National Iranian Oil Co v Banque Paribas (Suisse) SA and Another

• Jurisdiction: South Africa
• Judge: Hoexter JA, E M Grosskopf JA, Vivier JA, F H Grosskopf JA, Harms
• Judgment Date: 28 May 1993
• Citation: 1993 (4) SA 1 (A)
• Hearing Date: 06 May 1993
• Court: Appellate Division

E M Grosskopf JA:

This appeal concerns the priority of claims under s 11 of the Admiralty Jurisdiction Regulation Act 105 of 1983 ('the Act'), arising from the following facts.

The MV Bos Energy ('the vessel') was arrested in Cape Town on 19 G December 1990, and again subsequently, at the instance of her creditors. At the time of the various arrests she was chartered to the Golden Ivy Offshore Corporation ('Golden Ivy'), a company incorporated in Panama, which had in turn subchartered her to the National Iranian Tanker Co H ('Iranian Tanker'). The latter company had taken on a cargo of 1 601 461 barrels of Iranian heavy crude oil valued at approximately US$32 million. The owner and consignor of the cargo was the appellant, the National Iranian Oil Co. The vessel was still laden with this cargo when she was arrested.

As a result of the arrests several applications were made for the sale I of the vessel in terms of s 9 of the Act. Negotiations between the various creditors followed. It is not necessary to consider these events in any detail. The outcome was that eventually only one application for the sale of the vessel came before the Cape Provincial Division. This was brought by the Banque Paribas (Suisse) SA, the respondent in this appeal. The respondent had claims falling into three categories against the vessel. I give the amounts in round figures. The first category consisted of claims J for

E M Grosskopf JA

A US$15 million in respect of moneys lent and advanced, US$1,6 million in respect of moneys expended for goods supplied and rendered to the vessel, US$31 000 in respect of legal fees incurred by the respondent, and claims for interest in respect of the above amounts. In respect of this first category of claims the respondent had obtained default judgment against the vessel, her owners and any parties interested in her. These claims B were secured by Maltese statutory ship mortgages over the vessel. The second category of claims arose out of a guarantee given by the owners of the vessel to the respondent in respect of moneys advanced to associated companies. The amount claimed in this regard was US$15,4 million with interest. This claim also was secured by a Maltese statutory ship mortgage. The third category consisted of claims obtained by cession from C Acomarit Services Maritimes SA ('Acomarit'). These claims arose from management services provided by Acomarit in respect of four vessels which were associated ships of the vessel within the meaning of s 3(6) and 3(7) of the Act. The claims totalled US$285 906.

D The respondent's application was heard ex parte on 22 February 1991. A rule nisi was issued returnable on 11 March 1991, calling on interested parties to show cause why an order should not be made authorising the sale of the vessel in accordance with the provisions laid down in the order. Attached to the rule nisi were the conditions of sale. They included the E following:

'7. The vessel is sold in terms of South African law by virtue of the judicial order for the sale free of all liens, encumbrances, preferences or charges, and all arrests and attachments effected before any such sale shall be discharged on delivery of the vessel to the purchaser.

. . .

F 27. Prospective purchasers' attention is drawn to the fact that there is currently on board the vessel a quantity of approximately 219 650 metric tons of bulk crude oil.

28. The Registrar, the claimant, the auctioneer or any of their representatives accepts no responsibility for any delay caused to the vessel during either the carriage or discharge of the cargo or G negotiations with the purchaser or the cargo owners with regard to any of the terms of these conditions of sale or the order of Court.'

On 6 March 1991 the appellant gave notice that, as the owner of the cargo of oil on the vessel, it intended objecting on the return day to the grant of an order in terms of the rule nisi. I need not set out the H contents of the affidavit filed in support of the objection in any detail. The appellant's grounds of objection were succinctly summarised as follows:

'8.1 that the order makes no provision for the transshipment of the cargo prior to the sale of the vessel or indeed at all;

8.2 that the order makes no provision for the costs of such transshipment being accepted as a necessary expense to procure the I sale of the vessel; and

8.3 that the order in similar vein makes no provision that the freight payable for the onward carriage of the cargo (Cape Town to Europe) being accepted as a necessary cost of selling the vessel given, inter alia, that the cargo cannot be disposed of in South Africa J due to trade restrictions between Iran and South Africa'.

E M Grosskopf JA

A The appellant accordingly asked for the following order:

'(a)

that the respondent vessel may only be sold by public auction in terms of s 9 of Act 105 of 1983 once the cargo comprising some 220 175 metric tons of Iranian heavy crude oil has been removed from the vessel;

(b)

B that the owners of the abovementioned cargo be and are hereby required to remove their cargo from the vessel within 40 days of the date of service upon them of the order or within such extended period as the Court may on good cause allow;

(c)

that the cost and expense of removing the cargo from respondent vessel and of on-carrying it to its original destination C (Rotterdam) shall be regarded as costs and expenses incurred to procure the sale of respondent vessel and in respect of the distribution of the proceeds of the sale, such costs and expenses shall enjoy the ranking afforded by s 11(1)(a) of Act 105 of 1983'.

I shall have to refer again later to the papers filed in support of and D in opposition to the objection.

On 8 March 1991 Golden Ivy also filed a notice of objection. Its interest in the matter arose from the subcharter of the vessel to Iranian Tanker. The vessel's failure to complete its voyage to Rotterdam would give rise to a claim for damages by the owners of the cargo (the appellant) against Iranian Tanker, with which the appellant had contracted E under a bill of lading. Iranian Tanker would in turn be entitled to claim against Golden Ivy for breach of its charterparty. It was accordingly in the interest of Golden Ivy to reduce the damages suffered by the appellant as far as possible. It accordingly supported the appellant's objection and asked for the same relief.

F On the return day the matter came before Van den Heever J. After hearing argument, she ruled that the cost of discharging the cargo was for the account of the owner of the cargo. Moreover she decided that

'the rule should be confirmed with a suitable amendment to insert an order upon the owners of the cargo to remove that cargo from the vessel within 30 days'

and that clauses 27 and 28 of the conditions of sale should be amended G accordingly. These changes were reflected in the order as follows. New paragraphs were added reading:

'1.8.1

That the owner of the cargo of crude oil presently on board the vessel, the National Iranian Oil Co, is hereby ordered to remove from the vessel on or before 11 April 1991 at its own H cost the whole of the said cargo of crude oil.

1.8.2

Should the owner of the cargo fail so to remove the said cargo of crude oil the Sheriff is hereby authorised to remove such cargo and to recover the cost of doing so from the National Iranian Oil Co. Should payment of such expenses not be made by the National Iranian Oil Co within seven days of written demand I for payment delivered to the National Iranian Oil Co's Cape Town attorneys, Messrs Field & Sims, the Sheriff shall be entitled to cause the cargo to be sold and to recover his costs, including the costs of such sale, from the proceeds of the sale as a first charge against such proceeds. The balance of the proceeds of the sale is to be paid to Messrs Field & J Sims.'

E M Grosskopf JA

A Clauses 27 and 28 of the conditions of sale were amended to read:

'27.

Prospective purchasers' attention is drawn to the fact that there is currently on board the vessel a quantity of approximately 220 175 metric tons of bulk crude oil and that the owner of the said cargo has been ordered by the Court to remove such cargo from the vessel at its own cost on or before 11 April 1991. B

28.

The Registrar, the claimant, the auctioneer or any of their representatives accept no responsibility for any delay caused to the vessel by the discharge from the vessel of the cargo presently on board.'

The objectors were ordered to pay the respondent's costs occasioned by the objections. C

With the leave of the Court a quo the appellant now appeals against the above order. Its grounds of appeal may be summarised as follows:

(a)

The Court should have held that the cost of transshipment of the cargo and the freight payable for the onward carriage of the cargo...