MV Olympic Countess: Fortis Bank (Nederland) NV v Orient Denizcilik Turizm Sanayi Ve Tricaret As

• Jurisdiction: South Africa
• Judge: Scott JA, Farlam JA, Heher JA, Combrink JA and Hurt AJA
• Judgment Date: 21 September 2007
• Citation: 2008 (1) SA 376 (SCA)
• Docket Number: 242/2006
• Hearing Date: 23 August 2007
• Counsel: AM Stewart SC for the appellant J Marais SC (with PJ Wallis) for the respondent
• Court: Supreme Court of Appeal

Scott JA:

[1] On 8 January 2004 the passenger liner, Olympic Countess, was arrested at the instance of numerous creditors in D the port of Durban. She was subsequently sold in pursuance of an order in terms of s 9(1) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). A fund was constituted with the proceeds and a referee appointed to investigate claims. Both the appellant, to which I shall E refer as 'the bank', and the respondent, to which I shall refer as 'Orient', submitted claims. The bank's claim was in respect of a mortgage over the vessel and consequently ranked as a claim in terms of s 11(4)(d) of the Act. Orient contended that its claim ranked as a claim in terms of s 11(4)(c)(v). If its contention were to be upheld its claim would enjoy priority over the F bank's claim. But for Orient's claim and a costs order in favour of another creditor for which provision had been made, the bank would be entitled to the entire proceeds of the fund. It is not disputed that the bank's claim is valid and that it is a claim ranking in terms of s 11(4)(d). The bank, however, disputed the ranking claimed by Orient; it also disputed that Orient's claim was a 'maritime G claim' within the meaning of s 1(1) of the Act.

[2] Orient applied to the High Court, Durban, for an order for the payment of its claim out of the fund on the basis of its claimed ranking. The first respondent was the fund. The bank intervened as second respondent and opposed the relief claimed. It not only H disputed many of the material allegations made by Orient in its founding papers but [also] contended that in any event and even on Orient's own version the latter was in law not entitled to payment. It contended that on Orient's own version, one part of the claim was not a 'maritime claim' and the other part, at best for Orient, ranked as a claim in terms of s 11(4)(f) of the Act and hence below I that of the mortgagee's claim. The parties accordingly agreed that the court would be asked to decide first the two legal issues based on Orient's version of the facts and only in the event of their being decided in favour of Orient would the matter be referred for the hearing of oral evidence. The matter came before Balton J who acceded J

Scott JA

to the request to separate the issues and decided both legal issues in favour of Orient. The learned judge granted leave to appeal on one, A ie the issue whether one part of the claim was a maritime claim, but not on the other. However, leave to appeal on the latter issue was subsequently granted by this court.

[3] As the decision on appeal hinged exclusively on specific issues of law, the parties prepared a truncated record of the B proceedings in the court below as well as an agreed statement in terms of SCA Rule 8(8)(a) reflecting the facts alleged by Orient and the issues arising therefrom. The facts so agreed are shortly as follows. On 20 March 2003 Orient and Royal Olympic Cruise Lines Ltd (ROC), the owner and operator of the Olympic Countess, C entered into a written agreement in terms of which Orient was appointed as port agent for the former's vessels at the port of Istanbul for a minimum period of five years. In terms of clause 3.2 of the agreement Orient undertook to pay the sum of US$517 000 on behalf of ROC 'in partial settlement of debts previously incurred' in respect of various vessels including the Olympic Countess. In pursuance of this D undertaking Orient made the following payments:

(i)

US$21 558.43 to Kiyi Emniyet for light services furnished by Kiyi Emniyet to the Olympic Countess between August and October 2001;

(ii)

US$501 500.24 to Turkiye Den Isletmeleri (TDI) for port services rendered by TDI to the Olympic Countess in 2001; E

(iii)

US$17 109.87 to TC Saglik Bak for sanitary services rendered to the Olympic Countess by TC Saglik Bak in the period June to September 2001;

(iv)

US$10 060.17 to International Turizim Servis (ITS) for sanitary services provided to the Olympic Countess by TC F Saglik Bak in the period June to September 2001 and paid for by ITS as the then agent of the vessel;

TOTAL US$550 228.71.

ROC failed to pay certain instalments due to Orient in terms of the agreement or to maintain the agreement for a period of five years as it G was obliged to do. As a result, so Orient alleged, an amount in excess of the sums advanced aforesaid became repayable to it by ROC. Orient caused the vessel to be arrested and lodged a claim with the referee. The claim was confined to the amounts paid by it as set out above.

[4] It is necessary to quote the first eight subsections of s 11 of the Act. H

11 Ranking of claims

(1)(a) If property mentioned in section 3(5)(a) to (e) is sold in execution or constitutes a fund contemplated in section 3(11), the relevant maritime claims mentioned...