MV Alina II (No 2) Transnet Ltd v Owner of MV Alina II

• Jurisdiction: South Africa
• Judge: Brand JA, Ponnan JA, Malan JA, Theron JA and WALLIS JA
• Judgment Date: 15 September 2011
• Citation: 2011 (6) SA 206 (SCA)
• Docket Number: 898/10
• Hearing Date: 29 August 2011
• Counsel: RWF MacWilliam SC (with DJ Cooke) for the appellant. AM Stewart SC (with M Steenkamp) for the respondent.
• Court: Supreme Court of Appeal

Wallis JA (Brand JA, Ponnan JA, Malan JA and Theron JA concurring):

[1] This appeal raises a short but important question of admiralty law and practice. A plaintiff commences an action in rem by way of the arrest E of a vessel on the basis of the owner's personal liability for the claim. The owner of the vessel delivers notice of intention to defend the action in order to contest its liability for that claim. Can the plaintiff then obtain the attachment of the vessel to found and confirm jurisdiction [1] in separate proceedings in personam against the owner in respect of the same claims? The appellant, Transnet Ltd, says that it can, but the F respondent, the owner of the Alina II, disputes this. The question arises in the following circumstances.

[2] Transnet is the port authority at Saldanha Bay and trades as Transnet Port Terminals and Transnet National Port Authority. It is G responsible for the operation of the Langebaan Iron Ore Terminal at Saldanha Bay. On 29 October 2009 the Alina II, a bulk carrier, berthed at one of the two berths at the terminal and commenced loading a cargo of about 175 902 mt of Sishen iron-ore fines. The vessel completed loading on 31 October 2009. It was then observed that it had taken on a port list and it was down by the head by about 50 cm. Investigations H revealed that this was due to the ingress of water to the No 2 Double Bottom port ballast tank caused by a fracture at frames 227 – 228.

[3] After this discovery the vessel remained at the berth until her cargo had been transshipped. This took time and it only left Saldanha Bay on 27 March 2010. Transnet contends that it has suffered damages in I consequence of the vessel's occupation of the berth during this period. On 13 January 2010 Transnet caused the Alina II to be arrested in two actions in rem with a view to recovering those damages. There is no significant difference between the two and henceforth I will treat them as

Wallis JA (Brand JA, Ponnan JA, Malan JA and Theron JA concurring)

a single action. The owner of the vessel caused a notice of intention to A defend to be delivered on 27 January 2010 and on 19 February 2010 Transnet delivered its particulars of claim. It suffices for present purposes to note that it advances claims in both contract and delict. The contractual claim is said to arise from a contract between Transnet and the owner of the vessel. The delictual claim is based on a legal duty B allegedly owed by the owner to Transnet and a negligent breach of that duty by the owner, either personally or acting through the master and crew for whom the owner is said to be vicariously liable. Accordingly Transnet's claims are squarely based on the personal liability of the owner and are pursued in rem by virtue of the provisions of s 3(4)(b) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). C

[4] On 19 March 2010 the vessel was again arrested in an action by four companies in the Kumba Mining group advancing claims of nearly $275 million. This prompted the attorney acting for the owner [2] to send an email to all the other parties having actual or potential claims against the vessel saying: D

'Please be advised that:

1.

Any security which the owners may put up should be limited to the value of vessels;

2.

Let us know what you need in order to make a valuation of the vessel before she departs; E

3.

Be informed that any security which we provide to enable the vessel to depart is without prejudice to our rights to apply in due course to (1) reduce the security and/or (2) substitute it for security to cover all the claims against the vessel.'

This stance precipitated the application by Transnet for an attachment F of the vessel ad fundandam et confirmandam jurisdictionem. The reason, as explained by Transnet's attorney in the founding affidavit, was that it believed that if it attached the vessel to commence an action in personam against its owner the vessel could only be released against the provision of security for the full amount of Transnet's claims. [3] The application was brought ex parte and without notice to the owner or its attorney in order G to forestall a submission to the jurisdiction. The attachment order was made on 23 March 2010 and served on the master of the vessel the same day, the sheriff recording in his return of service that he explained 'the contents, nature and exigency thereof' to the master. He also affixed a copy to the windscreen of the superstructure of the vessel.

[5] On 26 March 2010 the vessel's P&I club provided a letter of H undertaking in respect of the full amount of Transnet's claims and in respect of both the in rem and the in personam actions. This allowed the vessel to sail. Thereafter the owner opposed the confirmation of the attachment order. It did so on essentially two grounds. The first was that

Wallis JA (Brand JA, Ponnan JA, Malan JA and Theron JA concurring)

A the attachment constituted an abuse of the process of the court. The second was that such an attachment was impermissible because, prior to the grant of the order or at least prior to the vessel being attached pursuant to that order, the owner had submitted to the court's jurisdiction and such submission precluded an attachment ad fundandam et B confirmandam jurisdictionem. [4] It advanced this second contention on three bases. First it said that there had been an express submission in a letter of undertaking (LOU) relating to potential pollution and wreck claims drafted and agreed between the owner's P&I club, Transnet, the South African Maritime Safety Association and the Department of C Environmental Affairs, but never implemented because the need for it fell away. Second it relied on its having entered appearance to defend the in rem actions and the procedural steps it had taken pursuant thereto. Third it contended that, whilst the sheriff served the attachment order, he did not attach the vessel and there was a clear submission to the D jurisdiction immediately the owner learned of the existence of the order.

[6] In the High Court Griesel J upheld both the abuse-of-process and submission-to-jurisdiction arguments, the latter on the footing that the submission was embodied in the LOU. Transnet appeals with his leave. It contends that the Act specifically contemplates and countenances E a plaintiff pursuing its claims both by an action in rem and by an action in personam. These are said to be two totally distinct forms of proceedings so that the actions of the owner in relation to the in rem actions cannot amount to a submission to the jurisdiction in relation to the in personam claims against it. In advancing this argument submissions F were made in regard to the nature of the action in rem and the effect of admiralty rule 8(3). In regard to the service of the attachment order it was said that the owner was incorrect in contending that in addition to service of the order it was necessary for the sheriff to serve a writ of attachment, and accordingly service of the order sufficed to effect the G attachment.

[7] In his heads of argument, counsel for the owner dealt with the effect of the owner defending the in rem actions under the rubric 'abuse of process/lis pendens'. The argument was that by defending those actions the owner had submitted to the jurisdiction of the court and in substance H had become the defendant. Accordingly it was contended that, as there were already in existence actions against the owner to recover the same claims as were being pursued in the in personam action, the commencement of the latter action by way of the attachment was an abuse of process. It was a situation where there was a pending action involving the I same parties, the same subject-matter and the same causes of action (lis

Wallis JA (Brand JA, Ponnan JA, Malan JA and Theron JA concurring)

pendens) and this provided a proper basis for concluding that to permit A a further action was an abuse of process. [5]

[8] These conflicting approaches resulted in a considerable debate in the heads of argument and before us about the true nature of the action in rem in South African admiralty procedure; the application in this country B of what was said to be the principle laid down in The Dictator; [6] and the impact of admiralty rule 8(3) on that decision, so far as our admiralty law is concerned. Interesting though these issues are, the dispute between the parties is capable of being resolved on a narrow footing, without resolving all of them, and it is preferable to do so and to leave the remaining questions to be dealt with when they more pertinently arise. C

[9] It is generally accepted that a claimant whose claim has not been satisfied after proceeding in rem is entitled thereafter to pursue a claim against the owner in personam for the balance. (This is of course only so if the owner is personally liable on the claim.) Put differently the judgment in rem does not merge in a judgment in personam. [7] This D illustrates the point that it is possible to conceive of circumstances in which resort may be had to both forms of action, without oppression or abuse and for entirely legitimate reasons. Thus, for example, if the owner as the person liable in personam on the claim does not defend the action in rem and it is perfectly clear that the claim will not be satisfied in full, E because it exceeds the value of the vessel (or the fund arising from its sale), the claimant may wish to pursue the claim in personam against the owner and to that end attach an asset to found the jurisdiction of the court. I am not satisfied that the Act precludes the claimant from doing that. [8] Certainly it seems an odd result to say that the in personam action can be pursued once the in rem action is complete, as is undoubtedly the F case, but cannot run simultaneously...