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[2015] ZAWCHC 62
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Aquarius Maritime (Pty) Ltd v MV Agatis and Others (AC14/2015) [2015] ZAWCHC 62 (15 May 2015)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No: AC14/2015
DATE:
15 MAY 2015
In
the matter between
AQUARIUS
MARITIME PTE
LTD
.................................................................................
APPLICANT
And
MV
AGATIS
.......................................................................................................
FIRST
RESPONDENT
MERANTI
BAHARI
PT
...............................................................................
SECOND
RESPONDENT
MERANTI
MARITIME
PT
............................................................................
THIRD
RESPONDENT
Coram
:
ROGERS J
Heard:
7 MAY 2015
Delivered:
15 MAY 2015
JUDGMENT
ROGERS
J:
Introduction
[1]
On 17 March 2015 and by way of an ex parte
application the applicant (‘Aquarius’), a Singaporean
company, caused MV
Agatis
,
then lying off Cape Town with a cargo of rice bound for the Ivory
Coast, to be arrested in terms of s 5(3)(a) of the Admiralty
Jurisdiction Regulation Act 105 of 1983 (‘the Act’) as
security for alleged claims by Aquarius (i) in respect
of the
management of
Agatis
and three other vessels to which I shall refer by their abbreviated
names
Putih
,
Eboni
and
Ramin
and
(ii) for the provision of security guards for two other vessels
Kenanga
and
Mahoni
.
The third respondent (‘Maritime’) is the owner or deemed
owner (as contemplated in s 3(7)(c) of the Act) of
Agatis
,
Putih
,
Kenanga
and
Mahoni
.
The second respondent (‘Bahari’) is the owner or deemed
owner of
Eboni
and
Ramin
.
Putih
,
Eboni
,
Ramin
,
Kenanga
and
Mahoni
are, in relation to
Agatis
,
‘associated ships’ as defined in s 3(7)(a) of the
Admiralty Jurisdiction Regulation Act 105 of 1983. Maritime
and
Bahari are Indonesian companies.
[2]
In the ex parte application the claims for
the management of
Agatis
,
Putih
,
Eboni
and
Ramin
were
alleged to total $2002677,78. Severance and repatriation costs for
the crew and technical severance costs were estimated at
a further
$315000. The claims for the provision of security guards for
Kenanga
and
Mahoni
were alleged to be $40000 each.
[3]
The management claims were alleged to arise
from four BIMCO contracts (Shipman 2009), one in respect of each
vessel. The BIMCO contracts
were attached to the founding affidavit.
In terms of clause 23(c) read with Box 21 the contracts are governed
by Singaporean law,
with disputes to be resolved by way of
arbitration in Singapore. The contracts in respect of
Putih
,
Eboni
and
Ramin
were
alleged to have been concluded on 1 March 2013 which is what the
signed contracts reflect. The contract in respect of
Agatis
is undated but appears from the affidavits to have been concluded or
to have commenced in November 2014. (Whether the contracts
in respect
of
Putih
,
Eboni
and
Ramin
were
in fact signed in March 2013 is called into question by a letter
written by Aquarius on 29 November 2013 to which I shall
refer
later.)
[4]
In respect of the provision of security
guards, Aquarius alleged in the ex parte application that on 3 August
2014 it entered into
so-called Guardcon contracts with Alphard
Maritime Security Personnel (‘Alphard’) on behalf of
Maritime as disponent
owner for the provision of security guards for
Kenanga
and
Mahoni
.
The two Guardcon contracts were attached to the founding affidavit.
Aquarius alleges that Maritime failed to pay the fees owing
to
Alphard. Because Aquarius regularly uses Alphard’s services, it
paid Alphard the amount owing in respect of
Mahoni
so as to maintain good commercial relations. Aquarius has not yet
paid the amount owing in respect of
Kenanga
and alleges that it is suffering serious reputational damage as a
result of Maritime’s default.
[5]
On 17 April 2015 Maritime delivered an
urgent application to set aside
Agatis
’
arrest for hearing on 24 April 2015. Aquarius filed answering papers
on 23 April 2015. On 24 April 2015 the application
was postponed to 7
May 2015 with a timetable. Maritime filed replying papers on 30 April
2015. At the hearing on 7 May 2015 Mr
Fitzgerald SC appeared for
Aquarius and Mr L Burger SC for Maritime.
[6]
In respect of the management claims,
Maritime says that the BIMCO contracts attached to the ex parte
application reflect that the
management company entitled to
management fees is not Aquarius but a related company Aquarius
Shipping Solutions Pte Ltd (‘Solutions’)
and that this is
the true position. Aquarius was a sub-contractor to Solutions.
Maritime says that the basis of the Guardcon claims
is unclear. To
the extent that they are based on the amount paid to Alphard in
respect of
Mahoni
,
the proof of payment attached to the ex parte application indicates
that it was Solutions and not Aquarius which paid the money.
The
law
[7]
The requirements for a security arrest were
dealt with by Wallis JA in
MV Pasquale
della Gatta; MV Filippo Lembo; Imperial Marine Co v Deiulemar
Compagnia di Navigazione Spa
2012 (1)
SA 58
(SCA) paras 19-26. The claimant must satisfy the court (a) that
he has a claim enforceable by an action in rem against the
ship or
against an associated ship; (b) that he has a prima facie case
in respect of such claim, which is prima facie enforceable
in the
relevant foreign forum; and (c) that he has a genuine and
reasonable need for security in respect of the claim.
Where
the claimant’s prima facie case depends on factual inferences
from the evidence, they must be inferences that can reasonably
be
drawn from the evidence, even if they are not the only possible
inferences. The onus is not discharged by tenuous or far-fetched
inferences. Furthermore, the facts from which the inferences are
drawn must be proven facts and not matters of speculation.
[8]
The
question whether the requirement of a prima facie case is to be
assessed solely with reference to the claimant’s allegations
or
whether regard can be had to the opposing papers was left open by
Wallis JA though he expressed a strong obiter view in favour
of the
latter approach. Nevertheless, from the authority cited by the
learned judge of appeal in para 20 and from
Cargo
Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris
1989
(3) SA 820
(A) at 831F-832C, it appears that the broader approach
would not entail a determination by the court as to where, on the
affidavits,
the balance of probabilities lies regarding disputed
facts.
[1]
But there may be facts
alleged by the respondent which the claimant cannot and does not
dispute. It thus seems to me that the claimant
must in the first
instance allege facts which, if accepted as true, establish his cause
of action. If he does so, it may nevertheless
appear from further
undisputed facts alleged by the respondent that the cause of action
is not tenable.
[9]
Wallis JA also touched on the proof of
foreign law (para 27). Ordinarily foreign law is a fact requiring to
be proved by tendering
expert evidence. This is unnecessary, however,
where the law in question ‘can be ascertained readily and with
sufficient
certainty without recourse to the evidence of an expert,
because the court is then entitled to take judicial notice of such
law’.
One ready example is English admiralty and maritime law.
Has Aquarius
established its claims prima facie?
[10]
The contentious issue in this case is
whether Aquarius has established a prima facie case in respect of its
alleged claims. If it
has, Maritime does not contest that the claims
are enforceable by action in rem against
Agatis
and that Aquarius has a genuine and reasonable need for security.
[11]
It is common cause that Aquarius’
claims have to be determined by arbitration in Singapore and in
accordance with Singaporean
law. Maritime filed an opinion by Mr
Winston
Kwek
of
solicitors Rajah & Tann of Singapore. He says that English law as
it stood immediately before 12 November 1993 is, by Singaporean
statute, the law of Singapore. English cases decided after 12
November 1993 are not part of Singaporean law but are generally seen
as persuasive. Counsel did not seem to think that there were, in
relation to the present case, any material differences between
English law and Singaporean law.
[12]
In argument Mr Fitzgerald focused on
Aquarius’ alleged claim against Maritime for the provision of
management services in
respect of
Agatis
.
This claim is for $666 170,64. Mr Fitzgerald appeared to accept
that in respect of the services rendered in respect of
Putih
,
Ebony
and
Ramin
,
Aquarius was a sub-contractor to Solutions. He conceded in argument
that if Aquarius was a sub-contractor Singaporean law did
not accord
it a right of action against Maritime. This is borne out by the
opinion of Mr Kwek, dealing with the rule of privity
of contract (see
also Leong
The Law of Contract in
Singapore
(2012) at 1043-1044). Mr
Fitzgerald submitted, however, that Aquarius was not merely a
sub-contractor in respect of the services
provided for
Agatis
and that the contractual arrangements in respect of
Agatis
were distinguishable from those in respect of
Putih
,
Ebony
and
Ramin
. Mr
Fitzgerald did not seek to justify the arrest with reference to the
Guardcon claims.
The
standard BIMCO contract
[13]
The standard BIMCO contract consists of
Part I and Part II. Part 1 is a page containing 23 boxes for the
insertion of yes/no answers
or various particulars. Attached to this
page are annexures ‘A’ to ‘E’ setting out
respectively details
of the vessel (‘A’), details of the
crew (‘B’), a budget (‘C’), particulars of
associated vessels
(‘D’) and a fee schedule (‘E’).
Provision is made at the foot of the page for signature by the
‘Owners’
and the ‘Managers’. (I shall on
occasion, for ease of expression, use these terms in the singular.)
Part II consists
of 28 standard clauses. Clauses 4, 5, 6 and 7 deal
with four types of management services, namely technical management
(clause
4), crew management and crew insurance (clause 5), commercial
management (clause 6) and insurance arrangements (clause 7).
[14]
Boxes 3 and 4 in Part I make provision for
the insertion of the particulars of the ‘Owner’ and
‘Manager’.
Particulars of the ‘Company’ must
be inserted in Box 5. As will appear, the ‘Company’ may
be the same entity
as the ‘Manager’ or a different
entity. Boxes 6, 7, 8 and 9 require the parties to indicate which of
the four types
of services dealt with in clauses 4 to 7 are to be
rendered by the Manager. Box 14 makes provision for the insertion of
details
of the annual management fee envisaged by clause 12(a). Box
21 deals with the law applicable to disputes. Immediately above the
provision at the foot of Part 1 for signature by the Owner and
Manager are the words:
‘
It
is mutually agreed between the parties stated in Box 3 and the
parties stated in Box 4 that this Agreement consisting of Part
1 and
Part II as well as [annexures “A to “E”] shall be
performed subject to the conditions contained herein.
In the event of
a conflict of conditions, the provisions of Part I and [annexures “A”
to “E”] shall prevail
over those of Part II to the extent
of such conflict but no further.’
[15]
Clause 2 in Part II provides that, with
effect from the date stated in Box 2 for the commencement of the
management services and
continuing unless and until terminated as
provided in the agreement,
‘…
the
Owners hereby appoint the Managers and the Managers hereby agree to
act as the Managers of the Vessel in respect of the Management
Services.’
The ‘Managers’
are defined in clause 1 as being the party identified in Box 4.
‘Management Services’ are
the services set out in clauses
4 to 6 to the extent that those services have been selected in Part
1. Accordingly, and depending
on the answers inserted in Part I, the
Manager may provide all or only some of the services set out in
clauses 4 to 7.
[16]
To
understand the expression ‘the Company’ in the BIMCO
contract it is necessary to know that a crucial part of the
technical
management services described in clause 4 is management to ensure
that the vessel complies with the International Management
Code for
the Safe Operation of Ships and for Pollution Prevention (‘the
ISM Code’) and with the International Code
for the Security of
Ships and Port Facilities (‘ISPS’) and relevant
amendments to Chapter XI of SOLAS.
[2]
The ‘Company’ is the entity with which port authorities
and other authorities involved in international shipping will
deal in
regard to compliance with the Codes. I was told from the bar that
there is a process of accreditation in order to be recognised
as a
‘Company’ for purposes of the Codes. This appears to be
borne out by Box 5 of Part I of the BIMCO contract which
requires the
‘Company’ to be identified with reference to the ISM/ISPS
Codes and to its IMO
[3]
unique
company identification number.
[17]
The BIMCO contract envisages that if the
Manager is engaged to provide technical management services (which
would be indicated by
inserting ‘yes’ in Box 6) it will
also be the Company, so that the same entity would be named in in
Boxes 4 and 5.
In particular, clause 8(b) in Part II states that
where the Managers are providing technical management services in
accordance
with clause 4 they shall procure that the requirements of
the Flag State administration are satisfied and
‘…
they
shall agree to be appointed as the Company, assuming the
responsibility for the operation of the Vessel and taking over the
duties and responsibilities imposed by the ISM Code and the ISPS
Code, if applicable.’
And clause 9(b)(i)
provides that where the Manager is providing technical management
services, it shall report to the Flag State
administration its (the
Manager’s) details as the Company to ensure compliance with the
ISM and ISPS Codes. Various clauses
in Part II impose differing
obligations on the Manager and Owner depending on whether or not the
Manager has been engaged to provide
technical management services.
These clauses appear to take for granted that if the Manager has been
engaged to provide technical
management services it will also be the
‘Company’ (see clauses 5(a)(viii) and (ix); clauses 9(b)
and (c); clause 9(e);
clause 18(a)).
[18]
The contract confers no rights and imposes
no obligations on the Company. Indeed, the latter is not a party to
the contract at all.
[19]
Clause 12 requires the Owner to pay the
Manager the annual management fee stated in Box 14 for their services
as Managers under
the agreement.
[20]
Clause 21 provides that the agreement
constitutes the entire agreement between the parties and that no
promise, undertaking, representation,
warranty or statement by either
party prior to the date stated in Box 2 shall affect the agreement.
Any modification of the agreement
is of no effect unless in writing
signed by or on behalf of the parties.
[21]
Clause 26 states that, except to the extent
provided in sub-clauses 17(c) and 17(d), neither of which is relevant
here, ‘no
third parties may enforce any term of this
Agreement’.
The
BIMCO contracts in this case
[22]
In the present case Boxes 4 to 9 of Part I
of the four BIMCO contracts were completed in an identical fashion:
Solutions was identified
in Box 4 as the ‘Manager’;
Maritime was identified in Box 5 as the ‘Company’ and its
IMO unique company
identification number furnished; Boxes 6 to 9 said
‘Yes’ in respect of technical management, crew management
and commercial
management and ‘No’ in respect of
insurance arrangements. In Box 15 the ‘Managers’
nominated account’,
being the account into which the Manager’s
management fees were to be paid, was in each case the account of
Solutions in
Singapore.
[23]
In the case of
Putih
,
Eboni
and
Ramin
, Box
23, in which was to be inserted the contact details for serving
notice and communications to the Manager, contained Aquarius’
name and address. In the case of
Agatis
,
Box 23 contained Solutions’ name and address. Solutions and
Aquarius had the same addresses in Singapore.
[24]
In the case of
Putih
,
Eboni
and
Ramin
, the
stamp of Solutions appeared next to the signature of the person
signing on behalf of the Manager. In the case of
Agatis
,
the stamp of Aquarius appeared next to the signature of the person
signing on behalf of the Manager. The same individual, Mr Pankaj
Mohan (‘Mohan’), signed all four contracts on behalf of
the Manager.
[25]
Boxes 1 and 2 of the BIMCO contract record
the date and place of the agreement and the date of commencement of
the agreement. In
the case of
Putih
,
Eboni
and
Ramin
, the
place and date of the agreements was recorded as being 1 March 2013
and the commencement dates 7 August 2012, 6 January 2013
and 9
January 2013 respectively. In the case of
Agatis
,
no particulars were inserted in these boxes.
[26]
In the case of
Putih
,
Eboni
and
Ramin
,
clauses 1 to 28 in Part I were signed without alteration. In the case
of
Agatis
,
certain clauses were scratched out. For example, clauses 5(a)(ix) and
9(e), which start with the words, ‘if the Managers
are
not
the Company’ (emphasis in the original), have been deleted. The
whole of clause 6, dealing with commercial management, is
scratched
out, being a clause applicable if the Managers are to provide
commercial management. Clause 9(c), which deals with the
Owners’
obligations where the Managers ‘are
not
providing technical management services
in accordance with Clause 4’ (emphasis in the original), has
been deleted.
[27]
Unless the parties, through an error of
recordal, entered mistaken answers in Part I, they seem to have
misunderstood the provisions
of the BIMCO contract in regard to
technical management services. Solutions was identified as the
‘Manager’ and was
inter alia to provide technical
management services. In these circumstances, the scheme of the BIMCO
contract was that Solutions
should have been identified as the
‘Company’ yet in each case Aquarius was so identified. In
the
Agatis
contract, the confusion is compounded by the deletion of clauses
which would have applied if the Manager and the Company were not
the
same entities.
[28]
The ex parte application did not identify
these difficulties. The supporting affidavit was drawn as if Aquarius
were in each case
the Manager. Mr Fitzgerald informed me that he had
appeared in the ex parte application and frankly acknowledged that
Aquarius’
legal team had failed to notice that the attached
BIMCO contracts identified Solutions rather than Aquarius as the
Manager.
[29]
In my view, the ex parte application failed
to make out a prima facie case in respect of the claims for
management services. Aquarius
was relying on four BIMCO contracts
which identified Solutions, not Aquarius, as the Manager. On the face
of the BIMCO contracts,
Solutions and not Aquarius was the party
which contracted with Maritime and Bahari. Even if Aquarius had
actually done the work,
this would not without more have entitled it
to make a claim for management fees under the contracts.
[30]
Maritime’s affidavit in support of
its application for the setting aside of the arrest was short and to
the point. In respect
of the claims for management fees, Maritime
simply made the point that Aquarius was not in terms of the BIMCO
contracts the Manager.
Aquarius attempted to deal with this in
answering papers to which Maritime replied. Although Aquarius was the
respondent in the
setting-aside application, it bore the onus of
justifying the arrest. However in so doing it was not confined to the
allegations
made in its ex parte application; it was entitled to rely
on all the information properly placed before the court in the
setting-aside
application (
MV Orient
Stride; Asiatic Shipping Services Inc v
Elgina
Marine Co Ltd
[2008] ZASCA 111
;
2009
(1) SA 246
(SCA) para 5 and authorities there cited). I shall assume,
as did counsel, that this principle permits a claimant not only to
allege
additional facts in support of its original cause of action
but to make out a different case in support of the arrest.
[31]
Aquarius did not, in its answering
affidavit, say that there had been an error in the completion of the
contracts. It did not allege
that the contracts fell to be rectified.
One can thus put aside three notional possibilities for the anomalies
I have mentioned:
that the parties intended that only Aquarius should
feature in Part I (and thus inter alia be the Manager); that the
parties intended
that only Solutions should feature in Part I (and
thus inter alia be the Company); or that the parties intended that
Aquarius and
Solutions should be joint contracting parties in respect
of different management services.
[32]
This really seems to leave only one
possibility, and it is the one supported by the evidence: that
although Solutions was
in all respects the Manager with the
contractual obligation to provide all the services, Aquarius was the
party which was actually
going to do the work, at least in regard to
the technical management services. Since Solutions was the Manager
and the contracting
party with the entitlement to the management
fees, Aquarius would have to be viewed as a sub-contractor. In terms
of clause 16
of Part II the Manager is not to sub-contract any of its
obligations without the prior written consent of the Owner which is
not
to be unreasonably withheld. Clause 16 stipulates that in the
event of such a sub-contract the Manager remains fully liable for
due
performance of its obligations under the agreement. By identifying
Aquarius as the Company in Box 5, the parties to the BIMCO
contracts
(Maritime and Bahari on the one hand, Solutions on the other) were
giving recognition to the fact that Aquarius would
be the entity
actually providing the technical management services.
[33]
If the parties agreed that Solutions would
be the contracting Manager inter alia in respect of technical
management services but
that Aquarius would be identified as the
Company because it would actually be performing the technical
management work on a sub-contract
basis, they were proceeding on a
basis at odds with the conception of the standard BIMCO contract.
However, this misapprehension
on their part would not entitle one to
give the contracts a different meaning to the one the parties plainly
intended.
[34]
In the light of the approach which a court
must adopt in deciding whether the claimant has established a prima
facie case, I must
accept Aquarius’ averments in the answering
affidavit to the effect that Solutions, unlike Aquarius, had no
infrastructure
to carry out technical and operational support
management duties, that it was Aquarius which actually did the work
giving rise
to the claims for management fees, and that this was
known to Maritime and Bahari. However, these facts do not in
themselves establish
that Aquarius rather than Solutions is the
contracting party with the right to claim the management fees.
[35]
The
further allegations made by Aquarius’ deponent, Mohan, in his
answering affidavit confirm rather than refute the proposition
that
Solutions was the entity with the contractual entitlement to the
management fees. After stating that Solutions had no infrastructure
to provide technical and operational management services, he alleged
that Aquarius and Maritime concluded a written agreement confirming
that Solutions ‘would sub-contract the commercial and technical
management of [
Agatis
]
and the associated vessels to [Aquarius]’.
[4]
In support of this assertion he annexed a letter dated 29 November
2013 addressed by Aquarius to Maritime and Bahari.
[36]
The opening paragraph of the letter
referred to an existing BIMCO contract for
Putih
dated 1 August 2012 and to a meeting held between the parties in
Singapore on 28 November 2013. The writer (Mohan) recorded the
letter’s purpose as being ‘to place on record the various
strategic changes discussed and agreed between the parties’
with regard to the management of
Ramin
,
Eboni
and
Putih
. The
current position as recorded in the letter was that as at November
2013 the only signed BIMCO contract was in respect of
Putih
.
In the opening paragraph of the letter the date of the existing
Putih
contract was said to be 1 August 2012 though a few lines later the
date is given as 1 August 2009 (as will appear below, the date
1
August 2012 seems to be correct). The letter recorded that the BIMCO
contract in respect of
Putih
was to be replaced by a new BIMCO contract which would incorporate
the provision of crew management services and commercial management
services and would record Solutions as the Manager. This implies that
crew management services and commercial management services
were not
being provided under the existing BIMCO contract dated 1 August
2009/2012 (ie that the existing contract only specified
the provision
of technical management services).
[37]
In respect of
Eboni
and
Ramin
,
the letter stated that no BIMCO contracts had as yet been signed but
that Aquarius had taken over management of the vessels on
6 January
2013 and 9 January 2013 respectively. The letter recorded the
parties’ agreement that BIMCO contracts for these
two vessels,
with the same details and terms as the proposed new contract for
Putih
,
would be executed as soon as possible.
[38]
The letter continued (I substitute the
terminology of this judgment for the names used in the letter):
‘
Both
parties (Aquarius and Maritime) agreed that since Solutions has no
infrastructure to carry out Ship Managers duties as per
BIMCO, hence,
Solutions shall be named Manager and shall sub-contract all ship
management duties as per the BIMCO Shipman to Aquarius.
This change will not
have any impact on the management fees paid by owners to the Managers
and Aquarius will continue to perform
all the duties of Ship Managers
as listed in BIMCO SHIPMAN 2009 Clauses 4, 5, 8 and shall be fully
responsible to ensure that the
vessels are managed technically as per
all international and national applicable regulations.
To this effect it
was agreed that there will be no change to Box 5 [with regard to]
ISM/ISPS code;
Except as specified
herein, the BIMCO Shipman for all vessels shall remain in full force
and effect and binding on the parties hereto.
Basis above, we
shall revert with the amended BIMCO Shipman for all 3 vessels
soonest. However, till such time, all existing BIMCO’s
are in
effect as usual.’
[39]
Since Mohan had said earlier in the letter
that no BIMCO contracts had as yet been signed for
Eboni
and
Ramin
,
it is difficult to understand what he meant by saying that until
amended BIMCO contracts were signed all existing BIMCO contracts
would remain in force. The letter calls into question whether the
contracts in respect of
Putih
,
Eboni
and
Ramin
, as
attached to the ex parte application, were actually signed on 1 March
2013. It seems that they must have been signed after
the letter of 29
November 2013 and backdated. Indeed in his answering affidavit Mohan
said that the BIMCO contracts were concluded
subsequent to the
sending of this letter. Aquarius pointed out in reply that the BIMCO
contracts in respect of
Putih
,
Eboni
and
Ramin
purported to have been executed some months before the letter but
neither side in their affidavits grappled with these aspects
of
Mohan’s letter. Mohan’s statement that the three BIMCO
contracts were executed subsequent to the letter may well
be right.
[40]
Maritime’s
replying affidavit sheds some light on the matter. The deponent
points out that, as appears from a company profile
attached to its
founding affidavit in the application to set aside the arrest,
[5]
Solutions was only incorporated on 25 January 2013. The deponent says
that
Putih
,
Eboni
and
Ramin
were previously managed by another party. During 2012 Aquarius
approached Maritime and Bahari offering technical management services
in respect of
Putih
.
This led to the conclusion on 1 August 2012 of a BIMCO contract
between Maritime and Aquarius in respect of
Putih
(Solutions did not yet exist). The deponent attached this contract to
his affidavit. Part I identified Aquarius as the Manager
and the
Company. The only services selected for provision by Aquarius were
technical management services. The deponent says that
Bahari
subsequently agreed that Aquarius could also take over the technical
management of
Eboni
and
Ramin
,
which was done on 6 and 9 January 2013 respectively. The deponent
does not say that Aquarius’ de facto assumption of technical
management was at that stage accompanied by the execution of BIMCO
contracts for
Eboni
and
Ramin
.
At around this time, so the deponent says, a corporate reorganisation
led to the establishment of Solutions and it was thereafter
that the
three BIMCO contracts bearing the date 1 March 2013 were executed.
[41]
The BIMCO contract between Maritime and
Aquarius attached to the replying affidavit must be the contract of 1
August 2012 in respect
of
Putih
to which Mohan referred in the opening line of his letter of 29
November 2013. As at November 2013 there seem not yet to have been
signed contracts for
Eboni
and
Ramin
though Aquarius was at that stage the party contracted to provide
technical management services. What was thus discussed at the
meeting
of 28 November 2013 and recorded in the letter of 29 November 2013
was that the only then existing signed BIMCO contract,
being the one
between Maritime and Aquarius for
Putih
dated 1 August 2012, would be replaced
by a contract between Maritime and Solutions in which the services to
be provided would be
extended to include crew management and
commercial management. Identical contracts were also be signed for
Eboni
and
Ramin
(
Agatis
was not yet part of the discussions). However, and because the
technical management services were to be sub-contracted by Solutions
to Aquarius, the latter’s particulars would continue to be
recorded in Box 5, as had been the case in the BIMCO contract
of 1
August 2012.
[42]
Be that as it may, the BIMCO contract for
Putih
bearing the date 1 March 2013 as attached to the ex parte application
accords with Mohan’s letter in making provision for
the Manager
to provide crew management and commercial management services and in
identifying Solutions as the Manager. The BIMCO
contracts for
Eboni
and
Ramin
bearing the date 1 March 2013 as attached to the ex parte application
reflect the actual commencement dates mentioned in Mohan’s
letter and accord with his letter in following the same pattern as
the
Putih
contract.
[43]
While the letter may not be a model of
clarity, it is quite specific in recording that Solutions would be
the named Manager and
that Aquarius would perform all management
duties on a sub-contract basis. This was not to have any impact on
the management fees
payable by Maritime and Bahari ‘to the
Managers’, ie to Solutions. The fact that there had previously
been a BIMCO
contract of 1 August 2012 between Maritime and Aquarius
in respect of
Putih
shows that there was a deliberate change in the identification of the
Manager. The parties also applied their mind to the details
to be
inserted in Box 5. In context, what they must have understood was
that because the actual work would be done by Aquarius
(ie on a
sub-contract basis) it would be identified as the ‘Company’
in Box 5.
[44]
Mohan
said in several places in his answering affidavit, with reference to
the above letter and certain other documents, that Solutions
was only
the ‘nominal manager and payment agent’ and that the
‘actual manager’ or ‘true manager’
was
Aquarius.
[6]
In the light of the
manner in which the BIMCO contracts were completed, the letter of 29
November 2013 and Mohan’s references
elsewhere to
sub-contracting, his statement that Solutions was the ‘nominal
manager’ is an affirmation that the parties
deliberately
identified Solutions as the ‘Manager’ in the BIMCO
contracts.
[45]
The
invoices attached to the ex parte application in support of the
claims accord with the conclusion that Solutions rather than
Aquarius
was the Manager with the right to claim the management fees. The
invoices for services supplied in respect of the management
services
and in respect of the Guardcon expenditure were issued by Solutions
in its own name, specifying its bank account for remittance
of
payment.
[7]
[46]
Mohan attached to his answering affidavit a
‘Letter of Intent’ dated 19 December 2012 addressed by
Bahari to Aquarius,
stating Bahari’s intention, in relation to
Ramin
and
Eboni
, to
appoint ‘your good company as the Technical Manager of our
ships’ and requesting that management be effected as
soon as
possible. This letter was written before Solutions was incorporated
and at a time when the parties may well have intended
that Aquarius
should be contracted to provide technical management services, as was
already the case for
Putih
in terms of the BIMCO contract dated 1 August 2012.
[47]
Mohan attached an identical undated Letter
of Intent in respect of
Agatis
.
It is likely that the Letter of Intent in respect of
Agatis
,
which Mohan says was issued during November 2014, was likewise
written prior to the signing of the BIMCO contract for
Agatis
.
The Letters of Intent cannot override the terms of the BIMCO
contracts subsequently signed. In any event, the Letters are not
inconsistent with the letter of 29 November 2013 and Mohan’s
allegation in the answering affidavit that Aquarius was to provide
technical management as a sub-contractor, something which was only
permissible in terms of clause 16 with Maritime and Bahari’s
written consent.
[48]
Mohan annexed certain other documents in
support of his contention that Aquarius was the ‘true manager’.
For example,
there were Certificates of Entry in respect of
Putih
,
Eboni
and
Ramin
in
which Aquarius featured as a co-assured for Protection &
Indemnity Insurance, being referred to as ‘Manager’
and
‘Crew Manager’. However, there is no evidence that
Maritime and Bahari were involved in the preparation of these
Certificates. The precise nature of the insurance and why any
particular entity would require it are not matters that were
traversed
in the papers. It is entirely plausible that Aquarius, as
the party actually performing technical management services, was
viewed
as the entity which, from a management perspective, needed
insurance. The same holds true for the Cover Note for
Agatis
’
Hull Interest Insurance, where Aquarius was again identified as an
assured in its capacity as Manager.
[49]
Another class of document which Mohan
annexed were International Ship Security Certificates, issued in
terms of the ISPS Code by
the relevant Flag States for
Putih
(Indonesia) and
Eboni
and
Ramin
(Panama). However, these documents simply identify Aquarius as the
‘Company’ with particulars of its address and IMO
number.
That is consistent with Aquarius’ identification as the
Company, though not the contracting Manager, in the BIMCO
contracts.
[50]
Mr Fitzgerald submitted that
Agatis
stood on a different footing from the other three vessels. He
acknowledged that the letter of 29 November 2013 made it difficult
for him to argue that Aquarius was not a sub-contractor in respect of
the other three vessels. He submitted, however, that because
the
Agatis
contract was concluded about a year after the date of the letter, the
letter could not be regarded as setting out the agreed arrangement
for
Agatis
.
He conceded that Mohan’s affidavit did not draw this
distinction but argued that Mohan’s reference to a
sub-contracting
in respect of
Agatis
as well as the other three vessels was an ‘error’, having
regard to the respective dates of the letter and the
Agatis
contract.
[51]
However, Mr Fitzgerald could not point to
any feature of the four BIMCO contracts or other documentation which
would justify treating
Agatis
differently from the other three vessels. As I have said, Part I of
the four BIMCO contracts was in relevant respects completed
in
identical fashion, except that in
Agatis
’
case Box 23 contained Solutions’ name, not Aquarius’,
which if anything strengthens rather than weakens the
case for
recognising Solutions as the contracted Manager. It is true that the
company stamp used in the signing of the
Agatis
contract was Aquarius’ stamp rather than Solutions’ but
Mr Fitzgerald did not suggest that this could affect the
interpretation
of the contract. The individual who signed the
contract for the Manager, Mohan, was a person equally authorized to
sign for Aquarius
or Solutions. Either the incorrect company stamp
was applied or Aquarius signed the contract as an agent for the
nominated Manager.
Although there was a Letter of Intent in respect
of
Agatis
addressed to Aquarius, the same is true for
Eboni
and
Ramin
,
so this cannot be a factor distinguishing
Agatis
’
case from theirs. Similarly, Aquarius featured as a co-assured not
only in respect of
Agatis
but also in respect of the other vessels.
[52]
I have mentioned that certain clauses in
Part II of the
Agatis
contract were scratched through. Why this was done is obscure. For
example, clause 6, dealing with commercial management, was completely
scratched out despite the fact that in Part I it was stated that
Solutions would be providing commercial management services. In
other
cases, clauses which are intended to be operative where the Manager
and Company are not the same entity were scratched out,
despite the
fact that in Part I the identified Manager and Company were indeed
different entities. Perhaps the parties considered
that because
Solutions and Aquarius were part of the same corporate group, clauses
applicable to the situation where the Manager
and Company are the
same entity should remain operative. Indeed, and since from a
contractual point of view Solutions was the party
engaged to provide
technical management services, one can understand why the parties may
have wished to exclude the operation of
clauses intended (on the
conception of the BIMCO contract) to apply where the Manager is not
providing technical management services,
ie where the Owner has
contracted separately (ie outside the scope of the BIMCO contract)
with a third part to provide technical
management services and thus
to serve as the ‘Company’ in respect of the vessel.
[53]
Submissions were made regarding the
Singaporean approach to the interpretation of contracts. I was
referred to Leong op cit at 300-301
and
Zurich
Insurance (Singapore) Pte Ltd v B-Gold Interior Design &
Construction Pte Ltd
[2008] 3 SLR(R)
1029, a decision of the Singaporean Court of Appeal, on the use of
extrinsic evidence (see in particular the summary
of principles in
para 132 of the judgment). Although Mr Fitzgerald was anxious to
persuade me of the liberal approach adopted by
Singaporean law to
extrinsic evidence, it was not apparent to me what extrinsic evidence
he wished to deploy and in what way it
aided the interpretation of
the BIMCO contracts. Absent a claim for rectification, the contracts
unambiguously identify Solutions,
not Aquarius, as the Manager
contracted to provide services and entitled to management fees.
[54]
Among the principles summarised in
Zurich
Insurance
are (i) that if a court
is satisfied that the parties intended to embody the entire agreement
in a written contract, no extrinsic
evidence is admissible to
contradict, vary, add to or subtract from its terms and (ii) that
where extrinsic evidence is admissible,
a court should always be
careful to ensure that it is used to explain and illuminate the
written words, not to contradict or vary
them. Where the court
concludes that the parties have used the wrong words, rectification
may be a more appropriate remedy. The
court also observed that a
judge ought to be more reluctant to allow extrinsic evidence to
affect standard form contracts and commercial
documents. The BIMCO
contracts are standard form commercial contracts. They contain an
entire-agreement stipulation (clause 25)
and a provision that no
third party may enforce any terms of the agreement (clause 26).
Evidence that Aquarius rather than Solutions
was intended to be the
Manager with the contractual entitlement to management fees would be
evidence in violation of the entire-agreement
stipulation and in
conflict with the express terms of the contracts. But in any event
the extrinsic evidence, to the extent that
it is admissible as an aid
to interpretation, does not lead to a conclusion that the parties
intended Aquarius rather than Solutions
to be the contracted Manager.
[55]
In my view, therefore, Aquarius has not
made out a prima facie case that it has a contractual right to claim
management fees under
the four BIMCO contracts.
Cession
or assignment?
[56]
Aquarius
did not claim to have obtained a cession from Solutions. Mohan said
in his answering affidavit
[8]
that clause 16 of the BIMCO contract only required written consent
for a sub-contracting of the Manager’s obligations. There
was,
he alleged, no prohibition on the Manager’s entitlement to
‘sub-contract any rights’ under the agreement,
‘which
axiomatically must include the right to demand payment and/or to take
action under the agreement to enforce such rights’.
Mr
Fitzgerald made no submissions in support of this proposition.
Self-evidently a right to payment cannot be ‘sub-contracted’.
On the assumption that there is otherwise no impediment under
Singaporean law to a cession or assignment of Solutions’ rights
to Aquarius, there is no allegation or evidence of a cession or
assignment.
Promissory
estoppel
[57]
Mohan
stated in his answering affidavit that Maritime was in any event
precluded by promissory estoppel from now denying that Aquarius
is
the true manager with locus standi to arrest
Agatis
.
[9]
The foundation for this conclusion was an allegation that Maritime’s
conduct ‘in acknowledging and in permitting [Aquarius]
actively
to manage the vessel for some two years without any objection’
constituted ‘a clear and unambiguous representation
that
[Aquarius] was indeed the true manager of the vessels’.
Aquarius and Solutions had, so Mohan alleged, acted on such
representations to their detriment.
[10]
[58]
In regard to the Singaporean law on
promissory estoppel, which appears to be in accordance with English
law, I was referred to the
decision of the High Court of Singapore in
Oriental Investments (SH) Pte Ltd v
Catalla
Investments
Pte Ltd
[2012] SGHC 246
, particularly
paras 82-93. In this case it was said that the doctrine of promissory
estoppel ‘protects a party’s reliance
on promises not
supported by consideration’ on the basis that ‘the party
has acted on the promise to his detriment
and it is now inequitable
for the promisor to go back on his promise’ (para 82). The
three elements which the promisee is
required to prove were said to
be trite, namely (a) that the promisor made a clear and
unequivocal promise; (b) that
the promisee acted in reliance on
the promise; and (c) that as a result of the reliance the
promisee suffered detriment. Additionally,
the promisee must show
that it would be inequitable for the promisor to resile from his
promise (para 83).
[59]
Mr Fitzgerald was unable to point me to any
authority for the proposition that promissory estoppel provides an
alternative way of,
in effect, rectifying a contract. The notion of
contractual rectification is well known in English law and thus, so I
can assume,
in Singaporean law. My analysis thus far has led to the
conclusion that the BIMCO contracts were between Solutions on the one
hand
and Maritime and Bahari on the other and that Aquarius, as a
sub-contractor to Solutions, actually did the technical management
work. In the absence of rectification, I fail to see how promissory
estoppel can result in Maritime being bound to accept that
it
contracted with Aquarius rather than Solutions.
[60]
The learned authors of
Chitty
on Contracts Vol 1 General Principles
31
st
Ed describe promissory estoppel as an equitable doctrine that can be
applied to arrangements which might formerly have been regarded
as
variations ineffective at common law for want of consideration (para
3-085). The three requirements mentioned in
Oriental
Investments
are dealt with by the
learned authors in paras 3-089 to 3-094, as is the need for the
promisee to show that it would be inequitable
for the promisor to go
back on his promise (para 3-095). But they make the point that the
doctrine only finds application where
there is a legal relationship
between the parties, generally though not necessarily a legal
relationship established by contract
(para 3-086 to 3-088). A
pre-existing contractual relationship appears to be the most frequent
setting for cases of promissory
estoppel though it may also apply
where the promise was made before the conclusion of the contract. The
equitable doctrine provides
a basis for one contracting party to
prevent the other from relying on its strict contractual rights, even
though the promise making
this inequitable is unsupported by
consideration and thus not, in English law, enforceable at common
law. The learned authors emphasise
that the doctrine is essentially
defensive in nature, a ‘shield and not a sword’, so it
does not give rise in itself
to a cause of action (paras 3-098 to
30-101; see also
Halsbury’s Laws
of England
5
th
Ed (2014) Vol 47 paras 385-391;
Lester &
Another v Woodgate & Another
[2010]
EWCA Civ 199
para 25).
Oriental
Investments
fits this paradigm –
the defendant (a landlord) was precluded by promissory estoppel from
relying on a condition precedent
contained in a clause of the lease
between the defendant and the plaintiff as tenant.
[61]
If there was a management contract between
Aquarius and Maritime, the latter might be precluded from relying on
one or other term
of the contract if, before or after the conclusion
of the contract, Maritime had made a promise inconsistent with the
enforcement
of the term in question and if the other requirements for
promissory estoppel were met. However, if the BIMCO contract is, as I
have found to be clear, one between Solutions and Maritime, Aquarius’
invocation of promissory estoppel would be an impermissible
attempt
to establish a cause of action (effectively a contract in its own
name against Maritime) .
[62]
But in any event, Mohan’s very
cursory allegations in support of promissory estoppel do not make out
even a prima facie case
for invoking the doctrine. Mohan does not
actually say that by virtue of promissory estoppel Aquarius must be
accepted as the Manager
for purposes of the BIMCO contracts. What he
says is that Maritime is estopped from denying that Aquarius was the
‘true manager’.
But in context what does that mean? If it
means that Aquarius was the person which actually did the technical
management work,
Maritime does not deny it. A representation that
Aquarius was the ‘true manager’ in that sense would not
be a representation
inconsistent with what Mohan elsewhere expressly
alleges, namely a sub-contracting arrangement. There is certainly no
evidence
that Maritime ever represented that it viewed Aquarius
rather than Solutions as the Manager with which it had contracted.
Even
if Mohan intended to make that assertion, it would be a
conclusion unsupported by factual foundation.
[63]
Mr Fitzgerald was also in some difficulty
in explaining how Aquarius had relied to its detriment on any
representation made by Maritime
(detriment being understood broadly
as encompassing a change of position in reliance on the
representation, such that it would
be inequitable for the promisor
thereafter to go back on his promise). He suggested that Aquarius
would be worse off if it had
to look to an associated company,
Solutions, for payment rather than being able to claim the money from
Maritime. Apart from the
fact that Mohan himself did not say so, the
submission does not make sense. If one views Aquarius as a separate
entity, there is
no reason why it should be worse off looking to
Solutions than to Maritime. If Aquarius was sub-contracted by
Solutions to do the
work, there must have been some inter-company
arrangement for Solutions to be reimbursed. If there was not,
Aquarius cannot complain.
If one views Aquarius and Solutions from a
group perspective, the claim could as well be advanced by Solutions
as by Aquarius.
As a fact, it was Solutions which issued the
invoices.
Conclusion
[64]
I do not intend to discuss the Guardcon
claims because Mr Fitzgerald did not press them in argument.
[65]
In the light of my conclusion that Aquarius
has failed to established its claims on a prima facie basis, it is
unnecessary to decide
whether the arrest should in any event be
discharged because of non-disclosure. Maritime complained that
Aquarius failed in its
ex parte application to draw to the urgent
judge’s attention that the contracting party according to the
annexed contracts
was Solutions, not Aquarius. I accept Mr
Fitzgerald’s explanation from the bar that Aquarius’
legal representatives
themselves failed to appreciate the discrepancy
when moving the urgent application. This would not in itself deprive
the court
of its discretion to discharge the arrest for
non-disclosure (see
National Director of
Public Prosecutions v Basson
2002 (1)
SA 419
(SCA) para 21), though bona fides may be a relevant
consideration in the exercise of the court’s discretion. The
non-disclosure
was undoubtedly material. I do not think a judge whose
attention had been directed to the terms of the BIMCO contracts and
the
manner in which Part 1 had been completed would, without more,
have ordered
Agatis
’
arrest. Even on the further information placed before me, I do not
think a prima facie case has been established. But if
I have erred in
my assessment of the prima facie case, the remedying of the defect in
the initial papers could not be regarded
as a straightforward matter.
[66]
Where an order obtained ex parte is
discharged because of material non-disclosure, it is ultimately the
non-disclosure of the litigant
which is censured, even if the
non-disclosure attributed to the litigant may on occasion be that of
an agent such as a legal representative.
The fact that there was a
bona fide oversight by Aquarius’ legal team does not mean that
there was an excusable oversight
by Aquarius itself. There is no
evidence that Aquarius drew to its legal team’s attention the
identification of Solutions
as the Manager or, importantly, furnished
to them a copy of the letter of 29 November 2013. If Aquarius’
legal representatives
had seen the letter of 29 November 2013 before
moving the ex parte application, they would have been alerted to the
identification
of Solutions as the Manager in the BIMCO contracts.
They would have been bound to disclose the letter and I not doubt
that they
would have done so. Although in the application to set
aside the arrest Aquarius has tried to use the letter to its
advantage,
the sub-contracting arrangement which it appears to
proclaim might well have been regarded by the urgent judge (as it has
by me)
as fatal to the management claims.
[67]
Self-evidently the ex parte arrest of a
ship can cause the owner material prejudice. The duty judge will
often not have sufficient
time to detect discrepancies unaided. The
courts are entitled to expect a high degree of care and disclosure in
such matters (see
MV
Rizcun
Trader (4); Rizcun Trader v Manley Appledore
Shipping
Ltd
2000 (3) SA 776
(C) at 793I-794D).
[68]
In terms of the ex parte order, a rule nisi
was issued calling on interested parties to show cause on 31 March
2015 why the respondents
should not be ordered to pay the costs of
the arrest application. (This was the only part of the ex parte order
which was the subject
of a rule.) I was informed that the extended
return day is now to be argued on 1 June 2015. The costs argument
presupposes a subsisting
arrest, the question being whether, given
that the merits of the claims are in dispute, there should be a costs
order at this stage
or at all. Counsel were in agreement that if I
set aside the arrest the rule nisi should be discharged.
[69]
As a postscript, it may be wondered why,
when the problem came to light, Solutions did not apply to join or be
substituted as the
claimant. The fact is that it did not and for all
I know there are sound reasons why this step was not taken.
[70]
I make the following order:
(a) The order made
by this court on 17 March 2015, authorising the arrest of the MV
Agatis
, and the resultant arrest of the vessel, are set aside.
(b) The rule nisi
contained in para 7 of the said order is discharged.
(c)
The applicant is ordered to pay the third respondent’s costs of
this application.
ROGERS
J
APPEARANCES
For
Applicant MJ Fitzgerald SC
Instructed
by Bowman Gilfillan
22
Bree Street
Cape
Town
For
Third Respondent L Burger SC
Instructed
by Shepstone & Wylie
18th
Floor, 2 Long Street
Cape
Town
[1]
This
is one of the meanings which the expression ’prima facie case’
can bear, as it does for example in applications
for provisional
sequestration and provisional liquidation:
Kalil
v Decotex (Pty) Ltd & Another
1988
(1) SA 943
(A) at 976C-979B.
[2]
The
International Convention for the Safety of Life at Sea, adopted by
the International Maritime Organisation ('the IMO’).
[3]
See
footnote 1.
[4]
Paras
19 and 20.
[5]
Record
283-287.
[6]
Paras
19, 29, 31 and 33.
[7]
Record
131, 132, 133, 217 and 219.
[8]
Para
36.
[9]
Para
40.
[10]
Paras
37-38.