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[1989] ZASCA 76
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Laden and Another v MV "Dimitris" (534/1987) [1989] ZASCA 76; [1989] 2 All SA 436 (A) (1 June 1989)
LL
Case
No 534/1987
IN THE SUPREME COURT OF SOUTH
AFRICA APPELLATE DIVISION
In the matter between:
THE CARGO LADEN AND LATELY
LADEN ON
BOARD THE VESSEL "THALASSINI
AVGI"
Appellants
and
THE MV "DIMITRIS"
Respondent
CORAM
:
CORBETT
CJ, BOTHA, HEFER, KUMLEBEN et
F.H. GROSSKOPF JJA
HEARD
:
5
MAY
1989
DELIVERED
:
1
JUNE 1989
JUDGMENT
BOTHA JA
:-
2.
The issues in this appeal relate
to the application, in unusual circumstances, of the novel procedure
for the arrest of a ship which
was introduced into our maritime law
by the provisions of section 5 (3) (a) of the Admiralty Jurisdiction
Regulation Act No 105 of
1983 ("the Act").
The appeal is directed against an
order dismissing,with costs, an application brought on notice of
motion by the appellants against
the respondent in the South Eastern
Cape Local Division. ZIETSMAN J, who made the order in the Court
a
quo
, granted leave to the appellants to appeal against it to this
Court.
In order to understand the nature
of the application in the Court
a quo
and the relief sought
therein, and to describe the identities of the parties involved in
the litigation, it is necessary to outline
the events which gave rise
to the application.
Towards the end of 1985 the ship
Thalassini Avgi
took on a load of general cargo in various
ports
3. in the Far East, including
Singapore, Yokohama, Kobe and Hong Kong, for carriage to various
ports in the Middle East, including
Aden, in the People's Democratic
Republic of Yemen ("South Yemen" or "Yemen"). The
owner of the MV
Thalassini Avgi
was Astromando Compania Naviera S A ("Astromando"), a
corporation which is domiciled in Panama, and which has a recorded
address in Athens, Greece. The vessel was registered in Greece and
most of her crew were Greeks. The voyage of the
Thalassini
Avgi
took place pursuant to a
time charterparty entered into between Astromando and
Nippon Yusen Kaisha ("NYK"),
a Japanese corporation
based in Tokyo. As the charterer
of the vessel, NYK issued bills of lading, in the standard form used
by it, in respect of the various
consignments of goods taken on board
the ship including goods destined for consignees who were in South
Yemen.
The
Thalassini Avgi
arrived
at Aden, her last port of discharge, on 2 February 1986. On 4
February
4. 1986 a fire broke out on board
the vessel. It destroyed or damaged much of the cargo still on board.
The ship herself was also
extensively damaged (apparently she was
later taken to a "scrapping port", after she had been sold
by auction by the Yemeni
authorities). The Yemeni consignees, being
the holders of the bills of lading and owners of the cargo which was
destroyed or damaged,
suffered losses which they claim total U.S.
dollars 1 037 407,00 in value. They were all insured against such
losses with the South
Yemen Insurance and Reinsurance Company, a
corpocation registered in accordance with the laws of South Yemen
("the Yemen Insurance
Company").
The scene now shifts to the
harbour of Port Elizabeth; the time, April 1986. In port, there was
thê ship
Dimitris
, taking on a cargo of steel for
carriage to the United States. The owner of the MV
Dimitris
is
a Panamanian based corporation, Compania de Navegacion Aeolus S A. On
21 April 1986 an
5. application
was made to the South Eastern Cape Local Division for an order for
the arrest of the
Dimitris
,
under section 5 (3) (a) of the Act, read with sections 3 (6) and (7).
It needs to be said at once that this application, to which
I
shall
refer as "the first application", is not in a direct sense
at stake in this appeal, although, as will appear in due
course, it
plays an important role in the consideration of the appeal. The
application which led to the order which is now under
appeal, came
later;
I
shall
refer to it as "the second application".
In the first application the
applicants were
stated in the
founding affidavit to be the Yemeni consignees to whom
I
have
referred above. They were cited in the papers (quaintly, it seems to
me) as "THE CARGO LADEN AND LATELY LADEN ON BOARD THE
VESSEL
'THALASSINI AVGI'". They were also the applicants in the second
application, cited in the same fashion.
I
shall
refer to them as "the appellants". The
6.
respondent in
the first application, as in the second, was the MV
Dimitris
.
I
shall, however, refer to the vessel by
name, and to her owner (as mentioned above, Compania de Navegacion
Aeolus S A) as "the
respondent". The founding affidavit in
the first application was deposed to by Mr John Edward Hare, a member
of a firm of attorneys
in Cape Town representing the appellants on
instructions from Messrs Clyde & Company, a firm of solicitors of
Guildford, in the
United Kingdom. It will be convenient at this stage
to refer to some of the averments contained in Mr Hare's affidavit.
He mentions
that the appellants are the holders of bills of lading
and owners of the cargo on board the
Thalassini
Avqi
which was destroyed or damaged in
the fire, as referred to earlier, and annexes a schedule listing
their names and the values of
their claims for damages. For reasons
which need not be explained, the exact number of the claimants cannot
be determined from the
list, but it would appear
7. that they
number between 50 and 60. Mr Hare states that they bring a
"collective" application through com-mon marine
assurance
cover held by the Yemen Insurance Company, which has a legal
liability to indemnify them to the extent of their respective
losses,
and upon so doing, will become subrogated to the rights of each
in-dividual assured. Messrs Clyde & Co act also as soli-citors
for the Yemen Insurance Company. Mr Hare states further that the
Dimitris
is an associated ship ^ of the
Thalassini
Avgi
,
and in support of this he re-fers to allegations concerning the
persons in control of Astromando and the respondent, which are set
forth in an affidavit made by him in a contemporaneous appli-cation
by NYK for the arrest of the
Dimitris
.
It is not necessary to canvass those allegations, since
it
was common cause in this appeal that the
Dimitris
was indeed an associated ship of the
Thalassini
Avgi
,
in accordance with the provisions of sections 3 (6) and (7) of the
Act. Nor is it necessary to give further
8.
attention to the NYK application
for the arrest of the
Dimitris
, for the course
that that application took and
its eventual outcome do not affect
the issues in this
appeal. Finally, in Mr Hare's
affidavit the following
is said:
" it is unlikely that any
cargo claims
(other than the request for
security herein)
will be brought to this jurisdiction for
trial,
"
"Without the security of the
arrest of the 'Dimitris' as an associated ship of the 'Thalassini
Avgi' therefore Applicants will
have little chance of satisfaction of
any judgment obtained in actions commenced either in Japan (the
country of jurisdiction in
the Bill of Lading contracts) or in South
Yemen where the Applicants are domiciled."
It is to be noted, with a view to
what is to follow
later in this judgment, that the
appellants
contemplated the commencement of
proceedings either in
Japan or in South Yemen.
The first application, which was
brought ex
parte
, resulted in an order
of the Court being issued
on 21 April
1986.
I
quote the relevant parts of it:
9.
"2. That
the M.V. 'DIMITRIS' at present lying alongside in Port Elizabeth
harbour be arrested by the Deputy Sheriff for the district
of Port
Elizabeth (in his capacity
as
Admiralty Marshall) in an action
in rem
to be instituted by Applicants (as Plaintiff) against Respondent (as
Defendant) in the above Honourable Court in which action Applicants
will claim against Respondent as a maritime claim as defined by
Section 1 (1) (ii) (i) read with Section 1 (1) (ii) (y) of Act 105
of
1983:
2.1
the
amounts indicated against
their individual names and Bills
of
Lading shown on Schedule
X
hereto, being
damages suffered by
each claimant arising out of the
loss of or
damage to cargo
shipped on board the 'THALASSINI
AVGI' for
carriage to and
discharge at the port of Aden
during February
1986, which
amounts aggregate U.S.D.
1 187 407;
2.2 interest a tempore morae on
each
claim;
and/or, in the event of any of the
above claims being brought for adjudication before any competent
Court elsewhere than in the Republic
of South Africa,
2.3 the provision of security as
a
maritime claim in terms of
10.
Section 1 (1)
(ii) (y) and/or in
terms of Section 5 (3)
(a) of Act
105 of 1983 with regard to or
arising out of the aforesaid claims which amount in
aggregate to U.S.D. 1 187 407;
and in any event, in respect of
each claim,
costs of suit; and
alternative relief.
3. That the said vessel be
released from arrest on security being furnished to the Applicants to
the satisfaction of the Registrar
for any judgment, including
interest and costs, which may be given in the said action
in rem
and on Respondent selecting a domicilium citandi et executandi within
the area of jurisdiction of this Honourable Court.
7. That the Respondent is given
leave to apply for this Order to be discharged on 48 hours notice to
the Applicants care of their
attorneys.
9. That the costs of this
Application be costs in the cause in the said action in. rem."
The order was duly served in
accordance with
the directions
for service contained in it (which
I
11.
have omitted from the quotation
above). A few days later the
Dimitris
, the shipment of her
cargo having been completed, was ready to sail. For the respondent it
was a matter of urgency that she should
do so as soon as possible.
This appears from an affidavit deposed to on 27 April 1986 by Mr
Marthinus Theunis Steyn, a member of
a Cape Town firm of attorneys
acting for the respondent. This affidavit was made in contemplation
of an application being made to
the Court on behalf of the respondent
for an order releasing the
Dimitris
from arrest. In the event,
no such applica-tion was in fact brought before the Court. The
parties, through their attorneys, reached
an agreement allowing for
the release of the vessel from arrest, thus rendering it unnecessary
to obtain an order of the Court.
From Mr Steyn's affidavit the
following appears. The respondent entered into negotiations with the
appellants, the parties acting
through their
12.
respective
legal representatives, regarding the provision of security to the
appellants in order to obtain the release of the
Dimitris
from arrest. Agreement was reached on the quantum of the security,
and also as to the form in which it would be provided. With regard
to
the latter, it was agreed that a letter of undertaking would be
furnished by what is called the "P &
I
Club".
However, a dispute arose as to whether the P &
I
Club
letter of undertaking to be procured by the respondent would apply in
respect of any judgment obtained in a court other than
the South
Eastern Cape Local Division or
the
Tokyo District Court, and more particularly, whether it should apply
to any judgment granted by a court in South Yemen. This dispute
could
not be resolved by negotiation: the appellants insisted that the
security should cover any judgment granted in any proceedings
instituted by them in South Yemen, while the respondent was not
prepared to include a reference in the letter of undertaking to a
judgment
13. of a Yemeni court. The reasons
for the respondent's attitude, as stated by Mr Steyn in his
affidavit, were, in the main, and in
brief, as follows: the NYK
standard form of bill of lading contained an exclusive jurisdiction
clause (clause 3), in terms of which
"any action against the
carrier thereunder shall be brought before the Tokyo District Court
in Japan"; the NYK standard
form of bill of lading furthermore
contained a demise clause (clause 4), the effect of which was that
the carrier of the cargo was
Astromando, and not NYK; accordingly,
the Tokyo District Court was the proper forum for the adjudication of
all claims between the
appellants and Astromando, since it was the
contractually agreed forum; the Yemeni Court was not the proper court
to determine any
action between the parties; and the respondent had
no confidence in the courts of South Yemen, since it feared that it
might not
be af f orded a f air hearing in such courts. Mr Steyn said
in his affidavit that, since it was not
14. possible at that stage, in
view of the urgency of the matter, to obtain a timeous decision of
the Court (the South Eastern Cape
Local Division) as to whether the
security in the form of a letter of undertaking should apply in
respect of a judgment of a Yemeni
court, the respondent would seek an
order determining the terms of the letter of undertaking in such
manner as to leave open the
question in dispute without causing
prejudice to either party. In this regard he referred to a letter of
undertaking which would
reserve the right for the appellants to apply
to the Court at a later stage, but before any action was instituted,
to determine whether
the security provided in the letter of
undertaking would stand as security in any court other than, or in
addition to, the Tokyo
District Court or. the South Eastern Cape
Local Division. On that basis, Mr Steyn submitted, there would be no
prejudice to any of
the rights of the appellants, and the respondent
would be able to have its vessel released from arrest,
15.
so as to enable her to proceed
with her voyage.
Thereafter an agreement was
reached between
the parties, on
the basis of the proposal put
forward
in Mr Steyn's affidavit. On 29
April 1986 The West
England Shipowners Mutual
Protection and Indemnity
Association
(Luxembourg) - the "P &
I
Club"
- issued a
letter of undertaking, addressed
to the appellants
(referred to as the owners of the
cargo in question) ,
the material part of which reads
as follows:
"In consideration of and upon
condition that you consent to the release from arrest of the vessel
'Dimitris' and refrain from
arresting and/or taking action resulting
in the arrest of the 'Dimitris', the 'Thalassini Avgi' and/or any
other vessel or property
in the same ownership, associated ownership
or management for the purpose of founding juris-diction and/or
obtaining security in
respect of the above claims against Astromando
Compania Naviera S A ('Astromando') the owners of the 'Thalassini
Avgi' concerning
the cargo referred to above, we hereby undertake to
pay to Clyde and Co on your behalf on demand such sums as may be
adjudged by
the Tokyo District Court or by the Supreme Court of South
Africa (South Eastern Cape Local Division) or by the judgment of such
other
Court as the Supreme Court of South
16.
Africa in its South Eastern Cape
Local
Division or any Court of Appeal therefrom and
in the
exercise of its discretion in terms of
Section 5 (3) of Act No.
195 of 1983 or
otherwise in terms of the said Act may on
your
application, brought prior to the
institution of proceedings in
such other
Court, direct that this undertaking should
cover "
Upon receipt of this letter of
undertaking, the
appellants, through their
attorneys, consented to the
release of the
Dimitris
from arrest. The release was
effected, we were informed from
the Bar, by means of an
informal authorisation issued by
the Registrar of the
Court (presumably pursuant to
paragraph 3 of the order
of the Court,
quoted
above).
The
Dimitris
departed
on her voyage to the United
States.
So ended the first application.
The second application was
launched some
months later, in October 1986. In
it, the appellants
sought an order in the following
terms:
"1. It is directed that the
undertaking furnished by the West of England Shipowners Mutual
Protection & Indemnity
17.
Association (Luxembourg) dated 29
April 1986, being annexure 'JEH3' to the Affidavit of JOHN EDWARD
HARE filed in support of the Notice
of Motion herein, shall cover any
judgment, either in delict or in contract, in respect of the claims
for which the said undertaking
was furnished, granted by any Court of
competent jurisdiction in the People's Democratic Republic of Yemen.
2. Respondent is ordered to pay
the costs of this application."
It is this order that the Court
a
quo
declined to
grant, resulting in the dismissal
of the second
application.
From the above survey it will be
seen that,
fundamentally, the sole isue for
decision in the second
application was whether or not the
appellants were
entitled to be furnished with
security in respect of
any judgment that might be given
in their favour in
legal proceedings which they
contemplated instituting
in South Yemen. If they were found
to be so entitled,
there were no problems relating to
either the quantum
of the security or the form of it.
However, in the
18.
papers
filed in the second application a number of other matters were raised
and extensively canvassed on both sides. These became
issues which,
it was con-tended, had a bearing on the main issue
I
have mention-ed, and which consequently
called for consideration and decision in order to resolve the main
issue. These matters were
dealt with, on the appellants' side, in the
founding affidavit of Mr Hare, in affidavits of two foreign law
experts, the one a lawyer
from Yemen and the other a lawyer from
Japan, and in an affidavit of a partner in the firm of Clyde &
Co; and on the respond-ent's
side, in the answering affidavit of Mr
Peter Rees Smith, a partner in a London
firm of solicitors, acting on behalf of the respondent and
Astromando, and in affidavits of
yet two further foreign law experts,
again a lawyer from Yemen and a lawyer from Japan.
I
shall, in due course, examine the various
matters raised, in greater or in lesser detail, but for the moment it
will be convenient
to indicate, in the
19. broadest terms, what they
relate to. The appellants contend that they have claims against
Astromando, in contract, or in delict,
or both; that such claims are
enforceable in the appropriate court of South Yemen, which has
jurisdiction to hear them; that such
court will in fact exercise its
jurisdition to adjudicate upon the claims; and that the Yemeni court
is a more appropriate and convenient
forum than either a South
African or a Japanese court. All these contentions are controverted
by the respondent. For its part, the
respondent contends further that
the appellants are bound by the exclusive jurisdiction clause in
respect of the Tokyo District Court,
as stipulated for in clause 3 of
the NYK standard form of bill of lading; and that, in any event,
Astromando will not be able to
obtain a fair hearing in any court of
South Yemen.
Before these
contentions are examined more
closely, it
will be expedient,
I
consider, first to
pass some general observations upon the application of
20.
section 5 (3) (a) of the Act in
practice. At the
outset of this judgment mention
was made of the novelty
in our law of the provisions of
the section - c f
Katagum Wholesale Commodities
Co Ltd v The MV Paz
1984
(3) SA 261
(N) at 263 B-E and
Euromarine International
of Mauren v The Ship Berq and
Others
1986 (2) SA 700
(A) at 711 D-I. The Act, however,
contains no
directions as to the procedure to
be followed in
practice, when an application is
made to a court to
exercise the power conferred upon
it by the section,
nor as to the approach to be
adopted by the court when
considering such an application.
It is desirable,
therefore, to indicate, in broad
terms, the views held
by this Court in regard to the
procedure to be followed
and the approach to be adopted
under the section, in
the context of facts such as those
of the present case.
Section 5 (3) reads as follows:
"5(3) (a) A court may in the
exercise of its admiralty jurisdiction order the arrest of any
property if -
21 .
(i) the person seeking the arrest
has a claim enforceable by an action in
rem
against the
property concerned or which would be so enforceable but for an
arbitration or proceedings contemplated in subparagraph
(ii); (ii)
the claim is or may be the subject of an arbitration or any
proceedings contem-plated, pending or proceed-ing either in
the
Republic or elsewhere and whether or not it is subject to the law of
the Republic.
Unless the court orders otherwise
any property so arrested shall be deemed to be property arrested in
an ac'tion in terms of this
Act.
A court may order that any
security for or the proceeds of any such property shall be held as
security for any such claim or pending
the outcome of the
arbitration or proceedings."
It is clear, in our view, that
subparagraphs
(i) and (ii) of section 5 (3) (a)
should be read
conjunctively, as if they had been
conjoined by the
addition of the word "and"
between them (c f the
22.
Euromarine
case
supra
at 708 E). The intention of the Legislature was to make it possible
for a claimant to apply to a court for,
inter
alia
(confining myself to what is
relevant in the context of the present case), an order for the
arrest
of a ship with the object of obtaining security in respect of a claim
which is the subject of proceed-
ings
contemplated in a foreign court (subparagraph
(ii)).
A prerequisite for the grant of such an order
is
that the claimant must have a claim enforceable by
an
action
in rem
(subparagraph (i)). In terms of
subparagraph
(i) the action
in rem
must be against the
ship which it is sought
to arrest, but when the
subparagraph is
read together with the provisions of
section
3 (6) of the Act, it is clear that an
order
of
arrest is also available against an
associated ship of
23.
the ship against which the
relevant maritime claim arose, as defined in section 3 (7). Although
the existence of a claim
in rem
is a prerequisite for the
exercise of a court's power to order an arrest in terms of section 5
(3) (a), the claimant will, in practice,
more often than not have no
need nor any wish to prosecute such action in the court in which the
application is being made;
ex hypothesi
, his sights will be
set on a foreign court. (Hence the common reference to the procedure
under the section as a "security arrest".)
It will be
recalled that in this case, in the first application, Mr Hare said in
his founding affidavit that it was unlikely that
the appellants'
claims would be brought to trial in the Court to which the
application was addressed. Such a possibility is indeed
remote. That
being so, it may be queried whether any useful purpose was served by
what appears to have been the dominant part of
the order issued by
the Court on 21 April 1986, viz that
24.
part of the order which is
contained in the main
section of paragraph 2 of it, as
quoted earlier.
However, since nothing turns on
this aspect of the
order,
I
shall say no more about it.
But what is of considerable
practical
significance is that part of the
order of 21 April 1986
which appears between the end of
paragraph 2.2 and the
beginning of
paragraph 2.3 of it. For convenience,
I
quote:
"and/or, in the event of any
of the above
claims being brought for adjudication before
any
competent Court elsewhere than in the
Republic of South Africa, "
Then follows paragraph 2.3,
containing the vital claim
for the provision of security,
which was really what
the first application was about.
What strikes one
immediately is
that in the words
I
have just quoted
there is no mention of any
specific foreign court in
which the contemplated proceedings
might be brought.
There is no more than a general
reference to "any
25.
competent Court
elsewhere". In our view this part of the order is too vague and
uncertain to be acceptable, and an order ought
not to be granted in
such wide terms. There is no way in which the parties can know how
the order is to be applied, and it opens
the door to future disputes
which could be extremely awkward to resolve. If security were to be
furnished on the basis of such an
order, and the claimant were to
institute an action in a court of his choice somewhere in the world,
it would be possible for the
defendant in such action to raise the
contention that the chosen court was not a "competent court"
as
envisaged in
the order, and that the security furnished accordingly did not apply
to it. Such a situation would create a virtual impasse,
which should
obviously be avoided. We consider, therefore, that, as a matter of
practice, a court making an order under section 5
(3) (a) should
specify and nominate the foreign court to which the order applies.
Where an order is sought for security
26.
to be provided
in respect of proceedings contemplated in a foreign court, it is
important to observe that the question as to the forum
to which the
security is to relate, is one that should be settled in the initial
application for such an order (other questions,
as to the quantum or
the form of the security and so forth, can be dealt with later). And,
of course, where more than one foreign
forum come into play, the
order must nominate all those to which the security is to be
applicable. From the requirement of practice
in regard to the form of
the order that
I
have been discussing, a
further requirement of practice follows. â It is that it is
incumbent on the applicant for such an order
to deal in his
application, initially, with the question of the court or courts in
which he contemplates bringing proceedings, and
to nominate the forum
or the forums to which he seeks the court to relate the security
claimed, in order to enable the court properly
to exercise its power
in that regard.
27.
In the present case we consider
that this requirement was adequately complied with. In the excerpt
quoted earlier from the founding
affidavit of Mr Hare in the first
application, it was made clear that the appellants contemplated
commencing an action in Japan or
in South Yemen. Accordingly the
Court hearing the application could, and should, have nominated the
courts of those countries in
its order, instead of merely referring
to "any competent Court elsewhere".
A claimant applying for an order
in terms of section 5 (3) (a) should be required, in addition to
nominating the forum of his
choice, to show
prima facie
that his claim is enforceable in
that forum. This requirement is closely allied to the requirement
that the claimant must satisfy
the court that he has a
prima facie
case on the merits against the person against whom he wishes to
institute proceedings. In
The MV Paz
case
supra
, which
was concerned with a security arrest in respect of proceedings
pending in a foreign
28.
court, FRIEDMAN J said at 268 A
that
" an applicant should make
averments
that will satisfy the Court
prima
facie
that he has reasonable prospects of success in the main
proceedings.",
while DIDCOTT J at 269 G required
circumstances to be
shown which would enable the Court
" to come to a conclusion
about the
applicant's
prima facie
prospects of success in the main proceedings."
With respect, it seems to us that
in these remarks the
test in regard to showing a
prima
facie
case is pitched
too high. In the analogous case of
an attachment of
property
ad fundandam
jurisdictionem
an applicant need
show no more than that there is
evidence which, if
accepted, will establish a cause
of action. In the
case of
Bradbury Gretorex Co
(Colonial) Ltd v Standard
Tradinq Co
(Pty) Ltd
1953 (3) SA 529
(W),
STEYN
J
,
after examining a number of common
law authorities and
earlier decisions, said the
following (at 533 C-E):
"The authorities and
considerations to which
I
have referred
seem to justify the
29.
conclusion that the requirement of
a
prima facie
cause of action, in relation to an attachment to
found jurisdiction, is satis-fied 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."
This approach is well established
in cases of
attachment of property to found
jurisdiction (see e g
Butler v Banimar Shippinq Co SA
1978 (4) SA 753
(SECLD)
at 757 C-G and the cases cited
there). In our
judgment, it is the proper
approach to be applied to
applications for the arrest of a
ship in terms of
section 5 (3) (a) of the Act, and
we hold accordingly.
This approach applies also to the
question of the
enforceability of the claimant's
claim in the chosen
forum. If it is shown
prima
facie
that the foreign
court nominated by the applicant
has jurisdiction to
30.
hear the case, that would normally
be the end of the enquiry into this aspect of the matter. It is
necessary to emphasize that an
application under section 5 (3) (a) is
not an appropriate vehicle for obtaining rulings or decisions on
issues that would have to
be adjudicated upon by the foreign court
hearing the main proceedings. Not infrequently, questions may arise
as to whether or not
the chosen foreign cóurt would grant a
stay of proceedings on the ground of a contractual clause conferring
exclusive jurisdiction
on some other tribunal, or on the ground that
such foreign court is a
forum non conveniens
, and so forth. A
court hearing an application under section 5 (3) (a) ought not to
involve itself with questions of this kind, unless
it is made to
appear quite clearly that the chosen foreign court, despite having
jurisdiction, will in fact not exercise it in favour
of the claimant.
In such a case an order under section 5 (3) (a) will not be granted,
since it
31. would be futile. But the onus
of proving such a state of affairs will rest squarely on the
respondent in the application.
An applicant
for an order in terms of section 5 (3) (a) must satisfy the court
that he needs security
in respect of his
claim. This requirement was fully discussed in the case of
The
MV Paz supra
, by FRIEDMAN J at 268 B-C
and by DIDCOTT J at 269
I
- 270 B. In that
case, the main proceedings had already been
commenced
and were pending in Hong Kong, and in view of
the
circumstances of that case particular aspects of the need to obtain
security in a South African court required to be emphasized
(see e g
per
FRIEDMAN J at 268 C-E) . The need for such emphasis does not arise in
the present case, where the main proceedings are yet in -
contemplation.
Subject to that observation, however, we are, with
respect, in general agreement with what was said in
The
MV Paz
on this score. By way of summary
it may perhaps be said that
32.
an
applicant must satisfy the court, in the words of
DIDCOTT J,
"that his need for security is both genuine and reasonable",
a criterion which would embrace the further refinements
mentioned in
the judgments, such as that the applicant must explain why he needs
security, that it must appear that he is not bent
on merely harassing
the other side, and so forth.
It may be
convenient now to summarize what has been said above. A claimant
applying for an
33.
order for the arrest of a ship in
terms of section 5 (3) (a), for the purpose of obtaining security in
respect of a claim which is
the subject of contemplated proceedings
to be instituted in a foreign forum, is required to satisfy the court
(a) that he has a claim
enforceable by an action
in rem
against the ship in question or against a ship of which the ship in
question is an associated ship; (b) that he has a
prima facie
case in respect of such a claim, which is
prima facie
enf
orceable in the nominated forum or f orums of his choice, in the
sense explained above; and (c) that he has a genuine and reasonable
need for security in respect of the claim.
If an applicant satisfies the
requirements enumerated above, he is, in our judgment, entitled to an
order in terms of the section,
unless the respondent
shipowner places countervailing
material before the
34.
court by which it is proved that
there is sound reason for not granting the order. Failing that, we do
not consider that the court
has a discretion to decline to exercise
its power in favour of the applicant; the postulate of an unfettered
discretion would, in
our view, run counter to the intention of the
Legislature. On this footing the apparent differences of approach
reflected in the
judgments in
The MV Paz
case
supra
do
not, with respect, call for further comment.
It follows, then, that when once
the criteria mentioned above are met, the respondent shipowner who
would oppose the granting of an
order must raise, and discharge the
onus of proving, some countervailing factor of sufficient weight to
persuade the court not to
grant the order. (The question as to when
and how that can be done in practice will be considered presently.)
An example of such
a ground of opposition has been mentioned earlier,
viz where it is proved that the foreign court, despite having
jurisdiction to
35.
adjudicate upon the claim, will
nevertheless decline to
do so for some
particular reason. Another example that may be conveniently mentioned
now, is where it
is proved by the shipowner
that the defendant in the
contemplated
proceedings will not receive a fair
hearing.
In this regard the onus of proof is a heavy
one.
In England it is well settled that a litigant
who
asserts that he may not obtain justice in a foreign
jurisdiction
is required to prove and establish his assertion objectively by means
of positive and cogent
evidence (see
The
"El Amria
"
(1981) 2 Lloyd's Rep 119
(CA)
at 126;
The Abidin Daver
(1984) 1 All ER 470
(HL)
at 475 h-j and 476 b-j; and
The
"Spiliada"
(1987)
1
Lloyd's Rep 1 (HL) at 11 i
f
- 12, the paragraph
numbered
(6)). We consider that our courts will apply
the
same approach.
In
practice an order in terms of section 5 (3) (a) will usually be
obtained
ex parte
. It is necessary to comment now on some
aspects of the
36.
procedure which is to be followed
thereafter. The ship is placed under arrest and her owner will want
to procure her release from
the arrest. This is usually achieved by
the owner furnishing security for the claim, in lieu of the ship. If
the parties agree on
the quantum and the form of security, there are
no further problems to be resolved. Failing agreement, the order of
the court may,
and usually does, provide for the release of the ship
from arrest upon security being furnished to the satisfaction of the
Registrar.
In the present case, however, the ambit of paragraph 3 of
the order which was issued on the first application, as quoted
earlier,
is not clear; it seems to be related only to the main part
of the order (paragraphs 2, 2.1 and 2.2). But nothing turns on this
and
it can be left aside. The shipowner is entitled, in any event, to
apply to the court for an order for the release of the ship against
the furnishing of satisfac-tory security. It is not in doubt that the
court has
37.
the power to order the furnishing
of security in exchange for the release of the ship from arrest (see
section 5 (3) (c) and section
5 (2) (b) and (c)). In such an
application the court will be concerned with the question whether the
security tendered is proper
and adequate.
There is, however, another way in
which the owner of the ship can obtain her release from arrest. He
can apply to the court for an
order setting aside the order of arrest
itself. In the present case, the order of the Court issued on 21 May
1986, on the first application,
in paragraph 7 expressly reserved the
right for the respondent to apply for the order to be discharged, on
48 hours' notice to the
appellants. The appending of such a condition
to the order of arrest is authorised by the provisions of section 5
(2)
38.
(c) of the
Act. In our view the incorporation of such a condition in an order
made under section 5 (3) (a) is a salutary practice.
Even in the
absence of such a condition, however, the shipowner would be entitled
to apply for the setting aside of the order of
arrest, and, although
the Act does not expressly empower the court to set aside such an
order, there can be no doubt that in fact
it has the power to do so,
in accordance with the common law principles relating to the setting
aside of attachment orders obtained
ex parte
. The incidence of
the onus in such a situation is of importance in this case. In the
Bradbury Gretorex
case
supra
, it was pointed out by
STEYN J at 531 A-D that an applicant cannot by obtaining
ex parte
an order in his favour secure a more advantageous position than he
would have been in if the other party had had an opportunity of
putting counter-allegations before the court; consequently, if the
other party applies for the setting aside of the order, the original
applicant
39.
retains
the onus of satisfying the court that he was entitled to it. That
approach was applied, correctly in our view, in the context
of
applications for setting aside the arrest of a ship procured in terms
of section 3 (4) and (5) of the Act, in
Transgroup
Shipping SA (Pty) Ltd v Owners of MV Kyoju Maru
1984 (4) SA 210
(D) at 214
I
and
Transol Bunker BV v MV Andrico
Unity and Others
1987 (3) SA 794
(C) at 799 D, and it must apply equally to an order
for arrest obtained
ex parte
in terms of section 5 (3) (a). In the last-mentioned case,
Transol
Bunker BV supra
,
MARAIS J held (at 799 H) that in an application for the setting aside
of an order of arrest the party who obtained the order may
advance
any ground to justify the arrest irrespective of whether or not he
relied upon it initially in obtaining the order. We agree
with this
finding and, generally speaking, with the reasoning of the learned
Judge in support of it (see at 799 A - 800 D), and we
would apply the
finding to orders obtained under
40. section 5 (3) (a). One further
observation should be made in regard to an application by the
shipowner for setting aside such
an order. While the party who
obtained the ordêr bears the same onus of justifying the
granting of it as would have applied
had the original application
been opposed after notice to the shipowner, the latter, by the same
token, remains burdened with the
onus of proving any countervailing
circumstances which he could have raised and proved in answer to the
original application. Thus,
while the claimant must still show that
he has a
prima facie
cause
of action,
prima facie
enforceable in the foreignr
court
of his choice, in the sense explained earlier,' the shipowner, if he
alleges that the foreign court would as a matter of fact
decline to
exercise its jurisdiction to adjudicate upon the matter, or that the
foreign court would not afford him a just and fair
hearing, is still
required to discharge the onus of proof in that regard.
41 . Applying what has been said
above to the circumstances of the present case, we are of the view
that the proper course of events
would have been as follows. The
order of the Court of 21 April 1986 would have nominated the courts
of Japan and South Yemen as the
forums to which the order was
related. The respondent, not wishing to submit to litigation against
Astromando in Yemen, would have
applied to the Court for the setting
aside of its order
pro tanto
,
by excising from it any reference to the court of Yemen. In its
application the respondent would have relied on its specific
objections
against the Yemeni courL entertaining the main
proceedings. But it could also have based its application more
broadly, by placing
in issue those matters in respect of which the
appellants bore the onus, and it could have done so even if it were
content to abide
by the furnishing of security relating to a Japanese
court or a South African court, thus using any alleged defect in the
appellants'
42.
original application merely as a
spring-board for achieving its real object, which was to avoid the
provision of security in respect
of proceedings in a Yemeni court, as
appears from Mr Steyn's affidavit of 27 April 1986, referred to
earlier. The appellants would
then have opposed the application,
seeking to justify their entitlement to an arrest order on any
grounds they wished to advance,
and to meet the respondent's
objections to the Yemeni court. And the respondent would have had the
right to reply. If this procedure
had been followed, all the relevant
ervidential material would have been collated in a satisfactory
fashion, the incidence of the
onus in relation to the various
averments and counter-averments would have been clear, and the court
hearing the application would
on that footing have decided the
central issue as to whether or not the reference to the Yemêni
court was to remain in the
order. To have brought the issue before
the court in this, the proper
43.
manner, could no doubt have caused
a delay, detrimental to the urgency of obtaining the release of the
ship from the arrest, but that
presents no insuperable problem. In
practice there ought not to be any difficulty in arranging
provisional or interim security to
be furnished, pending the
determination of an application of the nature described above, in
such a way as to allow the release of
the ship, without prejudice to
the rights of either party, and leaving it to them thereafter to
pursue to a conclusion an application
along the lines indicated
above. That concludes my survey of what this Court considers,
broadly, to be the proper procedure to be
followed, and the proper
approach to be adopted, in regard to applications under section 5 (3)
(a) in circumstances like those of
the present case.
I
revert now to
what actually happened in this case, as outlined earlier. Since the
order of the Court of 21 April 1986 did not nominate
Tokyo or
44.
Aden as the
place "elsewhere", where the appellants'
claims
could be "brought for adjudication", the parties
were
faced with a peculiar problem when they could not agree on whether
the security to be provided in order to obtain the release
of the
Dimitris
from arrest, was to apply in respect of a judgment of a court in
South Yemen or not. They resolved the problem, sensibly
enough,
by leaving open that question in the P &
I
Club
letter of undertaking of 29 April 1986. In
so doing, however, they created an unusual and artificial situation,
in which it was left
to the appellants to approach the Court for a
direction in regard to
the
applicability of the letter of undertaking to proceed-ings in Yemen.
At first sight, this arrangement may
seem
to suggest that the appellants assumed a different
kind
of onus, or a more burdensome one, in regard to satisfying the Court
that the security should relate also to proceedings in Yemen,
than
that which would have applied in the context of the first application
as
45. such,
or in the context of an application by the respondent for an order
setting aside or qualifying the order of arrest of 21
April 1986. It
is quite clear, however, that that could not have been the intention
of the parties, and that the arrangement in fact
had no such effect.
Mr Steyn's affidavit of 27 April 1986, referred to earlier, makes it
plain that the parties entered into the
arrangement without prejudice
to any rights of the appellants. In consequence, the appellants were
in no worse a position after they
had agreed to the release of the
Dimitris
on the basis of
the letter of undertaking
than they would have been
in
had they simply refused to accept the letter of
undertaking
and to consent to the release of the ship.
The
respondent would then have been compelled to apply to the Court for
relief, and the incidence of the onus in respect of the various
matters that could have been
raised
in such application would have been no different from that explained
earlier. This is the setting in
46.
which the second application falls
to be considered.
It is convenient at this stage to
refer to
the basis upon which the Court
a
quo
decided the second
application. The
ratio
decidendi
appears from the
following excerpts from the
judgment of ZIETSMAN J:
"The applicants could have
refused to release the ship unless security was supplied in the
amount and subject to the conditions
that would satisfy them. If they
felt that the South Yemen Court was the only appropriate fórum
for their proposed action
against the respondent [Astromando] they
could have re-fused to release the ship unless the respon-dent agreed
to make the security
it offered available to satisfy a judgment of
the South Yemen Court. When the respondent refused to agree to this
condition the applicants
re-leased the ship on the understanding that
they could then apply to this
Court for the terms of the security undertaking to be extended to
include a judgment of the South Yemen
Court. They now ask that this
be done, and in my opinion an
onus
rests upon them to justify
the granting of the order they seek.
If the
applicants had succeeded in persuading me that it will be impossible
or impractic-able for them to bring their action in this
Court, or in
the Tokyo District Court,
I
might have been
disposed to grant their application. Howeyer, they have failed to
47.
persuade me that this is the
case "
"The Tokyo District Court or
this Court are Courts available to the applicants and they have the
security required to satisfy
any judgment they may succeed in
obtaining in their favour. They have not persuaded me of the need to
extend the security to apply
also to a judgment of the South Yemen
Court."
In my view, with respect, the
learned Judge
erred. The reasoning that the
appellants had
attracted an onus by virtue of the
terms of the letter
of undertaking to which they
agreed, ignores entirely
that they did so in order to
accommodate the respondent
in connection with the release of
the ship, and without
prejudicing any of their rights.
The appellants'
acceptance of the letter of
undertaking in return for
the release of the ship was simply
part of an
arrangement devised to defer the
determination of the
issue between the parties, and the
appellants could not
be disadvantageously affected
because of it. To say
that the appellants were asking
for the security to be
"extended" may be right,
but only in a linguistic sense
48.
and only
because of the fortuitous circumstance that the parties had arrived
at the arrangement reflected in the letter of undertaking.
The
learned Judge, however, wrongly dealt with the extension of the
security in a conceptual sense, as importing, by way of principle,
the requirement that the appellants had to prove the necessity for
it. This approach loses sight of the fact that the extent of the
security, in relation to the courts to which it would apply, had not
yet been settled, either by an order of the Court or by agreement
between the parties. It is not the case that the appellants had
elected to seek
security
in respect of two courts only, that they had obtained such security,
and that they thereafter changed their minds and were
seeking fresh
or additional security in respect of yet a third court. Accordingly
there was no warrant for the learned Judge's reasoning
that there
were two courts available to the appellants, in respect of which they
held security, and that they had failed
49.
to show that it would be
impossible or impracticable for them to bring their action in those
two courts and that there was a need
to extend the security. In my
judgment, with respect to the learned Judge, these considerations
were wholly irrelevant to the decision
of the second application.
Consequently the Court a
quo
's dismissal of it on those
grounds cannot be sustained.
It follows,
therefore, that the second application must now be considered afresh.
Brief reference has been made earlier in this judgment
to the various
affidavits filed in the second appïication, and to the various
matters canvassed therein as being relevant to
a decision on the
issue between the parties. In the discussion of these matters which
is to follow,
I
shall give effect to the
general observations about procedure and approach that have been set
out above, and
I
shall do so by dealing
with the second application as if the order of the Court of
50. 21 April 1986 had contained a
nomination of the Yemeni court as a court to which the order was
applicable, and
as if the respondent had applied
for the settingaside
of it
pro tanto
. There is
no unfairness to the respondent in approaching the case on this
basis, for, as has been shown, such an approach is, in
effect,
tantamount to postulating that notice of the first application had
been given to the respondent, that the respondent had
had an
opportunity of opposing it and of placing the grounds of its
opposition before the Court, and that the appellants had replied
in
the ordinary course - all of this, hypothetically, before any order
of arrest had been issued. In this way, proper perspective
and effect
can be given to the relevant considerations concerning the onus
resting on the appellants and the respondent respectively,
as
discuss-ed earlier. In my view, such an approach is the prac-tioal
and also the fairest way of doing justice between the parties.
51 .
The appellants aver that they have
claims against Astromando in contract and in delict. The respondent
contends that the appellants
have failed to prove the existence of
their alleged claims on either basis.
Adverting first to the claims in
contract, it is clear from Mr Hare's founding affidavit in the first
application that he was asserting
a
prima facie
case on the
part of the appellants against Astromando, based on the latter's
breach of contract, which consisted of its failure to
deliver the
cargo due to the appellants in terms of the respective bills of
lading. In the answering affidavit of Mr Rees Smith there
is a bare
denial that Astromando had committed a breach of contract and that it
is liable to the appellants in contract. Mr Rees
Smith refers to an
affidavit of Mr Hiroshi Kimura, a practising attorney from Tokyo who
specializes in maritime law. Mr Kimura does
not deny that Astromando
is liable to the appellants in
52.
contract; on the contrary, it is
implicit in his
affidavit that Astromando is so
liable, in principle,
according to the terms of the NYK
bills of lading and
in conformity with Japanese law.
The respondent's
object in relying on Mr Kimura's
affidavit was to meet
an averment in Mr Hare's founding
affidavit in the
second application, namely that
Astromando was also
liable to the appellants in
delict. That averment, in
turn, was made in order to counter
Mr Steyn's reliance,
in his affidavit of 27 April 1986,
on the exclusive
jurisdiction provision contained
in clause 3 of the NYK
bills of lading. Clause 3 reads as
follows:
"The contract evidenced by or
contained in this Bill of Lading shall be governed and construed by
Japanese law except as may
be otherwise provided for herein, and any
action
against the carrier thereunder
shall be
brought before the Tokyo District
Court in Japan."
The entire thrust of Mr Kimura's
expert evidence in his
affidavit was to show that under
Japanese law clause 3
enures to the benefit of the
shipowner, even where an
53.
action is
brought against him in delict. In the course of his lengthy
exposition of the legal position in Japan Mr Kimura dealt
inter
alia
with the
effect of clause 4 (2), the so-called
"demise clause", and clause 6, the so-called "Himalaya
clause", of the NYK
bills of lading. It is not necessary to
trace Mr Kimura's reasoning. The conclusion stated by him is that
both NYK, as the charterer,
and Astromando, as the owner, of the
Thalassini Avqi
,
gualified as "the carrier" in terms of clause 3, and that,
accordingly, Astromando could invoke the provisions of that
clause if
it were sued in a court other than the Tokyo District Court, whether
the action was founded in contract under the bill
of lading or in
delict. Consequently there is nothing in Mr Kimura's affidavit
serving to controvert the effect of Mr Hare's affidavit
as showing
that the appellants have a
prima facie
cause of action for breach of contract against Astromando.
Counsel for the respondent rightly
conceded
54.
as much during the course of his
argument in this
Court, but he then went on to
submit that the
appellants had abandoned their
claims in -contract.
This submission was based on the
fact that Mr Hare in
his founding affidavit in the
second application sought
to put forward claims by the
appellants founded in
delict, and on the contents of an
affidavit made by Mr
Seijiro Ninomiya, another
practising lawyer from Tokyo
who specializes in maritime law.
This affidavit was
filed in reply to that of Mr
Kimura. In it, Mr
Ninomiya expounds his expert views
on the Japanese law
and expresses his disagreement
with the opinions held
by Mr Kimura. He states his
conclusion as follows:
"(1) In this case, in my
opinion, NYK is a contractual carrier, and not the owner.
(2) Irrespective of the conclusion
who is the carrier, the cargo interests may file a suit [against]
both the owner and time charterer
based on tort, and in the tort
claim, any clauses in the bill of lading are not applicable because
any clauses in the bill of
55.
lading stipulate terms and
conditions of a contract and have nothing to do with tort."
In my opinion, counsel's argument
that the appellants
had abandoned their claims in
contract is without
substance. The purpose of putting
in Mr Ninomiya's
affidavit was obviously to show
that, contrary to Mr
Kimura's opinion, there was an
expert opinion available
for the appellants to rely on,
showing that
at least
in
respect of a claim based on
delict, Astromando would
not be entitled to invoke the
exclusive jurisdiction
clause in its favour (clause 3).
The mere fact that
the appellants' witness expressed
the view that NYK was
the contractual carrier under the
bills of lading, and
not Astromando, with the implied
corollary that
Astromando was not liable to the
appellants in
contract, cannot justifiably be
construed as an
abandonment by the appellants of
their reliance on
claims in contract against
Astromando. That is far
too tenuous a basis for a case of
waiver to be made
56.
out. In any event, what Mr Hare
said in his founding
affidavit in the second
application is wholly
inconsistent with any suggestion
that the appellants'
claims in contract were being
jettisoned. He said,
inter alia
:
"For
purposes of this application
I
respectfully
submit that it suffices for Applicants to contend that they have a
right to sue Astromando (and in this forum the Respondent
as an
associated ship) based on an alleged breach of the contract evidenced
by the said Bills of Lading (to which, Respondent accepts
Astromando
was a party) and/or on the delictual (tortious) acts of Astromando
through its servants for which it is vicariously liable."
"Furthermore, and in any
event, Applicants respectfully submit that, in addition to claims
based upon breach of contract, claims
also lie against Astromando in
delict ....."
I
turn to the
appellants' claims in delict.
These are based on information
that members, or a
member, of the crew of the
Thalassini Avgi
deliberately
started the fire aboard the
vessel. The evidence on
which the appellants rely for
alleging that they have a
57.
prima facie
case in this regard, is admittedly of a hearsay nature. It is
contended for the appellants that the evidence is nonetheless
admissible
in terms of section 6 (3) of the Act, and that in terms of
section 6 (4) it should be accorded sufficient weight to justify a
finding
that the appellants have shown a
prima facie
cause of action in delict. For the respondent it is contended that
the evidence in guestion should not be admitted. In the court
a
quo
ZIETSMAN J in fact ruled
that it was inadmissible. This ruling was supported on behalf of
respondent, while on behalf of the appellants
it was argued that the
learned Judge had erred in not receiving the evidence.
The evidence in
question is contained in the founding affidavit of Mr Hare in the
second application. Before
I
quote the
relevant passage, some background facts must be mentioned. After the
fire, an official board of enquiry was appointed to
58.
investigate the matter. It
consisted of a Yemeni judge, as chairman, and three other members.
The board invited. two fire experts
to act as advisers to it, Mr
Bound and Dr Mitcheson. The former, who was retained as an expert by
the Yemen Insurance Company, accepted
the board's appointment, but
the latter, who was acting as expert adviser for Astromando, declined
to do so. Astromando had a legal
adviser acting on its behalf in
Aden, Mr Mohamed Shafi Abdul Karim, a practising lawyer of long
standing. When the board commenced
its proceedings, Mr Karim,
representing Astromando, objected to its holding an enquiry, on
technical grounds relating to its jurisdiction
to do so. The board
heard argument and then overruled the objection. Mr Rees Smith
alleges in his answering affidavit that Mr Karim
took no further part
in the proceedings before the board. This is disputed in an affidavit
made by another advocate practising in
Aden, Mrs Raquya AQ Humeidan.
She states that Mr Karim was
59.
present during the enquiry, that
he had appointed an advocate, Mr Wagih A Lugman, to represent six
crew
members of the
Thalassini Avgi
who were to be called as
witnesses, that Mr Lugman examined
and cross-examined these and other witnesses, that Mr Karim was
guiding him in doing so, and that
Mr Karim paid Mr Lugman's fee on
behalf of the crew members. The board heard the evidence of the
master of the vessel and five other
crew members, and of the
assistant port officer and the harbour master of Aden. At the time
when the papers in the second application
were filed, the board had
drawn up its reporron its findings, but the report had not yet been
formally released or published.
Mr Hare, in his founding affidavit
in the second application, dealing with the appellants' claims in
delict, refers to his founding
affidavit in the first application and
to the affidavit of Mr Lawrence Henley, which had been filed in the
NYK application for the
arrest of the
Dimitris
, mentioned
earlier in this
60.
judgment. On the basis of the
affidavit of Mr Henley
and of information obtained by the
representatives
of NYK, Mr Hare had said in his
first affidavit that it
appeared that a series of fires
had broken out
simultaneously in four different
places cm board the
Thalassini Avqi
. With these
introductory references,
Mr Hare's affidavit in the second
application then
proceeds as follows (this is the
hearsay evidence in
question):
"Further,
I
am instructed that the South
Yemeni
authorities have conducted an Enquiry into the circumstances
surrounding the fires
which broke out on
board the 'THALASSINI AVGI' at Aden.
I
am
informed by Messrs.
Clyde & Co that the
Report of the Enquiry has
been finalised
but has not yet been formally
released.
However Messrs. Clyde & Co have
been
informally advised that the Enquiry has
concluded
that the fires were started delibe-
rately
and in all probability by a member of
the
crew of the 'THALASSINI AVGI'.
I
respectfully
submit that, based on these unofficial findings and the facts set out
in my Affidavit and the affidavit of Messrs. Henley,
and in the
annexures to Mr Henley's Affidavit, an action based on delict is at
least prima facie available to Applicants as a means
of proceeding to
recover their
61.
claims."
Mr Rees Smith, in his answering
affidavit,
responded to the above-quoted
passage in Mr Hare's
affidavit as follows:
"I
deny
the correctness of the alleged in-
formal advice furnished to
Messrs Clyde & Co
by an undisclosed person or persons, and,
in
turn, conveyed to Mr Hare.
I
respectfully
submit
that the allegation constitutes hear-
say evidence at its worst.
Accordingly,
I
do
not deal with this
evidence and at the
hearing of this matter application will
be
made to strike out:- "
and then the alleged offending
parts of the passage are
set out. With reference to Mr Rees
Smith's response,
two further matters may
conveniently be noted at once.
The first is that, in another part
of his answering
affidavit, Mr Rees Smith stated
the following:
"I
am
informed by Mr Karim that the findings
of the Second Inquiry
[which is the one
referred to above] were pronounced on
25th
August 1986 and that although he has sighted
a copy of the
findings briefly, it will be
some time before these findings and
other
proceedings before the Second Inquiry are
formally
published "
62.
The second
is that Mr Karim made an affidavit for the
respondent,
dated 25 January 1987, which was filed in
the second
application as part of the respondent's.
answer to
the appellants' application: in it, Mr Karim
does not
mention a word of the proceedings and evidence
before the
board of enquiry, nor of the board's
findings
which he had "sighted".
Subsections
(3) and (4) of section 6 of the
Act
provide as follows:
" (3)
A court may in the exercise of its admiralty jurisdiction receive as
evi-dence statements which would otherwise be inadmissible
as being
in thê nature of hearsay evidence, subject to such directions
and conditions as the court thinks fit.
(4) The
weight to be attached to evidence contemplated in subsection (3)
shall be in the discretion of the court."
In the
Court
a quo
, ZIETSMAN J in his judg-ment dealt with the
objection to the evidence as follows:
"Hearsay
evidence may be admitted in
63.
applications of
this kind (see section 6 (3) of the Admiralty Jurisdiction Regulation
Act, No 105 of 1983) but
I
agree with Mr
Scott that the type of double hearsay evidence,
evident
in the above quotation from
Mr
Hare's
affidavit, where the original source
of the alleged communication is not even disclosed, cannot be
admitted."
In my view, with respect, the
learned Judge
erred in his approach to the
question he had to decide.
As
I
understand the passage in his judgment that
I
have
quoted, his approach was that he
had no power to allow
the evidence in question when once
the two features of
it mentioned by him were present,
viz that it
constituted "double hearsay"
and that the original
source of the communication was
not disclosed. On
this approach the learned Judge
fettered the exercise
of his discretion under the
section in a manner which
is not warranted by the terms of
it, and thus
effectively precluded himself from
actually exercising
his discretion. It may be that the
learned Judge
meant to convey that the two
features of the evidence
64.
mentioned by him constituted the
grounds upon which he exercised his discretion in deciding not to
admit the
evidence. But even if that were
his approach, it
seems to me, with respect, that he
misdirected himself by isolating those two features and by confining
his decision to a consideration
of them, to the exclusion of a
consideration of other circumstances which were relevant to the
exercise of his discretion and which
operated in favour of allowing
the evidence, as will be shown below. In my judgment, therefore, the
learned Judge failed to apply
his mind properly to the exercise of
the discretion conferred by section 6 (3), and this Court is obliged
to consider the matter
afresh.
Counsel for the respondent,
arguing in support of the conclusion arrived at by the Court
a quo
on this point, relied on the well-known prerequisites applied in
general practice for allowing hearsay evidence in urgent
interlocutory
applications - see e g
Southern Pride Foods (Pty)
Ltd v Mohidien
1982 (3) SA
65.
1068
(C) and the earlier cases cited in the judgment in
that
case. (The recent legislation concerning the admissibility of hearsay
evidence, contained in section 3 (1) (c) of Act 45 of 1988,
is
irrelevant for present purposes.) Counsel argued that those
pre-requisites should be applied in the context of section 6 (3) of
the Act, with the single exception that the operation of section 6
(3) is not confined to inter-locutory matters. Thus, counsel argued,
hearsay
evidence should only be received
under section 6 (3) if
it is shown,
inter
alia
(I
do
not propose to enumerate all of the prerequisites), that the matter
is one of urgency, and if the source of the inf ormation is
disclosed. Counsel referred us to an unreported judgment of NEL J in
the Cape Provincial Division, in the case of
Elsden
Shipping Lines (Holdings) Ltd v Atlantic Fisheries & Shippinq Co
Ltd
(21.3.1986), which contains remarks tending to support counsel's
argument.
I
do
not, however, agree with the argument, nor, with
66.
respect,
with the remarks in the unreported judgment which tend to support it.
In my opinion it is quite clear that the Legislature
intended, by
enacting section 6 (3), to sanction a departure, in admiralty cases,
from the general practice of the courts in other
cases, in regard to
receiving hearsay statements in evidence. The object of the
Legislature is placed beyond doubt by the use of
the expression
"which would otherwise be inadmissible". Counsel's attempt
to cut down the effect of that expression by
confining its operation
to cases which are not of an interlocutory nature rests on pure
speculation as to the Legislature's intention
and is wholly
unwarranted. Although the prerequisites in other cases, to which
counsel referred, such as urgency and the disclosure
of the source of
tne information, are matters which will no doubt be taken into
consideration in the exercise of the discretion conferred
by section
6 (3),
I
can
perceive no justification for thinking that the
67.
Legislature contemplated
compliance with such pre-requisites as a condition requiring
fulfilment before the exercise of the discretion
can come into play.
Counsel for the
appellants, on the other hand, contended that section 6 (3) should be
construed as if the word "may" meant
"shall",
with the result that the courts in admiralty cases are obliged to
admit hearsay statements in evidence.
I
do
not agree with this argument either. The obvious and simple answer to
it is that there is no justification for departing from the
plain
meaning of the language used by the Legislature.
The Legislature has given no
indication of how a court should approach the exercise of its
discretion under section 6(3), if regard
is had to that subsectfoh by
itself. It seems to me, however, that subsection (3) must be read
together with subsection (4) , and
that the latter subsection
provides the clue as to the general approach to be adopted in
68.
applying
subsection (3). In terms of subsection (4) the weight to be attached
to hearsay statements, if allowed under subsection (3),
is itself
left for assessment in the discretion of the court. Subsection (4)
is,
I
consider, of overriding importance in
the scheme of the procedure envisaged in the combined provisions of
the two subsections. Accordingly,
in my view, the general approach to
be' adopted in the application of section 6 (3) should be lenient
rather than strict; the court
should, speaking generally, incline to
letting hearsay statements go in
and to assess the weight to be
attached to them under
section 6 (4) when considering the
case in its totality; and a decision to exclude such statements
should normally be taken only when
there is some cogent reason for
doing so.
Reverting to the facts of this
case, the most important feature of the hearsay statement in Mr
Hare's affidavit is that its origin
is a finding of an
69.
official
board of enquiry, contained in a written report compiled by it. The
report was not yet officially available, and it is not
due to any
fault of the appellants that the report itself was not produced in
evidence. It appears that it was unlikely that the
report would have
become available within a reasonable period of time. Although it was
not shown that the second application was
one of "urgency"
in the usual sense, it could not reasonably have been expected of the
appellants to await the official
release of the report before they
launched the second application. The real source of Mr Hare's
information was the report itself.
The identity of the person who
conveyed the contents of the board's finding to Messrs Clyde &
Co, and the identity of the person
who received the communication and
in turn passed it on to Mr Hare, do not appear to me to be of any
moment in the particular circumstances
of this case. It can hardly
make any difference whether they were Mr A and Mr B, or Mr
X
and
70.
Mr
Y.
I
do not find
anything disturbing in the "double hearsay", nor in the
failure to supply the names of the communicants. Moreover,
what is of
decisive significance is that the respondent's own legal
representative and witness, Mr Karim, had first-hand knowledge,
not
only of the evidence that was given before the board, but also of the
board's finding itself. The respondent was accordingly
in at least an
equally good (and probably better) position, as com-pared to the
appellants, to gain access to the information contained
in Mr Hare's
statement. In all these circumstances, my conclusion is that the
Court a
quo
should have allowed the hearsay statement in evidence.
As to the weight to be attached to
the statement, counsel for the appellants pointed to various factors
tending to support the correctness
of Mr Hare's information. He
mentioned the information previously obtained, that the fire had
broken out
71 .
simultaneously in different places on board
the vessel, and the f act that Astromando's fire expert, who had
investigated the circumstances
of the fire, was not made available to
advise the board of enquiry, which, it was contended, justified an
adverse inference against
Astromando. In my view, two further
features of the case, relied on by counsel for the appellants, are of
decisive importance. The
first is Mr Rees Smith's response to the
statement, and the second, Mr Karim's silence about it. As to the
former,
I
find it
very difficult to understand Mr Rees Smith's bald denial (in
i
tself also hearsay) of the statement in Mr
Hare's affidavit. On the probabilities, Mr Rees Smith must have been
advised by Astromando's
legal representative, Mr Karim, about the
tenor of the evidence heard by the board, and specifically also about
what he (Mr Karim)
had seen of the board's report. His omission to
deal in his affidavit with the information that he must have received
from Mr
72. Karim, leaves one with the
impression that he was shielding behind the hearsay nature of Mr
Hare's statement, using it as a technicality
in order to avoid having
to deal with the substance of the allegation. After all, if he had
information at his disposal, showing
that Mr Hare's information was
wrong, why did he not say so? In my judgment, an adverse inference is
justified that Mr Rees Smith
was in no position to refute the
substance of Mr Hare's information. As to Mr Karim, his failure to
deal in his affidavit with the
statement in question is quite
mystifying, particularly in view of the absence of any explanation
proffered by or on behalf of the
respondent as to why Mr Karim was
not instructed to advert to the matter. In all these circumstances,
my conclusion is that the hearsay
statement in Mr Hare's affidavit
carries sufficient weight to justify a finding that the appellants
have shown a
prima facie
cause of action in delict against Astromando.
73.
Having found that the appellants
have proved
a
prima facie
case against
Astromando, both in contract
and in delict,
I
turn to the next question, viz whether
they have shown
prima facie
that their claims are
enforceable in
the courts of South Yemen.
I
dealt
earlier with the affidavits of Mr
Kimura and Mr
Ninomiya, concerning the position
under Japanese law.
It is now necessary to refer to
the opinions expressed
by the two experts on Yemeni Law,
Mrs Humeidan and Mr
Karim. Part of the opinion
originally expressed by
Mrs Humeidan, in a first affidavit
made by her, was
accepted by Mr
Karim, with some alterations.
I
quote
the altered version put forward by
Mr Karim:
"In cases in respect of
claims for marine cargo damage it is within the discretion of the PDR
Yemen Courts that claims can be
brought against shipowners and/or
charterers in tort as well as for breach of the Contract of Carriage.
The PDR Yemen Courts have
jurisdiction to adjudicate upon cargo
damage claims against a shipowner arising out of tortious or
deliberate acts committed within
the territory of the PDR Yemen even
if the cargo was carried under a Bill of Lading
74.
containing a demise clause and an
exclusive jurisdiction clause specifying a jurisdiction other than
the PDR Yemen."
In a second affidavit, Mrs
Humeidan said the following:
"The PDRY Courts will assume
jurisdiction in cases where a Plaintiff is a Yemeni National or the
cause of action arises within
the terriority of the PDRY. The fact
that there may be a contractual agreement between the Plaintiff and
the Defendant to refer disputes
to jurisdictions other than PDRY will
not prevent or dissuade the PDRY Courts from maintaining jurisdiction
and hearing the case."
In reply to this statement, Mr
Karim said in his
affidavit that he agreed with the
first sentence of it,
but not with the second. In regard
to the latter, he
stated:
"A contractual agreement
regarding jurisdic-tion can be enforced by way of an application for
a stay of proceedings commenced
in PDR Yemen in favour of
proceedings" in the contractual jurisdiction. The Court will, in
its discretion grant or refuse the
stay."
As far as the last two passages
quoted are concerned,
when they are read against the
background of the first-
quoted passage, it is not entirely
clear that the
75.
deponents were
referring to claims both in delict and in contract, or only to the
former. On balance, the wording of the last two
passages appears to
be wide and generalized enough to include both types of claims. It is
not necessary, however, to express a firm
opinion on this question.
Nor is it necessary to address the differences of opinion reflected
in the statements of Mrs Humeidan and
Mr Karim, or in those of Mr
Kimura and Mr Ninomiya, as quoted earlier. They raise issues which
the court hearing the main case will
be called upon to decide. As
explained earlier in this judgment,
proceedings under section 5 (3) (a) of the
Act are not appropriate for obtaining pronouncements of the court on
issues of this kind.
Adopting the approach set out earlier, it is
sufficient to say that, in my view, two conclusions emerge with
clarity from a conspectus
of the expert evidence as a whole. First,
the appellants have discharged the onus of showing that the courts of
South Yemen have
jurisdiction to
76.
adjudicate upon their claims, and
that their claims are
prima facie
enforceable in those courts.
Second, the respondent has not discharged the onus of proving that
those courts will clearly, or even
probably, decline to exercise
their jurisdiction in favour of the appellants, whether on the ground
of the exclusive jurisdiction
clause (clause 3) of the bills of
lading, or on any other ground. In the result, on the score of the
enforceability of the appellants'
contemplated action in South Yemen,
there is no reason for denying the appellants the relief claimed in
the second application.
As to the convenience or the
appropriateness of a court in Yemen as the forum for hearing the main
proceedings, my conclusion is the
same as that just stated above.
There is no need to enter into details. The main point raised on
behalf of the respondent was that
the Greek crew members of the
Thalassini Avqi
would not be prepared to go to Aden to testify
in the
77.
case, because the master of the vessel and
five crew
members had been prohibited by
court order from leaving
Yemen until the
conclusion of the hearing of evidence by the board of enquiry.
I
do not consider that there is any force in
this point. On the evidence contained
in
the affidavits filed by the appellants concerning
the
fair way in which the crew had been treated by the
Yemeni
authorities,
I
see
no reason why they should be reluctant to go there again. In any
event, should they refuse to return to Aden, there was no suggestion
that
their evidence could not be taken on
commission.
As to the
appellants' need f or security, it has not been contended by the
respondent that they did not genuinely and reasonably require
security, in general. The respondent's unwillingness to furnish
security in respect of a judgment of a Yemeni court has no bearing
on
the matter of security as such; it is confined to the respondent's
reluctance to litigate in Yemen. That is a matter that must
be
assessed on its
78.
own merits, irrespective of the
appellants' need f or security.
That leads me to the last issue
that calls for consideration: the respondent's fear that Astromando
will not receive a fair hearing
in any court of South Yemen. From the
respondent's point of view, there is no doubt that this is, and
always was, the fundamental
and crucial issue in the case. It had
already been foreshadowed in Mr Steyn's affidavit of 27 April 1986,
and it played the most
conspicuous part in Mr Rees Smith's answering
affidavit in the second applieation. However, the respondent's
expressed fear that
justice will not be done in South Yemen, and the
grounds advanced in support of it in Mr Rees Smith's affidavit,
evoked a very strong
and detailed response from the appellants,
particularly in the form of a forceful affidavit made by Mrs
Humeidan. In view of this
turn of events, this issue, despite its
vital importance to the respondent, need not be canvassed in
79.
any great
detail.
I
shall merely outline the main
opposing contentions advanced in the affidavits.
The allegations contained in the
affidavit of Mr Rees Smith may be summarized as follows. The
government of South Yemen is Marxist
in nature. In January and
February 1986 severe rivalries in the regime led to an outbreak of
fierce fighting and the temporary evacuation
of the foreign
community. While the laws of Yemen are equal to the best in force in
any other country, when it comes to the application
of those laws to
any particular case, the courts take into consideration a factor
known as "public interest" and give too
much weight to it;
because of this, parties involved in litigation against a public
sector corporation of Yemen are usually advised
to settle the dispute
rather than to proceed to court. In order to protect the interest of
the public sector, the courts are inclined
to disregard even the best
defences available on the other side. The Yemen Insurance
80. Company, through which the
appellants are acting collectively, is a public sector company which
is owned and controlled by the
State. The standard of the judiciary
is not high; the appointment of judges tend to be political
appointments. An example is the
recent appointment of the Chief
Justice of the Aden Governorate, which was felt by most lawyers to
have been inappropriate, since
he has little or no common law
experience.
Mr Rees Smith said in his
affidavit that he had intended to annex an affidavit or affidavits
from one or more of the people who furnished
him with the information
summarized above, but that he could not do so because the disclosure
of the identities of the people concerned
would place their personal
safety in jeopardy. He offered to appear personally in the Court
a
guo
and to disclose his sources of information in confidence. In
the event, nothing came of this offer.
81.
In the affidavit of Mrs Humeidan
each and
every allegation of substance made
by Mr Rees Smith is
dealt with and
explicitly denied.
I
see no point in
tabulating her
denials. Instead,
I
mention only some
of the salient features of her
evidence. As to the
alleged inclination of the courts
to favour the "public
interest" and public sector
companies, she says:
"These assertions are not
true at all because the judges in the P.D.R. Yemen are independent
and apply the applicable laws fairly.
The only f actors they take
into consideration and to which they give weight when hearing any
suit are the legal evidence submitted
by the parties and the fair
application of the applicable law."
With regard to the Yemen Insurance
Company, she says
that while it is a public sector
company owned by the
State, it nevertheless acts as an
independent company,
and she points out that the
reinsurers are foreign
companies in the United Kingdom,
and that in shipping
cases their interest and risk are
predominant, i e 70
percent. She asserts that the
standard of the
82.
judiciary in South Yemen is
considered to be among the best in the Middle East. With regard to
the criticism of the appointment of
the Chief Justice, she says that
the judge concerned was appointed as Chief Justice of the Republic' s
Supreme Court, and not of
the Aden Governorate Court. She explains
his qualifications and disputes that his appointment was considered
to be inappropriate,
except on the basis of a personal opinion held
by a certain practising lawyer. She is obviouSly referring to Mr
Karim. And she has
some interesting observations to make about Mr
Karim, in relation to Mr Rees Smith's allegation that parties
involved in litigation
with public sector companies are usually
advised to settle their cases. She avers that she has personal
knowledge of the manner in
which Mr Karim conducts his practice and
that she can according-ly confirm that Mr Karim is the source of Mr
Rees Smith's information.
In summary, she says of Mr Karim: he
handles most of the cases connected with
83.
shipping; he believes in settling
such cases; he strictly maintains this policy, not because of the
elements of public interest, but
because, as many times openly
declared by him, he seeks to avoid costs and lengthy litigation; he
also avoids litigation, because
he is neither familiar with the
applicable civil law nor the procedure, which is in the Arabic
language, in which he is weak; consequently
he gives his clients the
impression that the Yemeni courts may rule in favour of the public
corporation (which mostly repre-sents
the claimants); he emphasizes
the public interest factor as a means of persuading his clients that
it would be in their favour to
settle their disputes amicably.
The above survey of the evidence
speaks for
itself. The conclusion from it is
inescapable: the
respondent has failed to discharge
the onus of proving
objectively that Astromando is in
danger of not re-
ceiving a fair trial, or that
justice is not likely to
84.
be done, in the courts of South
Yemen.
In the final result, the
appellants have discharged the onus in regard to the matters which
they were required to prove, and the respondent
has failed to
discharge the onus in respect of matters concerning which the burden
of proof rested on it. Consequently the Court
a quo
should
have decided the second application in favour of the appellants.
The order of the Court is as
follows:
The appeal is allowed, with
costs, including the costs of two counsel.
The order of the Court
a quo
is set aside and there is substituted for it an order as follows:
"(a) It is directed that the
undertaking furnished by the West of England Shipowners Mutual
Protection and Indemnity Association
(Luxembourg) dated 29 April
1986, being annexure
85.
JEH 3 to the affidavit of John
Edward Hare filed in support of the notice of motion, shall cover any
judgment, either in delict or
in contract, in respect of the claims
for which the said undertaking was furnished, granted by any Court of
competent jurisdiction
in the People's Democratic Republic of Yemen.
(b) The respondent is ordered to pay the costs of the application."
A.S. BOTHA JA
CORBETT CJ
HEFER
JA
C
ONCUR
KUMLEBEN JA
F.H. GROSSROPF JA