About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
1994
>>
[1994] ZASCA 5
|
|
Bocimar NV v Kotor Overseas Shipping Ltd (323/93) [1994] ZASCA 5; 1994 (2) SA 563 (AD); [1994] 2 All SA 245 (A) (9 March 1994)
Case No 332/93
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE
DIVISION
)
In the appeal of:
BOCIMAR N V
APPELLANT
versus
KOTOR OVERSEAS SHIPPING
LTD
RESPONDENT
CORAM
: Corbett CJ, Joubert, Goldstone et Nienaber JJA, et Kriegler
AJA.
DATES OF HEARING
: 22 and 23 November 1993.
DATE WHEN REASONS FOR JUDGMENT HANDED IN
: 9 March 1994
REASONS FOR JUDGMENT
/
CORBETT
CJ
2
CORBETT
CJ:
After the hearing of this appeal on 22 and 23 November 1993 this Court made
an order in the following terms:
"For reasons to be furnished later the appeal is dismissed with costs, such
costs to include those occasioned by the employment of
two counsel."
Here are the reasons.
The appellant, Bocimar N V ("Bocimar"), a Belgian corporation, carries on
business from Antwerp as an operator and charterer of cargo-carrying
vessels. On
about 31 July 1992 Bocimar concluded a contract with the International Colombia
Resources Corporation of Colombia ("Intercor"),
a seller and shipper of coal, in
terms of which it (Bocimar) undertook to carry a cargo of between
3 60 000
and 64 000 metric tons of coal from Puerto Bolivar, Colombia to Rotterdam in the
Netherlands. To this end, Bocimar, having
chartered the CRNA GORA, nominated it
as the vessel to perform this contract of carriage. Intercor is a subsidiary of
the Exxon Coal
and Minerals Company, of the United States of America.
The
CRNA GORA had since 7 April 1992 been registered in Valetta, Malta. Prior to
that it had had a Yugoslavian registration. It was
owned and controlled by Zeta
Ocean Shipping Limited ("Zeta"), a company recently registered in Malta. Of the
500 issued shares in
Zeta 499 were owned by Boka Ocean Shipping Corporation
("Boka"), a company registered in Liberia. At all relevant times the controlling
shareholders in Boka were individual persons residing in Montenegro, a
constituent republic of Yugoslavia. (Incidentally, "Crna Gora"
is the
Serbo-Croat name for Montenegro: see
Encyclopaedia Britannica
, sv
"Montenegro".)
4
The CRNA GORA loaded the coal at Puerto
Bolivar on
about 23 August 1992 and set off for
Rotterdam. The vessel arrived off the
Hoek van Holland
on 7 September 1992, but was refused entry to the port
of
Rotterdam by reason of certain economic sanctions imposed
by the
Security Council of the United Nations
Organization in respect of the Federal
Republic of
Yugoslavia (Serbia and Montenegro) and reinforced by
a
resolution of the European Community. On the same day
application was
made on behalf of Bocimar and Enerco B V
of Holland ("Enerco"), one of the
consignees of the cargo
of coal, to the District Court of Rotterdam for an
order
directing the State of the Netherlands to permit the CRNA
GORA to
enter the port of Rotterdam and to discharge her
cargo. The Court refused to
grant the order sought.
On 9 September 1992 an application for similar relief
was
made by Zeta, to the President of the District Court, but
this was
also refused. On 11 September Enerco made
5 application to the relevant government department for exemption from the
regulations whereunder entry of the vessel had been refused.
This application
was also unsuccessful; as was recourse to an appeal tribunal.
Eventually on 15 or 16 October 1992 for "humanitarian reasons" the CRNA GORA
was permitted to enter the port of Rotterdam, but the
authorities refused to
allow the cargo of coal to be discharged. So matters rested until the Dutch
authorities were persuaded that
if the cargo was not discharged there was a
serious danger that the coal would ignite spontaneously and cause damage to the
vessel,
ships in the vicinity and harbour installations. The matter was
considered by the Security Council sanctions committee which in early
December
1992 resolved that, although sanctions prohibited the provision of port services
to a vessel such as the CRNA GORA, it would
authorize the unloading of the
ship's cargo on condition that, inter alia, the
6 cargo remained under
impoundment by the Netherlands authorities for the duration of the sanctions.
Pursuant to this resolution the
cargo was discharged between 15 and 18 December
1992, impounded by the authorities and stored for Intercor's account. Finally,
on
about 10 February 1993 and on the application of Zeta the President of the
District Court in Rotterdam ordered the release of the
cargo. He regarded the
cargo, destined for Dutch, Belgian and German consignees, as "neutral" once it
had been discharged from the
CRNA GORA and held that there was no lawful ground
for its detention.
In the meanwhile these events had given rise to legal claims. On the very day
that the CRNA GORA was denied entry to Rotterdam harbour
Intercor addressed a
letter to Bocimar's representatives in Bogota, Colombia holding Bocimar
responsible for all costs and damages
arising from this decision of the
Government of the Netherlands; and this has continued to be its attitude.
7
Bocimar, in turn, claimed that it was entitled to recover from Zeta whatever
amounts might be payable by it to Intercor by virtue
of the vessel's failure to
proceed without delay to the port of discharge and there to discharge the cargo
as required by the charterparty.
On 16 October 1992 Bocimar arrested the CRNA GORA in Rotterdam in order to
secure its claim against Zeta. At the same time arrests
of the vessel were also
effected by three banks, mortgagees of the vessel, in order to secure their
interest in the vessel. At the
time of the hearing in the Court a quo the vessel
was still in the port of Rotterdam under arrest.
On 24 December 1992 Bocimar made application ex parte to the Cape of Good
Hope Provincial Division, exercising its Admiralty Jurisdiction
in terms of Act
105 of 1983 ("the Act"), for an order under sec 5(3) of the Act for the arrest
of the M V KORDUN, then at berth in
the port of Saldanha Bay, for the purpose of
providing
8 security for Bocimar's claim against the CRNA GORA and Zeta
arising from the events at the port of Rotterdam. In the founding affidavit
these events were recounted and the averments made that Bocimar's claim against
Zeta was a maritime one, as defined in sec 1(1) of
the Act, and that Bocimar
would be entitled to enforce such claim by an action in rem against the CRNA
GORA if such action were to
be instituted in South Africa. The founding
affidavit also alleged, and explained the grounds for alleging, that the KORDUN
was an
"associated ship" as defined in sec 3(7) of the Act and, therefore, one
against which an action in rem could be brought in order
to enforce Bocimar's
aforesaid claim. These grounds, which are common cause, are as follows: the
KORDUN is owned by a company known
as Kotor Overseas Shipping Limited ("Kotor"),
registered in Malta and having the same registered address as Zeta. Of the 500
issued
shares in Kotor 499 are owned by Boka, which as I have
9 indicated
owns 499 of the 500 issued shares in Zeta. Kotor and Zeta have the same
directors. It is accordingly not disputed that
the KORDUN is an associated ship,
as defined in sec 3(7)(a)(iii) of the Act.
The founding affidavit also pointed out that the charterparty concerned made
provision for the resolution of all disputes arising
out of it by reference to
arbitration in London. To enforce its claim against Zeta, Bocimar, therefore,
had the alternatives of arbitration
in London or legal proceedings in Malta, the
forum domicilii.
In regard to the claim itself, Bocimar stated that Intercor had not
quantified its claim against Bocimar, but at that stage there
was the
possibility of the cargo of coal becoming commercially useless, resulting in a
claim of US $2,6m, the estimated value of
the cargo. Bocimar further alleged
that it had been advised that the claims of the mortgagee banks against
10
the CRNA GORA amounted to US $6,42m and that these claims would rank ahead of
its claim. It thus feared that, despite the arrest
of the CRNA GORA, this vessel
would not provide sufficient security for its claim. There was, accordingly, a
genuine and reasonable
need for further security in respect of its claim. This
would be afforded, so it was averred, by the arrest of the KORDUN in terms
of
sec 5(3) of the Act.
The application was heard by Scott J who made an order authorising the arrest
of the KORDUN for the purpose of providing security
in respect of, inter alia,
the claim by Bocimar against the CRNA GORA and/or Zeta for payment of, or
indemnity for, all amounts payable
by Bocimar to Intercor for all costs, damages
and other consequences arising from the decision of the Government of the
Netherlands
not to permit the CRNA GORA to enter Dutch ports for the purpose of
discharging Intercor's cargo, together with interest and costs.
It was
further
11
ordered that the KORDUN be released from arrest on security being furnished
for any amount which the CRNA GORA and/or Zeta might be
ordered to pay to
Bocimar by either a competent court in Malta or by any competent arbitration
tribunal in London; and that any security
furnished to Bocimar in respect of the
latter's claims against the CRNA GORA and/or Zeta should, pending the outcome of
proceedings
in Malta or London, be held as security for any judgment obtained by
Bocimar in such proceedings.
This order was duly served and the KORDUN arrested. There has been no
security furnished in order to obtain the release of the KORDUN
from arrest and
as at the date of the hearing of the appeal she was still lying inactive at
Saldanha Bay, at very considerable cost
to her owners.
On 15 March 1993 Kotor filed an application, citing Bocimar as the
respondent, in which it claimed an
12
order setting aside the arrest of the KORDUN and releasing the vessel from
arrest, together with certain alternative relief which
need not be detailed. The
application, which prompted the filing of fairly voluminous affidavits, was
eventually heard by Scott J
on 19 May 1993 and three subsequent court days. On
28 May the learned Judge gave judgment and ordered the setting aside of the
order
of arrest and the release of the vessel, with costs. Bocimar appealed to
this Court, with the leave of Scott J.
It is not in dispute that although
Kotor was the applicant in the setting-aside proceedings, Bocimar bore the onus
of proving that
its original application for the arrest of the KORDUN was
correctly granted (see
Weissglass NO v Savonnerie Establishment
[1992] ZASCA 95
;
1992 (3)
SA 928
(A), at 936 F-G). What an applicant for a security arrest in terms of sec
5(3) of the Act must prove was laid down by this Court
in the case of
Cargo
Laden and
13
Lately Laden on Board the M V Thalassini AVGI v M V Dimitris
1989 (3)
SA 820
(A) - "the
Thalassini
case". This decision was given in respect of
sec 5(3) prior to its amendment by sec 4(d) of Act 87 of 1992 (which came into
operation
on 7 August 1992), but since the principal alteration effected by the
amendment was simply to include the case where the person seeking
the arrest has
a claim enforceable by an action in personam, the
Thalassini
case remains
an authoritative exposition of what an applicant must establish to achieve the
arrest of a ship to provide security.
At p 832 I - 833 A Botha JA summed up the
position as follows:
"A claimant applying for an order for the arrest of a ship in terms of s
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
14
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 enforceable in the nominated forum or forums 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."
In view of the amendment of the
subsection, requirement (a) should be expanded to include, as an alternative,
that he has a claim
enforceable by an action in personam against the owner of
the ship concerned or against the owner of the ship in relation to which
the
ship in question is an associated ship. In regard to requirement (b), Botha JA
indicated earlier in his judgment (at 831 H-I)
what he meant by a prima facie
case, viz that the applicant -
".... need show no more than that there is evidence which, if accepted, will
establish a cause of action."
15
This was the standard of proof which applied to the establishment of the
applicant's claim (enforceable by action either in personam
or in rem) and also
to the establishment of its enforceability in the nominated forum or fora of the
applicant's choice. Botha JA
explained (at 832 C):
"It is necessary to emphasise that an application under s 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."
The Court further held (at 833 A-C) that if an applicant satisfied these
requirements he was entitled to an order in terms of sec
5(3) unless the
respondent shipowner placed countervailing material before the Court proving
that there was a sound reason for not
granting the order. In the present case
Scott J held that on the
16
papers Bocimar had established a prima facie case in regard to its cause of
action in rem against Zeta and had established, prima
facie, that its claim was
enforceable in the contemplated fora. Moreover, as I have indicated, it was
common cause that the KORDUN
was an associated ship as defined in the Act. None
of these findings was challenged by Kotor on appeal.
The learned Judge a quo further held that the onus was on Bocimar to
establish on a balance of probabilities that it had a genuine
and reasonable
need for security in respect of its claim. He pointed out that in the ordinary
case where the applicant holds no existing
security for his claim this
requirement would present no difficulty. In the absence of anything to the
contrary, the natural inference
would be that there is a need for security.
Where, on the other hand, there has already been an arrest of some other vessel
and what
is sought is additional security, then this inference
17 does not
really arise and in such a case it becomes necessary to consider the adequacy or
otherwise of the security already held.
Applying the aforementioned standard
of proof, the Judge a quo found that Bocimar had not shown on a balance of
probabilities that
the security furnished by the arrest of the CRNA GORA was
inadequate; and that, accordingly, it had not established a genuine and
reasonable need for the security to be provided by the arrest of the KORDUN.
The main point taken by appellant's counsel on appeal was that Scott J erred
in placing upon Bocimar the onus of proving the need
for security on a balance
of probabilities: that it was sufficient if an applicant under sec 5(3)
established prima facie that he
has a genuine and reasonable need for security.
Counsel explained that by this he meant the same standard of proof as that
required
to establish the applicant's cause
18
of action against the party whose ship he seeks to attach - as defined by
Botha JA in the
Thalassini
case, supra. Counsel argued, in the Court
below and before this Court, that in terms of the
Thalassini
decision the
applicant's claim, including the quantum thereof, had merely to be established
prima facie, and that, therefore, the
need for security should be proved on a
similar basis.
It seems to me that the correct starting-point in this inquiry as to onus is
the general principle that in a civil case an applicant
(or plaintiff) is
generally required to establish the ingredients of his cause of action upon a
balance of probabilities. One of
the ingredients of a case for the arrest of
property under sec 5(3) of the Act is a genuine and reasonable need for the
security
to be provided by the arrest. It is, therefore, logical that the
applicant for the arrest should be required to establish this need
on a balance
of probabilities. It is true that in the
Thalassini
case
19
this Court laid down a less stringent standard of proof, viz a prima facie
case (in the above-defined sense), with reference to the
establishment of the
applicant's claim and its enforceability in the nominated forum, but this was
because of the consideration that
these were issues which would have to be
adjudicated upon in the forum hearing the main action. This rendered an
application under
sec 5(3) an inappropriate vehicle for obtaining rulings or
decisions upon such issues. In my view, there is no good reason to extend
this
principle of a prima facie case to matters relating exclusively to whether the
applicant has made out a good cause of action
for arrest under sec 5(3), a
matter which would not arise for decision in the main action.
It is clear that an applicant who seeks to arrest an associated ship in terms
of sec 3(4), read with sees 3(6) and 3(7), is required
to establish that the
vessel in question is an associated ship on a balance of
20
probabilities (see
Transgroup Shipping SA (Pty) Ltd v Owners of MV KYOJU
MARU
1984 (4) SA 210
(D), at 214 I;
Zygos Corporation v Salen Rederierna
A B
1985 (2) SA 486
(C) , at 497 A-B) . The same rule as to standard of
proof would apply to an application to arrest an associated ship to provide
security
in terms of sec 5(3). Similarly it has been held that in applications
for the attachment of property to found or confirm jurisdiction,
either under
the common law or in terms of sec 3(2)(b) of the Act, the onus is upon the
applicant to prove on a balance of probabilities
that the property to be
attached belongs to the respondent (
Lendalease Finance (Pty) Ltd v
Corporacion De Mercadeo Agricola and Others
1976 (4) SA 464
(A), at 489 B-C;
Sunnyface Marine Ltd v Hitoroy Ltd (Trans Orient Steel Ltd and Another
Intervening); Sunnyface Marine Ltd v Great River Shipping Inc
1992 (2) SA
653
(C);
Rosenberg and Another v Mbanga and Others (Azaminle Liquor (Pty) Ltd
Intervening)
1992 (4) SA 331
21
(E), at 335 E - 336 D). The same rule would apply to applications to
arrest in terms of secs 3(4), (5) and (6) and 5(3) of the Act.
This was not in
dispute. Like the question whether there is a genuine and reasonable need for
security, these are matters relating
exclusively to whether the applicant has
made out a good cause of action for arrest and, in my view, the same rule as to
onus should
apply to them all.
As was rightly emphasized by Didcott J in
Kataqum Wholesale Commodities Co
Ltd v The M V Paz
1984 (3) SA 261
(N), at 269 H -
"It is a serious business to attach a ship. To stop or delay its departure
from one of our ports, to interrupt its voyage for longer
than the period it was
due to remain, can have and usually has consequences which are commercially
damaging to its owner or charterer,
not to mention those who are relying upon
its arrival at other ports to load or discharge cargo. Especially when the
22
attachment is sought ex parte, as can be and almost always is done, the Court
must therefore be given sufficient information to show
that a measure with
results so harmful to others is nevertheless necessary for the protection of the
applicant's legitimate interests."
As a matter of policy, therefore, it seems to me that there should be no
deviation from the normal standard of proof, i e balance
of probabilities, when
it comes to the question whether an applicant under sec 5(3) has established a
genuine and reasonable need
for security.
It was submitted by appellant's counsel that had this Court intended in the
Thalassini
case (supra) to lay down that an applicant under sec 5(3) must
satisfy the Court on a balance of probabilities that he needs security
in
respect of his claim, it would have been unnecessary to have required him to
show that his need for security was both "genuine
and reasonable"; for
23
having established his need for security on a balance of probabilities the
applicant would thereby of necessity also have established
that his need was
genuine and reasonable. Accordingly it must be inferred, so the argument ran,
that this Court did not intend that
this need should be established on a balance
of probabilities. There is, in my view, no substance in this argument. The
criterion
is that the applicant's need for security must be genuine and
reasonable. The onus is upon him to establish this; and in so far as
the
discharge of this onus involves matters of fact these must be proved by him upon
a balance of probabilities. The question of
the standard of proof in relation to
the need for security did not arise for decision in the
Thalassini
case.
To the extent that any inference can be drawn from what was stated in the
judgment of Botha JA at 831 E to 833 A, it seems
to me that the use of the
expression prima facie case
only
in relation to the
24
applicant's claim in the main case and its enforceability in the nominated
forum is an indication that in other respects the normal
civil onus was to
apply.
Appellant's counsel also stressed the difficulties of proving a need
for security where there is an existing security since it is
then necessary to
establish the value of the existing security, the amount of prior claims against
it and thus the amount potentially
available to satisfy the applicant's claim.
He argued that these difficulties militated against the view that proof on a
balance
of probabilities was required. But, as counsel was constrained to
concede, an application under sec 5(3) where there is an existing
security is an
unusual case - in fact no precedent for it could be found - and the rule must be
the same, whether there be an existing
security or not. The normal case where
there is no existing security does not pose these difficulties; and if an
applicant who already
holds
25
security wishes to obtain additional security, then he must be prepared to
establish the matters referred to on a balance of probabilities.
In support of his argument that the applicant need only prove a prima facie
case (in the above-defined sense) with reference to his
need for security,
appellant's counsel referred us to three English cases:
The "Moschanthy"
[1971] 1 Lloyd's Rep. 37;
The "Polo II"
[1977] 2 Lloyd's Rep. 115;
Greenmar Navigation Ltd v Owners of Ship "Bazias 3" and "Bazias 4" and Sally
Line
Ltd [1993] 1 Lloyd's Rep. 101. These cases establish the principle in
English law that where a vessel has been arrested in an action
in rem or to
provide security for an arbitration claim, the vessel will be released on
provision of sufficient security to cover
the amount of the claim, interest and
costs on the basis of the plaintiff's "reasonably arguable best case". This test
was accepted
and applied by Friedman J in
Zyqos
26
Corporation v Salen Rederierna AB
1984 (4) SA 444
(C), at
457 C - E. In my opinion, counsel's reliance on these cases is misplaced. The
principle which they establish postulates that a valid
arrest has taken place
and it deals with the quantum of security to be furnished to secure the release
of the vessel. In the case
under consideration one is dealing with one of the
requirements to be established in order to found a valid arrest. In any event,
I
am not persuaded that the "reasonably arguable best case" test excludes or is
incompatible with proof upon a balance of probabilities.
And here I would point
out that in applying this test and assessing the quantum of the claims in the
Zygos
case (1984) Friedman J seems to have made the probabilities his
criterion (see particularly
1984 (4) SA 444
(C), at 458 E and 459 F).
Appellant's counsel also drew attention to the provisions of sec 5(4), which,
he argued, constituted a safeguard indicating that the
Legislature
contemplated
27
that the requirements of sec 5(3) (a) would be satisfied
on a prima
facie basis only. Sec 5(4) reads:
"Any person who makes an excessive claim or requires excessive security or
without reasonable and probable cause obtains the arrest
of property or an order
of court, shall be liable to any person suffering loss or damage as a result
thereof for that loss or damage."
This is not the occasion for a consideration of the meaning and scope of sec
5(4). Whatever that may be, it is, in my view, a non
sequitur to say that
because of this safeguard the lesser onus of a prima facie case was intended as
far as the need for security
under sec 5(3) is concerned. Sec 5(4) would seem to
apply where the standard of proof is admittedly merely a prima facie case, e
g
the applicant's claim or the quantum thereof, and also where the standard of
proof is unquestionably on a balance of probabilities,
e g ownership of the
property
28
arrested or the fact that the vessel arrested is an associated ship. The fact
that on the papers an applicant may establish a balance
of probabilities in his
favour would not necessarily preclude the respondent from showing subsequently
that he did not have reasonable
and probable cause, e g where his allegations
were unfounded or based on false evidence. Moreover, it would seem that sec 5(4)
would
apply to, inter alia, orders of arrest obtained ex parte where the
probabilities are assessed on the applicant's evidence alone.
For these reasons I hold that the Court a quo correctly found that Bocimar
had to establish on a balance of probabilities that its
need for additional
security was genuine and reasonable. And I turn now to whether, applying that
test, Bocimar proved its case on
the papers before the Court.
In order to show a genuine and reasonable need for security provided by the
arrest of the KORDUN Bocimar
29 had to establish that the arrest of the CRNA
GORA provided no or inadequate security for its claim.
Bocimar's first argument (in logical order) was that the CRNA GORA provided
no security in that in terms of United Nations resolution
820 of 1993 the
Netherlands Government was obliged to impound the CRNA GORA; that the
probabilities were that the Dutch Government
would carry out this obligation;
and that once impoundment was effected the vessel could not be sold in order to
satisfy claims against
it.
Resolution 820 was adopted by the Security Council on 17 April 1993. In terms
of paras 24 and 25 of that resolution the Council decided
(I quote only the
relevant portions) -
"24 that all States shall impound all
vessels in their territories in which
a majority or controlling interest is held by a person or undertaking in or
operating from the Federal Republic of Yugoslavia
30
(Serbia and Montenegro) and that these
vessels may be forfeit to the seizing
State upon a determination that they have been in violation of resolutions 713
(1991), 757 (1992), 787 (1992) or the present
resolution.
25 that all States shall
detain pending
investigation all vessels....found in their territories and suspected of having
violated or being in violation of [the same resolutions
as listed in par 24] and
that, upon a determination that they
have
been in violation, such
vessels shall
be impounded and, where appropriate, they and their cargoes may be forfeit to
the detaining State."
Mr Hooykaas, Docimar's expert witness on the law of the Netherlands, stated
in his first affidavit that in terms of par 24 of resolution
820 the Dutch
Government was obliged to impound the CRNA GORA; that such impoundment would
take the form of an arrest under the Dutch
Code of Criminal Procedure, which
would mean
31 that neither the owners of the vessel nor third parties would
be entitled to exercise their rights pending decision on forfeiture
of the
vessel; and that once impoundment of the vessel had been effected it would not
be able to be sold in order to satisfy claims
against it.
Mr Cath, Kotor's legal expert, disputed much of this. In his first affidavit
he contended that the formal legal basis for the implementation
of the United
Nations resolution had to be found in the national law of the Netherlands, in
this case the Sanctions Act of 1980,
read in conjunction with certain other
statutes. The Sanctions Act empowers certain ministers of Government, by either
general decree
or ministerial decree, to take measures to implement decisions or
recommendations of organs or organizations established by public
international
law in relation, inter alia, to shipping. Various decrees had, according to Mr
Cath, been issued implement-
32 ing the Security Council resolutions referred
to above, including a decree of 28 April 1993 with reference to resolution 820,
but
none of these decrees contained any empowerment of Netherlands authorities
to impound a vessel or to apply for its forfeiture.
In response to this Mr
Hooykaas asserted that it was unnecessary for any Dutch legislation in order to
empower the Dutch authorities
to impound the CRNA GORA. Scott J found this "bald
assertion" in the face of Mr Cath's detailed explanation of the position
unconvincing
and held that inasmuch as Bocimar bore the onus it could not be
accepted. I agree.
Further points made in Mr Cath's affidavit were summed up by Scott J as
follows:
"Reverting again to Mr Cath's affidavit, after referring to the Ministerial
Decree of 28 April 1993, he proceeds to deal with the
existing Netherlands
legislation, in terms of which
33
vessels may be impounded or declared forfeited. What is of significance is that
he points out that in the event of the competent
authorities deciding to impound
a vessel or to apply to court for a forfeiture order, any interested party is
entitled in terms of
article 552 of the Code of Penal Procedure to apply to
court for an order protecting his interests. In this regard, Mr Cath referred
to
a decision of the Netherlands Supreme Court, a copy and translation of which was
provided, in which the rights of a mortgagee
and the holder of a right of
retention in respect of a vessel were preserved by the Court upon forfeiture of
the vessel, and he expressed
the view that the same would apply in the case of
an impoundment under the Civil law at the instance of a creditor. On this issue,
too, Mr Hooykaas disagrees with Mr Cath, but with little in the way of
elaboration."
Mr Cath further amplified
his views in a second affidavit.
34
On the probabilities it would seem that:
(1)
In order for the provisions
of resolution 820 to become enforceable law in the Netherlands it was necessary
that they be incorporated
by decree issued in terms of the Sanctions
Act.
(2)
A decree of 28 April 1993 was issued
in order to implement, inter alia, resolution 820, but neither this nor any
prior decree implementing
sanctions resolutions empowered the relevant
Netherlands authorities to impound a vessel and to obtain its
forfeiture.
(3)
As at the time of the hearing
before Scott J there was no indication that a decree would be issued providing
for impoundment and forfeiture.
(4)
Even if
such a decree were to be issued and impoundment and forfeiture took place the
likelihood was that the rights of creditors
35
would be preserved.
I accordingly agree with the
finding of the Court a quo that the United Nations resolutions would not prevent
the arrested CRNA GORA
providing security for the enforcement of Bocimar's
claim.
Accepting, therefore, that the CRNA GORA would provide security for
Bocimar's claim, the next question is whether it would constitute
adequate
security. This depends in turn on (a) what the CRNA GORA would be likely to
fetch on a judicial sale; (b) the quantum of
the prior claims of the mortgagees,
which would determine the amount of free residue available to meet Bocimar's
claim; and (c) the
quantum of Bocimar's claim. If, taking into account these
factors, it appears that the CRNA GORA would provide adequate security,
then
this would defeat Bocimar's right to arrest the KORDUN; and vice versa. As I
have already indicated, the onus was on Bocimar
to establish (a) and (b) above
on a balance of
36 probabilities; while, in regard to (c), it was sufficient
for Bocimar to place before the Court evidence which, if accepted, would
establish what it contended to be the quantum of its claim.
As to (a) above, divergent views were expressed as to the amount which the
CRNA GORA would be likely to fetch on a judicial sale.
Bocimar's experts valued
the vessel at US$7,5m, provided that she was "in class" and in good condition,
but contended that this figure
would have to be adjusted downwards by reason of
the following factors: (i) because the CRNA GORA had gone out of class during
her
arrest, the cost of bringing her into class would have to be taken into
account; (ii) judicial sales generally do not produce prices
reflective of true
market value; and (iii) the vessel's former Yugoslavian ownership would
adversely affect the amount realised at
a judicial sale. Motor's experts, on the
other hand, valued the vessel at between US$Bm and US$8,7m, disputed
37 the
validity of factors (ii) and (iii) above and minimized the cost of putting the
vessel back in class.
After carefully reviewing the evidence Scott J
stated:
"It follows, from what I have said, that the contention advanced by Bocimar
that the 'Crna Gora' if sold at a judicial sale in Rotterdam
would realise
substantially less than US$7.5m, is not only disputed but, on the contrary, a
cogent case has been made out by Kotor
that when sold in execution the vessel is
likely to realise a price in the region of US$8m or wore."
Later in his judgment the learned Judge worked on the basis of a realisable
value of the CRNA GORA "in the region of US$8m". I have
no quarrel with this
finding. I am satisfied that Bocimar has certainly not shown that on the
probabilities the realisable value
of the vessel is substantially less than
US$8m. It is not necessary
38 to review the evidence, as I understood
appellant's counsel to concede this.
As to (b) above, viz the quantum of the
mortgagee's claims, there is virtually no dispute. Kotor's attorney annexed to
one of his
affidavits a statement emanating from the agent for the mortgagees
dated 13 May 1993 in which the amount then owing to the mortgagees
was stated to
be:
" (a) Principal amount outstanding $4 583 333,31
(b) Interest due $ 60
091,59."
These amounts total US$4 643 425,90. The free residue would thus be likely to
be of the order of US$3,35m.
Turning to (c) above, the quantum of Bocimar's claim, the Judge a quo, after
a full consideration of the evidence, assessed Bocimar's
claim at "no more than"
US$2 615 957. On this basis there was clearly sufficient free residue to meet
the claim in full.
39 Respondent's counsel criticized this assessment, more
particularly a finding that Bocimar had established prima facie that it was
entitled to interest in the sum of R385 000. I am inclined to think that this
criticism is well-founded, but in view of the substantial
free residue which
even this assessment produces, it is not necessary to rule thereon.
For these reasons I agree that Bocimar failed to establish (i) that the
security provided by the arrest of the CRNA GORA was inadequate
and, therefore,
(ii) that there was a genuine and reasonable need for the KORDUN to be arrested
to provide additional security.
Finally, there was appellant's application that in the event of the Court
coming to this conclusion, it should not set the arrest
aside but should direct
that oral evidence be heard. The Judge a quo refused to exercise his discretion
to order that oral evidence
be heard. On appeal it was argued that he erred in
so
40
doing.
In giving his reasons for this decision Scott J stated:
"The present proceedings are clearly interlocutory. The outcome will have no
final and definitive effect on the main action (cf
South Cape Corporation
(Pty) Ltd v Engineering Management Services (Pty) Ltd
1977 (3) SA 534
(A) at
549 G). That main action is to be heard in a foreign jurisdiction. The parties
are peregrines and the dispute between them
has nothing to do with this country.
Applications for security in terms of section 5(3) (a) of the Act are by their
very nature inherently
urgent. Unless security is put up pending the outcome of
the application, the ship must remain under arrest. As was observed by Didcott
J
in
Katagum Wholesale Commodities v The M V Paz
, supra, at 269 H:
[The judgment then quoted portion of the passage from the judgment of Didcott
J already cited above and continued.]
41
In the present case he 'Kordun' has been tied up in Saldanha Bay since 24
December 1992 at a cost, according to the evidence, of
something like US$5 000
per day. If I were to direct the hearing of oral evidence, witnesses would have
to come from as far afield
as the Netherlands. What would follow would be
inevitably something in the nature of a mini-trial on an issue which, as I have
said,
will have no final and definitive effect on the main action. The delay
occasioned by such a hearing could be inordinate.
No doubt, in appropriate cases, the Court might exercise its discretion to
direct the hearing of oral evidence, but I do not consider
this to be such a
case. I should also add that I am unpersuaded that the balance of probabilities
would be materially disturbed by
oral
evidence."
I readily endorse these
views. Moreover, there are, in my opinion, further considerations which persuade
me that the learned Judge
correctly exercised the discretion vested in
him.
42 It would seem that in the Court a quo Bocimar's counsel simply
applied informally and non-specifically for the hearing of oral
evidence, at the
end of his argument on the merits, in the event of the Court holding that
Bocimar had failed on the papers to establish
a genuine and reasonable need for
security. No indication was apparently given of who would be required to give
evidence or submit
themselves to cross-examination nor was any indication given
of what evidence new witnesses would be able to give. In
Kalil v Decotex
(Pty) Ltd and Another
1988 (1) SA 943
(A), at 981 D - G, reference was made
to "the salutary general rule" that an application to refer a matter to evidence
should be
made at the outset and not after argument on the merits. It was
pointed out that the rule was not an inflexible one and that: in
exceptional
cases the Court may depart from it. It is, however, a factor to be considered in
the present case.
43 In
Kalil
's case, supra, this Court said, with
reference to the discretion to allow oral evidence in the case of an application
for a provisional
order of winding-up (at 979 H - I):
"Naturally, in exercising this discretion the Court should be guided to a
large extent by the prospects of viva voce evidence tipping
the balance in
favour of the applicant. Thus, if on the affidavits the probabilities are evenly
balanced, the Court would be more
inclined to allow the hearing of oral evidence
than if the balance were against the applicant. And the more the scales are
depressed
against the applicant the less likely the Court would be to exercise
the discretion in his favour. Indeed, I think that only in rare
cases would the
Court order the hearing of oral evidence where the preponderance of
probabilities on the affidavits favoured the
respondent."
These observations are, in my view, pertinent to applica-
44 tions
generally. In the present case, the probabilities on the affidavits (on those
issues where the balance of probabilities is
the standard of proof) tend to
favour Kotor rather than Bocimar. Moreover, the lack of any specific indication
as to what oral evidence
Bocimar had in mind increases the difficulty of making
a favourable assessment of the prospects of viva voce evidence tipping the
balance in favour of Bocimar.
A peculiar feature of arrests granted ex parte
under the Act is that pending the final determination of whether an arrest
should have
been granted the applicant enjoys the relief sought, viz the arrest,
in this case, of the vessel in question. This is in contrast
to the usual
position in applications where the relief is granted only after hearing both
parties. As appellant's counsel conceded,
this is also a factor to be considered
in making an order for the hearing of oral evidence, which will inevitably
prolong to a considerable
extent
45 the status quo, viz the arrest of the
vessel. Appellant's counsel argued that Kotor could have mitigated the prolonged
arrest of
the KORDUN by providing security and thus obtaining its release from
arrest. But the fact of the matter is that for reasons unknown
this has not been
done. And, in any event, it costs money to provide security.
It was for these reasons that the order recorded at the beginning of this
judgment was made.
M M CORBETT
JOUBERT JA) GOLDSTONE JA) CONCUR NIENABER JA) KRIEGLER AJA)