms that
Garanti was preserving the Vessel
not for any altruistic reason or
the benefit of the creditors but to protect its own property for its
own benefit. A preservation
claim is intended to obtain reimbursement
of expenses and costs incurred in preserving the Vessel for the
benefit of the creditors.
If Garanti’s claims as owner were
allowed, the security of the arresting creditors would be eroded.
[137]
In the light of the aforegoing considerations and conclusions, I am
unable to find that the arguments
advanced by Garanti to sustain its
main claim for preservation costs have any merit. I also do not find
it necessary to deal with
Mr
Gordon
’s
contention that the Referee erred in his interpretation and
application of the legal principles set out in
The
Kingston,
[69]
The
Maharani
[70]
and
The
DA Qing Xia,
[71]
as his argument in that respect was to reinforce the submissions that
I have dealt with. The Referee’s recommendation in any event
accords with the conclusion I have reached in respect of Garanti’s
main claim.
[138]
Turning to Garanti’s alternative claim premised on its reliance on
s 11(8), I am of the view that
the Referee was correct in his
reasoning and conclusion as set out in paragraphs 98-99 of this
judgment, and that Garanti’s alternative
claim must also fail.
Garanti’s crew
payment claims
[139]
In the notice of claim filed with the Referee on 18 February 2015,
Garanti claimed payment of the sum
of USD 257 030. 58, such claim to
rank in terms of s 11(4)(
a
) of AJRA, alternatively in terms of
s 11(4)(
c
)(i). The Garanti Claim Affidavit alleged that
various payments were made to the master and crew, and submitted
that: ‘. . . having
regard to the fact that the vessel was under
arrest at the time of these payments and that the Master and crew of
the vessel were
responsible for the preservation of the vessel, these
payment ought to rank as preservation costs in terms of section
11(4)(a) of
the Admiralty Act’.
In
the alternative, Garanti alleged that by virtue of having made
various payments it had ‘stepped into the shoes of each of the
crew
members referred to and its claim for this amount ought to rank in
terms of section 11(4)(c)(i) of the Admiralty Act’
.
However,
Garanti did not specifically identify the legal cause for the
payments allegedly due to the persons reflected in annexures
‘AC
24’, ‘AC 26’, ‘AC 28’ and ‘AC 30’ to its claim
affidavit.
[140]
In his report the Referee noted that Garanti stated it paid the
following amounts to the Master and
crew as wages:
(a)
US$ 55 149.51 in 11 August 2014.
(b)
US$ 62 311.28 on 17 August 2014.
(c)
US$ 73 980.85 on 28 August 2014.
(d)
US$ 62 721.50 on 12 September 2014.
[141]
Garanti provided a schedule with the names of the master and crew and
the respective amounts paid to
them, and crew lists with the names of
the master and crew and the dates upon which their wages became due
and payable. The Referee
had reservation about the crew lists because
they were not authenticated nor were they on either Garanti’s or
Caliskan’s letterheads.
Garanti also did not disclose where the
lists came from.
[142]
Credit Europe and Zeba et al raised objections, inter alia, on the
basis that no contracts of employment
were provided to prove the
employment of the master and crew and the amount of the wages to
which each person was entitled. Mr P
Holloway, the attorney for the
Opposing Suppliers, pointed out specifically that Garanti provided no
evidence to prove:
(a)
that each of the persons that Garanti allegedly paid were employed on
the Vessel and for what period;
(b)
the terms and conditions of the relevant contracts of employment;
(c)
the performance rendered by each of the persons concerned;
(d)
the computation of the amounts allegedly owed to each of them with
reference to the relevant contracts of employment and the services
performed; and
(e)
that the monies which were allegedly due owing and payable to each of
the persons concerned, was not paid.
In
effect, Garanti did not adduce the requisite evidence to establish
the validity and existence of any of the crew claims which allegedly
underlay the payments that Garanti is purported to have made.
[143]
However the Referee accessed employment contracts from the documents
removed by the Sheriff from the
Vessel which confirmed that many of
the crew who appeared on Garanti’s lists did conclude employment
contracts with Caliskan. Some
‘officers payslips’ and ‘ratings
payslips’ were also among the documents but the Referee was unable
to reconcile them with
the amounts claimed by Garanti. Without the
usual monthly wages accounts document produced by the master, the
Referee could not be
certain that the amounts claimed by Garanti were
correct.
[144]
The Referee therefore did not recommend payment of Garanti’s claim
for master and crew payment but
he recorded that if Garanti furnished
the proof that the lists upon which it relies are accurate, whether
by reference to the master’s
monthly wage accounts, correspondence
between the master and Caliskan/Horizon or an affidavit from the
master, the Court may be in
a position to allow this part of the
claim.
[145]
In its counter-application, Garanti provided further evidence in
support of this claim, which allegedly
included:
‘
112.1.
email exchanges between Horizon and Garanti between 8 August 2014 and
11 September 2014 in which Horizon requested Garanti
to effect
payment of crew wages for the months of May, June, July and August
2014;
112.2.
email exchanges between Horizon and Garanti during September 2014 in
which Horizon requested updates on whether payment of
the
aforementioned crew wages had been made by Garanti and for payment of
the crew’s wages for the month ending August 2014; and
112.3
copies of Garanti’s proofs of payment to the Master and crew of the
vessel which correlate with the amounts Horizon requested
Garanti to
pay.’
[146]
However, the following documents were in fact furnished:
(a)
Annexure ‘IT 24.3’ purports to be a list of payments to crew on
the Vessel for June 2014. The page is not legible. Annexures
‘IT
24.3.1’ - ‘24.3.24’ are allegedly IBAN for payment for the 24
crew listed on 24.3 on 11 August 2014.
(b)
Annexure ‘IT 24.4’ purports to be a list of payments to crew on
the Vessel for May 2014. The page is not legible. Annexures ‘IT
24.4.1 - IT 24.4.21’ are allegedly IBAN for payment for the 21 crew
listed on 24.4 on 11 August 2014.
(c)
Annexure ‘IT 24.5’ purports to be a list of payments to crew on
the Vessel for July 2014. The page is not legible. Annexures
‘IT
24.5.1’ - ‘IT 24.5.25’ are allegedly IBAN for payment for the
25 crew listed on 24.5 on 28 August 2014.
[147]
The following translated emails were furnished:
(a)
Annexure ‘IT 24.1’: Email dated 11 August 2014, from Horizon to
Oral Eren of GL (Garanti Leasing)- Asset Management in which
Horizon
furnished ‘IBAN details of the Truva and Tarik 3 seamen covering
the period May-June- July 2014’.
(b)
Annexure ‘IT 25’: Email dated 8 August 2014 from Murat Yidrim of
Horizon to Oral Eren of GL- Asset management attaching a request
from
Horizon’s personnel department, copied to Caliskan. The attached
email dated 8 August 2014 is an internal email from the human
resources manager for Horizon to Mr A Taymez recording that there is
a ‘seamen salary problem’ because the salaries of the petty
officers and crew of Tarik 3 (the Vessel) and Truva 1 have not been
paid for the months May June and July.
(c)
Annexure ‘IT26’: Email dated 11 September 2014 from M Yildrim of
Horizon to Oral Eren of GL-asset management copied to Caliskan.
Yildrim states that August wage lists of the seamen are attached.
(d)
Email dated 9 September 2014 from O Eren GL Asset Management to M
Yidirim of Horizon copied to Caliskan requesting ‘payroll for
seaman for the month of August (name surname, GB IBAN amount etc…)’.
the email also states ‘(Truva 1 Masters wage for August
was paid,
keep it out of lists pls, thx)’.
(e)
Email dated 28 August 2014 from I Tasliyurt of Garanti to Murat
Yildrim of Horizon requesting ‘payroll for seaman for the month
of
July (name surname, GB IBAN amount etc…)’. In the grid below the
text is the names of both Truva 1 and Tarik 3 (the Vessel).
Discussion
[148]
Firstly, it is not for this Court to attempt any reconciliation of
the payments claimed with the crew
lists and the additional documents
which purportedly are ‘copies of Garanti’s proofs of payment to
the Master and crew of the
vessel which correlate with the amounts
Horizon requested Garanti to pay’. It is also discourteous to the
Court to present illegible
documents for perusal. There are also a
number of anomalies in the documents provided. The most glaring is
that Garanti stated in
its claim documents that it effected payments
on 11, 17 and 28 August and 12 September 2014. The IBAN documents
reflect payments
on 11 August and 28 August 2014 only.
[149]
There is no record of the August payroll. Yet Garanti has alleged
that ‘Horizon requested Garanti
to effect payment of crew wages for
the months of May, June, July and August 2014’ and the
documentation provided ‘correlate
with the amounts Horizon
requested Garanti to pay’. In fact, the requests cover the period
‘May-June-July’ only. Even the email
of 28 August 2014 is a
request from Mr Tasliyurt of Garanti to Murat Yildrim of Horizon
requesting ‘payroll for seaman for the
month of July’. Yet
according to earlier email dated 11 August 2014 from Horizon to Oral
Eren of GL-Asset Management, Horizon furnished
‘IBAN details of the
Truva and Tarik 3 seamen covering the period May-June-July 2014’.
This creates an uncertainty as to what
documents in relation to the
Vessel in this matter (Tarik III/3) were actually received by
Garanti.
[150]
I am also in agreement with Mr
MacWilliam
’s contentions that
the documentation now belatedly put forward by Garanti still does not
address the difficulties that the Referee
identified. It also does
not assist in reconciling the amounts claimed by Garanti to the
payslips removed from the Vessel, nor does
it identify how each
amount claimed was calculated, nor how it allegedly relates to any
particular agreement of employment, nor the
service allegedly
rendered pursuant thereto. Garanti has made no attempt whatsoever to
reconcile the amounts claimed by it to the
documentation removed from
the Vessel (which reconciliation the Referee was unable to do). In
the result, there is nothing in the
four additional documents which
addresses either the objections raised by the Opposing Suppliers or
the underlying problem which
the Referee had with Garanti’s claim.
Therefore Garanti’s claim for crew payments must be refused.
[151]
Garanti has failed to prove that it is entitled to payment of any
preservation costs or expenses from
the Fund. Accordingly, its claims
fall to be dismissed and Garanti must pay the costs occasioned by the
opposition to its claims.
Costs
[152]
What remains for determination is the issue of costs arising from the
amended draft order filed by Credit
Europe. The Referee has provided
a concise but relevant basis for his recommendations in respect of
payments and ranking of costs
of claimants. He specifically recorded
that:
‘
Where
this report recommends that a party be awarded costs, this includes
any costs that have been incurred in instituting action
against the
vessel in respect of the claim in question, as well as the costs of
lodging the claim against the Fund and related costs
such as
responding to objections, replying to our queries, and arranging
payment from the Fund.’
[153]
AJRA contains the following relevant statutory provisions in relation
to costs:
(a)
Section 11(4)(
a
) sets out a ranking in respect of: ‘a claim
in respect of costs and expenses incurred to preserve the property in
question or to
procure its sale and in respect of the distribution of
the proceeds of the sale;’
(b)
Section 11(7) provides: ‘A court may, in the exercise of its
admiralty jurisdiction, on the application of any interested person,
make an order declaring how any claim against a fund shall rank.’
(c)
Section 11(10) provides: ‘Interest on any claim and the costs of
enforcing a claim shall, for the purposes of this section, be
deemed
to form part of the claim.’
[154]
To the extent that AJRA makes no provision to the contrary, the
common law in relation to costs must
apply. The rules generally
applied are:
(a)
A successful party is usually entitled to its costs.
[72]
(b)
All costs are in the court’s discretion.
[73]
(c)
A court must exercise its discretion to award costs judicially after
considering the facts of the case, and any factor it finds relevant
including, inter alia, the conduct of a party.
[74]
(d)
A court may for good reason deprive a successful party of all or a
portion of its costs.
[155]
In its amended form, Credit Europe seeks an order which foreshadows a
finding by this Court that the
claims of the Opposing Suppliers and
Garanti will not be allowed in accordance with the Referee’s
recommendation:
‘
1.
The Report of the Referee dated 10 September 2015 is hereby
further confirmed, to the extent that:
1.1
The Referee has recommended payment of the damages claim of the
Applicant,
ranking in terms of section 11(4)(f) of the Admiralty
Jurisdiction Regulation Act, 105 of 1983, as amended (“the Act”),
including
his recommendation in relation to interest thereon, and the
legal costs incurred in lodging the claim against the Fund.
1.2
The Referee has recommended the payment from the Fund of the legal
costs incurred by the Applicant in successfully opposing any claim
lodged against the Fund.
1.3
The Referee has recommended the rejection of the claims of the
Seventeenth
and Eighteenth respondents.
2.
The Registrar is directed to pay the balance of the
funds in the Fund
to the Applicant, subject to ensuring that sufficient funds are
retained in the Fund to cover the payment of legal
costs, as taxed or
agreed, of:
2.1
the Thirteenth, Fourteenth and Sixteenth respondents incurred in
prosecuting
their claims already paid from the Fund, as recommended
by the Referee;
2.2
the Thirteenth Respondent, pursuant to the sale order dated 5
December
2014.
3.
The Registrar is directed to pay any of the aforesaid
legal costs to
the respective parties once taxed, or agreed by those claimants
retaining an interest in the Fund.
4.
The Registrar is directed to pay any residue left
in the Fund, once
the legal costs as aforesaid have been taxed or agreed and paid to
the respective parties, to the Applicant.’
This proposed order does
not accommodate payment of the Opposing Suppliers’ claim which this
Court has approved. The proposed order
also authorises payment of
Credit Europe’s costs of this application from the Fund. However,
as held earlier in this judgment,
the costs of this application will
have to be borne by Credit Europe.
[156]
In the alternative, Credit Europe seeks an order consistent with its
alternative submissions that the
Opposing Suppliers should be ordered
to institute actions in
rem
against the Fund. This alternative
relief is not competent in the light of the findings of this Court.
[157]
Finally Credit Europe seeks the following declaratory relief:
‘
11.1
Any claim for the payment of the legal costs incurred by a party
(“the successful opponent”) in successfully opposing a claim
lodged against the Fund by another party shall have the same ranking
as the claim lodged against the Fund by the successful opponent.
11.2
A successful opponent is not entitled recover such costs from the
Fund unless it has
a valid claim against the Fund itself.
11.3
The legal costs incurred by the Applicant in relation to the
preservation and sale
of the vessel, and the constitution of the
Fund, are recoverable pursuant to and in terms of the sale order
dated 5 December 2014
or interlocutory order dated 14 January 2015,
or otherwise.’
[158]
I am unable to discern the rationale for such declaratory relief if
the award of costs and the ranking
of costs are comprehensively
provided for in AJRA. It is not in dispute that the Vessel was
arrested pursuant to the institution
of an action
in rem
and
sold at the instance of Credit Europe, or that Credit Europe incurred
preservation costs. The enforcement and preservation costs
incurred
by Credit Europe are specifically provided for in AJRA. The
enforcement claims are covered in s 11(10) of AJRA which provides
that ‘costs of enforcing a claim shall, for the purposes of this
section, be deemed to form part of the claim’. The preservation
costs are covered in s 11(4)(
a
) as constituting ‘costs and
expenses incurred to preserve the property in question or to procure
its sale’.
[159]
It is common cause that Credit Europe was awarded costs in the sale
order dated 5 December 2014 or interlocutory
order dated 14 January
2015. In respect of costs included in the orders of court, as
explained in
Mt
'Argun' v Master and Crew of
The
Mt 'Argun' Claiming Under Case No AC127/99 & others
:
[75]
‘
While
it is true that preservation costs and expenses are differentiated,
for ranking purposes, from the costs of enforcing the claim,
this
cannot detract from the fact that a costs order covers not only the
costs of instituting a claim and prosecuting it to judgment
but also
the expense of
(a)
executing against property belonging to a judgment debtor, (b)
preserving it until the execution sale and (c) the sale itself.’
[160]
Therefore the Referee, correctly in my view, assessed Credit Europe’s
‘Existing Costs Order Claims’
as follows:
‘
Having
regard to the fact that Credit Europe already enjoys a costs order in
relation to the arrest of the vessel and the application
for the sale
of the vessel, there is no need for any further order to be given in
this regard. Credit Europe also obtained an order
in its
interlocutory application regarding the sale of the vessel on 14
January 2015. To the extent that the existing orders do not
encompass
the “
sale of the vessel itself and creation of the Fund
”,
we do not believe that any case has been made out for such costs in
these proceedings.’
[161]
This recommendation has found favour with the Opposing Suppliers. The
Opposing Suppliers also agree
with the recommendation of the Referee
that Credit Europe’s legal costs associated with the submission and
proof of the preservation
claim ought to be paid out the Fund, and
ranked in accordance with s 11(4)(
a
) of AJRA. However, they
dispute the scale on which Credit Europe seeks such costs.
[162]
In respect of the costs incurred by Credit Europe in lodging its
claims against the Fund, the Referee
stated:
‘
.
. . it is not usual for applicants in sale applications to be allowed
a preferential scale of costs in relation to the costs of
advancing
their claims against the Fund. The reason for allowing attorney and
own client costs is that these parties have acted in
the interest of
all creditors in obtaining the sale order. This reason does not apply
to the costs incurred in presenting their claims
against the Fund.
Therefore we do not believe that the costs of the “
arrest of the
Ship
” extend to the costs of proving a claim against the Fund.’
The
Referee noted further:
‘
Credit
Europe seeks attorney and own client costs in respect of its claim
against the Fund to the extent that such costs fall within
the ambit
of the sale order. For the reasons given above.
.
. , we do not believe that paragraph 9.2 of the sale order
encompasses the costs of advancing claims against the Fund. Credit
Europe
is thus only entitled to costs on the ordinary party and party
scale.’
[163]
I am in agreement with the Referee’s recommendation on the issue of
the relevant scale. He has provided
clear justification for his
recommendation in a review of the authorities as to when attorney and
own client costs would be competent
and when it should not be
ordered. There is no justification for attorney and own client costs
as sought by Credit Europe, which
has in any event the advantage of
its costs ranking under s 11(4)(
a
).
[164]
The Opposing Suppliers submit that the Referee has correctly dealt
with the costs to be awarded to the
claimants against the Fund,
including Credit Europe, and that the ranking by the Referee is
consistent with the ranking provided
for in AJRA, and therefore the
Referee’s report should be confirmed in this respect too. What they
do dispute is that all various
costs claimed in the draft bills of
costs attached to the founding affidavit as annexures ‘4a’, ‘4b’
and ‘4c’ (totalling
R1 983 035.26 in respect of legal costs) are
all costs that properly fall to be paid in terms of the orders of
court dated 5 December
2014 and 14 January 2015. They submit,
properly in my view, that the extent to which claims for costs under
the existing costs orders
fall to be paid is a matter for
determination by the taxing master. On that basis, the Opposing
Suppliers have requested leave to
defend the costs claims of Credit
Europe against the Fund on taxation, and/or to agree the reasonable
quantum of those costs claims.
I see no reason why this request
should be refused. The taxing master will have the benefit of
submissions from both parties which
ought to facilitate a fair
taxation of the costs.
[165]
I have, in the premises, been unable to find that Credit Europe’s
application for only a partial
recommendation of the Referee’s
report is justified, whether it be on the issue of the claims of the
Opposing Suppliers or on the
issue of the costs and ranking thereof.
The dismissal of Garanti’s claim is also consistent with the
Referee’s recommendation.
I am accordingly satisfied that the
Referee’s report should be confirmed in its entirety.
[166]
The Opposing Suppliers have prayed that they be awarded the costs of
Mr Bowley who, in his capacity
as an attorney with the right of
appearance, assisted in the compilation of the Opposing Suppliers’
heads of argument and the costs
of the Opposing Suppliers’ Turkish
attorneys Yalcin Toyager & Tufekci Law office, including the
costs of expert witnesses Prof
Topuz and Prof Yavuz. No objections
were raised to this request. In any event, the costs of the Turkish
agents and the expert witnesses
were incurred as a consequence of
Credit Europe’s reliance on the alleged termination of the demise
charter. I am satisfied that
these costs may properly be allowed.
ORDER
1.
The Report of the Referee dated 10 September 2015 is confirmed.
2.
The Applicant is directed to pay the costs of this application taxed
or agreed,
such costs to include the costs of the Fifth, Eighth and
Tenth Respondents in respect of:
2.1
Mr
MacWilliam SC
;
2.2
Mr Bowley;
2.3
Turkish attorneys Yalcin Toyager & Tufekci Law office;
2.4
The expert witnesses Prof/Dr Topuz and Prof Yavuz.
3.
The Fifth, Eighth and Tenth Respondents are given leave to defend the
costs claims of Credit Europe against the
Fund on taxation and/or to
agree the reasonable quantum of those costs claims.
4.
The counter-application by the Seventeenth Respondent is dismissed
with costs, such costs to include the costs
consequent upon the
employment of two counsel, where so employed.
MOODLEY
J
APPEARANCES
Dates of
hearing
: 8-9 May 2017; 7 September 2017
Date
of judgment
: 6 May 2021
For
Applicant
Mr SR Mullins SC with Mr JD Mackenzie
Instructed
by
Bowman Gilfillan (Cape Town)
22 Bree Street Cape
Town Tel; 021 480 7806
Email:
jeremy.prain@bowmanslaw.com
c/o
Bowman Gilfillan (Durban)
1st
Floor Compendium House
5
The Crescent Westway Office Park Harry Gwala Road Westville
Tel
031265 0651 Ref:JDP/NN/6129046
Email:
Michael.pathan@bowmanslaw.com
For
5th 8th & 9th Respondents
Mr RWF MacWilliam SC with
Mr AR Bowley
Instructed
by
Webber Wentzel
15th
Floor Convention Tower
Heerengracht
Cape Town Tel 021 530 5000
Ref:
Patrick Holloway
Email:
Patrick.Holloway@webberwentzel.com
For
17th Respondent
Mr DA Gordon SC with Ms S Pudifin-Jones
Instructed
by
Cox Yeats Attorneys
21
Richefond Circle, Ridgeside Office Park
Umhlanga
Ridge
Durban
Tel:
031 – 536 8500
Fax:
031 5368088
Ref:
A Clark/ps/09 G962 001
Email:
aclark@coxyeats.co.za
tsimpson@coxyeats.co.za
[1]
Section 10A provides the following:
‘
Power
of court regarding claims against fund -
(1)
The court may make an order with regard to the distribution of a
fund or payment out of any portion of a fund or proof of claims
against a fund, including the referring of any of or all such claims
to a referee in terms of section 5(2)(e).’
[2]
The first respondent.
[3]
Mr Cooke has disclosed that he engaged the services Mr Z
Cornelissen, an advocate at the Cape Bar to assist with the
examination
of the claims and the report. I shall nevertheless refer
to ‘the Referee’ in this judgment.
[4]
J Hare
Shipping
Law and Admiralty Jurisdiction in South Africa
2
ed (2009) at 743.
[5]
Ibid, at 743 fn 66.
[6]
The demise charter is also described in the documents of record as
the ‘Statutory Form Leasing Agreement’, the ‘Financial
Leasing
Agreement’ and the ‘leasing agreement’, and in certain
correspondence between the parties as the ‘bareboat charter’.
For the sake of consistency in this judgment, it will be referred to
as the ‘demise charter’.
[7]
The claim of Noble Resources SRL, who is the twelfth respondent
herein, and one of the claims of Marichem Marigases Limited, the
seventh respondent were subsequently withdrawn.
[8]
Associated
Marine Engineers (Pty) Ltd v Foroya Banki PF
1994
(4) SA 676
(C) at 683H.
[9]
Excluding the Sheriff who had already been paid out of the Fund.
[10]
G Hofmeyr
Admiralty
Jurisdiction Law and Practice in South Africa
2
ed (2012) at 289.
[11]
The
Kingston In Re Creditcorp Ltd
1991
SCOSA D78 (D) at 84G.
[12]
Ibid at 85B-C.
[13]
CH
Offshore Ltd v PDV Marina
2013
JDR 2513 (KZD), para 18.
[14]
G Hofmeyr
Admiralty
Jurisdiction Law and Practice in South Africa
2
ed (2012) at 287-288.
[15]
Continental
Illinois National Bank and Trust Co. of Chicago v Greek Seaman’s
Pension Fund
1989
(2) SA 515
(D) at 523F-G.
[16]
Ibid at 527B-F.
[17]
Ibid at 537H-538B.
[18]
Chetty
v Naidoo
1974
(3) SA 13(A)
at p 20A-24A.
[19]
Naik
v Panday
1952
(1) P.H. A3 (D) at 13.
[20]
Garanti’s ownership of the vessel prior to its judicial sale on 5
February 2015 was not challenged in the application to sell
the
vessel or in the proceedings before the Referee.
[21]
G Glover
Kerr’s
Law of Sale and Lease
4
ed at 574.
[22]
Emphasis added.
[23]
In the founding affidavit to Garanti’s counter-application.
[24]
Confirmatory affidavit to the founding affidavit deposed to by Mr
Tasliyurt.
[25]
Dr Topuz is later referred to as Prof Topuz. I have retained the
title used by the Referee in his report.
[26]
See
MV
Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v
Deiulemar Compagnia Di
Navigazione
SPA
2012
(1) SA 58
(SCA) at 72B;
Stock
v Stock
1981
(3) SA 1280
(A) at 1296F.
[27]
The
Asphalt Venture; Windrush Intercontinental SA & another v UACC
Bergshav Tankers AS
2017
(3) SA 1 (SCA).
[28]
Ibid, para 31.
[29]
The affidavit of Mr Tasliyurt was furnished to the Referee on 10
June 2015.
[30]
MV
Pasquale
Della
Gatta;
MV
Filippo
Lembo;
Imperial
Marine
Co
v
Deiulemar
Compagnia
Di
Navigazione
SPA
2012
(1) SA 58
(SCA) at 71B-C.
[31]
The
Kingston In Re Creditcorp Ltd
1991
SCOSA D78 (D).
[32]
MV
‘Da Qing Xia’: LBH Mozambique Limitada v MV ‘Red Fin’
2015
JDR 0706 (KZD), para 15 (also reported as
The
DA Qing Zia
SCOSA
D410 (D)); Referee’s report p. 63.
[33]
Mak
Mediterranee Sarl v The Fund Constituting The Proceeds of The
Judicial Sale of The Mc Thunder
(S
D Arch, Interested Party)
1994
(3) SA 599
(C)
1994 (3) SA 599
(CPD) at 608B.
[34]
J Hare
Shipping
Law and Admiralty Jurisdiction in South Africa
2
ed (2009) at 170.
[35]
Credit
Europe Bank NV v MV Tarik III & another
2014
SCOSA B569 (KZD) para 22
[36]
The
Chenebourg
Lauritzen
Bulkers
A/S
v
The
Chenebourg
The
Cape
Gulf
Maple
Maritime
Inc
v
E.A.S.T International Ltd
2009
SCOSA C183 (D).
[37]
See also G Hofmeyr
Admiralty
Jurisdiction Law and Practice in South Africa
2
ed (2012) at 123-124.
[38]
Garanti seeks payment of four of the six claims which were lodged
with and rejected by the referee 39 Gauntlett AJ stated in
Pentow
Marine (Pty) Ltd v The Fund Being The Proceeds of The Sale of The
Mv
Argos (Transnet Ltd T/A Portnet Objecting)
1994
(2) SA 700
(C) at 704B-C: ‘Claims are not however in principle
excluded from being ranked in terms of s 11(4)(
a
)
merely because they are given a specific statutory ranking by the
lawgiver in terms of [another subsection]’.
[39]
Garanti seeks payment of four of the six claims which were lodged
with and rejected by the referee 39 Gauntlett AJ stated in
Pentow
Marine (Pty) Ltd v The Fund Being The Proceeds of The Sale of The
Mv
Argos (Transnet Ltd T/A Portnet Objecting)
1994
(2) SA 700
(C) at 704B-C: ‘Claims are not however in principle
excluded from being ranked in terms of s 11(4)(
a
)
merely because they are given a specific statutory ranking by the
lawgiver in terms of [another subsection]’.
[40]
The
Stainless Kobe (No 2) ‘t Wapen Van Marion BV v The Fund
Constituted By The Proceeds of the
Sale
of the MV Stainless Kobe
SCOSA
D69 (D) at D77E-78A.
[41]
J Hare
Shipping
Law and Admiralty Jurisdiction in South Africa
2
ed (2009) at 174.
[42]
Ibid at 176.
[43]
The
Mv Avalon Curnow Shipping Ltd v Brooks No & another
1996
(4) SA 989
(D) at 1008G-H.
[44]
G Hofmeyr
Admiralty
Jurisdiction and Practice
2
ed (2012) at 295.
[45]
Referee’s report page 8;
Petjalis
Engineering Works (Pty) Ltd v South African Transport Services &
another
1988
(1) SA 103
(C) at 116E-F.
[46]
Universal
Group Ltd t/a Island View Shipping Co v The Fund Created By The Sale
Of The Mv Maharani, Ex Mv Claire A Tsavliris, &
another
1990
(2) SA 480 (N).
[47]
Pentow
Marine (Pty) Ltd v The Fund Being The Proceeds of The Sale of The Mv
Argos (Transnet Ltd
T/A
Portnet Objecting)
1994
(2) SA 700 (C).
[48]
J Hare
Shipping
Law and Admiralty Jurisdiction in South Africa
2
ed (2009) at 173.
[49]
Ibid at 172;
Mv
Ocean King Den Norske Bank Asa V Mv Ocean King, Her Owners And All
Other Parties Interested In Her (Sheriff For The District
Of The
Cape Intervening)
1997
(4) SA 349
(C) at 351F.
[50]
The
Mv Avalon Curnow Shipping Ltd v Brooks No & another
1996
(4) SA 989
(D) at 1007G-1008E.
[51]
The
Kingston In Re Creditcorp Ltd
1991
SCOSA D78 (D).
[52]
Universal
Group Ltd T/A Island View Shipping Co V The Fund Created By The Sale
Of The Mv Maharani, Ex Mv Claire A Tsavliris, &
another
1990
(2) SA 480 (N).
[53]
MV
‘Da Qing Xia’: LBH Mozambique Limitada v MV ‘Red Fin’
2015
JDR 0706 (KZD).
[54]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) para 18; see also
Bothma-Batho
Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk
2014
(2) SA 494
(SCA) para 12.
[55]
Emphasis added.
[56]
The
Kingston In Re Creditcorp Ltd
1991
SCOSA D78 (D) at D98E.
[57]
Ibid at D92E-F.
[58]
MV
‘Da Qing Xia’: LBH Mozambique Limitada v MV ‘Red Fin’
2015
JDR 0706 (KZD), para 13.
[59]
Pentow
Marine (Pty) Ltd v The Fund Being The Proceeds of The Sale of The Mv
Argos (Transnet Ltd
T/A
Portnet Objecting)
1994
(2) SA 700
(C) at 706H-I.
[60]
Ibid at 708F
[61]
G
Hofmeyr
Admiralty
Jurisdiction Law and Practice in South Africa
2
ed (2012) at 137-138.
[62]
Transol
Bunker
BV
v
Motor
Vessel
“
Andrico
Unity”
&
others;
Grecian-Mar
SRL
v
Motor
Vessel
“
Andrico
Unity” & others
[1989]
2 All SA 303 (A).
[63]
Section 25(1) of the Constitution provides that: ‘No one may be
deprived of property except in terms of law of general application,
and no law may permit arbitrary deprivation of property.’
[64]
Credit
Europe Bank NV v MV Tarik II & another
Case
No A80/2014 (D).
[65]
Ibid paras 10-22.
[66]
Ibid para 18.
[67]
M J D Wallis
The
Associated Ship and South African Admiralty Jurisdiction,
PhD
thesis (University of KwaZulu-Natal) (2010) at 370. This thesis was
published in a book: Wallis
The
Associated Ship & South African Admiralty Jurisdiction
(SiberInk,
South Africa, 2010).
[68]
The
MT Argun: 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).
[69]
The
Kingston In Re Creditcorp Ltd
1991
SCOSA D78 (D).
[70]
Universal
Group
Ltd
T/A
Island
View
Shipping
Co
v
The
Fund
Created
By
The
Sale
Of
The
Mv
Maharani,
Ex Mv Claire A Tsavliris, & another
1990
(2) SA 480
(N).
[71]
MV
‘Da Qing Xia’: LBH Mozambique Limitada v MV ‘Red Fin’
2015
JDR 0706 (KZD).
[72]
Minister
of Defence & others v South African National Defence Union
2007
(1) SA 422
(SCA) at 433E.
[73]
Graham
v Odendaal
1972
(2) SA 611
(A) at 616;
Naylor
& another v Jansen
2007
(1) SA 16
(SCA) paras 14-23).
[74]
Gelb
v Hawkins
1960
(3) SA 687
(A) at 694.
[75]
Mt
'Argun' v Master and Crew of The Mt 'Argun' Claiming Under Case No
AC127/99 & others
[2003]
4 All SA 139
(SCA), para 48.