MT Pretty Scene: - Galsworthy Ltd v Pretty Scene Shipping SA and Another

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa

MT Pretty Scene:
Galsworthy Ltd v Pretty Scene Shipping SA and Another
2021 (5) SA 134 (SCA)

2021 (5) SA p134

Citation	2021 (5) SA 134 (SCA)
Case No	684/219; [2021] ZASCA 38
Court	Supreme Court of Appeal
Judge	Wallis JA, Zondi JA, Mocumie JA, Schippers JA and Goosen AJA
Heard	April 12, 2021
Judgment	April 12, 2021
Counsel	M Wragge SC for the appellant.; GD Harpur SC for the respondent.

Flynote : Sleutelwoorde

Shipping — Admiralty practice — Summons — Associated-ship arrest — Detail required — Clear and concise statement of nature of claim sufficient — Same detail as pleading not required — Practice Directive 27 of KwaZulu-Natal Division not to be read as requiring more — Admiralty Proceedings Rules, rule 2(1)(a), rule 4(3).

Shipping — Admiralty practice — Summons — Associated-ship arrest — Defect in summons not invalidating arrest — Arrest not nullity merely because claim insufficiently specified.

Shipping — Admiralty law — Maritime claim — Enforcement — Arrest — Associated-ship arrest — Deemed ownership of charterer — Charterer placed in position of owner of ship concerned when claim at issue arose — Immaterial whether charter subsequently terminated or vessel no longer existing — Admiralty Jurisdiction Regulation Act 105 of 1983, s 3(7)(c).

Shipping — Admiralty law — Maritime claim — Enforcement — Arrest — Associated-ship arrest — Second arrest in anticipation of first arrest being set aside — Permissible — Not barred by s 3(8) — Proper interpretation of s 3(8) — Admiralty Jurisdiction Regulation Act 105 of 1983, s 3(8).

Headnote : Kopnota

The present matter arose out of the 2016 arrest of MT Pretty Scene as a ship 'associated' [*] with MV Jin Kang, which had in June 2007 been time-chartered to Parakou Shipping Pte Ltd from the appellant, Galsworthy. Delivery was due to take place in April 2009 but Parakou, which had concluded a back-to-back time charter with an entity that went bankrupt soon afterwards, repudiated its charterparty with Galsworthy.

Galsworthy proceeded to London arbitration, seeking damages from Parakou. Galsworthy was successful, obtaining — in August 2010 — two awards totalling USD 41 million. To enforce them, Galsworthy applied ex parte to the three South African coastal High Court divisions for orders directing the registrars to issue warrants of arrest and writs of summons in respect of eight Jin Kang-associated ships, including Pretty Scene, which was arrested when it arrived in Durban in June 2016.

Pretty Scene's owner, the first respondent (PSS), [†] applied in the Durban High Court (Vahed J) to set aside the arrest. It was successful. Galsworthy then effected a second arrest of the vessel. This time the application to set it aside was unsuccessful (Henriques J). Both cases went on appeal to the full court, which dismissed the appeal against Vahed J's order but upheld the one

2021 (5) SA p135

against Henriques J's order. In the result both arrests were set aside and a counter-application for security for a claim of wrongful arrest granted. Pretty Scene was sold and the proceeds distributed. Galsworthy appealed to the Supreme Court of Appeal.

One of the issues was whether the underlying writ of summons in respect of the first arrest of Pretty Scene was defective because it contained insufficient facts to establish that the vessel was an associated ship as intended in the Admiralty Act 105 of 1983 (the Admiralty Act). In this respect it was argued that the summons did not comply with the requirements in The Galaecia [‡] and a practice directive of the KwaZulu-Natal High Court. The parties seemed to have accepted that the invalidity of the summons would lead inexorably to the invalidity of the warrant of arrest. This purely procedural objection was upheld by Vahed J and his decision endorsed by the full court.

Another issue arose out of PSS's argument that it was not competent for Galsworthy to have carried out the first arrest for the purpose of the enforcement of the London arbitration awards because the Jin Kang was no longer on charter to Parakou when the awards were made, with the result that Parakou's deemed ownership of Jin Kang had ceased when the claim arose.

Lastly, there was the issue of the legality of the second arrest and whether the full court correctly overturned Henriques J's finding that the arrest was in order. PSS argued that it was an abuse of process for Galsworthy to have effected the second arrest to protect its position in the event of the failure of the first arrest.

Held

The challenge to the warrant was misconceived. Even if the writ of summons was defective, the defect had to invalidate both the order that the warrant be issued and the warrant itself (see [11]). And even were the summons and the warrant of arrest linked, a defect in the former would not invalidate the arrest. The warrant was not a nullity just because the claim was insufficiently specified (see [13]). In addition, since an arresting party was entitled to alter the entire basis of its claim if an arrest in rem was challenged, it could supplement a deficient summons in the same way as Galsworthy had done in response to the application to set aside the first arrest (see [15]).

The judgments in the High Court and the full court attached greater significance to The Galaecia than was warranted. It was no more than an extended obiter dictum on procedural issues and had no binding effect (see [25]). The Practice Directive, [*] which in para 2 required the summons to 'contain a statement of the facts upon which the claim was based and the facts on the basis of which it is stated that a ship was an associated ship', was the source of confusion. It had led the courts below to erroneously demand the kind of detail that should appear in particulars of claim, which was not what the directive required. The only way to remedy this was to direct that this sentence was inconsistent with the requirements of Admiralty Rule 2(1)(a), which required the summons to set out a clear and concise statement of 'the nature of the claim' (see [27], [47], [50]).

The second issue was when a claim on an arbitration award arose. While the Admiralty Act viewed an arbitration award as a 'self-standing' claim independent from the underlying claim, that did not mean that the claim on

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the arbitration award could be detached from the underlying claim: the two were inextricably bound together. However, in considering when the award claim arose for the purposes of an associated-ship arrest, it was necessary to have regard to the underlying claim (see [67]).

In the case of charterparty claims, the charterer was under s 3(7)(c) of the Admiralty Act deemed to be the owner of the ship concerned 'in respect of any relevant maritime claim for which the charterer and not the owner is alleged to be liable'. Here the ship concerned was the Jin Kang. The relevant maritime claim was, in the first instance, the underlying claim which gave rise to the awards and, secondly, the claim based on the awards. It followed that the deeming had to be a deeming of ownership when the claim arose (see [69]).

When the claim was against the owner of the vessel, the fact that its ownership had terminated subsequently, or even that the vessel no longer existed, was irrelevant. All that mattered was that it was owner when the claim arose. The purpose of the deeming provision is to place the charterer who was liable for the claim in the same position as the owner. The vessel (the Jin Kang) was under charter and the charterer (Parakou), not the owner, was liable for claims arising in relation to it. For the purpose of identifying an associated ship that may be pursued for that claim the charterer will be deemed to be the owner of the ship when the claim arose (see [71]).

As to the second arrest of Pretty Scene, s 3(8) of the Admiralty Act provided that '(p)roperty shall not be arrested and security therefor shall not be given more than once in respect of the same maritime claim by the same claimant'. Its sole purpose was to govern arrests in South Africa. It did not extend to arrests made in other jurisdictions and Henriques J correctly ruled that its effect was that a second arrest of the same ship in relation to the same claim was only prohibited where security had been given for that claim (see [90]). Henriques J therefore correctly dismissed the application to set aside the second arrest (see [93]).

In MV Fortune 22: Owners of the MV Fortune 22 v Keppel Corporation Ltd 1999 (1) SA 162 (C) the court wrongly ruled that English law applied to s 3(8) of the Admiralty Act by virtue of s 6(1) of the Admiralty Act, and that s 3(8) extended to arrests made in jurisdictions other than South Africa. The section had to be interpreted in the light of South African law and there was nothing to indicate that its application extended to arrests in foreign jurisdictions (see [89]).

On the strength of the above the appeal against the order of Vahed J would be upheld and the one against that of Henriques J dismissed. In the result, the application to set aside the arrest of Pretty Scene would be dismissed (see [98]).

Cases cited

Southern Africa

Absa Bank Ltd v Janse van Rensburg and Another 2013 (5) SA 173 (WCC): referred to

American Natural Soda Corporation and Another v Competition Commission and Others 2003 (5) SA 633 (CAC): approved

Buchner and Another v Johannesburg Consolidated Investment Co Ltd 1995 (1) SA 215 (T): distinguished

Caesarstone Sdot-Yam Ltd v World of Marble and Granite 2000 CC and Others 2013 (6) SA 499 (SCA) ([2013] 4 All SA 509; [2013] ZASCA 129): dicta in paras [45] – [48] applied

Chancellor, Masters and Scholars of the University of Oxford v Commissioner for Inland Revenue 1996 (1) SA 1196 (A): dictum at 1250F – H applied

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