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The case concerned an interlocutory application for an order for security for costs brought by an American company (the Applicant) against a company registered in Gibraltar (Respondent). A Norwegian company sought leave to intervene. The main action disclosed a charter party dispute concerning an affreightment of coal transported by the Respondent on behalf of the Applicant. Arbitration was declared by the Applicant in terms of the charter party to be conducted in New York and security was sought, both for the enforcement of the claim and the costs incurred.

The applicant brought an urgent and ex parte application for the attachment of the bunkers on board the m.v. ‘Millenium Amanda’ docked at Port Elizabeth. The court issued a rule nisi calling on all interested parties to show why the bunkers on board the vessel should not be attached to found jurisdiction; why the property should not be released on condition that the Respondent provides security and why the Applicant should not be granted leave to sue the Respondent in personam. The intervening Respondent stepped in by tendering security for the release of the vessel and making application to intervene. The rule nisi was postponed to 22 November 2001 to afford the intervening Respondent the opportunity to file its so-called answering affidavit and for the Applicant to reply thereto.

The Applicant delivered notice ito URC 47 read with section 5(2)(b) of the Admiralty Jurisdiction Act No 105 of 1983 (‘the Act’) requiring the intervening Respondent to furnish security on the grounds that the intervening Respondent was a peregrinus and had no executable assets within the jurisdiction of the Court. The intervening Respondent complied by delivering a bank guarantee and similarly, the Applicant furnished security to the intervening Respondent for its costs.

A Mr Gran, being the sole shareholder and director of Nor Marine A S, deposed to the affidavit of the intervening Respondent. In essence he stated that the intervening Respondent, and not the Respondent was presently the time charterer of the vessel and that at the time that the attachment was made, the true owner of the bunkers had in fact been another named corporate entity (of which Gran was co-incidentally also the sole shareholder and director) from whom the intervening Respondent had purchased the bunkers subject to a reservation of ownership till full payment had been effected. At the time the attachment was made, payments were still outstanding.

The Applicant’s voluminous response reiterated that the Respondent was the owner of the bunkers on board the vessel at the relevant time and accused Mr Gran of dishonesty in various respects. In the alternative, the Applicant mooted for the hearing of oral evidence. The intervening Respondent then made application for a postponement for leave to file further affidavits to answer the serious allegations of dishonesty. The Applicant opposed the postponement and stated that a referral to oral evidence would be more preferable in resolving the dispute. Furthermore the Applicant requested that if the court allows neither of the above, that the intervening Respondent be ordered to provide the Applicant with security for its attorney and own client costs.

The matter came before Petse AJ on 22 November 2001 and an order was made by consent between the parties that the matter (the issue of the ownership of the bunkers) would be referred to oral evidence. Petse AJ then heard argument on the security for punitive costs and a dispute arose regarding the proper procedure to be followed. Judgement was reserved on the issue. Upon inspection of the file on 30 January 2002, the Applicant discovered an endorsement on the file to the effect that Petse AJ, whose term of office had come to an end and who had returned to his practice in Umtata, had intended a rule nisi to be ordered with the return day 31 January 2002 and had prepared a manuscript calling on the intervening Respondent to show why it should not be directed to furnish the security asked for. The order however was never typed, presumably as a result of some or other oversight. It was established from Petse AJ that it was his intention that the abovmentioned rule nisi be prepared and handed down by another judge.

On 8 Feburary 2002 Jennett J issued the above rule nisi. The return day was set down to be the date of the hearing of this matter before Kroon J. The intervening Respondent invoked two points in limine regarding the invalidity of the order namely that Jennett J had not been seized with the matter and that there had been non-compliance, without application for condonation, with Rule 47 requiring notice to be given to the other side. The court dismissed these two grounds stating that substantive compliance with Rule 47 had taken place and that since the delivery of the order of Petse AJ was a matter of convenience to the parties, "it [did] not lie in the mount of the intervening Respondent [then] to complain of certain alleged antecendent procedural shortcomings or about the constitution of the Court that issued the rule nisi."

The making out of a prima facie case:
Kroon J reiterated that the requirement that the Applicant establish a prima facie need for security (for costs on an attorney and own client scale) means no more than that the averment of evidence, if accepted, would establish the claim. The Applicant’s case was based on two facets namely that:

1. the Respondent was the owner of the bunkers at the time of the attachment; and

2. the Applicant was entitled to an award of costs against the intervening Respondent occasioned by its application for leave to intervene and that this order be taxed on an attorney and own client scale.

The intervening Respondent’s counsel conceded that on the first leg of the Applicant’s case, a prima facie case had been made out. It was also not disputed that the Applicant was entitled to costs simpliciter but counsel strongly argued against a prima facie case in respect of a claim for security on a punitive scale and went as far as to contend that there was no room for such a finding in a matter such as the one at hand. Kroon J stated that he was persuaded that "a court should tread warily and cautiously before finding that a prima facie case on an issue such as that presently under discussion, has been established" but nevertheless found that such a case had been made out. In support of his finding he stated that the intervening Respondent did not contest that the wide ranging allegations against Mr Gran, if established, would reveal dishonesty of an extremely serious and calculated nature which dishonesty would have been in the course of the conduct of the litigation and that such conduct would have fully justified the punitive costs order at issue.

The further test of genuine and reasonable need:
Regarding the further test relating to what the Applicant is required to have established in the matter of its need for security, the court upheld the test of genuine and reasonable need for security, to be proven on a balance of probabilities (see the m.v. Bocimar; the m.v. Leresti; the Catamaran TNT and the m.v. Akkerman). The learned judge rejected the dictum of the m.v.Yu Long Shan which stated that once a prima facie case had been made out, security in respect of a peregrine plaintiff followed as a matter of course. Kroon J preferred to follow the Cape cases of the m.v. Akkerman and the m. v. Heavy Metal which held that the need for security would not follow as a matter of course. He however disagreed with the two Cape cases on the issue of the court’s discretion and stated that whether a genuine and reasonable need had been established amounted to a finding of fact, albeit that a value judgment might have to be made. In other words only after the finding of fact in favour of the Applicant, would the court’s discretion come into play. Counsel for the intervening Respondent relied on the dictum in the Great River Shipping case in which the court said that "to grant a peregrine plaintiff security for its claim and/or costs…is virtually unheard of at common law " and the dictum in the m.v. Leresti in which the court stated that the granting of security to a peregrine claimant is a power that should be sparingly exercised. Kroon J, although not seeing a clear dividing line between the two approaches, instead and again aligned himself with the judgments of the m.v. Heavy Metal and the m.v. Akkerman, which simply recognized the substantial need for caution where costs are sought on a punitive scale.

Kroon J concurred with the intervening Respondent that the Applicant had not in the papers made the allegation that the intervening Respondent was not in a financial position to meet any claim for costs but went on to say that financial ability to meet a cost award is not the only consideration to which regard may be had. The fact that the intervening Respondent had no assets in South Africa and the Applicant’s averments regarding what the court called the "far-reaching and calculated dishonesty" of Mr Gran (which had been prima facie established) led the court to say that there was every reason to believe that the intervening Respondent, through Gran would avoid satisfying the debt when called on to do so. On this basis the court held that a genuine and reasonable need had been established and exercised its discretion in favour of the Applicant. The intervening Respondent was thus ordered to provide security for the Applicant’s attorney and own client costs, failing which the Applicant could approach the court on an urgent basis and on the same papers. The intervening Respondent was also ordered to pay the party and party costs occasioned by the hearings relating to security.

Rapporteur: Arabella Bennett

IN THE HIGH COURT OF SOUTH AFRICA
(Cape of Good Hope Provincial Division)
Exercising its Admiralty Jurisdiction

IN THE MATTER BETWEEN:
BRIDGE OIL LIMITED (Applicant)
and
THE FUND CONSTITUTING THE PROCEEDS OF
THE SALE OF THE MV "MEGA S" (First respondent)
G.O. VAN NIEKERK SC, N.O. (Second respondent) and
HAMBURGISHE LANDESBANK-GIROZENTRALE (Third respondent)

per Cleaver J
Judgment 12 June 2003
Full text available

IN THE HIGH COURT OF SOUTH AFRICA
(Cape of Provincial Division)
Exercising its Admiralty Jurisdiction

Case No.: AC87/01

IN THE MATTER BETWEEN:
P&O Nedlloyd Limited (Applicant)
and
United African Lines (Pty) Limited (Respondent)

per: SELIKOWITZ J.
Judgement: 7 July 2003.
Full text available.
Summary to follow.

IN THE HIGH COURT OF SOUTH AFRICA
(Cape of Good Hope Provincial Division)

mv "Sagittarius"

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE DIVISION
(Exercising its Admiralty Jurisdiction)

The Fortune 22 was arrested on 13 October 1997 thereby commencing the action in rem against the vessel. She was arrested in terms of section 3(6) & 3(7) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (‘the Act’) as a vessel associated to the MV "Mount Ymitos" (the "guilty" vessel). The Respondent’s maritime claim against the guilty vessel arose out of repairs done to the vessel for which the Respondent had not been remunerated.

In satisfaction of this claim, the Respondent had issued a writ out of the Supreme Court of Hong Kong against the guilty vessel, had the vessel arrested and put it up for auction. When the claim could not be satisfied from the proceeds of the sale, default judgement was obtained in the Hong Kong Court. This action remained purely an action in rem against the ship as no acknowledgement of service of the writ of summons was obtained from the owners of the demise charterers. Some three months later the associated arrest took place in Cape Town.

It was common cause that the vessels were associated and security was furnished for the release of the vessel. The vessel however remained under deemed attachment ito section 3(1)(a)(i). There was furthermore no doubt that both actions in rem (Hong Kong and Cape Town) were instituted by the same claimant in respect of the same maritime claim.

The question turned on whether the two arrests could be made in respect of the same claim.

Mr Mike Wragge for the Applicant contended that: the associated arrest had to be set aside as the guilty vessel had already been arrested for the same maritime claim for repairs in Hong Kong. In support thereof Mr Wragge looked at the meaning of "instead of" in section 3(6):

"…[A]n action in rem, … may be brought by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose." (my emphasis);

He referred to the ordinary meaning of the words; the dictionary definition; the Afrikaans text; section 3(8) –

"Property shall not be arrested and security therefore shall not be given more than once in respect of the same maritime claim by the same claimant";

the interpretation given by the English Court of Appeal to their, albeit in the somewhat differently worded, sec. 3(4) of the (English) Administration of Justice Act, 1956; the International Convention for the Unification of Certain Rules Relating to the Arrest of Seagoing Ships, Brussels, 10th May, 1952 – (SA was not a party to the Convention but it was ratified by the United Kingdom.)

"… [I]f a ship has been arrested in any one of such jurisdictions, or bail or other security has been given in such jurisdiction… any subsequent arrest of the ship or of any ship in the same ownership by the same claimant for the same maritime claim shall be set aside, and the ship released…’ (Lord Denning’s emphasis of the Convention in "The Banco" at 532f))

and further at 532g of the "Banco" –

"It was agreed that one ship might be arrested, but one. It might either be the offending ship herself or any other ship belonging to the same owner, but not more." (Lord Denning’s emphasis)

Mr Peter Hazell for the Respondent alleged that a different interpretation should be given to the meaning of "instead of". He said "notwithstanding the fact that, as in the case here, the offending ship has already been arrested in a foreign jurisdiction, an associated ship may nevertheless, and in addition, be arrested here". For this contention he relied on Miller A J’s judgment in Euromarine International of Mauren v. The Ship "Berg" and Others 1986 92) SA 700 (A) at 712 C-D in which the learned judge stated that sec. 3(6) read with sec. 5(3)

"provides the claimant not only with a method of recovery but with an additional or alternative defendant."

He also said that sec. 3(8) applied only within the jurisdiction of a South African court and that sec. 5(2)(d) allowed additional property to be arrested for additional security.

1. The Respondent’s contentions lacked a sound foundation and had to fail. The "Banco" case was held to have accurately reflected English law, allowing for the arrest of only one ship in respect of any one claim. The judge went on to say that:

"[P]roceedings in rem are often international in their operation…it frequently happens…that peregrini find themselves litigating with one another in foreign courts… Why, the, would our legislature don blinkers… and confine itself in enacting sec.3(6) of the Act entirely to arrests within the jurisdiction of a South African Court? Our common law recognizes foreign judgements…"; that nothing in our act was materially inconsistent with the "Banco" case and that our legislature must have been aware of the Convention when it passed the Act – see Great River Shipping Inc. v. Sunnyface Marine Ltd, 1992 (2) SA 87(C) when it used the words "instead of," being entirely consistent with the Convention;

2. the Respondent’s submissions based on the "Berg" case read to much into what was said in the case and that the issue of multiple actions for the same claim was not a question which had arisen for decision in the case;

3. it was unable to agree with the Respondent that the legislature could have intended sec. 3(8) to have been of only local application; and

4. sec. 5(2)(d) did not assist the Respondent as the "Fortune 22" was not arrested in terms of the section.

The appeal was upheld with costs.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE DIVISION

In the matter between
Liberty Life Association of South Africa — Applicant
and
Prof G.C. Kachelhoffer N.O and Others 2001 JDR 0276(C) — Respondents
per: VAN REENEN et JALI JJ
Date delivered: 12 April 2001

The applicant was a public company active in the life insurance industry and the employer of the second and further respondents. The respondents were retrenched on the basis of operational requirements and were of the view that their retrenchment constituted unfair labour practice. After failure by the conciliation board to resolve the dispute, the matter was referred to the industrial court. The court decided that certain employees of the applicant had to be reinstated and compensated for their losses. The applicant noted an appeal to the Labour Appeal Court (established ito s 167(1) of the Labour Relations Act of 1995). While the appeal was pending, the applicants instituted review proceedings in the Cape Town High Court. The second and further respondents opposed the application on the basis that:

(1) the High Court did not have jurisdiction to review the proceedings of the industrial court case;

(2) the fact that the applicant noted an appeal to the Labour Appeal Court prior to instituting review proceedings in the High Court and whilst the prosecution of the appeal was being persisted with precluded the applicant from instituting and pursuing the review proceedings; and

(3) that the applicant did not comply with the provisions of rule 53 relating to making available the "record of proceedings."

Point (1):

The applicant relied on section 17B of the 1956 Labour Relations Act as the basis for the High Court’s jurisdiction in review proceedings. Since the 1956 Act was wholly repealed by the Labour Relations Act of 1995, save only for schedule 7 item 22(3) [section 212 (3) of the 1995 Act] which was preserved for the limited purpose of finalising pending appeals, the applicants’ reliance on section 17B was misguided. The court however allowed the applicants to argue that the High Court had jurisdiction under common law to entertain the application.

Held (1): The onus of establishing the court’s jurisdiction law with the applicant. The High Court as a non-specialist Labour court had jurisdiction to entertain the review application. This jurisdiction was however concurrent with the attenuated powers of review vested in the present Labour Appeal Court, a specialist tribunal. The consequence of this was that there was no appeal to the Supreme Court of Appeal from the High Court but there was from the Labour Appeal Court. The court pointed out that this clearly militated against the legislature’s intention that a specialised forum should deal with labour-related disputes but that this was an unavoidable and unfortunate consequence of inept draftmanship on the part of the legislature. Fortunately this is now of pure academic interest as the transitional provisions of the Labour Relations Act of 1995 are no longer applicable.

Point (2):

Since the court was imbued with jurisdiction, the respondents urged the court to decline jurisdiction on the ground that the High Court was not an appropriate forum for settling the cause of action. The respondents argued inter alia that the

institution of review proceedings should be moved to the present Labour Appeal

Court by application of the principle of forum (non) convenience.

The court stated that the applicant could not be blamed for having preferred the High Court as the forum in which it wished to enforce its right of review against the respondents as the basis, relief and advantages of reviews are different to those of appeals. Regarding the principle of forum (non) convenience, the court reasoned that the removal of the proceedings to the Labour Appeal court was not competent for three reasons namely that:

1. (the principle only empowers the court to stay its own proceedings so as to enable another court of competent jurisdiction to exercise it;

2. the High Court does not possess the power to transfer the matter to the Labour Appeal Court which is a court of higher hierarchy; and

3. as the Labour Appeal Court is not a division of the High Court, it is not competent for the latter court to order the removal of the matter based on convenience or suitability ito section 9(1) of the Supreme Court Act, 24 of 1936. Whether s149(1) of the Insolvency Act, 24 of 1936 and s 7 of the Admiralty Jurisdiction Regulation Act, 105 of 1983 is applicable to the general body of law is contentious. The court in obiter stated that it seems to be generally accepted that convenience is not a general connecting factor but may be weighed with other factors to establish jurisdiction. In this instance, the inconvenience experienced by respondents lost force when weighed against the effective remedy which the applicant would have forfeited if the court were to have declined to exercise its powers of review and to have stayed the proceedings. The court emphasised that it was reluctant to decline to exercise jurisdiction for fear that doing so might have constituted an infringement of the applicant’s fundamental right of access to the courts.

Held (2): The court exercised its discretion in favour of the applicant.

Held (3): It was not possible at this juncture to decide whether there was compliance with Rule 53(3) as regards the furnishing of certified copies of the record to the registrar.

The question of costs was to stand over for later determination.

IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Exercising its Admiralty Jurisdiction

Name of Ship: mv "Ivory Tirupati" 
Judgment per Davis J -- 29 August 2001
Summary below
(Full text available as PDF file -- Adobe Acrobat Reader needed to view and print

In the matter between:
mv "IVORY TIRUPATI" (Applicant)
and
BADAN URUSAN LOGISTIK (also known as BULOG) (Respondent)

The Facts:

Respondent caused the vessel the "Amer Prabha" to be arrested for damage done to the respondent’s cargo. Following the arrest, the vessels’ P&I insurer, Ocean Marine Insurance Association Limited (‘Ocean Marine’) issued a letter of undertaking on the proviso that the respondent release the vessel in question and refrain from taking any action resulting in the arrest of the "Amer Prabha" or any associated ship with associated management or control for the purpose of founding jurisdiction and/or obtaining security iro any claims of the cargo owners. In terms of the undertaking Ocean Marine was obliged to file an acknowledgement of service of the court proceedings which it failed to do. In response, the respondent caused a summons in rem to be issued out of Hong Kong. The Hong Kong High Court granted an order compelling the owners of the vessel to serve their list of documents within seven days from the date of the order. When the defendants failed to comply with the terms of the court order, the claim was struck out and judgement entered against the owners of the vessel.

At the time, it was common cause that Ocean Marine was in provisional liquidation. When the company failed to effect payment of the judgement amount, the respondent caused the applicant vessel ("the Ivory Tirupati") to be arrested, thereby bringing proceedings in rem to enforce the judgement granted by the Hong Kong High Court or alternatively damages. A letter of undertaking was furnished to procure the release of the "Ivory Tirupati".

The applicant then brought an application setting aside the respondent’s arrest of the vessel and directing the respondent to return the letter of undertaking for the release of the ‘Ivory Tirupati’ to the applicant. The application was based on three grounds namely:

1. the arrest effected was that of an associated ship arrest ito s3(6) and 3(7) of the Admiralty Jurisdiction Regulation Act 105 of 1983.

2. the respondent was precluded from effecting the arrest by the provisions of s3(6); & s3(8) of the act; and

3. by the provision of security in the form of the letter of undertaking

The court held that the respondent retains the onus of satisfying the court that it was entitled to arrest the applicant. The respondent thus bears the onus of persuading the court that each of the grounds upon which the applicant attacked the arrest should fail.

1. Association

The court drew a strong inference from the facts put before the court by the respondent which pointed to overwhelming probabilities that the ‘Amer Prabha’ was associated to the ‘Ivory Tirupati.’ The evidence placed before the court, traced the nexus between the holding company, the ‘Amer Reefer Co’, which conducted its operations through wholly owned single purpose subsidiaries such as Pembroke, the subsidiary owning the ‘Ivory Tirupati’ at the time of the arrest AND the ‘Amer Prabha’, owned by Casterbridge.

The following factors placed before the court, were held to have established this nexus namely:

1. The ‘Amer Prabha’ shares the same prefix with most of the vessels of the ‘Amer Reefer’ fleet save for the applicant vessel;

2. The owner of the ‘Amer Prabha’ and the ‘Amer Reefer’ both had registered places of business at the offices of the firm Loikis Papaphilippou, who held a majority of the shareholding in Amer Reefer’s subsiduaries. (Quantoc Shipping Investments Ltd (QSIL) owns all the outstanding stock of the ‘Amer Reefer’ which has been set up to own all the outstanding capital stock of the Vessel Owning subsiduaries. The shares of QSIL are held by the Trustees of a Cypriot trust which was established for the benefit of the descendants of the late Chotre Lal Mehotra. Sashi Mehora, CEO of Amer Reefer is among the class of trust beneficiaries who collectively own 100% of the Company’s outstanding stock.)

3. The ‘Amer Prabha’ and the ‘Amer Reefer’ were both managed by the same mangaging agents namely Amer Shipping Ltd (ASL);

4. All shares in ASL were registered in Elpico Nominees and Elpico Managers, the majority shareholding of both of which companies was registered in the name of Ms Athienitic, Mr Papaphilippou’s daughter;

5. The majority shareholding in Casterbrigde was registered in the name of Andreas Phellas, the registered owner of 4 out of the 7 vessels owned by ‘Amer Reefer’. Phellas was also believed to be related to Mr Papaphilippou;

6. In the matter of the Amer Whitney the Forsight group was held to be controlled by Ravi Kumar Mehrothra. (Amer Reefer, the ASL and the Amer Ship Management (ASM) to whom the ASL subcontracts its technical management, are all members of the Forsight group, Foresight Ltd handling Amer Reefer’s general agency responsibilities.); and

7. A negative inference was drawn from the refusal of the applicants to deal with these averments save to record a bare denial insofar as ownership is concerned.

Held:

The registered shareholders of Casterbridge were the nominees of Papaphilippou, ‘Amer Reefer’ or beneficiaries of the trust established for the descendants of the late Mehotra. The beneficial owners of the shares of Pembroke and Amer Reefer either controlled Casterbridge or possessed the power to control the latter company. Alternatively Pembroke and Amer Reefer were controlled by the same persons who controlled Casterbridge at the time the Amer Prabha was arrested. Therefore, on a balance of probabilities, the evidence justified the conclusion that the applicant vessel and the ‘Amer Prabha’ were associated ships ito sections 3(5) and 3(7) of the Act.

2. Section 3(6) & section 3(8) precluding the arrest

Section 3(6): The respondent contended that while the 'Amer Prabha' was arrested iro a cargo claim, the applicant ship was arrested to enforce a judgement. Because the claim differed, section 3(6) had no application.

The court quoted section 1 para (g) of the AJRA referring to "loss or damage to goods…" and to para (aa) referring to "any judgment or arbitration award relating to a maritime claim, whether given or made in the Republic or elsewhere." The court stated that the Act presupposes two separate claims and that it was therefore satisfied that the enforcement of the judgment is a maritime claim with a separate and distinct existence which is recognised expressly by the Act. The court went on to refute counsel for the applicant’s contention that because the enforcement of the judgement is an action in personam, it could not form the basis of an action in rem against the applicant vessel. The court stated that this refuted the effect of section 3(4)(b) which considers the enforcement of a maritime claim as defines as an action in rem if the owners of the applicant vessel would have been liable to a claimant in an action in personam iro the cause of action concerned, that is the enforcement of the judgment. Hence even if it were correct that the Hong Kong judgment constituted an action in personam, would not come to the assistance of the applicants.

Section 3(8): Section 3(8) states that property shall not be arrested and security therefore shall not be given more than once iro the same maritime claim by the same claimant. The court relied on the Durban and Coast Local Division’s decision of the Merak S to support the contention that the word "security" in section 3(8) does not include the kind of contractual undertaking given by Ocean Marine for the release of the ‘Ivory Tirupati.’ The Merak S decision has since been overturned on appeal.

Held:

The applicant vessel was not arrested in iro the same maritime claim as the claim which formed the subject matter of the arrest of the ‘Amer Prabha’ and the proceedings in rem arising therefrom.

3. The Letter of Undertaking

The applicant submitted that the terms of the letter of undertaking demonstrated that it was intended that an English court would have exclusive jurisdiction as opposed to a South African court, whether arising out of any further arrest or otherwise.

Held: The wording of the undertaking did not preclude the respondent from arresting the ‘Amer Prabha’ or any associated ship for the purpose of enforcing the Hong Kong judgement. At best for the applicant, the undertaking only precluded the respondent from arresting the 'Amer Prabha' "in respect of any claim of the Cargo Owners concerning the cargo". The court stated that since the claim was based on the enforcement of the judgment, it was outside the scope of the undertaking. The court then pointed to two further difficulties with the undertaking: the first being that the undertaking was of a reciprocal nature and that the applicant had not honoured its obligations thereunder; the second being that the possible inability of the applicant to honour the undertaking due to the applicant's insolvency absolved the respondent from honouring the promise not to arrest the vessel. The court concluded that the undertaking had become a "worthless piece of paper" and could not be relied upon for the argument that the respondent should be precluded from arresting the applicant vessel.

Thus the court ordered that the arrest of the 'Ivory Tirupati' had been validly effected and was not precluded by either the provisions of the Admiralty Act or the terms of the letter of undertaking. The application was dismissed with costs.

Rapporteur: Arabella Bennett

IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Exercising its Admiralty Jurisdiction

Name of Ship: Oil Rig "South Seas Driller"
Judgement by Conradie J -- 28 November 2000 -- Case No. AC26/2000
(Full text available as PDF file -- Adobe Acrobat Reader needed to view and print)

Case no: AC26/2000

In the matter between:
THE SHERIFF OF THE HIGH COURT FOR THE
MAGISTERIAL DISTRICT OF THE CAPEPlaintiff
and
PRIDE FORAMER S.A. -- First Defendant
FORAMER S.A. -- Second Defendant
SOMASER S.N.C. -- Third Defendant

Admiralty action in personam

CONRADIE J:

On 10/02/1999, the drilling rig “South Seas Driller” broke its moorings in Table Bay harbour during a south-easterly gale and drifted across the harbour colliding with various ships and a harbour crane. One of the ships it collided with was the M.V. Limb. The Limb had been arrested on 23/12/98 and was sold by public auction on 16/03/99.

Plaintiff alleges that it was the fault of the Master, officers or crew that the moorings broke and that the defendants, as charterers of the rig, are liable for their negligence. Plaintiff alleges that due to the damage to the vessel caused by the collision, the vessels sale realised a far reduced price. Plaintiff paid the crew of the vessel and took cession of their claims against the vessel. He also bore the cost of their repatriation. Plaintiffs claim is for the amount he failed to recover, as due to the collision, the sale of the vessel did not yield enough to reimburse him for the claims and expenses incurred.

Counsel for the defendant argued that this was a claim for pure economic loss.

Held Plaintiff claiming for a loss which although tied to the reduction in the value of the vessel, does not correspond to it. It is not the type of loss which the owner would have been able to claim from the defendants.

Counsel for plaintiff contended in the alternative that South African law recognised a duty of care owed by the defendants to the plaintiff in such circumstances. Argued that the plaintiff, as a creditor of the vessel was a foreseeable plaintiff.

Held the test for liability for pure economic loss is whether the wrongdoer owed the injured person a duty of care to avoid negligent conduct causing him pure economic loss.

South African law has not recognised the right of a creditor to sue a wrongdoer for damage caused to his debtors estate, even where the damage is caused to an asset of the debtor over which the creditor has established security for his claim.

When the damaged vessel was sold the owners right of action to claim damages was not attached. Therefore the right to claim damages remains with the erstwhile owner. The right to sue is an asset in the estate of the former owner which can be attached by a creditor. Plaintiff therefore has that remedy.

Held that Aquilian liability should not be extended to impose liability for pure economic loss on the defendants in this case.

Plaintiffs particulars of claim set aside and plaintiff given leave to substitute amended particulars of claim.

Rapporteur: Lindsay Hussey

Case No. AC 156/1998

The Golden Island Shipping Company Ltd SA (Applicant)
and
ENE Kalamos Ltd (Respondent)

On 7^th May 1997 the "KALAMOS" was arrested at Cape Town and proceedings in rem were commenced against her for damages which the Applicant contended it suffered as a result of a collision between the "KALAMOS" and the "LUCKY RIVER". On the following day the Respondent's attorneys tendered a Club letter of undertaking to the Applicant's attorneys in order to procure the release of the "KALAMOS". The Applicant's attorneys did not accept the letter of undertaking as they were unable to obtain instructions from their clients who were situated in China.

Name of Ship: YUNG CHUN No. 17
Judgment by Davis J -- 1 September 2000
(Full text available) (as a .PDF file -- you will need Adobe Acrobat Reader to view this file). 

Case No. AC 30/97]

REPORTABLE

In the matter between
YUNG CHUN FISHERY COMPANY LIMITED (Plaintiff)
and
TRANSNET LIMITED t/a PORTNET (Defendant)

On the 24th September 1995, the Taiwanese fishing vessel, Yung Chun No.17, while under pilotage into Cape Town port, struck A-berth spur. It was contended by the plaintiffs that the defendants were vicariously liable for the damage to the vessel on the basis that the incident was caused solely by the fault of the pilot, being the defendants' servant.

The defendants alleged that the pilot had not been negligent, but even if negligence could be proved, they would escape liability in terms of Section 10(7) of the Legal Succession to the South African Transport Services Act, which excluded the defendants' liability for loss or damage caused by a negligent act or omission on the part of the pilot.

The plaintiffs contended that the pilot's actions amounted to gross negligence, and as such the defendants were not able to avail themselves of the protection afforded in terms of Section 10(7).

The court considered the distinction between negligence and gross negligence, accepting, on the authority of previous judgments that such a distinction did exist; gross negligence amounting to a blatant disregard for the consequences of one's actions. The court further stated that section 10(7) should be construed strictly, and should not be read as including wilfull or reckless acts.

The court found that the pilot's failure to make use of the appropriate radar in the circumstances (the visibility at the time was zero) constituted an act of gross negligence, and the defendant was therefore held liable.

[Rapporteur: E. Greiner]

IN THE SUPREME COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

Order for arrest confirmed, Respondent to bear costs of the Application. Amount of security to be provided by the Respondent to be reduced.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

NAME OF SHIP: "THE HEAVY METAL#2"
Per Comrie J, Cape Town  7 May 1999

In the matter between
BELFRY MARINE LIMITED (Applicant)
and
PALM BASE MARITIME SDN BHD (Respondent)

Shipping - Application for counter-security following arrest in terms of S(5)(3) of the Admiralty Jurisdiction Regulation Act 1983 - For a counter-security order the Applicant must show that it has a prima facie claim as well as a genuine and reasonable need for security - Decision in the discretion of the court - Applicant unable to show that the Respondent had demanded excessive security or that the order for arrest was obtained without reasonable or probable cause and therefore unable to show that it has a prima facie claim.

An Application for counter security arising from the arrest in terms of section 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 of the vessel "Heavy Metal" by the Respondent. This arrest was for the purpose of obtaining security in arbitration proceedings in London in respect of the sale of an alleged associated ship of the "Heavy Metal". The Applicant requiring counter-security for a claim which it intended to institute for damages arising from the arrest of the vessel. (i.e. not strictly a counter-claim.) Two legs to the application: That in the arrest application and subsequently the Respondent demanded and required excessive security and that the Respondent allegedly obtained the arrest of the vessel "without reasonable and probable cause".

Held, that S5(2)(a)(c) of the Act gives the court the discretion to order that counter-security be furnished. The requirements for such an order are that the Applicant must show that it has a prima facie claim as well as a genuine and reasonable need for security. It was conceded by the Respondent that the second requirement had been met. In order to show that it has a prima facie claim the Applicant was required to show that there was an absence of "reasonable and probable cause" in the arrest application. The evidence adduced by the Applicant falls short of establishing prima facie that there was a want of reasonable and probable cause.

Held, with respect to the second leg of its application (regarding the allegation of excessive security), that the security obtained by the Respondent was related to the amount of its claim. The fact that a plaintiff does not succeed in its claim does not mean that the claim was per se excessive. It is difficult to assess, well before a matter comes to trial, whether or not a claim is excessive. Applicant should not be encouraged, by afforidng it counter-security, to institute an action which may well turn out to be premature. The alternative basis for the Applicant’s claim of excessive security was that the Respondent unreasonably refused to agree to the release of the vessel against the provision of satisfactory security in the amount of the vessel’s true value. Applicant failed to establish a prima facie case for this alternative basis.

Application dismissed with costs.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

NAME OF SHIP: "The Rizcun Trader#3"
Per Knoll AJ, Cape Town 26 April 1999

In the matter between
MANLEY APPLEDORE SHIPPING LTD (Applicant)
and
mv RIZCUN TRADER (First Respondent)
LATIF MARINE LIMITED (Second Respondent)

Shipping - Interlocutory application for discovery in terms of Uniform Rule 35(2) – Exceptional circumstances should be present for discovery to be ordered in respect of motion procedures – Granting an order for discovery inappropriate where applicant bears onus in the main application to justify arrest – Would allow applicant to go on a "fishing expedition" and almost have effect of reversing the onus.

An interlocutory application for discovery in the context of an application to have an arrest set aside. Claim by the applicant that the respondents were withholding information and documentation relating to the ownership of the arrested vessel and that discovery would enable the applicant to deal with the discovery documents in its answering affidavit and for the respondent in turn to deal therewith in reply. Respondents opposed discovery as being premature.

Held, that Rule 15 of the Admiralty Rules makes Uniform Rule 35 applicable to admiralty procedures. In terms of this rule a court direction is required before discovery can be obtained in application procedures. A discretionary decision which should only be granted when exceptional circumstances are present (particularly before all affidavits are filed). No such exceptional circumstances exist. Should any reasonable doubt exist after the filing of all affidavits as to the correctness of the respondent’s allegations with regard to the controlling interests in the vessel, then, at that stage, there may be a case for the matter to be referred to oral evidence and perhaps for discovery to be granted. It would be inappropriate at this stage to grant an order for discovery as the applicant bears the onus in the main application to justify the arrest of the vessel and discovery would almost have the effect of reversing the onus and allow the applicant to go on a "fishing expedition".

Application for discovery dismissed with costs.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

NAME OF SHIP: "THE RIZCUN TRADER #2"
Per Knoll AJ, Cape Town 26 April 1999

In the matter between
MANLEY APPLEDORE SHIPPING LTD (Applicant)
and
The mv RIZCUN TRADER (Respondent)

Shipping - Interlocutory application for security for costs in opposing application to have arrest of vessel set aside -Operation of s 5(2)(b) and (c) and s 5(3) of Admiralty Jurisdiction Regulation Act 105 of 1983 - s 5(2)(b) gives power to order the person causing an application to be brought to provide security - Power to order provision of security for costs in terms of s 5(2)(b) a discretionary power and common law considerations of fairness and justice should be taken into account - A court would be slow to order security for costs to be provided by a shipowner who stands to the defence of a vessel.

Interlocutory application for security for costs incurred in opposing Respondent’s application to have the arrest of the vessel "Rizcun Trader" set aside. Section 5(2)(b) and (c) of the Admiralty Jurisdiction Regulation Act 105 of 1983 allows the court a wide discretion to act in ordering any person to give security for a claim. Section 5 (3) of the Act as well as various judicial decisions give context to this discretion.

Held, that the important distinction between Section 5(3) and Section (5)(2)(b) is that Section 5(3) is aimed at obtaining property and is thus analogous to an action in rem while Section 5 (2)(b) gives the court the power to order "any person" to give security. The court is therefore empowered to order security for costs against a person who may not be cited as a party to the proceedings but may have some legal liability in personam to the claimant in the proceedings to pay the costs of the proceedings.

Held, that it is the person who causes the application to be brought on behalf of the arrested vessel who attracts in personam liability for the costs of the application and that such a person can be ordered to provide security for costs in an appropriate case.

Held however, that the relief asked for is that the Respondent (being the vessel "Ruzcun Trader") provide security. The Respondent is clearly not a "person" and therefore the provisions of Section 5(2)(b) would not allow an order to be granted as sought.

Held, that the full value of the Respondent is represented in the letter of undertaking accepted by the Applicant in lieu of the vessel and the security provided in terms of this undertaking does not cover the costs of any proceedings in this court. In a Section 5(3) application the security which the vessel provides cannot extend beyond its value and the Respondent cannot therefore be looked to stand as security for any further purpose.

Held, that it may have been possible to order Latif Maritime Limited, being the person who caused the main application to be brought, to provide security without a specific amendment to the application being sought, but this issue did not need to be decided because there were reasons militating against the granting of such an order.

Held, that the power to order security for costs to be provided in terms of Section 5(2)(b) or (c) is a discretionary power but that such discretion was not unlimited and that some considerations of common law do apply insofar as they are based on considerations of fairness and justice. In this regard the Respondent is in the position of a foreign defendant and a distinction should be made between a foreign defendant and a foreign plaintiff. A foreign defendant cannot chose not to come to our court and may find himself debarred from putting his case before the court if forced to provide security in excess of the value of the attached property.

Held, that in all the circumstances of the instant case, including considerations of commercial convenience, a court would be slow to order that security for costs be provided by a shipowner who stands to the defence of its vessel.

Application dismissed with costs.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

NAME OF SHIP: MV LIMB
Per Donen AJ, Cape Town, 15 March 1999

Case No: AC 45/99

In the matter between
THE SHERIFF FOR THE MAGISTERIAL DISTRICT OF THE CAPE (Applicant)
and
SOUTH SEAS DRILLER, HER OWNERS AND ALL OTHER PARTIES INTERESTED IN HER (First Respondent)
THE OWNERS OF THE MFV "LIMB", HER CREDITORS AND ALL OTHER PARTIES INTERESTED IN HER (Second Respondent)

Judgement delivered on 15 March 1999

Shipping - Whether Sheriff has locus standi to pursue a claim for damages in respect of collision damages caused to a ship under attachment - Powers vested in sheriff pursuant to Admiralty Rule 21(1), and in terms of the order ordering sale in execution does not allow for authorisation to litigate - No evidence of any remaining creditors of the vessel except the applicant or evidence that the applicant’s claim will not be satisfied by the sale of the vessel .

Application by sheriff for declaration of locus standi to pursue a claim for damages, and to claim on behalf of creditors, in respect of collision damages caused to a ship under attachment. No opposing papers filed.

Held, that the order by the court authorising the sale of the vessel simply reaffirmed an aspect of the applicant’s powers in terms of Admiralty Rule 21(1). In this context the order limits the applicant to taking steps to ensure the continued operation of the vessel and well-being of the crew, and does not contemplate the authorisation of a mandate to litigate. In addition, the order does not give the applicant the authority to encumber the vessel, or the fund created by its sale, with the costs of pursuing an action for damages.
Held, that there was nothing on record to show that the applicant’s claim would not be satisfied by the proceeds of the sale. The applicant would, in any case, be entitled in due course to recover any damages suffered by him from the party who negligently and unlawfully caused such damage. No declaratory order was therefore necessary.
Held, that in any event the court was unable to pronounce upon the issue because there was no evidence on record to show how the collision occurred and demonstrating, even prima facie, who was responsible. No conclusion could be reached as to any existing future or contingent right or obligation or whether the applicant has a direct or substantial interest in the vindication thereof.
Held, with respect to his locus standi to claim for damages on behalf of creditors of the vessel that no case had been made out that other creditors existed or why such creditors should not themselves proceed against the person or persons who may be liable to them should they suffer damages.
Held, that on arrest the applicant assumes custody of the vessel and not possession. His responsibility ends with prevention of the collision and does not extend to curing unless he has been at fault in failing to prevent damage. The court has not been referred to any legislation, treaty, custom or other source of law which expressly vests the applicant with the power and authority which he presently seeks.

Relief  prayed for refused except with regard to costs, ordering that the costs of the application be costs of the applicant’s preservation costs.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIIVISION

NAME OF SHIP: "THE RIZCUN TRADER #1"
Per Conradie J, Cape Town 11 December 1998

Case Number: AC146/98
AC59/98

In the matter between
The MV RIZCUN TRADER   (Applicant)
And
MANLEY APPLEDORE SHIPPING LTD   (Respondent)

Shipping - Interlocutory application for security for application setting asside arrest - Respondent contends that obligation to furnish security conditional on applicant furnishing security for its costs in present and main application - Respondent’s obligation to provide security arises from operation of law and not conditional on applicant furnishing security - Application should not be delayed by respondent’s insistence on being accomodated.

Interlocutory application arising from application by the Applicant to set aside the arrest of the vessel "Rizcun Trader" by the Respondent. Applicant seeking security for its costs in the main action. Respondent does not dispute its obligation to provide security but avers that this obligation is conditional on applicant furnishing security for its costs in both the present and the main application.

Held, that there was no reason to invoke the provisions of S5(2)(b) and (c) of the Admiralty Jurisdiction Regulation Act, 105 of 1983 which allows a court exercising its admiralty jurisdiction to order any person to give security for costs. Instead, the respondent had a perfectly acceptable remedy in Rule 47 of the Uniform Rules of Court which requires a party desiring security for costs to deliver a notice setting out the grounds upon which securuty is claimed.

Held, that the applicant’s entitlement to security for costs should not by delayed by the respondent’s insistence on being accomodated.

Held, that it was not yet even clear whether the respondent had a good claim for security and it was not appropriate at this stage to say anything about the merits of the respondent’s claim.

Application granted.

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION

NAME OF SHIP: "THE HEAVY METAL #1"
Confirmed on Appeal 31 May 1999

Security Arrest of an Associated Ship - Application to set aside;
Effect of the Associated ship provisions:

The associated ship provisions, s 3(6) and 3(7) provide an extension of the remedy provided by s 3(5) and an alternative action in rem -- the decision of the NPD in The Fayroux IV confirmed. The amendment of s 5(3) to include claims in personam does not prevent the applicant from arresting an associated vessel in rem, where the applicant has no claim in rem aginst the guilty ship, but only a claim in personam against its owner.

Effect of section 3(7)(b)(ii):

In this instance a Cypriot advocate, as the nominee of two different beneficial owners, held the majority of shares in the companies which owned the guilty ship and the associated ship respectively. The Defendant argued that it was the beneficial owners who controlled the shares for the purposes of s 3(7)(b)(ii).

Held:

That in law the majority registered shareholder controls a company. Here the Cypriot advocate was the majority registered shareholder and, regardless of whether he had agreed with others that he exercise his powers according to their instructions, direct control of the companies vested in him. In terms of 3 (7)(b)(ii), he was deemed to control both owning companies. The Heavy Metal is hence a ship associated with the guilty ship.

The application to set aside the arrest was dismissed.
[Confirmed on Appeal]

IN THE HIGH COURT OF SOUTH AFRICA
CAPE PROVINCIAL DIVISION

NAME OF SHIP: "THE SNOW DELTA"
Per Thring J. Cape Town, 2 February 1998

In the matter between
DISCOUNT TONNAGE LTD   (Appellant)
and
SERVA SHIP LTD  (Respondent)

Shipping - Court’s jurisdiction continues to exist and it can entertain an appeal even though the vessel which was attached to found jurisdiction had long since sailed, the rule nisi having been discharged - Respondent’s rights as a time charterer are enforceable in Cape Town when the vessel concerned is in Cape Town and can therefore be said to be situated within the jurisdiction of the court and to be therefore attachable.

Appeal from the single judge decision of Foxcroft J in which a rule nisi was dismissed with costs and the vessel concerned (the "Snow Delta") accordingly released from attachment. The original attachment order was to attach the Respondent’s rights in the vessel in terms of a demise charterparty. In fact the nature of the charterparty was a time charter and it was the respondents rights under this type of charterparty which the court had to consider on the appeal.

Held, that although the vessel had already sailed and there was no property within the court’s jurisdiction to give effect to the ruling of the court, it could still hear the appeal since, as long as the attachment had been adequate to found jurisdiction, that jurisdiction would continue to exist until the end of the appellant’s action. Should the discharge of the rule nisi be set aside and the rule be confirmed, that order would take effect from the date of the order of the court a quo.

Held, that in granting the rule nisi, the court a quo had intended that all and any interest which the respondent might enjoy in the vessel arising our of any charter should be attached. For this reason the rule nisi was not a nulity simply because it was founded on the appellant’s incorrect reliance on a demise charterparty as was contended by the Respondent.

Held, that the Appellant’s rights arising from the time charterparty are incorporeal in nature. The general rule is that an incorporeal in the form of a right of action is deemed to be situated at the place where the debtor concerned resides or is domiciled as this is the place where the creditor’s rights can be enforced against the debtor. However, if the right can be enforced as effectively some other place it may equally be deemed to exist there. The Respondent’s rights under the head charterparty are as enforceable, after attachment, in Cape Town as anywhere. Therefore, during the period the vessel spends in Cape Town, the Respondent’s rights where amenable to attachment here (as rights in personam relating to the vessel).

Order of the court a quo set aside and the rule nisi confirmed.

[Website note:  The procedure of attachment in South African law should be distinguished from the arrest in rem.  The latter procedure names the vessel as the defendant in the action to which the arrest relates. An attachment, in contrast, founds the jurisdiction of the court against the defendant in personam, and also provides security for the claim. Release from arrest requires only the value of the vessel to be lodged as security (if the claim be higher than that value) whereas release from attachment requires the full amount of the claim to be secured.
An appeal has been filed to this judgement.]

IN THE HIGH COURT OF SOUTH AFRICA
CAPE OF GOOD HOPE PROVINCIAL DIVISION
(Exercising its Admiralty Jurisdiction)

NAME OF SHIP: "BOS 400" [Special Plea]

Bouygues Offshore and the H&M underwriters of the BOS 400 vs Caspian, Owners of the MT Tigr and Ultisol Transport Contractors.

In a special plea to the claim of Bouygues (as owners of the BOS 400) and its H&M underwriters, Caspian, the owners of the tug Tigr, averred that Sec 7(1)(a) of the SA Admiralty Jurisdiction Regulation Act should be invoked for the Cape High Court to decline to exercise its jurisdiction in favour of the High Court of England upon grounds of forum non conveniens.

Held:

That Defendant bears the onus of establishing, on a balance of probability, that there is a more appropriate court;
That the appropriate forum is established by reference to the connecting factors of the case which point to the forum which has the most real and substantial connection;
That such connecting factors can be found in consideration of the "natural forum", where the BOS 400 was lost by grounding and where the Tigr has been attached; of the "anticipated evidence", the preponderance of which is located in Cape Town; of the parallel action commended in Cape Town against Portnet, the Port Authority (over whom the English Court would not have jurisdiction) and to which action Portnet has joined Caspian and Ultisol;
That notwithstanding the decision of the English High Court to hear the action between Buoyges and Ultisol (the then charterers of the Tigr) in England in pursuance of the Towcon exclusive jurisdiction clause, Buoygues is e