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[1995] ZASCA 79
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London Steam-Ship Owners Mutual Insurance Association Ltd. v Westdeutsche Landesbank Girozentrale and Others (725/1993) [1995] ZASCA 79; 1996 (1) SA 1 (SCA); (24 August 1995)
Case No 725/1993
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
THE LONDON STEAM-SHIP OWNERS MUTUAL
INSURANCE ASSOCIATION
LIMITED Appellant
and
WESTDEUTSCHE LANDESBANK GIROZENTRALE First Respondent
THE FUND CONSTITUTED BY THE PROCEEDS
OF THE SALE OF THE mv "PACIFIC TRADER" Second Respondent
STANDARD STEAMSHIP PROTECTION AND
INDEMNITY ASSOCIATION OF BERMUDA LIMITED Third Respondent
STANDARD STEAMSHIP OWNERS'
MUTUAL FREIGHT,DEADFREIGHT, DEMURRAGE
AND DEFENCE ASSOCIATION LIMITED Fourth Respondent
CORAM: CORBETT CJ, SMALBERGER, EKSTEEN, VAN DEN HEEVER et OLIVIER,
JJA
HEARD: 12 MAY 1995
DELIVERED: 24 AUGUST 1995
JUDGMENT
2
EKSTEEN, JA
EKSTEEN
. JA
On 1 August 1990, and at
London, England, the Westdeutsche Landesbank Girozentrale ("the first
respondent") concluded a written loan
agreement with a Liberian company known as
the Pacific Trader Corporation ("the Corporation") in terms of which it lent the
Corporation
US$3 000 000 in order to enable it to purchase the ship
M V
Pacific Trader
(which I shall refer to simply as the
"Pacific
Trader"
). The agreement provided that the borrower would repay the sum lent
in fifteen equal consecutive quarterly instalments of U S $ 200
000 each,
together with interest thereon. The first instalment was payable three months
after the date on which the capital amount
lent had been advanced. Subsequent
instalments were payable three monthly intervals thereafter. The
Pacific
Trader
was to serve as security for the loan. In pursuance of this agreement
the Corporation, on 2 August 1990, executed a
3
Deed of Covenants and a Mortgage over the vessel in favour of first
respondent.
Thereafter, during the period from August 1990 to
November 1991 the Corporation duly paid the first five instalments. The sixth
instalment
which, it was alleged, was payable on 26 February 1992, was not paid
on due date or at all. In terms of the agreement the aggregate
of the loan, all
interest accrued thereon, and all sums of whatsoever nature payable under the
agreement and/or the Mortgage and
Deed of Covenants, then became immediately due
and payable.
The London Steam-Ship Owners Mutual Insurance Association Ltd ("the
appellant") carries on business as a protection and indemnity
club providing its
members with mutual insurance in respect of any maritime claims arising out of
such member's activities as a ship
owner or operator. The appellant's
relationship with its members is governed by a set of rules in terms of which a
member "enters"
a specific vessel in the club. The owner of the_
4
Pacific Trader
was a member of the appellant, and had entered the
ship in the club. In return the owner was obliged to pay subscriptions or
premiums,
known as "calls", to the appellant. From time to time - usually about
twice a year - the appellant would review its financial position
by comparing
its funds available, with claims paid or to be paid, as well as making allowance
for claims which may have arisen but
which had not yet formally been claimed. In
the light of this review it would, if it considered it necessary, make
"supplementary
calls" on its members. In the event of a vessel's entry being
terminated, or of a vessel being withdrawn from the club, the appellant
was
entitled to levy what was known as a "release call" to cover any further claims
which might arise in respect of an incident occurring
during the period of the
vessel's membership. Such release calls were, in terms of the rules, payable
within 30 days after the member
had received notification thereof.
5
Rule 24 provided that -
"Applications for insurance may be made and accepted in respect of ships of
which the beneficial ownership is separate on terms that
the ships concerned
shall be deemed (for these insurance purposes only) to form part of a specified
Fleet whereby the Association
shall deal with the entries of such ships in
combination and not individually in consideration for which all Members within
each
such Fleet entry shall accept joint and several liability to pay all
amounts due to the Association by way of Calls or otherwise
in respect of all
ships within that Fleet entry."
The entry of the
Pacific Trader
was made in terms of this rule. It was one of a number of
ships owned by single ship owning companies, but managed and operated by
a
company known as Multifleet Marine Limited ("Multifleet"). Multifleet was also a
member of the appellant's protection and indemnity
club.
From the
judgment
a quo
and the papers before us it would appear that in early May
1992 Multifleet cased to act as manager of the vessels in its fleet, and
in fact
ceased to trade. It was
6
subsequently liquidated. On 22 May 1992 the appellant
approached the Durban and Coast Local Division and obtained
an
order
in personam
attaching the
Pacific Trader ad
fundandam
jurisdictionem
for the recovery of calls then
due by the owner.
On 25 May 1992 a
rule nisi
returnable on 9 June was granted by
the
same local division calling on all interested parties to show
cause
why there should not be an order that the
Pacific Trader
be sold
in
terms of section 9 of the Admiralty Jurisdiction Regulation Act,
No
105 of 1983 ("the Act") and the proceeds of the sale be held in
a
fund as provided for in that section. The rule went on to
provide
for the payment, out of the proceeds of the sale, of various
expenses
incurred in the preservation of the ship, and in effecting the
sale
itself, and
"in payment of claims by creditors as may be directed by the Court in
accordance with the provisions of section 11 of Act 105 of 1983."
7
On 27 May 1992 the appellant, acting in terms of its rules, elected to
terminate the entry of the
Pacific Trader
, as well as the other vessels
comprising the Multifleet entry, and gave notice to the owners accordingly. It
also demanded payment
of release calls in respect of each of these ships. In
terms of rule 24 the owner of the
Pacific Trader
became jointly and
severally liable with the owners of all the other vessels for the payment of the
unpaid calls, including the release
calls, levied in respect of all the vessels
in the fleet. In terms of appellants' rules these calls became due and payable
on 26
June 1992.
In the meantime the
rule nisi
referred to above was confirmed on 9
June 1992, and on 16 July 1992 the ship was sold by judicial auction for the sum
of U S $ 1
500 000. This amount was held, and continues to be held, by the
Registrar of the Court as the fund referred to above. This fund ("the
Fund") is
the second respondent in the present appeal.
8
On 26 August 1992 the Court issued a further order appointing a referee
to receive "any claim against the
M V Pacific Trader
and, after her sale,
against the Fund constituted by the proceeds of her sale"; to consider such
claims; and to report to the Court,
i a, on the ranking of all such
claims.
Among the claims proved against the Fund were those of the first
respondent, the appellant, The Standard Steamship Protection and
Indemnity
Association of Bermuda Ltd (the third respondent) and the Standard Steamship
Owners' Mutual Freight, Dead Freight, Demurrage
and Defence Association Ltd (the
fourth respondent). The referee, in his report, ranked all the proved claims
according to the provisions
of section 11 of the Act prior to its amendment by
section 9 of Act 87 of 1992, which came into effect on 1 July 1992. The
appellant,
and third and fourth respondents objected to this ranking and
maintained that the claims should have been ranked according to the
section
after it had been amended.
9
After settling claims in respect of a number of the ships in the fleet,
appellant proved a claim for U S $ 774 006,39 against the
Fund. This amount
represented, not only the sum owing in respect of the
Pacific Trader
alone, but also the joint and several liability of the Corporation for unpaid
calls in respect of all the vessels which had been
included in the Multifleet
entry. The Fund, as I have indicated, consisted of some US$1 500 000. If first
respondent's claim of U
S $ 2 000 000 were to rank ahead of appellant's claim,
as the referee proposed, then there would be nothing left in the Fund for
appellant to recover. If, however, section 11 of the Act were to be applied in
its amended form, then, it is common cause, appellant's
claim would rank ahead
of that of the first respondent, and first respondent would only be able to take
what was left in the Fund
after the appellant's claim had been
satisfied.
First respondent, therefore, brought an application before the Court
a
quo
seeking an order declaring that section 11 of the Act,
10
before its amendment, was to be applied in determining the ranking of the
claims against the Fund. The appellant and third and fourth
respondents
thereupon applied for and were granted leave to intervene. Both third and fourth
respondents are also protection and
indemnity insurers and both had submitted
claims against the Fund in respect of calls and release calls. Their interests
in the application
brought by the first respondent are similar in practically
all respects to those of the appellant. Their contention was that, since
the
sale of the
Pacific Trader
took place on 16 July 1992, and the Fund only
came into existence after such sale, the amended section 11, which had come into
force
on 1 July 1992, should be applied to determine the ranking of
claims.
After hearing argument the Court
a quo
upheld the appellant's
contention that the ranking of claims fell to be determined by the section as
amended, but that its preferently
ranking claim should be limited to calls due
in respect of the
Pacific Trader
only, and did
11
not include the joint and several liability of the Corporation for calls
due by the other ships in the fleet. It is against this latter
part of the order
that the present appeal is brought. The third and fourth respondents have not
appealed against the order. First
respondent has however noted a cross-appeal
against the first part of the Court's
order.
From the papers before us it would appear that a number of
subsidiary matters were placed in issue between the parties, but
in
his judgment the learned Judge
a quo
has recorded that the
parties
had agreed that the following issues should be decided viz -
"(a) whether section 11 of the Admiralty Jurisdiction Act 105 of 1983 as
amended by Act 87 of 1992 applies to the distribution of
the respondent
fund;
(b) if the answer to (a) above is in the affirmative then do the
provisions of section ll(4)(c)(viii) apply only to that portion of
the claim of
each intervening applicant arising within the period there referred to relating
to calls levied in respect of the
M V Pacific Trader
or to all calls
calls for which the owners of the
M V Pacific Trader
were
12
liable."
These were also the issues argued before us
and I shall deal with
them in that order despite the fact that this
entails dealing with the
cross-appeal before turning to this appeal.
In fact it was common
cause that if the cross-appeal were to be
upheld, the appeal would
become academic.
Since the provisions of section 11 of the Act, both as it
read
before and after its amendment, are of primary
importance both in
the appeal and in the cross-appeal, it may be convenient to
reproduce the relevant parts of both versions at this stage. Prior
to
its amendment it read as follows:
"11. (1) Claims with regard to a fund in a court in terms of this Act or
security given in respect of property in connection with
a maritime claim or the
proceeds of property sold pursuant to an order or in the execution of a judgment
of a court in terms of this
Act shall be paid in the following
order:
(a) Claims in respect of costs and expenses
incurred
13
to preserve the property or to procure its sale, and in respect of the
distribution of the proceeds of the sale;
(b) claims to a preference based on possession, whether by way of a right of
retention or otherwise;
(c) claims which arose within one year before the commencement of the
proceedings, in respect of-
(i) wages and other sums due to or payable in respect of the master,
officers and other members of the ship's complement, in connection
with their
employment of the ship;
(i) port, canal and
other waterways deus and pilotage dues;
(iii) loss of life or personal injury, whether occurring on land or on
water, directly connected with the employment of the ship;
(iv) loss of or damage to property, whether occurring on land or on
water, resulting from delict and not capable of being based on
contract,
directly connected with the operation of the ship;
(v) the repair of a ship or the supply of
goods
14
or the rendering of services to a ship for the employment or maintenance
thereof; (vi) salvage, removal of wreck and contribution
in respect of a general
average act or sacrifice;
(d) claims in respect of mortgages, hypothecations, rights of retention of,
and other charges on, the ship, effected in accordance
with the law of the flag
of the ship;
(e) claims in respect of any maritime lien not falling under any category
mentioned in any of the preceding
paragraphs;
(f) all other claims.
(2) The claims referred to in
paragraphs (b) to (f) of subsection (1) shall rank after any claims referred to
in paragraph (a) of
that subsection in accordance with the following
rules:
(a) A claim referred to in the said paragraph (b) shall rank before any
claim accruing after it, other than a claim referred to in
paragraph (c) (vi) of
subsection (1);
(b) a claim referred to in paragraph (c)(vi) of that subsection, whether or
not arising within the period of one year referred to
in that subsection, shall
take priority over any claim arising before that
claim;
15
(c) otherwise claims referred to in any of the subparagraphs of the said
paragraph (c) shall rank
pari passu
with claims mentioned in the same
paragraph, irrespective of when such claims arose;
(d) claims referred to in paragraph (d) of subsection (1) shall rank
according to the law of the flag of the ship;
(e) claims referred to in paragraph (e) of subsection (1) shall rank among
themselves in their priority according to law;
(f) claims referred to in paragraph (f) of subsection (1) shall rank in the
order of preference according to the law of insolvency;
(g) save as otherwise provided in this subsection, claims shall rank in the
order set forth in subsection (1).
(3)
(4)
(5)
(0
(7)
(8) Where the fund arises by reason of an action
in
rem
an associated ship, the ranking of claims
set out in this section shall, notwithstanding the provisions of section 3(6),
apply with
regard to claims in respect of the associated ship,
16
and claims in respect of the ship concerned shall be paid thereafter in the
order set out in this section."
Subsequent to the amendment by section 9 of Act
87
of 1992 the relevant parts of the section reads:
"11. (1) (a) If property mentioned in section 3 (5)(a) to (e) is sold in
execution or constitutes a fund contemplated in section 3(11),
the relevant
maritime claims mentioned in subsection (2) shall be paid in the order
prescribed by subsections (5) and (11). (b) Property
other than property
mentioned in
paragraph (a) may, in respect of a maritime claim, be sold in execution, and
the proceeds thereof distributed, in the ordinary
manner.
(2) The claims contemplated in
subsection (l)(a)
are claims mentioned in subsection (4)
and
confirmed by a judgment of a court in the Republic or proved in the
ordinary manner.
(3) Any reference in this section to a ship shall,
where
appropriate, include a reference to any other
property mentioned in
section 3(5)(a) to (e).
(4) The claims
mentioned in subsection (2) are the
following, namely -
(a) a claim in respect of costs and expenses incurred to preserve the
property in
17
question or to procure its sale and in respect of the distribution of the
proceeds of the sale;
(b) a claim to a preference based on possession of the property in question,
whether by way of a right of retention or otherwise;
(c) a claim which arose not earlier than one year before the commencement of
proceedings to enforce it or before the submission of
proof thereof and which is
a claim -
(i) contemplated in paragraph(s) of the
definition of 'maritime claim';
(i) in respect of port, canal, other waterways or pilotage dues;
(iii) in respect of loss of life or personal injury, whether occurring on
land or on water, directly resulting from employment of
the ship;
(iv) in respect of loss of or damage to property, whether occurring on
land or on water resulting from delict, and not giving rise
to a cause of action
based on contract, and directly resulting from the operation
18
of the ship; (v) in respect of the repair of the ship, or the supply of
goods or the rendering of services to or in relation to a
ship for the
employment, maintenance, protection or preservation thereof; (vi) in respect of
the salvage of the ship, removal of
any wreck of a ship, and any contribution in
respect of a general average act or sacrifice in connection with the ship; (vii)
in
respect of premiums owing under any policy of marine insurance with regard to
a ship or the liability of any person arising from
the operation thereof; or
(viii) by any body of persons for contributions with regard to the protection
and indemnity of its members
against any liability mentioned in subparagraph
(vii); (d) a claim in respect of any mortgage,
hypothecation or right of retention of, and any other charge on, the ship,
effected or valid in accordance with the law of the flag
of a ship, and in
respect of any lien
19
to which any person mentioned in paragraph (o) of the definition of
"maritime claim" is entitled;
(e) a claim in respect of any maritime lien on the ship not mentioned in any
of the preceding paragraphs;
(f) any other maritime claim.
(5) The claims
mentioned in paragraphs (b) to (f) of subsection (4) shall rank after any claim
referred to in paragraph (a) of that
subsection, and in accordance with the
following rules, namely -
(a) a claim referred to in the said
paragraph
(b) shall, subject to paragraph (b) of
this
subsection, rank before any claim arising
after
it;
(b) a claim of the nature contemplated in paragraph (c)(vi) of that
subsection, whether or not arising within the period of one year
mentioned in
the said paragraph, shall rank before any other claim;
(c) otherwise any claim mentioned in any of the subparagraphs of the said
paragraph
(c) shall rank
pari passu
with any other
claim mentioned in the same
subparagraph,
irrespective of when such
claims arose;
20
(d) claims mentioned in paragraph (d) of subsection (4) shall, among
themselves, rank according to the law of the flag of the ship;
(e) claims mentioned in paragraph (e) of subsection (4) shall among
themselves, rank in their priority according to law;
(f) claims mentioned in paragraph (f) of subsection (4) shall rank in their
order of preference according to the law of insolvency;
(g) save as otherwise provided in this subsection, claims shall rank in the
order in which they are set forth in the said subsection
(4).
(6)
(7)
(8)
(9)
(10)
(11) In
the case of claims against a fund which
consists of the proceeds of
the sale of, or any security or undertaking given in respect of, a ship
(hereinafter referred to as the
ship giving rise to the fund) which is an
associated ship in relation to the ship in respect of which the claims arise,
the following
rules shall apply,
21
namely -
(a) all claims which fall under paragraphs (b) to (e) of subsection (4) and
which arose in respect of a ship in relation to which
the ship giving rise to
the fund is such an associated ship as is contemplated in section 3(7)(a)(i),
shall rank immediately after
claims which fall under the said paragraphs and
which arose directly in respect of the ship giving rise to the fund concerned
and
after any claims which fall under paragraph (f) of subsection (4) and which
arose from, or are related directly to, the operation
of (including the carriage
of goods in) the ship giving rise to the fund concerned;
(b) all claims which fall under the said paragraphs (b) to (e) and which
arose in respect of a ship in relation to which the ship
giving rise to the fund
is such an associated ship as in contemplated in section 3(7)(a)(i) or (iii)
shall rank immediately after
any claims mentioned in paragraph (a) of this
subsection or, if there are no such claims, immediately after the claims which
fall
under the said paragraphs and which arose directly in respect of the ship
giving rise to the fund concerned;
and
(c)
the
provisions of subsections (5) and (9)
shall
22
apply with regard to any claim mentioned in paragraph (a) or
(b)."
From a comparison of the two versions it may be seen that if the ranking
of the claims were to depend on the section prior to its
amendment then first
respondent's claim would fall under section ll(l)(d), and would rank ahead of
appellant's claim which would
fall under section ll(l)(f). If, on the other
hand, the section as amended were to apply the appellant's claim would come
under subsection
(4)(c)(viii) whereas first respondent's claim would come under
subsection (4)(d). Appellant's claim would therefore have priority
over first
respondent's claim. So much was common cause between the parties.
In the Court
a quo
the matter was approached by considering
whether the amended section should be given retrospective effect or not. In the
argument
before us, however, the issue of retrospectivity was hardly referred to
at all. As I understand the
23
argument, Mr
Shaw
, on behalf of the first respondent, contended
that because the order of Court authorizing the sale of the ship was made before
the
amendment of the section came into effect on 1 July 1992, the unamended
section governed the distribution of the proceeds, despite
the fact that the
sale itself took place only on 16 July 1992. It was only in cases where the
order authorizing the sale, and the
sale itself, had taken place after 1 July
1992 that the section as amended would apply. Mr Wallis, for the appellant,
conceded that
had the order and the sale both taken place before 1 1 July he
would not be able to contend that the amended section should apply.
The
touchstone in the present case, he submitted, was not the date of the order but
the date of the sale.
In developing his argument Mr
Shaw
submitted that the amended
section ll(l)(a) referred back to sections 3(5)(a) to (e) and to section 3(11)
all of which were new sections.
These sections, as well as the amended section
9, had an effect different
24
from the previous as yet unamended sections. In view of the express
references in section 1 l(l)(a) to the provisions which were introduced
by the
amendment, and the reference in section 3(11) to a sale in terms of an order
made in terms of section 9, he submitted, section
ll(l)(a) must be read as
referring to orders authorizing a sale, made after the commencement of the
amendments. To give it any other
interpretation would give rise to inequitable
results. In support of this latter submission he referred to the decisions of
this
Court in the matters of
Euromarine International of Mauren v The Ship
Berg and Others
1986 (2) SA 700
(A) and
National Iranian Tanker Company v
MV Pericles GC
1995 (1) SA 475
(A). Both these cases dealt pertinently with
the question of whether the legislative enactments under consideration there,
operated
with retrospective effect or not, and in both instances the Court held
that the provisions should not be so interpreted. It seems
to me as though the
issue of the retrospectivity of the amendments to the Act
25
in the present case was relied on more strongly in the Court
a quo
than before us, as this seems to underlie much of the reasoning of the
learned Judge in the judgment appealed against. In this Court,
as I have
indicated, the issue was hardly referred to at all. In fact it was common cause
that the matter was to be determined by
ascertaining the intention of the
Legislature as it appears from the wording of the statute seen in its general
context
(Adampol (Pty)Ltd v Administrator. Transvaal
1989 (3) SA 800
(A)
at 803 I -804 B;
Swanepoel v Johannesburg City Council
:
President
Insurance Co Ltd v Kruger
[1994] ZASCA 80
;
1994 (3) SA 789
(A) at 794 AD.) What we are
concerned with is not the retrospectivity or otherwise of the amended sections,
but simply whether they
apply in the circumstances of the present case. This, as
I have said, must be decided by looking at the language used seen in the
general
context of the Act as a whole.
As I have indicated section 11 of the Act deals with the
26
ranking of claims. The amended section provides that:
"If property mentioned in section 3(5)(a) to (e) is sold in execution; or
constitutes a fund contemplated in section 3(11)
which
is the case in the present matter - then
"the relevant maritime claims mentioned in subsection 2)" i e the claims
enumerated in subsection (4)
"shall be paid in the order prescribed in subsections (5) and
(11)."
Subsection (11) deals with claims in respect
of which an "associated
ship" is involved, and therefore does not affect the present
enquiry.
Subsection (5) deals with the ranking of the various claims set
out
in subsection (4). It is not necessary to refer to all the
various
rankings; suffice it to say that the only provision relevant to
the
facts of this case is (5)(g) which provides that
"(g) save as otherwise provided in this subsection claims shall rank in
the order in which they are set forth in
27
the said subsection (4)."
From these
provisions it seems to me that before one can consider in what order claims
should be paid out of a fund (as in the present
case) that fund must already be
in existence. It is only after the fund has come into existence and claims
against it have been proved
that the consideration of the ranking of those
claims will arise. In the present case it is common cause that the Fund only
came
into existence after the sale of the
Pacific Trader
on 16 July
1992.
In
R v Grainger
1958 (2) SA 443
(A) this Court was considered a
conviction of contravening section 131 (3) of Act 31 of 1917 as amended by
section 20(b) of Act 46
of 1935 and section 26 of Act 29 of 1955. These
statutory provisions had the effect of penalising the making of contradictory
statements
under separate oaths unless the swearer believed each statement to be
true when he made it. The amendment introduced by Act 29 of
1953 had
the
28
effect of facilitating proof of the offence. The appellant in
that
matter had made one statement under oath before this
latter
amendment had come into force and a second sworn statement
after
the amendment had taken effect. The Court held that the
matter
was to be considered in the light of the Act as amended,
and
confirmed the conviction.
Steyn
JA in his judgment referred
to
Bartolus ad D 1.1.9 n 47
and to
Wesel. Ad Novelles
Constitutiones
art 22 n 29 where
Wesel
was said at 448 H - 449 A to have
contended -
"dat die reel teen retrospektiwiteit slaan op handelinge wat klaar voor
die Wet verrig is en waardeur iemand onmiddellik daarop 'n
reg verkry het, en
stel hierteenoor 'n
actus pendens
wat nog nie voltrek is nie en wat in
die algemeen beheers word deur die nuwe verordening waaronder dit die aanvulling
kry waaruit
dan eers die reg ontstaan."
The learned Judge of Appeal then referred to the decision of
Natal
Bank v Deputy-Sheriff of Pretoria
1904 T S 620
where the
29
Court held that a Deputy-Sheriff who had executed a writ before
a
Government Notice had brought in a new tariff of fees, but
where
the writ was subsequently withdrawn after the new tariff had
been
brought in, was entitled to charge the fees provided for in the
new
tariff.
Steyn
JA then proceeded (at p 449 D - F) to
say:
"Uit die voorgaande blyk, meen ek, dat 'n
actus pendens
deur 'n nuwe
Wet beheers word, as die verdere feit of feite wat nodig is alvorens die
tersaaklike reg of verpligting uit die handeling
of kompleks van handelings
ontstaan, na die inwerkingtreding van die nuwe Wet tot stand kom. In die
onderhawige geval het ons ook
te doen met was as 'n
actus pendens
beskou
kan word, in die sin dat by die inwerkingtreding van genoemde sub-artikel een
van die vereiste handelings reeds verrig was,
maar sonder die regsgevolg wat
eers uit die tweede handeling, in sy verhouding tot die eerste, sou
ontstaan."
(cf also
Adampol (Pty) Ltd v
Administrator. Transvaal (supra
) at p 806 H - 807 B and 818 F - 819
B.)
Although, therefore, in the present case, the order of Court authorizing
the sale was an essential prerequisite to the sale taking
30
place, it did not have the effect of vesting any rights to the proceeds
of the sale in the first respondent. How much, if anything,
he would receive,
would depend on the fund itself coming into existence and on the amount of all
the other claims, with precedence
over his own, which might be proved against
the fund. The fund itself only came into existence after the amended provisions
had come
into force, and the subsequent vesting of the first respondent's claim
as the result of the ranking of the claim by the referee appointed
by the Court,
can be seen as an
actus pendens
which would therefore be governed by the
Act as amended. Only then can he be regarded as having a vested right to so much
of the
proceeds, after payment of other preferred claims, as may be available to
satisfy his claim.
It follows, in my view, that it would be anomalous in the present case to
hold that a fund, which only came into existence after the
amended Act had taken
effect, should be administered in
31
terms of the Act prior to its amendment. In fact certain claims against
the fund, such as harbour dues, may themselves only have come
into existence
after the amendments had taken effect. To suggest that such claims should be
administered under the preexisting Act
merely because the order of Court
authorizing the sale of the vessel had been made prior to the amendments, simply
serves to emphasize
the anomaly.
The mere face that the
rule nisi
issued on 25 May 1992 and
confirmed on 9 June 1992 provided for the proceeds of the sale of the
Pacific
Trader
to be applied to the payment of creditors "in accordance with the
provisions of Section 11 of Act 105 of 1983" cannot affect the
conclusion to
which I have come. If in law the Act as amended applies, then an order of Court
cannot alter that position, nor in
fact do I think that the Court making that
order had any such intention. The order must, in my view, be taken to refer to
section
11 of the Act as it may read at the time when it is to be
32
applied to the ranking of the creditors' claims; i e to the law as it
then may be.
The argument that, because the new section 11 referred to other new
sections, such as sections 3(5)(a) to (e), 3(11) and 9, it would
only apply to
orders made after 1 July, and that the old section 11 must apply to all orders
made before that date, seems to me to
be somewhat tenuous. Section 3(5)(a)-(e)
merely refers to the categories of property which may be arrested to found an
action
in rem
, and sections 3(11) and 9 both deal with the constitution
of a fund consisting i a of the proceeds of the property sold by order
of the
Court. The old section 9 also provided for the constitution of such a fund.
Section 11, however, - both as amended and as
unamended - deals with the ranking
of claims made against the Fund and, as I have indicated above, only finds
application once a
fund has come into existence. The fact that the new sections
3(5)(a) - (e), 3(11) and 9 may conceivably affect forms of property
33
other than those affected by the Act prior to its amendment, and
therefore the composition of the Fund, cannot, in my view, have any
effect on
the interpretation to be given to section 11 in its reference to the ranking of
claims.
In my view therefore the learned Judge
a quo
was right in holding
that the Act as amended must be applied to the ranking of claims, and that the
appellant's claim should rank
above that of the first respondent. The
cross-appeal, therefore, cannot succeed. I turn now to consider the appeal
itself. I turn
now to consider the appeal itself.
On an acceptance of the application of the Act as amended, it is common
cause that appellant's claim is one which falls under section
ll(4)(c)(viii).
The matter to be decided is whether the priority accorded by that subsection
applies only to that portion of the
claim which the appellant and the third and
fourth respondents have for calls levied in respect of the
Pacific Trader
itself or
34
whether it includes that portion which reflects the joint and
several
liability of the owner of the
Pacific Trader
in
respect of the other
ships in the fleet. The Court
a quo
held that it applied only
to
claims in respect of the
Pacific Trader
itself.
Section ll(4)(c)(viii) accords priority to a claim
-
"by any body of persons for contributions with regard
to the protection and indemnity of its members against any liability mentioned
in sub-paragraph (vii)"
id est
"(vii) in respect of premiums owing under any policy of marine insurance
with regard to a ship or the liability of any person arising
from the operation
thereof ...
Mr
Wallis
submitted that the word "thereof at the end of the
above-quoted subparagraph referred back to "a ship" and that the liability
referred
to in (vii) must therefore be "the liability of any person arising from
the operation" of a ship. The subparagraph uses the words
"a ship" and not "the
ship" as it does in other
35
subparagraphs, and therefore, he submitted, it applies to claims in
respect of calls due in respect of any ship, and not merely in
respect of the
vessel, the sale of which gave rise to the Fund.
This choice of words - which also appeared in section 11 prior to its
amendment - has been considered in previous decisions of our
Courts. In
Gulf
Oil Trading and Others v The Fund Comprising the Proceeds of the Sale of the M V
Emerald Transporter: Irving Trust Co v Gulf
Oil Trading Co and Others: Gulf Oil
Trading Co and Others v The Fund Comprising the Proceeds of the Sale of the M V
Jade Transporter
1985 (4) SA 133
(N) three separate cases had been set down
together for argument before a Full Bench exercising its Admiralty jurisdiction
under
the Act. First there was an appeal concerning the
quantum
and
ranking of certain claims against the fund comprising the proceeds of the sale
of the M V Emerald Transporter. Then there was
an application in terms of
section 11(4) of the Act for a declaratory
36
order to settle the ranking of certain claims against the fund comprising
the proceeds of the sale of the M V Emerald Transporter.
Then there was an
application in terms of section 11(4) of the Act for a declaratory order to
settle the ranking of certain claims
against the Fund comprising the proceeds of
the sale of the M V Steel Transporter; and finally there was a similar
application relative
to the
quantum
and ranking of certain claims against
the Fund comprising the proceeds of the sale of the M V Jade Transporter. All
three ships were
owned by a group of companies known as the Eddie Steamship
Group which in turn was controlled by Mr W H Eddie Hsu of Taiwan. Included
in
the group were Outer Ocean Navigation Corporation Ltd which owned,
inter
alia
. M V Emerald Transporter, Far Eastern Navigation Corporation Ltd, which
owned
inter alia
M V Jade Transporter and Eddie Steamship Ltd, which
owned,
inter alia
M V Steel Transporter. Each of the three ships was
therefore an associated
37
ship in relation to the other two, and to the other ships belonging
to
the group. Each of the ships had been arrested in actions
in
rem
.
and sold in terms of orders of Court issued under section 9
of the
Act. The claimants against the various funds had claims, e g
for
the supply of bunkers and lubricating oil supplied directly to
each
of the three ships concerned, but also had similar claims
against
other ships owned by the Eddie Steamship Group - i e against
associated ships. The issue before the Court, then, concerned
the
ranking of these claims. It was contended that claims in respect
of
the supply of bunkers and lubricating oil, even where such
supply
was to an associated ship, enjoyed priority over the claim of a
mortgage of the particular ship which had been sold. This
contention was based on the provisions of section 11 of the Act
which provided that claims in respect of
"the repair of a ship or the supply of goods or the ranking of services
to a ship for the employment or maintenance thereof (sec 11(1)(c)(v))
38
ranked before the claims of a mortgage (sec ll(l)(d)).
Counsel pointed to the use of the words "the ship" in
subparagraphs
(i), (iii) and (iv) of section 11(l)(c), and contrasted it with the
use
of the words "a ship" in paragraph (v). "A ship", he submitted,
therefore meant "any ship" and the price of bunkers and
lubricating
oil supplied to an associated ship, therefore was therefore a
claim
in respect of "the supply of goods ... to a ship" within the
meaning
of section 11(1)(c)(v).
Rejecting this argument,
Howard
J , remarked at 141 E-G :
"I agree that according to its ordinary meaning 'a ship', comprehends
'any ship' but I cannot accept that the Legislature used the
indefinite article
deliberately to signify that subpara (v) is intended to embrace associated ship
claims as well as direct claims.
A change of expression does not always and
inevitably denote a change of intention, even when the choice of words has been
deliberate
(see
R v Shole
1960 (4) SA 781
(A) at 787 B.)"
The learned Judge then went on to refer to the nature of a
maritime
39
lien such as those referred to in section ll(l)(c). They
encumbered
the ship against or in respect of which the claim lay and
did not
secure claims against or in respect of other ships. At p 142 C-F
he
remarked:
"It is quite clear that sec ll(l)(c) was designed to deal with claims
secured by maritime liens over the ship whose proceeds comprise
the fund. Such
claims can only be direct claims and it would be completely incongruous to
include associated ship claims among them.
I see no
reason why the associated ship claims of the necessaries man should be singled
out for preference over all associated ship
claims and included in para (c) of
sec 11(1) to rank for payment before the direct claims referred to in paras (d),
(e) and (f).
Their presence in sec ll(l)(c) would not only be incongruous for
the reasons indicated above, it would also upset the order set forth
for the
ranking of claims and could not be reconciled with the provisions of sec 11(8).
In short, Mr Shaw's construction of sec ll(l)(c)(v)
leads to results which the
Legislature manifestly did not intend. The considerations militating against
that construction are so
cogent that I am driven to the conclusion that the use
of the indefinite article in subpara (v) was due to a legislative mistake,
and
that in order to give effect to the Legislature's
40
intention 'a ship' has to be construed as 'the ship'."
In an appeal against that judgment in the matter
between
Summit Industrial Corporation v Claimants
against the Fund
Comprising the Proceeds of the Sale of the M
V Jade Transporter
1987 (2) SA 583
(A) this reasoning of
Howard
J and the
conclusion
to which he came in this regard was fully endorsed by
this Court.
Corbett
JA contended himself with remarking (at p 599 C-D that
-
"The Court
a quo
... held that the associated ship claims of the
necessaries man fell into the second queue. I agree, with respect, with this
conclusion
and the reasoning of the Court
a quo
in support of it and do
not find it necessary to elaborate thereon."
Then, in
1992, sec 11 was re-drafted in a form differing very considerably from its
predecessor, and enacted by the amending Act 87
of 1992. Despite the clear and
explicit language of both of the judgments I have referred to one finds,
mirabile dictu
. that the draftsman, in his rendering of subpara (v) in
the amended version,
41
merely succeeds in making the previous confusion worse confounded. He has
altered the first reference to "a ship" to "the ship" but
left the second
reference as it was, so that now that subparagraph reads:
"(v) in respect of the repair of the ship, or the supply of goods or the
rendering of services to or in relation to a ship for the
employment,
maintenance, protection or preservation
thereof."
On a literal reading of the
provision, we find that the draftsman accords priority to claims in respect of
the supply of goods or
the rendering of services to any ship, whereas he limits
the priority of claims for the repair of a ship to the repair of the particular
ship the sale of which gave rise to the fund. This is so incongruous that I
cannot conceive of it ever having been the intention
of the Legislature. The
legislative mistake to which
Howard
J referred
supra
has thus been
perpetuated - in part at least. The suggestion that the Legislature retained the
expression "a ship" in respect of
42
services on the assumption that the Courts had already
interpreted
it as meaning "the ship" is clearly untenable.
Further examples of the draftsman's confusing ineptness
are
reflected in other parts of the section, such as
subsection (3) - does
"any reference ... to a ship" exclude references to "the ship"?
Again in subsection 4(d) priority is accorded to
"a claim in respect of any mortgage ... of ... the ship, effected or valid
in accordance with the law of the flag of a ship ...
"
This, on the face of it, seems to make no sense, and
Mr
Wallis
was driven to concede that his deliberate change of language
was clearly wrong. It seems to me that the draftsman had no regard for
the
distinction between the definite and the indefinite article, and that, in the
interpretation of this section, no reliable inference
of a specific intention
can be drawn from the use of the one as opposed to the other.
In the present appeal we are, of course, not dealing with
43
claims in respect of associated ships, but with the joint and
several
liability of the owner of the
Pacific Trader
with
owners of other
ships for debts in respect of such other ships.
Nevertheless, if one
has regard to the general scheme of the Act -
and more particularly
to the provisions of section 11 - it seems to
me that the Legislature
sought to accord priority to claims against the ship the sale of
which gave rise to the fund. Dealing with the interpretation of
section 11(8) prior to its amendment,
Corbett
JA in the
Jade
Transporter (supra
) at p 598 F remarked :
"It is clear to me that when s 11(8) speaks of a claim 'in respect of a
particular ship, it means a claim which arose in respect of
that
ship."
After its amendment the Act retained this general
scheme. This
appears for example in sec 11(11)(a) and (b) where priority is
accorded to
"claims ... which arose directly in respect of the ship giving rise to the
fund concerned ... "
44
and to
"claims ... which arise from, or are related directly to , the operation of
... the ship giving rise to the fund concerned".
Section 11(4)(c) must, in my view, be interpreted in the
same
light, and due allowance must be made for the
careless and
indiscriminate use of the definite and indefinite
articles.
Accordingly the use of the words "a ship" in sec
ll(4)(c)(vii) must
be seen as a legislative mistake, and must be read as "the
ship".
If therefore one construes section 11 (4)(c)(vii) to refer to
"premiums owing under any policy of marine insurance with regard to the ship
or the liability of any person arising from the operation
thereof
there can be no room for the argument that it
includes liability arising from the operation of any ship other than the one
giving
rise to the fund. Such a construction, moreover, not only serves to make
sense of the provisions of the sub-paragraph, but is also
45
consistent with the general scheme of the Act. It follows therefore that
the appeal itself must also be dismissed.
The Court
a quo
ordered that the costs of all the parties there
concerned should come out of the Fund as this seemed to be most equitable
solution.
Mr
Shaw
in his heads of argument, has submitted that the effect
of this order is that the burden of all the costs falls on first respondent,
and
that that order should therefore be varied so that each party be ordered to pay
its own costs or , at worst, that only a portion
of the appellant's costs come
out of the Fund. No argument was addressed to us on this issue at the hearing of
the appeal, and I
see no valid reason to differ from the learned Judge
a
quo
in the conclusion to which he came.
46
In the result the appeal is dismissed with costs, and the cross-appeal is
also dismissed with costs.
J P G EKSTEEN, JA
CORBETT, CJ )
SMALBERGER, JA ... )
CONCUR VAN DEN HEEVER, JA )
OLIVIER, JA )