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[2011] ZASCA 131
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Imperial Marine Company v Motor Vessel Pasquale della Gatta and Another; Imperial Marine Company v Motor Vessel Filippo Lembo and Another (638/2010) [2011] ZASCA 131; 2012 (1) SA 58 (SCA); [2012] 1 All SA 491 (SCA) (15 September 2011)
Links to summary
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 638/2010
In the matters between:
IMPERIAL MARINE COMPANY
…..............................................
Appellant
and
THE MOTOR VESSEL
PASQUALE DELLA GATTA
…..
First
Respondent
DEIULEMAR COMPANGNIA DI NAVIGAZIONE Spa
….............
Second Respondent
and
IMPERIAL MARINE COMPANY
…..............................................
Appellant
and
THE MOTOR VESSEL
FILIPPO LEMBO
…....................
First
Respondent
DEIULEMAR COMPANGNIA DI NAVIGAZIONE Spa
….............
Second Respondent
Neutral citation:
Imperial Marine Company v
Pasquale della Gatta; Imperial Marine Company v Filippo Lembo
(638/10)
[2011] ZASCA 131
(15 September 2011)
Coram:
NAVSA, BRAND, LEWIS, LEACH and WALLIS JJA
Heard
: 18 August 2011
Delivered
: 15 September 2011
Summary:
Arrest
of vessels as security for claims being pursued in arbitration
proceedings in London – requirement of a prima facie
case –
application of established principles to the drawing of inferences
and the
evidence of experts – allegations of breach by
charterer – supply of bunkers not in accordance with
specification –breach
of safe port, safe berth warranty –
alleged breach of implied warranty under NYPE charter party form –
alleged failure
to redeliver vessel in the same good order and
condition, fair wear and tear excepted – claim for
counter-security –
charterer alleging a failure by owner to
deliver and maintain vessel in an efficient state causing it loss –
basis for assessing
– reasonably arguable best case.
ORDER
On appeal from:
Western Cape High Court, Cape
Town (Baartman J sitting as court of first instance):
[A] In the appeal against the judgment in the case of the arrest of
the
Pasquale della Gatta
(Case No AC20/09 in the high court)
the following order is made:
The appeal is dismissed with costs.
The cross-appeal is upheld with costs and the order of the high
court is altered to read as follows:
‘
(i) The order for the arrest of the
Pasquale della Gatta
granted
ex parte
on
20 March 2009 and the deemed arrest of the vessel pursuant to the
provision of security to obtain its release from that arrest
are set
aside.
(ii) The applicant is ordered to pay the costs of the application on
the scale as between attorney and client.’
(c) The order for the provision of counter-security by the applicant,
Imperial Marine Company, is set aside.
[B] In the appeal against the judgment in the case of the arrest of
the
Filippo Lembo
(Case No AC 8/09 in the high court) the
following order is made:
(a) The appeal succeeds to the extent that paragraphs 6 and 7 of the
order of the high court are altered in the following respects:
by the deletion in paragraph 6(a) of the amount of US$17 477 128.40
and its replacement by US$7 047 177.50;
by the deletion in paragraph 6(b) of the figure of US$3 408 040
and its replacement by US$1 374 199,61;
by the deletion in paragraph 7(a)(i) of the words ‘claims1(a)-(f)
US$20 485 587.17’ and their replacement by
‘claims
1(a), (b), (d) and (e) US$7 029 824.59;
by the deletion of paragraphs 7(b) and (d);
but is otherwise dismissed.
(b) The cross-appeal succeeds and paragraph 2 of the order of the
high court is altered in the following respects:
by the deletion of paragraphs 2(a)(iii) and (iv) thereof;
by the deletion in paragraph 2(a)(v) of the figure of
US$1 699 675.20 and its replacement by US$878 825.23;
by the deletion in paragraph 2(a)(vii) of the figure of
US$12 201 958.32 and its replacement by US$7 171 621.26.
(c) Each party is ordered to pay half the costs of and attendant upon
the preparation of the record in relation to this matter
being
volumes 1 to 9 and 16 of the record of appeal and is otherwise
ordered to bear its own costs.
JUDGMENT
WALLIS JA (NAVSA, BRAND, LEWIS AND LEACH JJA CONCURRING)
Introduction
[1] On 3 July 2003 Imperial Marine Company (Imperial Marine) and the
second respondent, Deiulemar Compangnia di Navigazione Spa
(Deiulemar), concluded a long term time charterparty on the NYPE form
in respect of the
George T
, a Capesize bulk carrier of some
170 00 dwt. A dispute arose in 2005 when the vessel
suffered damage to its main engine
and underwent repairs at Pylos,
Greece. Deiulemar treated the vessel as off-hire whilst it was under
repair. It thereafter commenced
arbitration proceedings against
Imperial Marine in London in terms of the charterparty, alleging
various breaches of the charterparty
and claiming damages flowing
from this incident. Imperial Marine responded with both a defence and
a counterclaim to recover the
unpaid hire and the cost of repairs. In
June 2007 a further dispute arose over the dry docking of the vessel
and this caused Deiulemar
to terminate the charterparty. Both parties
are pursuing the arbitration, albeit that progress has been slow and
many of the claims
now being advanced have not yet featured in the
formal points of claim and defence or counterclaim. Nonetheless all
are treated
as being claims in those proceedings and I shall do
likewise.
[2] Neither Deiulemar nor Imperial Marine held security for their
claims, whether those already incorporated in pleadings or those
they
proposed to include by way of amendment. On 3 February 2009,
and with a view to remedying this, Imperial Marine
obtained an order
for the arrest of the
Filippo Lembo
in terms of s 5(3) of
the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act) to
provide security for some of its claims.
Deiulemar challenged this
arrest in respect of two of those claims and counterclaimed for an
order in terms of s 5(2)(c) of
the Act that the arrest be
subject to a condition that Imperial Marine provide security for
Deiulemar’s own claims. Whilst
this litigation was still
underway Imperial Marine caused the
Pasquale della Gatta
to be
arrested in respect of a further claim. Deiulemar responded by
seeking to have that arrest set aside and counterclaimed
conditionally for security for a claim under s 5(3) of the Act.
Both arrested vessels were released against the provision of
security
in the form of P & I Club letters of undertaking.
[3] The two applications were argued together before Baartman J in
the high court and both parties enjoyed some success. Imperial
Marine
maintained its security for two of the claims advanced in support of
the arrest of the
Filippo Lembo
and also maintained its
security arising from the arrest of the
Pasquale della Gatta
,
albeit in an amount less than it had claimed. Deiulemar obtained the
counter-security it sought in both sets of proceedings and
also
obtained costs orders in its favour. With its leave both parties
appeal against the decision of the high court insofar as
it went
against them and seek to maintain that decision insofar as it
favoured them.
The facts
[4] The charter in respect of the
George T
was for a period of
35 to 37 months, with the charterers having an option to extend the
period for 11 to 13 months. Hire was payable
by Deiulemar at a daily
rate of US$16 350 for the initial period and US$17 350 for
the extension period. Deiulemar was
obliged to provide and pay for
fuel the specifications of which were stated in clauses 62 and 82. It
was entitled to trade the
vessel worldwide without limit subject to
certain exclusions and subject also to the usual provision that it
would only do so ‘via
safe port(s), safe berth(s), safe
anchorage(s) always afloat’. There was an unlimited entitlement
to sub-charter the vessel
although Deiulemar remained liable for the
obligations under the charterparty. Imperial Marine was obliged to
provide a vessel
that was in a thoroughly efficient state and for the
duration of the charter to ‘maintain her class and keep the
vessel in
a thoroughly efficient state in hull/holds, machinery and
equipment’. On redelivery Deiulemar undertook that the vessel
would
be in the same good order and condition as on delivery, fair
wear and tear excepted. None of this is in any way unusual.
[5] On 6 July 2003 the
George T
was delivered to Deiulemar and
for the first two years there appear to have been no significant
problems. The present disputes
originate with the provision by
Deiulemar of a bunker stem at Yeo Su, Korea on 4 March
2005. The vessel then sailed for
Dampier in Australia and started
burning these bunkers. Whilst it was en route to Dampier a
sub-charter was concluded between
Deiulemar and Dabkomar Bulk
Carriers Ltd (Dabkomar), also on NYPE terms, back to back with the
head charter, for a period up to
3 September 2007, minus 60
days in Dabkomar’s option, at a hire rate of US$45 000 per
day. In effect this
was a sub-charter for the remaining period of the
head charter inclusive of the extension period. The vessel completed
its voyage
to Dampier and loaded a cargo for Quingdao, China where it
was delivered under the sub-charter. From there it returned to Yeo Su
to take on a second stem of bunkers and then proceeded to Port
Hedland in Australia. All this occurred between 16 March and the
middle of May 2005, the precise date of each event being immaterial,
save that delivery under the sub-charter is said to have occurred
on
23 April 2005.
[6] Whilst the vessel was en route to Port Hedland the chief engineer
received a report that the bunkers delivered in the first
bunker stem
at Yeo Su were not in accordance with specification. This is accepted
as correct, at least insofar as the Kineamatic
viscosity of the
bunkers is concerned. The engineer’s response was to stop
burning those bunkers and to switch to others.
The unwillingness to
use the initial Yeo Su bunker stem meant that when the vessel left
Port Hedland it had insufficient bunkers
to reach its destination at
Redcar in the United Kingdom and it accordingly diverted to Colombo
in Sri Lanka to take on additional
bunkers. Its onward route was via
Suez where there was a brief stoppage because of engine problems.
Shortly thereafter it became
apparent that the main engine had
suffered major damage and required repairs. For that reason it went
to Pylos, Greece where the
repairs were undertaken over a period of a
little over 71 days.
[7] Deiulemar claims that the reason for the breakdown in the main
engine was a failure on the part of Imperial Marine to fulfil
its
obligations to provide a vessel with its machinery and equipment in a
thoroughly efficient state and its further obligation
to maintain it
in such state. It accordingly contends that the detour to Colombo was
an improper diversion and that the vessel
was off-hire during that
period as well as the periods of the breakdown at Suez and repairs at
Pylos. It fixes its damages for
this period as the difference between
the hire it would have paid had the vessel been working and the hire
it would have received
from Dabkomar if the latter had not also
contended that the vessel was off-hire during these periods. It
invoked the arbitration
clause providing for London arbitration and
served points of claim embodying this claim. Furthermore, on 29
September 2005, before
the points of claim were delivered, Dabkomar
had cancelled the sub-charter. Flowing from this Deiulemar pleaded
that, if the cancellation
were held to be valid in an arbitration
pending between Deiulemar and Dabkomar, there would be a further
claim for damages represented
by the difference between the hire it
would be obliged to pay under the head charter and the hire it would
have earned under the
sub-charter. It did not attempt to quantify
these damages.
[8] Imperial Marine disputed these claims. It laid the blame for the
damage to the main engine on the first Yeo Su bunker stem,
which led
to the vessel burning bunkers with excessive viscosity. It
accordingly counterclaimed for the unpaid hire and the cost
of the
repairs to the main engine at Pylos. Over and above this it claimed
an unspecified amount for the diminution in the value
of the vessel
arising from the manner in which the repairs to the engine’s
cylinder blocks were undertaken.
[9] The arbitration proceeded at a leisurely pace, in part because
Deiulemar indicated that it intended to amend its points of
claim to
include new and revised claims and Imperial Marine was unwilling to
agree to this. In the meantime the
George T
continued trading
in terms of the charterparty. There was allegedly a deballasting
problem at Richards Bay in February 2006 and
between 23 June and 17
August 2006 it was taken out of service for its annual class survey
and repairs at Zhoushan, China. It was
then under sub-charter until
26 December 2006 after which it sailed for Richards Bay,
where it arrived on 24 January 2007.
Four days later it
left with its cargo bound for Rotterdam.
[10] On 6 March 2007, whilst the
George T
was at
Rotterdam, Imperial Marine sent a message to Deiulemar that during
the course of tank cleaning of No 8 Double Bottom Tank
(DBT), prior
to inspection, damage to the tank had been discovered. This was
described as being:
‘…
a large indentation
over a distance spanning 8 web frames (about 28 metres), to a maximum
depth of about 400 millimetres, and about
4.5 metres at the widest
point.’
Surveyors were called in from Lloyds Register, with which the vessel
was entered for class. They required repairs to be undertaken,
some
immediately and others at a later stage. For the purpose of the
immediate repairs the vessel moved to Antwerp where substantial
repairs, especially to the vessel’s steel plating, were
undertaken between 8 March 2007 and 12 May 2007.
It then resumed trading but on 13 June 2007 Lloyds Register
refused to extend the date for its next dry docking survey,
which
accordingly had to take place before 25 August 2007.
Imperial Marine advised Deiulemar that they would send the
vessel to
Zhoushan, China for that purpose. After an exchange of correspondence
Deiulemar’s response was that this rendered
further trading
under the charter impossible. On 1 August 2007 they
delivered a letter to Imperial Marine terminating
the charter.
Shortly prior to that the vessel had entered dry dock at Zhoushan and
it remained there for the survey and repairs
until 20 December 2007.
These repairs also involved extensive work on and replacement of the
vessel’s steel plating.
[11] Two other facts should be mentioned before turning to consider
the arrests of the two vessels in South Africa. The first is
that,
whilst the vessel was undergoing repairs at Antwerp, Imperial Marine
sold it to Dalton Worldwide SA (Dalton) for a price
representing the
amount due under the outstanding mortgage over the vessel.
Registration of the change of ownership occurred on
29 June 2007. The
vessel thereafter continued trading but was scrapped in March 2010
shortly before the cases were argued in the
high court.
The claims
[12] Imperial Marine advanced three claims in support of the arrest
of the
Filippo Lembo
. The first can be described shortly. It
alleged that Deiulemar breached the charterparty by supplying out of
specification bunkers
at Yeo Su and that the use of these
bunkers occasioned damage to the vessel’s main engine. The
unpaid charter hire in
respect of the diversion to Colombo; the
stoppage in Suez; and the period while the vessel was undergoing
repairs at Pylos was
claimed, as well as the cost of the repairs.
Deiulemar accepted that a prima facie case had been made in respect
of this claim
and that Imperial Marine was entitled to security for
it. The capital amount is US$4 506 796.03. Deiulemar also
accepted
that the security should cover interest at 6.5 percent on
the amount claimed for three years, amounting to US$878 825.23,
and the costs of the arbitration, which it agreed should be fixed in
the sum of US$2 150 000. However, it contended that
Imperial Marine already held security for costs in an amount of
£250 000 and that the amount for costs should be reduced
accordingly. The high court upheld this latter contention.
[13] In the counterclaim in the arbitration the second claim was
formulated in the following way:
‘
Diminution in the value of the
vessel as a direct result of the fact that, in order to avoid the
need to wait for the manufacture
and delivery of new blocks, the
cracked cylinder blocks were repaired by way of Metalock stitching.’
In these proceedings this claim underwent a change. The affidavit in
support of the arrest said it was a claim to recover the cost
of
replacing the repaired cylinder blocks with new blocks at a cost of
US$700 000 apiece, totalling US$4.2 million, plus downtime
for
120 days at US$25 000 per day, occasioning a loss of a further
US$3 million. The claim was attacked on two grounds. They
were first
that new cylinder blocks were not required as the original repair was
perfectly adequate, and second that the vessel
was transferred to
Dalton, without the cylinder blocks being replaced so that no damages
were suffered. By the time of argument
in the high court the vessel
had been scrapped without replacing the cylinder blocks and this
became a further reason for contending
that no damages were suffered.
Albeit that the repairs were never done, Imperial Marine contended
that the cost of undertaking
them is nonetheless, as a matter of
English law, the proper measure of the diminution in value of the
George T
. The high court rejected this claim and reduced
the amount of security accordingly.
[14] The third claim, which had not been raised in the arbitration,
was for the cost of repairing the shell plating of the vessel
in way
of No 8 DBT. It was alleged that Deiulemar, in breach of its
obligations under the charterparty, directed the vessel to
load a
cargo at Richards Bay, which was not a safe port, or alternatively at
a berth at Richards Bay, which was not a safe berth.
In the further
alternative the claim was advanced on the basis of an implied
indemnity arising under clause 8 of the charterparty.
Imperial Marine
relied on circumstantial evidence and contended that the inference to
be drawn from this evidence is that an underwater
protrusion from the
wall of the berth at Richards Bay caused the damage noted in
Rotterdam. This constituted a hidden danger and
rendered either the
port or the berth unsafe. The claim was disputed on the facts in
regard to the cause of the damage and on the
law relating to what
constitutes a safe port and a safe berth and the existence of any
implied indemnity. The high court accepted
that Imperial Marine
established the claim on the requisite prima facie basis and upheld
the arrest and the claim for security
in respect thereof.
[15] It is convenient at this stage to deal with the claim advanced
by Imperial Marine in support of the arrest of the
Pasquale della
Gatta
. It was a claim for the cost of the repairs to the steel
work of the vessel undertaken in 2007 at Antwerp and Zhoushan, other
than
those relating to the hull in way of No 8 DBT. When the vessel
was inspected during the repairs at Antwerp considerable corrosion
was discovered in the internal shell plating and steel members of
numbers 7, 8, 9 and 10 DBTs. In seeking the arrest Imperial
Marine said that this was due to the action of Sulphate Reducing
Bacteria (SRB) and on two grounds blamed Deiulemar for the incursion
of these bacteria. The first was that in breach of its obligations as
charterer it directed the vessel to ports where it was particularly
vulnerable to corrosion in consequence of the activities of SRB. The
second was that in any event Deiulemar was obliged to re-deliver
the
vessel at the end of the charter in the same order and condition as
it was on delivery at the commencement of the charter,
fair wear and
tear excepted, and that re-delivery with extensive corrosion caused
by SRB was a breach of this obligation. Again
this claim, and the
expert evidence delivered in support of it, was disputed on the
facts. In addition the legal basis for the
claim was disputed. The
high court sustained the arrest although it reduced the amount of
security to be furnished.
[16] I turn to the claims that Deiulemar sought to have secured by
way of the condition imposed on the arrest of the
Filippo Lembo
.
It alleged that throughout the period of the charter Imperial Marine
was in breach of its obligations to provide a vessel in a
thoroughly
efficient condition and to maintain it in that condition. It
attributed any problems experienced with burning the first
bunker
stem at Yeo Su to this. It claimed on the basis of an inspection of
the damaged engine that the problems it experienced
were
long-standing and flowed from lack of maintenance and the manner of
the ship’s operation. It alleged that lack of maintenance
was
the reason for the corrosion of the ship’s steelwork and
necessitated the vessel going off-hire to undergo repairs. In
addition it said that the engine problems meant that it failed to
perform in accordance with the provisions of the charterparty.
Deiulemar claimed damages for loss of income under the Dabkomar
sub-charter; the loss of that sub-charter; and losses it said it
incurred, both by way of additional expenditure and by way of loss of
potential income, from its trading with the vessel after
the
termination of the sub-charter. It obtained an order that the arrest
of the
Filippo Lembo
be made subject to a condition that this
claim be secured in full, subject to an allowance to avoid
duplication. In relation to
the arrest of the
Pasquale della Gatta
it failed in its efforts to have the arrest set aside but succeeded
in a conditional counter-application for security for a claim
under
s 5(4) of the Act arising from delays in securing the release of
the vessel from that arrest. It was awarded the costs
of both
applications, including in the latter case the costs on an attorney
and client scale.
The appeals
[17] Imperial Marine is the party more aggrieved by the decision of
the high court. It appeals against the following aspects of
the
judgment:
(a) the reduction of its security for costs in the arbitration by
£250 000, being the amount of security already provided
by
Deiulemar;
(b) the rejection of the claim for security in relation to the
replacement of the cylinder blocks;
(c) the order attaching a condition to the arrest of the
Filippo
Lembo
that it provide security to Deiulemar in the full amount of
its claims arising from the cancellation of the sub-charter and the
alleged lack of seaworthiness and maintenance of the
George T
;
(d) the reduction of the amount of its security in respect of the
corrosion claim;
(e) the order that it bear the costs of the two applications
including, in the case of the
Pasquale della Gatta
, costs on
the scale as between attorney and client.
[18] For its part Deiulemar seeks to sustain the orders of the high
court insofar as they favour it and appeals against the following
portions of those orders:
(a) the maintenance of the arrest and security in relation to the
alleged damage to the No 8 DBT of the
George T
at Richards
Bay;
(b) the dismissal of its application to set aside the arrest of the
Pasquale della Gatta
.
The law
[19] In
Cargo Laden and Lately Laden on Board the MV Thalassini
Avgi v MV Dimitris
1
this court held that:
‘
A claimant applying for an
order for the arrest of a ship in terms of s 5(3)(a) for the
purpose of obtaining security in respect
of a claim which is the
subject of contemplated proceedings to be instituted in a foreign
forum is required to satisfy the Court
(a) that he has a claim
enforceable by an action
in
rem
against
the ship in question or against a ship of which the ship in question
is an associated ship; (b) that he has a
prima
facie
case
in respect of such a claim, which is
prima
facie
enforceable
in the nominated forum or forums of his choice, in the sense
explained above; and (c) that he has a genuine and reasonable
need
for security in respect of the claim.’
The focus in the present case falls on whether the parties have
established the requisite prima facie case in relation to their
respective claims. Whether there is a prima facie case may depend
upon issues of both fact and law, as with Imperial Marine’s
claim for damage to the vessel allegedly suffered at Richards Bay and
the claim arising from alleged SRB-induced corrosion. The
starting
point is the facts upon which any legal contentions are based.
[20] Scott JA addressed the topic of the evidence necessary to
establish a prima facie case in
Hülse-Reutter & others v
Gödde
2
in the following terms:
‘
[12] The requirement of a
prima facie
case in relation to
attachments to found or confirm jurisdiction has over the years been
said to be satisfied if an applicant shows
that there is evidence
which, if accepted, will establish a cause of action and that the
mere fact that such evidence is contradicted
will not disentitle the
applicant to relief – not even if the probabilities are against
him; it is only where it is quite
clear that the applicant has no
action, or cannot succeed, that an attachment should be refused. This
formulation of the test …
has been applied both by this Court
and the Provincial Divisions … One of the considerations
justifying what has been described
as generally speaking a low-level
test … is that the primary object of an attachment is to
establish jurisdiction; once
that is done the cause of action will in
due course have to be established in accordance with the ordinary
standard of proof in
subsequent proceedings. …No doubt for
this reason Nestadt JA, in the
Weissglass
case … warned that a
court “must be careful not to enter into the merits of the case
or at this stage to attempt to
adjudicate on credibility,
probabilities or the prospects of success”.
[13] Nonetheless, the remedy is of an exceptional nature
and may have far-reaching consequences for the owner of the property
attached.
It has accordingly been stressed that the remedy is one
that should be applied with care and caution … More recently,
in
Dabelstein and Others v Lane and Fey NNO
[2000] ZASCA 156
;
2001 (1) SA 1222
(SCA) at 1227H - 1228A, it
was suggested that the time may come to reconsider the approach
adopted in the past and to have regard
also, in the assessment of the
evidence, to the allegations in the respondent's answering affidavit
which the applicant cannot
contradict. In the present case, however,
the affidavits filed on behalf of the appellants are such that the
issue does not arise
and it is unnecessary to consider whether the
test should be refined in the manner suggested.
[14] What is clear is that the “evidence” on
which an applicant relies, save in exceptional cases, must consist of
allegations
of fact as opposed to mere assertions. It is only when
the assertion amounts to an inference which may reasonably be drawn
from
the facts alleged that it can have any relevance. In other
words, although some latitude may be allowed, the ordinary principles
involved in reasoning by inference cannot simply be ignored. The
inquiry in civil cases is, of course, whether the inference sought
to
be drawn from the facts proved is one which by balancing
probabilities is the one which seems to be the more natural or
acceptable
from several conceivable ones … While there need
not be rigid compliance with this standard, the inference sought to
be
drawn, as I have said, must at least be one which may reasonably
be drawn from the facts alleged. If the position were otherwise
the
requirement of a
prima facie
case
would be rendered all but nugatory …’ (Most authorities
omitted.)
[21] These appeals pertinently raise the issue whether Hefer ACJ
was correct in suggesting in
Dabelstein
’s case that
facts in the opposing affidavits that an applicant is unable to
contradict should also be taken into account
in weighing up whether
the applicant has discharged the onus of establishing a prima facie
case. The issue arises at various points
in the consideration of the
evidence presented by the parties in the present case. By way of
example, in relation to the claim
for the damage to the shell plating
of No 8 DBT, a diagram of the berth at Richards Bay and an
explanation of the mode of its construction
is put up and not
challenged by Imperial Marine. In regard to the SRB corrosion claim
there are unchallenged affidavits by Dr Bailey
and Dr Stott put in by
Deiulemar that undermine certain key statements by Imperial Marine’s
expert witness, Dr Cleland. Should
this evidence nonetheless be
ignored in considering these claims, or should it be taken into
account in considering whether Imperial
Marine has placed evidence
before the court that, if accepted by the arbitrators, could
reasonably lead to the conclusion that
the claims will succeed?
[22] When this question was put to him counsel for Imperial Marine
fairly accepted that the court should have regard to such evidence.
That resolves the need to decide finally whether to adopt the
approach of Hefer ACJ although, as the Constitutional Court
has
recently pointed out, deciding matters on the basis of concessions by
counsel is not always satisfactory.
3
For that latter reason I indicate briefly why there is much to be
said, in deciding whether the applicant has established a prima
facie
case, for taking into account the facts in the opposing affidavits
that an applicant does not contradict, at least where
there is no
reason to believe that in future proceedings, with the advantages of
discovery, those facts are capable of being challenged.
The primary
reason is that in principle to do otherwise is to shut one’s
eyes to relevant factual material that may fatally
undermine the
arresting party’s claim and courts do not ordinarily disregard
relevant and admissible evidence when reaching
their decisions.
Disregarding such evidence seems inconsistent with the constitutional
requirement that both parties are entitled
to a fair hearing and
confers an unjustifiable advantage on the arresting party. In the
present context, our courts have repeatedly
stressed that the arrest
of a ship is a matter with serious consequences.
4
That being so, it seems incongruous for a court faced with a decision
whether to order or sustain such an arrest to ignore materially
relevant and undisputed evidence.
[23] The consideration of such evidence does not offend against any
basic principle underpinning the traditional approach to proof
of a
prima facie case. Whilst the fact that the merits will be considered
at a later stage is said to provide the justification
for adopting
this low-level test in cases of attachments to found jurisdiction, it
is not relevant to the consideration of an application
for a security
arrest in terms of s 5(3) of the Act. A security arrest is not
directed at establishing the court’s jurisdiction
in future
proceedings but at obtaining final relief in the form of an order
that security be provided for the outcome of proceedings
in another
forum, usually in another jurisdiction.
5
This is a special jurisdiction vested in our courts under the Act
6
and in determining whether to order an arrest it is inappropriate for
the court to shut its eyes to admissible and relevant evidence
that
is not and cannot be disputed. This is particularly so because
obtaining security may play a crucial role in decisions concerning
the future conduct of the foreign proceedings and can even lead to
their being abandoned or settled.
[24] Leaving that aside two other points fall to be made about the
approach to proof of a prima facie case. They are first that
where
the applicant asks the court to draw factual inferences from the
evidence they must be inferences that can reasonably be
drawn from
it, even if they need not be the only possible inferences from that
evidence. If they are tenuous or far-fetched the
onus is not
discharged. Second the drawing of inferences from the facts must be
based on proven facts and not matters of speculation.
As Lord Wright
said in his speech in
Caswell v Powell Duffryn Associated
Collieries Ltd
:
‘
Inference must be carefully
distinguished from conjecture or speculation. There can be no
inference unless there are objective facts
from which to infer the
other facts which it is sought to establish … But if there are
no positive proved facts from which
the inference can be made, the
method of inference fails and what is left is mere speculation or
conjecture.’
7
[25] Lastly on the aspect of proof of a prima facie case, the parties
relied on expert evidence in regard to certain claims, namely
those
based on the existence of SRB-induced corrosion and the damage
allegedly suffered at Richards Bay, as well as the legal position
in
terms of English law, which governs the charterparty. In a trial
action it is fundamental that the opinion of an expert must
be based
on facts that are established by the evidence and the court assesses
the opinions of experts on the basis of ‘whether
and to what
extent their views are founded on logical reasoning’.
8
It is for the court and not the witness to determine whether the
judicial standard of proof has been met. How, if at all, are these
principles to be applied in the context of an application where the
applicant is required to show only that it has a prima facie
case?
There does not appear to be any authority dealing with this problem.
[26] In my view the court must first consider whether the underlying
facts relied on by the witness have been established on a
prima facie
basis. If not then the expert’s opinion is worthless because it
is purely hypothetical, based on facts that cannot
be demonstrated
even on a prima facie basis. It can be disregarded. If the relevant
facts are established on a prima facie basis
then the court must
consider whether the expert’s view is one that can reasonably
be held on the basis of those facts. In
other words, it examines the
reasoning of the expert and determines whether it is logical in the
light of those facts and any others
that are undisputed or cannot be
disputed. If it concludes that the opinion is one that can reasonably
be held on the basis of
the facts and the chain of reasoning of the
expert the threshold will be satisfied. This is so even though that
is not the only
opinion that can reasonably be expressed on the basis
of those facts. However, if the opinion is far-fetched and based on
unproven
hypotheses then the onus is not discharged.
[27] Foreign law is treated as a fact requiring to be proved by
tendering the evidence of a witness who can speak to the contents
of
that law. However, such evidence is unnecessary where the law in
question can be ascertained readily and with sufficient certainty
without recourse to the evidence of an expert, because the court is
then entitled to take judicial notice of such law.
9
In many maritime cases our courts deal with English admiralty or
maritime law. They are accustomed to considering questions arising
out of bills of lading and charterparties and the operation of
vessels. Since at least 1797 in the case of the Cape Colony
10
and 1856 in the case of the Colony of Natal
11
our courts have in relation to a wide variety of maritime matters
been required in admiralty cases to apply English admiralty and
maritime law. That law is readily accessible in law reports and
textbooks that are part of the standard libraries of the courts
and
practitioners in this field. In those circumstances it should
generally speaking be unnecessary for it to be presented through
affidavits from practitioners, who all too frequently (as in this
case with Deiulemar’s expert), are representatives of the
parties. The undesirability of expert evidence from such a source has
been the subject of previous comment from our courts.
12
[28] I turn then to consider the various claims advanced in the
present cases to assess whether, in the light of these principles,
the parties have made out a prima facie case in relation to the
claims on which each relies.
Imperial Marine’s claims
Costs of the arbitration
[29] Imperial Marine sought security for the costs of the arbitration
in an amount of US$2 150 000. Deiulemar accepted
that this
is a reasonable amount in respect of those costs. However, it
contended that this amount should be reduced by £250
000,
13
being the amount of security already held by Imperial Marine in terms
of a P & I Club letter of undertaking dated 28 November 2006,
but furnished in February 2007, expressed in material part in the
following terms:
‘
IN CONSIDERATION of your
refraining …from applying to the Tribunal or taking any other
steps to obtain security
for
your costs of defending the Claims in the proceedings before the
Tribunal
we
… undertake to pay you … such sums as may be agreed in
writing between you and Charterers (with our consent) to
be due to
you from Charterers
in
respect of your recoverable costs of defending the Claims before the
Tribunal
or as may
be awarded in your favour against the Charterers by Final award of
the Tribunal …in respect of your said recoverable
legal costs
…
It is understood that this security for costs is
intended for no particular stage of the aforesaid proceedings and
that there is
liberty generally to apply for further security for
costs at any time.’ (Emphasis added.)
[30] When that security was furnished Imperial Marine had delivered
its points of defence and counterclaim and the parties were
exchanging further information in preparation for the arbitration.
The issues raised by the claim and counterclaim were intertwined
and
there was no question of the costs for defending the one and pursuing
the other being incurred separately. It is plain that
the security
was given for the costs to be incurred by Imperial Marine in the
further conduct of the arbitration generally. Accordingly,
as held by
the high court, the £250 000 must be taken into account in
determining what security for costs should be given
arising out of
the arrest of the
Filippo Lembo
. Those costs must therefore be
limited to US$1 786 000 and the appeal against this portion
of the order of the high court
must fail.
Replacement of the cylinder blocks
[31] This claim had two elements. The first was a claim for the cost
of replacing the cylinder blocks amounting to US$ 4.2 million.
The
second was a claim for US$ 3 million being the anticipated loss
of revenue due to the vessel being out of service while
the
replacement was to be undertaken. The latter claim is plainly without
merit in view of the fact that the vessel was never withdrawn
from
service for the purpose of replacing the cylinder blocks. Accordingly
no loss of revenue was suffered or will be suffered
in the future.
[32] The evidence on the need to replace the cylinder blocks,
notwithstanding the temporary repairs effected in Pylos, is sparse.
In the founding affidavit it was said that the claim was for the cost
of replacement of the cylinder blocks and related downtime
without
any explanation of why this was necessary, or why the claim had been
formulated in the counterclaim in the arbitration
as one for the
diminution in value of the vessel due to the blocks having been
repaired by way of Metalock stitching. When this
deficiency was
pointed out Imperial Marine’s Cape Town attorney deposed to an
affidavit in which he said that at the time
the counterclaim was
delivered the cylinder blocks had been temporarily repaired with
Metalock stitching ‘so as to satisfy
the requirements of the
vessel’s classification society, which are subject to periodic
review’. He added that it was
intended to amend the
counterclaim.
[33] No certificate was annexed showing that Lloyd’s Register,
the vessels’ classification society, had imposed any
such
requirement or qualification on the initial repair. Mr Luukas, a
chartered engineer and experienced surveyor retained by Deiulemar,
said that:
‘
Metalock repair of cast
components is a recognised ‘permanent’ repair which is
approved by Classification Societies
albeit often subject to periodic
review by way of memorandum on the ship’s machinery
certificate. Typically, if the repair
remains successful, the
requirement for review is deleted by Class.’
This was not challenged in the period of some eight months that
elapsed between this affidavit being delivered and the hearing.
As a
matter of fact the cylinder blocks were not replaced in the nearly
five years that elapsed between the repairs undertaken
in Pylos and
the scrapping of the vessel.
[34] I do not consider that Imperial Marine established a prima facie
case that the repair to the cylinder blocks was inadequate
or
temporary or that they needed to be replaced. However the claim must
in any event founder on the law. Counsel for Imperial Marine
submitted that in English law, which governs the charterparty, the
measure of damages in a case such as this is the cost of repairs
of
the vessel. He relied upon the judgment of Greer LJ in
The London
Corporation
[1935] 51 Ll L Rep 67 (CA),
14
which, he submitted, established the principle that in cases of
damage to vessels the cost of repairs is the prima facie measure
of
the damages suffered by the owner. In that case a vessel had been
damaged in a collision whilst laid up and the cost of repairing
it
had been agreed between the parties. Thereafter, and before the
vessel was repaired, it was sold to be broken up. The question
was
whether the cost of repairs was nonetheless recoverable as damages.
The court held that it was.
[35] Counsel relied on the following passage in the judgment:
‘
Prima facie
the damage occasioned to a
vessel is the cost of repairs, the cost which it is correctly
estimated will be required to put the vessel
into the same condition
as it was in before the collision and to restore it in the hands of
the owners to the same value as it
would have had if the damage had
never been occasioned.
Prima
facie
the
value of a damaged vessel is less by the cost of the repairs than the
value would have been if undamaged.
It
is quite true that it may be established that the estimate is a wrong
estimate and that the value of the vessel undamaged is
exactly the
same as her value after she had been damaged.
’
(Emphasis
added.)
15
However, a reading of the judgment reveals that the only evidence
tendered by the appellant was the fact of the sale to shipbreakers
and, both in the high court
16
and in the Court of Appeal, that was held to be insufficient to rebut
the prima facie proof provided by the agreement between the
parties
on the cost of repairs.
[36] I do not understand the judgment to alter the basic principle
that the measure of the owner’s loss is the diminution
in value
of the vessel.
17
All that it says is that the cost of repairs will prima facie be the
measure of that loss
18
although that prima facie case may be displaced by evidence showing
otherwise. However, it is unnecessary to explore the niceties
of
English law in this regard because this is not a claim falling within
that principle. The cost of the repairs to the
George T
at
Pylos, including the Metalock stitching of the cylinder blocks, was
the subject of a separate claim and Imperial Marine’s
entitlement to security for that claim was not challenged. The claim
in respect of the cylinder blocks was based on the contention
that
those repairs were temporary in nature and replacement of the
repaired items was required. It arose after the repairs had
been
undertaken and was based on their inadequacy. In consequence of that
inadequacy it was contended that the value of the vessel
was
diminished and that the measure of that diminution was the cost of
replacing the cylinder blocks. This claim cannot be conflated
with
the original claim to have the damaged engine repaired.
[37] The evidence shows that the vessel continued to operate under
the charterparty after the repairs had been undertaken at Pylos.
No
complaint was made of any malfunctioning of the engine or
under-performance arising from its operating with repaired cylinder
blocks. Although it underwent three sets of major repairs after
leaving Pylos the cylinder blocks were not replaced. It was sold
at a
price represented by the outstanding balance on the mortgage over the
vessel and the new owners did not replace the cylinder
blocks or
require Imperial Marine to do so. The vessel was scrapped five years
later with the repaired cylinder blocks still
in situ
. The
question then is whether the replacement of the old cylinder blocks
by new ones would have altered its value either as a working
vessel
or as scrap. Prima facie the answer is in the negative. As a working
vessel Imperial Marine and its new owner operated it
without
identifying any problem with the cylinder blocks. As scrap the value
would be unaffected because a shipbreaker is largely
concerned with
the quantity of metal that can be extracted in breaking the ship and
there is no reason to expect a material difference
between the
quantities of steel in old as opposed to new cylinder blocks.
[38] In those circumstances the high court was correct to disallow
the claim for security in respect of the replacement cost of
the
cylinder blocks and the associated downtime claim. The appeal against
this part of its order must fail.
Damage at Richards Bay
[39] The damage discovered at Rotterdam gave rise to a claim that
first emerged in the founding affidavit in the application for
the
arrest of the
Filippo Lembo
. It was expressed in these terms:
‘
Further, whilst the vessel was
at Rotterdam in March 2007 water ingress was observed into No. 8
Double Bottom Tank through a breach
on the shell plating which, on
closer scrutiny, appeared to be the result of impact damage which
Imperial Marine believes was sustained
during the vessel’s call
at Richards Bay in January 2007 but in any event during the lifetime
of the charterparty to [Deiulemar].
The damage was repaired at
Rotterdam and Antwerp in April/May 2007. ’
The legal basis for the claim was said to be that the charterer, in
breach of its obligations, had ordered the vessel to an unsafe
port.
[40] Deiulemar attacked this claim on the basis that it was wholly
speculative and refuted by the evidence of Mr Luukas and Mr
Merckx,
the latter a marine surveyor, both of whom had inspected the vessel
while it was in Antwerp, before repairs were undertaken.
They were
adamant that the vessel displayed no sign of collision damage and
that the breach in the shell plating in way of No 8
DBT was due to
corrosion and failure of the underlying internal framework supporting
the shell plating. In the case of Mr Luukas
his views were set out in
two detailed reports supported by photographs showing the damage and
the corrosion of the internal framework
of the vessel.
[41] In a further affidavit Imperial Marine’s attorney said:
‘
The owner is unable to
pinpoint precisely when the damage to the shell plating occurred. Its
belief that it occurred at Richards
Bay is a matter of inference,
based on inspections previously carried out on the vessel and when
and how the damage was first detected.
Inspections (including, on
occasion, inspections by divers) were regularly carried out on the
vessel and the impact damage was
not noticed before 5 March 2007
when, during a survey at Antwerp, a crack was found in the ship’s
side plating
in way of web frame 125. The ingress of water was
detected during the vessel’s voyage from Richards Bay to
Antwerp.
19
Shortly prior to this, while
the vessel was discharging cargo, the crew had noticed water entering
the No. 8 Double Bottom Tank
and the vessel had called at Richards
Bay approximately a month before the water ingress became apparent.
Given the regularity
of the inspections of the vessel and the fact
that the water ingress had not been noticed previously, it is likely
that the damage
had occurred recently.
The damage to the shell plating was on the vessel’s
port side, where the plating had been bodily set in. The
George
T
was berthed at Richards Bay with her port
side against the berth. The vessel did not suffer any impacts from
tugs. There were no
reported collisions with other vessels or
containers. There is also no evidence in the damaged area of movement
ahead or astern,
which therefore eliminated navigational error.
The
most probable cause of the damage to the shell plating was impact
with some protrusion from the berth at Richards Bay. This
would make
the berth in question unsafe
.’(Emphasis
added.)
[42] Annexed to the affidavit was a report from Mr Armstrong, a
surveyor, who had inspected the damaged shell plating in Antwerp
after it had been cut out of the vessel. He noted that some of the
structure of the plating ‘could have been initially deformed
some time ago – some parts certainly appear to be old damage’.
He therefore advanced as a ‘possibility’
that the ship
‘may have suffered a second impact/contact in an area which was
already weakened’. Scratches that were
noted on the external
shell plating were discounted. His view was that the nature of the
damage to certain frames was suggestive
of an impact and the
application of an external force. His conclusions were:
‘
Such distortion requires a
substantial amount of energy consistent with the ship stopping
against a firm object, and is not compatible
with structural
collapse. Secondly it appears from the corrosion on torn edges of
fractures that the vessel may have suffered a
significant impact some
time ago which, together with the rate of wastage since that time
could have weakened the structure sufficiently
for a more recent
moderate contact to have caused further damage.’
[43] In addition Mr Armstrong noted that on the starboard side of the
vessel there was an indentation corresponding to the indentation
of
the outer shell of the vessel on the port side, although slightly
further forward. According to Mr Luukas these indentations
were
smooth and lacked any sharp creases or indentation. That was not
challenged by Imperial Marine. The significance of this observation
is that Mr Armstrong annexed to his report a photograph of the type
of fenders used to separate rafted vessels at Cosco’s
Zhoushan
Shipyard, where the vessel had undergone a survey and major repairs
were effected between June and August 2006. In relation
to these he
expressed the view that ‘these do not appear to be very
resilient, and it is possible that the shape could match
the port and
starboard indentations. Noting the apparent age of some of the damage
to the web frames, it would be worth investigating
when the vessel
could have been in contact with these or similar fenders and whether
the position of the indentations above the
keel accords with the
drafts at the time.’ There is no indication that this advice
was followed.
[44] These views, tentatively expressed as they were, are
inconsistent with the inferences that Imperial Marine seeks to draw
as to the cause of these indentations. Whilst they lend support to
the view that the vessel had come into contact with something
they
postulate two separate impacts, not one, and the earlier one is
described as significant. In addition they highlight the distinct
possibility, given the configuration of the indentations and the fact
that there were corresponding indentations on both port and
starboard
plating, that the damage originated with the fenders in Zhoushan.
[45] Imperial Marine’s attorney made it clear that its case is
dependent on inferences that it claims should be drawn from
the
underlying facts. However these are limited or lacking in relevant
detail. In regard to inspections, including underwater inspections,
there is no detail as to date or place. Also no attempt was made to
relate these inspections in point of time to the survey and
repairs
in Zhoushan. That is relevant because Imperial Marine wrote to
Deiulemar on 16 March 2007 in regard to this damage
saying
that the last clean underwater inspection had taken place in
Singapore, but the evidence did not indicate that the vessel
had
called at Singapore between leaving Zhoushan and arriving at Richards
Bay.
20
There was no factual basis for the contention that:
‘
Given the regularity of the
inspections of the vessel and the fact that the water ingress had not
been noticed previously, it is
likely that the damage had occurred
recently.’
[46] Nor is it logical to say that the absence of any report of a
collision elsewhere involving a tug or some other vessel or object
justified the inference of a collision with a protrusion from the
berth in Richards Bay. This ignores the glaring absence of any
report
of an impact being sustained when the vessel was berthing in Richards
Bay. It is hard to believe that an impact causing
an indentation 28
metres long, 4.6 metres high at its maximum and set in by up to 400
mm, could have occurred whilst the vessel
was engaged in the careful
manoeuvring that entering a berth entails, without the pilot, any
member of the crew or the crew of
the assisting tugs noticing. Such
an incident would ordinarily have been the subject of a note of
protest by the Master and should
have been reported to the port
authorities and the vessel’s P & I Club representative in
Richards Bay, Captain Wood,
but no such protest or report was made.
The reports made to Lloyd’s Register, with which the vessel was
entered for class,
were contradictory and referred both to a hull
contact of which there were no details and heavy weather as the cause
of the damage.
[47] What is finally decisive in assessing the evidence is the
unchallenged evidence of Captain Wood. He testified that there has
never been an incident of the type suggested involving a vessel
berthing at Richards Bay, which is one of the busiest harbours
in the
world, largely dedicated to the loading of raw materials into bulk
carriers. The existence of the suggested protrusion is
inconsistent
with the mode of construction of the berths at Richards Bay, as
illustrated in a plan provided by the port authorities.
It would
require an object protruding more than two metres from the wall of
the berth. Such a protrusion could hardly have gone
unnoticed in a
port as busy as Richards Bay and no attempt was made by Imperial
Marine to call for an investigation of the berth
to substantiate its
claims. Bearing in mind the statement in the attorney’s
affidavit that: ‘
There is also no evidence in the
damaged area of movement ahead or astern, which therefore eliminated
navigational error’
the protrusion would have needed to be some 28 metres long and
protruding more than two metres from the wall of the berth. It is
inconceivable that such a protrusion would have gone unnoticed.
[48] The inference that Imperial Marine wants the court to draw is
not a proper inference from the few facts that it placed before
the
court. In the light of all the unchallenged evidence the claim that
the
George T
was damaged as a result of coming into contact
with an underwater protrusion from the berth at Richards Bay is
nothing more than
speculation. Imperial Marine did not therefore
satisfy the requirements for a prima facie case in respect of this
claim. Accordingly,
the high court should have disallowed it, and to
that extent the cross-appeal by Deiulemar must succeed.
The corrosion claim
[49] This claim founded the arrest of the
Pasquale della Gatta
.
It was originally expressed in this way:
‘
Imperial Marine has determined
that the corrosion damage occurred as a result of the ballasting of
the vessel with seawater containing
Sulphate Reducing Bacteria
(‘SRB’). SRB are bacteria which reduce sulphate ions from
seawater to form hydrogen sulphide,
which react with ferrous ions
from the plating and hull to form iron sulphides, which in turn cause
accelerated corrosion damage.
Imperial Marine contends that the
bacteria entered the ballast tanks of the
George
T
during
the course of the charterparty as a result of following charterers’
orders to areas to where she was more prone to
pick up SRB from
seawater loaded into her ballast tanks in those areas as part of the
operation of the vessel.’
In that form the claim did not survive the affidavit in support of
the application to set aside the arrest, which pointed out,
on the
basis of expert evidence, that SRB are found worldwide and are not
even confined to seawater, so that their introduction
into ballast
tanks in the ordinary operation of a vessel is practically
unavoidable.
[50] The claim was then reformulated on the basis of an expert report
provided by Dr James Cleland. He based his report on calculations
of
the rate of corrosion he found in the vessel’s tanks between
the time of the survey and repairs to the vessel in Zhoushan
in
August 2006 and April 2007. From these calculations he concluded that
the corrosion in the vessel’s tanks was attributable
to the
actions of SRB. He accepted that SRB are omnipresent and said that
what would have triggered their activity in this case
was what he
referred to as ‘the impact’ with reference to the
indentation of the port side plating of the vessel in
way of No 8
DBT. His conclusions were that:
‘
9.1.1 The excessive corrosion
found at Antwerp in March 2007 in the No. 8 DBT of the
George
T
was
due to microbially-influenced corrosion due to a heavy infestation by
sulphate-reducing bacteria
compounded
and exacerbated by the mechanical and chemical effects of the impact;
and
9.1.2 The excessive corrosion found at Zhoushan in
August/September 2007 in the 10 Top Side Tanks, the Fore Peak, the 10
Double
Bottom Tanks and the After Peak of the renamed SEA CORAL was
also due to microbially-influenced corrosion due to a heavy
infestation
by sulphate-reducing bacteria compounded by the presence
of sulphur-oxidizing bacteria.’ (Emphasis added.)
[51] Imperial Marine’s attorney explained that the ‘impact
which the
George T
experienced in Richards Bay’ was
the trigger for the infestation by SRB and consequent corrosion
damage. That claim was problematic
in view of the absence of evidence
that there had been such an impact in Richards Bay, but it was dealt
a devastating blow by the
response, which pointed out that the
corrosion claim did not relate to corrosion damage in relation to No
8 DBT but to the damage
to the other tanks of the vessel where that
‘trigger’ mechanism for the development of microbially
induced corrosion
was absent.
[52] The day before the application to set aside the arrest was due
to be argued an affidavit from Dr Cleland was filed attaching
a
further report in which the theory of SRB infestation being triggered
by an impact in Richards Bay was abandoned and a fresh
theory
advanced. Dr Cleland now expressed the view that, because the attack
of SRB-induced corrosion was much greater than anticipated
in all
DBTs, it was clear that the infestation of SRB had occurred prior to
the summer of 2006 (when the vessel was in Zhoushan
and the
measurements of steel thickness on which he relied had been taken).
Accordingly ‘a re-assessment of the date of infestation’
was necessary. He then identified from the vessel’s ballast log
‘two ports as candidates’ and from the two (Quingdao
and
Xingang) he selected Xingang on the basis that there are two chemical
factories and one plastic factory upriver of the port.
The importance
of this was not explained.
[53] The production of this new case prompted a postponement of the
application and the delivery of affidavits by Drs Bailey and
Stott,
whose expertise in relation to microbially induced corrosion and SRB
is unchallenged. They pointed out that the theory that
every tank was
infested with SRB at the same time in the same port is untenable. As
to the choice of Xingang as the culprit port,
on the basis of the
presence of two chemical factories and one plastic factory, they said
that Quingdao has more than three factories
causing pollution of its
waters, including chemical and plastic factories. In addition they
said that the relevant nutrients for
SRB bacteria would come from
food processing plants and oil refineries rather than chemical and
plastic plants. No attempt was
made to rebut this evidence.
[54] Counsel for Imperial Marine properly accepted that his case
stood or fell by the court accepting the final view of Dr Cleland
as
being sufficient to establish a prima facie case. It is not. First
the facts on which he relied for his opinion are not established
even
on a prima facie basis. A glaring problem is that, once he fixed the
commencement date as being January 2006, when the vessel
called at
Xingang, this necessarily impacted upon his calculations, which
started from the steel thickness measurements in August
2006 at
Zhoushan. This is not dealt with. His explanation for choosing
Xingang instead of Quingdao is lacking in any reasoned foundation.
In
any event the notion of an infestation in all tanks occurring at one
port and remaining in place thereafter in all tanks despite
the
vessel’s undergoing a survey and repairs in Zhoushan, where in
the ordinary course the vessel would have been deballasted
to some
extent, if not entirely, stretches credulity. The opinion expressed
on this factual foundation is not within the reasonable
range of
expert opinion but is far-fetched and based on unproven hypotheses.
It is accordingly insufficient to discharge the onus
of proof resting
on Imperial Marine to establish a prima facie claim.
[55] It follows that the arrest of the
Pasquale della Gatta
was not justified and the high court should have granted the
application by Deiulemar to have it set aside. The cross appeal
directed
at this result must therefore succeed. This renders it
unnecessary to canvass the claim for counter-security for a possible
claim
in terms of s 5(4) of the Act, as that was expressly
conditional on the application to set aside the arrest being
unsuccessful.
The order made in that regard must be discharged but
without any penalty so far as costs are concerned. There was a
challenge by
Imperial Marine to the decision by the high court to
award those costs on an attorney and client scale. However that was a
matter
in the court’s discretion. Whilst some of the grounds on
which it was exercised may not be applicable in the light of this
judgment, the fact remains that the application was brought on a
basis that proved spurious; the attempt to rescue that was also
shown
to be spurious; and the final version on which the claim was advanced
lacked any merit. In those circumstances I can see
no reason to
interfere with the judge’s discretion.
Deiulemar’s claim for counter-security
[56] The parties approached the application for counter-security on
the basis that an applicant for such security must satisfy
the same
requirements as an applicant for an arrest, namely a prima facie case
in respect of the claim to be secured; that the
tribunal before which
the claim is to be debated has jurisdiction for that purpose; and
that the applicant for counter-security
must show a genuine and
reasonable need for such security. This is in accordance with what
was said by this court in
MV Wisdom C: United Enterprises
Corporation v STX Pan Ocean Co Ltd
[2008] ZASCA 21
;
2008 (3) SA 585
(SCA) para
26.
21
[57] However proof of these matters, whilst essential, is not
necessarily decisive of the question whether counter-security should
be ordered. As Comrie J pointed out in
The Heavy Metal
,
22
ss 5(2)(b) and (c) of the Act vest a court with a discretion and
that should not be constrained by a formulaic approach to
the
exercise of that discretion. He said, and I agree, that the proper
approach is that:
‘
In the first place, it is
evident that s 5(2)(a) - (c) of the statute vests the court with a
wide power, in its discretion, to order
that security or
counter-security be furnished for claims and counterclaims. Secondly,
confining myself to counterclaims, clearly
the Court must have
jurisdiction, which is invariably present in the circumstances.
Thirdly, it seems to me that an applicant must
show at least a
prima
facie
case
in respect of its counterclaim(s). I say “at least”
because less would not warrant security, while in my view more
may be
required in an appropriate case. Fourthly, I think an applicant must
show a genuine and reasonable need for security. …
Finally,
the Court has a discretion which in my opinion should not be unduly
circumscribed. All sorts of factors can arise in different
cases
which may affect the exercise of the discretion, such as whether the
arrest was in terms of s 5(3); the location of the forum;
whether the
arresting party is a
peregrinus
of this Court; the nature of
the counterclaims; and the effect that a “forfeiture”
order may have on the arrestor's
position … The list is not
exhaustive. The Court may find itself weighing and balancing
competing interests. The strength
of the counterclaimant's case on
the merits may then become a factor to be weighed in the balance. It
follows from all this that
I do not necessarily find myself in the
“sparing” school of thought, but that I do recognise a
substantial need for
caution.’
[58] In determining the quantum of any counter-security the court may
also have to exercise a discretion. A litigant is entitled
to
security in an amount determined on the basis of its reasonably
arguable best case.
23
That requires the existence of the claim to be established on a prima
facie basis and the quantum of security to be determined
on the basis
of the amount representing the reasonably arguable best case in
respect of that claim.
24
The need for security in the amounts claimed must be established on a
balance of probabilities.
25
However, the computation of those amounts may not always be
straightforward and may require the court to exercise a discretion
in
determining the quantum of the counter-security to which the litigant
is entitled.
[59] The exercise of such a discretion is pertinent in this case for
two reasons. First Deiulemar advances its claims on alternative
and
inconsistent grounds and there is an admitted risk of duplication
resulting in excessive security being granted. It attempted
to
accommodate the risk of duplication by deducting from the total of
the claims advanced in the proposed amendment to its points
of claim
in the arbitration (US$23 213 371.73) the amount of one
claim (US$5 721 243.33), arriving at an amount
of
US$17 477 128.40, which is the sum ordered by the high
court by way of counter-security.
26
The papers are not clear in showing how the overlap was determined
and it emerged in the course of argument that there are problems
with
the calculation by which it was determined. Some of these can be
resolved only by the exercise of a broad discretion.
[60] The second reason is that the claims advanced by Deiulemar are
claims for loss of profits. These are set out in the amended
points
of claim on the most optimistic possible basis with no allowance for
contingencies.
27
However, in assessing the proper amount of security the court cannot
be bound by the litigant’s assessment of the value of
its
claim. Where that assessment includes items that should not be
included, and makes no allowance for obvious contingencies,
the court
determining the security to which it is entitled must make an
appropriate adjustment to accommodate these shortcomings.
In doing so
it will ordinarily be unable to make a precise calculation and will
have to make a broad assessment of what is appropriate
and fair on
general grounds. Where a prima facie case and the need for security
have been established the litigant should not be
deprived of security
by reason of an inability to make an exact assessment of its quantum.
Nor should it be given security for
claims that are over-optimistic.
The Dabkomar claims
[61] In the ordinary course of events, had there been no difficulties
in operating the vessel, Deiulemar would have earned the
difference
between the hire under the head charter and the considerably larger
amount by way of hire that Dabkomar agreed to pay
under the
sub-charter, throughout the relevant period of the charter. However,
Dabkomar cancelled the sub-charter and Deiulemar
now accepts that it
was entitled to do so, irrespective of whether the cause of the
breakdown was Imperial Marine’s failure
properly to maintain
the vessel or its own fault in providing the out of specification
stem of bunkers. I proceed on the same footing.
[62] One claim flowing from the sub-charter can be dealt with before
reaching the consequences of its cancellation. It will be
recalled
that when the vessel went to Colombo for bunkers and thereafter was
briefly delayed in Suez before proceeding to Pylos
for repairs,
Deiulemar treated it as being off-hire and declined to pay hire for
the relevant periods. Dabkomar adopted the same
approach under the
sub-charter. In the result Deiulemar lost the difference between the
hire it would have paid and the hire it
would have received during
this period. The amount is US$2 197 773.59. This was the
original claim in the arbitration
and Deiulemar claimed
counter-security for this amount. It presented evidence that, if in
thoroughly efficient condition and properly
maintained, the vessel
should not have experienced problems with the out of specification
bunker stem at Yeo Su. Furthermore the
evidence was that an
examination of the damaged engine in Pylos indicated that it had been
operating for some time in a deficient
condition. Although this was
challenged in the heads of argument it is plain that if this evidence
is believed in the arbitration
it will warrant a finding in favour of
Deiulemar. Accordingly a prima facie case was made out in respect of
this claim and counter-security
for it was properly ordered.
[63] The next claim was based on essentially the same cause of
action. It was that the breaches of the charterparty in relation
to
the condition of the vessel and the failure to maintain it provided
proper grounds for Dabkomar’s cancellation of the
sub-charter.
As a result it was alleged that Deiulemar lost the benefit of a
profitable sub-charter for the balance of the head
charter period.
For the reasons given in the previous paragraph it established a
prima facie case in relation to this claim. However,
the calculation
of the claim presented some problems. The basis of calculation was an
arithmetic exercise. The number of days remaining
before the
sub-charter could reasonably have been expected to expire if it had
run its ordinary course were taken and multiplied
by the difference
between the two hire rates. The difficulty relates to the number of
days to be included in the calculation and
its effect on the total
amount of the claim.
[64] The claim has three components, two relating to the loss of hire
under the sub-charter and the third giving credit for trading
profits
earned by Deiulemar after the cancellation. The first loss of hire
calculation dealt with the initial period of he charter
up to
6 August 2006. For that period the hire payable under the
head charter was US$16 350 per day. The calculation
arrived at a
figure of US$9 988 324.94. An immediate problem is that it
took as the starting point of the calculation
the delivery date under
the sub-charter of 23 April 2005 and then deducted certain
periods when the vessel was off-hire.
However, that has the effect of
including days when the vessel was operating under the sub-charter
and the hire should have been
paid. There is nothing to indicate that
it was not. The proper place to start is the date of Dabkomar’s
cancellation, namely
29 September 2005. There are 310 days
28
from then until 6 August 2006 and the hire differential was
US$28 650 per day.
[65] In the affidavit in support of the application for
counter-security it was said that the vessel ‘was taken out of
service
for the purpose of the carrying out of repairs (primarily
steel renewals) at Zhoushan, China, during the period 23 June to
17 August 2006’. In a witness statement by
Deiulemar’s London solicitor annexed to that affidavit it
emerged
that Deiulemar was informed on 21 June 2006 that it
would be taken out of service for the purpose of undergoing its
annual
survey. Their complaint was that this took a long time and
that a superficial survey revealed that various steel renewals were
being carried out in addition to class requirements. The answering
witness statement on behalf of Imperial Marine, dated 21 March 2007,
pointed out that Deiulemar ‘do not now and never have asserted
that they have any claim arising out of’ the period
of time
that the vessel was off-hire in Zhoushan. It also rebutted
suggestions that the charterers were not kept apprised of progress
with the survey. None of this was refuted in a replying witness
statement. The claim only emerged when the amended points of claim
were delivered in the arbitration. It proceeded on the footing that
no part of the time taken at Zhoushan was permissible. Clearly
that
is incorrect once it is accepted that the vessel had to undergo an
annual survey. The affidavit in opposition to the claim
for
counter-security made the point that the repairs to the vessel’s
shellplating were undertaken in accordance with class
requirements.
This was not rebutted save for a complaint that the reports and
recommendations of the classification society were
not provided.
[66] In my view Deiulemar did not make out a prima facie case in
respect of this portion of its claim, but in any event it is so
speculative and lacking in an adequate factual foundation that it
would be inappropriate in the exercise of the court’s
discretion to order security for this period. That requires a period
of 44 days to be deducted from the 310 days with
which the
calculation commences, leaving a balance of 266 days. On the
basis of a hire differential of US$28 650 per day
that
results in a figure of US$7 620 900 in respect of this
component of the claim.
[67] Turning to the period between 6 August 2006 and
3 September 2007, when the sub-charter would have
terminated
if it had run its course, I assume in favour of Deiulemar
that Dabkomar would not have exercised its option to terminate up to
60 days earlier. In round figures that gives 394 days.
However, account needs to be taken of the fact that it is unlikely
that re-delivery would have occurred precisely on the stipulated
date. In the calculations in the papers periods amounting
cumulatively
to a little over 86 days were omitted in
calculating the remaining period of the sub-charter. Ten of these
related to the
survey period at Zhoushan. Two small deductions were
unexplained. The remainder related to the repairs at Rotterdam and
Antwerp.
If the evidence for Deiulemar is accepted in the arbitration
this will result in a finding that this last period was caused by a
breach by Imperial Marine of its obligations in regard to the
condition of the vessel and its maintenance. That being so these
days
should not have been excluded in calculating this element of the
claim. The Zhoushan days should be deducted and an allowance
made for
possible re-delivery before 3 September 2007 and for the
accepted need to satisfy a class requirement that there
be an
inspection before 25 August 2007. Working on a round figure
of 360 days is in my view fair and allows for
contingencies.
This component of the calculation is then US$9 954 000.
[68] That gives a total loss of income on the sub-charter of
US$17 574 900. From that the profits earned from trading
after the cancellation of US$12 742 849 must be deducted.
This leaves a figure of US$4 832 051. Deiulemar has
established its entitlement to counter-security in this amount but
that entitlement needs to be assessed in the light of the potentially
overlapping claims.
The potentially overlapping claims
[69] Counsel for Deiulemar correctly accepted that claims, amounting
in total to US$12 566 570.25, arose from the trading
activities of the vessel after the cancellation of the sub-charter
and could not be advanced in addition to the claim based on
the loss
of the sub-charter. That is because Deiulemar would not have traded
the vessel for its own account or concluded other
sub-charters if the
sub-charter had not been cancelled, but would simply have collected
the hire under the sub-charter each month.
It accordingly advanced
these claims in the alternative to its claim based on the
cancellation of the sub-charter.
[70] By far the largest component of this amount was a claim for
US$8 341 650. The claim arose because on 13 June 2007
Imperial Marine gave notice that following the discharge of the
vessel’s then current cargo it would be taken out of service
and sent to a shipyard in China to undergo a dry docking required by
class. Deiulemar contended that this was a routine bottom
survey that
should have taken only a day to complete and that the vessel’s
intermediate survey was not due until December
after the expiry of
the charter. It accordingly treated the owner’s conduct as
repudiatory of the charter, accepted the repudiation
and claimed for
the loss of profits it alleged it had suffered as a result.
[71] It is accepted by both parties that Imperial Marine were obliged
to undertake a dry docking survey as required by class and
had to do
so before 25 August 2007. Imperial Marine had asked the
classification society to extend the date so as to
coincide with the
vessel’s intermediate survey in December 2007, but this request
was refused. In correspondence between
the London solicitors for the
parties it was asserted on behalf of Deiulemar that the required
survey could have been done relatively
quickly while the vessel was
undergoing repairs to No 8 DBT at Antwerp, but that
assertion was roundly rejected by the
solicitors acting for owners.
Reliance was placed on this correspondence in support of the claim,
but I fail to see on what basis
the conflicting assertions by the
parties’ solicitors amounts to any evidence of the correctness
of the propositions they
are asserting, especially when those
assertions relate to technical matters of ship maintenance falling
outside their area of expertise.
[72] Imperial Marine made arrangements for the dry docking to
take place at Zhoushan in China after the vessel completed its
then
current voyage to Al Jubail. On 30 June 2007 Deiulemar placed the
vessel off-hire on the grounds that they had been unable
to find
business for the ship after completing discharge at Al Jubail,
which occurred on 2 July 2007, and would
not be able to do
so before the dry docking window closed. The vessel sailed to
Zhoushan from Al Jubail. On 1 August 2007
Deiulemar
cancelled the charterparty on the basis that there was no likelihood
that the vessel would be redelivered for trading
purposes after the
dry docking in sufficient time for it to make commercial use of
it. They attributed this to the failure
to undertake the survey in
Antwerp. As I have said there is no evidence to back up that claim.
[73] In those circumstances Deiulemar did not establish a prima facie
case in respect of this claim. If it is excluded, then the
claim
arising from the cancellation of the Dabkomar sub-charter exceeds the
amount of any claims arising from Deiulemar’s
trading of the
George T
after that cancellation. There are three of these,
one relating to the period of repairs at Zhoushan in 2006 and the
other two
relating to the work and repairs in Rotterdam and Antwerp.
The Zhoushan claim must be excluded for the reasons given in not
allowing
this time period in the calculation of the sub-charter
cancellation claim. The Rotterdam and Antwerp claims are prima facie
established
and the security should cover these claims.
Additional claims
[74] The other claims advanced by Deiulmar amounted in all to
US$2 727 784.56. One of these claims, in an amount of
US$ 1 429 992.44, was disallowed by the high court.
Leave to appeal against its disallowance was neither sought nor
granted. Accordingly this amount must be deducted in determining the
amount of counter-security. Its deduction reduces the amount
of these
claims to US$1 297 792.12.
[75] The remaining claims included a claim for US$15 000 in
respect of which Deiulemar’s attorney said that a claim
for
security was not being pursued. He should be taken at his word. There
was a claim for the balance of the provisional final
hire statement
of US$515 717.65. In support of this reliance was placed on the
copy of the statement annexed to the founding
affidavit. It was said
that Deiulemar was not aware of any dispute in regard to this amount.
That was not, however, the response
of Imperial Marine’s
attorney who said that his client found the calculation
incomprehensible. That is hardly surprising
as an examination of the
statement reveals that it includes amounts calculated on the basis of
Deiulemar being successful in relation
to some of the very issues
that are in dispute between the parties in the arbitration. No prima
facie claim was made out under
this head.
[76] Next there was a claim for US$17 352.91 in respect of the
short-loading of the vessel at Richards Bay in February 2006.
It
appears that such a claim was made by the vessel’s then
sub-charterer and was accepted by Deiulemar on the grounds that
there
had been a failure to make the entire reach of the vessel available
to the sub-charterer due to the presence of ballast that
could not be
stripped from the vessel before loading. A marine surveyor’s
report was put up in support of this claim and
it seems clear that
there were deballasting problems. The claim was challenged on the
basis that there was no evidence of any maintenance
problem but I
agree with Deiulemar’s attorney that an inability to pump
ballast of itself points to such a problem. In any
event there was
prima facie a breach of the obligation to make the entire reach of
the vessel’s holds available to the charterer.
The order for
counter-security in respect of this claim was accordingly justified.
[77] Lastly there were a number of performance claims based on
allegations that the vessel was at various times and on various
voyages not able to steam in accordance with the speed and
consumption figures given in clause 62 of the charterparty. The first
problem with these claims is that these figures were given subject to
certain weather and sea conditions and without guarantee.
They are
advanced in the draft amended points of claim on the basis of an
allegation that ‘the vessel failed to achieve the
performance
warranted under clause 62 of the charterparty’. However there
was no guarantee. Most of the claims were not included
in the
charterer’s provisional final hire statement. They were based
on what was said to be a standard system of measurement
of the
performance of vessels but no basis was laid for its application to
this charterparty and these voyages. In addition the
vessel appears
to have been under sub-charter during the voyages in question and
there is no evidence that the sub-charterers advanced
such claims,
nor any response to the statement by Imperial Marine’s attorney
that the sub-charters contained the same performance
figures on a
back to back basis. In my view no prima facie case was established in
respect of these claims and counter-security
should not have been
ordered in respect of them.
Summary of Deiulemar’s claims
[78] Deiulemar has established prima facie that it has the following
claims:
A loss of hire claim of US$ 2 197 773.59 under the
Dabkomar sub- charter for the deviation to Colombo and the period
of
repairs in Pylos;
A loss of hire claim of US$4 832 051 arising from the
cancellation of the Dabkomar sub-charter;
A short-loading claim of US$17 352.91.
The total amount of these claims is US$7 047 177.50. In
addition it seems to me that a prima facie case has been established
in respect of the ‘overlapping’ damages claims arising
from the unavailability of the vessel while it was detained
at
Rotterdam and Antwerp for repairs from 4 March 2007 to
12 May 2007. These claims are only valid if the loss
of
hire claim arising from the cancellation of the Dabkomar sub-charter
is bad so no additional security should be ordered in respect
of
them. However the counter-security should cover them in order to
allow for the possibility of the sub-charter cancellation claim
failing. They amount to US$3 052 029.62.
[79] In the result the counter-security ordered by the high court
should be reduced from US$17 477 128.40 to US$7 047 177.50
and the interest component falls to be adjusted accordingly. To that
extent Imperial Marine’s appeal against the order of
the high
court must succeed.
Disposal of the appeals and costs
[80] In the application arising from the arrest of the
Pasquale
della Gatta
the cross-appeal by Deiulemar against the dismissal
of its application to set aside the arrest of the vessel must succeed
with
costs. The order for counter-security made by the high court
pursuant to the conditional counter-application must be set aside.
Therefore Imperial Marine’s appeal against the order for
counter-security falls away. Its appeal against the quantum of
security granted to it and against the order for costs in the high
court falls to be dismissed.
[81] In the application arising from the arrest of the
Filippo
Lembo
Imperial Marine’s appeal against the order that it
provide counter-security fails but its appeal against the quantum of
that
security succeeds and the amount for which it was ordered to
provide security must be reduced to US$7 047 177.50 and the
interest component is reduced to US$1 374 199,61. Its
appeal against the orders reducing the amount of its security by
US$7.2 million in respect of the claim for the replacement of the
main engine cylinder blocks and its security in respect of costs
by
£250 000 fails as does its appeal against the costs order by
the high court. Deiulemar’s cross-appeal against the
order that
it provide security for Imperial Marine’s claims in an amount
of US$2 935 843.27 in respect of the claim
for repairs to
the shell plating at Antwerp succeeds. Both parties have achieved
significant success in this court. A fair reflection
of that would be
to order each party to bear one half of the costs of and attendant
upon the preparation of the record relating
to this arrest
29
and otherwise that each party bear its own costs of the appeal and
cross-appeal.
Order
[82] In the appeal against the judgment in the case of the arrest of
the
Pasquale della Gatta
(Case No AC20/09 in the high court)
the following order is made:
The appeal is dismissed with costs.
The cross-appeal is upheld with costs and the order of the high
court is altered to read as follows:
‘
(i) The order for the arrest of the
Pasquale della Gatta
granted
ex parte
on
20 March 2009 and the deemed arrest of the vessel pursuant to the
provision of security to obtain its release from that arrest
are set
aside.
(ii) The applicant is ordered to pay the costs of the application on
the scale as between attorney and client.’
(c) The order for the provision of counter-security by Imperial
Marine is set aside.
[83] In the appeal against the judgment in the case of the arrest of
the
Filippo Lembo
(Case No AC 8/09 in the high court) the
following order is made:
(a) The appeal succeeds to the extent that paragraphs 6 and 7 of the
order of the high court are altered in the following respects:
by the deletion in paragraph 6(a) of the amount of US$17 477 128.40
and its replacement by US$7 047 177.50;
by the deletion in paragraph 6(b) of the figure of US$3 408 040
and its replacement by US$1 374 199,61;
by the deletion in paragraph 7(a)(i) of ‘claims 1(a)-(f)
US$20 485 587.17’ and its replacement by ‘claims
1(a), (b), (d) and (e) US$7 029 824.59’;
by the deletion of paragraphs 7(b) and (d);
but is otherwise dismissed.
(b) The cross-appeal succeeds and paragraph 2 of the order of the
high court is altered in the following respects:
by the deletion of paragraphs 2(a)(iii) and (iv) thereof;
(ii) by the deletion in paragraph 2(a)(v) of the figure of
US$1 699 675.20 and its replacement by US$878 825.23;
(iii) by the deletion in paragraph 2(a)(vii) of the figure of
US$12 201 958.32 and its replacement by US$7 171 621.26.
(c) Each party is ordered to pay half the costs of and attendant upon
the preparation of the record in relation to this matter
being
volumes 1 to 9 and 16 of the record of appeal and is otherwise
ordered to bear its own costs.
M J D WALLIS
JUDGE OF APPEAL
Appearances
For appellant: M J Fitzgerald SC (with him D Melunsky)
Instructed by
Bowman Gilfillan Inc, Cape Town
Lovius-Block, Bloemfontein
For respondent: S Mullins SC
Instructed by
Shepstone & Wylie, Cape Town
Matsepes Inc, Bloemfontein.
1
Cargo
Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris
1989 (3) SA 820
(A) at 832J-833A.
2
Hülse-Reutter
& others v Gödde
2001 (4) SA 1336
(SCA) paras 12 - 14.
3
Premier:
Limpopo Province v Speaker of the Limpopo Provincial Government and
others
[2011] ZACC 25
, para 31.
4
Starting
with a statement by Didcott J in
Katagum Wholesale Commodities Co
Ltd v The MV Paz
1984 (3) SA 261
(N) at 269H, quoted with
approval by Corbett CJ in
Bocimar NV v Kotor Overseas Shipping
Ltd
[1994] ZASCA 5
;
1994 (2) SA 563
(A) at 581G-H and by Scott JA in
MV Snow
Crystal: Transnet Ltd t/a National Ports Authority v Owner of MV
Snow Crystal
[2008] ZASCA 27
;
2008 (4) SA 111
(SCA) para 36.
5
Ecker
v Dean
1937 SWA 3 at 4 cited in
Shepstone and Wylie &
others v Geyser NO
1998 (3) SA 1036
(SCA) at 1042C-D. Whilst
there remains a deemed arrest of the vessel in terms of s 3(10)(a)
of the ACT, even after it has
been released from arrest against the
provision of security, (see
MV ‘Alam Tenggiri: Golden
Seabird Maritime Inc v Alam Tenggiri SDN BHD
2001 (4) SA 1329
(SCA) paras 12 to 15) in the ordinary course if a challenge to a
security arrest is unsuccessful the South African courts play
no
further role in the proceedings in relation to which such security
has been furnished.
6
When
introduced it was unique internationally and even in jurisdictions
where similar relief is now obtainable it is neither as
straightforward nor as direct as in South Africa
7
[1939]
3 All ER 722
(HL) at 733E-F, cited in
Motor Vehicle Assurance
Fund v Dubuzane
1984 (1) SA 700
(A) at 706B-D. See also
Great
River Shipping Inc v Sunnyface Marine Limited
1994 (1) SA 65
(C)
at 75I-76C and particularly the statement that ‘evidence does
not include contention, submission or conjecture.’
8
Michael
& another v Linksfield Park Clinic (Pty) Limited & another
2001 (3) SA 1188
(SCA) para 36 and generally paras 34 – 40.
9
Section
1(1)
of the
Law of Evidence Amendment Act 45 of 1988
.
Kwikspace
Modular Buildings Ltd v Sabodala Mining Co SARL and another
2010
(6) SA 477
(SCA) para 7.
10
According
to Eric Walker,
A History of Southern Africa
, 3 ed (1968) at
126, 141 and 163 a vice-admiralty court was established in 1797; was
revived when the Cape reverted to British
control during the
Napoleonic wars and was firmly established by the Charters of
Justice of 1828 and 1832. See also Reinhard
Zimmermann and Daniel
Visser,
Southern Cross: Civil Law and Common Law in South Africa
,
at 446, fn 59.
11
Natal
acquired a vice-admiralty court after it became a crown colony by
royal charter in 1856. These courts functioned in terms
of the
Vice-Admiralty Courts Act 1832 (2&3 Will IV c51) and thereafter,
in terms of the Vice-Admiralty Courts Act 1863 (26 &
27
Vict. c24).
Under Law 8 of 1879 (Cape); The Colonial Courts of
Admiralty Act 1890 (53 &
54 Vict. C27)
and s 6(1)(a) of the Act,
our courts have consistently been required to apply English
admiralty and maritime law to disputes
including disputes such as
those in the present case.
12
Stock
v Stock
1981 (3) SA 1280
(A) 1296F;
Atlantic Harvesters of
Namibia (Pty) Ltd v Unterweser Reederei GMBH of Bremen
1986 (4)
SA 865
(C) 874F-J. For what is required of an expert witness, see
National Justice Compania Naviera SA v Prudential Assurance Co
Ltd (“The Ikarian Reefer”)
[1993] 2 Lloyds Rep 68
[QB (Com Ct)] at 81-2.
13
When
converted to dollars the resulting balance is US$1 786 000.
14
As
followed and construed in
The ‘Argonaftis’
[1989]
2 Lloyd’s Rep 487 [QB (Adm Ct)].
15
At
69. The principle that Greer LJ articulated is still accepted in
England.
Halsbury’s Laws of England
(5 ed, 2008), Vol
94, para 829.
16
The
‘London Corporation’
[1934] 50 Ll L Rep 14 [Adm].
17
Harvey
McGregor QC,
McGregor on Damages
18 ed (2009) para 2-043
states the rule in these terms: ‘Where the claimant’s
goods have been damaged, the basic pecuniary
loss is the diminution
in their value which is normally measured by the reasonable cost of
repair.’ This is more consistent
with the maritime cases in
which the principle has chiefly been stated and the leading case of
Darbishire v Warran
[1963] EWCA Civ 2
;
[1963] 3 All ER 310
(CA) than the
unqualified statement in
Halsbury’s Laws of England
4
ed, Vol 12(1), para 862 that: ‘The basic rule is that the
measure of damages in the case of damage to a chattel is the
cost of
repair.’
18
In
that respect there seems to be little difference in substance from
the approach taken in our law to the proof of damages arising
from
damage to movable property:
Erasmus v Davis
1969 (2) SA 1
(A).
19
Presumably
he meant Rotterdam.
20
On
leaving Zhoushan on 17 August 2006 the vessel was under sub-charter
to TMT for a voyage from Zhoushan to Saldanha where a cargo
of iron
ore was loaded for Rizao, China. From Rizao the vessel proceeded to
Richards Bay. Unless it called at Singapore for bunkers
–
which would not ordinarily be an appropriate time to undertake a
‘clean underwater’ inspection – the
message from
owners must refer to an inspection at Singapore prior to the survey
and repairs in Zhoushan. It is at the least
inconsistent with the
claim that there were regular underwater inspections by divers.
21
Approving
what was said in the high court:
MV Wisdom C: United Enterprises
Corp v STX Pan Ocean Co Ltd
[2007] ZAWCHC 12
;
2008 (1) SA 665
(C) paras 36 and 38.
22
MV
Heavy Metal: Belfry Marine Ltd v Palm Base Maritime Sdn Bhd
2000
(1) SA 286
(C) at 298E – I.
23
Zygos
Corporation v Salen Rederierna AB
1984 (4) SA 444
(C) at 457C-D
as qualified by
Bocimar NV v Kotor Overseas Shipping Ltd
[1994] ZASCA 5
;
1994
(2) SA 563
(A) at 582F-J.
24
According
to Gys Hofmeyr SC,
Admiralty Jurisdiction Law and PrActice in
South Africa,
at 84, fn 218, this is the basis upon which
Scott J approached the matter in the high court in
Bocimar
.
25
Bocimar
NV v Kotor Overseas Shipping Ltd,
supra.
26
There
was an arithmetic error in Deiulemar’s calculation but in the
light of what follows that is immaterial.
27
The
sub-charter cancellation claim is calculated with the inclusion of
the sub-charter period prior to its cancellation.
28
Working
in full days. It is impractical for present purposes to use the
calculation based on the precise hour during a day when
events
occurred as is usually done in charterparty hire statements. That
information is not available to us and in exercising
our discretion
we are not concerned to engage in ‘a meticulous readjustment
of economic interests between the parties’
in the felicitous
phrase of Van den Heever J in
Pucjlowski v Johnstone's Executors
1946 WLD 1
at 8.
29
Volumes
1 – 9 of the record.