Summit Industrial Corporation v Claimants Against the Fund Comprising the Proceeds of the Sale of the MV Jade Transporter

• Jurisdiction: South Africa
• Citation: 1987 (2) SA 583 (A)

Summit Industrial Corporation v Claimants Against the Fund Comprising the Proceeds of the Sale of the MV Jade Transporter
1987 (2) SA 583 (A)

1987 (2) SA p583

Citation	1987 (2) SA 583 (A)
Court	Appellate Division
Judge	Corbett JA, Trengove JA, Viljoen JA, Grosskopf JA and Nicholas AJA
Heard	November 13, 1986; February 16, 1987
Judgment	March 2, 1987

Flynote : Sleutelwoorde

Shipping — Admiralty Jurisdiction Regulation Act 105 of 1983 — Section 11(8) — Must be interpreted in accordance with C ordinary language of Legislature — Fact that there may be casus omissus not justifying Court's departing from clearly expressed intention of Legislature.

Shipping — Admiralty Jurisdiction Regulation Act 105 of 1983 — Fund in Court constituted in terms of s 9 from proceeds of sale of arrested ship — Claims against — When provisions D of s 11(8) apply — Section 11(8) brings about queuing only when fund arises by reason of an action in rem against an associated ship and a second claimant against the fund has a direct claim in respect of the arrested ship — Only provisions relating to queuing of claims those in s 11(8) — E Nothing in s 11(8) justifying drawing distinction between 'sister' ships and 'group 'ships when claims queued.

Headnote : Kopnota

Section 11(8) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (which provides for the queuing of claims against a fund in Court created in terms of s 9 in certain defined circumstances) must be interpreted in accordance with the F ordinary meaning of the language employed by the Legislature. The subsection brings about a queuing where a fund in the Court arises by reason of an action in rem against an associated ship. Therefore, when a claimant, having instituted an action in rem against a ship (ship B) which is an associated ship vis-à-vis the ship against which the claimant has a direct claim (ship A), applies for and obtains a Court order under s 9 for the sale of ship B and the creation of a fund in the Court, and a second claimant lodges a claim against the fund in G respect of a direct claim against ship B, then the provisions of s 11(8) apply and, in accordance with those provisions, the second claimant's claim will fall into the first queue, while the original claimant's claim will fall into the second queue against the fund. The fact that s 11(8) does not make provision for situations where applicants under s 9 have only direct claims in rem and/or direct claims in personam or only associated claims against the fund does not justify the Court's departure from the clearly expressed intention of the H Legislature - if there is indeed a casus omissus, it is for the Legislature to remedy the matter.

The only substantive provisions relating to the queuing of claims against a fund in the Court are those to be found in s 11(8). There is no foundation in that subsection for drawing a distinction between 'sister' ships and 'group' ships when claims against a fund are ranked.

The decision in Gulf Oil Trading Co and Others v The Fund I Comprising the Proceeds of the Sale of the MV Emerald Transporter; Irving Trust Co v Gulf Oil Trading Co and Others ; Gulf Oil Trading Co and Others v The Fund Comprising the Proceeds of the Sale of the MV Jade Transporter 1985 (4) SA 133 (N) reversed in part.

Case Information

Appeal from a decision in the Natal Provincial Division (Milne JP, Leon ADJP and Howard J). The facts appear from the judgment J of Corbett JA.

1987 (2) SA p584

A N W Hurt SC (with him C J Pammenter) for the appellant: The appellant's claim in respect of the bunkers supplied to the MV Iron Transporter should not rank after the payment of all direct claims in respect of the Jade Transporter, but on the contrary should rank with the direct claims in respect of the B Jade Transporter as a claim in terms of s 11(1)(f) of the Act. It is clear that the purpose of s 11(8) of the Act is to provide that there should be two queues of claims. See Euromarine International of Mauren v The Ship Berg 1984 (4) SA 647 (N) at 656F - 657D; Banque Paribas v The Fund comprising the Sale of the MV Emerald Transporter 1985 (2) SA 452 (D) at 461D - E. What is not clear is: (a) in what circumstances there are to be two queues; and (b) what type of claim falls C into each queue. Wilson J held in the Banque Paribas case that the marshalling into two queues only arose when a fund arose at the instance of a creditor who had initiated an action in rem against the ship sold to enforce a claim in respect of another ship in relation to which the ship sold was an D associated ship. See the Banque Paribas case supra at 461D. The learned Judge also held that claims against the ship sold which provided the fund were to be paid out of the fund before claims which arose as a result of the ship sold being an associated ship to the ship from which the claims initially emanate. See the Banque Paribas case supra at 461E.

E Howard J held in the Court a quo that to make the invocation of the two queues dependent upon the nature of the claim of the creditor at whose instance the ship was sold and the fund arose gave rise to an absurd result. The appellant agrees with this view. Howard J further held that to achieve its apparent object, the subsection should have been made applicable F whenever the claims against a fund include an enforceable associated ship claim. The learned Judge then applied an interpretation of the subsection, the effect of which was that G the invocation of the two queues would only arise when: (a) the claims against the fund include an associated ship claim which the claimant has taken steps to enforce by an action in rem pursuant to s 3(6) of the Act; and (b) the claims against the fund include an associated ship claim for the enforcement of which the ship was attached before sale to confirm jurisdiction in an action in personam. The marshalling in terms of s 11(8) would, in terms of the learned Judge's interpretation thereof, not be invoked where claims against the fund (i) do not include any claims against ships referred to in s 3(7)(a)(ii) of the H Act (hereinafter referred to as a 'group ship') since these could only be brought by an action in rem ; and (ii) include only claims against ships referred to in s 3(7)(a)(i) of the Act (hereinafter referred to as 'sister ships') where the claimants had not prior to the sale of the ship taken any steps to pursue their claims by way of an arrest or attachment. On I this basis the mode of distribution of the fund depends on the fortuitous question of whether a group ship claim is lodged against the fund or a sister ship claim is so lodged in respect of which the claimant has pursued the claim, whether it is in personam or whether in rem, by way of arrest or attachment. If no such claim was lodged, then a claim in personam, albeit a sister ship claim, would rank with direct claims and if such a J claim was lodged it would not. The true purpose of s 11(8) was not to provide when claims would be divided into

1987 (2) SA p585

two queues, but rather which claims would fall into each queue. A It is A assumed that a creditor, other than one pursuant to the institution of an action in rem in the case of an associated ship, does not have to have instituted action in order to participate in the distribution of the proceeds of the sale of the ship. This must be so because the distribution of the fund may take the place of the distribution of a fund B created upon the insolvency of the creditor. Upon the creation of the fund there is a concursus creditorum and creditors may pursue their claims against the fund only. This is why it is provided in s 11(2)(f) that all other claims referred to in s 11(1)(f) shall rank in the order of preference according to the law of insolvency. A person with a claim in personam against the owner of a ship, whether or not he has C instituted action in respect of that claim, would have been entitled on insolvency to participate in the division of the estate of the insolvent. Thus the creditor in respect of a claim against a sister ship would be entitled to participate in the proceeds of the sale of the ship sold and would not have to compete with creditors of another company, ie a group ship D claim. It cannot have been the intention of the Legislature that such a creditor's right to participate in preference to group ship creditors would depend upon whether or not any claim was pursued by a group ship creditor.

Section 11(8) must have been intended to apply the second stream only to claims which could arise only by reason of actions in rem in respect of a claim against an associated E ship, ie group ship claims and sister ship claims which could only be brought in rem. In this regard Wilson J in the Banque Paribas case was wrong when he held that there is nothing in the Act to indicate that sister ships are to be preferred above group ships. See the Banque Paribas case op cit at 461F. To achieve the aforementioned object, s 11(8) must be read as F follows: 'Where (a claim against) the fund arises by reason of an action in rem against an associated ship, the ranking of claims set out in this section shall, notwithstanding the provisions of s 3(6), apply with regard to claims in respect of the associated ship and (such) claims in respect of the ship concerned shall be paid thereafter in the order set out in this section.' The result would be that claims in personam against G the fund would in respect of the sister ship fall under 'all other claims' as referred to in s 11(1)(f) of the Act and rank in order of preference according to the law of insolvency before any group claims or other claims in rem in respect of an associated ship. The appellant's claim for bunkers in respect of the MV Iron Transporter (which was owned by the same company H that owned the MV Jade Transporter)...