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[2007] ZASCA 115
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Fortis Bank (Nederland) N V v Orient Denizcilik Turizm Sanayi Ve Ticaret A S (242/2006) [2007] ZASCA 115; [2007] SCA 115 (RSA); [2008] 2 All SA 387 (SCA); 2008 (1) SA 376 (SCA) (21 September 2007)
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 242/2006
NAME OF SHIP:
OLYMPIC
COUNTESS
In the matter between:
FORTIS BANK (NEDERLAND) N V
.......................
APPELLANT
and
ORIENT DENIZCILIK TURIZM SANAYI VE
TICARET A S
.......................
RESPONDENT
______________________________________________________________
Coram: SCOTT, FARLAM, HEHER, COMBRINCK JJA
et
HURT AJA
Date of
hearing: 23 August 2007
Date of
delivery: 21 September 2007
Summary:
Ranking of claims in terms of s 11 of Act 105 of 1983 – s
11(4)(c)(v) does not include the claim of the person who
pays the
person who renders services to the ship
Citation: This judgment may be referred to as
The
Olympic Countess
[2007] SCA 115 RSA
JUDGMENT
______________________________________________________________
SCOTT JA/….
SCOTT JA:
[1] On 8 January 2004 the passenger liner,
Olympic
Countess
, was arrested at the instance
of numerous creditors in the port of Durban. She was subsequently
sold in pursuance of an order in
terms of s 9(1) of the Admiralty
Jurisdiction Regulation Act 105 of 1983 (‘the Act’). A
fund was constituted with the
proceeds and a referee appointed to
investigate claims. Both the appellant, to which I shall refer as
‘the Bank’ and
the respondent, to which I shall refer as
‘Orient’, submitted claims. The Bank’s claim was in
respect of a mortgage
over the vessel and consequently ranked as a
claim in terms of s 11(4)(d) of the Act. Orient contended that its
claim ranked as a
claim in terms of s 11(4)(c)(v). If its contention
were to be upheld its claim would enjoy priority over the Bank’s
claim.
But for Orient’s claim and a costs order in favour of
another creditor for which provision had been made, the Bank would be
entitled to the entire proceeds of the fund. It is not disputed that
the Bank’s claim is valid and that it is a claim ranking
in
terms of s 11(4)(d). The Bank, however, disputed the ranking claimed
by Orient; it also disputed that Orient’s claim was
a ‘maritime
claim’ within the meaning of s1(1) of the Act.
[2] Orient
applied to the High Court, Durban, for an order for the payment of
its claim out of the fund on the basis of its claimed
ranking. The
first respondent was the fund. The Bank intervened as second
respondent and opposed the relief claimed. It not only
disputed many
of the material allegations made by Orient in its founding papers but
contended that in any event and even on Orient’s
own version
the latter was in law not entitled to payment. It contended that on
Orient’s own version, one part of the claim
was not a ‘maritime
claim’ and the other part, at best for Orient, ranked as a
claim in terms of s 11(4)(f) of the Act
and hence below that of the
mortgagee’s claim. The parties accordingly agreed that the
court would be asked to decide first
the two legal issues based on
Orient’s version of the facts and only in the event of their
being decided in favour of Orient
would the matter be referred for
the hearing of oral evidence. The matter came before Balton J who
acceded to the request to separate
the issues and decided both legal
issues in favour of Orient. The learned judge granted leave to appeal
on one, ie the issue whether
one part of the claim was a maritime
claim, but not on the other. However, leave to appeal on the latter
issue was subsequently granted
by this court.
[3] As the decision on appeal hinged exclusively
on specific issues of law, the parties prepared a truncated record of
the proceedings
in the court below as well as an agreed statement in
terms of SCA Rule 8(8)(a) reflecting the facts alleged by Orient and
the issues
arising therefrom. The facts so agreed are shortly as
follows. On 20 March 2003 Orient and Royal Olympic Cruise Lines
Limited (‘ROC’),
the owner and operator of the
Olympic
Countess
, entered into a written
agreement in terms of which Orient was appointed as port agent for
the former’s vessels at the port
of Istanbul for a minimum
period of 5 years. In terms of clause 3.2 of the agreement, Orient
undertook to pay the sum of US$517 000
on behalf of ROC ‘in
partial settlement of debts previously incurred’ in respect of
various vessels including the
Olympic
Countess
. In pursuance of this
undertaking Orient made the following payments:
‘
(i) US$21,558.43 to Kiyi
Emniyet for light services furnished by Kiyi Emniyet to the Olympic
Countess between August and October 2001;
US$501,500.24
to Turkiye Den Isletmeleri (TDI) for port services rendered by TDI
to the Olympic Countess in 2001;
US$17,109.87
to TC Saglik Bak for sanitary services rendered to the Olympic
Countess by TC Saglik Bak in the period June to September
2001;
US$10,060.17 to International
Turizim Servis (ITS) for sanitary services provided to the Olympic
Countess by TC Saglik Bak in the
period June to September 2001 and
paid for by ITS as the then agent of the vessel;
TOTAL US$550,228.71’
ROC failed
to pay certain instalments due to Orient in terms of the agreement or
to maintain the agreement for a period of 5 years
as it was obliged
to do.
As a result, so Orient alleged, an amount in excess of the
sums advanced aforesaid became repayable to it by ROC. Orient caused
the
vessel to be arrested and lodged a claim with the referee. The
claim was confined to the amounts paid by it as set out above.
[4] It is necessary to quote the first eight subsections of s 11 of
the Act.
‘
11.
Ranking
of claims. –
(1)
(
a
)
If property mentioned in section 3 (5) (
a
)
to (
e
)
is sold in execution or constitutes a fund contemplated in section 3
(11), the relevant maritime claims mentioned in subsection
(2) shall
be paid in the order prescribed by subsections (5) and (11).
(b) Property other than property
mentioned in paragraph (
a
)
may, in respect of a maritime claim, be sold in execution, and the
proceeds thereof distributed, in the ordinary manner.
(2) The claims contemplated in
subsection (1) (
a
)
are claims mentioned in subsection (4) and confirmed by a judgment of
a court in the Republic or proved in the ordinary manner.
(3) Any reference in this section to
a ship shall, where appropriate, include a reference to any other
property mentioned in section
3 (5) (
a
)
to (
e
).
(4) The claims mentioned in
subsection (2) are
the
following, namely –
(
a
)
a claim in respect of costs and expenses incurred to preserve the
property in question or to procure its sale and in respect of
the
distribution of the proceeds of the sale;
(
b
) a
claim to a preference based on possession of the property in
question, whether by way of a right of retention or otherwise;
(
c
) a
claim which arose not earlier than one year before the commencement
of proceedings to enforce it or before the submission of proof
thereof and which is a claim –
(i) contemplated in paragraph (
s
)
of the definition of “maritime claim”;
(ii) in respect of port, canal, other waterways or
pilotage dues, and any charge, levy or penalty imposed under the
South African Maritime Safety Authority Act, 1998
, or the
South
African Maritime Safety Authority Levies Act, 1998
;
in respect of loss of life or personal injury, whether
occurring on land or on water, directly resulting from employment of
the
ship;
in respect of loss of or damage to property, whether
occurring on land or on water resulting from delict, and not giving
rise to
a cause of action based on contract, and directly resulting
from the operation of the ship;
in respect of the repair of the ship, or the supply of
goods or the rendering of services to or in relation to a ship for
the employment,
maintenance, protection or preservation thereof;
in respect of the salvage of the ship, removal of any
wreck of a ship, and any contribution in respect of a general
average act
or sacrifice in connection with the ship;
in respect of premiums owing under any policy of marine
insurance with regard to a ship or the liability of any person
arising from
the operation thereof; or
by any body of persons for contributions with regard to
the protection and indemnity of its members against any liability
mentioned
in subparagraph (vii);
(
d
) a
claim in respect of any mortgage, hypothecation or right of retention
of, and any other charge on, the ship, effected or valid
in
accordance with the law of the flag of a ship, and in respect of any
lien to which any person mentioned in paragraph (
o
)
of the definition of “maritime claim” is entitled;
(
e
) a
claim in respect of any maritime lien on the ship not mentioned in
any of the preceding paragraphs;
(
f
) any
other maritime claim.
(5) The claims mentioned in paragraphs (
b
)
to (
f
) of subsection
(4) shall rank after any claim referred to in paragraph (
a
)
of that subsection, and in accordance with the following rules,
namely ─
(
a
) a
claim referred to in the said paragraph (
b
)
shall, subject to paragraph (
b
)
of this subsection, rank before any claim arising after it;
(
b
) a
claim of the nature contemplated in paragraph (
c
)
(vi) of that subsection, whether or not arising within the period of
one year mentioned in the said paragraph, shall rank before
any other
claim;
(
c
)
otherwise any claim mentioned in any of the subparagraphs of the said
paragraph (
c
) shall
rank
pari passu
with
any other claim mentioned in the same subparagraph, irrespective of
when such claims arose;
(
d
)
claims mentioned in paragraph (
d
)
of subsection (4) shall, among themselves, rank according to the law
of the flag of the ship;
(
e
)
claims mentioned in paragraph (
e
)
of subsection (4) shall, among themselves, rank in their priority
according to law;
(
f
)
claims mentioned in paragraph (
f
)
of subsection (4) shall rank in their order of preference according
to the law of insolvency;
(
g
) save
as otherwise provided in this subsection, claims shall rank in the
order in which they are set forth in the said subsection
(4).
(6) For the purposes of subsection (5), a claim in
connection with salvage or the removal of wreck shall be deemed to
have arisen
when the salvage operation or the removal of the wreck,
as the case may be, terminated, and a claim in connection with
contribution
in respect of general average, when the general average
act occurred.
(7) A court may, in the exercise of its admiralty
jurisdiction, on the application of any interested person, make an
order declaring
how any claim against a fund shall rank.
(8) Any person who has, at any time, paid any claim or
any part thereof which, if not paid, would have ranked under this
section,
shall be entitled to all the rights, privileges and
preferences to which the person paid would have been entitled if the
claim had
not been paid.’
[5] It will be observed that the claims participating in a fund are
listed in
s 11(4).
The order of their ranking is given in
s 11(5).
The claims listed in
s 11(4)(c)
, save for the claim referred to in
s
11(4)(c)(vi)
(salvage) which is given preference, rank
pari passu
.
Significantly, they rank ahead of the claim of the mortgagee, which
is dealt with in
s 11(4)(d).
But if a claim referred to in
s
11(4)(c)(i)
-(v) or
s 11(4)(c)(vii)
and (viii) is ‘a claim which
arose’ earlier than one year before the commencement of
proceedings to enforce it or before
the submission of its proof, it
falls to be ranked under
s 11(4)(f).
The words ‘a claim which
arose’ have been held to mean ‘a claim which came into
existence’ and not ‘a
claim which became enforceable’.
(See the MV
Forum Victory
2001 (3) SA 529
(SCA).)
[6] In the case of the first three of Orient’s four claims
listed in para 3 above, the entities paid by Orient were the entities
that actually rendered the services to the vessel. It was common
cause that those entities enjoyed maritime claims within the meaning
of s1(1)(m) of the Act; that is to say, they were claims ‘for,
arising out of or relating to . . . the supplying of goods or
the
rendering of services for the employment, maintenance, protection or
preservation of a ship’. In the case of the fourth
claim, the
entity paid by Orient was the entity that had paid the entity that
had rendered the services. The Bank contended in the
court
a quo
that even on Orient’s own version its fourth claim was not a
‘maritime claim’ under any of the paragraphs in s
1(1).
Whether it was or not was the first of the two legal issues the court
was asked to decide. In this court, however, Orient conceded
that the
claim would in any event rank after that of the mortgagee. For
reasons that will become apparent when dealing with the other
claims
the concession was well made and it is unnecessary to say anything
more about this claim.
[7] Counsel for the Bank, relying on
dicta
in
Weissglass NO
v Savonnerie Establishment
1992 (3) 928 (AD) at 941 D-F,
submitted that notwithstanding the wide meaning of the words ‘any
claim for, arising out of or
relating to’ which preceded
paragraph (m) in s 1(1), Orient’s remaining three claims were
not claims within the meaning
of that paragraph. In view, however, of
the conclusion to which I have come regarding the construction of s
11(4)(c)(v), it is unnecessary
to decide the point and I shall
assume, without deciding, that Orient’s claims are, indeed,
maritime claims within the meaning
of s 1(1)(m). I shall also assume
in Orient’s favour that ROC’s indebtedness to Orient
arose directly as a result of
Orient’s payments to the entities
rendering the services to the
Olympic Countess.
[8] Counsel for Orient submitted that, having regard to the wide
meaning of the phrase ‘in respect of’ in s 11(4)(c)(v),
the section was to be construed as including not only the claims of
the person who actually renders the services, but also the claims
of
the person who pays the person rendering the services. The latter
claims, so it was argued, come into existence only when the
person
who renders the services is paid and as Orient in the present case
paid the entities who rendered the services less than one
year prior
to submitting proof of the claims to the referee, the claims fell
within the ambit of s 11(4)(c)(v) and ranked ahead of
the mortgagee’s
claim.
[9] Counsel for the appellant drew attention to the distinction
between the phrase ‘in respect of’ in s 11(4)(c)(v) and
the phrase ‘for, arising out of or relating to’ in the
definition of ‘maritime claim’ and submitted that
the
former conveyed a different and narrower meaning than the latter and
that this was indicative of a change of intention on the
part of the
legislature. In
Mak Mediterranee SARL v The Fund Constituting the
Proceeds of the Judicial Sale of the MC Thunder (S D Arch, Interested
Party)
1994 (3) SA 599
(C) at 609G-J it was said that given the
indefinite meaning of expressions such as ‘in respect of’
and ‘for, arising
out of or relating to’ overmuch weight
ought not to be attached to this change of language and that more
important when construing
s 11(4)(c)(v) was the need to consider the
provision in its context in the section and in particular in the
light of s 11(8). However,
as counsel emphasized, the definition of
‘maritime claim’ is ‘a gateway provision’
into admiralty jurisdiction
and its object is to set the outer limits
of that jurisdiction.
The claims listed are accordingly couched in wide terms and many
clearly overlap. By contrast, the ranking provisions seek to
distinguish
between different claims in order to establish their
order of preference. Section 11 must therefore as far as possible be
construed
so as to avoid any overlapping between the different
categories of claims listed.
[10] Section 11(8) makes it clear that the person who pays any claim
of another which would have ranked under s 11 is entitled to
all ‘the
rights, privileges and preferences’ to which the person paid
would have been entitled if the claim had not been
paid. In other
words, it is clear that the expression ‘any claim’ in s
11(8) must be understood as referring to the claim
of the person who
would in the first instance be the claimant under one of the
categories listed under s 11(4). The claims of the
entities who
actually rendered the services in the present case would undoubtedly
fall within the scope of s 11(4)(c)(v). But those
claims arose
earlier than ‘one year before the commencement of proceedings
to enforce [them] or before the submission of proof
thereof’.
They would accordingly not have ranked under s 11(4)(c)(v) but under
s 11(4)(f). It is implicit in s 11(8) that the
person who pays the
claim of another cannot acquire a better right, privilege or
preference than the person paid. Section 11(8) makes
it clear
therefore that the claim referred to in s 11(4)(c)(v) was not
intended to extend to the claim of the person who pays the
actual
repairer, supplier or the person rendering the services. If the
position were otherwise, the one-year limitation in s 11(4)
could be
defeated by the simple expedient of the claimant ‘selling’
the claim to another and thereby conferring on the
claim an elevated
ranking. Such a construction would be wholly inconsistent with s
11(8) and could never have been the intention
of the legislature.
[11] It follows that in my view Orient is a ‘person’ who
paid the claim of another within the meaning of s 11(8). Its
claims
accordingly ranked no higher than the claims of the entities it paid.
Those claims fall to be ranked under s 11(4)(f) and
Orient’s
claims must likewise be so ranked.
[12] The appeal is upheld with costs. The order of the court
a quo
is set aside and the following substituted in its stead:
‘
The application is dismissed and the
applicant is to pay the intervening respondent’s costs.’
__________
D G SCOTT
JUDGE OF APPEAL
CONCUR:
FARLAM JA
HEHER JA
COMBRINCK JA
HURT AJA