MV Nyk Isabel Northern Endeavour Shipping Pte Ltd v Owners of MV Nyk Isabel and Another

• Jurisdiction: South Africa

MV Nyk Isabel
Northern Endeavour Shipping Pte Ltd v Owners of MV Nyk Isabel and Another
2017 (1) SA 25 (SCA)

2017 (1) SA p25

Citation	2017 (1) SA 25 (SCA)
Case No	972/2015; [2016] ZASCA 89
Court	Supreme Court of Appeal
Judge	Leach JA, Theron JA, Seriti JA, Wallis JA and Kathree-Setiloane AJA
Heard	May 25, 2016
Judgment	June 1, 2016
Counsel	M Wragge SC (with JD McKenzie) for the appellant.; SR Mullins SC (with S Linscott) for the respondents.

Flynote: Sleutelwoorde G

Shipping — Admiralty law — Maritime claim — Enforcement — Arrest — Associated-ship arrest — Guilty ship subject to charterparty — Deemed ownership H of charterer — Charterer including slot-charterer — Admiralty Jurisdiction Regulation Act 105 of 1983, s 3(7)(c).

Shipping — Admiralty law — Security — Security for counterclaim — Court having wide discretion to order — But applicant must first establish (i) prima facie existence of counterclaim and (ii) genuine and reasonable need for I security — Owner of arrested ship applying for countersecurity in respect of claim reinforced by judgment in foreign court — Both parties peregrini but respondent having subjected itself to jurisdiction of court — Court exercising discretion in favour of owner and ordering arresting party to provide countersecurity for foreign judgment — Admiralty Jurisdiction Regulation Act 105 of 1983, s 5(2)(b) and (c). J

2017 (1) SA p26

Headnote: Kopnota

A A number of containers aboard Northern Endeavour, a ship belonging to the appellant (NES), were lost or damaged en route from Durban to Brazil. NES blamed the respondent (NYK), a slot-charterer of a number of container slots on the ship, for the incident, arguing that it had been negligent when it stowed the containers. In Brazil, cargo underwriters acting under rights of subrogation sued NYK to recover the losses. Relying on an indemnity, NYK B joined NES to the proceedings. The Brazilian court upheld both the cargo underwriters' claim against NYK and NYK's indemnity claim against NES.

Aggrieved by this result, NES caused NYK Isabel, a ship controlled by NYK, to be arrested as an associated ship in an action in rem brought in the Durban High Court. NES argued that any amount it was obliged to pay NYK under the Brazilian judgment constituted damages it was entitled to recover from C NYK. NES relied on s 3(7)(c) of the Admiralty Act [*] for its argument that, as a slot-charterer of Northern Endeavour at the time of the incident, NYK had to be deemed its owner for the purposes of the associated-ship arrest.

NYK defended the action and brought a counterclaim under s 5(2)(b) and (c) [*1] of the Act for a matching provision of security by NES, failing which it asked the court to cancel the arrest. The security sought by NYK was in respect of the D indemnity claim granted against NES by the Brazilian court. Both parties were peregrini of the Durban court, and NES argued that NYK was not a party to the South African action, and that unless it became one it could not ask the court to order that NES provide it with security. Security was furnished to secure the release of NYK Isabel with the result that there was a deemed arrest in place under s 3(10) of the Act. Other than a reduction in the amount of security, the High Court granted relief in accordance with E the prayer.

In an appeal by NES to the Supreme Court there were three issues to be decided:

• (1)

whether a slot-charterer such as NYK counted as a 'charterer' for the purposes of s 3(7)(c);

• (2)

whether NYK was a party to the action; and

• (3)

F whether NYK was entitled to invoke s 5(2)(b) and (c) of the Act in order to obtain the security it sought.

Held

As to (1): It did. When the Act spoke of charterparties the expression had to be given a meaning that was consistent with current commercial usage (see [27]). Slot charters had evolved to meet an emerging commercial need, and G there was no reason the preclude them from being characterised as charterers as intended in the Act (see [28] – [29]). Since NYK was a charterer of Northern Endeavour for the purposes of the deeming provision in s 3(7)(c), it was not open to NYK to set aside the arrest of NYK Isabel as defective (see [30]).

As to (2): It was. The effect of rules 8(2) and 10 of the Admiralty Court Rules [*2] H was that when NYK entered an appearance to defend the in rem action

2017 (1) SA p27

instituted by NES against NYK Isabel, it ipso facto became a party to the A action (see [31] – [39]).

As to (3): It was. While courts had in the past expressed divergent views on the extent of their power to order security under s 5(2)(b) and (c), the preferable view was that they conferred a wide discretion (see [43] – [45]). Such an interpretation would allow the courts to balance the interests of B claimants and defendants by ordering countersecurity in appropriate cases and attaching conditions to arrest and attachment orders (see [45]). However, for the discretion to arise the applicant first had to show that it had (i) a prima facie enforceable claim; and (ii) a genuine and reasonable need for security (see [46], [51], [58]).

In the present case NYK complied with both requirements: It had a claim for C indemnity, reinforced by the Brazilian court's judgment, against NES; and since NES had disposed of Northern Endeavour and had neither assets nor income, a genuine and reasonable need for security (see [47], [55], [57]). Though both parties were peregrini, NES had subjected itself to the power of the court to grant countersecurity under s 5(2)(b) and (c), and it did not matter that the security was sought in respect of payment of a judgment NYK had obtained in Brazil (see [50]). D

The court would, in view of the following considerations, exercise its discretion in favour of NYK by ordering NES to provide security for its claim in Brazil (see [58] – [63]):

•

judicial comity — it would assist a fellow Brics nation to enforce a judgment by one of its courts; E

•

having invoked the jurisdiction of the South African court in order to obtain security for its claim against NYK, NES could not complain if NYK made use of the same jurisdiction for the same purpose;

•

since NYK seemed to have a strong claim and NES a weak one, considerations of fairness suggested that NYK should also have security;

•

NES was unable to point to policy or equity reasons why it would be unjust to require it to provide security; F

•

the provisions of the slot charterparty and applicable slot-exchange agreement favoured NYK's case.

The SCA accordingly dismissed the appeal and confirmed the High Court's order save for certain amendments.

Cases cited G

Southern Africa

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): referred to

Country Cloud Trading CC v MEC, Department of Infrastructure Development H 2015 (1) SA 1 (CC) (2014 (12) BCLR 1397; [2014] ZACC 28): referred to

Devonia Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd Intervening) 1994 (2) SA 363 (C): dictum at 371E – G approved

Jones v Krok 1995 (1) SA 677 (A): referred to

Katagum Wholesale Commodities Co Ltd v The MV Paz 1984 (3) SA 261 (N): I approved

M Rauff (Pty) Ltd v Pietersburg Coal Agency 1974 (1) SA 811 (T): referred to

2017 (1) SA p28

Malcolm v Premier, Western Cape Government 2014 (3) SA 177 (SCA) ([2014] ZASCA 9): referred to A

Mediterranean Shipping Co v Speedwell Shipping Co Ltd and Another 1986 (4) SA 329 (D): dictum at 333J – 334B approved

MV Akkerman: Fullwood Shipping SA and Another v Magna Hellas Shipping SA 2000 (4) SA 584 (C): dictum at 592B – F applied

MV Alina II (No 2): Transnet Ltd v Owner of MV Alina II 2011 (6) SA 206 (SCA) ([2011] ZASCA 129): explained B

MV Gladiator: Samsun Corporation t/a Samsun Line Corporation v Silver Cape Shipping Ltd, Malta 2007 (2) SA 401 (D) ([2005] 1 All SA 67): approved

MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD 2000 (1) SA 286 (C): dictum at 298D – H approved

MV Orient Stride: Asiatic Shipping Services Inc v Elgina Marine Co Ltd 2009 (1) SA 246 (SCA) ([2008] ZASCA 111): referred to C

MV Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Company v Deiulemar Compagnia di Navigazione SPA 2012 (1) SA 58 (SCA) ([2011] ZASCA 131): approved

MV Rizcun Trader (3): Manley Appledore Shipping Ltd v MV Rizcun Trader 1999 (3) SA 966 (C): D dictum at 973B – C overruled

MV Rizcun Trader (4): MV Rizcun Trader v Manley Appledore Shipping Ltd 2000 (3) SA 776 (C): overruled

MV Silver Star: Owners of the MV Silver Star v Hilane Ltd 2015 (2) SA 331 (SCA) ([2014] ZASCA 195): applied

MV Wisdom C: United Enterprises Corp v STX Pan Ocean Co Ltd 2008 (3) SA 585 (SCA) E ([2008] 3 All SA 111; [2008] ZASCA 21): dictum in para [26] applied

MV Zlatni Piasatzi: Frozen Foods International Ltd v Kudu Holdings (Pty) Ltd and Others 1997 (2) SA 569 (C): referred to

SA Boatyards CC (t/a Hout Bay Boatyard) v The Lady Rose (formerly known as the Shiza) 1991 (3) SA 711 (C): dictum at 716B – E applied

Sunnyface Marine Ltd v Hitoroy Ltd (Trans Orient Steel Ltd and Another Intervening); Sunnyface Marine Ltd v Great River Shipping Inc 1992 (2) SA 653 (C): dictum at 657G – H overruled F

The Catamaran TNT: Dean Catamarans CC v Slupinski (No 1) 1997 (2) SA 383 (C): overruled

The MV Leresti: Afris Shipping Corporation v MV Leresti (DMD Maritime Intervening) 1997 (2) SA 681 (D): referred to

The MV Millennium Amanda 2002 SCOSA B141 (SE): dictum at B151G – H approved G

The Yu Long Shan: Guangzhou Maritime Group v Dry Bulk SA 1997 (2) SA 454 (D): approved

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

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