MS Mare Traveller Tebtale Marine Inc v MS Mare Traveller Schiffahrts GmbH & Co KG

• Jurisdiction: South Africa
• Citation: 2018 (2) SA 490 (WCC)

MS Mare Traveller
Tebtale Marine Inc v MS Mare Traveller Schiffahrts GmbH & Co KG
2018 (2) SA 490 (WCC)

2018 (2) SA p490

Citation	2018 (2) SA 490 (WCC)
Case No	AC 4/2016
Court	Western Cape Division, Cape Town
Judge	Burger AJ
Heard	July 21, 2017
Judgment	July 21, 2017
Counsel	MJ Fitzgerald SC for the applicant.; M Wragge SC (with JD McKenzie) for the respondent.

Flynote : Sleutelwoorde

Shipping — Admiralty law — Maritime claim — Enforcement — Action in rem against associated ship — Ship sold after issuance of writ in rem but before C arrest — View that security accruing upon actual arrest rather than issuance of writ preferable — Bona fide sale before arrest therefore destructive of action in rem against associated ship — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a), s 3(4)(b) and s 3(7)(a)(i).

Shipping — Admiralty law — Admiralty practice — Writ in rem — Bona fide sale of D res (ship) after issuance of writ but before arrest — 'Protective writ' issued to preserve right of action against associated ship outside jurisdiction of court — Sale destructive of action in rem — Reference to ship struck from writ — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a), s 3(4)(b) and s 3(7)(a)(i).

Headnote : Kopnota

The E issue in the present case was whether a ship sold and transferred after issuance of summons can be arrested for the debt of a previous owner.

During 2016 Hanjin Shipping, a prominent South Korean shipping line, fell into bankruptcy. Certain creditors, which included the respondent, sought to recoup their losses by issuing 'protective writs' (summonses) out of various South African courts against more than 70 Hanjin Shipping beneficially F owned ships to facilitate their arrest in rem, as associated ships, when they called at local ports. The applicant purchased one of them, Mount Meru, from a third party in February 2017. When the applicant became aware of the writ, which was obtained in September 2016, it applied to have G Mount Meru struck from it. The parties agreed that when the writ was issued, Mount Meru was indeed an associated ship of Mare Traveller, the ship in respect of which the respondent's claim arose. But they disagreed on whether the passing of ownership to the applicant was destructive of the action in rem, the applicant arguing that it was, the respondent that it was not. The disagreement stemmed from their divergent views on the relevant time of ownership, the applicant arguing that it was the date of arrest [*] H (proposition A), and the respondent that it was the date of issuance of the writ (proposition B). In England the leading case on the matter, The Monica S [1967] 2 Lloyd's Rep 113 ([1967] 3 All ER 740 (PDA)), favoured proposition B by holding that the action in rem survived the passing of ownership, so that the ship could still be arrested (this is also the position in several Commonwealth jurisdictions). According to proposition A, however, the ship could no longer be arrested if it was sold prior to its actual I arrest.

In South Africa admiralty actions in rem are governed by provisions of the Admiralty Jurisdiction Regulation Act 105 of 1983. Relevant to the issue are:

2018 (2) SA p491

•

s 1(2)(a), which provides that 'an admiralty action shall . . . commence A (i) by the service of any process by which that action is instituted; . . . (iii) by the issue of any process for the institution of an action in rem';

•

s 3(4)(b), which requires the claimant to establish that the owner of the ship 'would be liable to the claimant in an action in personam'; and

•

s 3(7)(a)(i), which provides that 'an associated ship means a ship, other B than the ship in respect of which the maritime claim arose . . . owned, at the time when the action is commenced, by the person who was the owner of the ship concerned at the time when the maritime claim arose' (the applicant contended that this was the time of arrest (see proposition A above), the respondent that it was the time of issue of process (see proposition B above).

Held C

The matter, which would be decided on the basis that the sale and transfer of Mount Meru to the applicant were bona fide and not fraudulent, was essentially one of statutory interpretation (see [24], [71]). Since it was inconceivable that the legislature would have given greater rights against the associated ship than against the 'ship concerned', whichever proposition (A D or B) was correct would operate in respect of both s 3(4)(b) and s 3(7)(a)(i) (see [5], [72]).

On analysis, proposition B (the Monica S principle) was inapplicable in South Africa: it was contrary to s 25 of the Constitution and the abovementioned provisions of the Admiralty Act, which favoured proposition A. Since the E mere issuance of the protective writ, without an actual arrest, was therefore insufficient to protect the respondent against the change in ownership of the Mount Meru, the applicant was entitled to an order striking Mount Meru from the summons (see [23] – [24], [29], [54] – [55], [73] – [76]), [86]).

Cases cited

Southern Africa F

Cloete Murray and Another NNO v FirstRand Bank Ltd t/a Wesbank 2015 (3) SA 438 (SCA) ([2015] ZASCA 39): dictum in para [40] applied

MV Jute Express v Owners of the Cargo on Board the MV Jute Express 1992 (3) SA 9 (A): referred to G

MV NYK Isabel: Northern Endeavour Shipping Pte Ltd v Owners of MV NYK Isabel and Another 2017 (1) SA 25 (SCA): dictum in para [45] applied

MV Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v Deiulemar Compagnia Di Navigazione SPA 2012 (1) SA 58 (SCA) ([2011] ZASCA 131): dictum in para [27] applied

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) H ([2012] 2 All SA 262; [2012] ZASCA 13): dicta in paras [18] – [19] applied

The Asphalt Venture: Windrush Intercontinental SA and Another v UACC Bergshav Tankers AS 2017 (3) SA 1 (SCA): dictum in para [32] applied

Transol Bunker BV v MV Andrico Unity and Others; Grecian-Mar SRL v MV Andrico Unity and Others 1989 (4) SA 325 (A): referred to. I

England

The Monica S [1967] 2 Lloyd's Rep 113 ([1967] 3 All ER 740 (PDA)): discussed and not followed. J

2018 (2) SA p492

Legislation cited

Statutes

The A Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a), s 3(4)(b) and s 3(7)(a)(i): see Juta's Statutes of South Africa 2016/17 vol 1 at 2-90.

Case Information

MJ Fitzgerald SC for the applicant.

M Wragge SC B (with JD McKenzie) for the respondent.

Related applications for the setting-aside of a writ in respect of the vessel Mount Meru.

Order

1.

C The reference to the MV Mount Meru, formerly the MV Hanjin Cape Lambert, IMO No 9444039, in the summons in rem issued under case No AC40/2016, is deleted.

2.

The respondent shall pay the applicant the costs in respect of the application to delete the reference to the vessel on the legal issue of whether the vessel meets requirements of s 3(7)(a).

3.

D The applicant shall pay the respondent the costs in respect of the application to set aside the arrest on the factual basis that the vessel was not an associated ship, as alleged in paras 75 – 86 of the founding affidavit.

4.

The application to decline to exercise jurisdiction, alternatively to E stay the proceedings, is dismissed with costs.

5.

Costs shall include the costs of two counsel, where employed.

Judgment

Burger AJ:

[1] These proceedings involve three separate applications, although the F relief sought overlaps to some extent. In broad terms the applicant seeks the setting-aside of the writ, or summons, in respect of the vessel MV Mount Meru, formerly MV Hanjin Cape Lambert (the vessel). I will treat these as three separate applications or issues, each of which must be decided separately.

[2] G The first of these issues is the important and difficult question on which most time was spent, which is essentially a matter of law involving the interpretation of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). The question (oversimplified and slightly inaccurately) is whether, in respect of the statutory lien provided for in s 3(4)(b), the person who would be liable in personam must be the owner of the H property to be arrested at the time of the issue of process or the time of arrest, where the vessel to be arrested is an associated ship as provided for in s 3(7)(a)(i).

[3] The second issue or application was to set aside the writ of arrest on the grounds that the ship to be arrested is not an 'associated ship', as not I being controlled by the same person as the ship concerned. This is a factual issue. This application was abandoned by the applicant in reply. It is therefore not necessary to deal with this issue other than as to costs.

[4] The third issue or application is for an order that the court decline to exercise its jurisdiction on the basis of an arbitration clause. I will return J to this question later.

2018 (2) SA p493

Burger AJ

[5] For ease of reference I will refer to the contention that the relevant A time of ownership is the time of arrest as proposition A (applicant's contention), and the time of issue of process as proposition B (respondent's contention, sometimes referred to as the Monica S [1] principle). The issue whether it is proposition A or B can arise both in respect of s 3(4)(b) (against the ship concerned) and in respect of s 3(7)(a)(i) (against the associated ship). In this case the issue has to be decided in B respect of s 3(7)(a)(i).

[6] Mr MJ Fitzgerald SC appeared for the applicant; Mr M Wragge SC with Mr JD McKenzie appeared for the respondent. The argument by counsel was very helpful to me in trying to understand what I consider to be a difficult question. C

[7] The consideration of this issue is somewhat...