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[2016] ZAKZDHC 41
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Marubeni Corporation and Others v Intergis Co. Limited (A122/2015) [2016] ZAKZDHC 41 (11 November 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, DURBAN
(Exercising
its Admiralty Jurisdiction)
CASE
NO: A 122/2015
Name
of ship:
MV “IVS CRIMSON CREEK”
In
the matter between:
MARUBENI
CORPORATION
First
Applicant
MMSL
PTE
LIMITED
Second
Applicant
MV
“IVS CRIMSON
CREEK”
Third
Applicant
and
INTERGIS CO.
LIMITED
Respondent
Coram: Koen J
Heard: 28 October 2016
Delivered: 11 November 2016
ORDER
(a)
The order granted by this court on 30 December 2015 for the arrest of
the MV “IVS Crimson Creek” under Case No.
A122/2015 is
set aside.
(b)
The letter of undertaking dated 6 January 2016 furnished to Intergis
Co. Limited to secure the release of the MV “IVS
Crimson Creek”
must be returned to the Applicant’s attorneys forthwith;
(c)
The Respondent, Intergis Co. Limited is directed to pay the costs of
this Application, which will include the costs previously
reserved
and the costs of the arrest application.
JUDGMENT
KOEN
J:
Introduction
[1]
This is an application to set aside the deemed arrest of the MV “IVS
CRIMSON CREEK” at the instance of Intergis
Co. Limited
(‘Intergis’).
[2]
Intergis successfully brought an application (‘the arrest
application’) on 30 December 2015 against Marubeni Corporation
(‘Marubeni’) as first respondent and the MV “IVS
CRIMSON CREEK” as second respondent, for the arrest of
the
latter. Marubeni subsequently furnished security for the physical
release of the MV “IVS CRIMSON CREEK” which remains
under
deemed arrest in terms of section 3(10)(a)(i) of the Admiralty
Jurisdiction Regulation Act No. 105 of 1983, as amended (‘the
Act’). Marubeni, MMSLPTE Limited and the MV “IVS CRIMSON
CREEK” (collectively referred to as ‘the Applicants’)
thereafter applied in the present application on 25 February 2016 for
this deemed arrest to be set aside. On 14 October 2016 I
also heard
an application for the postponement of this application (‘the
postponement application’). I dismissed that
application with
costs. The postponement application retains relevance only insofar as
my reasons for the refusal thereof will
be dealt with briefly below.
Background
[3]
The following chronology of material events is relevant:
(a) On 8 October 2014, Intergis, as
disponent owner, chartered an (at that stage) unidentified vessel to
be nominated by Intergis
to Marubeni for a single load voyage.
(b) On 17 April 2015 Intergis as
charterers, chartered from United Bolt Carriers International
Limitado, Madeira (‘UBCI’)
a vessel ‘to be
nominated’ for a single load voyage with the same load port and
discharge ports as in the Intergis/Marubeni
charter, to fulfil
Intergis’s obligations to Marubeni under the voyage charter
[1]
of 8 October 2014.
(c) Pursuant to the Intergis/Marubeni
charter, Intergis nominated the MV “Great Prosperity”
(‘the Vessel’)
to be the carrying vessel in terms of the
fixture recap and Clause 56 of the pro-forma charter party.
(d) Intergis is one in a number of
charterers in a charter party chain, which it understands to be as
follows:
(i)
The head owners, Great
Prosperity Shipping Inc chartered the vessel to Sinotrans;
(ii)
Sinotrans sub-chartered the
vessel to Biebu Golf Shipping Ltd. (‘Biebu Golf’);(iii)
Beibu Golf sub-chartered the
vessel to Hyundai Merchant Marine Co. Ltd. (‘Hyundai’);
(iv)
Hyundai sub-chartered the
vessel to Fuk Hing Steamship Co. Ltd (‘Fuk Hing’);
(v)
Fuk Hing sub-chartered the
vessel to Solebay Shipping Limited (‘Solebay’);
(vi)
Solebay sub-chartered the
vessel to Jaldhi Overseas PTE Ltd; (‘Jaldhi’);
(vii)
Jaldhi sub-chartered the vessel
to UBCI;
(viii)
UBCI sub-chartered the vessel
to Intergis;
(ix)
Intergis sub-chartered the
vessel to Marubeni.
(e) In accordance with Marubeni’s
instructions the vessel proceeded to Uruguay and at Montevideo loaded
a cargo of soya beans
into holds 1, 3, 4, 5 and 7. In the arrest
application Intergis alleges that it ‘understands that the
cargo loaded in Uruguay
comprised nine parcels but that there was a
single shipper noted in the bill of lading’. It annexed a
‘non-negotiable
copy of bill of lading No. 1 issued at
Montevideo on 22 June 2015 relating to the cargo shipped at that
point’ reflecting
that the ‘cargo was shipped in apparent
good order and condition on board the vessel’, which became
Annexure JLK 7
to the founding affidavit in the arrest application.
The vessel also proceeded to Bahia Blanca in Argentina where cargo
was loaded
into holds 2 and 6.
(f) The cargo was carried to and
discharged at Qingdao, China.
(g) Upon arrival at the discharge
port, as alleged by Intergis in the arrest application, it ‘was
apparently established by
the receivers’, Siamen C & D
Commodity Trading Co. Limited, that the cargo in holds 1, 3, 4, 5 &
7 was in a discrepant
condition allegedly due to moisture migration
and self-heating. It is further alleged that a letter of protest was
issued stating
that discoloured and damaged cargo had been found in
cargo hold no. 4. It had apparently been noted that the moisture
content of
the cargo was “very high” before loading. The
cargo shipped from Bahia Blanca in holds 2 and 6 was undamaged.
(h) The receivers of the cargo allege
a total loss of R8 200 metric tons of the cargo (shipped on
board the vessel in hold
No. 1), depreciation of 50% in respect of
damage to 30 000 metric tons carried in holds 3, 4, 5 and 7 of
the vessel, a shortage
claim of 200 metric tons, a difficult cargo
handling fee, and additional expenses.
(i) Although some security has been
furnished by the owner’s P & I club (Swedish Club), the
claim still remains at ‘apparently’
USD 9.3 million,
exclusive of interest and costs.
(j) Sinotrans has advanced a claim
against Beibu Gulf seeking security. Beibu Gulf in turn placed
Hyundai on notice to take
over the defence of any claim and provide
counter security to their disponent owner. Hyundai in turn gave
notice of the claim to
Fuk Hing, which in turn placed Solebay on
notice. Solebay in turn placed Jaldhi on notice requesting security.
(k) Intergis arrested the MV “IVS
Crimson Creek” as an associated ship to the vessel by virtue of
the provisions of
sub-section 3(6) and (7) of the Act, in terms of
section 5(3) of the Act. The arrest was for the purpose of providing
security
for the claims that Intergis is advancing in London by way
of arbitration proceedings against Marubeni for a declaratory order
that, pursuant to the charter party concluded between Intergis and
Marubeni on 8 October 2014 in terms of which Intergis chartered
the
vessel to Marubeni, Marubeni is liable to indemnify Intergis in
respect of any liability incurred by Intergis to UBCI pursuant
to
Intergis’s charter of the vessel from UBCI and arising out of
the performance of the said charters, and an order compelling
Marubeni to so indemnify Intergis.
Legal
Requirements for an Arrest
[4]
It is trite law that in order to obtain and maintain an arrest under
s 5(3) of the Act, an Applicant for the arrest must establish:
(a) that it has a
prima
facie
claim against the
owner of the vessel, capable of being enforced by way of an action
in
rem
or in
in
personam
,
in the nominated forum;
(b) that on a balance of
probabilities, it has a genuine and reasonable need for security;
[2]
(c) that on a balance of
probabilities, the owner of the arrested vessel is liable to
the Applicant,
in personam
,
or that the vessel arrested is an associated ship of the ship
concerned in terms of the Act.
[3]
[5]
The proof of a
prima facie
claim must be adduced in the founding affidavit
[4]
but regard may also be had to any facts thereafter up to the time of
the hearing of any setting aside of such an arrest.
[6]
In
casu,
Marubeni disputes that Intergis has established a
prima facie
claim and that it has established on a balance on
probabilities that it has a genuine and reasonable need for
security. These
will be considered
seriatim.
A
prima facie
case:
[7]
A
prima facie
case is established if evidence is adduced which, if accepted, will
establish a valid cause of action in law.
[5]
[8]
The cause of action relied upon in respect of the
prima facie
case asserted by Intergis was encapsulated initially in the following
statement by the deponent Ms Kaufmann in the arrest application:
‘
I
accordingly respectfully submit that as a matter of English Law,
where dangerous cargo is loaded on board a vessel without the
knowledge and consent of the carrier, the ship or voyage charterer is
contractually liable, by virtue of an implied indemnity,
to indemnify
the carrier against all damages and expenses directly or indirectly
arising out of or resulting from such shipment.
That obligation
to indemnify is expressly provided for in section 4(6) of US COGSA
(and in the corresponding provision of Canadian
and COGWA) referred
to in the charter parties
.’
[9]
The reliance upon an alleged breach of an implied indemnity, or a
contractual right to be indemnified by Marubeni was subsequently
tacitly, if not expressly, accepted by Intergis, with reference to an
expert opinion on English law provided by Mr Akka QC, not
to be
available to it. Mr Akka opined as follows:
‘
It
is plain that the relevant claim is not a claim that there is some
implied right to an indemnity, but it claimed that the shipper
is in
breach of contract for shipping a dangerous cargo without giving
proper notice…’
[10]
Intergis accordingly
prima facie
had to establish that the
cargo was dangerous, hence that there was an implied duty on Marubeni
to give Intergis notice thereof,
and if it did not, that a remedy of
claiming damages would be available to it.
[11]
In respect of such a claim the deponent to the founding affidavit in
the arrest application, with specific reliance to,
inter alia
,
a demand addressed to FuK Hing, alleged variously as follows:
‘
(a)
‘
It
seems reasonable to conclude that certain (if not all) of the parcels
of soya beans loaded at Montevideo constituted cargo which
was not
fit to withstand the ordinary voyage to China;
(b)
The
apparent high moisture content of certain of the parcels of soya bean
cargo loaded at Montevideo into cargo holds 1, 3, 4,
5 and 7
had the result that such cargo suffered from inherent vice and, given
its ability to cause damage by moisture migration
and self-heating to
other parcels of cargo loaded in the same holes, would
constitute cargo of a “dangerous”
nature;
(c)
The
fact that one or more of the parcels of soya bean cargo loaded at
Montevideo was subject to the excess of moisture content was
apparently not apparent to the Master and officers of the MV “Great
Prosperity” at the time of loading;
(d)
The
issue (is) … as it is alleged by London solicitors appointed
by head charterers (Beibu)
that their
charterers (Hyundai) were in breach of charter due to the fact that
some of the Uruguayan cargo was “dangerous”.
Hyundai
contends that tendering such cargo for carriage constitutes a breach
of charterers’ implied obligation not to tender
dangerous
cargo;
(e)
English
Law imposes an obligation on a shipper or voyage charterer not to
ship dangerous cargo without giving notice to the carrier
so as to
enable the carrier to take suitable precautions to ensure that the
goods can be carried without causing damage;
(f)
There
is no exhaustive definition of dangerous cargo under English Law.
However, it has been held that cargo which by its properties
causes
damage to the ship or other cargo is “dangerous” (see the
Darya Radhe [2009] 2 Lloyd’s rep. 175).
There is some
overlap between the concept of dangerous goods and inherent vice.
Under English Law, inherent vice means the unfitness
of the goods to
withstand the ordinary incidence of the voyage given the degree of
care which the ship owner is required
by the contract to
exercise in relation to the goods (see “the Rio Sun”
[1985] 1 Lloyd’s rep. 350);
(g)
Any
tendency of the goods to heat, discolour, rot or evaporate may all
constitute inherent vice…;
(h)
The
Applicant is accordingly vested with the contractual right to be
indemnified
[6]
by the First
Respondent, requiring that it hold the applicant harmless in respect
of the claim.’
[12]
At a preliminary level Marubeni contends that there can be no cause
of action until Intergis’s liability, if any, to
disponent
owners has been ascertained by an award, judgment or reasonable
settlement. Mr Akka disagreed with that statement, contending
that it
falls within the first of the categories identified by Neil J in
Telfair Shipping Corporation
v Inersea Carriers SA
(“the
Caroline P”)
[7]
where the following was said:
‘
...
it seems to me that it is possible to identify at least three ways in
which a person, A, who has become liable to B may be able
to obtain
redress from C.
The
first way is by an action for damages for breach of contract (or
warranty). In such a case A will be in a position to
claim that
the incurring of his liability to B flowed directly from an act of C
which constituted a breach of a contract between
A and C or of a
warranty given by C to A. The damages will be assessed in
accordance with
Hadley
v Baxendale
(1854)
9 Exch. 341
principles. The cause of action will date from the date
of breach.’
The
above statement of the law was not debated before me in any detail,
probably because other arguments were considered dispositive
of the
application. I shall, for the purpose of argument and for deciding
the application, accept in favour of Intergis that Mr
Akka is correct
on this score.
[13]
The argument pressed specifically by Marubeni was whether the damage
to the cargo complained of arose from inherent vice or,
because the
cargo was ‘dangerous cargo’. Mr
Wragge
SC on
behalf of Intergis fairly accepted that the vital issue was whether
the cargo loaded at Montevideo in holds 1, 3, 4, 5 and
7 was
dangerous and caused damage to other sound cargo. Mr Akka had
concluded that it was dangerous cargo shipped without giving
proper
notice.
[14]
In response to Mr Akka’s opinion, Marubeni filed a legal
opinion it had obtained from Mr David Goldstone QC, who points
out
that
(a) ‘
As
a matter of English Law it is correct that a cargo which causes
damage to other cargo may constitute a dangerous cargo for the
purpose of a claim by carrier against the shipper (or charterer) for
breach of an obligation not to ship dangerous goods.’
(b)
‘However it is also clear that as a matter of English Law, the
mere shipment of a cargo which suffers from inherent vice
is not a
breach of duty. An inherent vice refers to goods which are at
risk after deterioration or damage during the course
of a voyage not
because of any external cause (such as an ingress of water via
hatch covers or excessive delays) but
as a result of their inherent
condition or characteristics. He referred to Lord Diplock in
Soya
GmbH v White
[1983] 1 Lloyd rep. 122 at 126, defining
“inherent vice” as the “risk of deterioration of
goods as a result
of their natural behaviour in the ordinary course
of the contemplated voyage without the intervention of any fortuitous
external
event or casualty…”’
(c)
‘Where goods suffer damage as a result of their inherent vice,
the carrier has a complete defence to any claim by the
shipper or
consignee’.
(d)
‘The critical distinction is thus between cargo that is a
danger only to itself (mere inherent vice) and cargo which is
a
danger to other cargo (dangerous goods)...It is only in (the case of
dangerous cargo which pose a risk of damage to other goods,
or the
ship) that the carrier will be exposed to the risk of claims by the
owner of such cargo and may then be entitled to pursue
a claim
against the shipper of the dangerous cargo (or in certain
circumstances the consignee…).’
(e)
‘The key question is thus whether the goods have damaged “other
cargo”.’
(f)
‘…as a matter of English Law, the contract between the
shipper and the carrier is evidenced by the bill of lading.
See e.g.
Scrutton
[8]
on Charterparties …;
Sewell
v Burdick
(1884) 10 App. Cas. 74 at 105’.
(g)
‘… where a single bill of lading is issued in respect of
a bulk cargo, the parties to the contract are the shipper
and the
carrier named in the bill of lading and the contractual cargo is that
described in the bill of lading. The fact that the
cargo may have
been made up from a number of parcels supplied by a variety of
physical suppliers is legally irrelevant as the contract
evidence by
the bill of lading is a single contract of carriage between the
shipper and the carrier for the entire cargo described
in the bill.’
[15]
I did not understand Intergis to take issue with the aforesaid
general statement of the legal position in English law. It also
coincides with my understanding of the applicable legal principles
from the authorities I have been able to consult in the time
available to me. The issue to be determined is however whether a
sufficient factual basis has been alleged, to establish a
prima
facie
case.
[16]
In considering that question, Goldstone QC states that he has
accepted the facts as alleged by Intergis in the founding affidavit
in the arrest application and in the answering affidavit of Mr Tucker
in the setting aside application, as correct in formulating
his
conclusions. He concluded from those facts, which represent the
version of Intergis, that:
(a)
The cargo shipped under bill of
lading No.1 caused damage only to itself (in other words ‘inherent
vice’). The position
would have been different if (for e.g.)
that cargo had somehow caused damage to the cargo shipped under bill
of lading No 2 in
respect of the cargo in holds 2 and 6.
(b)
Intergis’s claim (whether
put as a claim for damages or a contractual indemnity) raises no
issue of dangerous goods. Rather,
the case is one of mere inherent
vice and hence cannot succeed as a matter of English Law.
[17]
The factual assumptions on which Goldstone QC expressed his
conclusion include that although the cargo may have been made up
of
nine separate parcels, there was a single bill of lading in respect
of that cargo. He states correctly that whether the cargo
shipped
under that single bill was made up of nine separate parcels is
legally irrelevant, as the contract evidenced by the bill
of lading,
was a single contract of carriage between the shipper and the carrier
for the entire cargo described in that bill.
[18]
Intergis however argues that:
(a) Bill of lading No 1 reflected the
‘shipper’ as ‘LOC Uruguay SA’, whereas on the
affidavits it is not
in dispute that Marubeni was the shipper; hence
that this suggests that there were two shippers of the cargo in holds
1, 3, 4,
5 & 7, therefore the possibility that a cargo of one
shipper might have damaged that of another, thereby satisfying the
dangerous
goods requirement, cannot be excluded;
(b) That there were 9 parcels making
up the cargo, thus possibly suggesting that the cargo of one supplier
damaged that of another,
to satisfy the requirement to make the cargo
‘dangerous’.
[19]
Ex facie
bill of lading No. 1, the consignee was ‘to
order’ and the notified party was Xiamens & D Commodity
Trading Co.
Ltd. The cargo was described as ‘Uruguayan
soybeans, packing in bulk, clean on board’ and as having been
stowed
into holds 1, 3, 4, 5 & 7. The cargo loaded in those
holds therefore could only constitute a danger to itself. The
fact that there was also mention of another shipper, is as Mr
Fitzgerald
SC on behalf of Marubeni correctly submitted,
speculative and legally irrelevant. The only factual allegation made
by Intergis
is that all the cargo, including that damaged or which
might have caused damage, were the subject of a single bill of lading
and
to the extent that any of it caused damage, it caused damage to
itself not to other goods (or the ship) which would give rise to
claims by the owner of such other cargo. There is no suggestion in
Intergis’ affidavits that what Bill of Lading No 1 evidences,
being a single contract of carriage in respect of the cargo in holds
1, 3, 4, 5, and 7, in fact conceals a carriage of that cargo
by
multiple shippers under separate bills, contrary to the terms of bill
of lading No 1.
[20]
Intergis remained critical of the contradiction between Marubeni
being the admitted shipper but TAC Uruguay SA being effected
as the
shipper on bill of lading No. 1, stating that this anomaly fell
peculiarly within the knowledge of Marubeni, which it was
therefore
able to explain, but which it failed to clarify, and that an adverse
inference fell to be drawn from that failure, at
least at the level
of a finding that a
prima
facie
case had been
established. I was referred to what was said in MT Tigr
:
Owners of the MT
Tigr
v
Transnet Limited
[9]
with regard to a party in the position of Intergis and whether it was
obliged to adduce
evidence
to establish
prima facie
that it was liable to a third party making a claim against it. The
relevant principles are neatly summarised by Hofmeyr
[10]
where the learned author states the following:
‘
Where
the facts are peculiarly within the knowledge of the opposite party,
less evidence will suffice to establish a
prima
facie
case than would under other circumstances be required. When the
party having knowledge of the facts and in a position to
rebut them,
if they are capable of rebuttal, chooses not to do so, that in itself
is a factor that reinforces the
prima
facie
case
already before the court.
While
it is unquestionably true that an applicant is generally speaking
obliged to adduce evidence in order to establish a
prima
facie
case against the party whose property is sought to be arrested (or
attached), this requirement may in exceptional circumstances
be
relaxed. The requirement was relaxed in
The
Tigr
and in
The
Summit One
.
In both cases the nature of the application was such that the
prima
facie
case sought to be established and other allegations made by the
applicants were of a necessity mutually destructive…
In
both cases, because of the special circumstances, the court was
prepared to have regard to the allegations in the pleadings
in
determining that a
prima
facie
case had been made out
.’
[21]
An immediate point of distinction between the facts in
casu
and that in the
Tigr
is of course that at present no
allegations in pleadings have yet been made against Interis. Only
vague allegations from correspondence
exchanged higher up the charter
party chain have been referred to.
[22]
More importantly however is that nowhere in the founding affidavit in
the arrest application, or thereafter, was the anomaly
of Marubeni
being addressed as the shipper while the bill of lading reflects the
shipper as ‘LOC URUGUY SA’, thus possibly
suggesting more
than one shipper, expressly raised or relied upon as a point in some
way presenting a case to be answered and which,
if not addressed,
would be relied upon to establish a
prima facie
case.
Indeed, as pointed out by Marubeni, reliance was placed on a single
bill of lading, bill of lading No. 1 only, which
was annexed as an
annexure. Mr Fitzgerald accordingly submitted, correctly in my view,
that if Marubeni agreed that the cargo in
question was being conveyed
under the one bill of lading, that there was nothing for it to
comment on further.
[23]
In annexure JRK 10 to the founding affidavit in the arrest
application, being the demand addressed to Fuk Hing higher up the
charter party chain, the author of that letter had asserted that the
cargo was physically shipped at Montevideo by ‘9 different
shippers’ and that the ‘processes of cargo so combined
under one bill of lading did not conform to the description
of soya
beans which could withstand the ordinary voyage…’. If
Intergis believed that there was more than one shipper
involved based
on that letter, contrary to what the single bill of lading
ex
facie
its terms evidences,
then it should at least have made such an allegation, or at the very
least expressed such a suspicion, in
the founding affidavit in the
arrest application. Nowhere in the founding affidavit in the arrest
application was there ever any
suggestion of more than one bill of
lading and more than one shipper being involved. Marubeni
accordingly was under no duty
to comment further on the allegation by
Intergis of a single bill of lading, where that was indeed what they
accepted the position
to be, and Intergis’ contentions remain
speculative and without foundation. In the words employed in
MT
Tigr
[11]
if the allegations made by Intergis were advanced in pleadings, the
pleading would be excipiable or otherwise without substance.
[24]
The allegations in the affidavits do not go beyond there being a
single bill of lading and the cargo forming the subject matter
thereof comprising nine parcels. That is not in dispute.
Evidential considerations, or questions of the sufficiency
of
evidence, do not arise. The fact that the consignment might have
comprised nine parcels is legally irrelevant in the light of
the
undisputed fact that the cargo was the subject of a single bill of
lading, and it is only in respect of that cargo, loaded
into holds 1,
3, 4, 5 and 7, that the alleged claim arises.
[25]
Intergis has failed to establish a
prima facie
claim as
required.
A
Genuine and Reasonable Need for Security
[26]
In the light of my aforesaid conclusion, it is strictly speaking
unnecessary for me to consider whether Intergis has established
a
genuine and reasonable need for security on a balance of
probabilities.
[27]
It was incumbent on Intergis, as the Applicant in the arrest
application, to show that Marubeni, being the corporation against
which security was being claimed, was in a financially precarious
position or would not otherwise be able to meet any judgment
obtained
against it of the nature contemplated in the
MV
Rizcun Trader
(4)
;
MV
Rizcun
Trader
v Manley Appledore
Shipping Ltd.
[12]
There it was held that it would not be sufficient for an applicant
for arrest to show that the corporation against which it claims
did
not have assets within the jurisdiction where the claim was to be
enforced, if it had sufficient assets outside the jurisdiction
to
meet the claim.
[28]
Statements like that in
Bocimar
NV v Kotor Overseas Shipping Ltd
[13]
commenting on remarks by the Judge in the court
a
quo
:
‘…
that
in the ordinary course where the Applicant holds no existing security
for his claim this requirement would present no difficulty.
In
the absence of anything to the contrary, the natural inference would
be that there is a need for security.’
must
also be understood in the context of that case and are not of
universal application.
[29]
Intergis also placed reliance on the following statement by Davis J
in
The
Peregrine III
; Lisnave
Estaleiros Navais SA v Falcon Drilling Co Inc:
[14]
‘
The shipping business is a
notoriously volatile enterprise. A company which exhibits
financial strength in one year may well
disappear by year three.
In addition a controlling company may decide to restructure its
subsidiary operations as indeed
has occurred within the Falcon
Group. Corporate changes become notorious, particularly within
a market exhibiting a high
level of volatility. Accordingly
Applicant has genuine reason to demand the provision of sufficient
security to cover the
amount of the claim plus interest and costs on
the basis of its reasonably arguable best case.’
[30]
The uncertainty of a respondent’s financial viability in the
future also arose in
MV
Wisdom C
United
Enterprises Corporation v STX Pan Ocean Co. Ltd.
[15]
This had been based on there being ‘no guarantee as to
what its financial position will be in the future, the shipping
industry being notoriously volatile.’ The judgment in the
Wisdom C
however did not refer to the above comments in Peregrine III.
[31]
In
MV
Orient Stride;
Asiatic
Shipping Services Inc v Elgina Marine Co Ltd
[16]
the Supreme Court of Appeal held that a genuine and reasonable need
for security did not mean that in every case it must be proved
that
the party whose property is arrested has or will have insufficient
assets to meet a judgment granted against it in the main
proceedings. What must be established is a genuine and
reasonable apprehension that the party whose property is arrested
will not satisfy any judgment or award made in favour of the
arresting party. This apprehension may be founded upon actual
knowledge
of the extent of the assets of the party whose property has
been arrested, or it may founded on factors giving rise to an
inference
that the party in question will be unable to meet the
judgment, or that, whether for geographical reasons or otherwise, it
will
be extremely difficult for the Applicant to enforce any judgment
in its favour. Evasive responses by Respondent that it has
more
than sufficient assets to satisfy any judgment without furnishing any
details of the nature and extent of the assets may,
together with
other circumstances, result in a finding that an applicant has
succeeded in establishing the existence of a reasonable
apprehension.
[17]
[32]
In
casu,
Intergis has relied on the volatility of the maritime
industry (although recognising that Marubeni is not an entity
confining its
operations to shipping, but also a trading company not
entirely dependent on the volatility of the shipping industry). Some
commentators
have commentated adversely on its long term viability
and other negative factors, such as a drop in its share price.
Marubeni
has however not left these criticisms unchallenged. It
has provided its non-consolidated financial statements which show a
significant increase in cash on hand reserves and a significant
increase in its total equity for its 92
nd
business year
ending at 31 March 2016, when compared to the 91
st
business year which ended on the 31
st
March 2015.
[33]
The parties were agreed, in my view correctly so, that Marubeni would
in the event of any dispute of fact have the benefit
of the rule in
Plascon- Evans Paints Ltd v
Van Riebeeck Paints (Pty) Ltd.
[18]
[34]
On that basis too, I conclude that Intergis has not discharged the
onus of establishing a genuine and reasonable need for security.
Supplementary
Affidavit
[35]
Intergis has also sought to introduce a further affidavit.
Marubeni did not agree to this affidavit serving before me,
but the
parties adopted the practical solution that I could have regard
thereto with due reservation of Marubeni’s opposition
to it
being admitted. As I indicated during argument, nothing
material turned on the contents of this further affidavit and
it has
been of no consequence to the conclusions I have reached in this
judgment. I accordingly simply intend making no order in
respect
thereof.
The
Postponement Application
[36]
On 14 October 2016 Intergis applied for a postponement of the hearing
of this application on the basis that it required additional
time to
obtain more details of claims being made higher up the charter party
chain and to file further affidavits to set out the
nature of its
claims against Marubeni in more or better detail. I refused the
application with costs and indicated at the time
that my reasons
would follow later. I intend being very brief in that regard.
[37]
I have for the purposes of the application to set aside and also the
postponement application, accepted the factual correctness
of the
allegations advanced by Intergis.
[19]
No prospect could be expressed in the postponement application,
beyond a mere forlorn hope, that something might emerge from the
further exchanges of correspondence between attorneys, which might
possibly advance the case of Intergis. If an application
for a
postponement is to succeed on the basis that a party wishes to place
further facts or evidence before a court, then the nature
of that
evidence, particularly the materiality thereof and the impact on the
result, along with cogent reasons why this evidence
was not placed
before the court before, need to be advanced.
[20]
I was left totally without any basis upon which to make any
determination as to whether any additional evidence would become
available, and if so, whether it would be material to the outcome of
the setting aside application, rather than just being a
spes
that it might contribute to that debate. Intergis bore the onus of
satisfying those requirements but, despite Mr
Wragge’s
best attempts to do so, failed to advance a factual foundation on
which such an application could succeed.
Costs
[38]
Apart from the costs of the arrest application and this application,
there are also the costs of an application earlier this
year to
compel the delivery of an answering affidavit. The parties were
agreed that the costs relating thereto should simply be
costs in the
cause. That certainly seems to me to be prudent and I intend
sanctioning that suggestion of the parties.
[39]
Marubeni has sought an order that the setting aside application
succeed, and that the arrest be set aside, with costs on the
attorney
and client scale. Essentially, the punitive award of costs was
sought on the basis that the arrest was without any
proper legal
foundation.
[40]
As much as Intergis has been unsuccessful, it has not been guilty of
conduct which would justify a punitive award of costs
as a mark of
disapproval of its conduct. It is in an invidious position,
being faced with a claim from IBCI (which it apparently
contractually
bound itself to for security), is aware of claims made higher up the
charter party chain, and was aware of another
arrest having been
granted in this court at the instance of Solbay Shipping Limited on
the 11 November 2015 for the attachment
of certain bunkers on board
the MV “Jag Arya”. Its legal representatives
presented what was always going to be
a difficult case, as best and
as honestly as they could. Certainly, where the test is one of
a
prime facie
case, their judgment call to proceed with the
application for arrest, cannot be criticised.
[41]
In the exercise of my discretion on costs, I am of the view that the
costs of the applications must follow the result but only
on the
party and party scale.
[42]
I was not addressed specifically on whether the costs of two counsel
as sought by the Applicant should be allowed. Intergis
was
represented by one counsel only. Although the amount involved
is substantial, the matter was not one of particular complexity
and
could comfortably be dealt with by senior counsel. I
accordingly do not award the costs of two counsel.
Order:
[43]
I grant the following order:
(a) The order granted by this court on
30 December 2015 for the arrest of the MV “IVS Crimson Creek”
under Case No.
A122/2015 is set aside.
(b) The letter of undertaking dated 6
January 2016 furnished to Intergis Co. Limited to secure the release
of the MV “IVS
Crimson Creek” must be returned to the
Applicant’s attorneys forthwith;
(c) The Respondent, Intergis Co.
Limited is directed to pay the costs of this Application, which will
include the costs previously
reserved and the costs of the arrest
application.
_______________________________
Appearances
For
the Applicant:
M J Fitzgerald
SC with J Thobela Mkhulisi
Instructed
by:
COX YEATS
Ref:
A Clark/T Viljoen/L Maitre/9 M020 001
Tel
: 031 – 536 8500
For
the Respondent:
M Wragge SC
Instructed
by:
EDWARD NATHAN SONNEBERGS INC.
C/O
Edward Nathan Sonnebergs Inc.
Ref.:
Tony Nathan
Tel
: 031 536 8500
[1]
Given that the charger parties are voyage charters rather than time
charters, they essentially amount to contracts of afreightment,
for
the carriage of goods, the voyage charterer, in each case, in
relation to the disponent owner from whom they chartered the
vessel,
being in the position of the ‘shipper’ of the cargo on
board the vessel
[2]
This is not an express requirement of the Act but has been described
as a formulation of Didcott J in
Katagum
Wholesale Commodities Co Ltd v The MV
Paz
1984 (3) SA 261
(N) at 270A – see
MV
Orient Stride;
Asiatic
Shipping Services Inc v Elgina Marine Co Ltd
[2008] ZASCA 111
;
2009 (1) SA 246
(SCA) at 248G. It is an entrenched requirement in
our law.
[3]
MV
Pasquale Della Gatta; MV Filippo Lembo
;
Imperial
Marine Company v Deiulemar Compagnia Di Navigazione Spa
2012 (1) SA 58 (SCA).
[4]
Poseidon
Ships Agencies (Pty) Ltd v African Coaling and Exporting Co (Durban)
(Pty) Ltd and another
1980
(1) SA 313 (D).
[5]
G
Hofmeyr
Admiralty
Jurisdiction Law and Practice in South Africa
2ed at124.
[6]
More correctly the position is, as also stated by Mr Akka, that it
is ‘not uncommon’ for claims of this nature to
be
referred to as claims for ‘an indemnity’ because
‘although the claim is strictly speaking for damages, the
measure of loss claimed is an indemnity against liability to
another.’
[7]
[1985] 1 WLR 553
; [1984] 2 Lloyd’s rep. 466.
[8]
In Scrutton at article 47 the following is said:
‘
The
bill of lading is not the contract, for that has been made before
the bill of lading was signed and delivered, but it is excellent
evidence of the terms of the contract, and in the hands of a
indorsee is the only evidence. But it is open to the shipper to
adduce oral evidence to show that the true terms of the contract are
not those contained in the bill of lading, but are to be
gathered
from the mate’s receipt, web-sites, work-sites, booking notes,
e-mails, exchange of telexes, advice-notes freight-notes,
undertakings or warranties by the broker, or other agent of the
carrier just as formerly they were gathered from shipping cards,
placards and handbills announcing the sailing of the ship.’
[9]
1998 (3) SA 861
(SCA) at 869.
[10]
Hofmeyr
Admiralty
Jurisdiction Law and Practice
p
125.
[11]
at 871 B.
[12]
2000 (3) SA 776
(C) at 804 I.
[13]
[1994] ZASCA 5
;
1994 (2) SA 563
(A) at 580 D-E.
[14]
SCASA B73 (C) at B80
[15]
[2008] ZASCA 21
;
2008 (3) SA 585
(SCA) at 592 I.
[16]
[2008] ZASCA 111
;
2009 (1) SA 246
(SCA) at 248 F – 249 B.
[17]
See also Hofmeyr
Admiralty
Jurisdiction Law and Practice in SA
para
11.14.
[18]
[1984] ZASCA 51
;
1984
(3) SA 623
(A)
[19]
These
are of
a
hearsay nature, as they customarily are in applications of this
nature. Why it should be so in this modern era of electronic
communications might be something to be revisited at some stage. In
some instances they constitute double hearsay, as they also
include
allegations made up the charter party line by other charter parties
prior to Intergis..
[20]
Myburgh
Transport v Botha t/a SA Truck Bodies
1991
(3) SA 310
(NmS)