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[2000] ZASCA 169
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Serva Ship Limited v Discount Tonnage Limited (263/98) [2000] ZASCA 169; [2000] 4 All SA 400 (A); 2000 (4) SA 746 (SCA) (31 August 2000)
THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Case No. 263/98
In
the matter between:
SERVA
SHIP LIMITED Appellant
and
DISCOUNT
TONNAGE LIMITED Respondent
In re:
M.V. SNOW DELTA
Coram: HEFER, GROSSKOPF, HARMS, OLIVIER JJA and
MELUNSKY AJA.
Heard: 18 AUGUST 2000
Delivered: 31 AUGUST 2000
Subject: Jurisdiction
- situs of rights in personam - maritime claims
JUDGMENT
HARMS JA
HARMS
JA:
[1] The general rule is that where
the plaintiff and the defendant are both
peregrini
,
a recognised
ratio
jurisdictionis
as
well as arrest of the defendant or attachment of his property are
essential to found jurisdiction in a high court (
Siemens
Ltd v Offshore Marine Engineering Ltd
[1993] ZASCA 87
;
1993
(3) SA 913
(A) esp at 928F-G). The position is different where a
high court exercises admiralty jurisdiction in terms of the
Admiralty
Jurisdiction Regulation Act 105 of 1983 (“the Act”).
According to s 2(1), admiralty jurisdiction exists in relation
to a
maritime claim irrespective of the place where the claim arose, i.
e., irrespective of the existence of some
ratio
jurisdictionis
.
One implication of s 3(2)(b) read with s 4(4)(a) is that an action
in personam
may be instituted by a peregrine plaintiff against a peregrine
defendant “whose property within the court's area of
jurisdiction”
has been attached by the plaintiff to found or
to confirm jurisdiction (
The Shipping
Corporation of India Ltd v Evdomon Corporation and Another
[1993] ZASCA 167
;
1994 (1) SA 550
(A) 562C-H.) This appeal is concerned essentially
with the question whether the rights of a charterer (the hirer) of a
ship
in terms of a time charter-party can be said to be “property”
which is located wherever the ship may be from time to
time. A
time charter-party does not entitle the charterer to the possession
and control of the ship; in other words, the charterer
has no real
rights in relation to the ship but only contractual rights against
the owner.
[2] The facts of this case have been
reported and do not require much by way of elaboration. The
present respondent (“DTL”),
a peregrinus from Jersey,
believes that it has a maritime claim for damages, mainly because of
a breach of contract, against
the present appellant(“SSL”),
also a peregrinus but from the Isle of Man. The cause of action has
no connection
with this country. Litigation began with an
ex
parte
application
before Lategan J in the Cape High Court in which DTL obtained an
order authorising the sheriff of Cape Town to attach
“all
of [SSL's] possessory right, title and interest in the MV 'SNOW
DELTA' ('the vessel') currently lying alongside at
the Port of Cape
Town, including any possessory right which may arise from [SSL's]
possession and control of the vessel in terms
of a demise
charter-party concluded between [SSL] and the vessel's owners”
to found jurisdiction for the
alleged claim. At the same time a rule
nisi
was issued calling upon all interested parties to show cause why the
attachment should not be confirmed. It will be immediately
apparent
to the reader that the order related to the attachment of real
rights flowing from a demise charter-party (the charterer
under a
demise charter-party being regarded as the owner of the ship during
the term of the charter) and not from contractual
rights flowing
from a time charter-party. The reason for this was that at the time
of the launch of the application DTL believed
that SSL had
possession of the vessel in terms of a demise charter-party. In
this regard DTL erred.
[3] The fact of the matter was that
SSL had chartered the vessel in terms of a time charter-party
entered into on the Isle of
Man from the disponent owner (Blue Star
Line, a concern in the United Kingdom) and, further, had entered
into a sub-charter by
time-chartering (“leasing”) the
vessel to yet another Manx company, Universal Reefers Ltd. In spite
of having been
made aware of these facts, DTL persisted in its
application, alleging that SSL still had “a right in the
vessel arising
from the time charter” which was susceptible to
attachment. It did not, however, persevere with an application for
the
amendment of the interim attachment order. In the event, on the
return day, Foxcroft J was not prepared to confirm the rule
nisi
and discharged it (
The
MV “Snow Delta”: Discount Tonnage Ltd v Serva Ship Ltd
1997 (2) SA 719
(C)). His reason essentially was that the contractual obligation
of the disponent owner was not “property” within
the
area of jurisdiction of the Cape High Court.
[4] Having been granted leave to
appeal to the full court, DTL contended that the ship had to remain
under attachment pending
the finalisation of the appeal and the
sheriff refused to release the ship. This led to an urgent
application by SSL for a declaratory
order, declaring that the ship
was no longer under attachment. This application before Selikowitz
J was successful (
The
MV Snow Delta: Discount Tonnage Ltd v Serva Ship Ltd
1996 (4) SA 1234
(C)).
[5] On appeal the Full Court
overruled the judgment of Foxcroft J and confirmed the rule
nisi
in other terms (
MV
Snow Delta: Discount Tonnage Ltd v Serva Ship Ltd
1998 (3) SA 636
(C), per Thring J, King DJP and Viljoen AJ
concurring). What was attached was
“all
of [SSL's] right to and interest in the use and employment of the MV
Snow Delta . . . which [SSL] might have by virtue
of a time
charter-party concluded between [SSL] and the said vessel's owner .
. .”
(at
655G-H). The instant appeal is, with special leave, against this
order.
[6] It is convenient at the outset
to say something about the judgment of Selikowitz J. The ratio of
the decision was based
on
SAB
Lines (Pty) Ltd v Cape Tex Engineering Works (Pty) Ltd
1968 (2) SA 535
(C) where Corbett J had held that the granting of
interim relief as an adjunct to a rule
nisi
is to provide protection to a litigant pending a full investigation
of the matter by the court of first instance. Once that
interim
order is discharged, it cannot be revived by the noting of an
appeal. This approach was and still is generally accepted
as
correct. Dissenting views were, however, expressed in
Du
Randt v Du Randt
1992 (3) SA 281
(E) and
Interkaap
Ferreira Busdiens (Pty) Ltd v Chairman, National Transport
Commission, and Others
1997 (4) SA 687
(T). The essence of these judgments was that
Corbett J had failed to have regard to the common law rule as
received by our
courts that an appeal suspends the execution - or,
in the words of Rule 49 (11), the operation and execution - of an
order (cf
Reid and
Another v Godart and Another
1938 AD 511).
Unfortunately, the criticism was based upon a
misunderstanding of the concept of suspension of execution. For
instance, an
order of absolution from the instance or dismissal of a
claim or application is not suspended pending an appeal, simply
because
there is nothing that can operate or upon which execution
can be levied. Where an interim order is not confirmed,
irrespective
of the wording used, the application is effectively
dismissed and there is likewise nothing that can be suspended. An
interim
order has no independent existence but is conditional upon
confirmation by the same court (albeit not the same judge) in the
same proceedings after having heard the other side (
Chrome
Circuit Audiotronics (Pty) Ltd v Recoton European Holdings Inc and
Another
2000 (2)
SA 188
(W) 190B-C). Any other conclusion gives rise to an
unacceptable anomaly: If an applicant applies for an interim order
with
notice and the application is dismissed, he has no order
pending the appeal; on the other hand, the applicant who applies
without
notice and obtains an
ex
parte
order
coupled with a rule
nisi
and whose application is eventually dismissed, has an order pending
the appeal.
[7] The order of Selikowitz J gave
rise to an argument by SSL before the Full Court that the appeal to
it had become moot and
was of academic interest only: the ship had
left and there was no longer anything within the court's
jurisdiction to attach to
give effect to the order. When this Court
raised the issue of mootness under s 21A of the Supreme Court Act 59
of 1959, SSL
had second thoughts about the matter. The Full Court
judgment has far-reaching implications for foreign ships that enter
South
African waters and that, at least for that reason, this Court
should consider its correctness. There is a discretion and not an
obligation to refuse to hear a moot appeal. In any event, there is
much force in the argument, in the light of a passage quoted
by the
Full Court (at 644C-G) from
Thermo
Radiant Oven Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd
1969 (2) SA 295
(A) at 310D-H, that the matter is not moot. The
passage contains the following statement:
“.
. . the crucial time for determining the jurisdiction of a court to
entertain an action is the time of the commencement
of the action.
Jurisdiction having once been established at such time, it continues
to exist to the end of the action even though
the ground upon which
the jurisdiction was established ceases to exist. . . .. If,
therefore, at the time of the institution
of the action there is an
asset which will in all probability still exist at the time of
judgment, such an asset is capable of
attachment to found
jurisdiction. If such an asset is, for some reason or other,
destroyed before institution of the action,
such attachment ought on
application to be set aside. If the asset is, however, destroyed
after the institution of the action,
jurisdiction will, in
accordance with the principle enunciated above, not cease to exist.”
Unfortunately,
the generally sound analysis by Thring J on this aspect of the case
(at 643G - 644C), suffers from a malady to
which I shall return in
that it fails to distinguish between the attachment of the vessel
and the attachment of the contractual
rights flowing from the time
charter-party.
[8] Since the rule
nisi
was premised upon the existence of a demise charter, DTT argued in
the courts below that it was not possible to make a final
order
based upon a time-charter; it would amount to the confirmation of a
rule on completely different facts giving rise to
different rights.
The Full Court may have been correct in dismissing this objection
(at 646D-649H) but if correct in the result,
the reasoning is not at
all appealing. I will confine myself to one or two observations
relating to the interpretation of the
rule
nisi
(at 648C-G). The Full Court in my view strained the ordinary and
commonsense meaning of the rule
nisi
.
The phrase “right, title and interest” can only refer to
“rights” because the law does not protect titles
and
interests that do not translate into “legal” rights. To
hold that an order may encompass more than the evidence
justifies
(at 648F) is untenable. Assuming the rule
nisi
to have been open to another interpretation, the Full Court was not
justified in closing its eyes to the contents of the application
in
order to establish its meaning. It was in the position of the judge
who had to consider the matter on the return day. The
whole case is
before such a judge and the record is not extrinsic evidence at that
stage of the proceedings. Having said this,
I refrain from
pursuing the matter any further because the appeal has to succeed on
another ground.
[9] The central question is whether
the rights of the charterer (SSL) flowing from the time-charter
between SSL as charterer and
Blue Star Line as disponent owner can
be said to be “property” which was in Cape Town because
the ship, the subject-matter
of the charter-party, itself was there
for the time being. Some trite observations may be necessary to
introduce a discussion
of the subject. Rights in relation to the
(contractual) performance (
obligatio
)
of another have since time immemorial been classified as
incorporeal. The obligation of the debtor is not property; it is
the right (often referred to as the “action”) of the
creditor. Obligations can therefore not be attached because
they do
not form part of the patrimony of the creditor whereas rights can be
attached and do form an asset in the estate of the
creditor.
Intangibles by their very nature cannot have a physical locality.
They do not attach to the objects to which they
relate. For
purposes of, for instance, jurisdiction the law had to make an
election based upon practical considerations by deeming
incorporeals
to have a location. They are not located where the obligation has
to be performed (Voet 1.8.30). Voet preferred
the view that they
are located at the domicile of the creditor (in this case SSL, not
DTL), but proceeded to deal with the merits
(which he recognised) of
the opinion of Grotius (
Consultatien
part 3 no 151) which was that the situs of an incorporeal right is
where the debtor (in this case Blue Star Line) resides.
[10] Our courts have adopted the
view of Grotius. The first reported judgment is
Union
Government v Fisher's Executrix
1921 TPD 328
(Wessels JP, De Waal J concurring). This judgment was
approved and followed by this Court in
Randfontein
Estates Gold Mining Co Ltd v Custodian of Enemy Property
1923 AD 576.
Innes CJ (at 581) pertinently held that the only
attribute of locality that personal actions possess must relate to
the locality
where the debtor resides; it is only there that
incorporeal rights can be regarded as localised. He also noted that
he knew
of no principle of our law which justifies the merger of the
personal rights evidenced by a negotiable document in the instrument
itself (at 582 in fine). Solomon JA, in a concurring judgment,
pointed out that the rule adopted was in accordance with English
law
(585-586). The question in that case was whether the rights
reflected in bearer shares and bearer debentures of a company
registered in Transvaal were “property” within this
country where the company was resident or whether they should
be
regarded as localised at the situs of the documents. Since the
documents, although bearer documents, are not the right but
merely
evidence the right (at 579 in fine - 580), and applying the Grotius
approach, the judgment held that they were property
in this country,
irrespective of where the documents were.
[11] Two further judgments of this
Court confirmed the approach (
Longman
Distillers Ltd v Drop Inn Group of Liquor Supermarkets (Pty) Ltd
[1990] ZASCA 39
;
1990 (2) SA 906
(A) and
Nahrungsmittel
GmbH v Otto
[1992] ZASCA 228
;
1993
(1) SA 639
(A) 647F-649C). Both related to taxed bills of costs and
especially the latter judgment made it clear that the certificate of
the taxing master did not constitute the right but merely evidenced
it and that the right is located where the debtor is. (It
may be
mentioned that there may be an inconsistency in
Nahrungsmittel
.
On the one hand it held that the court of first instance had
correctly held that incorporeal movables did not have an existence
separate from that of the creditor (at 647G-J) and on the other that
the incorporeal had its situs where the debtor resided (at
649B-C).
For purposes of that or this case it does not matter because all
the parties involved were
peregrini
.)
[12] The Full Court, apparently
relying on the doctrine of effectiveness, held that incorporeal
property can be at more than one
place at the same time (at 653B-E).
In reaching this conclusion it relied on an inappropriate analogy,
namely that a company
may be sued at either its registered office or
its principal place of business. We are concerned with the situs of
property.
The situs of incorporeals exists by virtue of the
analogy between corporeals and incorporeals. Corporeals have only
one situs
and by analogy the same ought to apply to incorporeals.
The error in relying on the doctrine of effectiveness is similar to
the one exposed by Nienaber AJA in
Ewing
McDonald & Co Ltd v M & M Products Co
[1990] ZASCA 115
;
1991 (1) SA 252
(A) 259I-260C. The flaw in the Full Court's
approach can be easily demonstrated with reference to its
consequences. If a personal
right has the ability to exist at more
than one place at a time, it would mean that it could be attached by
more than one creditor
and sold to more than one execution
purchaser. And if the charter-party related to more than one
vessel, is the charter-party
divisible? The law would be at sea if,
for instance, the situs of a loan would be wherever the debtor had
money or the situs
of the sale of a movable wherever the article
sold was.
[13] The
ultimate ratio of the Full Court (at 654D) was that -
“
during the period that the vessel spent
here they [the rights in personam] were indeed located here,
inasmuch as they constituted
intangibles (rights
in personam
) which were exigible here
as long as the tangible property to which they related (the vessel)
was here.”
The argument is circuitous: it
assumed that the right was enforceable in Cape Town in order to find
that it was “property”
which was within its area of
jurisdiction whereas the ability to enforce the time-charter
depended on its location. The Court
never considered the question
why the rights were exigible in Cape Town during the period of the
vessel's stay. The reasoning
fails to distinguish between the
personal right (or claim) against the debtor and the vessel which is
the subject-matter of the
agreement. Although the Full Court
purported to attach personal rights, it does not appear to have been
clear in its own mind
whether the ship or rights in the ship were
being attached (e g at 643F-H, 648F, 653I and 654A). Counsel for
DTL was unable
to state whether the ship could have left the harbour
after the attachment of the rights in personam and, if not, why not,
since
the Full Court had made it clear that personal rights can
exist at more than one place at the same time. Once again the court
elevated an interest in an object to a right therein. A simple
example will illustrate the point I am trying to make. If the
rights of a hire-purchase seller in the agreement are attached, the
article sold on hire-purchase is not attached, even though
the
seller may still have an interest therein. Neither are the
obligations of the purchaser attached (cf Pistorius
Pollak
on Jurisdiction
2
nd
ed 106 n10).
[14] Without wishing to belabour the
point, it appears to me that the Full Court did not succeed in
distinguishing clear authority
binding on it. That raises the
question whether this Court should, on policy considerations,
reconsider Grotius's rule. I think
not. Apart from the fact that
it was not suggested that our law in this regard is out of step with
the international position,
it has often been said that our courts
should not easily assume jurisdiction in favour of
peregrini
against
peregrini
in relation to litigation which has no connection to this country.
Such an assumption of jurisdiction may prevent potential peregrine
defendants from trading here and put them to unnecessary
inconvenience and expense in requiring them to litigate here. There
is also no reason why our limited public and judicial resources
should be expended in respect of disputes which are unconnected
to
and between persons who have no relationship with our country. (Cf
the quotations in
Siemens
especially at 922A-B and 926A-C.) These considerations raise the
further question namely whether an applicant for attachment,
and not
the respondent as the Full Court held (at 654D-655D), is not
invoking the exercise of the court's discretion to attach.
In other
words, should such an applicant not place facts before the court
which show that the court is the convenient forum
for the
litigation? Since this aspect was not argued, it is preferable to
say no more about it.
[15] In the result the appeal must
succeed and the order of Foxcroft J discharging the rule
nisi
be reinstated. The following order is made:
The
appeal is upheld with costs, including the costs of two counsel.
The
order of the Full Court is set aside and for it is substituted an
order that “the appeal is dismissed with costs,
including the
costs of two counsel.”
_________________
L T C
HARMS
JUDGE
OF APPEAL
AGREE:
HEFER JA
GROSSKOPF JA
OLIVIER JA
MELUNSKY AJA