Judgment of Kruger J DCLD Dated 14 November 2007

2007 CASES

ASIAN HOPE

Judgment of Kruger J DCLD dated 14 November 2007.

Held that a party arresting a ship is required to make allegations of fact, not merely assertions. A party may effect company restructuring arrangements to ensure that a ship which was an associated ship is no longer an associated ship as at date of arrest, the effect being to entitle that party to a setting aside of any such arrest.

ELGINA MARINE V ASIIATIC SHIPPING SERVICES

Judgment of Patel J (DCLD) dated 4 October 2007.

The Plaintiff had obtained an ex parte order for the arrest of the bunkers on board a vessel. The Defendant's right, title and interest in the bunkers were also attached. In terms of Section 5(2)(dA) of the Admiralty Jurisdiction Regulation Act 105 of 1983, the defendant sought the discharge of the arrest. Held that the defendant's case was based on the argument that the arrest fell to be set aside because the Plaintiff had failed, in its ex parte application, to disclose relevant facts which, if they had been disclosed, may have resulted in the court declining to grant relief ex parte. Contrary to the Defendant's submission, the Plaintiff established that it had a genuine need for the security in respect of which the arrest was effected. In such circumstances, the application fell to be dismissed.

M/V VISVLIET

Judgment of Griesel J, CPD on 28 November 2007.

In 1997, the Plaintiff had launched an admiralty action in rem against the Defendant vessel for payment in respect of the purchase price of bunkers sold and delivered by the Plaintiff to the Defendant. In a subsequent application, the present Applicant sought to strike out the Plaintiff's claim on the basis that it was vexacious and/or an abuse of the process of the court held that in terms of Rule 20(1) of the Admiralty Rules, the court may strike out any proceedings which are vexacious or an abuse of the process of the court. An action may be held to be vexacious if it is obviously unsustainable, or frivolous, improper, instituted without sufficient ground, to serve solely as an annoyance to the defendant. The present application was based on the allegation of unsustainability and the inordinate delay and the failure on the part of the Plaintiff to prosecute its claim. The court agreed with the latter objection and struck out the Plaintiffs claim.

SILVER CONSTELLATION

Judgment of Balton J, DCLD on 4 October 2007.

The applicant Ipanema had to show on a balance of probabilities that the Silver Constellation was an associated ship of the Orient Alliance an that its claim arose at a time when the orient Alliance was owned by Orient Alliance Ltd. The arrest had to be set aside if Ipanema's claims only arose after the Orient Alliance had been delivered and ownership had passed. Ipanema contended that its claim arose when the classification society issued the deficient certificate. However, the evidence showed that the buyer became the owner of the ship upon delivery and that the claim arose no earlier than this. As at the date when the claim arose, Ipanema no longer controlled Orient Alliance Ltd, and the Silver Constellation was not an associated ship of the Orient Alliance. The arrest of the Silver Constellation was set aside.

2008 CASES

CAPE COURAGE

Judgment of Balton J DCLD on 4 March 2008.

For purposes of determining whether or not a ship is an associated ship susceptible to arrest, the claim alleged in respect of the guilty ship much have arisen at the time when the person controlling the associated ship controlled that ship. After delivery in terms of the Memorandum of Agreement, Bulkship was dissatisfied with its condition, and it's claim could be divided into tow catergories: those based on breach of contract and one based on alleged misrepresentation. Expert English opinion was that the cause of action for damages for breach of contract arose immediately after delivery of the ship and thus that Bulkship's causes of action for damages arising from the breach of contract arose immediately after delivery. Bulkship was therefore not entitled to arrest the Cape Courage and the order of arrest was set aside.

FINO MARITIME

Judgment of Madondo J, DCLD on 8 January 2008

The Court had granted an order for the arrest of the second respondent's vessel in terms of Section 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983. The purpose of the arrest was to obtain security for a claim the applicant had instituted against the owner of the vessel, based on the fact that the vessel was an associated ship. The first respondent then lodged an application for the release of the second respondent vessel on the basis that the applicant had at the time of the arrest of the vessel and of the application for the release of the vessel, no genuine and reasonable need for security in respect of its claim.

The issue between the parties was whether the applicant had demonstrated the existence of a genuine and reasonable need for the security sought.

The court held that in order to succeed in the application for an order for the arrest of a ship in terms of Section 5(3)(a) of the Act for the purpose of obtaining security in respect of a claim, the applicant must satisfy the Court that it has a claim enforceable by an action in rem against the ship in question or against a ship of which the ship in question is an associated ship, it has a prima facie case in respect of such a claim, which reasonable need for security in respect of the claim.

Finding that the applicant had not shown a genuine and reasonable need for the security sought, the court set aside the arrest of the ship.

MV SNOW CRYSTAL

SCA, 27 March 2008

The Snow Crystal arrived in Cape Town on October 16, 2002. Internal repair work commenced and, ten days later, the owner's technical superintendent joined the crew to oversee the dry docking of the vessel.

At the time, the Gulf Fleet 29 was in the dry dock. This vessel had entered the dry dock six days late, but the owners had assured the dock master that the work would be completed on time. When the repair manager advised that they were behind schedule two days later, the dock master contemplated issuing a Regulation 61(10) notice, giving the Gulf 24 hours notice to leave.

The manager of the Gulf immediately became hostile and said that the vessel could not be moved because her hull was 'open'. The dock master’s offer to move the Gulf to the Robinson dry dock (which would have accommodated the Gulf but not the Snow Crystal) was rejected as it was believed to be too risky to move the Gulf across the harbour while she was floating on her tank tops.

However, according to experts who testified in court, it would have been possible to close the hull opening to enable the Gulf to be floated. The owners of the Snow Crystal also offered to pay the expenses for moving the Gulf. However, the repair manager announced that surveyors had condemned the keel coolers and this was a reason for further delay until December 6. On December 4, the repair manager advised that as it had been raining, the Gulf would only leave the dry dock on 9 December.

On December 10, the Snow Crystal cancelled its dry dock booking as the vessel was due to be on hire from December 14, 2002. It was ultimately dry docked in Bulgaria between November 15 – December 1, 2003.

The NPA alleged that the physical presence of the Gulf in the dry dock had stopped them honouring their agreement. The dock master failed to give notice in terms of Regulation 61(10) for the Gulf to leave the dock as he believed this notice would be ignored and would further upset the contractors who had already proved uncooperative.

However, the owners of the Snow Crystal expected the dock master to enforce Regulation 61(10) as it was part of the agreement they had entered into. The Robinson dry dock was available and with a minimum of work, the vessel could have been floated to that dock.

The court awarded damages for temporary work to remove accumulated underwater growth, repainting the vessel in Cape Town while she was afloat so that she would be presentable to the charterers (this had to be redone in Bulgaria) and for the loss of charter hire from November 15 to December 1, 2003 when the vessel was dry docked in Bulgaria. This amounted to US$ 156 424,63.

However, the NPA challenged this on the basis that none of the damages flowed naturally from the breach. The issues on appeal were whether a contract existed between the parties and if so, it’s nature, scope, terms, whether there was a supervening impossibility and the owner's entitlement to damages.

Arrangements had been made for the vessel to be dry docked via Quay Maritime Services, the company that was tasked with carrying out steel and pipe repairs. In June 2002, an official application form was submitted for the use of the dry dock. However, this form erroneously referred to Regulation 60 of the Harbour Regulations when in fact it ought to have referred to Regulation 61(1), which provides as follows:

Before a ship is admitted to dry dock in a harbour the name and full particulars of the ship shall be entered in a book to be kept for that purpose at the port office of the harbour, and the owner, master or agent of the ship shall sign an agreement acknowledging himself to be bound by the following conditions and undertaking to pay the applicable charges…

The court on appeal found that there was a contract in existence between the parties as contemplated in Regulation 61(1) subject to a degree of flexibility. The owners of the Snow Crystal had made allowances for delay. However the Gulf only left the dry dock on 10 December 2002 and it would only have been available to the Snow Crystal two days later. It was a term of the agreement that time was of the essence – for that reason, the NPA was in mora from at least 4 December 2002.

The court on appeal recognized that the vessel's managers would have planned a schedule around the period the vessel would be dry docked and would thus be out of commission. In this case, the period had been agreed to six months in advance.

The last minute failure of the NPA to make the dry dock available meant that the vessel would have to go off -hire or out of commission all over again. In the court's view, this was clearly a natural consequence of the breach. There were no special circumstances and the appeal was dismissed with costs.

ships.

MV "WISDOM C"

SCA 27 March 2008

An order for the arrest of a ship will not be set aside on the grounds that the arrest order was preceded by a judgment determining the issues in dispute between the parties (the exception rei iudicata) if the prior judgment was not a final and definitive decision which determined the matter on the merits of the case. An affidavit in support of an application for the arrest of a ship may depend on sources which are not identifiable; it may also depend on double hearsay evidence; relevant evidence may be introduced in an answering affidavit. A counterclaim for security must show that the claimant has a genuine and reasonable need for security and cannot depend merely on considerations of convenience.

MT ARISTIDES

Judgment of Koen J, DCLD, 23 September 2008

A maritime claim upon which an arresting party depends for the arrest of an associated ship, must have arisen at the time when the defendant was the owner of both the associated ship and the ship in respect of which the arresting party makes its claim.

MV FOTIY KRYLOV

Judgment of Davis J, CPD, 12 February 2008

A maritime lien for damages will not support a claim against the owner of a ship which has caused damage in circumstances where the party in control of the ship at the time damage was caused may rely on contractual exemptions from liability. In such a case, no prima facie case for the arrest of a ship is made out

MV ASIAN HOPE

SCA, 23 September 2008

A party may establish that it has a genuine and reasonable need for security by showing that it has a reasonable apprehension that the party whose ship has been arrested will not otherwise satisfy a judgment or award made against it. Such an apprehension may arise if there is evidence that that party acted as agent of an undisclosed principle which holds all the assets of the enterprise in which that party operates.

MV "ORIENT STRIDE"

SCA, 23 September 2008

A party may establish that it has a genuine and reasonable need for security by showing that it has a reasonable apprehension that the party whose ship has been arrested will not otherwise satisfy a judgment or award made against it. Such an apprehension may arise if there is evidence that that party acted as agent of an undisclosed principal which holds all the assets of the enterprise in which that party operates.

MV "SAFMARINE AGULHAS"

Judgment of Sangoni J, 3 october 2008

Joinder of a party to an action in terms of Section 5(1) of the Admiralty Jurisdiction Regulation Act No. 105 of 1983 requires demonstration that the plaintiff has a reasonably arguable case that the court has jurisdiction over the party joined and the plaintiff has a prima facie case against that party. The final determination of both aspects is however a matter for the trial court.

MV "SYLVIA"

Judgment of Levinsohn J, 1 April 2008

In determining whether a party arresting a ship has a prima facie case, a court should not defer assessment of the rights of the disputing parties between themselves to the tribunal which will ultimately determine such rights, but should make its own assessment of the relative obligations of the parties as evident in the contracts and events which have taken place and been concluded between them.