Nagos Shipping Ltd v Owners, Cargo Lately Laden on Board the MV Nagos, and Another

• Jurisdiction: South Africa
• Judge: Alexander J
• Judgment Date: 14 February 1994
• Docket Number: A137/93
• Hearing Date: 01 November 1993
• Counsel: M J D Wallis SC for the applicant. D J Shaw SC for the first respondent. No appearance for the second respondent.
• Citation: 1996 (2) SA 261 (D)

B Alexander J:

On 26 May 1993 the MV Nagos sank with loss of life and cargo some 50 nautical miles south of Cape St Francis. Violent seas and waves encountered off that part of the South African coast are said to have accounted for the disaster. The ship, a bulk carrier with a gross registered tonnage of 36 982 metric tons, had sailed from Richards Bay a day or so earlier where it had loaded a cargo of low ash coal C destined for Antwerp. It is the potential claims arising from the loss of this cargo that give rise to the present application.

It is brought by the owner of the ship in terms of s 1(1)(w) read with s 5(2)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983 ('the Admiralty Act'). The Court in its exercise of its admiralty jurisdiction is accordingly required to 'consider and decide D any matter arising in connection with any maritime claim' which in the present context involves one 'arising out of or relating to the limitation of liability of the owner of a ship . . .'.

These procedural provisions reflect the substantive rights accorded a shipowner by s 261(1)(b) of the Merchant Shipping Act 57 of 1951 ('the Shipping Act'). This provides:

'(1) The owner of a ship, whether registered in the Republic or not, shall not, if any loss of life or personal injury to any person, or any loss of or damage to any property or rights of any kind, whether movable or immovable, is caused without his actual fault or privity -

(a)

. . .

(b)

F if no claim for damages in respect of loss of life or personal injury arises, be liable for damages in respect of loss of or damage to property or rights to an aggregate amount exceeding an amount equivalent to 850 gold francs for each ton of a ship's tonnage. . . .'

'The Owners of the Cargo lately laden on board the Ship' have, as the immediately interested party, been cited as the first respondent, and the ship as second. The inclusion of the ship in these proceedings would appear to follow in consequence of its attachment in rem at the instance of the first respondent in proceedings commenced in Port Elizabeth under case No 1939/93. I shall have occasion to refer to these antecedent proceedings more fully for they are relevant to at least one objection now taken by the first respondent in opposing the relief sought. There are others.

In order to highlight the areas of dispute it may be as well to summarise them now in relation to the various parts of the proposed order.

I The applicant first claims the right, if any, to limit its liability in respect of cargo claims as provided for in s 261(1)(b) of the Shipping Act. The first respondent contends that the basis of any relief under this section is that the loss or damage giving rise to a claim must have occurred, however, without the 'actual fault or privity' of the owner. In the first place, it says that the applicant has placed insufficient information before the Court to substantiate its contentions. Secondly, application proceedings are J inappropriate for determining such a right. Thirdly, on the

Alexander J

A merits, the ship left Richards Bay in an unseaworthy condition with the knowledge, actual or imputed, of the owners.

Next, para 2 of the prayer claims:

'Without prejudice to any defence which may be raised to any alleged liability of the applicant or the second respondent to the first respondent or any cargo B claimant it is directed that the question of the applicant's right to limit such liability be determined in proceedings before this Court under case No A137/93.'

The first respondent objects to the Court's jurisdiction. This is based on the earlier proceedings already alluded to. The first respondent subsequently withdrew the in rem proceedings against the ship. As a result it argues that the Court no longer has any C power to entertain the present application. This step by the first respondent has evoked a sharp response from the applicant, but in any case the applicant disputes that such a withdrawal ousts the Court's jurisdiction.

Furthermore, the first respondent questions that South Africa is the appropriate forum D for an order limiting liability.

In paras 3 and 4 of the order the applicant seeks to establish a limitation fund with the Registrar in the amount of R5 140 498, alternatively R6 582 796. The alternative figure has come about as a result of Government Notice 1747 of 24 September 1993, which has put a new value on the '850 gold francs' mentioned in s 261(1)(b) of the E Shipping Act. It was promulgated after the present proceedings were commenced and, so far as it may be held retrospective, has raised the erstwhile equivalent value in Rand terms from 139 to 178.

The first respondent however contends that, as there has been a loss of life in addition F to loss of cargo, a limitation fund, if one is to be set up at all, must reflect the provisions of s 261(1)(c) of the Shipping Act, which provides:

'(I)f claims for damages in respect of loss of life or personal injury and also claims for damages in respect of loss of or damage to property or rights arise, be liable for damages to an aggregate amount exceeding an amount equivalent G to 2 635 gold francs for each ton of a ship's tonnage: Provided that in such a case claims for damages in respect of loss of life or personal injury shall, to the extent of an aggregate amount equivalent to 1 785 gold francs for each ton of the ship's tonnage, have priority over claims for damages in respect of loss of or damage to property or rights, and, as regards the balance of the aggregate amount equivalent to 2 635 gold francs for each ton of the ship's tonnage, the unsatisfied portion of the first-mentioned claims shall rank pari H passu with the last-mentioned claims.'

Granted that there could be claims based on loss of life, then the operative figure for limiting liability would be '2 635 gold francs'. Under Government Notice 1747 the equivalent Rand value has been determined as R552. Based on the ship's tonnage an I amount of R15 976 224 would result. The first respondent contends that, as a matter of law, the new figure of R552 applies to the matter, and not the previous figure of R432 fixed in Government Notice 2515 of 8 November 1985 and which was withdrawn by Government Notice 1747.

J Finally, para 5 of the order claims:

Alexander J

A 'After a determination that the applicant is entitled to limit its liability any cargo claimant which has proved its entitlement to damages arising out of the loss of such cargo by proceedings before a competent forum is given leave to move the Court on notice to all affected parties for directions as to the lodging of claims B against the limitation fund and the distribution thereof.'

Apart from its objection to the fund being limited to cargo claims only, the first respondent objects to what is in effect a final order in relation to setting up the fund itself. It submits that even on the question of cargo claims one potential claimant is not before the Court. A rule nisi should rather issue covering both this remaining cargo C claim as well as any claim resulting from loss of life. The applicant disputes the need to do so in the case of the former as the concern in question had notice of these proceedings; and, as for loss of life claims, the indications are that all have already been settled.

Jurisdiction D

These proceedings have their origin in two cases brought by the first respondent on 20 May 1993 in the South Eastern Cape Local Division sitting as a Court of Admiralty at Port Elizabeth.

In the first such matter an order issued attaching the ship in rem - or, more accurately, E that part of the ship's equipment that had survived the sinking. To be precise, nine life jackets. The basis of the attachment was by way of security for the first respondent's claims as owner of the cargo. The applicant entered an appearance to defend.

The second matter was brought in terms of s 5(5)(a) of the Admiralty Act with a view F to securing the evidence of 16 surviving members of the crew who had been landed at Port Elizabeth.

It is not necessary to burden this judgment with an excursion into a number of procedural skirmishes that preceded the eventual hearing of these cases. It was eventually heard on an opposed basis by Froneman AJ as a matter of urgency. What is G of present relevance was the argument by counsel on behalf of the applicant that the attachment of the vessel in rem was incompetent as the arrest of the life jackets neither constituted the vessel nor the res. Counsel for the first respondent strongly opposed the submission, arguing that the items had a commercial value, that their attachment was accordingly a valid commencement of action in this country and it was appropriate H in the circumstances that the evidence of the crew be received here. The learned Judge held that the arrest of the life jackets was a proper basis for the in rem proceedings. The rest of his order vis-à-vis evidence by the crew is not germane to the present dispute.

On 8 July 1993 the applicant, relying on s 7(1)(a) of the Admiralty Act, brought an I application in the South Eastern Cape Local Division seeking to have the aforementioned proceedings heard in the 'more appropriate' forum of the Durban and Coast Local Division. There was no objection by the first respondent. The order was granted by consent and the matter consequently arrived in this Court.

The first respondent requested an extension of time to 16 August to file opposing J affidavits. The applicant agreed.

Alexander J

A On 13 October 1993, however, a notice was received by the applicant intimating that, so far as the action in rem was concerned, the 'plaintiff (the first respondent) hereby withdraws its claim against the defendant (the ship)'. This came about, according to...