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| Updated: 22 May 2008 |
Synopses of Judgments — Durban |
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NOTE: A synopsis is given of the following judgments, some as yet unreported, from the High Court, Durban & Coast Local Division:
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IN THE HIGH COURT OF SOUTH
AFRICA NAME OF SHIP: mv "Pioneer Trader" CASE NO. A41/2008 IN THE MATTER BETWEEN IN THE
HIGH COURT OF SOUTH AFRICA NAME OF SHIP: mv "Asean Sea 01" CASE NO. A32/2006 IN THE MATTER BETWEEN IN THE
HIGH COURT OF SOUTH AFRICA NAME OF SHIP: mv "Bow Neptune" CASE NO. A62/2005 In the matter between P&I Club letters of undertaking: The Durban High Court has found that a P&I Club letter is acceptable security for the release of a vessel from a security arrest. As with a bank guarantee, it involves a certain amount of commercial risk, but this accords with modern commercial practice. (Full text available here) IN THE
HIGH COURT OF SOUTH AFRICA NAME OF SHIP: mfv GALAECIA Case Number: A19/2006 In the matter between: In the matter of an application by the Applicant to set aside the arrest of the vessel persuant to a writ issued in an in rem action. Judgment: Per Combrinck, J. IN THE
HIGH COURT OF SOUTH AFRICA NAME OF SHIP: mv
"GLADIATOR 1" Case no. A213/2003 IN THE MATTER BETWEEN In the matter of an application to lift the Arrests of a cargo or Rice by the First and Second Respondents under the terms of Section 5(3) of the Admiralty Jurisdiction Regulation Act, No. 105 of 1983. Judgment:
Per: Msimang J. IN THE
HIGH COURT OF SOUTH AFRICA Case No. A108/2003 IN THE MATTER BETWEEN Per: Magid J. IN THE
HIGH COURT OF SOUTH AFRICA Case No. AR 289/2002 Name of Ship: "Afris Pioneer" In the matter between and mv "Afris
Pioneer" (First Respondent) (First Defendant in the Court a quo) IN THE
HIGH COURT OF SOUTH AFRICA Case No. A210/02 Name of Ship: "The Wisdom" In the matter between per: Nicholson J (20 November
2002) (see also mv "Wisdom" [per McCall J, Case No. A39/2002]) IN THE
HIGH COURT OF SOUTH AFRICA Case No. A55/2003 Name of Ship: mv "Atlantic Spirit" In the matter between per: Msimang J IN THE
HIGH COURT OF SOUTH AFRICA Case No. A130/1999 Names of ships: mv "ACOR" and mv "SALANGO" In the matter between: Per: Galgut DJP Summary to follow IN THE
HIGH COURT OF SOUTH AFRICA Case No. A39/2002Name of ship: mv "WISDOM" In the matter between: And In the matter between: Judge: McCALL
J Facts: The applicants arrested bunkers on board the mv “Wisdom” in terms of secton 5(3) of the AJRA for the purpose of obtaining security for an alleged claim against the respondent. Shortly after, Oil Bulk Inc. (“the intervener”) applied to set aside the arrest on the grounds that it was the time charterer of the vessel at the time of the arrest and that in the result, the bunkers were not the property of the respondent. The intervener evidenced their application with a document marked “TR3” in which the purported owners of the mv “Wisdom” stated that their vessel was on charter with “Messrs OLBUK INC. (sic) pursuant to a fixture concluded on 1st August 2002…”. In turn, the applicants brought a counter-application, requiring the intervener to produce certain documents for inspection, i.e. the documents relevant to the conclusion of the fixture of the charterparty, the documents entitling the respondent to nominate the charter of the vessel, as well as the documents containing the nomination of the intervener as the charterer. Arguments: The applicants purported to have brought the counter-application in terms of Rule 35(12) of the Uniform Rules, which provides :–
The applicant argued that the documents requested pertaining to the fixture, were those to which annexure “TR3” referred. He contended that a fixture is the result of negotiations conducted by an exchange of correspondence, and that it is inevitable that there exists a file of correspondence evidencing the fixture. As far as the documents relating to the nomination were concerned, the applicant argued that the Court was entitled to have regard to the surrounding circumstances, particularly the documents supporting the application which shows that the nomination was in writing. Alternatively the applicant argued that the Court should exercise its general discretion to order discovery of the documents. It was the case of the intervener that the documents requested are not those to which Rule 35(12) applies. The intervener contended further that the reference in annexure “TR3” to a fixture, was a reference to the actual written Time Charter, which was in fact annexed to the intervener’s founding affidavit. As regards the nomination, the intervener countered that it was not permissible to look at any documents other than “TR3”, and that the nomination could have been in writing or oral. As to the alternative argument, the intervener argued that this was not a case where the Court should exercise its discretion to order discovery. Judgement: McCall J. stated that it was highly improbable that the parties would have conducted their negotiations resulting in the fixture, orally. In the result, annexure “TR3”, at least by implication, refers to the documents constituting the fixture. Accordingly, these documents, for purposes of Rule 35(12), constitute documents to which reference is made in the founding affidavit of the interveners. On the other hand, McCall J. was of the opinion that reference in annexure “TR3” to the nomination of “Olbuk Inc” (sic) as charterers is not necessarily a reference to a document, and might have been an oral nomination. The Judge held that there was no reference in annexure “TR3” to “fixture files”, nor to “documents entitling the respondent to nominate the charterer of the vessel”. In terms of Rule 35(12), the applicant was therefor only entitled to disclosure of the documents constituting the “fixture concluded on 1st August 2002”. On the authority of The mv Urgup 1999 (3) SA 500 (C) and The mv Rzcun Trader (2) 1999 (3) SA 956 (C), McCall J. held that it would be inappropriate to go beyond Rule 35(12) and to allow the applicant, who bore the onus of justifying the arrest, access to documents which were not mentioned in the affidavit of the intervener, and subsequently allow the applicant to “go on a fishing expedition in the hope of bolstering its case”. Raporteur: Johan Botes IN THE
HIGH COURT OF SOUTH AFRICA Case No. A39/2002 Name of ship: mv "Gallant II" In the matter between: Wajilam Exports (Singapore)
Pte Limited (Applicant) Judge: Pillay AJ (Ms) Facts Transpacific Eternity SA (the respondents) were the owners of the mv “Antares III”. Wajilam Exports (Singapore) Pte Limited (the applicants) chartered the mv “Antares III” on the NYPE form to ship inter alia a cargo of steel coils from Mumbai to Ravenna, Italy. The bill of lading in respect of this cargo identified the respondent charterers as the carrier. Upon discharge at Ravenna, the receivers alleged that many of the coils were damaged. The receivers arrested the mv “Anteres III” and damages in the sum of US$ 300 000 were laid at the door of the applicant owners. Since this claim gave rise to a maritime lien under Italian law, the applicants put up security, notwithstanding the fact that the applicants were the carriers under the bill. Consequently, the respondents requested the applicants to substitute the security, and furthermore alleged an outstanding balance on the hire statement. The respondents proceeded to arrest the applicants’ bunkers on board another vessel chartered by them, the mv “Galant II”, in order to obtain security for the outstanding hire, and for the cargo claim. In order to lift the arrest, the applicants provided a bank guarantee as security in the amount of US$109 912. Arguments In the present application, the applicants sought to reduce the security under section 5(2)(d) of the AJRA. The applicants contended that the respondents have no claim against them, and therefore did not make out a prima facie case against the applicants in respect of the cargo claim, which in accordance to Botha J.A. in Cargo Laden on Board the M.V. “Thalassini Augi” v MV “Dimitris” 1989 (3) SA 820 A.D. at 832 the respondents had to establish to succeed with a security arrest. It was their case that in accordance with clause 4(c) of the Inter Club Agreement, which applied to the charter and governed the settlement of cargo claims between owners and charterers, apportionment shall only take place once the claim has been properly settled or compromised. The respondents, in turn, contended that under clause 18 of the charter they were still entitled to an indemnity, regardless of the Inter Club Agreement. In terms of this clause, the applicants undertook not to permit any lien to continue which might have priority over the title and interest of the owner of the vessel. Judgment Pillay A.J. found in favour of the applicants. She held that the claim under consideration is in fact a cargo claim, and purported to follow the principle laid down in Primegates Maritime v Bunders on Board mv “Cargo Explorer” 1995 CLD 617 (D). In that case it was held that the Inter-Club Agreement only comes into operation after the cargo claim has been settled, and that the obligation to indemnify only arises once the underlying claims have been met. Subsequently, Pillay A.J. held that the respondent could not claim for indemnity nor for security in that respect until the cargo claim is settled, and that this finding does not conflict with section 5(3) of the AJRA. She concluded with a reference to the American case Seguros Banavenez SA v The Oliver Drescher, 761 F.2d 855, 1985 AMC 2168 (2d Cir. 1985). The Second Circuit reversed the order for the arrest of a vessel as security for a cargo claim, holding that, whereas the quid pro quo for voluntarily furnishing security is the release of the vessel, the charterers may not be deprived of its property rights without any similar quid pro quo. Supposedly following this decision, Pillay A.J. found that even if the claim was not a cargo claim, any claim for security was premature without any prior establishment of the liabilities for the cargo damage. In the result, she allowed the amount of security to be reduced to US$35 745. Raporteur: Johan Botes IN THE
HIGH COURT OF SOUTH AFRICA
Name of ship: mv "Evelyn" In the matter between Owner and/or Underwriters
of Cargo Formerly Laden on Board Judge: Hugo J The Facts: The Applicant had an in rem summons issued on 1 June 2000 aimed at the defendant vessels , being two allegedly associated ships of the mv "Evelyn" (termed "the guilty" ship for being the ship against which the Applicant’s claim lies). The Applicant’s claim was based on loss of cargo of fertilizer shipped on board the "Evelyn" from Russia to Malaysia. The cargo was lost when the ship sank in mid Atlantic on 19 May 2000. The Hague Rules incorporated in the contract of carriage stipulated that suits for loss or damage had to be brought within one year after the goods should have been delivered. In terms of sec.1(2)(b)(iii) of the Act the institution of an action in rem lapses if not served within twelve months of the issue thereof. Prior to the lapsing of the summons the Applicant approached the court for a two year extension in terms of sec.5(2)(d)(A) of the Admiralty Jurisdiction Regulation Act 105 of 1983 ("the Act"). The court’s reasoning:
The judge stated that there should be an indication whether the ship concerned would be likely to enter the ports within the jurisdiction of the Court within the foreseeable future. When the Applicant supplemented its papers to show that there had been the occasional visit to Cape Town and Durban by these vessels the judge disposed of this issue by stating :
The court referred to the fact that a similar summons had been extended for a two-year period by the Cape High Court but hastened to add that clear policy considerations motivated the legislature in enacting sec.2(b)(iii). The judge proffered that it was
In terms of the Hague Rules, the ship would only have been discharged from liability within one year of the date on which the goods had to be delivered and thus summons need only to have been issued a year later i.e in May 2001. Nevertheless, the court stated that an extension would not be prejudicial to the associated vessels but that the position may have been different regarding attachment or arrest proceedings against the guilty vessel itself.
Hugo J stated in essence that two factors should be taken into account namely that :
and the likelihood of the ship finding itself in the jurisdiction of the court exercising its discretion should be taken into account. Held: Rapporteur: Arabella Bennett IN THE
HIGH COURT OF SOUTH AFRICA Name of ship: MV "Able Monarch" Unreported Case Nos:
A249/2001 In the matter between: Per: Gyanda J The Facts: The Applicant sought:
The matter came before Gyanda J as a matter of urgency. The First and Second Respondents applied to file further affidavits in response to certain new allegations raised by the Applicant in its replying affidavits. Counsel for the Respondents argued that inasmuch as Admiralty Rule 9(3)(c) allowed the Applicant to introduce new material in its replying affidavit; in light of the urgency of the matter and in view of the fact that the Monarch in Malaysia had died and that there thus was a public holiday, it was in the interest of fairness and justice to have allowed the Respondents to file such further papers in terms of the provisions of Uniform Rules of Court, Rule 6(5)(e). The court granted the Respondents leave to file further papers and offered the Applicant the indulgence of an adjournment to respond to the those allegations. Counsel for the Applicant advised that it would have taken days to respond and that in light thereof it requested the noting that the filing of further papers by the Respondents was prejudicial to the Applicant’s case. It was agreed that the Respondents bore the onus of proving on a balance of probability that they were justified in arresting the vessel in the circumstances. The Issue in Dispute: It was common cause that the vessel had previously belonged to Tauladan Gigih SND BHD (“Tauladan” / “Tauladam” used interchangeably in the judgment) against whom the Respondents had a claim. The Applicant alleged that it had purchased the vessel from Tauladan prior to the arrest. The Applicant bore the onus or evidentiary burden of establishing prima facie that it owned the vessel at the relevant time. Only once this onus had been discharged would it become necessary to look into the question of counter-security for wrongful arrest. The Respondents alleged that several factors indicated that at the time of the arrest the vessel was still the property of Tauladan and that the purchase of the vessel by the Applicant was a means to having the vessel released from arrest and avoiding to pay the debts of Tauladan. The Respondents averred that there was no independent evidence confirming the sale in question. The court found that this onus had not been discharged by the Applicant for the following reasons:
In view of the above the judge stated that: “… this also creates a strong suspicion that the entire transaction was not one at arms length but a collusive one in order to obtain the release from arrest of the vessel in question and to avoid paying the Respondents and other creditors of Tauladan what was due to them.” [at page 7]. The Order: The application was dismissed with costs. Rapporteur: Arabella Bennett IN THE
HIGH COURT OF SOUTH AFRICA Name of ship: mv "Als Express" Case No. A55/2001 In the matter between P.C. Combrinck, J IN THE
HIGH COURT OF SOUTH AFRICA Name of ship: mv "Fayrouz IV" Case Citation 1998 (4) SA 675 October International
Navigation Inc (Applicant) Shearer J, Page J and Booysen
J Appellant’s attorneys:
Bowens, Garlicke & Bousfield The Facts: The Jade II ("the guilty vessel") was sold by a Panamanian Company, Katerina I Compania Maritima SA ("Katerina") on 17.07.1987 to a Liberian Company, October International Navigation Inc ("the Appellant") on a standard form contract. In terms of the contract, the buyer/ Appellant was indemnified against any outstanding claims against the vessel. Prior to the sale the World Food Programme acquired a maritime lien over the Jade II for non-delivery of cargo [a maritime lien of carriage ito sec.1(1)(ii)(h) of the Admiralty Jurisdiction Regulation Act ("the Act")]. After the sale, the World Food Programme notified the Appellant that the former sought to enforce this lien against the Jade II, now belonging to the Appellant. The appellant then, in pursuance of its action in personam against Katerina, based on the indemnity clause (being a maritime claim ito sec. 1(1)(ii)(y)) arrested the m.v Fayrouz IV ("the associated vessel"). The association in terms of section 3(7)(ii) was found to have been established (in the court a quo and confirmed by the appeal) due to the fact that, at the time that the agreement arose, 3 members of a family owned/controlled the shares in both Katerina (then owning the guilty vessel) and Vassiliki Maritime Co ("Vassiliki") who then, and at the time of the arrest, owned the associated vessel. The finding of the court a quo: Gordon AJ in the court a quo set the appellant’s urgent and ex parte arrest aside (judgment delivered on 3 December 1987) and leave to appeal was granted. The vessel was released from arrest on the basis that
The appeal court’s finding: Shearer J in the Natal Provincial Division stated that the court a quo erred in its finding. He said that the expression "The guilty ship is the ship against or in respect of which the claim lies" led the court a quo astray in that the liability was that of the legal entity against which the claim lay and not the vessel itself. He stated that from the moment the Appellant owned the guilty ship no action in rem was available to it against the ship but that the action in personam against Katerina remained. He further emphasized that it was
The court dismissed the Respondent’s contention that the arrest was only available when an action in personam lay at that moment in time against the owner or property to have been arrested and said that s3(6) & 3(7) extended the circumstances in which an arrest was available. Shearer J held that "it was immaterial that no action in rem [was] available to the appellant against the MV Jade II" when it had an action in personam lay against Katerina which was owned/controlled by the same entity (when the claim arose) which owned the associated and arrested vessel. The court held that
The appeal was accordingly upheld with costs including the costs of the proceedings in the Court a quo. Rapporteur: Arabella Bennett IN
THE HIGH COURT OF SOUTH AFRICA Name of Ship: mv "Ain TEMOUCHENT" Case No. A135/2001 In the matter between: KEYTRADE USA INCORPORATED
(Applicant) An ex parte application for
the arrest of the per: PATEL J. IN THE
HIGH COURT OF SOUTH AFRICA Name of Ship: mv "MSC ALEXANDRA" Case No. A228/2000 In the matter between: MEDITERRANEAN SHIPPING
COMPANY per: PATEL J. In October 1999 the Plaintiffs, being the Respondents in these proceedings, threatened to attach the assets of the Defendant (the Applicant in these proceedings) in South Africa to found or confirm jurisdiction in an action in personam in connection with damage to a cargo of frozen hake loins. In response, and pursuant to section 3(10)(a)(i) of the Admiralty Jurisdiction Act 105 of 1983 (‘the Act’), the Defendant furnished security, in the form of a letter of Undertaking in consideration for the Plaintiffs’ refraining from attaching any of the Defendant’s assets. In so doing the Admiralty action was commenced in terms of section 1(2)(a)(iv) of the Act. In terms of section 3(10)(a)(ii) attached property is deemed to be released if no further steps are taken by the party attaching the property within one year of the giving of security or undertaking. The Plaintiffs, prior to the expiration of one year caused, an in personam summons to issued and instructed the office of the sheriff, on the same day, to serve same on the Defendant. However due to omission/negligence on the part of the sheriff only a copy of the particulars of claim and not of the summons was left with the Defendant’s correspondent attorney’s offices. The Defendant claimed, in this application, that the action had thus lapsed and requested the return of their undertaking. The Plaintiffs in response contended that the issuing of the summons was in itself a further step as contemplated in section 3(10)(a)(ii) and in the alternative applied for condonation of the improper/incomplete service. The court heard evidence regarding what transpired when the documents were served and found that the sheriff had clearly informed the receptionist of the nature of the summons and had exhibited the original to her. A week later and upon realizing that he had omitted to leave the summons with her; the sheriff had returned and served the copy of the summons (by this time a year had lapsed since the undertaking was given). In deciding whether the issuing of the summons in itself constituted a further step taken ito section 3(10)(a)(ii) the court stated that the rationale behind the section was to "penalize dilatoriness and avoid inaction" which would be "to the detriment of the party which has to continue to bear the costs of maintaining the security." The court went on to state that this section was born in mind by the drafters of the Rules of the Act when Rule 8(4) was drafted which allows for the giving of a Notice of Intention to Defend after the issuing, but prior to the service of a summons. The court equated the meaning attributed to the term "further step" with the same wording to be found in Rule 10 of the Magistrates Court Rules, which had been interpreted to mean that the Plaintiff, evidencing the intention to proceed with a further step, had taken a formal step. Held: The court found that the issuing of the summons amounted to such a step and stated that to hold otherwise would have made nonsense of Rule 8(4). The court argued further that it was more imagined than real that the Plaintiffs would have obtained security, issued a summons within a year and prior to prescription and then done nothing further. All the Defendant was required to do, to avoid any prejudice to it, was to look in the Admiralty Register to determine whether summons had been issued. It was thus not necessary to discuss the Plaintiffs’ counter-application for condonation. The application was dismissed with costs. IN
THE HIGH COURT OF SOUTH AFRICA Name of Ship: mv 'Mbashi' Case No.
A284/97; A66/98 In the
matter between: This case concerns a salvage operation performed outside the Durban Harbor on 7 August 1997 when a fire broke out in the engine room of the m.v. Mbashi causing the vessel to lose all her power and become a "dead ship." In response to a distress call from the vessel, the plaintiff sent out a pilot and two tug boats that responded promptly and, despite harrowing sea and vessel conditions, performed a successful rescue operation. The plaintiff consolidated two actions in rem for its salvage claim into one action against the first defendant being the m.v. Mbashi, the second defendant being the cargo on board the vessel and the third defendant being the charterers as owners of the bunkers on board the vessel. The plaintiff contended that its actions amounted to a salvage operation ito article 1(a) of the schedule to the Wreck and Salvage Act 94 of 1996 ("the Act") entitling it to a salvage reward for saving the lives of the crew, members, the ship, her furniture, stores and victuals, the bunkers, the cargo and the freight as well as averting damage to the environment as contemplated ito article 1(d) of the schedule to the Act. In the alternative the plaintiff claimed special compensation ito article 13 and 14 of the schedule to the Act. The defendants placed in issue whether the actions of the plaintiff amounted to salvage operations and alleged that the operations were conducted simply under a contract of carriage. This refute was based on the fact that the defendants believed the actions of the plaintiff not to amount to ‘voluntary’ conduct ito the South African common law. The defendants argued that because the plaintiff’s powers were limited (unlike the erstwhile South African Railways and Harbors whose powers were not circumscribed) it was not in a position to undertake salvage operations voluntarily. The court did not accept this argument and stated that the plaintiff was entitled to a salvage reward. Regarding the fixing of the reward, the court stated that it was plainly self-evident on the facts of the case that the rescue efforts of the plaintiff had been wholly successful ito the requirement of "useful result" in article 12 of the Act. The court then examined the matters which it was enjoined to take into account ito article 13(1)(a) to (j) of the Act and held that all the requirements had been satisfied in this particular case judged on its own facts and circumstances (section 3 of the Convention). The court stated that although it must be born in mind that a salvage reward should not be unduly burdensome to the ship owners and cargo interests; it was particularly impressed with the conduct of the plaintiff. The court fixed the reward at R3 212 459.90 with interest running from the date of judgment (being the date of liquidation of the reward). The first defendant was ordered to pay the costs of the action including the costs of two counsel. On request of the parties, no apportionment between the defendants was made ito article 13(2) of the Convention but leave to approach the court in this regard was granted. Rapporteur: Arabella Bennett IN THE HIGH COURT DURBAN AND COAST LOCAL DIVISION Name of ship: mv 'Delta Peace' Case No.
A224/97 In the
matter between:" The Facts: The Sheriff of the High Court of South Africa, Durban and Coast Local Division (exercising its admiralty jurisdiction) applied for an order directing the Registrar of the High Court to authorise payment out of the fund constituted ito s 9 (2) of the Admiralty Jurisdiction Act 105 of 1983. The fund was the result of the proceeds of the judicial sale of the m.v. Delta Peace and the payment was for costs and expenses incurred by the Sheriff in respect of the preservation, maintenance and provisioning of the vessel while in the sheriff’s custody and also for the repatriation of its crew. The relevant claim concerns the ‘reasonable remuneration’ to which the sheriff is entitled ito Rule 21(3) of the Admiralty Proceedings Rules for work performed by him in his custodial capacity in respect of the preservation of the vessel. The opposition to the relevant order sought by the sheriff came from a group of creditors of the ship cited as the fourth respondent. The respondent’s objection was based on 3 grounds:
Held: Combrinck J in a preliminary comment stated that rule 21(1) imposed a positive duty on the sheriff to act as enjoined by the rule. The rule expressly leaves it up to the sheriff to take such steps ‘as appear to him to be appropriate’ in order to preserve the vessel and a court of law will riot readily interfere in the exercise of that discretion. Furthermore, rule 21(3)(a) makes no provision for a specific tariff and if the rulemakers had had in mind that the quantum of remuneration contemplated in the rule should dwell in the vicinity of the comparable tariff in rule 68 of the Uniform rules, they could easily have said so.
Rapporteur: Arabella Bennett IN
THE HIGH COURT OF SOUTH AFRICA CASE NO. A104/98 NAME OF SHIP: mv 'Bunga Mas Tiga' In the
matter between: per:
THERON J The Facts: The plaintiff purchased 320 window fitting air-conditioning units from Topaire SDN BHD of Singapore. Topaire was obliged to arrange carriage of the goods to Hong Kong and the plaintiff ex Hong Kong. The Plaintiff contracted with Italfreight SA (Pty) Ltd acting as agent for the Allied Seafreight Line (‘ASL’) for the carriage of goods ex Hong Kong. The ASL is a Non-Vessel Owning Common Carrier entity (‘NVOCC’) registered with the International Federation of Freight Forwarders Associations ("FIATA") for the Aprile Group, a group specialised in international freight forwarding, based in Genoa. Italfreight is the Aprile Group’s South African Company registered with the FIATA. The plaintiff’s contract with Italfreight was for the carriage of cargo laden on the Bunga Mas Tiga, from Hong Kong to Johannesburg on the terms of ASL’s bill of lading usual form. ASL thereafter contracted with the Malaysian International Shipping Corporation (‘MISC’) for the transport from Hong Kong to Durban on the terms of the MISC bill of lading usual form or general trading conditions. The plaintiff instituted action against the defendant for damage to the goods incurred while the cargo was stored at the defendant’s premises in Durban. The defendant’s sought to rely on the so-called ‘Himalaya clauses’ contained in both the bill of lading issued by ASL and by MISC. The Himalaya clause seeks to extend protective terms of the contract to sub- contractors or agents of one of the parties as against the other party. In each bill of lading, the carrier contracted not only on his own behalf but as agent or trustee of the person by whom carriage was undertaken. The defendant alleged that the plaintiff stepped outside of the contractual nexus by suing the defendant and that the plaintiff sought to circumvent the contractual protection clauses. The defendant’s defence thus depended on the defendant establishing a contractual nexus between the plaintiff and the defendant in terms of which the enforceability of the plaintiff’s claim in delict was restricted to the provision of time – bar contained in the plaintiff’s bill of lading with either the ASL or the MISC. The question for the case at hand was whether the Himalaya clause is applicable to a party twice removed from a party to the contract. The law: In Santam Insurance Co v South Africa Stevedores Ltd 1989 (1) SA 182 (D) the extended agency doctrine was adopted as part of South African law provided it either conforms with the requirements of the stipulatio alteri or meets 3 requirements namely: (1) the bill of lading makes it clear that the carrier intended by its terms to protect the defendant; (2) the carrier by the bill contracted for the defendant’s protection as well as for his own ; and (3) the authority of the carrier to act for the defendant in this respect, whether antecedently or by ratification, is made out. Defendant’s 5 grounds of defence:
The court’s dismissal of the defendant’s grounds of defence:
Held:
Rapporteur: Arabella Bennett IN
THE HIGH COURT OF SOUTH AFRICA CASE NO: A 72/99 NAME OF SHIP: MV “MERAK S” In the
matter between: Hearing:
20/09/99 Security Arrest – in terms of S 5 (3) of the Admiralty Jurisdiction Regulation Act, 105 of 1983, for claims to be brought in arbitration proceedings in London – Guarantee – what constitutes “security” in terms of the Act – Application for counter-security in terms of S 5 (2) (b) & (c). Respondent brought an application for arrest of mv “Merak S” in terms of S 5 (3) of the Act as security for claims it intended to pursue against applicant in arbitration proceedings in London. Claims arising out of charterparty concluded between respondent and applicant in respect of the mv “Merak S”. The vessel was released after a bank guarantee was put up to secure the claims of the arresting party in such arbitration proceedings. The bank guarantee was put up in terms of a court order by Jappie J directing the arresting party to accept such guarantee as “security for its claims” against delivery of which the vessel was to be released. The court further granted leave to the owners of the “Merak S” to apply to the court for a reduction of security sought by the arresting party and to compel the arresting party to put up counter-security in respect of counterclaims to be brought by way of arbitration proceedings in London. Application now brought by applicant against respondent for:
Held that in granting the applicant leave to apply for the relief it presently seeks Jappie J did not intend to deprive the respondent of any of it’s legal rights, including the right to contend that this court has no power to grant such relief under the sections of the Act relied upon by the applicant. Issued adjudicated as follows:
Held that is a distinction between security in terms of the Act and a private contractual undertaking between the arresting creditor and either the owner of the vessel or a third party in terms of which the arresting creditor’s claim is secured. Security in terms of the Act is furnished to the Court through the Registrar and is under the control of the court. There must be something tangible, held or controlled by the Registrar which may be used to satisfy the judgement. If security cannot be held by the court, it is not within the control of the court, and not subject to the powers vested in the court in terms of S 5 (2) (d) The guarantee in question constitutes a private contractual undertaking given by FNB to the respondent in order to secure the respondent’s claims against the applicant. Fact that order of Jappie J directed applicant to accept the guarantee as “security” does not make it security for the purposes of S 5 (2) (d) of the Act. Only an order for the release of the vessel upon basis that court considered that respondent’s claims were adequately secured by the guarantee. Therefore applicant’s claim for relief in terms of S 5 (2) (d) must fail. Not disputed that applicant has genuine and reasonable need for security for it’s counterclaim. Court has power to order the giving of security in terms of S 5 (2) (b) or (c) for a counterclaim where defendant has been compelled to litigate in a South African Court by virtue of an arrest or attachment at the instance of the plaintiff. Held that S 5 (2) (b) can only be invoked in relation to actions in rem or in personam proceeding before the courting the exercise of it’s admiralty jurisdiction, and the relief provided by this section is not available to a claimant in foreign proceedings. Held that as the undertaking given to the respondent does not constitute security for the purposes of the Act, there no longer exists “anything done” or “to be done” in terms of S 5 (2) (c) of the Act which the court may make conditional upon the provision of security to the applicant for it’s counterclaim. Held further that in any event applicant could avail itself of S 5 (2) (c) as respondent had established all requirements for a security arrest in terms of S 5 (3). That section does not make it a condition of an arrest for security that the other party’s counterclaim should be secured. Accordingly applicants claim for counter-security must also fail. Application dismissed with costs. Rapporteur: Lindsay Hussey IN THE
HIGH COURT OF SOUTH AFRICA mv "Stella
Tingas" [Case No. A.224/97 - reportable] -- In the matter between The Facts: The Plaintiff is the owner of the "Stella Tingas", a vessel berthed alongside in the Durban Harbour and loading cargo on 17 June 1997 when the m.v. "Atlantica" (First Defendant) entered the Durban Harbour under pilotage and with two tugs in attendance and collided with the "Stella Tingas". The masters, officers and crew of the "Atlantica" were at all material times employed by the owner of the vessel and acting within the course and scope of their employment. The pilot was at all material times employed by the Second Defendant (Transnet) and acting within the course and scope of his employment. The harbour of Durban is a compulsory pilotage harbour with regard to which the provisions of paragraph 10 of Schedule 1 to the Legal Succession to the South African Transport Services Act, No 9 of 1989. The pilotage referred to in paragraph 5(b) of the particulars of claim was compulsory pilotage and the pilot was a person duly licensed by the Second Defendant to act as a pilot at Durban harbour and an employee of the Second Defendant. Legal Issue: Whether the collision was caused by the recklessness, alternatively gross negligence, alternatively negligence of the master, officers and crew of the "Atlantica"; the pilot or the Second Defendant; Whether ito section 6 of 1983 the United Kingdom Pilotage Act of 1983 was applicable; Whether ito section 35 of the United Kingdom Pilotage Act of 1983, the owners of the "Atlantica" were liable for the negligence of the pilot who acted as their agent and within the course and scope of his authority; Whether apportionment should take place between Defendants and Third Parties; Whether Third Parties were liable to compensate the First Defendant; and Whether ito Uniform Rule 33(4) the quantum of the Plaintiff’s claim could be dealt with later. Held:
Rapporteur: Arabella Bennett IN THE HIGH
COURT OF SOUTH AFRICA [Case No. 105/2000] Name of Ship: mv
"Minas Del Frio" In the matter between: The facts The respondent arrested the vessel the “Minas Del Frio” allegedly owned by a Cuban commercial enterprise, Naviera Frigorifica Maritima (“Friomar”) as security for a judgment in its favor granted by the Commercial Court of the Queen’s Bench Division of the High Court in England. The judgment was against another Cuban commercial enterprise called Empresa Cubana de Fletes (“Cuflet”) and arose out of unpaid hire relating to the time chartering of the “Dona”. Because Cuflet was the charterer of the “Dona” it was deemed ito section 3(7)(c) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (“the Act”) to be the owner of the vessel; and because both Friomar and Cuflet were controlled by the Cuban Government, the “Minas Del Frio” was alleged to be an associated vessel of the “Dona.” The Respondents had obtained a default judgment against the Applicant and application was made for the sale of the vessel. The applicant applied for recission and the setting aside of the arrest on the basis that it, Naviera Insular Frigorifica, being a Spanish company, and not Naviera Frigorifica Maritima (“Friomar”), had always owned the arrested vessel. The respondents contended that the applicant did not have a bona fide defense to the claim because the arrested vessel has been owned since 1 February 2002 by another commercial agency of the Cuban government called Empresa de Navegacion Mambisa (“Mambisa”).
The crux of the case The crux of the case was whether the ownership of the arrested vessel had passed from the applicant to Mambisa. The court stated that in deciding of whether or not the applicant had a bona fide defense (i.e. that the vessels were not associated) would be decisive of both legs of the applicant’s relief.The determination of this question involved and interpretation of the bare boat charter party which included a hire purchase option. The history The applicant had ordered the construction of two reefer vessels, one of which was the “Barrueta”, later renamed to be the “Minas del Frio.” The repayment of the loans over the vessels were secured by a mortgage passed over each ship and guarantees were furnished by the director, shareholders of the applicant and some of their wives. The applicant entered into a bare boat charter party with Mambisa for 120 months including a hire purchase option. The agreement was on a standard form of the Baltic and International Maritime Conference bareboat charter and stipulated that after 10 years if Mambisa had fulfilled its obligations as charterer and paid the last month’s hire, Mambisa would have purchased the vessel. In exchange for the last payment, the applicant undertook to furnish the charterer with all documentation necessary to evidence that ownership had passed free from encumbrance to Mambisa including inter alia the bill of sale, mortgage canceling docs, and proof of change of registration. A tripartite agreement was concluded between the applicant, the charterer Mambisa and the mortgagee bank whereby the monthly hire costs were paid directly to the bank. The 120-month period was extended at a later stage and at the end of the extended period (speculated by the judge to be due to a lack of foreign exchange) the charterer fell into arrears with his payments. Settlement was reached and the bank agreed to accept 18 000 000 pesetas from the charterer payable by 15 December 1999. The charterer only effected payment on 1 February 2002. As a result the applicant had not delivered the bill of sale nor provided a certificate reflecting existing encumbrances as was required by the agreement. The law The court applied English law as the proper law of the contract and stipulated that in terms of section 17(1) of the English Sale of Goods Act, 1979 transfer of goods passes at the time the parties to the contract so intend. On the reading of the charter party the court found that ownership had not passed to the charterer as buyer merely because the last payment was made (on 1 February 2002) as the intention of the parties was that the seller had to perform certain acts after payment in order for delivery to have taken place. The court found that this charter party was not like the situation in the normal hire purchase agreement where goods already in the possession of the buyer (bailee) would pass without further ado once the last payment is made but that the parties had contemplated some delay between payment and transfer of ownership which the judge gleaned from the surrounding features of the agreement. The court disregarded the evidence the respondent’s chief deposer, Mr Colin Ferris. He attested that the dealings between the applicant and the Cuban government agencies were not at arms length and that payment of the full hire charge could be equated with the passing of ownership without further ado. The respondent further argued that the transfer of the repayment obligation of the loan to Mambisa by the tripartite agreement was merely a way for the Cuban government to pay for a vessel that it could not have acquired by direct purchase. The court found Mr Ferris not to have been impartial, as he had acted for the respondent in other claims against various maritime surrogates of the Cuban government. The outcome The court held that the “Minas del Frio” was not an associated ship of the “Dona”, the application succeeded and costs of the two counsels were included. Rapporteur: Arabella Bennett IN THE
HIGH COURT OF SOUTH AFRICA Case No: A 163/99 Name of ship(s): mvf “Amer Yumana” and mvf “Amer Whitney” In the
matter between: The defendant vessel, MV “Amer Whitney” was arrested as security for a claim for payment in respect of work carried out and services rendered on the MV “Amer Yamuna” by the plaintiff company, Shippers D’Singapore PTE LTD. Plaintiffs alleged that the vessels were associated ships in terms of section3(6) & (7) of the Admiralty Jurisdiction Regulation Act, as at the time the claim arose the defendant vessel was owned by a company controlled by the same person (Mr Ravi Kumar Mehrotra) as the company owning the “Amer Yamuna”. It was not disputed that the plaintiff had a claim against the owner of the “Amer Yamuna”, nor that the claim could be enforceable in rem against that vessel. Control of the company owning the “Amer Yamuna” was not in dispute. Identity of control of the company owning the “Amer Whitney” was disputed by the defendant. In terms of s3(7)(b)(ii) of the Act Mr Mehrotra would be deemed to control that company if he had the power directly or indirectly to do so. Squires J held that that power does not necessarily come from control of the shares in a company and it is the object of the legislation to look beyond the façade established by the real owner in order to protect his assets from creditors. In his judgement he refers to the distinction between the de jure situation of direct control, and the de facto situation of indirect power as set out in MV “Heavy Metal” : Belfry Marine v Palm Base Maritime 1999 (3) SA as providing the basis for holding that the “Amer Whitney” is an associated ship of the “Amer Yamuna”, by reason of section 3(7)(a)(iii) read in conjunction with 3(7)(b)(ii) of the Act. It was held that the formation of the various companies and the trust was not a genuine exercise in separation of control, but rather an exercise in damage limitation concealing his assets from attachment and execution by creditors. Rapporteur: Lindsay Hussey IN THE
HIGH COURT OF SOUTH AFRICA mv "MSC MICHELE" [Case No. A95/99] -- 16 November 2000 In the matter between: Admiralty action in personam before Galgut J Application for attachment of first respondent’s right to freight monies held on it’s behalf by its Durban agent. Attachment in order to confirm jurisdiction in admiralty action in personam which applicant proposes to institute against first respondent for damage and loss of income caused by MSC Michele colliding with a synchrolift leased by the applicant in Durban harbour. According to the law applicant had a maritime lien over the ship in terms of which it instructed its then attorney, the second respondent, to institute an action in rem against the ship. This was duly done by the arrest of the ship. An undertaking was provided to and accepted by the applicant to secure the release of the ship from arrest. The owner of the damaged synchrolift, Dorbyl Marine, also instituted an action in rem against the ship for damages resulting from the collision. Both actions arose out of the same collision and an order was granted to consolidate the two actions. Before trial, Dorbyl Marine’s action was settled with the owner of the ship who paid them an undisclosed sum. Applicants claim was to be resisted as it was regarded as having no merit. Applicants action did not come to trial as it was withdrawn on the basis of a settlement reached between attorneys acting on behalf of the ship and the second respondent. Each party was to pay its own costs. Applicant maintains that this settlement was reached without its consent or knowledge. Applicant contends that second respondent acted negligently or in breach of their contract, and that applicant suffered damages as a result. Applicant therefore also seeking an order for the consolidation of its action against the second respondent with its action against the first respondent. Applicant alleges that negligence on the part of the master and crew caused the collision. As ship was under demise charter at the time of the collision, the master and crew were the servants of the first respondent, not the owner, and they were acting within the course and scope of their employment at the relevant time. First respondent therefore vicariously liable for any negligence on their part. Applicant therefore contends that it has the right to proceed in personam against first respondent. First respondent opposes the application to attach the freight monies on the following grounds:
Held that it was on behalf of the ship that the notice of opposition was filed, not on behalf of the first respondent. The correspondence between the respective attorneys was in their capacities as representatives of the parties to the action in rem. The letter was therefore written on behalf of the ship, not the first respondent. Statement in the letter to the effect that there must be no attempt “to reinstitute action de novo” refers to the fresh institution of an action in rem, against the ship for the same relief as claimed in the action sought to be settled. Counsel for the first respondent submits in the alternative that the settlement of an action in rem has the automatic legal effect of settling any action in personam. Held that this was based on the BANCO (1971) 1 All E 524 , decision of which the facts differed to this case and the rule has not been adopted in South Africa. Lastly respondents contended that the court was not entitled to grant the damages sought by the applicant as he was not the owner of the synchrolift and therefore any loss suffered was purely economic. S 6 of the Admiralty Jurisdiction Regulation Act 105 of 1983 requires our courts to apply the law applied by the High Court of England, and in English law no action lies for pure economic loss. Held based on the decisions of the English courts in the MINERAL TRANSPORTER (1985) 2 All E 935 and the ALIAKMON (1986) 2 All E 145, the rule is not absolute. Exception have been recognised where the claimant has a possessory right or title to the damaged goods. Neither have our courts have not closed the door on claims for pure economic loss. ADMINISTRATEUR, NATAL v TRUST BANK VAN AFRIKA BPK 1979 (3) SA 324 (A). Each case is dealt with on its own facts. The matter can only properly be dealt with by hearing oral evidence on the facts at a trial. Rapporteur: Lindsay Hussey IN THE HIGH
COURT OF SOUTH AFRICA MV Stainless Kobe [Case No. A471/95] -- 25 November 1996 In the matter between before The Hon. Mr Justice Combrink IN THE HIGH COURT OF
SOUTH AFRICA The Niki T [Case No. 7737/2000] In the matter between: Chong Sun Wood Products PTE Ltd,
Applicant (NB – this matter was not adjudicated upon as an admiralty claim.) Application for attachment to found and
confirm jurisdiction. The applicant was seeking an order for the attachment of certain logs lately laden aboard the vessel "Niki T" in order to found and confirm jurisdiction in respect of an action it sought to bring against the 1st respondent for breach of contract in respect of the sale of the said logs. The 1st respondent raised the point that the facts contained in the applicants launching papers were insufficient to sustain a cause of action in respect of the attachment. On an analysis of the facts presented in the founding papers the court concluded that the logs were the property of the applicant, it having acquired ownership once the logs were loaded on board the vessel, the sale contract being f.o.b.. The 1st respondent contended that in this case the attachment would be bad for two reasons:
The court in respect of (a) concluded, after reference to the Supreme Court of Appeals decision in Ewing McDonald & Co. Ltd v M&M Products Co., that in claims sounding in money between two peregrini, a ratio jurisdictiones is required in addition to an attachment or arrest to found and/or confirm jurisdiction. As to (b), the court stated that the onus rests on the party seeking to attach the property to prove that it is indeed the property of the debtor. The court delved into the aspects of claims in rem and personam and the requirement for a concomitant attachment when the property in question was within the courts jurisdiction. The court stated that, where the applicant asserts ownership over property, there is no reason to attach that property as such an attachment would not increase the effectiveness of the courts jurisdiction. The court concluded that the aim of an attachment to found and confirm jurisdiction is to render the exercise of the court more effective, and not to prevent the removal of the property from its jurisdiction. The plaintiffs remedy in that regard, according to the court, would be in the form of an interdict. The rule nisi in which the provisional attachment has been granted was thus discharged. Rapporteur: Edmund Greiner IN THE
HIGH COURT OF SOUTH AFRICA [Case No. A64/98 and A65/98] Name of ship(s): mfv "DUBYSA" and mfv "DAUGAI" In the matter between: The Lithuanian State
Enterprise, First Intervening Party Sale of vessels, application for rescission of order on basis that respondents not owners. Question whether applicant had maritime lien against owner of vessel in respect of section 11(8) of the Admiralty Jurisdiction Regulation Act, 105 of 1983 (as amended). Issue considered but not decided. The applicant had, pursuant to arresting the vessels in respect of various amounts allegedly owed to him by the respondents, whom he believed to be the owners, sought an order for the sale of the vessels in terms of section 9 of the Act. The amounts were in respect of the maintenance and running expenses of the vessels that the applicant was operating. The claimant had based the arrest of the vessels on the statutory right in rem provided for in terms of section 3(4)(b) of the Act. The intervening party claimed however that it was the owner of the vessels, the sale agreement between it and the two respondents (which was one by auction) never having come to fruition due to non-payment of their deposits. This being the case, it was alleged that the order for the sale of the vessels had been incorrectly given, as the claimant could, in such an instance not have a statutory right in rem, as the applicant had not brought its claim against the owner of the property which it had arrested. It was argued by applicants counsel that the arrests, and therefore the subsequent sale of the vessel were not defeated by such an allegation, as section 1(1)(o) read together with section 11(8) of the Act conferred a maritime lien on the applicant in respect of disbursements made by the applicant for master and crews wages, and thus the applicant had a claim against the property arrested. Applicants counsel conceded that, but for section 11(8) the applicant would have no lien unless he had obtained the leave of the court to acquire such lien. Counsel for the intervening party argued that section 11(8) did not automatically confer a lien on the applicant, and that it pertained only to the ranking of claims subsequent to a sale. The court considered, but decided it was unnecessary to rule on this issue on the basis that the applicant, in its papers had never based its claim, nor alleged, that it had a maritime lien. The court thus rescinded the sale order. Rapporteur: Edmund Greiner IN THE
HIGH COURT OF SOUTH AFRICA Case no A243/98 Name of Vessel: MV ALAM TENGGIRI ALAM TENGGIRI SDN BHD and ONE OTHER v GOLDEN SEABIRD MARITIME INC and ONE OTHER Security Arrest - Associated Ship - requirements for an arrest in terms of Section 5(3) of the Admiralty Jurisdiction Regulation Act – guarantee – what kind of security is acceptable – can party refuse security in a specified form – whether court will exercise jurisdiction to adjudicate on issues relating to security where guarantee not given to registrar and where there is a foreign choice of law clause. The applicants sought an order setting aside the arrest of the vessel, together with a reduction in the amount of security furnished, which had been arrested in terms of section 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 in order to provide security for Arbitration proceedings which were pending between the parties in London in connection with an alleged breach of a ship sale contract. The second respondent had taken delivery of the MT "Theano" pursuant to the sale contract from the applicants on the 29 October 1997. At this point a dispute had been declared with respect to the vessels specifications, and delivery was taken under protest. The respondents sought to obtain suitable security from the Applicants in respect of the pending arbitration proceedings, but had, in their view been unsuccessful, and therefore arrested the vessel. The Applicants had contended that suitable security, in the form of a corporate guarantee had been given which the respondents had wrongfully rejected. As matters stood the vessel had been released on the furnishing of security by the Bank of Nova Scotia. These guarantees stated that any dispute relating to them would be adjudicated upon by the High Court of England. Held: that in order for the respondents to show that they were entitled to the arrest in terms of Section 5(3) they would have to show that:
Held: that the respondent’s refusal of the corporate guarantee had not been unreasonable, and so they were entitled in this respect to arrest. Held: that the central issue was whether or not the MV "ALAM TENGGIRI" was an associated ship of the MT "THEANO" within the meaning of the Act. It was argued by the Applicants that the cause of action only arose once delivery of the vessel had taken place to the Respondents, i.e. that the respondents were owners of the vessel at the time the cause of action arose, and thus the guilty vessel (the MT "THEANO") was not owned by the respondents at the time the cause of action arose, and thus the MV "ALAM TENGGIRI" was not an associated ship within the meaning of the act. The respondents alleged that delivery did not transfer ownership, and therefore the vessels were associated within the meaning of the Act. No consensus was reached as to what law governed the contract of sale, Japanese or English law. The Court concluded therefore that the respondents had not discharged the onus of proving on a balance of probabilities that the vessels were associated. The court refused to hear oral evidence on this point on the grounds that such an order would have no practical effect. In |