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[1994] ZASCA 145
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National Iranian Tanker Company v M V "Pericles GC" (726/92) [1994] ZASCA 145; [1995] 1 All SA 493 (A) (30 September 1994)
Case
No 726/92
IN
THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION
!
In
the matter between:
NATIONAL
IRANIAN TANKER COMPANY
Appellant
and
M
V "PERICLES GC"
Respondent
CORAM
:
CORBETT CJ, VAN HEERDEN, NIENABER, HOWIE JJA,
et
NICHOLAS
AJA.
DATE
OF HEARING
: 2 September 1994
DATE
OF JUDGMENT
: 30 September 1994
JUDGMENT
/CORBETT
CJ
:
2
CORBETT
CJ:
The
Admiralty Jurisdiction Regulation Act 105 of 1983 ("the Act")
came into operation on 1 November 1983. It repealed
the Colonial
Courts of Admiralty Act, 1890 of the United Kingdom in so far as it
applied in relation to the Republic of South
Africa. It also
introduced into our Admiralty law a novel concept, the "associated
ship".
Sec
3(5) of the Act prescribed that an action
in rem
to enforce a
maritime claim should be instituted by the arrest, within the
area
of jurisdiction of the Court concerned, of property against or in
respect of which the claim arose. Included among the
categories of property which could be so arrested was -
"The
ship, with or without its equipment, furniture,
stores or
bunkers".
This
ship, i e the ship against or in respect of which the claim lay, may
conveniently be referred to as "the guilty ship".
3
Sec
3(6)
introduced another category of property which, save in certain
exceptional instances not presently relevant, might be arrested,
instead of the guilty ship, in the process of instituting an action
in rem,
viz the associated ship. Such a ship was defined in
sec 3(7), the relevant portion of which read:
"(a)
For the purposes of subsection (6) an associated ship means a ship,
other than the ship in respect of which
the
maritime claim arose -
(i)
owned by the person who was the owner of the ship concerned at the
time when the maritime claim arose; or
(ii)
owned by a company in which the shares, when the
maritime
claim arose, were controlled or owned by a person who then
controlled or owned the shares in the company which owned
the ship
concerned.
(b)
For the purposes of paragraph (a) -
(i)
ships shall be deemed to be owned by the same persons if all the
shares in the ships are owned by the same persons;
(ii)
a person shall be deemed to control a company if
he
has power, directly or indirectly, to control the
company."
(I
shall call this "the original definition".)
4
In
1992 the Act was amended by,
inter alia,
the
Admiralty Jurisdiction Regulation Amendment Act 87 of 1992, which
came into effect on 1 July 1992. I shall refer to this
Act as
"the amending Act". In terms of the amending Act the
above-quoted definition of associated ship was altered
to read:
"(a)
For the purpose of subsection (6) an associated ship means a ship,
other than the ship in respect of which the maritime
claim arose -
(i)
owned, at the time when the action is commenced, by the person who
was the owner of the ship concerned at the time when the
maritime
claim arose; or
(ii)
owned, at the time when the action is commenced, by a person who
controlled the company which
owned
the ship concerned when the maritime claim
arose; or
(iii)
owned, at the time when the action is commenced
by
a company which is controlled by a person who
owned the ship
concerned, or controlled the company which owned the ship concerned,
when the maritime claim arose.
(b)
For the purposes of paragraph (a) -
(i)
ships shall be deemed to be owned by the same
5
persons
if the majority in number of, or of voting
rights
in respect of, or the greater part, in value, of,
the shares
in the ships are owned by the same persons;
(ii)
a person shall be deemed to control a company if he has power,
directly or indirectly, to control the company;
(iii)
a company includes any other juristic person and
any
body of persons, irrespective of whether or not
any interest
therein consists of shares."
(I
shall call this "the new definition".)
It
will be seen that the original definition described two distinct
situations in which a ship, other than the guilty ship (the
guilty
ship is referred to in the Act as "the ship concerned"),
could be an associated ship, viz -
(i)
where a person (say
"X")
was
the owner of both the associated ship and the guilty ship at the
time when the maritime claim
arose;
and
(ii)
where, at the time when the maritime claim arose,
X
owned or controlled the shares in a company (A Coy) which
owned the associated ship and at the same time
X
owned or controlled the
6
shares
in a company (B Coy) which owned the guilty ship.
Thus
situation (i) dealt with the case of direct ownership
of
both the guilty ship and the associated ship by the person concerned
(X);
whereas situation (ii) dealt
with a form of indirect, or beneficial, ownership achieved through
companies the shares in which
were owned or controlled by
X.
A
comparison of the original definition with the new definition shows
that three main changes have come about as a result of the
amending
Act. These are:
A
new situation, not specifically provided for by the Act, was
introduced, viz the case where
X
owns
the associated ship directly and also "owns" the guilty
ship indirectly through a company.
The
time when
X
or the company, as the case
may be, is required to own the associated ship is the time when the
action
is commenced, instead
of, as it was under the original definition,
7
the
time when the maritime claim arose.
(c)
Where there is the interposition of a company between the person
concerned
(X),
and either the associated
ship or the guilty ship,
X
is required to
control the
company
, in contrast to controlling or owning the
shares
in the
company
, as was the position under the
original definition.
Another
innovation introduced by the Act was the so-called security arrest.
This was originally provided for by sec 5(3) of the
Act. Under the
amending Act a new subsection 5(3) has been substituted. The
original sec 5(3) read as follows:
"(a)
A court may in the exercise of its admiralty jurisdiction order
the arrest of any property if -
(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 contemplated, pending or proceeding either in the
Republic or elsewhere and whether or not it is subject to the law
of
the Republic.
8
Unless
the court orders otherwise any property
so arrested shall be
deemed to be property arrested in an action 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."
This
subsection was the subject of extensive interpretation by this Court
in the case of
Cargo Laden and Lately Laden on Board the MV
Thalassini Avgi v M
V
Dimitris
1989 (3) SA 820
(A), at 829
et seq.
At 830 A-C Botha
JA, who delivered the judgment of the Court, stated:
"It
is clear, in our view, that subparas (i) and (ii)
of
s 5(3)(a) should be read conjunctively, as if they
had been
conjoined by the addition of the word
'and'
between them (cf the
Eurohiarine
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
9
security
in respect of a claim which is the subject of proceedings
contemplated in a foreign court (subpara (ii)). A prerequisite
for
the grant of such
an order is
that the claimant must have a claim
enforceable by an action
in rem
(subpara (i)). In terms of subpara (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 s 3(6) of the Act, it is
clear that an order of arrest is also available against an
associated ship of the ship
against which the relevant maritime
claim arose, as defined in s 3(7)."
Thus
in order to provide security for a claim, such as that described
in
the subsection, which is or may be the subject of arbitration or
other proceedings the court may on the application of the
claimant
order the
arrest of an associated ship. It is not necessary
to refer to sec 5(3) under the amending Act in any detail. The main
change which
it brought about was the inclusion of a claim
enforceable by an action
in personam
against the owner of the
property concerned.
With
that introduction I now turn to the facts. Appellant
10
is
the National Iranian Tanker Company, a company incorporated and
having its principal place of business in Iran. During the
period
October 1990 to January 1991 the appellant chartered two vessels,
the "Trade Honor", owned at the time by Trade
Gulf
Navigation Co Ltd ("Trade Gulf) of Nicosia, Cyprus, and the
"Trade Independence", owned at the time by Morella
Shipping Co Ltd ("Morella"), also of Nicosia.
Appellant alleges that under the relevant charterparties it
has
claims
in rem
against those two vessels, the details of which
need not be stated. It appears that arbitration proceedings in
respect of
these claims have been initiated in London. Since the
"Trade Honor" was the sole major asset of Trade Gulf and
the
"Trade Independence" the sole major asset of Morella
and since both vessels have been sold
and
the two companies have no substantial assets, appellant now needs
security for its claims.
At
the end of September 1992 the appellant filed an urgent application
to the Durban and Court Local Division for the
11
arrest,
in terms of sec 5(3) of the Act, of a vessel known as MV "Pericles
GC", in order to provide security for its
claims
in rem
against the "Trade Honor" and the "Trade
Independence". It was alleged in the founding papers that what
I
shall call the "Pericles" was either awaiting a berth
outside Durban harbour or was actually berthed in the harbour and
that it was an associated ship. It is clear that from the start
appellant based its case on the relevant portions of the Act
as
amended, and more particularly on the new definition. It further
alleged -
that
the maritime claims arose, in respect of the "Trade Honor",
on 8 February 1992 and, in respect of the "Trade
Independence", on 31 October 1991;
that
the "Pericles" was at all material times owned by Trade
Banner Line Ltd ("Trade Banner") of Nicosia,
Cyprus;
that
at the relevant times a certain Mr Gregory Callimanopoulos
controlled the companies which owned the "Trade Honor",
the
12
"Trade
Independence" and the "Pericles";
that
accordingly the "Pericles" was an associated ship; and
that
appellant had a genuine and reasonable need for security. Appellant
sought to establish Mr Callimanopoulos's control, direct
or
indirect, over the companies in question by reference to various
documents and fragments of evidence from which,
so it
was contended, such control should be inferred.
The
matter came
ex parte
before Shearer J and on 2 October 1992
he granted an order for the arrest of the "Pericles". This
was implemented the
same day. Shortly thereafter the owners of the
"Pericles", Trade Banner, filed an urgent application for
the setting
aside of the arrest. In the affidavit filed in support
of the application the deponent stated the following:
"4
This is an application to set aside the arrest on the
grounds
that the application papers on the basis of
which the
application was made did not make a
13
case
for the granting of the arrest, more particularly
in that:
This
application proceeds on the basis that
the
relevant provisions are the provisions of
Act 105 of 1983 as
amended by Act No 87 of 1992. The said owners submit that this is
incorrect.
In
any event, the application papers do not make allegations
sufficient to establish the relevant control of the companies or
shares in question."
He
went on to say that the only questions involved at this stage were
the questions of law reflected
in para 4 and that it was appropriate that
they be dealt with
in limine.
The
application to set aside the arrest was heard by Shearer J on 14
October 1992. He then granted the order as prayed and furnished
his
reasons for doing so on 30 October 1992. With leave of the Judge
a
quo
the matter is now before us on appeal.
It
is conceded by appellant's counsel (rightly in my view)
14
that
inasmuch as the maritime claims in question arose on 31 October and
8 February 1992 and the amending Act took effect only
on 1 July
1992, the application for the arrest of the "Pericles"
could be
founded on the
provisions of the amending Act only if it were to be
construed
as having retrospective effect, i e as applying to matters which
existed or occurred prior to its coming into operation.
It was also
conceded by appellant's counsel in oral argument before us that
if
the appplication for arrest had to be adjudged in the light of the
Act,
and particularly sec 3(7), before amendment, the papers
did not establish that the Pericles was an associated ship. It is
thus
of cardinal importance to appellant's case whether the amending
Act of was retrospective in its effect or not.
In
a somewhat similar case,
Euromarine International of Mauren v The
Ship Berg and Others
1986 (2) SA 700
(A), this
Court
considered the question as to whether the provisions of sees 3(6)
and 5(3) in the Act were to be given retrospective effect, in
the sense
15
of
applying to maritime claims which arose before the Act came into
operation on 1 November 1983. The Court decided against
retrospectivity.
In
delivering the judgment of the Court Miller JA referred
extensively
to the authorities. The principles to be extracted from this
judgment and the authorities quoted may, I think, be
summed up as
follows.
There
is at common law a
prima
facie
rule of
construction
that a statute (including a particular provision
in a statute) should not be interpreted as having retrospective
effect unless
there is an express provision to that effect or that
result is unavoidable on the language used. A statute is
retrospective in
its effect if it takes away or impairs a vested
right acquired under existing laws or creates a new
obligation
or imposes a new duty or attaches a new disability in regard
to
events already past. (This definition appears to merge two canons of
interpretation: the presumption against retrospectivity
and the
16
presumption
against interference with vested rights. This, however,
is
not of great moment, as both canons lead in the same direction: see
Cape Town Municipality v F Robb
&
Co Ltd
1966
(4) SA 345
(C), at 350 F - 351 D.)
There
is an exception to this rule in the case of a statute which is
purely procedural and operates prospectively on all matters
coming
before the Court after the passing of the statute, though even here
it is the intention of the legislature which is paramount.
Moreover,
a provision which is procedural in form may in essence affect the
substantive rights of persons.
In
the case of
The Ship Berg,
supra,
the argument
revolved around the newly-introduced provisions whereby an
associated ship could be arrested in the process of instituting
an
action
in rem
or in order to provide security in proceedings
to enforce a maritime claim. In dealing with the question as to
whether the Act
applied to claims which arose prior to its
commencement Miller JA
17
said
(at 712 B-E and 713 D-E):
"The
contention on behalf of the appellant was, however, that the
new provision enabling a claimant to bring
an action
in rem
by the anest of
an
associated ship instead of the ship in respect of which the maritime
claim arose should be taken to have retrospective effect,
because it
is in essence a
provision
relating to procedure rather than to substantive or vested
rights. Such provision, it was said, in effect
provided the
legal machinery by
which
a claim could be enforced. It is true that s 3(6) read with s 5(3)
describes a method for recovery of money due to one
who has
suffered
injury
or loss for which he has a maritime claim, but it does much more
than that; it gives to the
claimant
a right which he never had before, namely
to
recover what is due to him from a party who was not responsible for
the damage suffered by him. It provides the claimant
not only
with a
method
for recovery but with an additional or alternative defendant.
And by that token, it is creative of new liabilities
or obligations
in owners
of
ships, or the potential thereof, of which such owners, if the
claims arose prior to the commencement of
the Act,
would have been
18
wholly
unaware and unsuspecting.
The
applicability of the Act to claims which arose prior to its
commencement would not only result in the owners of ships being
deprived of the opportunity of taking precautionary measures to
avoid, if possible, the anest of an associated ship,
but
the sudden, unsuspected confrontation with the
fact of arrest
of such ship would carry its own potential of prejudice."
Applying
these principles to the present case, it seems to me that if the
amending Act of 1992 were to be applied to the maritime
claims which
appellant seeks to enforce it would operate in a manner which
prejudiced shipowners by creating burdens or obligations
that did
not exist before. This can best be illustrated by two examples, one
concentrating on the change introduced by the new
definition as to
the nature of the relationship between the person concerned and the
company owning the ship; and the other relating
to the time when the
person concerned is required to hold his interest
in
the associated ship.
19
Example
1
:
X
(the person concerned) owns all the shares in company A which
in turn owns ship no 1. Ship no 2 is owned by company B, in which
X
has a minor (as to number of shares),
but controlling, shareholding. Prior to the coming into effect of
the amending Act in 1992
(but after the coming into effect of the
Act on 1 November
1983)
an event occurs giving rise to a maritime claim in respect of ship
no 1, thus causing it to become the guilty ship.
After the
amending Act has come into effect the claimant applies to arrest
ship no 2 as an associated ship. If the Act and
the original
definition apply, ship no 2
cannot
be arrested because at the
time when the claim arose
X
did not own or
control the shares in B company. If, on the other hand, the
amending Act and the new definition were to apply,
ship no 2 could
be arrested because at the time the action commenced
X
controlled B company.
As
was pointed out in Zygos Corporation v Salen
20
Rederierna
AB
1985
(2) SA 486
(C), at 489 B-C, it is possible for a person to control a
company without necessarily controlling the shares in that company.
This example accordingly illustrates how a new burden could be
placed upon a shipowner and how his vested rights could be adversely
affected were the amending Act to be given retrospective effect.
The inequity of such a result is intensified if one postulates
that
X
deliberately
arranged his affairs and his relationship with company B in order to
avoid the possibility of ship no 2 being arrested
as an associated
ship.
Example
2
:
X
owns ship no 1 directly. Prior to the coming into effect of
the amending Act an event occurs giving rise to a maritime claim in
respect of ship no 1. Thereafter, but still prior to the coming into
effect of the amending Act,
X
acquires
ship no 2. After the amending Act has come into effect the claimant
commences an action
21
in
re/w by seeking the arrest of ship no 2 as an associated ship. If
the Act and the original definition apply, ship no 2 cannot
be
arrested because
X
did not own it at the
time when the maritime claim arose. If, however, the amending Act
and the new definition apply, ship no
2 can be anested because
X
owned ship no 2 at the time the action was commenced.
Retrospective effect would thus operate to X's detriment by creating
a new burden.
These
examples were put to appellant's counsel during the
course of
argument and he conceded the correctness of the legal conclusions
arrived at on the facts postulated.
Furthermore,
the rights of innocent third parties could be
adversely
affected by giving the amending Act retrospective operation.
Take
the facts of example 1, but postulate that
X
acquired his
minority,
but controlling, shareholding from Y, then the sole beneficial
shareholder, after the maritime claim arose, but before the
amending Act came into operation; and that proceedings to arrest
ship no 2 are
22
taken
after the amending Act has come into operation. One of the
consequences of giving the amending Act retrospective operation
would be that Y's -shareholding would be adversely affected by the
arrest of ship no 2.
In
my view, therefore, to give the amending Act
retrospective operation would interfere with existing rights
and create new burdens. There is nothing in the amending Act
itself
to indicate any intention that it, or at any rate the
provisions in it now relevant, should operate retrospectively.
Moreover,
it is clear, on the authority of
The Ship Berg,
that
the provisions in question cannot be regarded as purely procedural.
It follows that the relevant provisions of the
amending
Act do not have retrospective effect and that appellant's case
must
be adjudged on the basis of the Act before amendment. So
adjudged, the application failed to establish that the "Pericles"
was an associated ship. Accordingly, my conclusion is that
Shearer J correctly set aside the arrest of the "Pericles"
and that the appeal must
23
fail.
This conclusion renders superfluous any consideration of the
further question debated by counsel, viz whether, even
on the basis
of the amending Act and the new definition, the appellant made out a
prima facie
case.
The
appeal is dismissed with costs.
MM
CORBETT
VAN
HEERDEN
JA)
NIENABER
JA)
CONCUR
HOWIE
JA)
NICHOLAS
JA)