MV Rizcun Trader (4); MV Rizcun Trader v Manley Appledore Shipping Ltd

• Jurisdiction: South Africa
• Judge: van Reenen J
• Judgment Date: 12 April 2000
• Citation: 2000 (3) SA 776 (C)
• Docket Number: AC 146/98
• Counsel: R W F MacWilliam for the applicant. D A Gordon SC (with him M Wragge) for the respondent.
• Court: Cape Provincial Division

Van Reenen J:

This Court in the exercise G of its admiralty jurisdiction, in an urgent ex parte application brought by Manley Appledore Shipping Ltd (MAS) on 17 October 1998 granted an order for the arrest in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (as amended) of the H MV Rizcun Trader (the arrest application). The purpose of the arrest was to obtain security for a claim that MAS intended instituting against Ikhlas Off-shore Shipping Co Ltd (Ikhlas) by means of arbitration proceedings in London, England, for a claim of US $1 028 535,05 pursuant to a charterparty entered into in respect of the MV Manley Appledore between Sumo Shipmanagement Ltd and I Ikhlas, on 23 November 1995 in London. I shall for the purposes of this judgment assume that the terms of the charterparty and the surrounding circumstances do not exclude the intervention of MAS as an undisclosed principal (see Wilford et al Time Charters 4th ed at 66 - 7). MAS contended that the Rizcun Trader was an associated ship of the Manley Appledore because the owner of the Rizcun Trader at the time of the J

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arrest, namely Latif Maritime Ltd (Latif) was controlled by the same A person who at the time that MAS's claim arose, controlled Ikhlas, who as the charterer of the Manley Appledore, is in terms of s 3(7)(c) of the Act deemed to be the owner thereof. When the Rizcun Trader arrived in Cape Town on 18 April 1998 in order to take on bunkers it was arrested by the Sheriff of this CourtC . The Rizcun Trader was released from arrest after its owner's P & I Club, the West of England Shipowners Mutual Insurance B Association (Luxembourgh), had, on 5 May 1998, provided a letter of undertaking (the letter of undertaking) to the London representatives of MAS for a maximun amount of US $900 000, namely the agreed value of the Rizcun Trader.

The Rizcun Trader on 5 November 1998 launched an C application out of this Court for an order setting aside its deemed arrest (the setting aside application); an order that MAS be directed to return the letter of undertaking; costs (including the costs of the arrest application); and in the event of the application being opposed, an order directing MAS to provide security for (a) its costs in amounts of \P45 000 and R185 000; and (b) its claim for D wrongful arrest together with interest thereon as well as the costs associated therewith in amounts of US $207 241, \P10 000 and R100 000 respectively.

MAS conceded that it was obliged to furnish the security claimed in respect of costs but contended that its obligation to do so was conditional on the Rizcun Trader in turn furnishing security E for its costs of opposing the setting aside application as well as the costs of the application to compel it to comply with its admitted obligation. After argument Conradie J on 11 December 1998 dismissed the aforementioned contention with costs and ordered MAS to provide the security as claimed.

MAS on 21 December 1998 brought an application for an order F compelling the owners of the Rizcun Trader and Latif to make discovery prior to answering affidavits being filed. It brought a further application on 26 January 1999 for an order directing the Rizcun Trader to furnish security for its costs.

Knoll AJ (as she then was) on 26 April 1999 dismissed both the G aforementioned applications with costs; postponed the application for the setting aside of the arrest of the Rizcun Trader to 7 June 1999; and imposed a time-table for the filing of answering and replying affidavits and heads of argument. By agreement between the parties, King JP on 7 June 1999 postponed the matter for hearing to 30 August 1999 and determined new dates for the filing of H replying affidavits and heads of argument.

Certain procedural steps were taken by both parties' legal representatives immediately prior to the hearing, but because they have no bearing on the outcome of the judgment, they are not enumerated. I

On the second day of argument the Rizcun Trader delivered a notice of motion in which it sought orders in the following terms:

'(1)

directing that clause 5 of the order granted by this honourable Court on 17 April 1998 under case No AC 59/98 ("the arrest order") be reconsidered in accordance with the provisions of Uniform Rule 6(12)(c); and/or J

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(2)

setting aside and/or rescinding clause 5 of the arrest order in A accordance with the provisions of clause 4 of the arrest order, alternatively Uniform Rule 6, alternatively Uniform Rule 42(1), alternatively the common law; alternatively

(3)

condoning the applicant's failure to comply with the provisions of clause 5 of the arrest order in terms of Uniform Rule 27, B alternatively Admiralty Rule 20; alternatively

(4)

extending the period of two months referred to in clause 5 of the arrest order to 12 months, alternatively to such date as this honourable Court may deem fit after 5 November 1998 in accordance with the provisions of Admiralty Rule 19'.

As Mr Gordon SC, who with Mr Wragge appeared for C MAS, sought an opportunity to deal with the averments in the affidavits filed in support of the last-mentioned application, the matter was postponed to 21 September 1999. Supplementary affidavits, answering affidavits and replying affidavits were duly filed.

The catalyst for the relief claimed in the said notice of motion (the D August application) appears to have been the argument presented in limine by Mr Gordon to the effect that, as the setting aside application had not been made within two months after the letter of undertaking had been furnished, as provided in para 5 of the order granted by Thring J on 17 April 1998 (the arrest order), it cannot be entertained by this Court, as well as the fact that the Court E questioned whether such relief could be granted in the absence of a formal application supported by the necessary factual averments.

Paragraph 5 of the said order - which had been sought without any factual basis for its necessity having been established in the founding affidavit - provides as follows: F

'If the second respondent [the Rizcun Trader] is released from arrest pursuant to the provision of security as referred to in para 2 above or the furnishing of an undertaking acceptable to the applicant [MAS] in terms of s 3(10) of the Act and, if no application to set aside the deemed arrest of the G vessel is made within two months of the furnishing of such security or undertaking no such application may thereafter be made.'

As already stated, the arrest application was brought ex parte and accordingly the relief granted therein is provisional irrespective of the form in which it was cast (see Ghomeshi-Bozorg v Yousefi 1998 (1) SA 692 (W) at 696C). Our H Courts strictly adhere to the fundamental precept audi alteram partem (see Clegg v Priestley 1985 (3) SA 950 (W) at 954E - F; Sun World International Inc v Unifruco Ltd 1998 (3) SA 151 (C) at 161B - C; Siegwart v Fey NO and Another JOL 4263 (C)), and entertain ex parte applications that affect I the interests of others only in the limited circumstances set out in Gouws v Scholtz 1989 (4) SA 315 (NC) at 320A - B. Where an order is made in such circumstances the right of an interested person to be heard is recognised by granting a rule nisi operating as a temporary interdict (see Network Video (Pty) Ltd v Universal Studios Inc and Others 1984 (4) SA 379 (C) at 381E - F) or by expressly reserving such right in the Court order or by bringing the fact J

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that such a right exists - either under the Rules of Court or the A common law - to such a person's attention in the order granted. Our Courts' adherence to the fundamental precept audi alteram partem is the most likely explanation for the common-law practice that any person against whom an order of attachment or arrest has been granted ex parte is entitled to approach the Court to have it set aside. That practice has been engrafted onto proceedings for security arrests in terms of s 5(3)(a) of the Act (see B Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A) at 834B - C). Paragraph 4 of the arrest order appears to give effect to that 'salutory practice' (per Botha JA in the Thalassini Avgi at 834B). It provides as follows:

'All interested persons are given leave to apply to this C honourable Court for the setting aside of the arrest of the second respondent on 48 hours' notice to the applicant's attorneys.'

Paragraph 5 of the arrest order clearly intended extending that practice to the fictional arrest that would ensue, by virtue of the provisions of s 3(10)(a)(i) of the Act, if the Rizcun Trader were to be released as a result of the providing of security. In my view there is substance in Mr Gordon's D submission that the arrest order envisaged that para 4 thereof would not find application after the release of the Rizcun Trader from arrest as a result of the provision of security.

As the aim of the arrest application was to procure the security arrest of property, namely the Rizcun Trader, it possessed E the 'characteristics of' (see MV Zlatni Piasatzi: Frozen Foods International v Kudu Holdings (Pty) Ltd and Others 1997 (2) SA 569 (C) at 575 C) or was 'analogous to' (MV Rizcun Trader (3): Manley Appledore Shipping Ltd v MV Rizcun Trader 1999 (3) SA 966 (C) at 972A) an action in rem, and did not have any bearing on any of the issues that form the subject-matter of the arbitration in London. The sole issue in the arrest application was whether MAS succeeded in F establishing the requirements laid down in the Thalassini Avgi at 832I - 833A and Bocimar NV v Kotor Overseas Shipping Ltd 1994 (2) SA 563 (A) at 579A - D, for the arrest of the Rizcun Trader as security. In the...