Adventure Catamarans Limited v Florida Marine Corporation (AC33/05) [2006] ZAWCHC 13 (24 March 2006)

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[2006] ZAWCHC 13
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Adventure Catamarans Limited v Florida Marine Corporation (AC33/05) [2006] ZAWCHC 13 (24 March 2006)

42
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF HOOD HOPE PROVINCIAL
DIVISION)
REPORTABLE
CASE NO. AC 33/2005
In
the matter between:
AVENTURE
CATAMARANS LIMITED APPLICANT
And
FLORIDA
MARINE CORPORATION RESPONDENT
JUDGMENT DELIVERED ON 24 MARCH
2006
DLODLO,
J
INTRODUCTION
The vessel “Duetto” was arrested
for the purpose of providing security for a counterclaim pursuant to
a
Rule Nisi
granted by this Court in an application brought
in terms of Section 5(3) of the Admiralty Jurisdiction Regulation
Act 105 of 1983
as amended (the Act). This is the return day of the
said
Rule Nisi
. Mr. Steenkamp and Mr. Wragge appeared for the
Applicant and the Respondent respectively.
BACKGROUND
The Applicant is Aventure Catamarans
limited, a company with limited liability incorporated in the Grand
Cayman Islands and having
its registered address as c/o Pensum Ltd.,
Cayman Business Park, A7, Charlotteville, Grand Cayman, Cayman
Island, BMI. The Applicant
is the Defendant in an action pending in
this Court under the case number AC150/04. It has pleaded to the
Summons and has instituted
a Claim in Reconvention (the
counterclaim) against the Respondent in the action under the said
case number AC150/04.
The Respondent is Florida Marine
Corporation, a company with limited liability, duly incorporated as
such in accordance with the
company laws of the British Virgin
Islands and which carries on business at Road Town, Tortola, British
Virgin Islands. The Respondent
is the Plaintiff in the action under
case number AC150/04 aforementioned. The Respondent is a
peregrinus
of this Court. The nature and grounds of the Applicant’s claim
is to be found in the Applicant’s plea read together with the
Plaintiff’s Particulars of Claim and Counterclaim. These are set
out
infra
in summary form under the heading “the Founding
Affidavit”.
On or about 23 June 2000 and at Cape
Town, the parties duly represented, entered into a written agreement
in terms of which the
Applicant and the Respondent established a
Joint Venture for the purpose of manufacturing, marketing and
exporting power catamarans.
A copy of the Joint Venture Agreement is
annexed to both the Respondent’s Particulars of claim and the
Applicant’s Plea and
Counterclaim filed in the proceedings to
which this application relates. These pleadings are annexed to Mr.
Hunter’s Founding
Affidavit as Annexures “FA1” and “FAII”
respectively.
In terms of the Joint Venture
Agreement:
The Joint Venture would contract
with Bongers Marine CC for the construction of Lavranos Marine
designed Aventure 1300 power catamarans.The
Joint Venture would
place all orders for the construction of catamarans with Bongers
Marine or with such other manufacturers
as the parties might agree
from time to time in writing (Clause 5.3).
The parties would contribute
equally to all costs in respect of the design and drawings and all
plugs and moulds for the building
of the catamarans, which would be
amortized at R100 000.00 per catamaran manufactured and sold
(Clause 6.3). The ownership of
the drawings, plugs and moulds would
vest in the parties in equal shares (Clause 6.4).
The first catamaran would be
produced and built for the Respondent, and the second one for and
at the cost of the Applicant. Thereafter
each catamaran would be
produced in the same order. In the event, however, that either
party forfeited his allocations, he would
be entitled to the next
allocation available. Changes in this order of preference could,
however, be altered by the parties in
writing (Clause 7).
A ten (10%) percent commission on
the total ex factory price would be paid by the Respondent to the
Applicant should the Respondent
sell a catamaran and likewise the
Applicant would pay a 10% commission to the Respondent should the
Applicant sell a catamaran
(Clause 8.1).
On the sale of a catamaran the
amortized cost of the design and drawings and the plugs and moulds
would be paid to the parties
as to R50 000.00 each (Clause 8.2).
Other than the parties’ contribution to the costs of the design
and drawings and plugs
and moulds, each party would pay to Bongers
Marine the cost of the vessel ordered by it (Clause 8.3). No
alteration, cancellation,
variation of or addition to the Joint
Venture Agreement would be of any force and effect unless reduced
to writing and signed
by the parties’ authorised representatives
(Clause 15). After the Joint Venture Agreement was signed the first
catamaran was
built for and at the cost of the Respondent. This was
the “Duetto” which is currently under arrest. This catamaran
was built
by Bongers Marine pursuant to the terms of the Joint
Venture Agreement. Bongers Marine had also made the moulds for the
construction
of Aventure 1300 power catamarans. The cost of the
moulds, exclusive of VAT, was R1 075 000.00. The cost of the design
and plans,
including legal fees for the Aventure catamarans was
R166 586.00. Pursuant to the terms of the Joint Venture Agreement
the Applicant
and the Respondent each paid one-half of these costs.
The Respondent’s share was R620 796.00. After “Duetto” had
been constructed
the Applicant exercised its right in terms of the
Joint Venture Agreement to have the second Aventure 1300 catamaran
built for
it at its cost. Bongers Marine constructed the hull and
deck of the second catamaran which was named “Kiwanda”.
During the latter part of 2001,
whilst Bongers Marine was constructing the hull and deck of the
“Kiwanda”, Mr. Bongers advised
that the construction of the
Aventure 1300 power catamarans was having an adverse impact on his
work. He planned to downsize
his staff and to re-arrange the
factory. He advised further that Bongers Marine could not build any
more catamarans for the Joint
Venture and gave the Joint Venture
five (5) months to make alternative arrangements. The parties
decided, (so as to continue
with the construction and marketing of
Aventure 1300 catamarans in terms of the Joint Venture Agreement),
to form a company in
which the Applicant and Respondent would hold
equal shares, and which would act as an agent for the Joint Venture
and which would
supervise the construction of Aventure catamarans.
The company, named Power Catamaran Projects (Pty) Limited (“PCP”),
was
duly formed and on 2 January 2002, the parties entered into an
agency agreement with PCP. A copy of the agency agreement is
annexed
to the Applicant’s Plea and counterclaim marked Annexure
“C”. In terms of Clause 1.4 of the agency agreement it is
recorded
that the construction of the Aventure range of catamarans
would be sub-contracted to Helderberg Marine CC. This close
corporation
appears to have been established to attend to the
actual construction of the catamarans.
There is a dispute of facts on
whether or not the agency agreement replaced the Joint Venture
Agreement. The Respondent maintains
that the latter agreement
remained operative and in force. According to the Respondent the
purpose of the agency agreement was
simply to provide for the
construction of Aventure 1300 catamarans by Helderberg Marine CC
under the supervision of PCP. All
the parties’ rights and
obligations in terms of the Joint Venture Agreement remained of
full force and effect.
The construction of “Kiwanda”
was completed by Helderberg Marine and sold to Mr. K. Millisor for
an ex factory price of US$335
661, 04. The SA Rand equivalent of
this amount at a SAR/US$ exchange rate of 10, 1332, which was the
prevailing exchange rate
during May 2002 when “Kiwanda” was
shipped to the seller and the purchase price became payable, was R3
401 320,45. According
to the Respondent, in terms of the Joint
Venture Agreement, the Applicant should have paid the following
amounts to the Respondent:
R340 132, 05, being 10% of the ex
factory price of the catamaran; R50 000,00, being the Respondent’s
share of the amortised
costs of the design and drawings and moulds
as provided for in Clauses 6.2 and 8.2 of the Joint Venture
Agreement.
(6) The Respondent contended that the
Applicant did not pay these amounts to it. It is further contended by
the Respondent that in
terms of the Joint Venture Agreement the
Respondent had the right to the allocation of the next catamaran to
be constructed. The
Respondent however forfeited its allocation and
the Applicant commissioned the construction of the third catamaran,
named “Yum
Yum” for and at its cost. The latter was constructed
by Helderberg Marine cc in accordance with the Lavranos design for an
Aventure
1300 power catamaran. The only difference, save for minor
alterations, was that the hulls were extended by approximately one
(1)
metre. The moulds made by Bongers Marine were used for the
construction of this catamaran, save that the hull moulds were
extended
as aforesaid and referred to thereafter as the Aventure
Flybridge 460 model. “Yum Yum” was originally commissioned for
construction
by Mr. and Mrs. Franklin. During October 2002 Mr.
Franklin came to South Africa to inspect the catamaran. He concluded
that the design
of the catamaran was not suitable for fishing, which
he required, and cancelled the order.
(7) As a result of Mr. Franklin
having cancelled his order for “Yum Yum”, Mr. Jordaan decided to
change the design of the Aventure
catamaran to make it more suitable
for fishing. Mr. Jordaan decided to use the same hull moulds which
had been made by Bongers Marine.
He, however, constructed new moulds
for the catamaran’s hull internals and superstructure in which he
converted the catamaran into
a four level vessel and changed the
layout below decks. Mr. Jordaan ordered new superstructure moulds for
the modified catamaran
from Helderberg marine. He called the modified
catamaran the Aventure Flybridge 480 “Sportster” model. The
Respondent was not
in favour of the manufacture of new superstructure
moulds and did not agree to bear one-half of the cost of the new
moulds. Clause
6.2 of the Joint Venture Agreement applied only to
plugs and moulds for the building of “the Vessel”, “Lavranos
Marine Design
New Zealand designed Aventure 1300 power Catamaran”
as appeared from the summary specification annexed to the Joint
Venture Agreement.
The Sportster model catamaran was not a “Vessel”
as described in the Joint Venture Agreement.
(8) The Respondent decided not to
take up its entitlement to the fourth catamaran to be built by
Helderberg Marine. The Respondent
therefore forfeited its allocation
and the fourth catamaran, named “Split Decision”, was constructed
for and at the Applicant’s
cost. This catamaran, which was
constructed by Helderberg Marine, was built using the Aventure 1300
model extended hull moulds and
the Sportster model superstructure
moulds. “Split Decision” was sold to Mr. and Mrs. Franklin during
October 2002 for an ex factory
price.
(9) On 18 March 2005 this Court
granted a
Rule Nisi
calling upon interested parties to show
cause why a final order in the following terms should not be made:
Authorising the Sheriff to arrest a
catamaran known as “Duetto” in terms of section 5(3) of the
Admiralty Jurisdiction Regulation
Act 105 of 1983 as amended (“the
Admiralty Act”) for the purpose of providing security for a
counterclaim instituted by the
Applicant in the proceedings under
Case No. AC50/2004 for:
payment of the sum of R770 379,87
being in respect of the Respondent’s half share of the cost of
preparing certain moulds “until
the date of termination of the
Joint Venture”;
alternatively, payment of the sum
of R1 038 879,87, should the Court find that the Joint Venture
Agreement or new agreement and/or
Agency Agreement have not come to
an end;
payment of the sum of R154 065, 00
being the Respondent’s half share of the audit costs of the Joint
Venture;
payment of the sum of US$426 688,38
being in respect of expenses paid by the Applicant in respect of a
catamaran named “Yum
Yum”;
payment of the sum of US$35 955,10
“in respect of 10% of the ex factory selling price”.
(10) This order was given effect to
and the “Duetto” was arrested. However, the Respondent opposed
the confirmation of the Rule
Nisi granted by the Court calling upon
interested parties to show cause why a final order should not be
granted authorising the Sheriff
of the High Court to arrest the
Respondent’s power catamaran “Duetto” then lying alongside at
Club Mykonos, Langebaan, Western
Cape in terms of Section 5(3) of the
Admiralty Jurisdiction Regulation Act 105 of 1983 as amended. The
matter came before Court on
19 April 2005 when an order by agreement
(consequent upon the parties’ business arrangement) in the
following terms was made:
directing the Respondent to provide
security in an amount of R350 000,00;
directing that the catamaran
“Duetto” be released from arrest on the provision of such
security; and
extending the Rule Nisi to 2 August
2005, being the first available date on the semi-urgent roll.
(11) The security referred to in the
above order was provided and the “Duetto” was released from
arrest. The Respondent persists
with its opposition to the
confirmation of the
Rule Nisi
granted on 18 March 2005.
FOUNDING AFFIDAVIT
The deponent hereto is John Graham
Hunter, an Attorney acting on the instruction of Ms Lesley Paitaki, a
director of the Applicant
Company duly authorized by the latter in
terms of a resolution. Mr. Hunter also derived his instructions from
Mr. Tim Jordaan and
Ms Rosa Deyer. According to Mr. Hunter the
purpose of this application is to cause the arrest for purposes of
security in that the
Respondent is allegedly indebted to the
Applicant in the sum of R924 444,87 or alternatively R1 192 944,87
and US$462 543,48
(12) It is Mr. Hunter’s contention
that the Applicant’s claim is maritime in nature and that it arises
and relates to the design
and construction of moulds and catamarans
which are the subject matter of the various agreements concluded
between the parties. Describing
the property to be arrested, Mr.
Hunter averred that the estimated value of the catamaran is an amount
of R2 400 000.00. Referring
to the provisions of the Joint Venture
Agreement, Mr. Hunter stated that Clause 7 thereof provides that “the
Vessel produced will
be built for and at the cost of Florida Marine
Corporation”. According to Mr. Hunter the first vessel produced was
built for and
at the cost of the Respondent and that is the vessel
named “Duetto”. Mr. Hunter also refers to the allegations by the
Respondent,
in an application for arrest under case number AC144/04,
namely that it is a 50% owner of certain moulds used for the
production
of Aventure Flybridge 460 model power catamaran. Mr.
Hunter averred that these moulds have already been attached by the
Respondent
and are of low value. Mr. Hunter alluded to the fact that
the percentage ownership of the Respondent in the moulds is disputed
by
the Applicant.
(13) In support of the genuine and
reasonable need for security, Mr. Hunter made an averment that the
Respondent does not have any
other assets within the Republic in
respect of which the Applicant would be able to levy execution should
it be successful in its
counterclaim. Accordingly, submitted Mr.
Hunter the Applicant has a genuine and reasonable need for security.
Mr. Hunter alleged
that the Respondent Company is not trading and
that according to information gathered from Mr. William Christopher
O’Reilly, the
Respondent (in which Mr. O’Reilly has an interest)
is under investigation by the South African Revenue Services in
respect of alleged
tax irregularities. According to Mr. Hunter this
application was brought on
ex parte
basis because there was a
risk that should the Respondent be given notice of the application,
it may seek to alienate its interests
in the aforementioned vessel
and therefore defeat the very purpose of the application or even
remove the vessel from the jurisdiction
of this Court. “The Vessel
is fully seaworthy and could depart at a moment’s notice from the
territorial waters of the Republic”,
concluded Mr. Hunter on this
aspect.
THE RESPONDENT’S CLAIMS
UNDERCASE NUMBER AC 150/2004
(14) The Respondent alleges that
pursuant to the terms of the Joint Venture Agreement in January 2002
the parties commissioned Bongers
Marine to construct a set of moulds
for the construction of a catamaran known as Aventure Flybridge 460
model power catamaran (“the
Flybridge moulds”). The Plaintiff and
the Defendant duly effected payment of the sum of R1 075 000, 00 VAT
excluded to Bongers
Marine, being the costs of the construction of
the Flybridge moulds. Subsequently in October 2003 the South African
Revenue Services
assessed Value Added Tax payable in respect of the
construction of moulds in an amount of R150 500, 00 together with
penalties and
interest amounting to a further R40 357, 45, a sum of
money which Bongers Marine paid to the South African Revenue
Services. This
resulted in Bongers Marine claiming the sum of R190
857, 45 from the Respondent and the Applicant. The sum of money was
settled by
the Respondent alone, hence its claim in the sum of R95
428, 75 against the Applicant.
THE SECOND CLAIM
(15) The Respondent alleges in the
Particulars of Claim that during the period 2003 to 2004 and pursuant
to the Joint Venture Agreement
the Applicant ordered and sold three
(3) catamarans, namely:
the “Kiwanda” at an ex factory
price of R3 258 212,00
the “Yum Yum” at an ex factory
price of R3 122 527,00, and
the “Split Decision” at an ex
factory price of R3 200 500,00.
The Respondent further alleges that
pursuant to the provisions of the Joint Venture Agreement it is
entitled to commission of 10%
of the amount referred to in paragraphs
(a) to (c)
supra
constituting a total amount of R958 123, 90.
On 8 December 2004 this Court granted an order for the attachment of
property owned
by the Applicant to found and/or confirm the
jurisdiction in respect of the Respondent’s First and Second
Claims. The attachment
was effected and the provisional order of
attachment was confirmed in January 2005.
APPLICANT’S PLEA
(16) The Applicant in its plea
admitted the conclusion and existence of the Joint Venture Agreement
as from 23 June 2000 and it enumerates
what it termed were the
material express, tacitly and/or implied terms thereof. I will only
briefly set out those terms alleged by
the Applicant on which its
subsequent counterclaim is founded. These are among others:
the first vessel produced would be
built for and at the cost of the Respondent and the second for and
at the cost of the Applicant;
thereafter each vessel produced would
be in the same order;
a 10% commission of the total ex
factory price would be paid by the Respondent to the Applicant
should the Respondent sell a vessel
and likewise the Applicant would
pay the Respondent a 10% commission should the Applicant sell a
vessel.
On the sale of the amortised joint
costs would be paid to the parties as to R50 000,00 each;
No alteration, cancellation,
variation of or addition to the written Joint Venture Agreement
would be of any force or effect unless
reduced to writing and signed
by the duly authorized representatives of the parties.
(17) The Applicant pleads that on a
proper interpretation of the written Joint Venture Agreement, it only
applied to the construction
of one Aventure 1300 power catamaran
(Flybridge 430) known as “Duetto” built by Bongers Marine
retained by the Respondent as
its vessel. The Applicant pleads
further that during the period September/October 2001 to January 2002
and at Cape Town, the Respondent
and the Applicant concluded an oral
agreement (“the new agreement”) which had certain material
express, tacit and/or implied
terms
inter alia
:
it was agreed that in order to audit
and follow the expenses incurred and amounts contributed by the
parties, a private company
would be formed to be controlled by the
Respondent and the Applicant acting as conduit and “agent” in
the management of the
activities of the joint venture parties;
the company would be formed in South
Africa and known as Power Catamaran Projects (Pty) Ltd (“PCP”),
the shares of which would
be held as to 50% by W.C O’Reilly and
50% by T.C Jordaan;
after expenses raised in PCP had
been accounted for and paid by the joint venture parties, the net
profits or losses from the sale
of any catamaran would be
distributed between the Plaintiff and the Defendant in equal shares.
(18) Pursuant to the new agreement it
is pleaded that the Respondent, the Applicant and PCP duly
represented, concluded a partly oral
and partly written agreement
called “the Agency agreement” which had certain material express,
tacit and/or implied terms. It
is further pleaded that the written
Joint Venture Agreement was terminated, alternatively substituted,
alternatively replaced, alternatively
novated by the new agreement
and/or the agency agreement pleaded
infra
. The Applicant
denied that the construction of the Flybridge 460 Model Power
Catamaran came about as a result of the Joint Venture
Agreement. It
also disputes the amount alleged to have been paid by the parties to
Bongers Marine and the VAT allegedly assessed
and paid by Bongers
Marine which the latter reclaimed from the parties. The Applicant
admits the sale of “Kiwanda”, the “Yum
Yum” and the “Split
Decision” but denies that there were any profits generated by the
sale of all three (3) catamarans. In
the alternative in this regard
the Applicant pleads prescription in respect of whatever commission
was claimable arising from the
sale of the “Kiwanda”
THE APPLICANT’S CLAIM IN
RECONVENTION
(19) Under Claim A the Applicant
avers that the following moulds were constructed on behalf of the
parties, namely:
Flybridge 430 Model Power Catamaran
moulds;
Flybridge 460 Model Power Catamaran
moulds;
Flybridge 480 Model Power Catamaran
or Sportster moulds;
The Applicant claims the sum of R770
379, 87 in respect of half share of the costs of preparing the mould
until termination of the
joint venture. In the alternative, in the
event that the Court should find that the written Joint Venture
Agreement, or new agreement
and/or the agency agreement has come to
an end, the Applicant pleads that the Respondent is indebted to it
for the additional amount
of R268 500, 00, being its half share in
respect of the Sportster moulds constructed by Applicant after 13
October 2003 on which
the Applicant spent R537 000, 00.
(20) In its Claim B the Applicant
claims the sum of R154 065, 00 being its half share of R308 130, 00
representing the audit costs
in respect of account of PCP and the
Joint Venture. In a conditional Claim C the Applicant avers that in
the event of the Court holding
that the written Joint Venture
Agreement still subsists between the parties and that it applied to
the manufacture of all three (3)
vessels referred to in this matter,
then the Applicant avers that pursuant to Clause 7 of the written
Joint Venture Agreement, the
allocation of vessels could only be
varied by the parties in writing and consequently the Applicant would
be entitled to the sum
of US$462 543, 48 being 10% of the ex factory
selling price in respect of the “Yum Yum”.
ANSWERING AFFIDAVIT
(21) This was deposed to by William
Christopher O’Reilly, the Manager of the Respondent Company. Mr.
O’Reilly specifically admitted
that the Respondent is the owner of
the power catamaran “Duetto” presently under arrest. It is
contended on behalf of the Respondent
that the Applicant has failed
to demonstrate the existence of a
prima facie
case in respect
of its claim. In Mr. O’Reilly’s view the Applicant is engaged in
harassing the Respondent because an alternative
and less disruptive
opportunity was available to the Applicant to obtain security for its
claim in reconvention. He mentioned an
application in terms of
section 5(2) (b) and (c) of the Admiralty Act as one such alternative
remedy the Applicant should have resorted
to instead of arresting the
vessel. In other words, in terms of section 5(2) (b) and (c),
according to Mr. O’Reilly, the Applicant
could have brought an
application in which it sought an order that the Respondent furnishes
security for the Applicant’s claim
in reconvention, and that, in
the event of the Respondent being ordered to furnish such security
and not doing so, that the Respondent’s
attachment of the
Applicant’s assets shall lapse or be set aside.
(22) Mr. O’Reilly averred that in
terms of the Joint Venture Agreement the Applicant should have paid
the Respondent a commission
amounting to R273 672.48 plus a further
amount of R50 000.00 for the amortised costs of the design of the
drawings as well as the
moulds, but these payments were not made.
These amounts according to Mr. O’Reilly, form part of the claim
being advanced by the
Respondent against the applicant in the action
to which this application is related. Further, according to Mr.
O’Reilly, on 12
May 2003, the Applicant sold “Yum Yum”, which
was by then 60% completed, to Mr and Mrs P. Barrette for an ex
factory price of
US$ 358 007.00, (R2 689 420.00). It is by virtue of
this sale that certain commission accrued to the Respondent. It is
accepted by
the parties as common cause that the Joint Venture
Agreement terminated by no later than 13 October 2003.
(23) Mr. O’Reilly alleged that the
Joint Venture effected payment of R1 075 000.00 to Bongers Marine,
being the price of the construction
of the Aventure 1300 moulds.
However, according to Mr. O’Reilly, on 13 October 2003, the South
African Revenue Services assessed
Value Added Tax payable in respect
of the construction of the moulds and directed that Bongers Marine
pay a total amount of R244
225.58, being the outstanding VAT plus
penalties and interest on the moulds and penalties and interest due
in relation to “Duetto”.
Of the aforesaid amount, an amount of
R190 857.45 constituted VAT, penalties and interest relating to the
moulds. Concluding on this
aspect, Mr. O’Reilly stipulated that in
terms of the Joint Venture Agreement with Bongers Marine, and in the
event that any VAT
should become payable in respect of the moulds,
the Joint Venture undertook to reimburse Bongers Marine for the VAT
in question.
Mr. Bongers allegedly called upon the Joint Venture to
reimburse him in the mount of R244 225.88, an amount Bongers Marine
had been
obliged to pay to the Receiver of Revenue. This resulted in
the arrest of the “Duetto” and the institution of proceedings in
rem
by Bongers Marine in which it claimed payment of the
aforesaid sum of money, being in respect of the VAT charges,
penalties and interest
levied by the Receiver of Revenue.
(24) Mr. O’Reilly averred that in
order to procure the release of the “Duetto” from the
aforementioned arrest the Respondent
settled the Joint Venture’s
liability to Bongers Marine by arranging payment from an associated
company called Mail Marketing (Pty)
Ltd. (Mail Marketing cc) on loan
account to the Respondent. Mr. O’Reilly averred that in terms of
the Joint Venture Agreement the
Applicant is liable to reimburse the
Respondent for over half of R190 857.45, being VAT, interest and
penalties payable in respect
of the moulds, hence the claim in an
amount of R95 428.73 in case number AC 150/04.
(25) In response to the averments
contained in paragraph 6 of the Founding Affidavit, Mr. O’Reilly
denied that the Respondent is
indebted to the Applicant in any amount
and disputed the Applicant’s averment that it has made out a
prima
facie
case in respect of its claim. As necessitated by the
allegations contained in paragraph 8 of the founding Affidavit, Mr.
O’Reilly
dealt with the Applicant’s Plea in case number AC 150/04
as follows:
He denied that, on a proper
interpretation of the Joint Venture Agreement, it only applied to
the construction of one Aventure 1300
power catamaran. He also
emphatically denied the existence of an oral agreement in the terms
alleged for that matter.
He admitted that by no later than 13
October 2003 the Joint Venture Agreement, and therefore the Agency
Agreement as well, had been
terminated. He specifically denied that
the Joint Venture was terminated, substituted, replaced or novated
by the oral agreement
referred to in paragraph 2 of the Applicant’s
Plea and he referred the Court to his earlier denial of the
existence of the oral
agreement.
(26) Mr. O’Reilly denied that, on a
proper interpretation of the Joint Venture Agreement and the Agency
Agreement it can be said
that there was a reciprocal obligation on
the parties to contribute equally to the costs and expenses of the
moulds. According to
him the question of the costs of the moulds is
expressly dealt with in the Joint Venture Agreement. Mr. O’Reilly
averred that the
Respondent did contribute its shares of the costs of
fabricating the moulds referred to in the Joint Venture Agreement. He
stated
and reiterated that it was the Applicant’s decision to have
other moulds fabricated so as to enable the Joint Venture, through
the agency of PCP to cause sportster model catamarans to be
constructed. Responding to the allegation of prescription Mr.
O’Reilly
stated that the Respondent commenced its action in
personam
against the Applicant by effecting an attachment of
the Applicant’s property by order of the court and that therefore
in terms
of section 1(2)(a)(ii) the Respondent’s action against the
Applicant commenced on the date that the attachment application was
made. The result is that there can be no question of the Respondent’s
claim having prescribed.
(27) Mr. O’Reilly dealt at length
with
THE APPLICANT’S CLAIM IN RECONVENTION.
The crux of his
dealing with this is the following:
The Respondent contributed an amount
of R668 075.66 being its half share of the moulds constructed by
Bongers Marine and the costs
of the design and plans for the Aventure
1300 power catamarans. The calculation of the sum of R131 943.26 by
the Applicant is disputed
by the Respondent. According to Mr.
O’Reilly no obligation existed on the part of the Respondent to
contribute towards the cost
of the sportster moulds constructed at
the instance of the Applicant. Mr. O’Reilly mentioned and dealt
with various figures allegedly
owing to the Applicant and concluded
that on the latter’s own figures Respondent is only liable to pay
R235 190.00. As far as payment
allegedly made by the Applicant to Van
der Ahee Inc and Ms Deyer is concerned, Mr. O’Reilly averred that
the Joint Venture did
not have books of account and no audit was ever
carried out and that in any event in terms of Clause 10.3 of the
Joint Venture Agreement,
the parties agreed that Greenwoods shall be
the auditors of the Joint Venture. The Respondent denies that it is
liable to the Applicant
in the sum of R154 065.00 claimed.
(28) In response to paragraph 17 of
the applicant’s claim in reconvention, Mr. O’Reilly denied that
Clause 7 of the Joint Venture
Agreement provides that the allocation
of vessels could only be varied by parties in writing. In any event,
according to Mr. O’Reilly,
the parties agreed that the catamarans
“Kiwanda”, “Yum Yum” and “Split Decision” would be built
for and at the cost of
the Applicant. Consequently “Yum Yum” was
in fact built for and at the cost of the Applicant and the Applicant
was paid the proceeds
of the sale of the catamaran. In the view of
Mr. O’Reilly the Applicant’s attempt to place reliance upon
Clause 7 of the Joint
Venture Agreement is unconscionable and it
constitutes a manifestation of bad faith.
(29) Returning to dealing with the
averments in the Founding Affidavit Mr. O’Reilly stated that the
Respondent denies that the Applicant
has any claim against the
Respondent at all. He hastened to add that if the Applicant does have
a claim arising from the Joint Venture
Agreement, however, then such
a claim would be a maritime claim as described in section 1(1)(q) of
the Admiralty Act. Mr. O’Reilly
categorically stated that the
Respondent invoked the jurisdiction and having done so, the
Respondent’s conduct constituted a submission
to the jurisdiction
of this Court in respect of its claim by an attachment of the
Applicant’s assets to found and confirm such
jurisdiction of this
Court in respect of Applicant’s claim in reconvention. In the
circumstances, holds Mr. O’Reilly the Applicant
would have no
entitlement to attach property belonging to the Respondent in order
to found and confirm this Court’s jurisdiction
in relation to its
counterclaim. Hence, the Applicant does not seek to attach the
“Duetto” but rather to effect its arrest in
terms of section 5(3)
of the Admiralty Act for the purpose of providing security for its
claim in reconvention. Mr. O’Reilly averred
that the applicant’s
claim in reconvention is a spurious claim which has been devised to
provide a basis for the arrest of “Duetto”
so as to harass the
Respondent.
(30) Mr. O’Reilly strongly denied
that Mr. Erasmus mentioned by the Applicant was a tax advisor to any
of the companies in which
the Respondent was involved. He reiterated
that Mr. Erasmus was however, once referred to him by Mr. Jordaan to
advise on the question
of the VAT, penalties and interest which the
SA Revenue Services assessed as being payable by Bongers Marine on
the construction
costs of the moulds. He emphatically denied that the
Respondent intended to sell “Duetto” and stated that he had never
given
the Applicant or Mr. Jordaan for that matter, any indication of
his intention to sell the vessel.
REPLYING AFFIDAVIT
(31) Ms Lesley Paitaki, a
businesswoman and a director of the Applicant deposed to the Replying
Affidavit on behalf of the Applicant.
Ms Paitaki stated that she has
taken note of the averments made by Mr. O’Reilly but reiterated
that the Applicant has a
prima facie
case in respect of its
claims and that it has indeed demonstrated this
prima facie
case sufficiently in its Founding papers. She specifically denied
that the Applicant is intent on the harassment of the Respondent
or
causing any inconvenience of any kind and added that the same
procedure was adopted by the Respondent under case numbers Ac 148/04
and Ac 144/04 at a time when it was within the latter’s knowledge
that those assets were at the premises of Heldeberg Marine cc
with
the vessel not in a complete state and could not be put to sea.
(32) In response to the defence
raised by the Respondent, Ms Paitaki averred in reply that the total
cost of the moulds was R2 090
566.90. An additional sum of R420
000.00 was spent on sportster moulds during 2004. According to Ms
Paitaki, the Respondent only
paid R668 075.66 towards its half share
of the moulds and a shortfall of R377 207.80 to which must be added
the Respondent’s half
share of the tools and equipment of R139
925.34 amounting to a total of R517 133.10 less R131 943.26 (amount
allegedly paid by the
Respondent). That, according to Ms Paitaki’s
calculation gives a total of R385 189.84. Ms Paitaki explained that
the relationship
between the parties (Applicant and Respondent) was
amended in accordance with the provisions of a partly written and
partly oral
agreement as is referred to in Paragraph 2 of the
Applicant’s Plea. According to Ms Paitaki the purpose of the Agency
Agreement
was to further regulate the relationship between the Joint
Venture partners.
(33) Ms Paitaki responded on the
aspect of the Receiver of Revenue and stated that the South African
Revenue Services agreed to refund
the amount paid but did not do so
due to the fact of the dispute between them and the Respondent
relating to the Respondent’s payment
of VAT on the vessel “Duetto”.
In support of her contention in this regard Ms Paitaki attached
annexure “C” to which the
Court’s attention was invited. In
response to the Respondent’s denial of the existence of any oral
agreement, Ms Paitaki stated
that the oral agreement superseded the
Joint Venture Agreement and was simply never reduced to writing and
signed by the parties
and was the precursor to the Agency Agreement
which was intended to further regulate the relationship between the
parties. Having
dealt with other claims, Ms Paitaki averred that the
conditional claim “C” is predicted upon the terms of the written
Joint Venture
Agreement in terms whereof the catamaran “Yum Yum”
was the Respondent’s allocation and had to be constructed at its
cost which
cost was never paid by the Respondent and is now due,
owing and payable.
(34) In response to the averment that
Messrs Greenwoods were the appointed auditors in terms of the Joint
Venture Agreement, Ms Paitaki
explained that at a meeting the
applicant expressed its dissatisfaction with what had been prepared
by Greenwoods hence the draft
financial statements and loan account
were not settled by the Applicant. She described it as disingenuous
for the Respondent to allege
that Clause 7 of the Joint Venture
Agreement could be amended otherwise than in writing. Ms Paitaki
insisted that the Respondent
indeed did intend to sell the “Duetto”
and attached copies of an internet advertisement marked Annexure “E”.
THE REQUIREMENTS FOR ARREST IN
TERMS OF SECTION 5(3) OF THE ADMIRALTY ACT
(35) John Hare in his authoritative
work, namely,
Shipping Law and Admiralty Jurisdiction in South
Africa
states that to be successful in an application such as the
present one the Applicant must satisfy the Court:
That it has a maritime claim as
defined by the Act (
The Rosario Delmar
1995(1) SA 716
(C) ); and
That its maritime claim is
enforceable (or would be enforceable but for arbitration or other
unsecured Court proceedings) by an
action in
personam
against
the owner of the property to be arrested or by an action in
rem
against such property, including, where appropriate, an associated
ship; and
That, on a balance of probabilities,
it has a
prima facie
case based upon facts which if proved
would give rise to a cause of action; and
That this
prima facie
case
would, on a balance of probabilities, be enforceable in a forum or
forums of the claimant’s choice;
That the property to be arrested has
not previously been arrested nor has security already been given for
the same claim of the
same claimant (The Act,
Section 3(8)
,
unless top-up security is sought, in which case this must be
averred, and the Applicant must make out a case for additional
security);
and
That it has a genuine and reasonable
need for security for its claim. (See
Section 5(3)
of the
Act)
Prima facie
case has been held
in numerous decisions to mean evidence which, if accepted, will
establish a cause of action.
THE APPLICATION OF LAW TO FACTS
(36) Mr. Steenkamp submitted that
seeing that the Applicant has three (3) claims against the
Respondent, if the Applicant shows that
it has a
prima facie
case in respect of any one of these three (3) claims that alone will
be sufficient to sustain the arrest of the vessel. In other
words the
purport of this submission is that the arrest will then be valid and
that will render it an unnecessary exercise on the
part of the Court
to consider the merits or demerits of the other claims.
(37) The Applicant alleges that it is
entitled to half of the amount that it has paid in excess of what the
Respondent has paid in
respect of the costs of the moulds and tools
and equipment, in terms of the new oral agreement and the first
written Joint Venture
Agreement. Notably the Respondent denied that
the parties entered into the new oral agreement and contended that
the first agreement
was applicable. In Mr. Steenkamp’s submission
the Respondent only relies on what he referred to as vague
allegations of “good
faith” to get around the problem that the
written agreement on which it places reliance has not been amended in
writing. Concluding
his submission in this regard Mr. Steenkamp
referred me to
Brisley v Drotsky
2002(4) SA 1 (SCA) at
para (11) to (34) where the Court dealt at length with the contention
of “good faith”. The Court expressed
itself as follows in
paragraph (26) to (27) of the
Brisley v Drotsky
case
supra
:
“
(26) Dit staan dus vas dat ‘n
verskansingsklousule op sigself nie ongeldig is nie ten spyte daarvan
dat ‘n beroep daarop noodwendig
sal neerkom op ‘n weiering om
uitvoering te gee aan ‘n mondelinge ooreenkoms wat animo
contrahendi aangegaan is. Wat beklemtoning
uit die aanhaling verdien,
is dat die verskansingsklousule beide party beskerm – en dit was
hulle vrye keuse. Die potensiële ongelykheid
van die partye in hulle
bedingingsmag of finansiële vermoë en die beskerming van swakkere
kontraktante kom dus glad nie hier te
sprake nie.
(27) Die standpunt in die
Miller-saak waarop die huurder steun, kom in wese daarop neer dat
hoewel daar geen beswaar ingebring kan
word teen die
verskansingsklousule nie, ‘n beroep op die toepassing van die
klousule in stryd is met die beginsels van goeie trou.
Suiwer logika
toon dat so ‘n standpunt onhoudbaar is. Die alternatiewe betoog was
dat selfs al sou die beroep op die verskansingsklousule
in die
algemeen gesproke nie in stryd met die beginsels van goeie trou wees
nie, die afdwinging daarvan in die onderhawige geval
so onbillik sal
wees dat die Hof in openbare belang behoort te weier om dit af te
dwing. As gesag van hierdie betoog is ‘n beroep
gedoen op
Magna
Alloys
asook
Sasfin (Pty) Ltd v Beukes
1989(1) SA 1 (A).”
(38) In Mr. Steenkamp’s submission,
under the circumstances it cannot be said that the Applicant has no
action or that it cannot
succeed because, in his views, it is clearly
possible that at the very least, the Applicant’s version that a new
oral agreement
was possible. In Mr. Steenkamp’s views, it matters
not that the Respondent has put up contested evidence that seeks to
contradict
the applicant’s evidence in some respects. He contended
that the Applicant has established that it has a
prima facie
claim in respect of claim A.
(39) Dealing with genuine and
reasonable need for security Mr. Steenkamp submitted that there are
no other assets belonging to the
Respondent which the Applicant would
have been able to attach to levy execution, should the Applicant be
successful in its counterclaim.
In his view, in the light of the fact
that the Respondent is a
peregrinus
the Applicant does have a
reasonable and genuine need for security. With regard to the
Applicant’s
prima facie
case, the Applicant need show no
more that that there is evidence which, if accepted, will establish a
cause of action. (See
Cargo Lately Laden on board the MV
“Thalassini Avgi” v MV “Dimitris”
1989(3) SA 820 (A)
at 831 H-C.)
In
Bradbury Gretorex Co
(Colonial) Ltd v Standard Trading Co (Pty) Ltd
1953(3) SA 529
(W), Steyn J, after examining a number of common law authorities and
earlier decisions, made the following authoritative
statement of the
law in this regard (at 533 C-E):
“
The authorities and
consideration to which I have referred seem to justify the conclusion
that the requirement 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 should be refused or discharged on the ground here in
question.”
The aforesaid approach has become
well established in all cases involving the attachment to found
jurisdiction (See eg.
Butley v Banimar Shipping Co.
SA
1978(4) SA 753 (SE) at 757 C-G and case cited there).It is, however,
important to note that there is a difference between
“evidence
contradicted”
and
“contradictory evidence”
. The
former, in my view refers to a scenario where the evidence tendered
by the Applicant is contradicted by the evidence tendered
by the
Respondent. But where the Applicant’s own evidence is
contradictory, in my view, it cannot successfully be contended that
such Applicant’s evidence justifies the conclusion that a
prima
facie
cause of action has been established.
(40) It is thus of paramount
importance that the Court must carefully investigate the Applicant’s
case with a view of discerning
from it whether it demonstrably makes
out, first and foremost, a
prima facie
case even before the
necessity arises to check if the Applicant has a genuine and
reasonable need for security in respect of its
claim. It is necessary
also to note that evidence referred to in
Cargo Lately Laden on
board case
supra
does not include contention,
submission or conjecture. (See
Great River Shipping Inc v
Sunnyface Marine Ltd
1994 (1) SA 65(A)
at 75I).
(41) Should the Applicant satisfy the
above requirements then, in assessing the quantity of security to
which the Applicant is entitled,
regard must be had to the
Applicant’s “reasonably arguable best case” It is incumbent
upon the arrestor to demonstrate, on
a balance of probabilities, that
it has a genuine and reasonable need for security in respect of its
claim (See:
Bocimar NV v Kotor Overseas Shipping Ltd
1994(2) SA 563(A)). See:
Zygos Corporation v Salen Rederierna
AB
1984(4) SA 444 (C) at 457 C-E where the following appears:
“
It is appropriate therefore
for the Court to determine the amount of security that should be
furnished by Zygos Corporation in order
to secure the release of its
vessel.
Two points require to be met
made at this stage. The first is that Salen is entitled to security
sufficient to cover the amount of
its claim, together with interest
and costs, on the basis of its “reasonably arguable best case”
(See The Moschanthy (1971) 1
Lloyd’s Law Reports 37 and The Polo II
(1977) 2 Lloyd’s Law Reports 115 at 119.) the second is that in
assessing the amount of
security to be furnished by Zygos
Corporation, a deduction must be made for the security already held
by Salen, ie security already
furnished by Antaios Corporation. I
turn, firstly, to an assessment of Salen’s claims on the basis of
its “reasonably arguable
best case”.
In the
Great River Shipping
Inc. v Sunnyface Marine Ltd
case
supra
Howie J (as he
then was) agreed with the qualification submitted by counsel to the
effect that evidence excludes contention, submission
or conjecture. A
statement in
Cochran v Miller
1965(1) SA 162 (D),
namely that in an application for arrest to found jurisdiction the
test for a
prima facie
case is whether there is evidence
which, if believed, might persuade a reasonable man to draw the
inference that the wrong complained
of had been committed, was relied
on by counsel. Aforementioned statement is correctly likened to a
prima facie case in the absolution
context in a trial by his
Lordship, Howie J (as he then was). In his view in the latter context
a
prima facie
case is established by circumstance where the
inference the Plaintiff seeks to have drawn is as ‘more or less
equally open’ on
all the available evidence as the inference
favouring the defendant .
(42) The “reasonably arguable best
case” test
supra
is not incompatible with proof on a balance
of probabilities. In
Bocimar NV v Kotor Shipping Ltd
supra
(at 582 F-J) Corbett CJ made the following authoritative
observation:
“…
.with reference to his need
for security, appellant’s counsel referred us to three English
cases:
The ‘Moschanthy’
(1971) 1 Lloyd’s
Rep 37;
‘The Polo II’
(1977) 2 Lloyd’s Rep
115;
Greenmar Navigation Ltd v Owners of Ship ‘Bazias 3’
and ‘Bazias 4’
and
Sally Line Ltd
(1993) 1 Lloyd’s Rep 101. These cases establish the principle in
English law that, where a vessel has been arrested in an action
in
rem
or to provide security for an arbitration
claim, the vessel will be released on provision of sufficient
security to cover the amount
of the claim, interest and costs on the
basis of the Plaintiff’s ‘reasonably arguable best case’. This
test was accepted and
applied by Friedman J in
Zygos
Corporation v Salen Rederierna
AB SA 444 (C) at 457 C-E.
In my opinion, counsel’s reliance on these cases is misplaced. The
principle which they establish postulates
that a valid arrest has
taken place and it deals with the quantum of security to be furnished
to secure the release of the vessel.
In the case under consideration
one is dealing with one of the requirements to be established in
order to found a valid arrest. In
any event, I am not persuaded that
the ‘reasonably arguable best case’ test excludes or is
incompatible with proof upon a balance
of probabilities. And here I
would point out that in applying this test and assessing the quantum
of the claim in the Zygos case
(1984) Friedman J seems to have made
the probabilities his criterion. (See particularly 1984(4) SA 444 (C)
at 458 E and 459 F)”.
It is necessary that I have a close look
at and consider deeply the Applicant’s various claims before
embarking on any further
analysis of the legal principles applicable
in this matter. I must now
infra
focus on the claims which
form the subject-matter of this application.
THE APPLICANT’S FIRST CLAIM
(43) It is common cause between the
Applicant and the Respondent that the parties entered into a written
agreement in terms of which
they established a Joint Venture for the
purpose of manufacturing, marketing and exporting power catamarans.
Clause 6.2 of the joint
venture agreement stipulates that parties
agreed that they would contribute equally to all costs in respect of
the design and moulds
for the building of the catamarans which would
be amortised at a rate of R100 000.00 per catamaran manufactured and
sold. In its
counterclaim and in its application for the arrest of
the “Duetto” the Applicant claimed that the Respondent was
indebted to
it in an amount of R770 397.87 in respect of the
Applicant’s half share of the costs of preparing the moulds until
the date of
termination of the Joint Venture. The calculation of the
Respondent’s indebtedness to the Applicant is set out in the
Respondent’s
claim in Reconvention. It is thus not necessary to
repeat same here. The Respondent contends that, even if the
Applicant’s allegations
are accepted, the claim is most certainly
miscalculated. Properly calculated and taking into account the fact
that the cost of the
moulds falls to be amortised in terms of the
Joint Venture Agreement, on the Applicant’s own figures the
Respondent is only liable
to pay to the Applicant the sum of R235
190.00.
(44) It would appear that the
Applicant essentially agrees that, on its own figures, the
Respondent’s indebtedness to it is no more
than R385 189.84. If,
therefore, the amortisation of the costs of the moulds, arising from
the sale of the catamarans “Duetto”,
“Kiwanda” and “Yum
Yum” are taken into account, then the Respondent’s indebtedness,
at most, amounts to R235 189.84. Under
the circumstances, I cannot,
but agree with Mr. Wragge’s submission, namely, that the
Applicant’s contention as to what the cost
of the manufacture of
moulds actually was is contradictory and therefore cannot be accepted
as constituting evidence which, if accepted,
establishes the
Applicant’s cause of action as set out in this claim. I am mindful
of the formulation namely, that “the mere
fact that such evidence
is contradicted would not disentitle the Applicant to the remedy”.
(See
Bradbury Gretorex Co
(Colonial) Ltd v Standard Trading Co. (Pty) Ltd
supra
)
I must, however, hasten to add that there is a marked difference
between “evidence contradicted” and “contradictory evidence”.
Where a litigant itself gives contradictory evidence on one and the
same issue that certainly bears serious significance and should
ordinarily result in certain negative inference. It does not fall to
be ignored. It would not, in my view, entitle the Applicant
to the
remedy sought. When the Court referred to “the fact that such
evidence is contradicted” in
Bradbury Gretorex Co (Colonial)
Ltd v Standard Trading Co. (Pty) Ltd
supra
, it
certainly meant evidence from any other source including evidence
from the Respondent in an application, which contradicted the
assertions made by the Applicants.
(45) In paragraph 7 to 11 of the
Applicant’s Claim in Reconvention it is alleged that the total cost
of the moulds, including the
sportster moulds, until October 2003,
was R2 090 566.90. In paragraph 12 of its Claim in Reconvention the
applicant averred that
an additional amount of R420 000.00 was spent
on the sportster moulds after 13 October 2003. In paragraph 22 of Ms
Paitaki’s Replying
Affidavit it is alleged that the total costs of
the moulds was R2 090 566.90, and that an additional amount of R420
000.00 was spent
on the sportster moulds during 2004. In paragraph 75
of her affidavit Ms Paitiki contends that the total cost of the
moulds was the
sum of R2 036 576.00. Notably, no detail is given as
to how the abovementioned amounts are made up, and there are no
documents annexed
to either the Applicant’s claim in Reconvention
or Ms Paitaki’s affidavit supporting what I would be inclined to
call “bald
allegations” made in the above quoted paragraphs. Once
again, I would under the circumstances be inclined to agree with Mr.
Wragge’s
submission in this regard, namely, that these are simply
contentions which are unclear and are contradictory. Such
contentions, do
not, in my view, constitute evidence which, if
accepted, demonstrate that the Applicant has a cause of action for
these amounts.
(46) It is noteworthy that the
Respondent, on the other hand, has adduced evidence which
demonstrates that the moulds referred to
in the Joint Venture
Agreement, were made by Bongers Marine and that the cost of the
moulds exclusive of VAT was R1 075 000.00. The
Respondent also avers
that the costs of the design and plans, including legal fees for the
Aventure Catamarans were R166 586.00.
The Respondent has also annexed
a copy of Bongers Marine’s invoices for the construction of the
moulds. In my view the Applicant
has not established its
prima
facie
case in respect of its very first claim. The alternative
first claim contained in paragraph 12 consists of an additional
amount of
R268 500.00 explained as being one half of the amount
allegedly expended by the Respondent in respect of the sportster
moulds after
13 October 2003. This claim is advanced in the
alternative and “insofar as the Honourable Court finds that the
written Joint Venture
Agreement, or the new agreement and/or the
Agency Agreement have not come to an end”. In my view this
alternative claim has no
basis to exist because in any event it is
common cause that the Joint Venture Agreement and any other agreement
that might have existed
between the parties came to an end on or
about 13 October 2003.
THE APPLICANT’S SECOND CLAIM
(47) The Applicant avers that it has
had books of account of a company named Power Catamaran Projects
(Pty) Ltd (“PCP”) and the
Joint Venture written up and audited at
the accost of R308 130.00. This amount is made up of two (2) amounts
payable to Van der
Ahee Inc and Rosa Deyer. Annexed to Ms Paitaki’s
Replying Affidavit are three (3) invoices, purporting to be
supporting the Applicant’s
second claim, which invoices appear to
be accounts rendered by a company named Moore Stevens VDA Ing. The
difficulty I am faced with,
however, is that these accounts do (as
per annexed invoices) not reflect amounts payable to Van der Ahee
Inc. They do not therefore
support the allegation made in paragraph
99 of Ms Paitaki’s Replying Affidavit. The Respondent, however,
avers that as provided
for in the Joint Venture Agreement, Greenwoods
were the auditors of the joint venture and it alleges that Greenwoods
drew up the
Joint Venture’s books of account. (See Joint Venture
Agreement par. 10.3; Answering Affidavit par. 21.8.4 and Annexure
“WOR 6”).
(48) My difficulty is compounded by
the fact that the Applicant has not produced any document which might
suggest that, as is provided
for in sub-paragraph 10.3 of the Joint
Venture Agreement, auditors other than Greenwoods were retained as
auditors of the Joint Venture.
Most importantly, the Applicant has
also produced no evidence which, if accepted, demonstrates that
either Van der Ahee Inc or Ms
Deyer was appointed to write up and
audit the books of account of PCP. My simple view is that the
Applicant has not produced evidence
which if accepted, sustains its
second claim.
THE APPLICANT’S THIRD CLAIM
(49) The Applicant claims payment of
the sum of US$462 543.48. This claim is conditional upon “the
Honourable Court holding that
the written Joint Venture Agreement
still subsists between the parties and that it applied to the
manufacture of all three (3) vessels
referred to herein above”. The
Court does not have to make any such finding at all. It remains
common cause that the written Joint
Venture Agreement was terminated
on or before 13 October 2003. Accordingly, for this, reason alone,
the Applicant’s third claim
falls away.
(50) The Respondent, however,
contends that the Joint Venture Agreement did apply to the
construction and sale of the catamaran “Yum
Yum”. In regard to
the latter vessel the Applicant contends that:
In terms of Clause 7 of the Joint
Venture Agreement, the allocations of the vessels could only be
varied by the parties in writing.
The allocation of “Yum Yum” was
not varied in writing.
In the premises the Respondent was
obliged to take up the allocation and to pay the expenses in respect
of the manufacture of “Yum
Yum”.
The Applicant paid the expenses in
respect of “Yum Yum”, being US$426 588.38.
The Applicant is also entitled to
payment of 10% of the ex-factory selling price of US$35 955.10.
(51) The reading of the Answering
Affidavit paragraph 21.10.3 and Replying Affidavit paragraph 10.9
makes it abundantly clear that
it is common cause that:
The catamaran “Yum Yum” was
constructed at the instance of the Applicant and the Applicant was
paid the proceeds of the sale
of the catamaran.
The Applicant paid the cost of the
construction of the catamaran.
(52) It is apparent that the
Applicant’s averment that Clause 7 of the Joint Venture Agreement,
the allocation of vessels could
only be varied by the parties in
writing is only partly correct. The clause in question provides as
follows:
“
The first vessel produced will
be for and at the cost of FMC (ie the Respondent) and the second for
and at the cost of AC (ie the
Applicant). Thereafter each vessel
produced shall be in the same order. In the event that either party
shall forfeit his allocation,
he will be entitled to the next
allocation available. Changes in this order of preference/option may
be altered by the parties in
writing.”
On a proper construction the above
quoted clause clearly does not require a party that forfeits its
allocation, to do so in writing.
It is only if the parties wish to
vary the order of preference and option set out in the first and
second sentence of the clause
that a written document is required
evidencing such change. The consequence is that it is not the
Respondent that is liable to the
Applicant but that, it is the
Applicant that is liable to the Respondent for 10% of the sale price
of the catamaran “Yum Yum”.
CONCLUSION
(53) I am in full agreement with the
Court in
Katagum Wholesale Commodities v The MV Paz
1984(3) SA 261 NPD at 269 H-270 B where the learned Judge made the
following important formulation, namely:
“
It is a serious business to
attach a ship. To stop or delay its departure from one of our ports,
to interrupt its voyage for longer
than the period it was due to
remain, can have and usually has consequences which are commercially
damaging to its owner or character,
not to mention those who are
relying upon its arrival at other ports to load or discharge cargo.
Especially when the attachment is
sought
ex parte
, as can be
and almost always is done, the Court must therefore be given
sufficient information to show that a measure with results
so harmful
to others is nevertheless necessary for the protection of the
Applicant’s legitimate interests. It will therefore want
to assure
itself, for instance,
that his claim in the main proceedings is
apparently no spurious one, that he is not bent on harassing the
other side in these or
gaining a tactical advantage in relation to
them
, that his need for security is both genuine and reasonable,
that no alternative and less disruptive opportunity for obtaining
such has been or is likely to become available to him and, if
one
has already been lost, that this was not his fault or, I should
rather say, not his fault to such a degree as to be fairly held
against him. The Court must be told enough to put it at its ease on
all these scores………………………………………………
To scare ships away is hardly good for domestic business. It would be
unfortunate were our Courts to damage this Country’s commerce,
or
even to harm the individual interests of any local traders…………..”
(54) The arrest of the vessel has
been recognized time and again as a drastic remedy. The following has
crystallized into legal requirements
for the arrest of the vessel,
namely:
It is incumbent upon the party
seeking the arrest to assure the Court that he is not bent on
harassing the Respondent or gaining
a tactical advantage in relation
to the Respondent.
The Applicant must demonstrate that
his need for security is reasonable and that no alternative and less
disruptive opportunity
for obtaining such security is available to
him. (See:
Katagum Wholesale Commodities Co Ltd v The MV “Paz”
supra
;
The MV cc Thalassini Avgi”
supra
at 832 F-H;
Bocimar HV v Kotor Overseas Shipping
(supra)
at 581 F-H of the report.
(55) It is apposite to set out infra
the provisions of section 5(2) of the Admiralty Act. This Section
provides as follows:
“
5(2) A Court may in the
exercise of its Admiralty jurisdiction
consider and decide any matter
arising in connection with any maritime claim, notwithstanding that
such matter may not be one which
would give rise to a maritime
claim;
order any person to give
security for costs or for any claim
;
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;
..................................”
(My underlining)
The aforesaid provisions of the
Admiralty Act empower the court, in the exercise of its admiralty
jurisdiction, to order that counter-security
be furnished. (See:
MV
Leresti: Afris Shipping International Corporation v MV Leresti (DMD
Maritime Intervening)
1997(2) SA 681 (D)). In the latter case
Squires J said:
“
As a general approach and
without more ado, or more than can be said for the intervening
respondent here, I share the caution expressed
by King J in Sunnyface
Marine Ltd v Hitoroy Ltd (Trans Orient Steel Ltd and Another
Intervening); Sunnyface Marine Ltd v Great River
Shipping Inc 1992(2)
SA 653 (C) at 657 G-I that the granting of security to a peregrine
claimant in circumstances such as these,
is a power which should be
sparingly exercised. Unless it is to assist a litigant with a firm
claim to bring against the defendant
who may not otherwise satisfy a
judgment, I do not think it should be readily granted.”
(56) I fully agree with the cautious
approach advocated for
supra
. I am, however, also mindful of
The Yu Long Shan Guangzhou Maritime Group Co v Dry Bulk SA
1997(2) SA 454 (D&CLD), a judgment wherein Hurt J held that the
Court had the power, in its discretion, to order the security
requested. In the latter judgment, Hurt J appears to have disagreed
that such power should be exercised sparingly. He held that the
Applicant for counter-security under Section 5(3) had to show a
prima
facie
case in respect of the counterclaim.
In the instant case it has not been
shown that there was no alternative and less disruptive opportunity
available to the Applicant
to obtain security for its claim in
Reconvention. The Applicant could have brought an application in
terms of Section 5(2)(b) and
(c) of the Admiralty Act set out supra
in which it sought for an order that the Respondent furnish security
for the applicant’s
claim in Reconvention and that, in the event of
the Respondent being ordered to furnish such security and not doing
so, the Respondent’s
arrest of the Applicant’s assets should
lapse or be set aside (See:
MV “Heavy Metal” 2000(1) SA 268
(C)).
(56) The conclusion I arrive at is
that the applicant’s arrest of the “Duetto” in circumstances
where it could have invoked
a less drastic, but no less effective
remedy, constituted an attempt by the applicant to harass the
Respondent. This arrest was not
at all necessary for the protection
of the Applicant’s legitimate interests. In reply the Applicant
pointed out that the Respondent
itself utilized the procedures set
out in Section 5(3) of the Admiralty Act under case numbers AC 148/04
and AC 144/04 at a time
when it was within Respondent’s knowledge
that those assets were at the premises of Heldeberg Marine cc with
the vessel not in
a complete state and could not be put to sea. The
papers make it apparent that both the applicant and the Respondent
are peregrine
in the Republic of South Africa. They are in law
entitled to bring these proceedings before our Courts. It may well be
true that
the Respondent utilized the same procedure in obtaining
relief. In my view the allegation the Applicant makes in this regard
provides
no grounds for a finding that the Applicant was also
entitled to invoke the procedure under section 5(3) of the Admiralty
Act on
a type of “tit for tat” basis as Mr. Wragge correctly
submitted. John Hare is perfectly correct in his book,
Shipping
Law and Admiralty Jurisdiction in South Africa
(1999 first
publication) when he sounds the following warning:
“
Detaining a ship by arrest
or attachment is a serious matter with potential of causing huge
losses not only to the ship owner but
to many others who depend upon
her uninterrupted operation. Most ships are chartered, and the arrest
of a ship, for a claim against
her owner is likely to result in her
being put off hire. Delays may result further in cancellation of
charter party fixtures, cargo
shipments and general damages claims.
Shippers and receivers of cargo may suffer prejudice through no fault
of their own.”
I am of the firm view that the Applicant
seeking to arrest or cause the vessel to be arrested whether for
purposes of jurisdiction
or as security for anticipated costs in a
pending action must first exhaust all other available alternative
remedies which are less
harmful to the business operations of the
vessel, but which are also equally effective in addressing the needs
of the Applicant.
In
casu
it has not been shown that the
Applicant could not have had security provided by following other
paths. It is my view that it is
quite clear that the Applicant cannot
succeed in all of its counterclaims. It is trite law that the remedy
of
attachment ad fundandam jurisdictionem
in order to create
jurisdiction in our Courts is certainly an exceptional remedy.
Similarly the arrest of a vessel for purposes of
providing security
for costs in a pending action is an equally exceptional remedy. It
must be applied or resorted to with care and
caution. It has been
held that, if, on the facts as revealed either in the petition, or
after hearing both sides, the Court comes
to the conclusion that
prima facie
the Applicant has not made out his case, then it
should not grant an order of attachment, or if it had granted such an
order, it
should set same aside on the return date. (See:
Exparte
Acrow Engineers (Pty) Ltd.
1953(2) TPD 319 at 321H) I have
already demonstrated
supra
that the applicant has not
succeeded in making out a
prima facie
case and is therefore in
my view not entitled to the confirmation of the
Rule Nisi
.
COST
The rule with regard to cost is
well-known, namely that the successful party is entitled to its
costs. No submissions have been
made with a view of persuading me
not to follow the general rule in this matter. I have gathered no
circumstances in the matter
persuading me from not following the
general rule.
ORDER
In the circumstances I make the
following order:
The Application is dismissed and the
granted on 18 March 2005 is discharged.
The Applicant is ordered to pay
costs of this Application.
______________
DLODLO, J