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[2019] ZAWCHC 97
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Van Niekerk v MV "Madiba 1" (AC13/2018) [2019] ZAWCHC 97; 2019 (6) SA 551 (WCC) (6 August 2019)
IN THE HIGH COURT OF SOUTH AFRICA
[WESTERN CAPE DIVISION, CAPE TOWN]
(EXCERCISING
ITS ADMIRALTY JURISDICTION)
CASE NO: AC13/2018
ANDRE VAN
NIEKERK
Plaintiff/Applicant
and
MV “MADIBA
1”
Defendant/Respondent
JUDGMENT DATED: 06 AUGUST 2019
LE
GRANGE, J
:
Introduction:
[1]
The Plaintiff instituted an admiralty action
in
rem
against the Vessel MV “MADIBA 1” (the Defendant) for
repayment of a loan in the amount of R 1 900 000, 00 plus interest
from the maturity date, alternatively such rate as may be deemed
appropriate in terms of s 5(2)(f) of the Admiralty Jurisdiction
Regulation Act, 105 of 1983 as amended (“the AJRA”).
[2]
The Defendant has taken exception in accordance with Rule 9(5)(b) of
the Admiralty Rules
[1]
to the
Particulars of Claim (POC) in their existing form, on two grounds.
The first is that the claim advanced in the POC is not
a maritime
claim as defined in s 1(1) of the AJRA. The second ground is the
Plaintiff has failed to allege compliance with the
various conditions
precedent in the terms of the Loan Agreement.
[3]
The Plaintiff, as a result of the exception taken, now seeks to amend
its POC by the introduction of a paragraph 13 A, which
apparently
relates to the fulfilment of the conditions precedent in the Loan
Agreement. The Defendant has objected to this proposed
amendment as
well on two grounds. First, on the basis that if granted the
amendment it would render the amended particulars of
claim
non-complaint with Admiralty Rule 9(3)(a), which prescribes that
every pleading should contain a clear and concise statement
of the
material facts upon which the party relies for the claim or defence
and susceptible to a challenge in terms of Admiralty
Rule 20(2).
Secondly, that the claim even as described in the proposed amended
particulars of claim, is not a maritime claim as
defined in s 1(1) of
the AJRA and that this Court accordingly lacks jurisdiction to
determine the claim.
Jurisdiction
:
[4]
In view of the exception and the objection that the claim even as
described in the proposed amended particulars of claim, is
not a
maritime claim, it is necessary to forthwith consider whether
in terms of s 7(2) of AJRA, the Plaintiff’s claim
as currently
pleaded, is a maritime claim or not. If the exception is good,
the Application for leave to amend the POC with
the introduction of
paragraph 13 A will have to be considered. If the exception is
unsustainable, it follows that the Application
for leave to amend and
the objection thereto do not require further consideration, except
perhaps on costs.
Background
[5]
In the action, the Defendant
in
rem
is
described as the Motor Vessel “Madiba 1”, which is a 2016
built passenger ferry operating in the port of Cape Town
to and from
Robben Eiland.
[6]
The Plaintiff, in para 5 of the POC, pleaded the following allegation
namely that; a loan agreement was entered into in August
2016 between
the Plaintiff as lender, the Owner and Bareboat Charterer as
borrower, and that the Plaintiff lent and advanced to
the Bareboat
Charterer the capital loan amount of R1 900,000.00 to pay for the
design, construction and equipping of the Vessel
so as to be put into
service for the transportation of passengers to and from Robben
Island. The Loan Agreement was attached as
POC1. What is evident from
the terms of the Loan Agreement is that Iscorp Investments (Pty) Ltd
is the ship owner and that Meltt
(Pty) Ltd (“Meltt”) is
the Bareboat Charterer of the Defendant.
[7]
In the Preamble of the Loan Agreement in Clauses 1. 2 and 1.3, the
following has been recorded, that : -
“
1.2 The
Borrower has entered into a Bareboat Charter with Isocorp in respect
of providing the Vessel for the ferry services to Robben
Island;
1.3 The Borrower
requires funding for the improvements to the Vessel and working
capital.”
[8]
Under the heading
Loan and Purposes
in the Loan Agreement, the
following is stipulated, that:
‘
3.1 Subject to
the other provisions of this Agreement, the Borrower hereby borrows
from the Lender, and the Lender hereby lends
to the Borrower, in
order to:
3.1.1 fund
improvements to the Vessel;
3.1.2 provide working
capital required by the Borrower.’
[9]
In was further recorded that the owner agrees and acknowledges that
improvements were being made to the Defendant of which the
owner is
the true and registered owner (Clause 4.1.4.1). Incorporated in the
Loan Agreement was also an architectural drawing of
the Defendant in
her intended completed state.
[10]
The Loan Agreement further provides that the capital amount of the
loan was to be repaid from the proceeds of the trading income
generated from the operations of the Defendant, save
that
Meltt
was
allowed
to
procure
further
funding
to
settle
the loan
(Clause 7.5).
If
Meltt failed to repay the capital and interest in full on or before
the maturity date the Defendant would be liable in the place
instead
of Meltt. (POC, para 7.8)
[11]
At the heart of the Defendant’s exception is the contention
that the claim as advanced by the Plaintiff is not a maritime
claim
and does not require the protection of the Admiralty Courts.
According to the Defendant, the nature of the agreement between
the
parties, as relied upon by the Plaintiff for its alleged claim, is
not maritime in nature but a commercial loan and its purpose
was to
finance a company.
Argument
[12]
Counsel for the Defendant, Mr JD Mackenzie, heavily relied on the
dictum in
MFV
El Shaddai
[2]
and the cases referred to therein (to which I will return) in support
of the proposition that the underlying nature of the claim
in
casu
,
falls to be classified as a commercial loan as the essential
character of the loan agreement is not maritime in nature. According
to the argument advanced, the purpose of the loan was to finance
Meltt, to provide working capital and to pay for improvements
to the
Defendant. It was further contended, the fact that the loan was to be
repaid out of the proceeds of the ferry operations
is of no
assistance to the Plaintiff to have his claim determined in admiralty
as it does not properly fall within the purview
of admiralty
proceedings. It was also argued that if the Plaintiff wanted to
ensure an enforceable claim
in
rem
then the Plaintiff ought to have ensured that a mortgage was
registered over the Defendant as such security for the claim
would
have created the requisite right to proceed
in
rem.
Counsel
further argued the boundaries of the admiralty jurisdiction would be
stretched too far and well recognised principles will
be diluted and
the rationale for separate admiralty jurisdiction would be
undermined, if the Plaintiff’s claim is seen as
a maritime
claim.
[13]
The principal contentions advanced by Counsel for the Plaintiff, Mr
PA van Eeden, SC, were the following, that:- the POC read
together
with the annexures thereto have demonstrated the Plaintiff’s
claim has a direct link to the ship (Madiba 1)
as defined in terms of
sub-sections 1(1)(c) and (1)(1)(q) of the AJRA; Para 5 of the POC
read with paras 2, 3 and 4 sufficiently
establish that the capital
loan amount was advanced to pay for the design, construction, repair
and equipment of the Defendant
as contemplated in sub-s (1)(1)(q);
the relationship between the claim and the proceeds of the
Defendant’s employment as
a ferry has been established by the
allegation that the vessel was to be put into service for the
transportation of passengers
to and from Robben Island and thus the
claim falls under sub-s 1(1)(c) of the AJRA. Furthermore, it was
contended that the reliance
by the Defendant on the dictum in
MVF
El Shaddai
[3]
is misguided as the alleged maritime claim in that matter differ
significantly from the claim advanced
in
casu.
Furthermore,
it was argued that a loan agreement can be regarded as a maritime
claim provided that the necessary link had been established.
For the
latter proposition, reliance was placed on the dictum in
MV
Guzin S (No 1)
2002 (6) SA 105
NPD.
The
Law
[14]
Admiralty Rule 9(5)(b)(i) provides that:
“
(i)
Where any pleading lacks averments which are necessary to sustain an
action or defence, the opposing party may within 10 (ten)
days of the
receipt of the pleadings deliver and Exception thereto and may cause
it to be set down for hearing”.
[15] The sub-sections relied upon by
the Plaintiff to aver that his claim constitutes a maritime claim,
namely sub-ss 1(1)(c) and
(q) of the ARJA, provide as follows: -
……
.
‘
maritime
claim’ means any claim for, arising out of or relating to –
(a)
…
.;
(b)
…
.;
(c)
any
agreement for the sale of a ship or a share in a ship, or any
agreement with regard to the ownership, possession, delivery,
employment or earnings of a ship;
(d)
…
..
(p);
(q) the design,
construction, repair or equipment of any ship.
[16]
The manner in which the Legislature has circumscribed the
jurisdiction of the High Court in the exercise of its admiralty
jurisdiction is to confine such jurisdiction which are exhaustively
defined in s1(1) of the AJRA. Most of the expressions used in
the
definition have of course, been the subject of interpretation by
courts in various contexts. I have been referred by counsel
to a
number of decisions in this regard. What does emerge clearly from all
the authorities, however, is that the meaning to be
assigned to the
expression in any particular case must be determined from the context
in which it appears.
[17]
The question which must ultimately be considered is whether the claim
is such that its relationship with ‘marine or maritime’
matters is sufficiently close, that it is necessary to be heard as a
maritime claim in this court. ‘That requires that there
must be
a meaningful maritime connection between the maritime claim, the ship
and the owner of the ship to impart to the claim
a maritime character
which would render it appropriate to adjudicate the claim in
accordance with maritime law’.
[4]
Each case must be decided upon its own facts. An important
consideration is thus whether, given the subject matter of the claim,
it is indeed a maritime claim as envisaged in the AJRA
[5]
.
[18]
In interpreting a statutory provision, the approach adopted in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[6]
is equally applicable in this instance.
Discussion:
[19]
As a result of the view I have taken in this matter, it is
unnecessary to discuss all the cases alluded to by Counsel. In the
MFV
El Shaddai
case, the common cause facts can be summarised as follows: Aston
Seafood SA (Aston), a company incorporated in accordance with
the
laws of the Republic of Uruguay, but having its principal place of
business in Chile, loaned and advanced certain moneys to,
inter
alia
,
the owner of the ship Braxton Security Services CC (Braxton); the
purpose of the loan was to conduct a commercial enterprise in
the
waters surrounding the Republic of South Africa; an acknowledgment of
debt was signed on behalf of Braxton, acknowledging the
payment to it
in the sum of $ 2 270 678; that acknowledgement of debt had
set out how the amount loaned was to be repaid
by Braxton, by way of
instalments calculated by reference to the income received by Braxton
from the proceeds of the sale of fish
sold pursuant to the fishing
enterprise; the acknowledgement of debt was the document upon which
the applicants’ claims in
the Montevideo court was based.
[20]
The applicants in seeking to arrest the ship, relied on a maritime
claim as defined,
inter
alia
,
in sub-s (1)(1)(aa) and also (1)(1)(ee) of the AJRA. The first
provision was a claim in respect of any judgment or arbitration
award
relating to a maritime claim. The latter is the section that relates
any matter which by virtue of its nature or subject
matter is a
marine or maritime matter, the so-called catch all section.
[21]
The Court, in assessing the underlying cause of action (the
acknowledgment of debt) had to determine whether the claim achieved
the purpose of establishing a link between the maritime claim, the
ship and the owner of the ship. The Court, concluded that the
fact
that the funds were provided pursuant to a contract of loan may have
been used for a fishing venture in South Africa, does
not in itself
characterise the contractual relationship between parties as maritime
claim, albeit that it is one having a maritime
flavour’
[7]
.
[22]
The Court further concluded that the nature of the agreement between
the parties was a loan and its purpose was to finance
a company and
that the nature and purpose were not altered by the fact that the
company was to repay the loan out of the proceeds
of its fishing
operations.
[23]
The facts in the
MFV
El Shaddai
,
are certainly not on all fours with the matter
in
casu
as
contended by the Defendant and is distinguishable. In the
present instance the Plaintiff’s claim is clear. He loaned
money to Meltt to fund the design, construction and equipping of the
Defendant, and to provide working capital, to enable the deployment
of Defendant as a ferry. The loan was to be repaid out of the
proceeds of the ferry operations. Iscorp, the owner of the Defendant,
guaranteed the obligations of Meltt. In Clause 4.1.4.1 of the Loan
Agreement, Iscorp further agreed and acknowledged that improvements
were being made to the Defendant and incorporated an architectural
drawing of the Defendant in a completed state.
[24]
In assessing the
underlying cause of the action, in the present instance, the Loan
Agreement has clearly achieved the purpose of
establishing a link
between the ship, the owner of the ship and the maritime claims,
namely the design, construction, repair or
equipment of the ship and
the earnings of the ship.
[25]
In
MV
Guzins (No 1)
,
a vessel registered in the Turkish Registry, had been sold by an
order of Court and the proceeds, some US $ 2 780 000,
had
been held as a fund in terms of s9 of the AJRA. One of the claims
filed against the fund by the Applicant was for US $ 2 327 135,
97, being the balance owing to it on a loan secured by a first degree
first rank Turkish mortgage registered over the vessel. The
referee
appointed to receive and report on the claims filed against the fund
had recommended that the claim be paid in full and
that it ranked
under s 11(4)(d) read with s 11(5). The two intervening respondents
opposed the Applicant’s application for
the confirmation of the
referee’s report and recommendations. Their attack focused on
both the validity of the Applicant’s
claim and ranking. It was
argued firstly that, if the Applicant’s claim was based on a
loan agreement, it did not fall within
para (d) of the definition of
‘maritime claim’ in s 1(1) of the AJRA; secondly that,
since the Applicant’s claim
was based on a loan and not a
mortgage, it could not be ranked under s 11(4)(d) but should instead
be ranked as ‘any other
maritime claim’ under s 11(4)(f);
and thirdly, that the Applicant could not rely on one cause of action
(the loan agreement)
for the submission and proof of its claim before
the referee and upon another cause (the mortgage) for the ranking.
Paragraph (d)
of the definition of ‘maritime claim’
provides for ‘any claim for, arising out of or relating
to…..any
mortgage, hypothecation, right of retention, pledge
or other charge on or of a ship’. Section 11(4)(d) provides for
‘a
claim in respect of any mortgage’.
[26]
The Court, in considering the nature of the Applicant’s claim
held at
(119G-H
and 120B-C)
that it was clear from the terms of the loan agreement (which
provided for the execution of a mortgage over the vessel as security)
and from the terms of the Applicant’s summons which has led to
the arrest and subsequent sale of the vessel that the Applicant’s
claim against the fund had clearly been one of payment of an amount
due under a loan agreement, which had been secured by a first
degree
first rank mortgage over the vessel.
[27]
The Court further held at
(123
E)
that when s 11(4)(d) referred to a ‘claim in respect of any
mortgage’, it must of necessity be intended to refer to
a claim
based on the principal obligation secured by the mortgage.
Accordingly it was held that the referee’s recommendations,
the
payment and ranking of the Applicant’s claim had been correct.
[28]
I am acutely aware that in general there is no justification for the
extension of admiralty jurisdiction to matters having
no meaningful
maritime connection
but
in my view, the dictum in
MV
Guzins (No 1)
on a proper reading does not support the Defendant’s argument
that the Plaintiff’s Loan Agreement could only be regarded
as a
maritime claim if a mortgage was registered over the Defendant as,
according to the argument, it is the mortgage which creates
the
requisite right to proceed
in
rem
to
enforce the loan secured thereby.
[29]
The ultimate question in matters of this nature in my view remains
whether, ‘
the
claim is such that its relationship with ‘marine or maritime’
matters is sufficiently close that it is necessary
to be heard as a
maritime claim in this court. ‘That requires that there must be
a meaningful maritime connection between
the maritime claim, the ship
and the owner of the ship to impart to the claim a maritime character
which would render it appropriate
to adjudicate the claim in
accordance with maritime law’
.
[8]
A loan may therefore clearly be regarded as a maritime claim provided
that the necessary link is established. To view it
differently, would
essentially mean that a matter with meaningful maritime connection
would be dealt with within the usual jurisdiction
of the High Court.
This in my view would
undermine the ‘special rules and procedures relating to the
exercise of admiralty jurisdiction which
are justified by, and
intended to accommodate, the particular needs associated with
maritime matters.’
[9]
[30]
The contention therefore that the Plaintiff’s Loan Agreement
could only be regarded as a maritime claim if a mortgage
was
registered over the Defendant, is in my view unsound and not
supported by case law.
[31]
The Judgment in
Peros
v Rose
[10]
is of no assistance to the Defendant’s primary argument in the
present instance. That case was considered before the extension
of
the definition of a maritime claim and at that stage the expression
indicating the required relationship between the claim and
subject of
the claim varied from paragraph to paragraph.
[32]
As a result of the abovementioned reasons, it follows that the
exception raised by the Defendant cannot succeed. In view of
what has
been said, it is therefore unnecessary to deal with the Plaintiff’s
application for leave to amend its POC with
paragraph 13A. I am also
not convinced that a costs order is warranted in respect thereof
against the Defendant.
[33]
In the result the following order is made.
The
Defendant’s exception is dismissed with costs.
________________
LE GRANGE, J
[1]
Admiralty Proceedings Rules, as amended by GN R
1026 of 7 August 1998, regulates the conduct of proceedings in the
High Courts
and Local Divisions of the High Courts in South Africa.
[2]
2015 (3) SA 55
(KZD)
[3]
Supra ft 2
[4]
See
Peros v Rose
1990 (1) SA 420
(N) at 426E;
Minesa
Energy (Pty) Ltd v Stinnes International AG
1988 (3) SA 903
(D) at 906 G;
MVF El
Shadddai
, supra at 58 B.
[5]
In this regard see G Hofmeyr, Admiralty
Jurisdiction Law and Practice in South Africa 2
nd
Edition at 21.
[6]
2012 (4) SA 593
SCA, [17]- [25].
[7]
See
MVF El Shadddai
,
supra at paras 24-25.
[8]
See ft 4.
[9]
See ft 5.
[10]
supra