United Enterprises Corporation and Another v STX Pan Ocean Company Limited (AC131/2006 , AC111/2006) [2007] ZAWCHC 12; 2008 (1) SA 665 (C); [2007] 3 All SA 87 (C) (1 March 2007)

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[2007] ZAWCHC 12
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United Enterprises Corporation and Another v STX Pan Ocean Company Limited (AC131/2006 , AC111/2006) [2007] ZAWCHC 12; 2008 (1) SA 665 (C); [2007] 3 All SA 87 (C) (1 March 2007)

IN THE HIGH COURT OF
SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
CASE NO: AC 131/2006 Related to
Case No: AC 111/2006
In the matter between:
UNITED ENTERPRISES CORPORATION
First Applicant
MV “WISDOM C” Second
Applicant
and
STX PAN OCEAN COMPANY LIMITED
Respondent
JUDGMENT GIVEN THIS THURSDAY, 1
MARCH 2007
­­­­­­­­­­
CLEAVER
J:
[1] On 6 July 2006 and pursuant to an
ex parte
application brought by the respondent (“STX”) as
applicant, the MV “Wisdom C” (“the Vessel”) was arrested in
the exercise
of the court’s admiralty jurisdiction in terms of
section 5(3) of the Admiralty Jurisdiction Regulation Act No 105 of
1983 (“the
Act”). The arrest was for the purpose of providing
security in arbitration proceedings in London for STX’s
counter-claims against
the applicant (“UEC”), for payment of
amounts due in terms of a Charterparty agreement and the repudiation
thereof.
[2] Thereafter, security was provided
by UEC, the owner of the Vessel, for an amount acceptable to STX and
the Vessel was released
from arrest and left the jurisdiction of this
court.
[3] UEC now applies on motion for the
deemed arrest of the Vessel to be set aside and for the letter of
undertaking by which security
was provided to be declared null and
void. In the alternative, and in the event of the aforesaid prayers
not being granted, UEC
counterclaims for security to be furnished in
respect of its claims in the arbitration proceedings in London.
[4] Before dealing with the grounds on
which the applicant seeks relief, it would be convenient to record
the events which preceded
the application for the arrest of the
Vessel in this court.
[5] On 17 December 2003 STX entered
into a Time Charterparty (the Head Charterparty) with UEC whereby it
agreed to hire the Wisdom
C from UEC
“from the time of delivery,
for a minimum 10 months upto about 13 months (about to mean 15 days
more or less in CHOPT)”
. The Vessel was delivered to STX only
on 23 September 2004 and STX was accordingly entitled to employ the
Vessel for a period up
to 7 November 2005. On 30 January 2004, STX
as despondent owners sub-chartered the Vessel to VOC Bulk Carriers
(
“the 1
st
Time Sub-Charteres”
)
under a Time Charterparty for a period of about four to about six
months. According to STX, the 1
st
time Sub-Charterers
claimed off-hire and balance of account from STX and after adjusting
for the difference in rates of hire STX
contend that they have a
claim for off-hire and balance of account against UEC in the sum of
US$283,282.00.
[6] The Vessel was re-delivered by the
1
st
Time Sub-Charterers to STX on 16 February 2005.
However, on 28 January 2005 before the 1st Time Sub-Charterer party
came to
an end, STX sub time chartered the Vessel to Daeshin Shipping
Co Ltd (“the 2
nd
Time Sub-Charterers”). The period of
the sub time charter was
“from the time of delivery … for
period minimum 6 months upto about 7 months”
and the Vessel was
delivered to the 2nd Time Sub-Charterers on 16 February 2005.
STX contends that the 2nd Time Sub-Charterers
could have employed the
Vessel for a duration of up to 1 October 2005.
[7] Before the 2nd Time
Sub-Charterparty between STX and the 2nd Time Sub-Charterers came
to
an end, UEC purported to terminate the Head Charterparty agreement.
This occurred in June 2005 when the Vessel was reported to have
been
refused permission to berth at the port of Mina Saqr in the United
Arab Emirates (“UAE”) on account of problems with the
Vessel’s
crane. At that time disputes arose between STX and UEC in regard to
the Head Charterparty. UEC contended that a rental
payment due on 5
June 2005 had not been paid, whereas STX contended that even though
the payment of hire had not been made, it had
overpaid hire in the
sum of US$15 608.47. There is a dispute as to what happened at the
port of Mina Saqr, but on 16 June 2005 UEC
purported to terminate the
Head Charterparty as a result of the alleged repudiatory breach
thereof by STX and purported to withdraw
the Vessel from STX’s
service. The claim for termination by UEC was based on the
following:
1. STX
had made excessive and unlawful deductions from hire.
2. STX
had failed to provide and pay for bunkers.
3. STX had demanded unreasonable
security during the course of negotiations to obtain security for its
claim against UEC.
STX denies that the grounds for
termination relied upon by UEC are sound in law and maintains that
UEC’s action in purporting to
terminate the Head Charterparty
amounted to a repudiatory breach thereof and alleges that in the
result it has suffered damages.
[8] In March 2006, STX applied
ex
parte
to the Italian Court of Gorizia for the arrest of the
Vessel in order to provide security for the counter-claims which it
intended
to file in the arbitration proceedings in London. An order
for the conservatory seizure of the Vessel was obtained and early in
April a decision as to the future of the seizure order was made by a
judge in Gorizia, after consideration of representations made
on
behalf of the parties. In terms of an order dated 8 April 2006, the
order of seizure was revoked. An appeal noted by STX was
dismissed
“on account of intervened lack of interest to act”
.
Counsel were agreed that the reason for the dismissal of the appeal
was that by the time the appeal was heard, the Vessel had left
Italian waters and the court concluded that in the circumstances the
appellant had been unable to prove the existence and duration
of its
interest to act, i.e. the presence of the Vessel in Italian waters.
[9] The principal submission to me
on behalf of UEC was that the judgment of the court at Gorizia
constituted a final judgment and as such UEC was entitled to raise
the exception
rei iudicatae.
In the alternative, it was
submitted that the arrest warrant issued in this court should not
have been granted because of material
non-disclosures in the founding
affidavit. Counsel for UEC also submitted that the founding
affidavit in the proceedings before
me
lacked the necessary
factual averments to establish the
prima facie
case which STX
had to put up.
[10] The requirements for a successful
defence of
res iudicata
are
well known, namely that the judgment pleaded must be a final and
definitive decision which puts an end to the dispute between
the
parties
1
.
[11] An English translation of the
Gorizia judgment in which the arrest was set aside is included in the
papers and both counsel have
accepted the accuracy of the translation
which does make for rather quaint reading.
[12]
THE GORIZIA JUDGMENT
After dismissing certain points taken
in limine
on behalf of UEC, the judge proceeds to deal with
what he terms the point of
“Fumus boni iuris”
. (Counsel
were agreed that the English translation of ‘
fumus boni iuris
’
is
prima facie
case). The judge then records that STX intends
to bring an action in the arbitration proceedings in which it will
dispute the lawfulness
the termination of the Charterparty by UEC
relating to
i)
“Set off on freight amounts
to an excessive extent
ii)
The
failure of STX to pay for bunkers at their charge under the
Charterparty”
He finds that STX has made out a
prima
facie
case
“at least as concerns the ‘fumus’”
in
respect of its claim for set-off on freight amounts to an excessive
extent. However, in regard to the issue of payment for the
bunkers,
after recording that payment was not made, the judge concludes that
the evidence presented on affidavit by STX is not sufficient
“since
it is, in itself, but a statement of knowledge having no value even
as a mere clue”
. (According to STX’s expert, this was
because evidence by way of affidavit was not acceptable.) Then
follows what is to my mind
the crucial portion of the judgment,
namely:
“
Moreover,
the facts underlying the second Sub-Charterers’ refusal to pay for
bunkers and thus the alleged ‘set-off’ under point
ii) hereof
(against delays caused by the ship’s cranes and the consequent
inability of the ship to berth at the port of Mina Saqr)
appear,
under the present circumstances, altogether uncertain and
unsubstantiated, with reference to both the ‘an’ and the ‘quantum
debeatur’, there being no proof (on the point, a thorough
investigation would be necessary, as object of the pending
proceedings
on the merits) either on the causes of such damages or on
the party to whom they are ascribable, or again on the amount of the
damages.
In
view of the foregoing, vis-à-vis the ‘fumus’ of the Defendants’
submissions on the reasons underlying the advanced termination
of the
Charter and with specific reference to failure to pay for the bunker,
in the light of the result of the summary investigation,
which is
customarily made in the preliminary proceedings for obtainance of a
remedy measure, the Court does not envisage the existence
of the
‘fumus boni iuris’ in the Plaintiff’s demand.
The Order of seizure granted ‘ex
parte’ on 29.3.2006 must therefore be revoked.”
[13] Both parties produced an expert
witness who supported each’s case. On behalf of UEC, an affidavit
was filed by one Filippo
Bruno (“Bruno”), an Italian attorney
with experience in maritime law. His view of the judgment is that
the court set aside the
arrest of the Vessel on the basis that STX’s
admitted failure to provide bunkers for the Vessel as it was obliged
to do in terms
of the Charterparty amounted to a breach of the
Charterparty justifying the termination thereof by UEC. In his
affidavit he records:
“
The Court found that the
Respondent had failed to establish even on a ‘prima facie’ basis
that the conduct of the First Applicant
(UEC) in terminating the
Charterparty amounted to a repudiatory breach thereof entitling the
Respondent to the contemplated relief
it sought in the London
proceedings.”
As to the order made by the appeal
court, he states that STX’s appeal
“was not admissible,
because an appeal which cannot lead to a concrete result is not
admissible for ‘lack of interest’,
according to art. 100
of Italian Civil Procedure Code”.
His view is that the
decisions of both the court of first instance and the court of appeal
are final because no further appeal is
allowed against the decision.
He bases this view on a judgment of the Court of Cassation, to which
he refers, and also refers to
article 669.septies paragraph 1 of the
Italian Civil Procedure Code, the relevant portion of which reads:
“
669.septies (Negative Order). A
Court Order stating lack of jurisdiction does not prevent a new
presentation of the petition. The
Order of dismissal does not
prevent a new presentation of the petition for a remedy in case the
circumstances of the case change
or new points of fact or law are
submitted.”
In his view the papers filed in the
application before me do not reveal any new facts, circumstances or
other reasons which would
persuade an Italian court to reconsider the
arrest of the Vessel.
[14] Mr Alberto Batini (“Batini”),
an Italian attorney who also practises maritime law, filed an
affidavit on behalf of STX.
He explains that article 669.septies of
the Code of Civil Procedure provides for the issue of a decree of
arrest without notice to
the debtor if notice to the debtor might
jeopardise the execution of the decree. The decree of arrest issued
by a judge after a
summary enquiry into the application is
provisional only and stipulates a date by which the decree is to be
served on the respondent
and a date upon which the hearing will take
place. Paragraph 2 of article 669.septies authorises the judge at
the hearing to issue
an order confirming, amending or setting aside
the decree. His view is that until such time as the hearing takes
place, the original
ex parte
order detaining the Vessel is, by
its very nature, an interim order granted to enable the respondent an
opportunity to submit his
defence. It is only after the hearing
before which there will be a more complete disclosure of documents
and a full exchange of
pleadings and motions, that the decree and
arrest may be confirmed. Should the court, after the hearing,
decline to confirm the
provisional decree and set aside the arrest of
the Vessel, the effect thereof is as if the original petition had not
been granted.
As regards a new presentation of a petition, Batini’s
view is that the new points of fact or law referred to in the article
may
have been in existence at the time that the original decree was
issued. His view is therefore that a conservatory arrest, which
the
arrest in question was, is interlocutory in nature according to
Italian law. The arrest proceedings did not dispose of the merits
of
the dispute between the parties and a second arrest may be sought
should circumstances change or new points of fact or law be
advanced.
He also refers to the 1952 Arrest Convention (presumably a
convention adopted by Italy). Article 3(3) of the convention
prohibits the re-arrest of a ship if it has been arrested in any one
jurisdiction and bail or any other security has been given to
procure
the release of the ship from arrest. The Vessel arrested in Italy
was released without any bail having been provided and
accordingly
the provisions of article 3(3) of the Arrest Convention do not apply.
In regard to
res iudicata
Batini’s view is that the setting aside of a provisional decree
such as one made in terms of article 669.septies of the Code of
Civil
Procedure does not give rise to a defence of
res iudicata
because:
14.1 The decree is provisional. When
it is set aside, the effect of this is that it was as if the original
petition has been rejected.
14.2 Article
669.septies, paragraph 1, of the Code of Civil Procedure expressly
provides that a claimant may present a new petition
for the
conservatory arrest of property if there are changed circumstances,
or where new points of fact or law are submitted. It
is not
necessary that the points of fact or law should only have come into
existence after the provisional order was made. A new
petition may
be presented supported by different legal arguments based upon the
same facts.
14.3 The
setting aside of a provisional arrest order does not finally dispose
of any part of the substantive dispute between the parties.
These
disputes will be dealt with in the proceedings in the foreign
jurisdiction.
[15] Counsel for UEC submitted that in
terms of the Gorizia judgment the application had been refused and
that on the authority of
African Farms and Townships v CT
Municipality
the application had in fact been dismissed.
“
As
pointed out in
Purchase
v. Purchase
,
1960 (3) S.A. 383
(N) at p. 385, dismissal and refusal of an
application have the same effect, namely a decision in favour of the
respondent.
2
”
In support of his argument, counsel
pointed out that the equivalent of an order for absolution would be
that no order is made or that
leave is granted to apply on the same
papers. As no such orders were made he submitted that the judgment
ought not to be interpreted
as being akin to an order for absolution.
In my view, this argument loses sight
of the nature of the unique proceedings before the Gorizia court
which required the court to
confirm,
amend or set aside the
provisional conservatory order.
It
is clear from the judgment that the Gorizia court did not in terms
dismiss the application. As to the form of the order, it would
be
instructive to bear in mind the distinction drawn by
Watermeyer
J in
Commissioner of Customs
v Airton Timber Co Ltd
3
between the actual judgment and the reasons for judgment. The
learned judge expressed the view that, in effect where the decision
of a particular question, although dealt with in the reasons for
judgment is not incorporated in the actual judgment, and the question
is not necessarily determined by the judgment, the matter is not
res
iudicata.
[16] As to the South African position,
in terms of
Laconian
Maritime Enterprises Ltd v Agromar Lineas Ltd
4
,
I am to apply the
lex fori.
In this connection,
regard
may be had to
Great River
Shipping Inc v Sunnyface Marine Ltd
5
.
In that matter the facts were not dissimilar to the facts in the
matter before me. An order for the arrest of a ship which had
been
obtained
ex parte
was set aside on the ground that the applicant had failed to make out
a
prima facie
case in respect of the cause of action on which it had relied. The
application was thereafter supplemented by further affidavits
and a
second arrest was successfully obtained. The issue before the court
was the interpretation to be given to the provisions of
section 3(8)
of the Act which reads
‘
Property shall not be arrested
and security therefor shall not be given more than one in respect of
the same maritime claim by the
same claimant.”
The finding of the court was that the
section could be invoked only where
a) An arrest which may be actual or
deemed in section 3(10)(a) had been effected; and
b) Security had been provided.
Significantly,
however, in the course of his judgment,
King
J said
“
However,
where an arrest, which is after all a procedural step which emanates
ex
parte
from
the office of the Registrar, is set aside by reason of a want of one
or other of the legal requisites of a valid arrest (such
as the
absence of a
prima
facie
case), then in my view s 3(8) does not preclude a further arrest
provided such legal requisites are present on the later occasion.”
6
This is clear authority against the
application of the exception
rei iudicatae
where an arrest has
been set aside on grounds that the applicant had failed to make out a
prima facie
case.
Counsel
for the applicants submitted that the judgment in
Great
River Shipping Inc
was
concerned only with the application of section 3(8) of the Act and
did not provide authority for the proposition that the exception
rei
iudicatae
would not apply
where an arrest had been set aside on the grounds that the applicant
had failed to make out a
prima
facie
case. Although the
pronouncement which I have quoted is
obiter
,
its logic is in my view compelling. Furthermore, in terms of the
Italian law, the refusal by a court to confirm a provisional arrest
does not preclude the applicant from bringing a new application in
which new points of fact or law are introduced, or in which changed
circumstances are shown to exist. Similarly, in South Africa, it has
been held that a party whose arrest is set aside as a result
of a
failure to place certain evidence before the court in its founding
affidavit may simply bring a new application relying upon
amplified
averments. It is for this reason that our courts permit parties who
have arrested vessels to advance any ground to justify
the arrest,
irrespective of whether or not it was relied upon initially in
obtaining the arrest order
7
.
[17] In the proceedings before me,
STX, while being entitled to supplement its case for the arrest in
its answering affidavit
8
bears the onus of establishing
1) That
it has a
prima facie
cause of action
2) which
is
prima facie
enforceable in the foreign court of its choice;
and
3) that
it has a genuine and reasonable need for security
9
.
In
Bocimar
NV v Kotor Overseas Shipping Limited
10
the court held that the onus of proving the need for security is to
be established on a balance of probabilities. With this as a
starting point, counsel for UEC submitted that STX also bore the onus
of establishing on a balance of probabilities that
res
iudicata
did not apply.
The logical extension of this submission was then that the
Plascon
Evans
rule is to be applied
and that accordingly, the view of UEC’s experts as to the
interpretation of the Gorizia judgment and the
interpretation of the
statute should apply.
I
have some difficulty with this proposition. STX is required to
establish that
prima facie
it has an enforceable claim against
UEC. In this context I cannot conceive that it now carries an onus
similar to that which it
has to prove its genuine and reasonable need
for security. Its onus is merely to put up a
prima facie
case. The test for such a case has been stated to be the following:
“
The
authorities and considerations to which I have referred seem to
justify the conclusion that the requirements of a
prima
facie
cause of action, in relation to an attachment to found jurisdiction,
is satisfied where there is evidence which, if accepted, will
show a
cause of action. The mere fact that such evidence is contradicted
would not disentitle the applicant to the remedy. Even
where the
probabilities are against him, the requirement would still be
satisfied. It is only where it is quite clear that he has
no action
or cannot succeed, that an attachment would be refused or discharged
on the ground here in question.”
11
On this basis, the view of STX’s
expert in regard to the Italian law is sufficient to make out a
prima
facie
case, even if UEC’s expert holds a different view.
[18] As explained in
African
Wanderers Football Club (Pty) Ltd v Wanderers Football Club
12
a judgment is final if it has determined the substantive rights of
the parties. In the matter before me, the issue is whether the
Gorizia court made a final and definitive pronouncement on STX’s
claim that it was entitled to arrest the Vessel in order to obtain
security for its counter-claim in the arbitration proceedings. As I
understand the judgment, the court found
1) The so-called novation of the
obligation to supply bunkers had not been substantiated, the reason
being that the evidence tendered
was by way of affidavit, and
2) That
“the facts underlying the second sub-Charterers’ refusal to
pay for bunkers and thus the alleged ‘set-off’ under point ii)
hereof (against delays caused by the ship’s cranes and the
consequent inability of the ship to berth at the port of Mina Saqr)
appear, under the present circumstances, altogether uncertain and
unsubstantiated, …”
In the result, the court could not
find that the respondent had established a
prima facie
case.
(
“The court does not envisage the existence of the fumus boni
iuris in the plaintiff’s demand.”
) For that reason the order
of seizure was revoked. In my view it is clear that the court did
not find that the facts alleged by
STX were insufficient to establish
a
prima facie
case, but rather that the facts had not been
substantiated. (Incidentally, Bruno also appears to be incorrect
with his contention
that the court set aside the arrest of the Vessel
on the basis of STX’s admitted failure to provide bunkers for the
Vessel. The
court merely found that as a fact, payment for the
bunkers had not been made, but as I have indicated, STX’s case was
that it did
not need to make payment for the bunkers as it had
already overpaid on the hire due to UEC.) I do not agree with
counsel for UEC
that the order amounted to a dismissal of STX’s
claim. In my view, the order was akin to an order for absolution
from the instance.
For that reason, I conclude that the exception of
the
rei iudicatae
cannot be sustained.
[19] In
the alternative, counsel for UEC submitted:-
* That no case had been made out in
the founding affidavit and that accordingly there was nothing which
could be supplemented in the
answering papers; and
* STX’s failure to place all
material information before the judge who authorised the arrest
warrant amounted to a breach of the
requirement of
uberrima fides
and for that reason also the
ex parte
order ought not to have
been granted.
[20] Relying principally on the
decision in
Qatar Steel
Company Ltd v The Doxa
(“the Doxa”)
13
,
counsel for UEC submitted that the allegations in the founding
affidavit were so lacking in sufficiency that no
prima
facie
case had been made
out. In the Doxa the applicants purported to adduce evidence that
the servants of the carrier did not exercise
due diligence in order
to show that the carrier was not exempted from certain provisions of
the Hague and Hague-Visby Rules. The
court found that the deponent
to the founding affidavit went no further than to contend that the
engine failure of the vessel resulted
from the respondent’s
servants lack of due diligence. The court’s view was that this was
insufficient.
Two submissions were advanced on
behalf of UEC;
* Firstly, that the founding affidavit
contained only assertions by the deponent; and
* Secondly,
that the deponent should have revealed the nature of UEC’s claim of
a repudiatory breach by STX as the latter’s claim
flowed from this.
[21] As is usual in cases of this
nature, the deponent to the founding affidavit was an attorney from
the firm of attorneys representing
STX. She sets out her authority
to make the affidavit in the following manner:
“
3. The contents of this
affidavit are not within my knowledge, unless otherwise stated, but
have been made known to me by the following
people:
3.1 Mr Nick Graydon, a partner in
the firm Clyde & Co. of 51 Eastcheap, London, EC3M 1JP, my
firm’s instructing correspondent
in this manner. Mr Graydon has
the conduct of the matter on behalf of Applicant and has knowledge of
the facts set out herein in
relation to the arbitration proceedings
commenced by the First Respondent in London as referred to below, as
well as the counterclaim
instituted by the Applicant herein in such
arbitration proceedings.
3.2 Mr Graydon informs me that he
is, in turn, instructed by Mr Jae Hoon Kim, the manager (Insurance
and Legal Department) of
STX Pan Ocean Co Ltd
, the Applicant
in these proceedings, which has its offices at Seoul, South Korea.
4. I believe the information given
to my by Mr Graydon to be true and correct, and I depose thereto on
such basis. In turn, Mr Graydon
informs me he believes the
information and instructions given to him by Applicant’s officers
and servants to be true and correct.
Mr Graydon informs me that he
has personal knowledge of the said arbitration proceedings in London,
and has obtained his knowledge
of the factual averments relating to
the claim and other facts set out relating thereto from the aforesaid
sources.
……………
9. Disputes have arisen between
Applicant and First Respondent in connection with the said
charterparty, in respect of which arbitration
proceedings have been
instituted in London for the litigation of such disputes. Applicant
avers that it has certain substantial
claims against First Respondent
arising out the aforesaid charterparty. Applicant holds no security
for such claims, and has a genuine
and reasonable need for such
security…”
[22] The deponent then deals with
UEC’s alleged claims against STX in the following manner:
“
10. First Respondent has alleged
that it withdrew the Second Respondent from the said charter owing to
Applicant’s alleged repudiatory
breach of the charterparty. In
essence, First Respondent alleges that, in breach of its obligations
under the charterparty:
10.1 Applicant failed and/or
refused and/or neglected to pay the full amount of hire due to First
Respondent;
10.2 Applicant failed and/or
refused and/or neglected to stem bunkers to the Second Respondent
vessel at the port of Mina Saqr, at
a time when the fuel position of
the Second Respondent vessel was critically low.
11. First Respondent alleges
further that such alleged breaches by Applicant constituted a
repudiation by Applicant of the charterparty,
which alleged
repudiation First Respondent accepted and consequently took the
Second Respondent vessel off-hire from Applicant.
12. First
Respondent alleges further that it has a claim against Applicant for
the alleged unpaid charter hire, and for alleged damages
arising from
Applicant’s alleged unlawful repudiation of the charterparty.
Respondent further asserts an additional claim for
alleged damage to
the Second Respondent vessel by Applicant’s servants/agents.”
After recording that STX has asserted
its claims against UEC in the arbitration proceedings, the deponent
records that STX’s defence
to UEC’s claim and its counter-claim
against UEC in the arbitration proceedings run to several hundred
pages. For this reason,
a copy of all the papers was not annexed to
the founding affidavit, but STX’s defence and counter-claim
submissions (without annexures)
were annexed. The deponent then
alleges that from the defence and counter-claim submissions it is
clear that on the face of it STX
has valid defences to UEC’s claims
inter alia
on the basis that
“
15.1.1 Applicant was entitled to
deduct certain sums from the hire payable to First Respondent owing
to First Respondent’s non-performance
under, and/or breach of the
terms of, the terms of the charterparty;
15.1.2 Rather
than Applicant failing or refusing to stem bunkers to the vessel as
required, such bunkers could not be stemmed owing
to Second
Respondent being refused entry to port by reason of equipment
deficiencies, which deficiencies were the responsibility
of First
Respondent.”
Details as to how STX’s claim for
damages are arrived at are provided
and the relevant portion
of the affidavit concludes with the following:-
“
I respectfully submit that such
claims by Applicant have been sufficiently particularised and
evidenced herein so that, if accepted,
same will establish a cause of
action for Applicant against First Respondent in respect thereof.”
[23] As already mentioned, in
establishing its
prima facie
case, an arrestor is not confined to the allegations made in the
founding papers. It can also rely on what is alleged in its
answering
affidavit filed in the application to set aside the
arrest
14
.
Furthermore,
“
In
admiralty cases the evidence tendered and accepted by the Courts for
the purpose of establishing a
prima
facie
cause of action is almost invariably of a hearsay nature. Even
‘double hearsay’ evidence from an undisclosed source has been
accepted for this purpose (see
The
MV Thalassini Avgi
case (
supra
)
at 841C-843D). It follows that the level of the test applied is,
generally speaking, a low one even in the type of applications
for
attachment or arrest to which reference has just been made.”
15
[24] Counsel for UEC contended that
the deponent to the founding affidavit failed to disclose the
ultimate source of her information
in that she describes one of her
sources as certain unnamed officers and servants of the respondent.
In response to UEC’s challenge,
the deponent amplified her
averments in this connection in the answering affidavit in the
following manner:
“
12.2 I have been advised by Mr
Graydon that he and his firm became involved in the dispute between
STX Pan Ocean and UEC on 17 June
2005, one day after UEC
purported to terminate the charterparty.
12.3 When Mr Graydon first received
instructions it was from Mr S. R. Kim, and his superior, Mr J. H.
Kim, who was the team leader
of STX Pan Ocean’s insurance and legal
department. Mr Graydon was briefed with copies of the correspondence
and documents that
had been exchanged between STX Pan Ocean and UEC,
as well as between STX Pan Ocean and the vessel’s sub-charterers
VOC Bulk Shipping
(USA) Inc (‘VOC’) and Daeshin Shipping Company
Limited (‘Daeshin’), as well as the other sub-charterers in the
chartering
chain.
12.4 Several months after the
termination of the charter the day-to-day handling of the file at STX
Pan Ocean passed to Mr Jae Hoon
Kim, an assistant manager in the
insurance and legal department still under the supervision of Mr J.
H. Kim, the team leader. Mr
Jae Hoon Kim is a qualified lawyer. It
was Mr Jae Hoon Kim who communicated confirmation of STX Pan Ocean’s
instructions to Mr
Graydon at the time of the arrests in Italy and
South Africa.
12.5 STX Pan Ocean’s insurance
and legal department in turn obtained their information from STX Pan
Ocean’s breakbulk liner operations
department and, in particular,
from Mr B. J. Chun who was directly involved in the operation of the
vessel.
12.6 STX Pan Ocean’s breakbulk
liner operations department was directly involved in the calculation
of the hire payable to UEC and
the deductions to be made from the
hire, and in the problems which arose in relation to the bunkering of
the vessel at Mina Saqr,
Kuwait. The insurance and legal department
was copied into the operations department’s exchanges from UEC from
an early stage
in June 2005 and took over exchanges with UEC in and
around 16 June 2005. STX Pan Ocean’s breakbulk liner operations
department
were at all times involved in, or kept fully advised of,
the frequent difficulties experienced by the sub-charterers in
relation
to the vessel’s operation arising from engine and
equipment failures. As a disponent owner in the chartering chain STX
Pan Ocean’s
breakbulk liner operations department was also kept
fully advised by sub-charterers of the vessel’s movements.”
[25] In
Thalassini Avgi
the
Supreme Court of Appeal held that in applying the provisions of
sections 6(3) and 6(4) of the Admiralty Act which permit the
reception
of hearsay evidence,
“
Accordingly,
in my view the general approach to be adopted in the application of s
6(3) should be lenient rather than strict; the
Court should, speaking
generally, be inclined to letting hearsay statements go in and to
assess the weight to be attached to them
under s 6(4) when
considering the case in its totality; and the decision to exclude
such statements should normally be taken only
when there is some
cogent reason for doing so.”
In the light of this pronouncement, I
conclude that the attack on the deponent’s evidence cannot succeed.
In her answering affidavit
she also stated:
“
As I have indicated above, Mr
Jae (not Gae) Hoon Kim, as manager of STX Pan Ocean’s insurance and
legal department, was fully aware
of the facts and circumstances
which are described in the arrest application and in the defence and
counterclaim submissions submitted
to the arbitrator on STX Pan
Ocean’s behalf.”
[26] In my view there is also no merit
in the submission that the failure to record details of UEC’s cause
of action resulted in
no
prima facie
case being made out in
the founding affidavit. The submission is based on the premise that
it is fundamental to STX’s case that
its claims against UEC flowed
from the purported termination of the charterparty by UEC. Since the
reasons for UEC’s termination
of the charterparty appear in its
claim submissions, it was contended that details of UEC’s claim
should have been included in
the founding affidavit. The following
appears in the founding affidavit.
“
Disputes have arisen between
Applicant and First Respondent in connection with the said
charterparty, in respect of which arbitration
proceedings have been
instituted in London for the litigation of such disputes. Applicant
avers that it has certain substantial
claims against First Respondent
arising out the aforesaid charterparty. Applicant holds no security
for such claims, and has a genuine
and reasonable need for such
security…”
The submission on behalf of UEC was
that the inclusion of STX’s defence and counterclaim submissions in
the founding affidavit was
insufficient, particularly in regard to
the dispute concerning the supply of bunkers at Mina Saqr. In
particular it was submitted
that the founding papers lacked averments
by someone with knowledge of the facts that the averments in the
defence and counter-claim
submissions were true. In this connection,
counsel submitted that full details of the happenings at Mina Saqr
ought to have been
disclosed. This issue was dealt with in the
following manner in the founding affidavit. The deponent submitted
that STX had valid
defences to UEC’s claim
inter alia
on the
basis that
“
15.1.2 Rather
than Applicant
(STX)
failing or refusing to stem bunkers to the vessel as required, such
bunkers could not be stemmed owing to Second Respondent
(the
Vessel)
being refused entry
to port by reason of equipment deficiencies, which deficiencies were
the responsibility of First Respondent
(UEC)
.”
The statement that the bunkers could
not be stemmed is not entirely correct in that the bunkers were
ultimately stemmed. According
to STX’s defence and counterclaim
submissions, the sub-charterers had stemmed bunkers at Mina Saqr, but
it appears that the Vessel
was unable to enter Mina Saqr due to
equipment deficiencies. UEC then arranged for the bunkers to be
supplied outside Mina Saqr.
STX’s case is that since UEC had
advised it, before UEC purported to terminate the charter, that UEC
intended to replenish the
bunkers, STX’s obligation to provide
bunkers would have been replaced by an obligation to reimburse UEC
for the bunkers once they
had been replenished, which obligation they
would have fulfilled.
STX’s
was required to establish on a
prima facie
basis that it had
an enforceable claim against UEC in the arbitration proceedings. In
my view that did not require STX to give details
of UEC’s claim.
As to the averment that details should have been given as to
precisely what happened at Mina Saqr, although the
founding papers
contain the averment that the bunkers could not be stemmed, this must
be read with the full explanation for that
statement in the
submissions in the arbitration proceedings. It is my view further
that even if there was an obligation on STX to
provide details of
UEC’s claim, the defence and counter-claim submissions in effect
reveal the nature of UEC’s claim.
[27] It is trite that in
ex parte
proceedings an applicant is obliged to observe the utmost good faith
in placing all material facts before the court and the failure
to do
so may result in the order being set aside on the grounds of
non-disclosure alone. Furthermore,
* In
ex parte
applications all
material facts must be placed before the court which might influence
a court in coming to a decision;
* the
non-disclosure or suppression of facts need not have been wilful or
mala fide
to incur the penalty of rescission; and
* the
court, apprised of the true facts, has a discretion to set aside the
former order or to preserve it.
16
[28] On behalf of UEC it was contended
that the founding affidavit falls short of the requirement that all
material facts be placed
before the court in the following respects:
Details of UEC’s claim in the
arbitration proceedings were not disclosed.
Insufficient and inaccurate details
relating to the Italian proceedings were given.
Insufficient details of events
leading up to STX’s claim for security of its costs in the
arbitration proceedings were provided.
[29] The submissions on behalf of UEC
to the effect that STX should have provided fuller details of UEC’s
claim in the arbitration
proceedings and more accurate information as
to the taking on of bunkers at Mina Saqr were of course also raised
in support of the
submission that the founding affidavit in the
arrest proceedings did not contain sufficient information to make out
a
prima facie
case. My view in regard to these submissions
appears in para [26].
[30] As
to the Italian proceedings, the following was stated by the deponent
to the founding affidavit in the arrest proceedings in
this court.
“
The
Applicant
(UEC)
has previously attempted to
arrest the Second Respondent
(the
Vessel)
within the
jurisdiction of the Courts of Italy, but the court of first instance
declined to confirm the arrest. The court of final
instance in Italy
declined to determine an appeal against the order of the court of
first instance, on the basis that the vessel
had left its
jurisdiction by the time the appeal was to be determined and that
Applicant as appellant therefore had no material interest
enforceable
by the appeal court.”
“
Accordingly, the provisional
arrest of the Second Respondent in Italy was never confirmed, thereby
leaving it open to Applicant to
procure the arrest of Second
Respondent in any other jurisdiction.”
The description of the proceedings in
the Gorizia court is certainly terse, but is accurate, save for the
statement that the court
of final instance declined to determine the
appeal. In fact, the appeal court dismissed the appeal. However,
the reasons for the
dismissal are correctly set out in the affidavit.
On behalf of UEC, it was submitted that the court had set aside the
arrest of
the Vessel on the basis that STX’s admitted failure to
provide bunkers for the Vessel as it was obliged to do in terms of
the charterparty,
amounted to a breach of the charterparty justifying
the termination thereof by UEC. As I have already stated and as will
appear
from the judgment itself, the court did not make such a
finding. It recorded that the parties did not dispute that UEC had
failed
to pay for the bunkers and then went on to record that such a
failure would constitute a breach of one of the obligations arising
from the charter which would justify termination thereof, but that
STX had submitted that its obligation to pay for the bunkers had
been
novated. In respect of that alleged novation, the court found that
STX had not substantiated its claim because the affidavit
submitted
by STX was not sufficient, since it was in itself
“but a
statement of knowledge having no value”.
I have already set
out my understanding of the judgment and its effect.
[31] The question to be answered is
what fuller details should have been given to the judge who granted
the arrest application which
might have influenced her decision. As
I have already said, the summary of the Italian proceedings was
factually correct save for
the indication that the appeal court had
declined to determine the appeal whereas it had in fact dismissed it.
However, the basis
for the dismissal was disclosed. Since the
Italian court did not make a positive finding that STX’s failure to
provide bunkers
for the Vessel amounted to a breach of the Head
Charterparty and since its refusal to confirm the provisional arrest
order was made
on the basis that the evidence put before it was
insufficient, I do not consider that the provision of fuller details
of the reasoning
of the court and the appeal court in Italy might
have influenced the judge in coming to her decision to grant the
arrest application.
[32] The
final submission on behalf of UEC under this rubric was that STX
failed to place all material information leading up to STX’s
claim
for security before the judge who granted the arrest warrant. The
claim for security is advanced in the following terms in
the founding
affidavit.
“
26. Applicant
has a genuine and reasonable need for the security sought in terms of
this application, for the reasons as set out further
below.
27. The
Applicant has no security whatsoever for its counterclaims.
…..
29 The
Applicant has called on the First Respondent to provide security for
the amount of its counterclaim in the arbitration proceedings,
but
such security has not been provided to date.”
Counsel for UEC referred me to
correspondence which had been exchanged between the London solicitors
acting for the parties; correspondence
regarding the amount which
each of the parties required the other to pay into an escrow account
as security for their claims commenced
on 20 June 2005. The main
point made on behalf of UEC is that in a letter dated 4 July 2005
addressed by STX’s London solicitors
to UEC’s London solicitors
it was recorded that UEC had not responded to proposals in respect of
the furnishing of security made
on behalf of STX and that pending a
reply, STX’s rights were reserved. A copy of this letter was filed
with STX’s affidavits.
It would seem that UEC’s counsel was of
the view that a reply to this letter, which had been forwarded to
STX’s London solicitors
on 14 July, was not referred to and
that the correspondence in regard to the furnishing of security
should have been revealed
to the judge who might have been influenced
thereby. STX’s London solicitor responded in an extra affidavit
filed by him in which
he pointed out that the letter of 14 July
addressed to his firm was marked ‘without prejudice’ as had been
other correspondence
between the solicitors and it was for that
reason he did not consider it proper to refer to the letter. The
letter records the following:
“
Our
clients are prepared to secure your clients’ claim, including those
indicated in your e-mail dated 24
th
June 2005, on condition that your clients secure the deductions
already made from hire, together with the further sum of U.S.$
1,100.000,
representing:”
In the additional affidavit filed by
Graydon, he records that he sent a telefax to UEC’s solicitors on
the day that he received
the letter of 14 July requesting a breakdown
of the three figures making up UEC’s claim which he indicated
appeared to be excessive.
He says that neither he nor STX received
any breakdown of UEC’s claim until its claim submissions were
served on 7 October 2005
and the damages breakdown was served on 7
November 2005.
[33] It is difficult to imagine how
the judge who granted the arrest warrant might have been influenced
had the correspondence in
regard to the furnishing of security been
made available to her. The fact is that STX required security to be
provided for its claim
and for whatever reason, no such security was
provided.
In
Cometal-Mometal
SARL v Corlana Enterprises (Pty) Ltd
17
the court listed certain factors which should be taken into account
by a court in the exercise of its discretion whether to grant
or deny
relief to a litigant who has breached the
uberrima
fides
rule namely, the
extent to which the rule has been breached; the reasons for
non-disclosure; the extent to which a court might have
been
influenced by proper disclosure; the consequences, from the point of
doing justice between the parties; of denying relief to
the applicant
on the
ex parte
order and the interests of innocent third parties. Even if there had
been a breach of the
uberrima
fides
rule, my view is that
the breach would have been so slight that I would not have exercised
my discretion in favour of UEC. It was
not suggested that
if additional information
relating to the correspondence between the solicitors had been
furnished, the order for arrest would not
have been made. As to the
parties, I am informed that the second applicant is the only ship
owned by the first applicant. Therefore,
it could certainly be said
that the discharge of the order would have created a risk for the
respondent.
[34] Having concluded that the
applicants have failed to establish their primary claims for relief,
it is necessary to consider their
alternative claim for counter
security. That the respondent, having sought a security arrest in
this court, renders itself liable
for a claim for counter security is
clear from the provisions of section 5(2) of the Act. This provides:
“
(2)(a) A court may in the
exercise of its admiralty jurisdiction –
a)
….
b)
order any person to give security for costs or for any claim;
c) order that any arrest or
attachment made or to be made or that anything done or to be done in
terms of this Act or any order
of the court be subject to such
conditions as to the court appears just, whether as to the furnishing
of security or the liability
for costs, expenses, loss or damage
caused or likely to be caused, or otherwise;
d) notwithstanding the provisions
of section 3(8), order that, in addition to property already arrested
or attached, further property
be arrested or attached in order to
provide additional security for any claim, and order that any
security given be increased, reduced
or discharged, subject to such
conditions as to the court appears just.”
[35] As
pointed out in para 17, an applicant, applying for the arrest of a
ship in terms of section 5(3)(a) of the Act bears the onus
of
establishing, on a balance of probabilities, that it has a genuine
and reasonable need for security. The relevant wording in
the
section is:
“
A
court may in the exercise of its admiralty jurisdiction order the
arrest of any property for the purpose of providing security for
a
claim which is or may be the subject of an arbitration or any
proceedings contemplated, pending or proceeding, either in the
Republic
or elsewhere, and whether or not it is subject to the law of
the Republic, if the person seeking the arrest has a claim
enforceable
by an action
in
personam
against the owner
of the property concerned or an action
in
rem
against such property or
which would be so enforceable but for any such arbitration or
proceedings.”
[36] Unsurprisingly, in view of the
authorities on this issue, counsel were not in agreement as to the
test which is to be applied
in establishing that counter security is
to be furnished. The difficulty stems from the different approaches
adopted by the courts
in different divisions of the High Court. In
this division, the courts have consistently held that an applicant
for counter security
must satisfy the same requirements as must be
satisfied for an arrest in terms of section 3(a) of the Act. This
means that in such
a case an applicant must show that it has a
genuine and reasonable need for such security
18
.
This approach was also followed in the
Eastern Cape
19
.
[37] In the Durban and Coast Local
Division a different approach has been adopted. The effect of the
decisions in this division is
that while security will not be ordered
to be given if there is no case or need for it, to require that the
need to be genuine and
reasonable is inconsistent with the unfettered
discretion of the court
20
.
[38] Respondent’s counsel relied
heavily on the judgment of
Southwood
AJ in the
Samsung
Corporation
case. After
undertaking an exhaustive survey of the case law, the learned judge
concluded that because of the wide discretion afforded
to a court to
order counter security in terms of section 5(2) of the Act, as also
the difference in wording between that section
and section 5(3)(a),
the court’s discretion ought not to be fettered by an applicant
having to establish that its need for security
is genuine and
reasonable. He also did not agree with the view expressed in the
MV
“Rizcun Trader (4)”
case
that the content for the discretion which paras (b) and (c) of
section 5(2) conferred on the court is to be found in the decisions
relating to section 5(3) of the Act. In the
Yu
Long Shan
21
case, a case relied upon by
Southwood
AJ, the court held that in
maritime litigation between the peregrine plaintiff and the peregrine
defendant, the following should apply
22
:
“
As
far as the ‘genuine and reasonable need’ for security is
concerned, I think that the requirement really pertains to the s 5(3)
situation. As long as a defendant and prospective plaintiff in
reconvention satisfies the Court that he has a
prima
facie
claim on which he
could not execute if successful, it seems to me that the need for
security in respect of a peregrine plaintiff
is established and
follows as a matter of course.”
Southwood
AJ plays down the
significance of the court’s finding that in such event the need for
security would follow as a matter of course
by
1. Pointing out that the leaned judge
did not say that the test set out was the only test to be applied;
and
2. Highlighting the reluctance of the
court to lay down a test for quantifying the need for security.
I do not agree with this view. The
view of the learned judge in the
Yu Long Shan
case that the
need for security to be afforded to a counter-claimant once it
satisfied the court that it had a
prima facie
claim followed
on an analysis of previous judgment and is clearly stated. I
respectfully disagree with that view. Similar disagreement
was also
expressed in this division in the
MV “Heavy Metal”
, the
MV
“Rizcun Trader (4)”
and the
MV
“Akkerman”
(all
supra
).
[39] In the
MV
“Heavy Metal”
(cited
with approval in the
MV
“Rizcun Trader (4)”
and the
MV
“Akkerman”
judgments)
23
,
Comrie
J
said the following:
“
Having
reviewed the case law, I may be permitted some observations of my
own. In the first place, it is evident that s 5(2)(a)-(c)
of the
statute vests the Court with a wide poser, in its discretion, to
order that security or counter security be furnished for
claims and
counterclaims. Secondly, confining myself to counterclaims, clearly
the Court must have jurisdiction, which is invariably
present in the
circumstances. Thirdly, it seems to me that an applicant must show
at least a
prima
facie
case in respect of its
counterclaims(s). I say ‘at least’ because less would not
warrant security, while in my view more may
be required in an
appropriate case. Fourthly, I think an applicant must show a genuine
and reasonable need for security. Respectfully
disagreeing with Hurt
J in the
Yu Long Shan
case
supra
,
I do not think this follows as a matter of course. Finally, the
Court has a discretion which in my opinion should not be unduly
circumscribed. All sorts of factors can arise in different cases
which may affect the exercise of the discretion, such as whether
the
arrest was in terms of s 5(3); the location of the forum; whether the
arresting party is a
peregrinus
of this Court; the nature of
the counterclaims; and the effect that a ‘forfeiture’ order may
have on the arrestor’s position
(cf Foxcroft J,
supra
).
The list is not exhaustive. The Court may find itself weighing and
balancing competing interests. The strength of the counterclaimant’s
case on the merits may then become a factor to be weighed in the
balance. It follows from all this that I do not necessarily find
myself in the ‘sparing’ school of thought, but that I do
recognise a substantial need for caution.”
Although disagreeing with the view
that a genuine and reasonable need for security must be shown,
Southwood
AJ approved the last six sentences in the extract
quoted from the judgment of
Comrie
J.
[40] The difference of approach in the
two divisions boils down to this. In this division, a
counterclaimant for security must establish
a reasonable and genuine
need for such security. The court then has a wide discretion in
deciding whether or not to order security
to be furnished. It is
worth noting that in respect of a security arrest in terms of section
5(3) of the Act where the applicant
has in terms of the case law to
show a genuine and reasonable need for security, the court similarly
has a wide discretion to make
such an order. In the Durban and Local
Division the discretion is to be exercised, starting as it were, with
a clean sheet, but
it would seem that the sheet is not entirely
clean, for as
Southwood
AJ himself says:
“
Plainly
if the need for security is not shown, an order may not be made for a
person to furnish it.”
So, in both divisions a need for
security must be shown and that all that is in issue is the
difference in describing the level of
that need. The difference in
approach may well be nothing more than one of semantics for it seems
that it will be difficult to identify
the difference in practice.
Gys Hofmeyr, while of the view that the argument advanced by
Southwood
AJ is compelling, points out that
“…
its
application is unlikely to result in any difference in practice
having regard to the conventional view that despite the requirement
that the need must be genuine and reasonable, the Court retains an
overriding discretion to refuse to order security to be furnished.
24
”
[41] I am not persuaded that the view
adopted in this division is clearly wrong and respectfully associate
myself with the view of
Comrie
J in the
Heavy Metal
case quoted in para [39]. The approach to be adopted in the last six
sentences of the quotation from the judgment makes it clear,
in my
view, that in all probability the result will be the same, whichever
test is applied.
[42] STX does not dispute that the
evidence before the court reflects that it has a
prima
facie
case in respect of
its claim in the London arbitration proceedings. It takes the view
that UEC has to establish a genuine and reasonable
need for such
security and denies that such need has been established. UEC’s
case is that even if it has to establish a genuine
and reasonable
need for security, that has been established by virtue of the facts
and circumstances prevalent in the matter, and
in particular, that it
has no security at all for its claim. On behalf of UEC, it was
pointed out that the parties were attempting
to agree on the amount
of security which was to be furnished for UEC’s claim before
negotiations broke down. It is also contended
that UEC has no
assurance from STX that if it is successful in the arbitration, STX
will be able to pay the amount of its claim.
The point is made that
it would have to launch proceedings in South Korea to enforce any
award and that such proceedings could take
up to three years after
the grant of an award. STX’s financial circumstances are set out
in the papers. These reveal that it
is one of the world’s largest
ocean carriers, operating 250 vessels and that it and the companies
within its group own 24 bulk
carriers, four container vessels, seven
tankers and two car carriers. It also has 17 vessels on long-term
time charter and two vessels
on order for delivery in 2007. It is
the registered owner of 43 vessels. During the latter part of 2005
STX was listed on the Singapore
stock exchange with a value of
Singapore $621 million. Its financial results for the second quarter
ending June 2006 reflected assets
valued at US $1.3 billion. Its
vessels call at Cape Town and other South African ports on a regular
basis. The information in regard
to its financial position is not in
dispute. In these circumstances, UEC’s claim for security is in
fact based on a consideration
of convenience. In the
MV
“Rizcun Trader (4)”
it
was held that this was not a sufficient basis for an order that
security be furnished
25
.
Relying on the judgment in the
Peregrine
III
26
,
counsel for UEC submitted that whatever the position might be now,
there is no guarantee as to what STX’s position will be in
the
future. In that case,
Davis
J after referring to the
fact that the shipping industry is notoriously volatile, concluded
that there was overriding principle that
the present financial status
of the respondent was a material factor to be taken into account in
determining the
quantum
of the security to be furnished. His finding accordingly related to
the
quantum
and did not extend, as I read his judgment, to the statement of a
principle that the present financial status of a party should not
be
a material factor to be taken into account in determining whether or
not security was to be furnished.
[43] A final issue to be taken into
account is the fact that the arbitration proceedings are well
advanced, STX having delivered its
defence and counterclaim
submissions in May of last year.
[44] Having taken all the
considerations into account, I have come to the conclusion that my
discretion should not be exercised in
favour of UEC. I have reached
this conclusion from the starting point that UEC had to establish a
genuine and reasonable need for
security. However, even if UEC only
had to establish a need for security, whatever such lesser test might
entail, I would still
have come to the same conclusion. Obviously,
if the financial position of STX were to change for the worse in the
future, it would
be open to UEC to renew its claim for counter
security.
[45] The applicant also sought a
reduction of the amount which it had been ordered to furnish as
security in case no AC 111/2006 in
this division. I was advised that
after the institution of proceedings, this aspect was resolved to the
satisfaction of the parties.
Its resolution had a minimal impact on
the proceedings and did not result in any cost implications.
[46] UEC’s counsel resisted the
admission of further affidavits which were filed on behalf of STX in
November of last year. The
case for STX was that these papers were
necessary in order to deal with new matter raised in replying
affidavits filed on behalf
of UEC which it was prevented from
striking from the record by virtue of the provisions of Admiralty
Rule 9(3)(c). In my view the
further affidavits were permissible
since specific paragraphs of the replying affidavit were dealt with
and additional Italian authorities
were provided in response to
authorities which had been provided in the answering affidavits.
[47] In the circumstances, the
following orders are made:
1. The
application to set aside the arrest of the
MV “Wisdom C”
is
dismissed.
2. The applicant’s counter
application for security for its claim in the arbitration proceedings
pending in London is dismissed.
3. The
applicant is to pay the respondent’s costs in respect of the main
application and the counter application which costs are
to include
the qualifying fees of Messrs Graydon, Kimbell and Battini.
_____________________
R B CLEAVER
1
Custom
Credit Corporation (Pty) Ltd v Shembee
1972
(3) SA 462
(A) at 472a;
African
Farms and
Townships
Limited v Cape Town Municipality
1963 (2) SA 555
(A) at 562C-D
2
1963
(2) SA 555
at 563E-G
3
1926
CPD 351
at 359
4
1986
(3) SA 501
5
1992
(2) SA 87
6
p
89 at G-H
7
Transol
Bunker BV v MV “Andrico Unity and others”
1987 (3) SA 794
(C) 799G-H
8
Transol
Bunker BV
(
supra
)
at
794C-J
9
The
Cargo Laden on Board the MV ‘Thalassin
i
Avgi’
v
MV ‘Dimitris’
1989 (3) SA 820
(A) at 832I-833A
10
[1994] ZASCA 5
;
1994
(2) SA 563
(A) at 580I-J
11
Per
Steyn
J in
Bradbury
Gretorex Co (Colonial) Limited v Standard Trading Co (Pty)
Limited
1953
(3) SA 529
(W) at 533C-E quoted with approval in
The
Cargo laden on Board the MV ‘Thalassini Avgi’ v MV ‘Dimitris’
1989
(3) SA 820
(A) at 831H-832B
12
1977
(2) SA 38
(A) at 45-6
13
SCOSA
B277D
14
The
MV “Thalassini Avgi”
(
supra
)
at 834F-G;
Weissglass
NO v Savonnerie Establishment
[1992] ZASCA 95
;
1992 (3) SA 928
(A) at 936G-I;
Transol
Bunker BV v MV “Andrico Unity and others”
(
supra
)
at 798H-800E.
15
Per
Scott
JA in
The
MT “Tigr”: Owner of the MT “Tigr” v Transnet Limited
1998 (3) SA 861
(SCA) at 868H-I
16
Schlesinger
v Schlesinger
1979
(4) SA 342
(W) at 349A-B;
The
National Director of Public Prosecutions v Braun and another
2007 (1) SA 189
(C) at para [22] at p196
17
1981
(2) SA 412
(W) at 414g-h
18
Devonia
Shipping Limited v MV “Luiz”
1994 (2) SA 363
(C) at 374B-C;
The
Catamaran “TNT” (No. 1)
1997 (2) SA 383
(C) at 394C-E;
The
MV “Rizcun Trader (4)”
2000
(3) SA 776
(C) at 804I-J;
The MV “Heavy Metal”
2000 (1) SA 286
(C) at 298E-I;
The
MV “Akkerman”
2000 (4) SA 584
(C) at 592B-F.
19
The
MV “Millennium Amanda”
2002
SCOSA B141 (SECLD) at B151G-H
20
Samsung
Corporation v Silver Cape Shipping Limited, Malta
[2005] 1 All SA 67
(D);
Guangzho
Maritime Corp v Dry Bulk SA
1997 (2) SA 454
(D) at 463E.
21
Yu
Long Shan: Guangzho Maritime Corp v Dry Bulk SA
1997 (2) SA 454
(D)
22
At
463E-F
23
See
footnote 18
24
Admiralty
Jurisdiction Law and Practice in South Africa, Juta Law 2006 at
p123.
25
The
MV “Rizcun Trader (4)”
2000
(3) SA 776
(C) at 805C-E
26
1999
SCOSA B73 at B79-80