MV Wisdom C United Enterprises Corporation v STX Pan Ocean Co Ltd

• Jurisdiction: South Africa
• Judge: Scott JA, Farlam JA, Cloete JA, Combrinck JA and Hurt AJA
• Judgment Date: 27 March 2008
• Docket Number: 222/07
• Hearing Date: 26 February 2008
• Counsel: RWF MacWilliam SC (with RDE Gordon) for the appellants. M Wragge SC for the respondent.
• Court: Supreme Court of Appeal

Farlam JA: I

Introduction

[1] The first appellant, United Enterprises Corporation, a company J incorporated in accordance with the company laws of the Marshall

Farlam JA

Islands, is the owner of the second appellant, the MV Wisdom C, a bulk A carrier registered in the Republic of Panama. The respondent is STX Pan Ocean Co Ltd, a company incorporated in accordance with the company laws of South Korea, which carries on business as a charterer of vessels.

[2] The appeal is from a judgment of Cleaver J, sitting in the Cape High B Court, who dismissed an application brought by the appellants for orders (i) setting aside the arrest of the second appellant at the instance of the respondent; and (ii) in the alternative, directing that the respondent furnish counter-security in respect of the first appellant's claim against the respondent in arbitration proceedings in London. The judgment of C the court a quo has been reported - see MV Wisdom C: United Enterprises Corporation v STX Pan Ocean Co Ltd 2008 (1) SA 665 (C). [*]

[3] On 6 July 2006 the respondent obtained an ex parte order for the arrest of the second appellant in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (which I shall call in what follows 'the Act'). D The arrest was for the purposes of providing security for the respondent's counterclaim in arbitration proceedings in London. In those proceedings the first appellant is claiming from the respondent payment of money allegedly due to it in terms of a charterparty and damages suffered by it (a) in consequence of the alleged repudiation of the charterparty by the respondent and (b) in consequence of damage allegedly done to the E second appellant's crane by servants or agents of the respondent. The respondent has in turn instituted a counterclaim against the first appellant and it was in order to obtain security for this counterclaim that the arrest was effected. Subsequently the first appellant provided a letter of undertaking to the respondent and the second appellant was allowed to sail. In F terms of s 5(3)(b), read with s 3(10)(a)(i) of the Act, the second appellant is deemed to be under arrest.

[4] The appellants then sought to set aside the deemed arrest of the second appellant and the discharge in terms of s 5(2)(d) of the Act of the security provided by the appellants to the respondent. In the G alternative they sought, inter alia, an order that counter-security be provided by the respondent in respect of the first appellant's claims in the arbitration.

[5] The grounds on which the appellants relied in support of the contention that the deemed arrest be set aside and the security H discharged were:

(a)

that previous arrest proceedings in Italy gave rise to a defence based upon the exceptio rei judicatae which prevented the respondent from causing the second appellant to be arrested under s 5(3) of the Act to obtain security for its counterclaim in the arbitration;

(b)

that the respondent failed to adduce admissible evidence in its founding affidavit to prove that it had a prima facie case in respect of its cause of action in its counterclaim in the arbitration; I and

Farlam JA

(c)

A that the respondent had failed to comply with the obligation resting on it as a litigant seeking ex parte relief to make a full disclosure to the court of all material facts and circumstances which might have influenced the decision of the judge hearing the ex parte application.

The res judicata point B

[6] The first ground relied on was based on the fact that the respondent had previously, in March 2006, obtained ex parte an order for the conservatory arrest of the second appellant to provide security for its counterclaim from the court at Gorizia in Italy, which order was revoked C on 8 April 2006. An appeal against the revocation of the order was dismissed on the ground that, as the second appellant had left Italian waters by the time the appeal was heard, the respondent was unable to prove the existence and duration of its interest to act. The appeal was dismissed without the merits of the matter being considered. The judge D who revoked the arrest did so because, so he held, the facts on which the respondent's claim was based appeared 'under the present circumstances altogether vague and unsubstantiated'. (The relevant portion of the judgment of the Italian court on the point is set out at 670F - I of the reported judgment of the court a quo.)

E [7] It is clear that the Italian court did not make a decision on the merits but gave a judgment which if it had been given in a South African court would have amounted to absolution from the instance. (In this regard I agree with what the learned judge in the court below said in para 18 of his judgment at 675B - H.)

F [8] There was a dispute between the experts on Italian law whose affidavits were filed by the parties as to whether the decision of the Gorizia court which revoked the arrest order was final, or whether it would have been open to the respondent to present a further petition in an Italian court for the arrest of the second appellant based on new G points of fact or law even if such points had already existed when the original order was made. (The contrasting opinions of experts are summarised at 671A - 672F of the reported judgment.)

[9] It was common cause before us that Cleaver J, following Laconian Maritime Enterprises Ltd v Agromar Lineas Ltd 1986 (3) SA 509 (D), was H correct in applying the lex fori. It is clear that in our law a defendant who has been absolved from the instance cannot raise the exceptio rei judicatae if sued again on the same cause of action: see Grimwood v Balls (1835) 3 Menz 448; Thwaites v Van der Westhuyzen (1888) 6 SC 259; Corbridge v Welch (1891 - 2) 9 SC 277 at 279; Van Rensburg v Reid 1958 (2) SA 249 (E) at 252B - C; Herbstein & Van Winsen The Civil Practice of the Supreme I Court of South Africa 4 ed 1997 544 and 684. It was held in African Farms and Townships Ltd v Cape Town Municipality 1963 (2) SA 555 (A) at 563G - H that the dismissal of an application (which ordinarily would be regarded as the equivalent to...