The Catamaran TNT Dean Catamarans CC v Slupinski (No 1)

• Jurisdiction: South Africa
• Judge: Foxcroft J
• Judgment Date: 25 October 1996
• Counsel: R W F MacWilliam for the applicant M Wragge for the respondent
• Docket Number: AC63/96
• Court: Cape Provincial Division

Foxcroft J:

The applicant describes itself as a manufacturer of yachts in Saldanha Bay. The respondent is a businessman of Mallentin, Germany, and a peregrinus in these proceedings. I

The respondent has instituted proceedings against the applicant in this Court, having effected a security arrest in terms of s 5(3) of the Admiralty Jurisdiction Regulation Act 105 of 1983 as amended ('the Act').

The applicant contends that when the respondent arrested the Catamaran XX, lying alongside at the Club Mykonos Resort, Langebaan, J

Foxcroft J

Cape, the respondent thereby submitted to the jurisdiction of this Court as provided in A s 3(2)(c) of the Act. In due course the Catamaran XX was sold by the applicant and the proceeds of the sale were substituted as security in its stead by agreement with the respondent. The amount involved was R650 000. In addition to this amount of security, the respondent holds the further sum of R550 000 which was furnished to him B by the applicant in order to secure the release of another arrested catamaran, namely the TNT.

A brief history of events is necessary in order to understand the problem which arises in the present proceedings.

On or about 10 November 1995 and at Saldanha Bay, the respondent concluded an C agreement with the applicant in terms of which the applicant would complete the construction of a catamaran named TNT and deliver this to the respondent at Cape Town before the commencement of the Cape to Rio race on 6 January 1996. The TNT would be sailed to Rio de Janeiro and, allowing for a deposit of R150 000 due to be paid before the race, the balance of the purchase price would be paid on TNT's D arrival in Rio de Janeiro or on 31 January 1996, whichever occurred later.

When the respondent came to Cape Town on 1 January 1996 to take delivery of the TNT and to participate in the Cape to Rio race, he found that the refit had not been completed. This resulted in the arrest of the TNT in proceedings in rem. As already E stated, the applicant tendered R550 000 as security for the release of the TNT. This was accepted and the TNT joined the Cape to Rio race. Eventually the respondent withdrew the action in rem against the TNT on 9 April 1996. Under case No AC35/96 the respondent obtained an order for the arrest in terms of s 5(3) of the Act F of this sum of R550 000 held in trust by the respondent's attorneys. This arrest was effected in order to provide security for an action which the respondent intended to institute against the applicant in which the applicant would be sued for the sum of R2 500 000 arising from alleged breach by the applicant of three separate contracts for the purchase of catamarans by the respondent from the applicant. G

On 17 April 1996 under case No AC37/96 the respondent obtained an order for the arrest, again in terms of s 5(3) of the Act, of the Catamaran XX. As had occurred in the case of the TNT, the Catamaran XX was also sold and the purchase price of R650 000 was substituted as security by agreement with the respondent. H

A continuing refrain during the argument before me was that while the respondent has security in respect of its claims in a total sum of R1,2 million exclusive of any interest which has accrued in the interim, the applicant has no security for the counterclaim which it wishes to launch against the respondent. I

The applicant also contends that it suffered damages in the amount of R26 500, being the reasonable and necessary expense incurred in bringing the TNT back to Cape Town after the completion of the Cape to Rio race.

The respondent's second claim against the applicant in respect of another catamaran named the African Queen is resisted by the applicant, J

Foxcroft J

which denies any breach of contract in regard to this yacht. In regard to the A respondent's third claim, which relates to the construction and delivery of six Dean 400 model catamarans during the course of 1996, the applicant denies breaking any provisions of this third agreement. The applicant concedes that it is correct that on 3 January 1996 Mr Peter Dean, acting on behalf of the applicant, advised the respondent that the applicant did not intend to construct and deliver the six B catamarans. The applicant contends in the papers before me that it was entitled to adopt this attitude since the respondent had by that time failed to honour certain arrangements in regard to the African Queen and other matters, which entitled the applicant to resile from the third agreement. C

The applicant also points out that it was entitled to rely on this conduct of the respondent in relation to its resiling from the so-called 'third agreement', more particularly since the third agreement was actually the one first concluded between the parties. The applicant's proposed counterclaim is largely concerned with the loss which it alleges it suffered when the respondent repudiated the agreement for the construction D and delivery of six more catamarans.

Mr MacWilliam, who appeared for the applicant, went so far as to contend that, when the respondent said in relation to the agreement for the construction of six catamarans that he hoped that the parties would 'have a very productive and successful business co-operation in the next few years', that imported a tacit term into E the agreement between the parties that the respondent would do nothing to undermine this contemplated successful business relationship. The applicant contends in all the circumstances that it is entitled to an order in terms of s 5(2)(b) and (c) of the Act in terms whereof the respondent be directed first to provide security for its action in F damages to be instituted by way of a claim in reconvention and for the costs thereof in the total amount of R1 250 000, and further in respect of the costs incurred to date in matters Nos AC17/96 and AC37/96 and to be incurred by the applicant in its defence of the respondent's intended claim in convention in the further total sum of R150 000. G It is further contended that these amounts are not unreasonable. In regard to the sums claimed, it is contended that the applicant is entitled to security sufficient to cover the amount of its counterclaim together with costs on the basis of its 'reasonably arguable best case'. It is also contended by the applicant that, since the respondent is a H peregrinus of this Court and has no assets within the area of jurisdiction of this Court, the applicant's need for security is both reasonable and genuine. It is also contended that the applicant's intended counterclaim for damages is a maritime claim as contemplated by s 1(1)(c) read with s 1(1)(f) of the Act.

In the answering affidavit of one Bernd-Dieter Itzeck, an attorney of this Court acting for the respondent, it is specifically stated in para 11.2 that I

'(w)ith regard to the allegation made in the second part of para 3 relating to the jurisdiction of this honourable Court, the respondent admits that, for the purposes of any claim in reconvention that the applicant might have, he is amenable to the jurisdiction of this Court. The respondent, however, denies that J

Foxcroft J

he has consented or submitted to the jurisdiction of this Court in respect of any A other action or proceedings.'

In para 42.3 of this affidavit the respondent disputes that the provisions of s 5(2)(b) and/or (c) entitle this Court to order that he furnish security for the counterclaim to be brought against him, and in para 43.1 adds that

'(t)he respondent, with respect, disputes that this honourable Court has a B discretion to direct that the respondent furnish security for the applicant's alleged claim for damages in the absence of an arrest by the applicant of assets belonging to the respondent in terms of s 5(3) of the Act'.

In para 44.3 it is pointed out that the applicant currently holds an amount of R150 000 to which the respondent is actually entitled. The respondent agrees that the applicant C may retain this sum pending the determination of proceedings in personam and the claim in reconvention as security for its costs.

In para 47 of the answering affidavit the respondent admits that he is a peregrinus of this Court and that, save for the deposit of R150 000 currently held by the applicant, D he has no other substantial assets within the area of jurisdiction of this Court.

The application for security by the applicant raises a question which, as far as I can determine, has been dealt with in only two judgments in this Division. The first was given in 1990, when Rose Innes J heard the matter of Devonia Shipping Ltd v MV E Luis (Yeoman Shipping Co Ltd Intervening) 1994 (2) SA 363 (C) and the second was MV Zlatni Piasatzi: Frozen Foods International Ltd v Kudu Holdings (Pty) Ltd and Others (case No AC213/93 delivered by Conradie J on 7 December 1993) [*] and not yet reported.

The question of law which arises in limine is whether s 5(2) of the Act enables a F Court to provide security to a party wishing to launch a counterclaim in circumstances such as the present. Section 5(2)(a)–(d) of the Act provides as follows:

'A Court may in the exercise of its admiralty jurisdiction -

(a)

consider and decide any matter arising in connection with any maritime claim, notwithstanding that any such matter may not be one which would give rise to a maritime claim; G

(b)

order any person to give security for costs or for any claim;

(c)

order that any arrest or attachment made or to be made or that anything done or to be done in terms of this Act or any order of the court be subject to such conditions as to the court appears just, whether as to the furnishing of security or...