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[1999] ZASCA 44
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Belfry Marine Ltd v Palm Base Maritime SDN BHD Name of Ship: mv 'Heavy Metal' (323/98) [1999] ZASCA 44; [1999] 3 All SA 337 (A); 1999 (3) SA 1083 (SCA) (31 May 1999)

REPORTABLE
Case
No: 323/98
IN
THE SUPREME COURT OF APPEAL OF
SOUTH
AFRICA
In
the matter between:
BELFRY
MARINE LIMITED Appellant
and
PALM
BASE MARITIME SDN BHD
NAME
OF SHIP: MV “HEAVY METAL” Respondent
CORAM
: SMALBERGER,
NIENABER, MARAIS JJA, MELUNSKY and FARLAM AJJA
HEARD
: 8
MARCH 1999
DELIVERED
: 31
MAY 1999
________________________________________________________
JUDGMENT
________________________________________________________
.
. . SMALBERGER JA
SMALBERGER
JA:
[1]
I
have had the benefit of considering the judgment of my colleague
Farlam. I share his views, and the conclusions reached by
him, in
regard to the first two issues on appeal. I disagree, however, with
his approach and conclusion in respect of the third
issue.
[2] To
recapitulate, the third issue is whether it was established that
Lemonaris, or some other person or persons, had “power,

directly or indirectly, to control” Dahlia and the appellant
at the relevant times.
[3] The
answer to the third issue lies in the proper interpretation of sec
3(7)(b)(ii) of the Act (“the subsection”)
which provides
that
“
(A) person shall be deemed to control a company
if he has power, directly or indirectly, to control the company.”
[4] It was pointed out
in
Dole Fresh Fruit
International Ltd v MV Kapetan Leonidas and Another
1995(3) SA 112 (A) at 119 F - G that a person may control a company
without controlling all the shares in the company; and control
over
a company can be exercised even without a majority shareholding. In
the present case there is no suggestion that Dahlia
and the
appellant were controlled in any way other than
via
their majority shareholdings, and it is common cause that Lemonaris
was, in terms of the respective share registers, the majority

shareholder of both companies.
[5] When
interpreting the subsection, and in order to give proper effect
thereto, regard must be had to the language used, the
apparent
purpose of the provision, its contextual setting and the object of
the Act as a whole.
[6] The
object of the associated ship provisions in the Act is to enable an
associated ship to be arrested instead of the ship
in respect of
which the maritime claim arose (“the guilty ship”). Its
purpose was to benefit a party applying for
arrest by providing it
with a method of recovery against an alternative defendant thereby
affording relief to which it would
not otherwise have been entitled.
[7] Sec
3(7)(a) deals with the meaning of an associated ship. Sec
3(7)(a)(ii) and (iii) both contemplate a situation where either
the
guilty ship or the ship which it is sought to arrest as an
associated ship (“the targeted ship”), or both, are

owned by a company or companies controlled by a particular person.
[8] The subsection
elaborates upon and refines the concept of control by that person.
Control is expressed in terms of power.
If the person concerned has
power, directly or indirectly, to control the company he/she shall
be deemed (“geag ... word”)
to control the company.
“Power” is not circumscribed in the Act. It can be the
power to manage the operations of
the company or it can be the power
to determine its direction and fate. Where these two functions
happen to vest in different
hands, it is the latter which, in my
view, the legislature had in mind when referring to “power”
and hence to “control”.
In South African legal
terminology that means (essentially for the reasons given by the
court
a quo
at 1998(4) SA 479 (C) at 492 C - F (“the reported judgment”);
see also sec 195(1) of the Companies Act 61 of 1973)
the person who
controls the shareholding in the company. Foreign law is a question
of fact. If the appellant wished to make
out a case that the law of
the Republic of Cyprus differed significantly from the law of South
Africa, it should have adduced
evidence to that effect. It did not
do so. Consequently there is no reason to surmise that the
applicable law in Cyprus differs
materially from that of South
Africa (
cf Caterham
Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another
1998(3) SA 938 (A) 954 B - E).
[9] The subsection
clearly distinguishes between “direct” and “indirect”
power. That distinction must
be given a meaning. Indirect power
can only refer to the person who
de
facto
wields power
through, and hence over, someone else. The latter can only be
someone who wields direct power
vis-à-vis
the company and the outside world and who therefore, in the eyes of
the law (i.e.
de
jure
), controls
the shareholding and thus determines the direction and the fate of
the company. On the facts of the present case
Lemonaris is the
person in that situation. Of course, the same person may in given
circumstances exercise both
de
facto
and
de
jure
control.
[10] In my view,
therefore, direct power refers to
de
jure
authority
over the company by the person who, according to the register of the
company is entitled to control its destiny; and
indirect power to
the
de facto
position of the
person who commands or exerts authority over the person who is
recognised to possess
de
jure
power (i.e.
the beneficial “owner” as opposed to the legal “owner”).
This extension of
de
jure
power to
de
facto
power is in
line with the objective of the section: to prevent the true “owner”,
by presenting a false picture to
the outside world, from concealing
his assets from attachment and execution by his creditors.
[11] From the above
analysis it follows in my view that if the person who has
de
jure
power happens
to control, at the relevant times for such control, both companies
concerned (i.e. the company which owns the guilty
ship and the
company which owns the targeted ship), the statutory requirement of
a
nexus
between the two companies will have been satisfied. This is the
position in which Lemonaris found himself.
[12] On the other hand,
if
de jure
control of the respective companies vests in different hands it
would still be open to the applicant for arrest to establish
that
the same person was in
de
facto
(i.e.
indirectly) in control of both, thereby also supplying the required
statutory
nexus
to satisfy the provisions of sec 3(7)(a) of the Act.
[13] The principal
purpose of the Act is to assist the party applying for arrest rather
than the party opposing it. While the
section is designed, in the
interests of an applicant, to cater for the situations referred to
in paras [12] and [13] above,
it is not, in my view, designed to
cater for the converse situation where
de
jure
control over
both vessels (companies) vests in one person but the owner of the
targeted ship is able to show that such person
is a mere puppet
dancing at the string of two different masters. If the latter
approach were to be the correct one, the distinction
drawn by the
legislature between “direct and indirect control” would
fulfil no purpose. The only issue, on that
approach would be
de
facto
control. If
that had been the legislature’s intention it need only to have
spoken of the “power to control”
in the section. Any
approach which effectively negates a clear provision in an Act
cannot be sound unless there are compelling
reasons to the contrary.
No such compelling reasons have been advanced in the judgment of my
colleague.
[14] It needs to be
emphasised that the subsection does not speak merely of the “power
to control”. If it did, the
decision in
Barclays
Bank Ltd v Inland Revenue Commissioners
[1961] AC 509
(HL) referred to by my colleague may have been of
greater relevance to its interpretation. There is much to be said
for the
view that where one speaks simply of a “power to
control” one is concerned with a single repository of power -
the
person who is in actual, overall control. But the power to
control directly or indirectly envisages two possible repositories

of power, one
de
jure
and one
de
facto
. Either
form of control can be satisfied to bring the subsection into
operation. If there can only be one repository of power
in terms of
the subsection it would follow that the person who has
de
jure
control could
be ignored once it has been established that someone else has
de
facto
power. This
would appear to be contrary to the clear wording of the subsection.
By using the words “directly or indirectly”
the
legislature clearly intended to extend and not restrict the
expression “power to control” (
cf
Olley v Maasdorp and Another
1948(4) SA 657 (A) at 665 - ff and
Lipschitz
NO v UDC Bank Ltd
1979(1) SA 789 (A) at 797 D - E).
[15] In my view, and on
the undisputed facts, the respondent therefore succeeded in
establishing the requisite
nexus
for the conclusion that the Heavy Metal was an associated ship of
the Sea Sonnet. If that conclusion results in the bizarre
position
referred to in para 57 of my colleague’s judgment, that is the
direct and foreseeable consequence of a shipowner
choosing to
operate behind a cloak of secrecy. It is precisely for that reason,
because the creditor is at such a disadvantage
in tracing the assets
of his debtor, of which this case is a prime example, that the
subsection was worded as it is. The result
is not as unfair as it
may at first blush seem, for it lies within the power of the
shipowner to arrange his affairs and his
relationship with the
company in question so as to avoid any prejudicial consequences to
himself (
cf
National Iranian Tanker Co v MV Pericles
1995(1) SA 475 (A) at 485 C).
[16] Apart
from that, it seems to me that the appellant in any event failed to
rebut the inference arising on the papers, that
the power behind
Lemonaris in respect of the Heavy Metal is in fact the same entity
who is the power behind Lemonaris in respect
of the Sea Sonnet.
[17] The appellant had
no difficulty in disclosing the identity of the beneficial owner of
the Sea Sonnet but it steadfastly refused
to disclose the identity
of its own beneficial owner. In those circumstances the respondent,
in launching its application, had
little option but to list a host
of objective factors which it submitted pointed,
prima
facie
it not
conclusively, to a duality of control between the guilty ship and
the targeted ship, and to speculate as to the identity
of the common
controller. (As to these see, for example, the reported judgment at
489 B - G.)
[18] In
the light of the appellant’s policy of presenting a distorted
picture to the outside word by spuriously holding
out Lemonaris as
its majority shareholder and, when that fact was exposed, by
refusing to reveal the true power behind the throne
when challenged
to do so, the respondent cannot fairly be criticised for not leading
contradicting evidence or for deviating,
between its founding and
replying affidavits, in its speculation as to the controlling force
behind the appellant’s affairs.
[19] Admittedly the
dispute of fact on the issue of who controls Lemonaris had to be
approached in line with what was stated in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984(3) SA 623 (A) at 634 E - 635 C. Due allowance must, however,
be made for the fact that the appellant deliberately concealed
the
identity of the true beneficial owner of the Heavy Metal in
circumstances where that was the central issue in dispute. In
my
view that silence and the failure of the appellant to offer an
adequate explanation for it, when the appellant must have
appreciated that it ran the risk of an inference being drawn against
it, justifies the conclusion that the appellant had every
reason not
to be candid with the court and,consequently, that the dispute
raised by Lemonaris as to the beneficial ownership
of the Heavy
Metal was a contrived one and as such was not a genuine dispute of
fact.
[20] In my view, those
considerations, read against the background of the
prima
facie
case made
out by the respondent, are enough to overcome Lemonaris’s
express denial that there was a relevant connection
in the ownership
of the Sea Sonnet and the Heavy Metal. It can therefore not be
accepted as an established fact, as the judgment
of my brother seems
to do, that Lemonaris was not controlled in respect of the Heavy
Metal by either Tsavliris, or someone who
in turn controlled
Tsavliris. On the facts of this case, as presented by the
appellant, one simply does not know.
[21] With
regard to whether the deeming provision in the subsection gave rise
to an irrebuttable finding (the fourth issue on
appeal) I agree with
Thring J where he said, at 491 D - E of the reported judgment:
“
In other words, this is a situation in which the
Legislature sought to achieve finality as regards the identity of
the person
or persons who control such companies, even at the
expense perhaps of artificiality. Had it not sought this result, it
seems
to me that the Legislature would not have used the very strong
word ‘deemed’ in the subsection (Afrikaans text:
‘geag’):
it would have used some less far-reaching
expression such as ‘presumed until the contrary is proved’.”
[22] This
conclusion is fortified by a consideration of other deeming
provisions in the Act (see eg secs 3(7)(c), 3(10)(a)(i)
and (ii) and
(b), 3(11)(b)) all of which have an element of finality with regard
to that which is deemed. It is unlikely that
the legislature would
have adopted an inconsistent approach towards the effect of the
various deeming provisions.
[23] In
the result the appeal is dismissed with costs, including the costs
of two counsel.
___________________
J
W SMALBERGER
JUDGE
OF APPEAL
NIENABER JA )
)Concur
MELUNSKY AJA)
FARLAM
AJA/...
[1]
This
is an appeal with the leave of the court
a
quo
from a
judgment of Thring J sitting in the Cape of Good Hope Provincial
Division exercising its admiralty jurisdiction in terms
of the
Admiralty Jurisdiction Regulation Act 105 of 1983 (to which I shall
hereinafter refer as “the Act”).
[2] The
order against which the appeal is brought was for the arrest of the
appellant’s motor vessel Heavy Metal, in terms
of section 5
(3) of the Act, the purpose of the arrest being to provide the
applicant therefor, the respondent in this court,
with security for
a claim for US $2 737 776,49 (plus interest and costs) which is to
be the subject of an arbitration which the
respondent contemplates
bringing in London against a company known as Dahlia Maritime
Limited (to which I shall hereinafter refer
as “Dahlia”).
[3] This claim, which
is alleged to be a maritime claim in terms of section 1(1)(c) of the
Act, arose from a dispute under a
memorandum of agreement dated 23
October 1996, in terms of which the respondent, Palm Base Maritime
SDN BHD
,
a
Malaysian company, purchased the MV Sea Sonnet (to which I shall
hereinafter refer as “the Sea Sonnet”), which was
later
(after she became the property of the respondent) renamed the MV
Seri Ibonda, from Dahlia. Both Dahlia and the appellant
are
companies incorporated in the Republic of Cyprus, with their
registered offices at the same address.
[4] The
respondent’s claim against Dahlia is based on an alleged
breach of clause 11 of the memorandum of agreement, which
reads as
follows:
“11.
Condition on delivery
The vessel with
everything belonging to her shall be at the Sellers’ risk
and expense
until
she is delivered to the Buyers, but subject to the conditions of
this contract, she shall be delivered and taken
over as
she is at the time of inspection, fair wear and tear excepted.
However, the vessel shall be delivered with
present class free of recommendations. The Sellers shall notify
the Classification
Society of any matters coming to their
knowledge prior to delivery which upon being reported to the
Classification Society
would lead to the withdrawal of the
vessel’s class or to the imposition
of
a recommendation relating to her class.”
[5]
According
to a report furnished to the respondent by Michael Cheyne, a
consultant marine engineer, “numerous problems with
the vessel
were uncovered after [her] delivery and these were matters which
should have been reported to ... the seller’s
classification
society”. He stated further that in his opinion, Dahlia, the
seller, was “unquestionably in breach
of clause 11” of
the memorandum
of
agreement.
[6] Mr
Cheyne expressed the view in his report that if the “matters
[in question] had been reported to class then recommendations
would
have been imposed”. Attached to his report was a “schedule
of losses” totalling US $ 2 737 776,49, which
losses had
arisen, according to Mr Cheyne “due to seller’s breach
of the [memorandum of agreement]”.
[7] The respondent
sought the arrest of the
Heavy Metal on the
basis that she was, so it was alleged, a vessel associated with the
Sea Sonnet in terms of section 3 (6) and
(7) of the Act and that it
had a genuine and reasonable need for security in the arbitration.
[8] In
the founding affidavit filed on the respondent’s behalf the
allegation that the Heavy Metal and the Sea Sonnet were
associated
ships was put on two bases.
[9] The
first was that one Emilios Lemonaris, a Cypriot advocate, was the
majority shareholder and sole director of both Dahlia
and the
appellant.
[10] The
second was that the same person, probably one Nikolaos H Vafias,
exercised what was called ultimate control over an
entire group of
vessel owning companies, plus a company called Brave Maritime
Corporation Inc, which is incorporated in Greece,
and which managed
and operated a fleet of vessels which included the Heavy Metal and
the Sea Sonnet, when it belonged to Dahlia.
[11] As
far as Lemonaris was concerned it was stated in the affidavit filed
on behalf of the respondent that he was “probably
a nominee
for Mr Vafias and his family”. The deponent of the affidavit
continued: “To the best of the knowledge
and belief of those
instructing me, he is not directly involved in the business of
owning or operating ships but serves as a
‘postbox’ and
registered office for the Brave Maritime group of companies, and
possibly in other roles, such as the
authorised signatory of the
companies. If I am wrong in this speculation, however, in any event
he has a controlling interest
in all of the vessels by virtue of his
position as majority shareholder”.
[12] Earlier
in the affidavit it was submitted that the Sea Sonnet and the Heavy
Metal were associated because Lemonaris “apparently
has the
power directly or indirectly to control the vessels”.
[13] In an opposing
affidavit filed on behalf of the appellant, Mr Lemonaris stated that
the shares he held in Dahlia and in
the appellant were held by him
as nominee for non-residents of Cyprus
.
He
added:
“It is normal
practice in Cyprus for Advocates to be appointed as nominee
shareholders and
Directors. We act on the instructions of beneficial owners, which
instructions are often given through
intermediaries. We are
required by the laws of Cyprus to abide strictly by, and carry
out, these instructions and we are
more often than not, as in the
case of my relationship with [Dahlia] and [the appellant], simply
‘postboxes’.
I am therefore merely a nominee Director and
shareholder of [Dahlia] and [the appellant] in which I have no
interest or ownership.
I exercise no control over these companies
and, indeed, I have no discretion to represent these companies
without having received
instructions as I have, for example, for the
purpose of dealing with this application.
Cypriot
Advocates are not, in terms of the ethical rules applicable,
permitted to disclose information given to them in confidence
by
their clients. The information contained in the instructions
given to me when I attended to the registration of
[Dahlia] and
[the appellant] was given to me in confidence
and I am accordingly not at large
to disclose this
information.
I
am, however, able to disclose that Mr Nikolaos Vafias did not own
or control [Dahlia] at the time of the delivery and sale
of the MV
‘Sea Sonnet’ or at any other material time.”
[14]
While
admitting that the Sea Sonnet was managed by Brave Maritime
Corporation Inc he denied that the vessel was operated by it
and
also denied that a document annexed to the affidavit filed on the
respondent’s behalf and relied on by it to show that
the Heavy
Metal was operated by Brave Maritime Corporation Inc indicated that
fact. He said, correctly, in my view, that the
document concerned
showed no more than that Brave Maritime Corporation Inc was an agent
for the Heavy Metal.
[15] He
denied the allegation in the founding affidavit that he had a
controlling interest in all the vessels allegedly managed
by Brave
Maritime Corporation Inc. including the Heavy Metal. He admitted the
earlier allegation made on behalf of the respondent,
which has been
quoted in paragraph [11] above, that he served as a “postbox”
for Dahlia and the appellant.
[16] In
response to the allegation that he “apparently had the power
directly or indirectly to control” the Sea Sonnet
and the
Heavy Metal he pointed out that it was alleged elsewhere in the
affidavit that the ultimate control over the vessels
rested with
Vafias and that he, Lemonaris, was merely a nominee for Vafias and
his family.
[17] In
a subsequent affidavit filed on behalf of the appellant Mr Lemonaris
stated that during the whole of the period from
23 October 1996, the
date of the memorandum of agreement relating to the sale of the Sea
Sonnet, to 9 December 1996, the date
the vessel was delivered to the
respondent, the Sea Sonnet was owned by Dahlia, the shareholding in
which, during that period,
was held as to 52% of the shares by
himself, as nominee on behalf of a Liberian corporation called
Carnation Finance Inc, and
as to 48% by another Liberian Corporation
called Wichita Maritime and Trading Inc. He stated further that
during the whole of
the period in question all the shares of
Carnation Finance Inc were owned by one Nikolaos Tsavliris and that
he had, for the
purposes of the application, been specifically
authorised to disclose the identity of Mr Tsavliris as “the
ultimate beneficial
owner of the MV Sea Sonnet at the time of the
conclusion of the memorandum of agreement of sale of the vessel and
the subsequent
delivery thereof to the purchaser”.
[18] He
also stated in this affidavit, as he had in his earlier affidavit,
that
he “acted as a nominee shareholder in respect of
the controlling interest in the MV Heavy Metal. I am not authorised
by
the beneficial owner of the MV Heavy Metal to disclose to the
above Honourable Court the true identity of such owner. However,
I
can state that Mr Nikolaos Tsavliris had no interest, whether as
owner or otherwise, in the MV Heavy Metal on 1 April 1988
or at any
time to date hereof.”
[19] In
an answering affidavit filed on behalf of the respondent it is
stated that Lemonaris’s “bald statement that
he is
‘merely a nominee Director and shareholder in [Dahlia] and
[the appellant] in which I have no interest or ownership’

cannot be accepted in the absence of corroboration”, this
despite the statement in the founding affidavit that “it
seems
likely that Lemonaris is probably a nominee for Mr Vafias and his
family”.
[20] Later
in the answering affidavit appears the following statement:
“In the circumstances I respectfully submit that
Mr Lemonaris’ bald and uncorroborated statement that he holds
the
shares in [Dahlia] and [the appellant] as nominee only and that
Mr Vafias did not own or control [Dahlia] at any material time

should not be accepted as materially placing in dispute the
[respondent’s] allegation that the Sea Sonnet and the [Heavy

Metal] are indeed associated ships in terms of section 3(6) read
with section 3(7) of Act 105 of 1983 as amended.”
[21] Before
I set out the issues which have to be considered in this appeal it
is desirable to set out the relevant sections
of the Act.
Section
3, as far is material, provides as follows:
“
(1) Subject to
the provisions of this Act any maritime claim may be enforced by an
action
in personam.
....
(4) Without prejudice
to any other remedy that may be available to a claimant or to the
rules relating to the joinder of causes
of action a maritime claim
may be enforced by an action
in
rem
-
(a) if the claimant has a maritime lien over the
property to be
arrested;
or
(b) if the owner of
the property to be arrested would be liable to the claimant in an
action
in personam
in respect of the
cause of action concerned.
(5) An action
in
rem
shall be
instituted by the arrest within the area of jurisdiction of the
court concerned of property of one or more of the
following
categories against or in respect of which the claim lies:
(a) The ship, with or without its equipment, furniture,
stores or bunkers;
...
(6) Subject to the
provisions of subsection (9), an action
in
rem
, other than
such an action in respect of a maritime claim contemplated in
paragraph (d) of the Definition of ‘maritime
claim’, may
be brought by the arrest of an associated ship instead of the ship
in respect of which the maritime claim arose.
(7)( 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, 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
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.
(c) If at any time a ship was the subject of a
charter-party the charterer or subcharterer, as the case may be,
shall for the
purposes of subsection (6) and this subsection be
deemed to be the owner of the ship concerned in respect of any
relevant maritime
claim for which the charterer or the subcharterer,
and not the owner, is alleged to be liable.”
Section
5 (3) is in the following terms:
“
(a) A court may
in the exercise of its admiralty jurisdiction order the arrest of
any property for the purpose of providing security
for a claim which
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, if the person seeking the arrest has
a claim enforceable
by an action
in
personam
against
the owner of the property concerned or an action
in
rem
against such
property or which would be so enforceable but for any such
arbitration or proceedings.
(aA) Any property so arrested or any security for, or
the proceeds of, any such property shall be held as security for any
such
claim or pending the outcome of any such arbitration or
proceedings.
(b) Unless the court orders otherwise any property so
arrested shall be deemed to be property arrested in an action in
terms
of this Act.”
[22] The action
in
rem
dealt with in
section 3 (5) is instituted by the arrest of the ship “against
or in respect of which the claim lies”,
sometimes referred to
as the “guilty ship”: see, eg,
Euromarine
International of Mauren v The Ship Berg and Others
1986 (2) SA 700
(A) at 708 B - C.
[23] Four issues arose
for decision in the court
a
quo
and arise
again for decision in this Court.
The first two flow
from the fact that the respondent did not cancel the sale of the Sea
Sonnet when the defects therein were
discovered after delivery.
When the Heavy Metal was arrested, as a ship “associated”
with the Sea Sonnet no action
in
rem
could have
been brought by the respondent in terms of section 3 (4) (b) against
the Sea Sonnet because it was its own property
and not the property
of Dahlia.
[24] The first issue
argued before the learned judge in the court below and before this
Court on appeal was whether, before the
associated ship provisions
(section 3 (6) and (7)) can be utilised by a claimant, such claimant
has to have a claim
currently
enforceable by an
action
in rem
in terms of section 3 (4) against the “guilty ship”. Put
differently, is an action
in
rem
against an
associated ship (under section 3 (6) and (7)) available to a
claimant only as an alternative to a presently existing
action
in
rem
against the
guilty ship?
[25] The
second, third and fourth issues are all linked to the question as to
whether the Heavy Metal was a ship associated with
the Sea Sonnet
within the meaning of section 3 (7) of the Act.
[26] The
second issue was: at what time did the respondent’s claim
arise? The appellant contended that it arose when the
Sea Sonnet
was delivered to the respondent and simultaneously with the passing
of ownership of the vessel to the respondent and
that accordingly,
as the Sea Sonnet was the property of the respondent when the claim
arose, from that time on there could be
no association between her
and the Heavy Metal which belonged to the appellant, even if Dahlia
and the appellant were controlled
at all material times by the same
person.
[27] The
third issue was whether it was proved that Lemonaris or some other
person or persons had the “power, directly
or indirectly, to
control” Dahlia and the appellant so that the deeming
provision in section 3 (7) (b) (ii) of the Act
came into operation.
[28] The
fourth issue was whether, even if the deeming provision came into
operation, it gave rise to an irrebuttable presumption
incapable of
being refuted by what the appellant’s counsel described as
“explicit evidence to the contrary”.
[29] In his judgment
in the court
a quo
,
which is reported as
MV
Heavy Metal, Palm Base Maritime SDN BHD v Dahlia Maritime Ltd and
Others
1998 (4)
SA 479
(C), Thring J found in favour of the respondent on all four
issues.
[30] On the first he
followed the judgment of a Full Bench of the Natal Provincial
Division in
October
International Navigation Inc v MV Fayrouz IV
1988 (4) SA 675
(N), in which it was held (at 679 C - D) that
section 3(6) and (7) of the Act “provide an extension of the
remedy provided
by Section 3 (5) and an alternative action
in
rem
”.
Thring J said (at 486 B) that, although he was not bound by the
Fayrouz IV,
as a
decision of a Full Bench it nevertheless had strong persuasive value
and added that unless he was persuaded that it was clearly
wrong he
proposed to follow it. He stated (
ibid
)
that although there was, in his view, considerable force in the
argument advanced by the counsel who appeared before him for
the
appellant, he was not persuaded that the
Fayrouz
IV
was clearly
wrong with the result that he followed it.
[31] He added that it
seemed to him that the decision in the
Fayrouz
IV
case was
supported by what had been said earlier in this Court in
Euromarine
International of Mauren v The Ship Berg and Others
,
supra
,
at 712 C - D to the effect that section 3 (6) gives a 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.”
(Whether the use of the
phrase “
additional
or
alternative”
was happily chosen need not presently be considered:
cf
MV Fortune 22 : Owners of the MV Fortune 22 v Keppel Corporation Ltd
1999 (1) SA 162
(C) at 166 D - F.)
[32] On the second
issue Thring J found that the respondent’s claim arose before
ownership of the Sea Sonnet passed to
the respondent and when she
was still owned by the appellant. In this regard he held that the
respondent’s claim arose
when delivery of the vessel was
tendered
by Dahlia to the respondent after the former had failed to perform
the obligations imposed on it by Clause 11 of the Memorandum
of
Agreement. He referred in this regard to the following statement
by F S Steyn J in
Hawken
v Olympic Pools (Pty) Ltd
1979 (3) SA 224
(T) at 227 A - B:
“
As the debtor
might remedy his prior breach at any stage during the execution of
the contract, the right of action will only accrue
when the contract
has been completed and the debtor
offers
his completed, but defective work as ostensible performance of his
obligation.”
(The
emphasis was Thring J’s.)
[33] On
the third issue Thring J held that Lemonaris as the majority
shareholder had the power directly to control Dahlia and
the
appellant.
After
stating that Lemonaris said nothing in his affidavits “to
indicate that in the law of Cyprus companies are controlled

differently in any material respect from the manner in which they
are controlled in our law”, he continued (at 492 A -
H):
“His statement
in para 19 of his first affidavit that ‘I exercise no control
over these companies’ when read
in its context means no more,
to my mind, than that the manner in which he acts in relation to
the first and third respondents
is subject to direction by others.
He does not say that under Cypriot law he has no power to control
the companies. In the
absence of evidence to the contrary it is
presumed that foreign law is the same as ours, being the
lex
fori
: see
Yorigami
Maritime Construction Co Ltd v Nissho-Iwai Co Ltd
1977 (4) SA 682
(C) at 692D - E; Forsyth:
Private
International Law
3rd ed 100 - 1.
In
s 440A of the Companies Act 61 of 1973 ‘control’ is
defined as
‘... a holding or aggregate holdings of shares
or other securities in a company entitling the holder thereof to
exercise,
or cause to be exercised, the specified percentage or more
of the voting rights at meetings of that company, irrespective of

whether such holding or
holdings confer
de
facto
control.’
The ultimate control
over a company’s affairs is exercised by its members in
general meeting, although immediate and direct
control may vest in
its directors, but they are answerable to the company’s
members in general meeting who may, of course,
determine who the
directors are to be. (See
Henochsberg
on the Companies Act
,
5th ed, vol I p 327.) It is the policy of the law that a company
should concern itself only with the registered owners of
its shares:
see
Sammel and
Others v President Brand Gold
Mining Co Ltd
1969(3) SA 629 (A) at 666 C - 667 A;
Oakland
Nominees (Pty) Ltd v Gelria Mining & Investment Co (Pty) Ltd
1976(1) SA 441 (A) at 453 A - B and
Standard Bank of South Africa Ltd and Another v Ocean Commodities
Inc and Others
1983 (1) SA 276
(A) at 289 A-B. It follows that even if he holds
the shares of the first and third respondents as a nominee for
others, Lemonaris,
as the registered shareholder, has the power
directly to control these companies by voting the majority of their
shares in their
shareholders’ meetings. This means that as the
majority shareholder of both companies Lemonaris has overall control
over
them; he can exercise control over their assets and their
destinies: see
EE
Sharp & Sons Ltd v MV Nefeli
1984 (3) SA 325
(C) at 327A. Moreover, as their sole director, he is
probably the only person with managerial powers in them. In my view
it does
not matter that other persons or entities, as beneficial
owners of the shares held by Lemonaris, may be entitled by reason of
arrangements made
inter
se
to direct
Lemonaris as to how he exercises his powers: the companies are
obliged to give effect to his legitimate wishes as the
registered
holder of the majority of their shares and are therefore subject to
his direct control.”
[34] On
the fourth issue Thring J held that the deeming provision in section
3 (7) (b) (ii) gave rise to an irrebuttable finding
with the result
that Lemonaris, who was found to have the power to control Dahlia
and the appellant,
was
to be conclusively regarded as controlling the companies whether he
did so in fact or not and whether or not that power was
exercised
through him by others. (See the reported judgment at 491 C - E.)
[35] I turn now to
deal with the first question which arises for decision in this
appeal,
viz
,
whether a claimant has to have a claim currently enforceable by an
action
in rem
in terms of section 3 (4) before the associated ship provisions
(section 3 (6) and (7)) can come into play.
[36] On
this part of the case I shall assume that the other issues are to be
decided in favour of the respondent, i e, that
the Sea Sonnet was
the property of Dahlia when the respondent’s claim arose and
that Dahlia was controlled by the same
person when the claim arose
as the person who controlled the appellant when the action was
commenced. That is to say, I assume
in the respondent’s favour
that the provisions of section 3(7)(a)(iii) have been complied with
so that the Sea Sonnet and
the Heavy Metal are to be regarded as
“associated ships”.
[37] The question to
be considered therefore is whether on a proper interpretation of
section 3 (6) the respondent had to have
an action
in
rem
available to
it against the Sea Sonnet when it arrested the Heavy Metal.
[38] It
will be recalled that section 3 (6), as far as is material, reads as
follows:
“
... an action
in
rem
... may be
brought by the arrest of an associated ship instead of the ship in
respect of which the maritime claim arose.”
The Afrikaans text of the subsection, which is the
signed text, reads as follows:
“
... ‘n
aksie
in rem
[kan] ... ingestel word deur die inbeslagneming van ‘n
geassosieerde skip in plaas van die skip ten opsigte waarvan die

maritieme eis ontstaan het.”
[39] Mr
Gauntlett
, who
appeared together with Mr
Berthold
on behalf of the appellant, contended in favour of a restrictive
interpretation of section 3 (6). He pointed out that the associated

ship provisions in the Act and similar provisions in England
(section 3 (4)) of the Administration of Justice Act, 1956 (4 &

5 Eliz 2, cap 46), now section 21 (4) of the Supreme Court Act, 1981
(29 & 30 Eliz 2, cap 54)) have their root in article
3 of the
International Convention relating to the Arrest of Sea-going Ships,
which was signed at Brussels in 1952. (In what follows
I shall refer
to this convention as the “Arrest Convention”.) He
submitted further that it was clear from the debates
at the
conference which preceded the signing of the Convention that the
provisions of the Convention were to be restrictively
interpreted.
[40] He contended
further that any form of arrest is under our common law a drastic
invasion of proprietary rights or personal
liberty which will not
readily be accepted as having been intended unless there are
compelling reasons for doing so. He relied
in this regard,
inter
alia
, on a passage
in the dissenting judgment of Didcott J in
Katagum
Wholesale Commodities Co Ltd v The MV Paz
,
1984 (3) SA 261
(N) at 269 H - 270 B where the learned judge spelt
out the drastic consequences for a shipowner or charterer if a
vessel is arrested.
[41] He also submitted
that the use of the words “
in
plaas van
die
skip” in section 3(6) indicated that a narrower interpretation
of the section is to be favoured.
[42] As
was pointed out by the South African Law Commission in its Report on
the Review of the Law of Admiralty, Project 32,
1982, p 10, there
were great developments in maritime law in the period after 1890,
when the British Parliament enacted the Colonial
Courts of Admiralty
Act, 1890 (53 & 54 Vict Cap 27), which formed the basis of
admiralty practice in South Africa until
the coming into operation
of the Admiralty Jurisdiction Regulation Act 105 of 1983. Among
these developments was the Arrest
Convention which endeavoured to
produce a unification of rules relating to the arrest of sea-going
ships. As most of these developments
had not been incorporated in
South African legislation South African maritime law had become out
of date and filled with anachronisms.
In the report it was also
pointed out (at 13) that it was desirable that there should be as
great a degree of consistency as
can be achieved with other systems
of maritime law.
[43] In the
circumstances it comes as no surprise that the Arrest Convention
served as the basis for a number of provisions in
the Act, which was
enacted by Parliament following the presentation of the Commission’s
report to the Minister of Justice
in terms of section 7 (1) of the
South African Law Commission Act 19 of 1973, in particular the
definition of maritime claims
in section 1. In addition the
provisions in the Arrest Convention for the arrest of sister ships,
i e, ships in the same ownership
as the guilty ship, were not only
taken over but also extended to cover associated ships, so that the
device adopted by many
shipowners of registering so-called “one
ship companies” in order to evade the sister ship provisions
of the Convention
could be countered by what may be described as a
statutory mode of piercing the corporate veil. As far as I have been
able to
ascertain, none of the other major maritime nations has
adopted legislation which goes as far as we do in this regard. It
follows
that where our legislation goes further than that of other
maritime nations their case law can obviously provide no guidance as

to the interpretation of our provisions. Where, however, provisions
in the Act are clearly modelled upon articles in the Arrest

Convention and the legislation of other countries which have adopted
it, it is appropriate, in my opinion, for our Courts to
have regard
to the Convention and the case law of those countries in order,
inter alia
,
to help to bring about that degree of consistency among maritime
nations to which I referred earlier.
[44] Section
3 (6) is modelled on article 3 (1) of the Arrest Convention which
reads as follows:
“
... a claimant may arrest either the particular
ship in respect of which the maritime claim arose, or any other ship
which is
owned by the person who was, at the time when the maritime
claim arose, the owner of the particular ship, even though the ship

arrested be ready to sail ...”
[45] The purpose of
the Arrest Convention was considered by Lord Diplock in the opinion
he delivered in
The
Jade, The Eschersheim,
[1976] 1 All ER 920
(HL) at 923 f - j, where he said the following:
“
The purpose of that convention was to provide
uniform rules as to the right to arrest seagoing ships by judicial
process to secure
a maritime claim against the owner of the ship.
Article 1 defined by reference to their subject-matter various
classes of maritime
claim in respect of which alone a right of
arrest was to be exercisable; while arts 2 and 3 granted and
confined the right of
arrest to either (a) the particular ship in
respect of which a maritime claim falling within one or more of
those classes arose,
or (b) any other ship owned by the person who
was, at the time when the maritime claim arose, the owner of the
particular ship.
The provisions of art 3 represented a compromise
between the wide powers of arrest available in some of the civil law
countries
(including for this purpose Scotland) in which
jurisdiction to entertain claims against a defendant could be based
on the presence
within the territorial jurisdiction of any property
belonging to him, and the limited powers of arrest available in
England and
other common law jurisdictions, where the power to
arrest was exercisable only in respect of claims falling within the
Admiralty
jurisdiction of the court and based on a supposed maritime
lien over the particular ship in respect of which the claim arose.”
(I take it that by
referring to “a supposed maritime lien over the particular
ship in respect of which the claim arose”
Lord Diplock was
referring
not
only to maritime liens properly so-called but also to statutory
rights of action
in
rem
(sometimes
called “statutory liens” - see
The
Zafiro
[1960] P 1
per Hewson J at p 13). In the case of both maritime liens and
statutory
rights
of action
in rem
in England prior to the coming into operation of the Administration
of Justice Act, 1956, the procedure
in
rem
to arrest a
ship only applied to the ship to which the cause of action related:
see
The Beldis
,
[1936] P 51
(CA).)
[46] The effect of the
Arrest Convention was also summarised by Lord Denning MR in
The
Banco
, [1971] ) P
137 (CA) (at 151 F - H) as follows:
“
In 1952 there
was an International Convention held at Brussels. ... It was held
because of the different rules of law of different
countries about
the arrest of seagoing ships. Some countries, like England, did not
permit the arrest of any ship except the
offending ship herself:
whereas many continental countries permitted the arrest, not only of
the offending ship, but also of
any other ship belonging to the same
owner. In the result a middle way was found. It was agreed that
one
ship might be arrested, but only
one
.
It might
either
be the offending ship herself
or
any other ship belonging to the same owner: but no more. This was
an advantage to plaintiffs in England because it often happened

previously that, after a collision, the offending ship sank or did
not come to these shores. So there was nothing to arrest.
Under
the Convention the plaintiff could arrest any other ship belonging
to the same owner whenever it happened to come to
England.”
A
similar view of this effect of the Convention and the 1956 Act was
taken by Cairns LJ (see his judgment at 161 B).
[47] That
Lord Denning MR was right in saying that article 3 (1) of the
Convention authorised arrest of a sister ship even when
the “guilty
ship” was not available to be arrested because she had sunk
seems to follow from the nature of the compromise
arrived at
Brussels between the English “guilty ship” approach and
the continental approach (which is also our own
in non-admiralty
matters where property is arrested to found or confirm
jurisdiction).
[48] In my opinion an
important indication of Parliament’s intention in this regard
is to be found in section 3(7)(a)(i)
of the Act which, it will be
recalled, provides that an associated ship is a ship, other than the
guilty ship, “owned,
at the time the action is commenced, by
the person who
was
the owner of [the guilty ship] at the time when the maritime claim
arose”. All that is required therefore for ships to
be
associated in terms of section 3(7)(a)(i) is that they should have a
common owner (1) who
was
the owner of the guilty ship when the claim arose and (2) who
is
the owner of the associated ship when the action is commenced, ie,
when the associated ship is arrested.
[49] I accordingly
agree with the following passage in Shaw,
Admiralty
Jurisdiction and Practice in South Africa
,
pp 37 - 38:
“If, therefore, A, at the relevant time (that
is, at the time of the arrest) owns a ship, that ship will be an
associated
ship if A, at the time when the maritime claim arose, was
the owner of the ship concerned [the guilty ship]. Changes of
ownership
in the ship concerned after the time when the maritime
claim arose are irrelevant, as is the question whether the ship
which
is an associated ship was owned by A at the time when the
maritime claim arose.”
[50] In
my opinion the language in the Afrikaans text is capable of being
interpreted to cover a case where an arrest of an associated
ship
takes place where the guilty ship can no longer be arrested at all
(because she has sunk) or is no longer in the hands of
her owner at
the time the claimant’s right of action arose (in cases
falling under section 3 (4) (b)) because she has since
been disposed
of. In such cases it can be said that the associated ship was
arrested “in plaas van” the guilty
ship.
[51] In
the circumstances I am satisfied that Thring J was correct in
deciding the first issue in favour of the respondent.
[52] I proceed now to
consider the second issue which arises for decision in this case,
viz,
whether
the respondent’s cause of action arose at a time when the Sea
Sonnet was still the property of the appellant.
[53] It is clear in my
opinion that if the appellant failed to notify the Classification
Society before delivery of “problems”
which it
encountered with the vessel which should have been so reported, as
the respondent alleges, the appellant breached clause
11 of the
memorandum of agreement before delivery. It is true that the
appellant could have remedied this alleged failure at
any time up to
delivery but that does not detract from the fact that the alleged
breach (if there was one) was committed
before
delivery. One can only ascertain
after
delivery by when the “problems” encountered had to be
reported but this does not alter the time when the alleged
breach
took place,
viz
,
before delivery. In the circumstances it is not necessary for me to
express any opinion as to the correctness of the dictum
by F S Steyn
J in
Hawken v
Olympic Pools (Pty) Ltd
,
supra
,
upon which Thring J relied.
[54] I
now turn to consider the third issue in this matter, which it will
be remembered was whether it was proved that Lemonaris
or some other
person or persons had “power, directly or indirectly, to
control” Dahlia and the appellant.
[55] Mr
Gauntlett
contended on this part of the case that the respondent did not prove
that Lemonaris had the power, directly or indirectly, to
control
Dahlia and the appellant. He submitted that the respondent failed to
adduce any evidence to contradict what Lemonaris
had said and that
his version ought to have been accepted, namely, that he was a mere
nominee or puppet and had no actual control
over either Dahlia or
the appellant.
[56] Mr
Gauntlett
submitted further that in the circumstances the deeming provision
contained in section 3 (7) (b) (ii) does not come into operation

because the requisite power on the part of Lemonaris was not proved
to exist.
[57] He
argued that what the provision was concerned with was purely
factual: who actually has the power to control the company.
If it
were to be held that a mere nominee director and majority
shareholder, who acts on the instructions of the beneficial
owners
of two companies (being different persons), who is required by the
laws of his country to abide strictly by and to carry
out those
instructions, and who exercises no control over the companies
concerned and is a mere “postbox” for the
beneficial
owners in the case of each company, has power to control the
companies, with the result that vessels belonging to
the two
companies concerned are to be regarded as associated ships for the
purposes of section 3 (6), then the purpose which
the subsection is
designed to achieve will not be achieved, ships which are not truly
associated will wrongly be associated for
the purposes of section 3
(6) and a bizarre position will result.
[58] The law to be
applied in a case such as this, where final relief is sought on
papers without resort to oral evidence was,
as Mr
Gauntlett
submitted, set out by Corbett JA in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
,
[1984] ZASCA 51
;
1984 (3) SA 623
(A), at 634 E - 635 C, as follows:
“[T]he
affidavits reveal certain disputes of fact. The appellant
nevertheless sought a final interdict, together with
ancillary
relief, on the papers and without resort to oral evidence. In such a
case the general rule was stated by Van Wyk J
(with whom De Villiers
JP and Rosenow J concurred) in
Stellenbosch
Farmers’ Winery Ltd v Stellenvale Winery (Pty) Ltd
1957 (4) SA 234
(C) at 235E - G, to be:
‘
..... where there is a dispute as to the facts a
final interdict should only be granted in notice of motion
proceedings if the
facts as stated by the respondents together with
the admitted facts in the applicant’s affidavits justify such
an order
... Where it is clear that facts, though not formally
admitted, cannot be denied, they must be regarded as admitted.’
This rule has been
referred to several times by this Court (see
Burnkloof
Caterers (Pty) Ltd v Horseshoe Caterers (Green Point) (Pty) Ltd
1976 (2) SA 930
(A) at 938A - B;
Tamarillo
(Pty) Ltd v B N Aitkin (Pty) Ltd
1982 (1) SA 398
(A) at 430 - 1;
Associated
South African Bakeries (Pty) Ltd v Oryx & Vereinigte Bäckereien
(Pty) Ltd en Andere
1982
(3) SA 893
(A) at 923G - 924D). It seems to me, however, that this
formulation of the general rule, and particularly the second
sentence
thereof, requires some clarification and, perhaps,
qualification. It is correct that, where in proceedings on notice of
motion
disputes of fact have arisen on the affidavits, a final
order, whether it be an interdict or some other form of relief, may
be
granted if those facts averred in the applicant’s
affidavits which have been admitted by the respondent, together with

the facts alleged by the respondent, justify such an order. The
power of the Court to give such final relief on the papers before
it
is, however, not confined to such a situation. In certain instances
the denial by respondent of a fact alleged by the applicant
may not
be such as to raise a real, genuine or
bona
fide
dispute of
fact (see in this regard
Room
Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T) at 1163 - 5;
Da
Mata v Otto NO
1972 (3) SA 858
(A) at 882 D- H). If in such a case the respondent
has not availed himself of his right to apply for the deponents
concerned
to be called for cross-examination under Rule 6 (5) (g) of
the Uniform Rules of Court (
cf
Petersen v Cuthbert & Co Ltd
1945
AD 420
at 428;
Room
Hire
case
supra
at 1164) and the Court is satisfied as to the inherent credibility
of the applicant’s factual averment, it may proceed
on the
basis of the correctness thereof and include this fact among those
upon which it determines whether the applicant is entitled
to the
final relief which he seeks (see eg
Rikhoto
v East Rand Administration Board and Another
1983 (4) SA 278
(W) at 283E - H). Moreover, there may be exceptions
to this general rule, as, for example, where the allegations or
denials of
the respondent are so far-fetched or clearly untenable
that the Court is justified in rejecting them merely on the papers
(see
the remarks of Botha AJA in the
Associated
South African Bakeries
case,
supra
at 924A).”
[59] Applying
the law as set out in that passage to the facts of this case, I do
not think that Lemonaris’s denials can
be regarded as so
far-fetched or clearly untenable that they can be rejected merely on
the papers nor can it be said that the
respondent’s factual
averments are inherently credible. I also do not agree with the
submission made in the respondent’s
papers that Lemonaris’s
statement that he held the shares in Dahlia and the appellant as a
nominee only should not be accepted
as materially placing in dispute
the respondent’s allegation that the Sea Sonnet and the Heavy
Metal were associated ships.
[60] Lemonaris’s
statement regarding the legal position in Cyprus was not refuted by
the respondent despite the fact that
it had a firm of lawyers
practising in Nicosia which made investigations on its behalf in
Cyprus.
[61] His statement
that the respondent’s allegation about his apparent power to
control the vessels was contradicted by
later passages in the
founding affidavit, in which it was stated to be probable that the
companies owning the vessels in question
were ultimately controlled
by the same person who was probably Vafias, is correct. Indeed the
only passage in the founding affidavit
in which the deponent speaks
of “power directly or indirectly to control” is the
paragraph quoted above in which
it was said that “Lemonaris
apparently has the power directly or indirectly to control the
vessels
”
(my emphasis).
[62] The
deeming section speaks of “power ... to control the company”
so that the passage quoted reveals some degree
of confusion of
thought. The respondent’s approach appears to have been the
following as far as its first basis for alleging
that the ships were
associated ships was concerned: Lemonaris had the controlling
interest in the companies which owned the
two ships , therefore he
apparently had power, directly or indirectly, to control the ships.
[63]
As far as indirect control is concerned in my view it must be
accepted that Lemonaris’s statement on oath that Tsavliris
was
“the ultimate beneficial owner” of the Sea Sonnet at the
time of its sale and delivery to the respondent cannot
be rejected
as being so far-fetched or clearly untenable that the Court would be
justified in rejecting it merely on the papers.
As far as the Heavy
Metal is concerned it is noteworthy that Lemonaris never directly
denied that Vafias was her probable ultimate
beneficial owner. What
he said was that Tsavliris had no interest, as owner or otherwise,
in the Heavy Metal while Vafias did
not own or control the Sea
Sonnet at any material time.
[64] In my view on the
application of the
Plascon-Evans
principles it has to be accepted that at the relevant times
Tsavliris was the ultimate beneficial owner of the Sea Sonnet and

that Vafias may well have been the ultimate beneficial owner of the
Heavy Metal. In other words it is not possible to base
an
association between the vessels on the fact that the same person had
the power indirectly to control the companies which owned
them. I
do not understand Thring J to have held otherwise. His judgment, as
appears from the extract quoted above, was based
on the fact that
the same person, Lemonaris, had the power directly to control the
companies which owned the vessels.
[65] Certainly, if it
were not for the complication that it appears that power indirectly
to control the companies which owned
the two vessels was in
different hands at the relevant time, I think that no fault could be
found with Thring J’s finding
regarding what one may, for the
sake of brevity, call direct control. In South African legal
terminology the person who controls
the shareholding in the company
has the power to determine the company’s direction and fate.
Foreign law is a question
of fact. In the absence of evidence to the
effect that the law of the Republic of Cyprus differs materially
from our own there
is no reason to suspect that the applicable law
differs materially from the South African model (cf
Caterham
Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd and Another
[1998] ZASCA 44
;
1998 (3) SA 938
(SCA) at 954 B - E).
[66] The
complication to which I referred earlier gives rise to the following
problem: can there simultaneously be two repositories
of power to
control for the purposes of the section?
[67] The meaning of
the expression “control of the company” was considered
by the House of Lords in
Barclays
Bank Ltd v Inland Revenue Commissioners
[1961] AC 509
(HL). All the Lords who participated in the appeal
were agreed that a person could be said to have control of a company
if he
or she could by his or her votes control the company in
general meeting. There was, however, a difference of opinion
between
them as to whether it made a difference if the shareholder
who had apparent control might himself be amenable to some external

control. Viscount Simonds, Lord Cohen and Lord Keith of Avonholm
held that it was not relevant. Lord Reid, with whom Lord Denning

agreed on this point (although he sided with the majority on another
point which is not relevant for present purposes), held
that control
means real control and that the shareholder who the majority held
had control of the company did not have real control
of the majority
of votes because he was not entitled to cast votes which gave him
his majority (which he held as one of four
trustees but in respect
of which he could vote because his name appeared as the first of the
four trustees’ names in the
company register) without the
consent of his co-trustees.
[68] The
case concerned the valuation for estate duty purposes of shares held
by a deceased person in a company. In terms of
section 55 of the
Finance Act, 1940, the deceased’s shares were to be valued by
reference to the value of the assets of
the company “if the
deceased had the control of the company at any time during the five
years ending with his death”.
If on the other hand the
deceased did not have the control of the company during the period
referred to his shares were to be
valued by reference to their
market value under section 7 (5) of the Finance Act, 1894.
[69] For
almost twenty years before his death the deceased was the registered
holder of 1100 shares in a company whose share
capital was 8350
shares. A further 3650 shares had been settled by the deceased
nineteen years before his death upon trusts for
the benefit of his
wife and children. He and three other persons were the trustees who
were registered as the holders of the
3650 shares. As the
deceased’s name appeared in the company’s register of
members as the first holder he was entitled
under the company’s
articles of association to vote in respect of the shares, which
meant that he was entitled to vote
in respect altogether of shares
amounting to more than half the issued share capital of the company.
As
Lord Reid explained in his speech (at 526):
“
The deceased had not an unrestricted power to
vote in respect of these 3,650 shares. It was his duty to obtain the
concurrence
of the other three trustees, and, if they objected to
the way in which he proposed to vote, it [was] admitted that they
could
obtain from the court a direction as to how the votes should
be cast and, if necessary, an injunction to prevent the deceased
from voting as he proposed.”
[70] In concluding
that the fact that the deceased was amenable to external control was
irrelevant, the majority followed an
earlier decision of the House
of Lords,
Inland
Revenue Commissioners v J Bibby & Sons Ltd
[1945] 1 All ER 667
(HL), a case concerning excess profits tax in
which it was held that the register alone could be looked at and
that the fact
that a registered shareholder might be subject to
outside control was irrelevant in deciding whether he had “a
controlling
interest” in the company within the meaning of a
section of the Finance (No
2) Act, 1939.
[71] Lord Reid held
that what he called “the rule in
Bibby
’s
case” did not apply. He said (at 531 - 2):
“
... I do not
see how that can be applied to this case unless, indeed, it were
held that this rule is of such general application
that even under
the Act of 1940 only the register can be looked at. Neither party
has argued that, and there are numerous provisions
in the Act of
1940 which, in my opinion, clearly entitle the Crown to go behind
the register and prove that the deceased had
control although he was
not the holder of a majority of the shares. If it were not so there
would be such an easy and obvious
method of evasion that an amending
Act would immediately be necessary. And if under this Act the Crown
can go behind the register,
what ground is there for applying the
rule in
Bibby
’s
case to prevent the shareholder from doing the same?”
[72] He
was of the view that what was required was “real control”
and not “apparent control” and that
the deceased did not
have real control of the majority of the votes because he was not
entitled to cast the trust votes without
the consent of his
co-trustees. He rejected an argument advanced by the Crown that
control had a double meaning and covered both
real and apparent
control, saying (at 532):
“
... if we cannot
apply [the rule in
Bibby
’s
case] to prevent the Crown from going behind the register, I see no
reason to apply it to prevent the taxpayer from doing
the same”
[73] As
I have said, Lord Denning agreed with Lord Reid on this part of the
case. He dealt with the point as follows (at 544):
“
... I agree with my noble and learned friend,
Lord Reid, in thinking that
‘
control’ in this Act means real control
and not apparent control. I am not prepared to subscribe to the view
that a man
who is a nominee or a bare trustee has control of a
company.”
[74] In the present
case it is clear from the use in section 3 (7) (b) (ii) of the
expression “power, directly or indirectly,
to control the
company” that Parliament did not intend the court to look only
at the register: the rule in
Bibby
’s
case is clearly not applicable.
[75] In
this regard it is important to point out that the definition of
“control” which Thring J quoted from section
440 A of
the Companies Act 61 of 1973, as amended, as it was worded before it
was substituted by section 14 (b) of Act 35 of
1998, only applied
to Chapter XVA of the Companies Act which deals, as the chapter
heading indicates, with the regulation
of securities. It was not of
general application in our company law and in so far as the learned
judge was influenced by it in
coming to the conclusion to which he
did he was wrong.
[76] Real, not
apparent, control is what is required and a nominee shareholder who
can be directed by a mandamus from a court
as to how he is to vote
at a general meeting cannot be said to be in control of the company.
The reference to “power directly
... to control” in my
view is to real control exercised by the person in whose name the
relevant shares are registered
and who is not subject to external
control, while the reference to “power ... indirectly to
control” is once again
to real control this time exercised
indirectly through the registered shareholder who is entitled to
exercise the majority of
votes at the general meeting. There is
nothing in the section which indicates that apparent as opposed to
real, control is sufficient.
When one has regard to the mischief at
which the section is directed,
viz
the device of hiding the fact that two vessels are associated in
that a single person “owned” them at the relevant
times,
it becomes obvious that an association based on apparent but not
real control was not what Parliament had in mind when
it enacted the
section. Furthermore if apparent control were to be held to be
sufficient this would lead to the bizarre result
to which Mr
Gauntlett
referred.
[77]
In my view what Parliament had in mind when it enacted the
subsection was that there was only one criterion, namely power
to
control and that, whether it is directly or indirectly exercised,
there can be only one person who has it for the purposes
of the
subsection. There are not two repositories of power to control for
purposes of the subsection - only one. If someone has
indirect power
to control it must follow that the ostensible holder of direct power
does not have it within the meaning of the
subsection. The
consequence of that is that an arrestor who seeks to make out a
direct control case is impliedly saying that
there is no-one who
exercises indirect control. On the other hand an arrestor who seeks
to make out an indirect control case
is impliedly saying that the
person ostensibly exercising direct control is not the true
repository of power to control within
the meaning of the subsection.
[78] In
the present case the respondent alleged that Lemonaris had direct
power but contradicted itself by saying that he was
a “postbox”,
who was ultimately controlled by someone else who had indirect power
over the companies. That seems
to be correct except that ultimate
control over the two companies may well not be in the hands of one
person but two different
persons. The respondent has accordingly
failed to establish that the vessels owned by the two companies at
the material times
were associated vessels within the contemplation
of section 3 (6) and (7).
[79] It follows that I
am of the opinion that on the third issue the court
a
quo
should have
found in favour of the appellant and that the appeal should be
allowed on that basis.
[80] This
conclusion renders it unnecessary for me to consider the fourth
issue referred to above.
[81] In
my opinion the appeal should succeed with costs, including those
occasioned by the employment of two counsel.
I G FARLAM
ACTING
JUDGE OF APPEAL
/
MARAIS
JA
:. . .
MARAIS JA
:
[1] I
have had the benefit of reading the judgments of Smalberger JA and
Farlam AJA. I agree with Smalberger JA that the appeal
should be
dismissed but I reach that conclusion for substantially different
reasons. However, I agree with Farlam AJA’s
judgment in all
respects other than his assessment of the facts (to which I shall
return) and his ultimate conclusion as to the
fate of the appeal.
I commence by adding some observations of my own. It will appear
from them where I am in respectful disagreement
with Smalberger JA.
[2] As regards the
question of whether there was a breach by the seller of the Sea
Sonnet of its obligation under clause 11 of
the memorandum of
agreement before ownership of the vessel passed to the buyer, I
emphasise that the moment of delivery marked
the expiration of the
period of time which was available to appellant to fulfil the
obligation. Notification
simul
ac semel
with
delivery was not what the contract required. Notification
prior
to delivery was required. If that did not take place prior to
delivery then
ex
hypothesi
the
failure to fulfil the obligation occurred prior to delivery and
before ownership of the vessel had passed to the respondent.
[3] On the question of
whether or not the owner of a guilty ship has still to own it before
an associated ship can be arrested,
I think a comparison with sec 3
(7)(a)(ii) is instructive. The plain language of the provision
shows that what is envisaged
is a person who had the power to
control at the time when the maritime claim arose (but does not
necessarily still have the power
to control) a company which owned
the guilty ship, and that he owns another ship at the time action is
commenced. It follows
that notwithstanding the fact that he no
longer controls the company which owned the guilty ship, his own
ship may be arrested
irrespective of when he acquired it. It seems
quite plain that the words “who controlled the company which
owned the
[guilty] ship . . . when the maritime claim arose”
cannot be interpreted as meaning “who controlled
and
still controls
the
company which owned the [guilty] ship . . . when the maritime claim
arose”. What warrant is there then for interpreting
sec 3
(7)(a)(i) as meaning “who was
and
still is
the owner
of the [guilty] ship . . . at the time when the maritime claim
arose”? Surely none. In both instances there
is no longer
any existing bond between the two ships. If that does not matter
in a claim based on sec 3 (7)(a)(ii) I see no
justification for
saying that it matters in a claim based on sec 3 (7) (a)(i). I
might add that a close study of the provisions
of subsections
(7)(a)(i), (7)(a)(ii) and (7)(a)(iii) will show that they would
make little sense if the owner of the guilty
ship had still to own
it before an associated ship could be arrested.
[4] As
to the interpretation of sec 3(7)(b)(ii), I supplement Farlam AJA’s
discussion of the problem with the following
comments.
When the legislature
decided to provide the alternative remedy of an action
in
rem
against an
associated ship with ownership as a criterion for association, it
realised that account would have to be taken of
well-known
mechanisms whereby the benefits of ownership are retained but
ownership itself is not. That is why ownership is
not the only
criterion for association and power to control is also included as a
determinant of association. The way in which
this was done was,
first, by describing in sec 3 (7)(a)(i), (ii) and (iii) the
circumstances in which ships were to be regarded
as associated, and,
secondly, by enacting certain deeming provisions in sec 3
(7)(b)(i), (ii) and (iii) which are obviously
designed not only to
defeat defensive stratagems which ship owners might deliberately
deploy to ward off potential arrests of
associated ships by
disguising their ownership or their control of such ships, but also
to allow it to be shown even in a case
where no such motive existed
where power of control
really
lay.
[5] Subparagraph
(i) of sec 3 (7)(a) required the ship sought to be arrested to be
owned at the time of commencement of action
by a person who owned
the guilty ship when the maritime claim arose. Subparagraph (ii)
required the ship sought to be arrested
to be owned at the time of
commencement of action by a person who controlled the company which
owned the guilty ship when the
maritime claim arose. Subparagraph
(iii) required the ship sought to be arrested to be owned at the
time of commencement of
action by a person who owned the guilty
ship, or who controlled a company which owned the guilty ship when
the maritime claim
arose.
[6] The
deeming provisions in sec 3 (7)(b)(i) enable a claimant to equate
the position of a person who holds, or persons who
together hold,
the majority of the shares in a ship, or the majority of voting
rights attaching to the shares in a ship, or the
greater part in
value of the shares in a ship with that of a sole owner of a ship.
For example, if x was the sole owner of
ship A (the guilty ship) and
there is another ship, B, in which there are sixty-four shares of
which x owns thirty, y twenty,
and z ten, ship B in its entirety is
deemed to be owned by x even although it is not in fact so owned.
It seems clear that
dominance of ownership in a situation of divided
ownership, or dominance of control in such a situation, or dominance
in the
relative values of respective shareholdings, is considered to
be the justification for equating the situations.
[7] The deeming
provision in sec 3 (7)(b)(ii) is obviously intended to operate in
tandem with sec 3 (7)(a)(ii) and (iii) and,
for that matter, with
sec 3 (7)(b)(iii) which provides that a company includes any other
juristic person and any body of persons
irrespective of whether or
not any interest therein consists of shares. Sec 3 (7)(b)(ii)
provides that “a person shall
be deemed to control a company
if he has power, directly or indirectly, to control the company”.
Here again the legislature
seems to me to be more concerned with
where the power to control a company actually resides than with
where it may appear to
reside. In my opinion, the manifest purpose
of the provision is to enable claimants to penetrate protective
facades such as
nominee shareholdings and demonstrate that real
power to control the company lies in other hands where such is in
fact the case.
And if the real
situs
of power to control is the criterion, as I consider it to be, I see
no justification for saying that it is only open to a claimant
to
demonstrate where it lies and that it is not open to the targeted
ship’s owner to do so.
[8] I think that the
untenability of interpreting the provision as if it was not
concerned with the real
situs
of power to control and was intended to permit a claimant to arrest
even a third party’s ship which was not consciously
connected
in any way with the guilty ship appears when the following example
is considered. Assume it to be common cause between
the parties to
an application for arrest that the sole shareholder and director of
a company which owns an allegedly associated
ship is a mere nominee
and that there is a beneficial shareholder on whose instructions he
acts. Which of them has power to
control the company within the
meaning and for the purposes of sec 3 (7)(b)(ii)? The answer cannot
be both. If it can only
be one of them, I fail to see why it must
or should or could be taken to be the nominee and not the
beneficial owner. The
provision accords no arbitrary priority to
the nominee in such a case. As I see it, the provision does not
give the claimant
a choice as to which of the two it best suits him
to have regarded as having the power to control the company. The
purpose
of the provision is not to create a fiction which could
place innocent third parties in jeopardy of having their ships
arrested
to secure payment of claims brought against persons or
ships of whose existence they were quite oblivious. That would be
tantamount
to naked confiscation without compensation - a purpose
which one shies away from attributing to the legislature unless that
is
unmistakably what it intended. Its purpose is to allow a
claimant to pierce the veil of apparent or ostensible power to
control
a company and so reveal the identity of the real holder of
power to control the company.
[9] There
is another consideration. If it is so, as I consider to be the
case, that the provision postulates that the direct
and indirect
power to control a company of which it speaks cannot co-exist
simultaneously, and if it were so, as Thring J held,
that as soon as
it is shown that there is a person who holds the majority of the
shares in a company that person is deemed, for
the purposes of the
associated ship provisions, to control the company directly
irrespective of whether or not he is a mere nominee,
it would mean
that the question of indirect control could never arise for it would
be irrelevant. It would mean too that a
claimant who wished to
prove that in fact power to control the company lay with someone
else,
would
be forestalled at the outset. That would defeat the very purpose of
the provision.
[10] It is of course
so that the subsection distinguishes between direct and indirect
power to control a company. But that
tells one very little. It
begs the question which remains: was the legislature merely
distinguishing between two manifestations
of
real
power to control, either of which would suffice to trigger the
operation of the deeming provision, or was it saying that direct

power to control includes both real power to control and apparent
(but illusory) power to control, and that the existence of
either
will suffice to trigger its operation, but that in the case of
indirect power to control, only the existence of real power
to
control will trigger its operation? If the latter, the
inconsistency of its approach is immediately apparent.
[11] I
am unable to appreciate why it is thought that the distinction
between direct and indirect power to control drawn by the

legislature would be set at naught and fulfil no purpose if the
beneficial owner of the shares in a ship-owning company threatened

with the arrest of its vessel as an allegedly associated ship were
permitted to show that the registered owner of the shares
was merely
his nominee. On the contrary; it would be an invocation of the
distinction to show that what might appear to be
direct power to
control is not in fact real power to control because there is
someone else in whom power to control actually
resides, namely, the
beneficial shareholder who exercises it indirectly.
[12] I am equally
unable to agree that it would have been open to the beneficial owner
of the shares in such a situation to show
that the registered
shareholder is a mere nominee if the legislature had spoken simply
of the “power to control”
in the section, but that it is
not open to him to do so because the legislature speaks of “power,
directly or indirectly,
to control”. Had the words “power
to control” been used, it might well have been contended on
the strength
of the majority decision in
Barclays
Bank Ltd v Inland Revenue Commissioners
[1961] AC 509
(HL) that the existence of a power behind the throne
was irrelevant. In my view, the inclusion of the words “directly
or indirectly” was intended to emphasise that the true
situs
of power to control, whether it be direct or indirect power, is what
matters for the purposes of the provision. However, I
agree with
Smalberger JA that it is not power to manage the operations of the
company but the power to determine its direction
and fate which is
what counts.
[13] I
cannot subscribe to the proposition that, if the interpretation of
the provision favoured by Smalberger JA should result
in a third
party who has no connection whatsoever with the guilty ship other
than that he happened unwittingly to use as his
nominee to hold
shares in his ship-owning company a person who also holds as a
nominee all the shares in the company which owns
the guilty ship,
losing his company’s ship, that is his fault for “choosing
to operate behind a cloak of secrecy.”
There is nothing
inherently immoral, unethical, or reprehensible in nominee
shareholdings. The reasons why they may be resorted
to in good
faith are legion and the interpretation to be given to the provision
cannot be grounded upon an assumption that there
must always be some
or other disreputable purpose lurking behind their use.
[14] I do not think
that anything can be learnt from what is thought to be a contrast in
the provision between the exercise of
power
de
jure
and its
exercise
de facto
.
To illustrate: to say that power exists only
de
facto
carries with
it the implication that it does not exist
de
jure
. If it is a
fact that a board of trustees is so spellbound by the personality of
the founder of a trust that they always do
his bidding even though
they are not obliged to do so in law, then the founder has power
de
facto
, but not
de
jure
, to control
the trust. If, on the other hand, a company’s shares are all
held by a nominee who has agreed with the beneficial
owner to always
do his bidding, the beneficial owner’s power to indirectly
control the company does not exist merely
de
facto
; it exists
de jure
. In
other words, it is an enforceable power which he has in law and not
merely in fact. Power
de
jure
to control a
company can thus exist directly or indirectly and should not be
confused with the entirely separate and distinct
rules of law which
govern the relationship between a company and its registered
shareholders and delineate the powers of its
shareholders. As
between the company and the person who is registered as the holder
of the majority of its shares, the person
so registered has power
de
jure
to control
the company even although he is a mere nominee. But
non
constat
that the
beneficial shareholder’s power to control directly his nominee
and thereby indirectly the company is merely power
de
facto
. In short,
it is fallacious, in my opinion, to always equate indirect control
with control
de
facto
. I think
the truth of the matter is that, depending on the facts of each
particular case, indirect control may be exercised
sometimes
de
facto
and
sometimes
de jure
.
Whether the deeming provision must be read as extending to
indirect power which exists only
de
facto
, but not
de
jure
, it is not
necessary to decide. What seems to me to be plain is that it must
extend at least to indirect power which exists
de
jure
.
[15] It
is in the assessment of whether there is adequate proof of the
facts which must exist before the existence of indirect
control can
trigger the provisions which would result in the Sea Sonnet and the
Heavy Metal being taken to be associated ships
that I differ from
Farlam AJA. In the context of this case (in which it ultimately
became virtually common cause that Lemonaris
was a mere nominee)
what respondent had to prove on a balance of probability was that
appellant company (“Belfry Marine”)
was controlled
indirectly when action was commenced by the same person or persons
who controlled indirectly the company (Dahlia
Maritime Limited)
(“Dahlia”) which owned the Sea Sonnet when the maritime
claim arose. It is not necessary to be
able to name that person;
it would be sufficient to prove that, whoever he or she or it or
they may be, it is one and the same
person. In the present case
respondent did attempt to provide a name albeit in a highly
speculative manner. And it is so,
of course, that inability to
prove who the person is may diminish the prospect of ultimately
succeeding in proving that the same
person has power to indirectly
control both companies. But, in a given case, it may yet be
possible to prove it. All will
depend on the particular facts.
[16] In considering
the evidence contained in the affidavits one is of course bound to
apply the principles set forth in the
case of
Plascon
Evans Paints Ltd
to which Farlam AJA has referred. However, as the extract from the
judgment quoted by him shows, a court will not necessarily
be
hamstrung by a respondent’s denials of facts in motion
proceedings. In my view a highly unusual situation arises
in this
case. There is a welter of circumstantial evidence pointing very
strongly indeed to Lemonaris, whether he knows it
or not, being
subject in his capacity as majority shareholder and sole director of
both companies to the ultimate control and
direction of the same
person or persons. I say “whether he knows it or not”,
because Lemonaris himself says the
instructions of beneficial owners
to nominees “are often given through intermediaries”.
There is the fact that
both companies have the same nominee and sole
director; that their addresses are the same; that both ships were
managed (if
not operated) by Brave Maritime Corporation Inc (“Brave
Maritime”); that the Greek Shipping Directory shows the

operating address for both vessels to be the address of Brave
Maritime; that the managing director of Brave Maritime was said
in a
published list of Piraeus Shipping Offices to be Mr Nikolaos Vafias;
that he is the registered holder of 10% of the shares
in Belfry
Marine; that there is a fleet of vessels managed by Brave Maritime,
many of which have musically related names such
as the names of
popular rock music bands. Heavy Metal is such a name. There are
also two vessels in the fleet named Sea Muse
and Sea Concert. The
“guilty” ship is named Sea Sonnet.
[17] When
one of the vessels in that fleet was arrested in another
jurisdiction in respect of a claim relating to another ship
in the
fleet on the ground that it was an associated ship, security was
established by Brave Maritime. When one examines the
response to
this powerful array of evidence pointing in the direction of
commonality of control one is struck by the evasiveness
which
permeates it. The pattern consists of some specific and, to my
mind, selective and limited denials in instances where
the facts
enabled denials to be made but, for the rest, of either diversionary
strategies or argumentation as to what the value
was of evidential
material placed before the court by respondent. Thus, the
allegation that security had been provided by Brave
Maritime when an
arrest of a ship in the fleet was made on the strength of it being
an associated ship of another ship in the
fleet, was not denied;
instead it was met with a bald contention that it was inadmissible
evidence of similar facts. The allegations
concerning commonality
of control contained in certain well-known publications which
circulate in the shipping industry were
dismissed as hearsay; some
peripheral allegations were singled out as not being in accordance
with the true facts but, for the
rest, no attempt was made to
counter the allegations by setting out fully the true state of
affairs.
[18] In
appellant’s first answering affidavit Lemonaris declined to
name the beneficial owner of either Dahlia or Belfry
Marine but
failed to explain why his principals should have any objection to
disclosure. When respondent took him to task for
doing so, he
filed a further affidavit in which he claimed that he had been
authorised since to disclose the name of the principal
(Mr Nikolaos
Tsavliris) in Dahlia but persisted both in refusing to disclose the
identity of his principal in Belfry Marine and
in providing no
reason whatsoever for the insistence upon non-disclosure. All that
he was prepared to say was that it was not
Tsavliris, the person he
had disclosed as being his principal in Dahlia. This despite the
fact that it was Belfry Marine’s
ship and not the Sea Sonnet
which had been arrested and was in danger of being lost.
[19] No
affidavit from Tsavliris was filed and no explanation for the
failure to file such an affidavit was given. No explanation
was
given of who holds the shares in Whichita Maritime and Trading Inc
which is said to own 48% of the shares in Dahlia. As
to the
remaining 52% of the shares in Dahlia, they were said to have been
held at the time of the sale of the Sea Sonnet by
Lemonaris as
nominee for Carnation Finance Inc which was owned by Nikolaos
Tsavliris. It was said that Tsavliris had since
(the date is not
disclosed) sold his entire shareholding in Carnation Finance Inc to
an individual known to Lemonaris but whose
identity he claimed to be
unable to disclose. He asserted that Tsavliris had “no
interest” in the Heavy Metal “as
owner or otherwise”.
However, he failed to disclose who held the shares in Heritage Sea
Carriers Ltd of Monrovia which
in turn held 30% of the shares in
Belfry Marine. Despite his admission that Brave Maritime had
managed the Sea Sonnet and
his denial that it operated it, he
failed to disclose who did operate it.
[20] Finally,
notwithstanding the foreshadowing in correspondence which passed
between the attorneys for the parties while affidavits
were being
prepared, of the production of documents which would disprove the
alleged association, virtually nothing in the way
of any such
documentation was produced.
[21] I do not think
that a litigant in motion proceedings who resorts to this kind of
response in the face of a powerful circumstantial
showing that, on
the probabilities, whoever ultimately had the power to control the
company which owned the guilty ship also
has the power to control
the company which owns the ship sought to be arrested as an
associated ship, can shelter behind the
principles laid down in the
case of
Plascon-Evans
Paints Ltd
. In
a few words, such an approach should not be regarded as giving rise
to a genuine dispute of fact.
[22] Accordingly,
I concur with the majority of the Court that the appeal should be
dismissed with costs, including the costs
of two counsel.
_____________________
R M MARAIS