The Seaspan Grouse Seaspan Holdco and Others v MS Mare Tracer Schiffahrts and Another

• Jurisdiction: South Africa
• Judge: Gyanda J
• Judgment Date: 26 February 2018
• Citation: 2018 (5) SA 284 (KZD)
• Docket Number: A 69/2016
• Hearing Date: 26 February 2018
• Counsel: MJ Fitzgerald SC for the applicant. SR Mullins SC (with J McKenzie) for the respondents.
• Court: KwaZulu-Natal Local Division, Durban

Gyanda J: I

[1] By notice dated 15 September 2017 the applicants, who had an interest in the MV Seaspan Grouse (ex MV Hanjin Gdynia) and held a cession of the right to pursue the current litigation from the first and second applicants, brought an application against the respondents in J which it sought an order —

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(a)

that the arrests of the third applicant (the MV Seaspan Grouse) A under case Nos A69/2016 and A70/2016 be and are hereby set aside;

(b)

that the first and second respondents are directed to return the original letter of undertaking issued as security for their alleged claims to the applicant's attorney of record within two court days of this order; and B

(c)

that the respondents should pay the costs of this application.

By the time the matter served before me the security in terms of para 2 was replaced by a cash amount paid into an account opened for that purpose by the registrar of this court. C

[2] The background leading up to the present application is set out in the respondents' heads of argument and is not in dispute. It is as follows:

(a)

MTS1 and MTS2 (the first and second respondents) are German-registered ship owning companies, each alleging a separate claim against Hanjin Shipping, arising out of the respective charters to D Hanjin Shipping of the MV Mare Traveller and the MV Mare Tracer.

(b)

Hanjin Shipping was South Korea's largest container line and one of the world's top ten carriers in terms of capacity.

(c)

On 1 September 2016 the Seoul Central District Court (Korea) granted an order commencing rehabilitation proceedings in respect of Hanjin Shipping. E

(d)

In response thereto, and so as to protect themselves against a change of ownership or control of the vessels in Hanjin Shipping Fleet, the respondents caused in rem summonses (ie protective writs) to be issued out of this court (and also out of the High Courts in the Eastern Cape Province and the Western Cape Province), citing F various allegedly 'associated ships' as defendants, initially in respect of 72 vessels which were subsequently reduced to 64 vessels.

(e)

The vessels were alleged to be associated ships on the basis that Hanjin Shipping was deemed to be the owner of the MV Mare Traveller and MV Mare Tracer in respect of the respondents' claims in terms of s 3(7)(c) of the Admiralty Act, and the defendant vessels G (ie the associated ships) were each owned by a company controlled by Hanjin Shipping at the time that the in rem summonses were issued in terms of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act).

(f)

The in rem summons was issued on 2 September 2016 and the H relevant warrants of arrest were issued by the Registrar on the same date.

(g)

The vast majority of the ships referred to above (all named with the prefix Hanjin) were sold subsequent to 2 September 2016, which included, inter alia, the MV Hanjin Cape Lambert, which was acquired by Tebtale Marine Inc (Tebtale) and the vessel which was I acquired by the first applicant.

(h)

Tebtale made application in the Cape Town High Court of the Western Cape Division to have the protective writs issued out of that court set aside, or at least to have the MV Hanjin Cape Lambert (by then renamed MV Mount Meru) deleted from the protective J

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writs, A inter alia, on the basis that the vessel had been acquired by it on an arm's-length basis subsequent to the protective writs being issued, and as such was no longer susceptible to arrest in rem pursuant to such writs.

(i)

Tebtale's application was opposed and argued before Burger AJ, B who delivered judgment on 21 July 2017 in favour of Tebtale and ordered the deletion of the MV Hanjin Cape Lambert from protective writs.

(j)

The respondents applied for leave to appeal the judgment of Burger AJ.

(k)

Thereafter, on 23 August 2017, after having applied for and C obtained an amendment of the protective writs from Sishi J in this court, the respondents caused the arrest of the third applicant at Durban.

(l)

The applicants secured the release of the vessel (the third applicant) from arrest by establishing security and the vessel is accordingly D deemed to be under arrest in terms of s 3(10) of the Admiralty Act.

(m)

Although respondents obtained leave to appeal the Tebtale judgment on 24 August 2017 they have decided not to prosecute the appeal further.

(n)

The applicants challenge the deemed arrests of the MV Seaspan Grouse on the same legal basis that they challenged the validity of the E protective writs issued against Tebtale and which form the ratio of the judgment of Burger AJ in the Tebtale matter.

[3] It is common cause between the parties that the sole issue for determination by this court in the present application is whether the relevant time for determining the requisite control/ownership of the F vessel, as an associated ship and liable to be arrested as such, is the time of issue of the protective writs as contended for by the respondents, or both the time of issue of the protective writs and the time of arrest of the ship as contended for by the applicants.

[4] For the purposes of this application it is common cause (a) that the G MV Seaspan Grouse is an associated ship of the MV Mare Tracer and MV Mare Traveller; and (b) that the sale of the MV Seaspan Grouse to the first and second applicants was an arm's-length sale.

[5] The issue to be determined between the parties has also been defined by raising the question whether the decision in The Monica S is still good H and binding law in South Africa in the light of the provisions of the Act. The applicants argue that The Monica S is no longer binding authority in South Africa while the respondents argue that it still is. The parties are in full agreement, however, that immediately prior to the promulgation of the Act, The Monica S was good and binding authority in South Africa. In The Monica S [1967] 2 Lloyd's Rep 113 ([1967] 3 All ER 740 (PDA)) I at 132 Brandon J held:

'Under s 3(4) of that Act two requirements are laid down for proceeding in rem against a ship in connexion with which a claim falling within para (d) to para (r) of s 1(1) arises. The first requirement is that the person who would be liable [my emphasis] on the claim in personam J should have been the owner or charterer of, or in possession or control

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of, the ship when the cause of action arose. The second requirement is A that, at the time when the action is brought, the ship should be beneficially owned as respects all shares in it by that person. These are the express requirements, and the only express requirements, and I see no reason, as a matter of construction of the Act, for implying a further provision that, in cases where the claim does not give rise to a maritime lien, if there is a change of ownership after action [is] brought but B before service or arrest, the right which is given to proceed in rem against the ship is thereupon to lapse'. [My emphasis in this part of Brandon J's judgment is relevant to the construction to be given to certain words in s 3(4)(b) of the Act hereinafter.]

[6] It was, as I have said, common cause, or not in dispute, that the C admiralty law which was applicable in South Africa prior to the commencement of the Admiralty Act was the English admiralty law which the English Supreme Court would have applied (Malilang and Others v MV Houda Pearl [1] and G Hofmeyr Admiralty Jurisdiction Law and Practice in South Africa 2 ed (Juta 2006) at 5 – 6). Therefore South African law was, on the issue concerned as agreed by the parties, the law D as set out by Brandon J in The Monica S.

[7] In this regard s 6(1)(a) of the Admiralty Act provides that a court in the exercise of its admiralty jurisdiction shall —

'with regard to any matter in respect of which a court of admiralty of the Republic referred to in the Colonial Courts of Admiralty Act, 1890, of E the United Kingdom, had jurisdiction immediately before the commencement of this Act, apply the law which the High Court of Justice of the United Kingdom in the Kingdom, had jurisdiction immediately before the commencement of this Act, apply the law which the High Court of Justice of the United Kingdom in the exercise of its admiralty jurisdiction would have applied with regard to such a matter at such commencement, insofar as that law can be applied; . . .'. F

Section 6(2) provides that the provisions of ss (1) shall not derogate from the provisions of any law of the Republic applicable to matters described in the subsection. These sections confirm that the law applicable before the commencement of the Admiralty Act was the English law as it G existed on 1 November 1983. Therefore, the decisions of Brandon J in The Monica S is still good and binding law unless that decision has in any way been altered, modified or even overruled by a later South African decision, or is inconsistent with the provisions of the Admiralty Act or any other South African law and, in that case, the extent thereof (see MV Silver Star: Owners of the MV Silver Star v Hilane Ltd). [2] H

[8] Both the respondents and the applicants addressed argument to me as to how certain provisions of the Admiralty Act were to be interpreted. I have been referred to various authorities in this regard, inter alia, Natal Joint Municipal Pension Fund v Endumeni Municipality, [3] in which Wallis JA set out the approach to be adopted in relation to interpretation and construction to be given to documents: I

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'The A present state of the law can be expressed as follows: Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the...