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[2018] ZAKZDHC 3
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Seaspan Holdco I Ltd and Others v MS Mare Tracer Schiffahrts GMBH & Co, KG and Another (A69/2016; A70/2016) [2018] ZAKZDHC 3; [2018] 2 All SA 551 (KZD); 2018 (5) SA 284 (KZD) (26 February 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL LOCAL DIVISION,
DURBAN
CASE
NO: A69/2016
A70/2016
In
the matter between:
SEASPAN
HOLDCO I
LTD
FIRST APPLICANT
SEASPAN
CORPORATION
SECOND APPLICANT
MV
“SEASPAN GROUSE” (EX “HANJIN
GDYNIA”)
THIRD APPLICANT
and
MS
MARE TRACER SCHIFFAHRTS GMBH FIRST
RESPONDENT
&
CO, KG
MS
MARE TRAVELLER SCHIFFAHRTS GMBH SECOND
RESPONDENT
&
CO, KG
Date
of Hearing
:
2
February 2018
Date
of Judgment
:
26
February 2018
ORDER
[1]
The application to strike out is refused;
[2]
The application to set aside the arrests is dismissed;
[3]
The applicants are ordered to pay the respondents’ costs of the
application inclusive of the costs of two counsel, jointly
and
severally, the one paying the other to be absolved.
J U D G M E N T
GYANDA
J
[1]
By
notice dated 15 September 2017 the applicants, who had an interest in
the MV ‘SEASPAN GROUSE’ [EX “HANJIN GDYNIA”]
and held a cession of the right to pursue the current litigation from
the first and second applicants, brought an application against
the
respondents in which it sought an order:
(a) THAT the arrests of the third
applicant [MV ‘SEASPAN GROUSE’] under case numbers
A69/2016 and A70/2016 be and are
hereby set aside;
(b) THAT the first and second
respondents are directed to return the original letter of undertaking
issued as security for their
alleged claims to the applicant’s
attorney of record within two [2] court days of this order; and
(c) THAT the respondents should pay
the costs of this application.
By
the time the matter served before me the security in terms of para 2
was replaced by a cash amount paid into an account opened
for that
purpose by the Registrar of this Court.
[2]
The
background leading up to the present application is set out in the
respondent’s heads of argument and are not in dispute.
They are as follows:
(a) MTS1 AND MTS2 [the first and
second respondents] are German registered ship owning
companies, each alleges a separate
claim against HANJIN Shipping,
arising out of the respective charters to HANJIN Shipping of the MV
‘MARE TRAVELLER’
and the MV ‘MARE TRACER’;
(b) HANJIN Shipping was South Korea’s
largest container line and one of the world’s top ten carriers
in terms of capacity;
(c) On 1 September 2016, the Seoul
Central District Court [Korea] granted an order commencing
rehabilitation proceedings in respect
of HANJIN Shipping;
(d) In response thereto, and so as to
protect itself against a change of ownership or control of the
vessels in HANJIN Shipping
Fleet, the respondents caused
in rem
summonses [i.e. protective writs] to be issued out of this court
[and also out of the High Courts in the Eastern Cape Province and
the
Western Cape Province] citing various allegedly ‘associated
ships’ as defendants initially in respect of 72 vessels
which
was subsequently reduced to 64 vessels.
(e) The vessels were alleged to be
associated ships on the basis that: HANJIN Shipping was deemed to be
the owner of the MV ‘MARE
TRAVELLER’ and the ‘MV
MARE TRACER’ in respect of the respondent’s claims in
terms of Section 3 (7) (c)
of the Admiralty Act and the defendant
vessels [i.e. the associated ships] were each owned by a company
controlled by HANJIN Shipping
at the time that the
in rem
summons
were issued in terms of the Admiralty Act.
(f) The
in rem
summons was
issued on 2 September 2016 and the relevant warrants of arrests were
issued by the Registrar on the same date.
(g) The vast majority of the ships
referred to above [all named with the prefix ‘HANJIN] were sold
subsequent to 2 September
2016, which included, inter alia the MV
‘HANJIN CAPE LAMBERT’ which was acquired by TEBTALE
MARINE INC. [TEBTALE’]
and the vessel which was acquired by the
first applicant;
(h) TEBTALE made application in the
Cape Town High Court of the Western Cape Division to have the
protective writs issued out of
that court set aside, or at least to
have the MV ‘HANJIN CAPE LAMBERT’ [by then renamed the MV
‘MOUNT MERU’]
deleted from the protective writs, inter
alia, on the basis that the vessel had been acquired by it on an
arm’s length basis
subsequent to the protective writs being
issued, and as such was no longer susceptible to arrest
in rem
pursuant to such writs.
(i) TEBTALE’S application was
opposed and argued before Burger AJ who delivered judgment on 21 July
2017 in favour of TEBTALE
and ordered the deletion of the MV ‘HANJIN
CAPE LAMBERT’ from protective writs.
(j) The respondents applied for leave
to appeal the judgment of Burger AJ.
(k) Thereafter on 23 August 2017,
after having applied for and obtained an amendment of the protective
writs from Sishi J in this
court, the respondents caused the arrest
of the third applicant at Durban.
(l) The applicants secured the release
of the vessel [the third applicant] from arrest by establishing
security and the vessel is
accordingly deemed to be under arrest in
terms of Section 3 (10) of the Admiralty Act.
(m) Although respondents obtained
leave to appeal the TEBTALE judgment on 24 August 2017 they have
decided not to prosecute the
appeal further.
(n) The applicants challenge the
deemed arrests of the vessel MV ‘SEASPAN GROUSE’ on the
same legal basis that they
challenged the validity of the protective
writs issued against the TEBTALE and which form the ratio of the
judgment of Burger AJ
in the TEBTALE matter.
[3]
It
is common cause between the parties that the sole issue for
determination by this Court in the present application is whether
the
relevant time for determining the requisite control / ownership of
the vessel, as an associated ship and liable to be arrested
as such,
is the time of issue of the protective writs as contended for by the
respondents, or both at the time of the issue of
the protective writs
and at the time of the arrest of the ship as contended for by the
applicants.
[4]
For
the purposes of this application it is common cause:
(a) THAT the vessel MV ‘SEASPAN
GROUSE’ is an associated ship of the MV’MARE TRACER’
and MV ‘MARE
TRAVELLER’; and
(b) That the sale of the vessel
MV’SEASPAN GROUSE’ to the first and second applicants
were an arm’s length sale.
[5]
The
issue to be determined between the parties has also been defined by
raising the question whether the decision in the ‘‘Monica
S’’ is still good and binding law in South Africa in the
light of the provisions of the Admiralty Jurisdiction Regulation
Act
105 of 1983 [The Act]. The applicants argue that the ‘Monica
S’ is no longer binding authority in South Africa
whilst the
respondent argues that it still is. The parties are in full
agreement; however that immediately prior to the promulgation
of the
Act the ‘‘Monica S’’ was good and binding
authority in South Africa. In the ‘‘Monica
S’’
[1967] Vol. 2
Lloyds List Law Reports
115 at 132 Brandon J
held that:
‘
Under
s 3 (4) of the Act, two requirements are laid down for proceeding
in
rem
against a ship in
connection with a claim falling within para (d) to (r) of Section
1(1) arises. The first requirement is
that the person
who
would be liable
(my
underlining) on the claim in
personam
and should have been the owner or charter of, or in possession or
control of the ship when the cause of action arose. The
second
requirement is that, at the time when the action is brought the ship
should be beneficially owned as respects all shares
in it by that
person. These are the express requirements, and the only
express requirement, and I see no reason, as a matter
of construction
of the Act, for implying a further provision that, in cases where the
claim does not give rise to a maritime
lien,
if there is a change
of ownership after action (is) brought, but before service or arrest,
the right which is given to proceed
in
rem
against the ship
is thereupon to lapse’.
[My
underlining in this part of Brandon J’s judgment is relevant to
the construction to be given to certain words in Section
3 (4) (b) of
the Act hereinafter].
[6]
It
was, as I have said, common cause, or not in dispute that the
Admiralty law which was applicable in South Africa, prior to the
commencement of the Admiralty Act, was the English Admiralty law
which the English Supreme Court would have applied
MALILANG
& ORS v MV HOUDA PEARL
[1]
and G HOFMEYER ‘
Admiralty
Jurisdiction Law and Practice in South Africa
– 2
nd
Edition at p 5 – 6.
Therefore,
South African law was on the issue concerned as agreed by the
parties, the law as set out by Brandon J in the ‘Monica
S’.
[7]
(a) In this regard Section 6(1)
of the Admiralty Act provides that a court in the exercise of its
Admiralty jurisdiction shall:
‘
with
regard to any matter in respect of which a court of admiralty of the
republic referred to in the Colonial courts of Admiralty
Act, 1890,
of the United Kingdom, had jurisdiction immediately before the
commencement of this Act, apply the law which the High
Court of
Justice of the United Kingdom in the Kingdom, had jurisdiction
immediately before the commencement of this Act, apply
the law which
the High Court of Justice of the United Kingdom in the exercise of
its admiralty jurisdiction would have applied
with regard to such a
matter at such commencement, in so far as that law can be applied’;
(b) Section 6 (2) provides that the
provisions of sub-section (1) shall not derogate from the provisions
of any law of the Republic
applicable to matters described in the
sub-section. These sections confirm that the law applicable
before the commencement
of the Admiralty Act was the English law as
it existed on 1 November 1983, therefore, the decisions of Brandon J
in the ‘Monica
S’ is still good and binding law unless
that decision has in any way been altered, modified or even
over-ruled by a later
South African decision or is inconsistent with
the provisions of the Admiralty Act or any other South African law
and, in that
case, the extent thereof. See:
MV
SILVER STAR, OWNERS of the MV SILVER STAR v HILANE LTD
[2]
.
[8]
Both
the respondents and the applicants addressed argument before me as to
how certain provisions of the Admiralty Act were to be
interpreted.
I have been referred to various authorities in this regard
inter
alia:
Natal
Joint Municipal Pension Fund v Endumeni Municipality 2012
[3]
where Wallis JA set out the approach to be adopted in relation to
interpretation and construction to be given to documents.
‘
The
present state of the law can be expressed as follows:
Interpretation is the process of attributing meaning to the words
used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by
reading the particular provision or provisions in the light of the
document as a whole and the circumstances attendant upon its
coming
into existence. Whatever the nature of the document,
consideration must be given to the language used in the light
of the
ordinary rules of grammar and syntax; the context in which the
provision appears; the apparent purpose to which it is directed
and
the material known to those responsible for its production.
Where more than one meaning is possible each possibility
must be
weighed in the light of all these factors. The process is
objective, not subjective. A sensible meaning is
to be
preferred to one that leads to insensible or unbusinesslike results
or undermines the apparent purpose of the document.
Judges must
be alert to, and guard against, the temptation to substitute what
they regard as reasonable, sensible or businesslike
for the words
actually used. To do so in regard to a statute or statutory
instrument is to cross the divide between interpretation
and
legislation; in a contractual context it is to make a contract for
the parties other than the one they in fact made.
“The
‘inevitable point of departure is the language of the provision
itself,” read in context and having regard
to the purpose of
the provision and the background to the preparation and production of
the document.’
This
approach was followed and applied by Ploos van Amstel J in
Columbus
Stainless (Pty) Ltd & Ors v National Port Authority of SA &
Others.
Case no. 3580/2013 at p 10 para 18 where he said:
‘
The
modern approach to the interpretation of Legislation and contracts is
that the process of attributing meaning to words used,
having regard
to the context provided by reading the particular provisions in the
light of the document
as
a whole and the circumstances attendant upon its coming into
existence. Consideration must be given to the language used
in
the light of the ordinary rules of grammar and syntax; the context in
which the provision appears; the apparent purpose to which
it is
directed and the material known to those responsible for its
production. Wallis AJ said that where the language is
ambiguous, the apparent purpose of the provision and the context in
which it occurs will be important guides to the correct
interpretation.
An interpretation will not be given that leads
to impractical, unbusiness like or oppressive consequences or that
will stultify
the broader operation of the legislation or contract
under consideration’.
In
the ‘
Heavy Metal’
[4]
Smalberger JA stated that:
‘
In
construing the Admiralty Act regard must be had to the language used,
the apparent purpose of the provision, its contextual setting,
and
the object of the Admiralty Act as a whole’.
These
are the same sentiments expressed by Wallis JA and Ploos van Amstel J
subsequently in the judgments referred to above.
[9]
Mullins
SC for the respondents, relying on the authority of the decision in
the
Heavy Metal
at pages 1105 G – H; 1106 I submitted
that the object of associated ship arrest provisions is to enable a
plaintiff to arrest
and recover from an alternate defendant,
according to the plaintiff relief to which it would not otherwise be
entitled. And
that the principle purpose of the Admiralty Act
is to assist the party applying for the arrest rather than the party
opposing it.
Mr
Mullins submitted further, on the basis of the sentiments expressed
by Wallis JA in the
NYK
ISABEL
[5]
regarding maritime defendants becoming mobile and transitory causing
maritime claimants to become ‘wandering litigants of
the world’
the provisions of the Admiralty Act fell to be given a generous
interpretation consistent with its purpose of
assisting claimants to
enforce their claims.
[10]
Mr
Fitzgerald
for the applicant whilst agreeing with the above
submissions by Mr
Mullin
on the issue of the interpretation of
the Admiralty Act stressed that this court must interpret the Act in
a constitutionally compliant
manner and order that liability for
claims should fall on the person responsible therefor and not an
innocent third party who is
totally unrelated to the transaction in
question. He submitted that the Act should be interpreted in a
manner that kept a
balance between the competing interests.
[11]
The
first issue to be determined is when does an action
in rem
commence?
(a) The respondents contend that an
action
in
rem
commences when the summons is issued;
(b) The applicants, on the other hand,
contend that in the present case as we are dealing with an associated
ship that action is
instituted or brought in terms of Section 3 (6)
of the Act by the arrest of the associated ship.
[12]
In
the
JUTE EXPRESS
[6]
Howie AJA said:
‘
In
the first place, at the time the Act was passed, this Court had long
since held that all actions commence with the issue of summons:
Marine
& Trade Ins. Co. Ltd v Reddinger
[7]
and
Labuschagne:
Labuschagne v Minister of Justice
[8]
.
There was therefore no need for the lawgiver to say anything in
Section 3 (5) about when an action would commence.
It was a
matter of settled procedural law.’
At
p 17 A – B Howie AJA went on to say:
‘
And
as already mentioned an action is not commenced by the service of the
summons but by the issue of the Summons. Manifestly
the
Legislature intended to unify the moment of commencement in relation
to prescription on the one hand and statutory time limitations
on the
other. One finds, therefore, that in the case of an action
in
rem
the moment of
commencement is deemed to be the issue of the process and, in the
case of an action
in
personam,
the
service of the process [see Section 1 (2) (c)].’
Further
at p 17 he said:
‘
Because
this topic was not a matter of dispute between counsel it is
unnecessary in this judgment to say more than that the primary
purpose of an arrest in such an action is to give the action utility
and effectiveness by affording the plaintiff pre-judgment
security.
See e.g.
The
Dictator
[9]
The
Banco;
Owners of the M V
MONTE ULIA v Owners of the ship BANCO & Ors
[10]
[13]
Mr
Fitzgerald
relied upon the opinion of Farlam AJA (as he then was) in
MV
HEAVY METAL; BELFRY MARINE LTD V PALM BASE MARITIME SDN BHD
[11]
where the learned Judge
said at para 48 (p1089):
‘
In
my opinion an important indication of Parliament’s intention in
this regard is to be found in Section 3 (7) (a) (i) of
the Act which,
it will be recalled, provides that an associated ship is a ship,
other than the guilty ship, “owned at the
time the action is
commenced, by the person who was the owner of [the guilty ship] at
the time when the maritime claim arose.”
All that is
required therefore for ships to be associated in terms of Section 3
(7) (a) (i) is that they should have a common owner
(1) who was the
owner of the guilty ship when the claim arose and (2) who is the
owner of the associated ship when the action is
commenced, i.e. when
the associated ship is arrested.’
Mr
Fitzgerald
relied also on the authority of the judgment of Steyn J in the INDIAN
GRACE –
Republic of
India and Government of the Republic of India [Ministry of Defence] v
India Steamship Company Ltd
(THE INDIAN GRACE) no. 2
[12]
where Lord Steyn said:
‘
It
is now possible to say for the purposes of Section 34 an action
in
rem
is an action
against the owner from the moment that the Admiralty Court is seized
with jurisdiction. The
jurisdiction
of the Admiralty Court is invoked by service of the writ or where the
writ is deemed to be served, as a result of the acknowledgement
of
the issue of the writ by the defendant before service: The BANCO
[1971 1 LLOYDS REP
[1971] P 137
from that moment the owners are
parties to the proceedings
in
rem’.
(my
underlining).
[14]
In
the “HEAVY METAL” Farlam AJA gave his opinion without
regard to the decision, in this regard, by Howie AJA in the
JUTE
EXPRESS, for if he did he would, in my view, most definitely come to
the conclusion that an action
in rem
, like all other actions
commence with the issue of the summons. I say so for the
following additional reasons:
(a) For an action
in rem
to
commence with the arrest would imply that the issue of the summons or
the writ had no legal affect whatsoever up until the arrest.
This could never be the intention because the Act itself, s 1 (2) (b)
provides for any action instituted in terms of s 1 (2) (a)
(iii) if
it is not served within twelve months of the issue thereof, to lapse.
(b)
With the commencement of the
action
in rem
by
the issue of a writ, a contingent right of security is created upon
the ship which will be brought into effect by the arrest
of the
ship. MANDRAKA – SHEPPARD –
Modern
Maritime Law
[13]
(c) The plain language used in the Act
given its ordinary meaning, without resort to any linguistic
gymnastics, supports the proposition
that the action
in rem
is
commenced by the issue of the process (summons / writ). S 1(2)
(a) (iii) provides that:
‘
An
Admiralty action shall for any relevant process commence:
(iii)
by the issue of any process for the institution of an action
in
rem’.
(d) It is common cause that the
meaning to be ascribed to the adjective ‘any’ in the
provision referred to have been
reiterated in numerous decisions as a
word of very wide import and,
prima facie,
the use of it
excludes limitation.
See:
Asprint v Gerber Goldschmidt
Group SA (Pty) Ltd
[14]
;
R v Hugo
[15]
;
S v Wood
[16]
;
Clarke-Jervaise v Scutt
[17]
;
Proctor & Gamble SA (Pty) (Ltd) v Carlton Paper of SA &
Ano
[18]
;
Kham & Ors v Electoral Commission & Ano
[19]
.
Any
relevant purposes, therefore, is to be loosely, and generally
interpreted to mean all purposes relating to the Act in question.
[15]
In
the argument between the parties the applicants have submitted, on
the authority of the key holding in the JUTE EXPRESS AT P
19 H - J
that the intention of the Legislature ‘was in’ my
opinion, to lay down that an arrest is an essential element
of the
process whereby an action
in rem
is brought to
court
‘my underlining.’
Fitzgerald
SC is
supported in his view by WALLIS JA in his book
The Associated Ship
and South African Admiralty Jurisdiction
at pgs 339 and 340 who,
in turn, is supported by
Hofmeyer ‘Admiralty Jurisdiction’
2
nd
Ed at p 129 especially at para v1.7. It is
common cause in argument between the parties, or at least, not
disputed by
Fitzgerald
SC for the applicants, that
Hofmeyer
initially supported the decision in ‘Monica S’, and,
after WALLIS’S publication changed his stance to support
the
view of WALLIS. I, however, disagree with this view and agree
with the argument of Mullins SC for the reasons given in
this
judgment.
[16]
As
Mullins SC points out an action can only be commenced once, and this
occurs when the summons is issued by the Registrar.
He
correctly points out that in s 1(2) of the Act, the Legislature is
pertinently concerned with the moment of initiation of the
action and
uses the word ‘commenced’ and not as in s 3 (5) the word
‘instituted’.
This
contrast between the terms used by the Legislature, he submits, is
more marked if one examines the signed Afrikaans text wherein
in
relation to s 1 (2) it uses the expression ‘
ʼn aanvang
te geneem het’,
whereas in s 3 (5) the term is ‘word
ingestel’. These, Mr Mullins submits, correctly in my
view, are strong
indications that s 3 (5) was not intended to deal
with the matter of commencement. Furthermore, by the use of
the word
‘instituted’ (ingestel) in s 3 (2) and 3
(3) and the word ‘brought’ in s 3 (6), the Legislature
was not
referring to ‘commencement’ of proceedings in the
latter instances but used the terms as having a broader meaning and
intended to refer to the process of bringing the claim before court.
It therefore, intended the word ‘instituted’
in s 3 (5)
to have the same meaning.
I
am of the view that this explanation is in conformity with the key
holding referred to in the JUTE EXPRESS in paragraph [15] above
and
that the arrest is merely a means to give utility and effectiveness
to the judgment that the plaintiff seeks in the court.
[17]
Wallis
in his book
supra
at p 340 in relation to the provisions
contained in s 3 (4) (b) which reads:
‘
(4)
without prejudice to any other remedy that may be available to a
claimant or to the rules relating to joinder of causes of action,
a
maritime claim may be enforced by an action
in
rem:
(a)
…
(b)
If the owner of the
property to be arrested
would
be liable
to the
claimant in an action
in
personam
in respect
of the cause of action concerned.’
Wallis,
in support of his contention that the owner of the guilty ship and
the associated ship must be personally liable both at
the time that
the action is instituted and at the time of the arrest of the
associated ship, contends that the words ‘would
be liable’
is couched in language of futurity. However, the same words
were used by Brandon J in the ‘MONICA
S’ (see para 5
supra
). In my view the use of those words in s 3 (4) (b)
and as used by Brandon J in the ‘MONICA S’ are used to
denote
simply that liability on the summons was yet to be
determined. In most, if not all, of these typical situations,
liability
has not yet been determined and the Legislature, being
aware of that would not have used the term ‘is liable’ in
s
3 (4) (b).
[18]
In
the un-amended form of s 3 (7) (a) of the Admiralty Act the liability
of an ‘associated ship’ to be arrested was
determined as
‘that time when the maritime claim arose’. Hence in
NATIONAL IRANIAN TANKER CO v
MV PERICLES GC
[20]
the Appellate Division held that on the un-amended s 3 (7) the
relevant time for determining ownership or control of the
associated
ship was when the maritime claim arose.
Accordingly,
any change of ownership subsequent to the issue of a writ of summons
in rem
but before service, to a third party, would not be able
to prevent the arrest.
[19]
The
1992 Amendments to the Admiralty Act, more especially s 3 (7) (a)
thereof, replaces the wording ‘at the time when the
maritime
claim arose’ with the words, ‘at the time when action is
‘commenced’. This is, as I have
already said, at
the time when the summons is issued.
[20]
The
Legislature, by the promulgation of the Admiralty Act and the
amendments thereto could not have intended to change the position
postulated by Brandon J in the ‘MONICA S’. I say so
for the following reasons:
(a) The Legislature is presumed not to
intend to change the existing law more than is necessary,
particularly when taking away existing
rights.
Cloete Murray & Ano NNO v
Firstrand Bank t/a Wesbank
[21]
L C Steyn ‘Die Uitleg van
Wette
[22]
De Venish ‘Interpretation of
Statutes
[23]
On the interpretation contended for by
the applicants, the plaintiff would no longer have the right to
arrest an associated ship
if the ownership thereof changed subsequent
to the issue of the summons and protective writ but prior to the
arrest in the case
of an action
in rem
in terms of s 3 (4) (b)
of the Act.
(b) It is common cause that the
purpose of the associated ship provisions was to benefit the party
applying for the arrest by providing
it with an alternate method of
recovery and affording it relief to which it would not otherwise have
been entitled. See:
The
Heavy Metal
[24]
The principle purpose of the Admiralty
Act is to assist the party applying for the arrest rather than the
party opposing it.
The Heavy
Metal
[25]
See also:
The
NYK ISABEL
[26]
where Wallis JA contended
for the Act to be given a generous interpretation consistent with its
manifest purpose of assisting maritime
claimants to enforce maritime
claims. This was especially so because maritime defendants are
mobile and transitory in their
presence in any one jurisdiction, and
maritime claimants are compelled to become wandering litigants of the
world.
Hofmeyer
– footnote 121
page 17 justifies the generous interpretation of the Act on the basis
of the difficulties which may face a
maritime claimant in seeking to
obtain satisfaction of his claim.
(c) The provisions of the Admiralty
Act fall to be interpreted against the background of the existing law
at the date of its commencement
as many provisions are modelled on or
are declaratory of the existing Admiralty Law.
National Iranian Oil Co v BANQUE
PARIBAS (SUISSE)
[27]
G Hofmeyer ‘Admiralty
Jurisdiction Law & Practice on South Africa
[28]
The existing Common Law in South
Africa at the time of the promulgation of the Admiralty Act was the
English Admiralty Law as at
1 November 1983 which emphasised the
position adopted by BRANDON J in the ‘Monica S’ as set
out in paragraph 5 (
supra)
hereof.
[21]
It
is common cause that the provisions of the Act must be interpreted in
a manner which promotes the spirit, object and purport
of the bill of
rights. The courts are obliged to interpret provisions in a
manner that does not give rise to Constitutional
inconsistency.
A provision should, therefore, not be interpreted in a manner which
results in a distortion of the meaning
of the provision or places
undue strain upon the language of the provision.
National
Coalition for Gay and Lesbian Equality & Os v Minister of Home
Affairs & Others.
[29]
[22]
The
respondents submit that where the Act demonstrates the adoption of a
particular policy, the validity of which policy has not
been formally
constitutionally challenged; this court cannot choose to adopt a
different policy. I agree. However, what is
contended for by
the applicants is that the Act must be interpreted in a manner that
upholds the values enshrined in the constitution.
It is not an
attack on the validity of any policy adopted in formulating the Act.
[23]
The
applicants support the argument by Wallis in his book. The
argument by Wallis regarding the constitutional interpretation
of the
Act is based on the provisions of s 25(1) of the Constitution.
He concludes in his book at page 210 and 211 that it
would lead to an
arbitrary deprivation of property for the Act to be interpreted as
contended for by the respondents. Wallis
submits that it is
unconstitutional and an arbitrary deprivation of property if an
innocent person who has no contractual relationship
with the
plaintiff and is blissfully unaware of the protective writ issued, or
action instituted by the plaintiff against a former
owner of a ship
that he (the innocent third party) purchased in a legitimate arm’s
length deal, to have that ship arrested
for the former ship owners
debt.
[24]
This
situation complained of by Wallis prevails in respect of maritime
liens
in England and South Africa and other commonwealth
maritime jurisdictions which are based on the English Common Law and
in those
jurisdictions even in respect of the Common Law or Statutory
liens
. The fact that a ship may be arrested, whether or
not a sister ship or an associate ship for the alleged debts of a
former
ship owner has been recognized for a long time and is a fact
of maritime industry. This fact gave rise to contracts to
purchase
ships having clauses in them recognizing the fact that
claims can survive the change in ownership of the vessel.
The
examples of the Norwegian sale form and Nipponsale form given by the
respondents (Greiner answering affidavits para 74-76 at
page 343-344,
annexures ECG 25-27) containing clauses warranting sales of ships
free of pre-existing maritime
liens
and claims and undertaking
to indemnify purchasers against such actions based on such claims.
[25]
As
a result of the pre-existing claims, and/or
liens
purchasers
also take out indemnity insurance against such risks. This is a
common occurrence in the shipping industry.
The applicants had
such insurance in respect of the ‘MV SEASPAN GROUSE’ at
the time of its arrest.
Moreover,
buyers perform writ searches in prominent arrest jurisdictions,
particularly when acquiring a vessel out of what the respondents
refer to as a distressed fleet like the HANJIN fleet. Both the
attorneys for the applicants and the respondent are aware
of this
practice and conduct such writ searches for their clients.
See:
Mandaraka- Sheppard –
Modern Maritime Law
[30]
where the learned author
opines:
‘
On
balance Brandon J preferred to protect maritime claimants, because a
purchaser would be able to rely on the contractual indemnity
obtained
from the seller, if he had not become insolvent by the time it was
discovered that ship bought was encumbered by maritime
liens
or other maritime claims giving cause for arrest of the ship.
As far as statutory rights
in
rem
are concerned, a
purchaser can carry out a search in the admiralty register’.
[26]
Although
the practice appears to amount to an arbitrary deprivation of
property it is apparent that it is an accepted practice in
most, if
not all, of the major maritime countries to which the respondents’
expert witnesses have referred in their answering
affidavits.
It is an accepted fact in keeping with the accepted purpose of the
Admiralty Act, namely to assist maritime claimants
in realizing their
chains.
[27]
It
is a known fact that the Registrar of the Court keeps a register of
the writs that are issued which makes it possible for all
to
ascertain what writs have been issued in respect of certain vessels.
[See:
MANDARAKA – SHEPPARD – MODERN MARITIME LAW
p
104
supra].
It would defeat the stated purpose of the
Act if a ship owner was able to avoid an arrest by selling a ship to
a third party
upon ascertaining the existence of a writ in respect of
his ship. The issuing of the writs and recording their
existence
in the Admiralty register is as public an act as the
arresting of a ship.
[28]
I
have read the judgment of Burger AJ in the TEBTALE matter referred to
above and I respectfully disagree with the conclusion he
reached.
He seemed to be extremely doubtful as to which way he should rule on
the issue (to use his words whether to support
proposition A or B)
and was, in my view, swayed by the view adopted by Wallis in his book
in reaching his conclusion in spite of
him expressing certain doubts
in this regard.
[29]
With
regards to the application to strike out the expert testimony in
relation to the law in other maritime jurisdictions referred
to in
the affidavits of the respondents, it is important to bear in mind
the following:
(a)
Mr
Fitzgerald
in his heads of argument refers to the Australian decision
of
Comondate Marine
Corporation v The Pou Australlia Shipping (Pty) Ltd
[31]
where Justice Allsop said:
‘
The
utmost respect of course must be paid to the reasoning of such
eminent court, and the need for consistent doctrine in international
shipping as far as possible must be recognized’.
Similar sentiments were expressed by
Farlam AJA (as he then was) in the HEAVY METAL at paragraph 43 where
he said:
‘
It
follows that where our legislation goes further than that of other
maritime nations their case law can obviously provide no guidance
as
to the interpretation of our provisions. Where, however,
provisions in the Act are clearly modelled upon articles in the
Arrest Convention and the legislation of other countries which have
adopted it, it is appropriate, in my opinion for our courts
to have
regard to the convention and the case law of those countries in
order,
inter alia,
to
help bring about that degree of consistency among maritime nations to
which I referred earlier’
.
(b) I agree fully with the sentiments
expressed by Allsop J and Farlam AJA. The modern world has
become a global village with
the advances in science and technology
and in the field of maritime law; there is a greater need for
uniformity in its enforcement
and application.
In this regard the respondents
reference to the law in the various Commonwealth countries, Canada
and the USA have been of great
assistance in understanding the
seemingly incongruous and arbitrary deprivation of property that
results in the application of
the ‘Monica S’ principle.
It is also indicative of an almost uniform application of the
principle in the jurisdictions
referred to in one guise or another.
(c) The reference to the other
jurisdictions was of great assistance to this court and, for these
reasons the application to strike
out these paragraphs cannot be
acceded to.
(d) Mr
Fitzgerald
submitted
that the reference to the law in the foreign jurisdictions in the
respondents’ affidavits was unnecessary as they
were all
contained and easily ascertainable by reference to;
inter alia,
Derrington and Turner QC ‘
The Law and Practice of
Admiralty Matters
– 2
nd
ed. However, Mr
Mullins, showed in argument that the book in question did not cover
all the aspects referred to in the affidavits
more especially, there
is no reference to the issue of whether the ‘MONICA S’ is
followed in any other Commonwealth
jurisdictions or Hong Kong.
Moreover, the book reflects the state of the law in October 2015 and
is not current.
(e)
Mr Greiner in his answering
affidavit (para 56) confirmed that MTS’s South African legal
representatives attempted to research
the position in Singapore, Hong
Kong and Australia as to whether the ‘MONICA S’ has been
followed in those jurisdictions,
independently, but were unable to
obtain clarity on the prevailing positions. I ask the question
why the respondents would
go to the extent of obtaining the expert
testimony if all such authority was available and ‘readily
ascertainable with sufficient
certainty’ as argued by Mr
Fitzgerald
and as held in IMPERIAL MARINE.
[32]
I accept the respondents’ argument that recourse to the expert
testimony was necessary to bring to the courts attention
the current
position in each of the jurisdictions in relation to the issue in
question.
[30]
The applicants also apply to strike out all those allegations in the
respondents’ affidavits relating to the ownership
and financial
structure of the HANJIN Shipping fleet as irrelevant. The
purpose of the Admiralty Act has been stated, it
is common cause, to
assist maritime claimants in effecting payment of their claims.
The efforts of certain ship owners to
evade payment to creditors by
the use of separate corporate personality and purported sale of
vessels are sought to be overcome
by provisions of the Act. In
my view, the respondents were entitled to show to the court the
commercial realities that maritime
creditors face. I am
satisfied that the reference to the ownership and finance structure
of the HANJIN Shipping Fleet and
the foreclosure by the banks which
followed HANJIN Shipping’s bankruptcy are all matters relevant
to the present application
in spite of the respondents concession
that the purchase of the MV SEASPAN GROUSE by the applicants was a
legitimate arm’s
length sale. I would accordingly refuse
the application to strike out.
In
the circumstances I make the following order:
[1]
The application to strike out is refused;
[2]
The application to set aside the arrests is dismissed;
[3]
The applicants are ordered to pay the respondents’ costs of the
application inclusive of the costs of two counsel, jointly
and
severally, the one paying the other to be absolved.
______________
GYANDA
J
Case
Information
Application
heard on: 2 February 2018
Judgment
handed down on: 26 February 2018
Appearances
For
the Applicant:
Mr M J Fitsgerald SC
Instructed
by:
Bowman
Gilfillan Inc.
Tel:
021 480 7800
Email:
craig.cunningham@bowmanslaw.com
lana.jacobs@bowmanslaw.com
Ref
no. CNC/LJ/6174126
For
the respondent:
Mr S R Mullins
SC [with him J Mackenzie]
Instructed by:
Shepstone & Wylie
Tel: 021 419 6495
Email: Greiner@wylie.co.za
Ref no. EC Greiner/phk/STEA7.58
[1]
1986(2) SA 714 @
722 (j) to 723 C.
[2]
2015 (2) SA 331
(SCA) @ p 344 para 31
[3]
2012 (4) SA 593
(SCA) @ para 18
[4]
1993 (3) SA 1083
SCA @ p 1105 F
[5]
2017 (1) SA 25 (SCA)
[6]
1992 (3) SA 9
AD @ P16 H-I
[7]
1966 (2) SA 407
A - 413D
[8]
1967 (2) SA 575
(4) at 584.
[9]
[1892] p 304
(1891 ALLER REP 360)
AT 363 d - e
[10]
[1971] 1 ALL ER 524
(Vacation Ct Adm & CA @ 531 (a) – (b),
Thomas Maritime Liens British Shipping Law vol. 14 para 67 at 43
[11]
1999 (3) SA1083 SCA
[12]
[1995]
Lloyds Law Reports
Part 1 Vol 1
[13]
Vol. 1 (3
rd
Ed.) (2013) at p 104
[14]
1983 (1) SA 254
A at p 261 A-D
[15]
1926 AD 268
@ 271
[16]
1976 (1) SA 703
(A) at 706
[17]
(1920) 11 Ch 382
@ 388
[18]
1197 (3) SA 292
at p 296 E-J
[19]
2016 (2) SA 338
(CC0 at pgs 356G to 357 G per Wallis AJ
[20]
1995 (1) SA 475
A at p 481 C
[21]
2015 (3) SA 438
SCA at para 40
[22]
5
th
Ed (1981) at pg 97 and 337
[23]
(1992) at pg 159
[24]
At pg 1105 G-H
[25]
At pg 1106 I
[26]
2017 (1) SA 25
SCA at paras 44-45
[27]
1993 (4) SA 1
(A) at p 8 A-E
[28]
2
nd
Ed JUTA p 17
[29]
2000 (2) SA 1
(CC) at para 23
[30]
Volume 1 (3
rd
Ed) (2013) at p 104
[31]
[2006] FCAFC 162
[32]
2012 (1) SA 58
SCA AT PARA 27