MV Pasquale Della Gatta MV Filippo Lembo Imperial Marine Co v Deiulemar Compagnia di Navigazione Spa

• Jurisdiction: South Africa
• Judge: Navsa JA, Brand JA, Lewis JA, Leach JA and Wallis JA
• Judgment Date: 15 September 2011
• Citation: 2012 (1) SA 58 (SCA)
• Docket Number: 638/2010 [2011] ZASCA 131
• Hearing Date: 18 August 2011
• Counsel: MJ Fitzgerald SC (with D Melunsky) for the appellant. S Mullins SC for the respondent.
• Court: Supreme Court of Appeal

Wallis JA (Navsa JA, Brand JA, Lewis JA and Leach JA concurring):

Introduction

[1] On 3 July 2003 Imperial Marine Co (Imperial Marine) and the F second respondent, Deiulemar Compagnia di Navigazione Spa (Deiulemar), concluded a long-term time charterparty on the NYPE form in respect of the George T, a Capesize bulk carrier of some 170 000 dwt. A dispute arose in 2005 when the vessel suffered damage to its main engine and underwent repairs at Pylos, Greece. Deiulemar G treated the vessel as off-hire whilst it was under repair. It thereafter commenced arbitration proceedings against Imperial Marine in London in terms of the charterparty, alleging various breaches of the charterparty and claiming damages flowing from this incident. Imperial Marine responded with both a defence and a counterclaim to recover the unpaid H hire and the cost of repairs. In June 2007 a further dispute arose over the dry-docking of the vessel and this caused Deiulemar to terminate the charterparty. Both parties are pursuing the arbitration, albeit that progress has been slow and many of the claims now being advanced have not yet featured in the formal points of claim and defence or counterclaim. Nonetheless all are treated as being claims in those proceedings and I shall do likewise. I

[2] Neither Deiulemar nor Imperial Marine held security for their claims, whether those already incorporated in pleadings or those they proposed to include by way of amendment. On 3 February 2009, and with a view to remedying this, Imperial Marine obtained an order for the arrest of the Filippo Lembo in terms of s 5(3) of the Admiralty Jurisdiction J

Wallis JA (Navsa JA, Brand JA, Lewis JA and Leach JA concurring)

A Regulation Act 105 of 1983 (the Act) to provide security for some of its claims. Deiulemar challenged this arrest in respect of two of those claims and counterclaimed for an order in terms of s 5(2)(c) of the Act that the arrest be subject to a condition that Imperial Marine provide security for Deiulemar's own claims. Whilst this litigation was still under way B Imperial Marine caused the Pasquale della Gatta to be arrested in respect of a further claim. Deiulemar responded by seeking to have that arrest set aside and counterclaimed conditionally for security for a claim under s 5(3) of the Act. Both arrested vessels were released against the provision of security in the form of P&I Club letters of undertaking.

C [3] The two applications were argued together before Baartman J in the High Court and both parties enjoyed some success. Imperial Marine maintained its security for two of the claims advanced in support of the arrest of the Filippo Lembo and also maintained its security arising from the arrest of the Pasquale della Gatta, albeit in an amount less than it had claimed. Deiulemar obtained the counter-security it sought in both sets D of proceedings and also obtained costs orders in its favour. With its leave both parties appeal against the decision of the High Court insofar as it went against them and seek to maintain that decision insofar as it favoured them.

The facts E

[4] The charter in respect of the George T was for a period of 35 – 37 months, with the charterers having an option to extend the period for 11 to 13 months. Hire was payable by Deiulemar at a daily rate of US$16 350 for the initial period and US$17 350 for the extension F period. Deiulemar was obliged to provide and pay for fuel, the specifications of which were stated in clauses 62 and 82. It was entitled to trade the vessel worldwide without limit subject to certain exclusions and subject also to the usual provision that it would only do so 'via safe port(s), safe berth(s), safe anchorage(s) always afloat'. There was an unlimited entitlement to subcharter the vessel although Deiulemar G remained liable for the obligations under the charterparty. Imperial Marine was obliged to provide a vessel that was in a thoroughly efficient state and for the duration of the charter to 'maintain her class and keep the vessel in a thoroughly efficient state in hull/holds, machinery and equipment'. On redelivery Deiulemar undertook that the vessel would H be in the same good order and condition as on delivery, fair wear and tear excepted. None of this is in any way unusual.

[5] On 6 July 2003 the George T was delivered to Deiulemar and for the first two years there appear to have been no significant problems. The present disputes originate with the provision by Deiulemar of a bunker I stem at Yeo Su, Korea, on 4 March 2005. The vessel then sailed for Dampier in Australia and started burning these bunkers. While it was en route to Dampier a subcharter was concluded between Deiulemar and Dabkomar Bulk Carriers Ltd (Dabkomar), also on NYPE terms, back to back with the head charter, for a period up to 3 September 2007, minus 60 days in Dabkomar's option, at a hire rate of US$45 000 per J day. In effect this was a subcharter for the remaining period of the head

Wallis JA (Navsa JA, Brand JA, Lewis JA and Leach JA concurring)

charter inclusive of the extension period. The vessel completed its A voyage to Dampier and loaded a cargo for Quingdao, China, where it was delivered under the subcharter. From there it returned to Yeo Su to take on a second stem of bunkers and then proceeded to Port Hedland in Australia. All this occurred between 16 March and the middle of May 2005, the precise date of each event being immaterial, save that delivery B under the subcharter is said to have occurred on 23 April 2005.

[6] While the vessel was en route to Port Hedland the chief engineer received a report that the bunkers delivered in the first bunker stem at Yeo Su were not in accordance with specification. This is accepted as correct, at least insofar as the kinematic viscosity of the bunkers is C concerned. The engineer's response was to stop burning those bunkers and to switch to others. The unwillingness to use the initial Yeo Su bunker stem meant that when the vessel left Port Hedland it had insufficient bunkers to reach its destination at Redcar in the United Kingdom and it accordingly diverted to Colombo in Sri Lanka to take on additional bunkers. Its onward route was via Suez where there was a brief D stoppage because of engine problems. Shortly thereafter it became apparent that the main engine had suffered major damage and required repairs. For that reason it went to Pylos, Greece, where the repairs were undertaken over a period of a little over 71 days.

[7] Deiulemar claims that the reason for the breakdown in the main E engine was a failure on the part of Imperial Marine to fulfil its obligations to provide a vessel with its machinery and equipment in a thoroughly efficient state and its further obligation to maintain it in such state. It accordingly contends that the detour to Colombo was an improper diversion and that the vessel was off-hire during that period as well as the F periods of the breakdown at Suez and repairs at Pylos. It fixes its damages for this period as the difference between the hire it would have paid had the vessel been working and the hire it would have received from Dabkomar if the latter had not also contended that the vessel was off-hire during these periods. It invoked the arbitration clause providing G for London arbitration and served points of claim embodying this claim. Furthermore, on 29 September 2005, before the points of claim were delivered, Dabkomar had cancelled the subcharter. Flowing from this Deiulemar pleaded that, if the cancellation were held to be valid in an arbitration pending between Deiulemar and Dabkomar, there would be a further claim for damages represented by the difference between the hire it would be H obliged to pay under the head charter and the hire it would have earned under the subcharter. It did not attempt to quantify these damages.

[8] Imperial Marine disputed these claims. It laid the blame for the I damage to the main engine on the first Yeo Su bunker stem, which led to the vessel burning bunkers with excessive viscosity. It accordingly counterclaimed for the unpaid hire and the cost of the repairs to the main engine at Pylos. Over and above this it claimed an unspecified amount for the diminution in the value of the vessel arising from the manner in which the repairs to the engine's cylinder blocks were undertaken. J

Wallis JA (Navsa JA, Brand JA, Lewis JA and Leach JA concurring)

A [9] The arbitration proceeded at a leisurely pace, in part because Deiulemar indicated that it intended to amend its points of claim to include new and revised claims, and Imperial Marine was unwilling to agree to this. In the meantime the George T continued trading in terms of the charterparty. There was allegedly a deballasting problem at B Richards Bay in February 2006, and between 23 June and 17 August 2006 it was taken out of service for its annual class survey and repairs at Zhoushan, China. It was then under subcharter until 26 December 2006 after which it sailed for Richards Bay, where it arrived on 24 January 2007. Four days later it left with its cargo bound for C Rotterdam.

[10] On 6 March 2007, whilst the George T was at Rotterdam, Imperial Marine sent a message to Deiulemar that during the course of tank cleaning of No 8 Double Bottom Tank (DBT), prior to inspection, damage to the tank had been discovered. This was described as being —

D 'a large indentation over a distance spanning 8 web frames (about 28 metres), to a maximum depth of about 400 millimetres, and about 4,5 metres at the widest point'.

Surveyors were called in from Lloyds Register, with which the vessel was entered for class. They required repairs to be undertaken, some immediately E and others at a later stage. For the purpose of the immediate repairs the vessel moved to Antwerp where substantial...