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[2015] ZAWCHC 160
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Motor Vessel "Asturcon" and Others v Afriline Denizcilik Veg Emi Kiralama Ltd and Another (AC11/2015) [2015] ZAWCHC 160 (2 September 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
CASE
NO: AC11/2015
DATE:
02 SEPTEMBER 2015
Name
of ship: MV “Asturcon”
In
the matter between:
THE
MOTOR VESSEL
“ASTURCON”
.......................................................................
First
Applicant
STALLION
FIVE SHIPPING COMPANY
S.A
........................................................
Second
Applicant
ASSURANCEFORENINGEN
GARD –
GJENSIDIG
................................................
Third
Applicant
And
AFRILINE
DENIZCILIK VEG EMI KIRALAMA
LTD
........................................
First
Respondent
NORTON
ROSE FULBRIGHT SOUTH AFRICA
INC
.......................................
Second
Respondent
JUDGMENT
DELIVERED
ON THIS 2
nd
DAY OF SEPTEMBER 2015
VAN
ROOYEN,
AJ
[1]
The second applicant (“Stallion”)
is the registered owner of MV Asturcon (“the vessel”).
[2]
On
2 March 2015 the first respondent (“Afriline”), pursuant
to the provisions of the Admiralty Jurisdiction Regulation
Act, 105
of 1983, (“the Act”), instituted an admiralty action
in
rem
in this court against the vessel for payment of the sum of USD251,920
and the vessel was arrested pursuant to a warrant of arrest
issued by
the Registrar in terms of Admiralty Rule 4(2)(a)
[1]
,
without prior notice to the applicants.
[3]
On 10 March 2015, the third applicant, in
order to secure the release of the vessel, furnished security by way
of a letter of undertaking
(“the LOU”) on behalf of the
vessel and Stallion.
[4]
On 27 March 2015, Stallion launched an
application for security for costs, the setting aside of the arrest
of the vessel and the
return of the LOU to Stallion for cancellation.
[5]
On 19 May 2015 this court ordered Afriline
to furnish security, in an amount to be determined by the taxing
master of this court,
to Stallion. On 20 May 2015 the taxing master
directed Afriline to furnish security to Stallion in the amount of
R650,000 by way
of a bank guarantee.
[6]
On 3 June 2015, Stallion’s
application for the setting aside of the arrest of the vessel and the
return of the LOU was argued.
By agreement, judgment was pended and
this court ordered Afriline to furnish the security by 12h00 on 9
June 2015, failing which
Stallion, without further notice to
Afriline, would be entitled to seek the setting aside of the arrest
of the vessel and the return
of the LOU.
[7]
Afriline failed to furnish security by
12h00 on 9 June 2015 and after 12h00 that day, its legal
representatives sought from this
court an extension of the period
within which to furnish security. It was refused and this court
ordered the setting aside of the
arrest of the vessel and the return
of the LOU to Stallion within a day of the order.
[8]
Afriline sought leave to appeal but it was
refused by this court. Subsequently, leave to appeal was sought from
the Supreme Court
of Appeal and during oral argument I was informed
that leave had been granted.
[9]
The return of the LOU is the subject matter
of this application. Stallion has sought the return of the LOU but
Afriline has asserted
that, pending the application for leave to
appeal (and the appeal), the order granted on 9 June 2015 is
suspended.
Urgency
[10]
This application was launched as a matter
of urgency on 1 July 2015 with the stated intention to be heard on 21
July 2015.
By 21 July 2015 Afriline’s
answering affidavit and the applicants’ replying affidavit had
been filed and it was ordered
that the matter be postponed for
hearing in the Fourth Division (a division for the hearing of matters
in due course) of this court
on 31 August 2015.
[11]
The grounds relied on by the applicants for
bringing this application as a matter of urgency, are that Afriline
is in contempt of
the order granted on 9 June 2015 and that the
security constituted by the LOU costs Stallion in the region of
USD2,000 per month
to maintain. It was submitted in the founding
affidavit that this application should be treated as one of
semi-urgency.
[12]
According to Afriline, the matter is not
urgent at all and the form, manner and time periods adopted by the
applicants were inappropriate.
Afriline argues that, by “
jumping
the queue
” and having this
application heard urgently and before the appeal is determined, the
applicants have procured for themselves
an unfair and highly
prejudicial procedural advantage. Afriline submits that the
determination of this application should stand
over until the appeal
has been determined.
[13]
An arrest
in
rem
on an
ex
parte
basis is an invasive process and,
understandably, an affected party is permitted to approach a court on
an urgent basis to apply
for the setting aside of an arrest. By
parity of reason, an affected party should be permitted to approach a
court on an urgent
basis for the setting aside of a deemed arrest and
the security that has been required to create the deemed arrest.
Logic dictates
that such urgency should be extended to the
determination of the effect of a pending appeal on a letter of
undertaking which has
been given to create a deemed arrest.
[14]
Moreover,
the maintenance costs of the LOU are substantial and that
consideration in itself constitutes semi-urgency
[2]
.
If the applicants are correct that the appeal does not suspend the
order granted on 9 June 2015 it will be iniquitous to expect
of
Stallion to continue maintaining the LOU at a substantial cost.
[15]
Fairness therefore dictates that the effect
of the 9 June 2015 order, pending the appeal, be determined
expeditiously.
[16]
In any event, Afriline had sufficient time
to prepare an answering affidavit and this court was not
inconvenienced because this
application was not even postponed to the
semi-urgent roll but to the Fourth Division.
[17]
In these circumstances the applicants’
non-compliance with the Uniform Rules is condoned.
Merits
[18]
Section
18(1)
of the
Superior Courts Act, 10 of 2013
, as well as Uniform
Rule
49(11)
provide that “
the
operation and execution of a decision
”
which is the subject of an application for leave to appeal or of an
appeal, is suspended pending the decision of the application
or
appeal.
[3]
[19]
For suspension contemplated in
s 18(1)
of
the
Superior Courts Act and
Uniform
Rule 49(11)
to come into effect,
there must be a decision susceptible to “
execution”
.
[20]
In
S.A.B Lines
(Pty) Ltd v Cape Tex Engineering Works (Pty) Ltd
1968 (2) SA 535
(C) an applicant obtained a rule
nisi
calling upon the respondent to show cause why an interdict against
it, to prevent it from removing a vessel from the Cape Town
docks
pending payment of an amount due, should not be granted. In terms of
the order, the rule operated as an interim interdict.
The Court
subsequently refused the application and discharged the rule
nisi
.
The Court was called upon to consider the execution of the order
pending the appeal and made the following findings:
“
The
order of the Court was one refusing the application, and I have
difficulty in seeing how a negative order of that nature could
be
carried into execution.
”
[4]
And
[5]
:
“
In
my view such a provision for an interim interdict is always intended
to operate pending the decision of the application on the
return day
of the rule nisi and I read the provision for an interdict in this
case in that light and with that intention.
”
[21]
It needs to be considered whether the order
granted on 9 June 2015 can be described as “
one
refusing the application
” which
is a “
negative order
”
and which cannot be carried into execution. If it can be categorised
as such, there is no “
operation
and execution of a decision
”,
contemplated in
s 18(1)
of the
Superior Courts Act and
Uniform
Rule
49(11)
, that can be considered.
[22]
Whether the 9 June 2015 order is a
“
negative order
”
can be determined with reference to the way in which courts have
approached applications for setting aside orders for the
arrest of
vessels, obtained
ex parte
.
[23]
In
Cargo Laden
on Board the MV Thalassini AVGI v MV Dimitris
1989 (3) SA 820
(A) at 834D-F the approach to an application for the
setting aside of an order for the arrest of a vessel, obtained
ex
parte
, was explained as follows:
“
The
incidence of the onus in such a situation is of importance in this
case. In
[Bradbury Gretorex Co
(Colonial) Ltd v Standard Trading Co (Pty) Ltd
1953 (3) SA 529
(W)] …
it was pointed out by Steyn J at 531A-D
that an applicant cannot by obtaining ex parte an order in his favour
secure a more advantageous
position than he would have been in if the
other party had had an opportunity of putting counter-allegations
before the Court;
consequently, if the other party applies for the
setting aside of the order, the original applicant retains the onus
of satisfying
the Court that he was entitled to it. That approach was
applied, correctly in our view, in the context of applications for
setting
aside the arrest of a ship procured in terms of
s 3(4)
and
(5) of the
[Admiralty Jurisdiction
Regulation]
Act in Transgroup Shipping
SA (Pty) Ltd v Owners of MV Kyoju Maru
1984 (4) SA 210
(D) at 214I
and Transol Bunker BV v MV Andrico Unity and Others
1987 (3) SA 794
(C) at 799D, and it must apply equally to an order for arrest
obtained ex parte in terms of s 5(3)(a).
”
[24]
In
The
MV Snow Delta: Discount Tonnage Ltd v Serva Ship Ltd
1996 (4) SA 1234
(C), Selikowitz J, relying on
inter
alia
The
Dimitris
,
stated the following
[6]
:
“
I
have had regard to Admiralty Rule 4 and find that it is to be
interpreted in the light of the law relating to the approach when
an
order of attachment is obtained ex parte and then reconsidered when
opposed either on the return day of the accompanying rule
nisi or
where the respondent actively seeks to set aside the order. Our law
treats the matter as a reconsideration of the application.
The
original applicant bears the onus in both the stated circumstances.
”
And
[7]
, with reference to the
S.A.B
Lines
matter:
“
The
effect of the setting aside of the attachment … was analogous
to the attachment having been unsuccessfully sought …
for the
first time. The grant of leave to appeal does not, in my view, revive
the order which had earlier been granted ex parte.
”
[25]
The
Supreme Court of Appeal accepted Selikowitz J’s reasoning
[8]
and stated the following
[9]
:
“…
dismissal
of a claim or application is not suspended pending an appeal, simply
because there is nothing that can operate or upon
which execution can
be levied. Where an interim order is not confirmed, irrespective of
the wording used, the application is effectively
dismissed and there
is likewise nothing that can be suspended. An interim order has no
independent existence but is conditional
upon confirmation by the
same Court … in the same proceedings after having heard the
other side …
”
[10]
[26]
Afriline seeks to distinguish the situation
in
casu
from
The Snow Delta
on the basis that, in
The Snow Delta
,
the Court dealt with an application to attach property for purposes
of founding an admiralty action in
personam
and in which a rule
nisi
had been granted which was not confirmed on its return day. Afriline
contends that an admiralty
in rem
arrest by means of which an action
in
rem
is instituted, is neither temporary
nor interlocutory and the fact that it may be granted by the
Registrar and without notice,
or the fact that it may subsequently be
challenged in further proceedings does not transform its fundamental
nature. Thus, Afriline
submits, when an
in
rem
arrest is set aside, it cannot be
argued that, when an appeal is lodged, there is nothing that can be
revived. There is an existing
and extant arrest conferring procedural
and substantive rights on the party in whose favour it has been made
and which underpins
an existing action in the very Court where the
arrest has been obtained.
[27]
However, it is clear from the aforequoted
passage from Selikowitz J’s judgment in
The
Snow Delta
that he dealt with the way
in which Admiralty Rule 4 (which provides for an arrest in an action
in rem)
must be interpreted in general. That includes the situation where, as
in
casu
, a
warrant is issued by the registrar without referring it to a judge.
[28]
Hofmeyr
[11]
deals with the Supreme
Court of Appeal’s judgment in
The
Snow Delta
and states the following:
“
The
question which arises is whether similar considerations apply to an
arrest in rem made pursuant to an order for arrest made
by the
registrar which is subsequently challenged and set aside by the
court. While the registrar’s order is not an adjunct
to another
order in the same way as an interim order of attachment, which is
only intended to operate until the return of the rule
nisi, it may be
contended that it is implicit in the registrar’s order that it
is provisional in the sense that it was only
intended to continue to
operate unless and until challenged. On this basis, if the challenge
succeeds, the case for arrest is effectively
dismissed and there is
no order having operation which can be suspended in terms of Uniform
Rule 49(11). It is submitted that this
approach is the correct one.
Where the registrar’s order is confirmed there is an order that
can be suspended pending an
appeal.
”
[29]
Hare
[12]
presents an argument to
the contrary but then concludes that:
“
On
balance, however, the Supreme Court of Appeal’s approach in The
Snow Delta would probably prevail, even in the case of
a simple
Registrar’s arrest, especially because of the very strong views
expressed in the long line of cases in South Africa
that where relief
is obtained ex parte (such as a simple arrest order issued by the
Registrar), the relief granted in that order
is provisional –
irrespective of the form in which it was cast.
”
[30]
The
provisions of s 3(6) and (7) of the Act are “
manifestly
procedural in nature”
as was pointed out in
Transgroup
Shipping SA v Mv Kyoju Maru Owners
[13]
and:
“…
merely
provide a remedy whereby an existing claim may be enforced leaving
the merits of the claim unaffected. The subsections do
not involve
any interference with existing rights and obligations, in as much as
they do not affect the nature or validity of the
claim but merely
provide a procedure for enforcing it …
”
[14]
The
onus remains on Afriline to justify the arrest of the vessel
[15]
.
[31]
In
these circumstances I cannot see why, in the instance of an arrest
in
rem
on an
ex
parte
basis, a party should be allowed to “
secure
a more advantageous position than he would have been in if the other
party had had an opportunity of putting counter-allegations
before
the Court
”
[16]
and why the principle
enunciated in
The
Snow Delta
should not apply.
[32]
As
far as the arrest of the vessel is concerned, the order granted on 9
June 2015 should therefore be treated as analogous to the
arrest of
the vessel being “
unsuccessfully
sought … for the first time
”
[17]
and the dismissal of an
application for a warrant authorising such an arrest. Consequently,
it is a “
negative
order”
which
cannot “
be
carried into execution
”
[18]
and there is nothing to
be suspended in terms of
s 18(1)
of the
Superior Courts Act and
Uniform
Rule 49(11).
[33]
Afriline further argues that the wording of
the LOU operates to secure Afriline’s claim against the vessel
and costs, including
the costs of the pending appeal. The return of
the LOU can therefore not be ordered as it continues to act as
security for proceedings
(the appeal) which have not been determined.
[34]
The
LOU ought to be considered in the context
[19]
in which it was furnished. It served the purpose of securing the
release of the vessel and to create a deemed arrest of the vessel,
contemplated in
s 3(10)(a)(i)
of the Act. The LOU therefore owes its
raison
d’être
to the arrest of the vessel.
[35]
The
effect of the setting aside of the arrest of the vessel is analogous
to the arrest “
having
been unsuccessfully sought”
[20]
. It follows of necessity
that, if the arrest is to be seen as having been unsuccessfully
sought, the deemed arrest is terminated
and the rationale for the LOU
falls away.
[36]
In these circumstances, it is untenable to
argue that the LOU ought to be interpreted as an undertaking to
secure the costs of the
pending appeal even if the arrest of the
vessel cannot be revived by the pending appeal. If it were not for
the LOU, the vessel
would have been released, courtesy of the 9 June
2015 order, despite the pending appeal. Why then should the LOU which
took the
place of the vessel to create a deemed arrest, stay in
place?
[37]
I was urged by counsel for the applicants
to order Afriline to pay the applicants’ attorney-and-client
costs. However, I am
not convinced that Afriline’s opposition
to this application is so unreasonable that it warrants a special
order as to costs.
[38]
It is therefore ordered that:
(a)
The original letter of undertaking dated 5 March 2015 furnished to
the first respondent by Gard AS (a copy of which is annexed
to the
applicants’ founding affidavit, marked “JLD1”)
shall be delivered by the second respondent to the applicants’
attorneys of record within 24 hours of this order.
(b)
The first respondent shall pay the applicants’ costs of this
application.
R
F VAN ROOYEN, AJ
[1]
Published
in GN R571 of 18 April 1997
[2]
See
Twentieth
Century Fox Film Corporation v Anthony Black Films (Pty) Ltd
1982 (3) SA 582
(W) at 586G, regarding the principle that the
urgency of commercial interests may justify the invocation of
Rule
6(12)(a).
[3]
In
terms of
s 18(1)
, read with
s 18(3)
, a court may, under exceptional
circumstances, order otherwise.
[4]
At 536G
[5]
At 537E-F
[6]
At 1234J – 1235B
[7]
At
1235B-C
[8]
MV
Snow Delta: Serva Ship Ltd v Discount Tonnage Ltd
2000
(4) SA 746
(SCA) at para [6]
[9]
At 752A-B
[10]
See too
National
Director of Public Prosecutions v Rautenbach
2005 (4) SA 603
(SCA) at para [12]
[11]
Admiralty
Jurisdiction Law and Practice in South Africa
,
2
nd
ed, at 171 para X.41
[12]
Shipping
Law & Admiralty Jurisdiction in South Africa
,
2
nd
ed at 88-89
[13]
supra
at 213H
[14]
At 214E
[15]
Transgroup
at 214I
[16]
MV
Dimitris
at 834D
[17]
Selikowitz J in
The
Snow Delta
,
supra
[18]
S.A.B
Lines
at 536G
[19]
See
the emphasis on context in the interpretation of a contract as dealt
with in
KPMG
Chartered Accountants (SA) v Securefin Ltd and Another
2009 (4) SA 399
(SCA) at para [39]. See too Christie,
The
Law of Contract in South Africa,
6
th
ed at 221-227 regarding the importance of “wider context”
which means that “context does not stop at the four
corners of
the written contract” (at 221) and the need for a purposive
construction.
[20]
Selikowitz J in
The
Snow Delta
,
supra