The Seaspan Grouse - Seaspan Holdco 1 Ltd and Others v MS Mare Tracer Schiffahrts and Another

• Jurisdiction: South Africa

The Seaspan Grouse
Seaspan Holdco 1 Ltd and Others v MS Mare Tracer Schiffahrts and Another
2019 (4) SA 483 (SCA)

2019 (4) SA p483

Citation	2019 (4) SA 483 (SCA)
Case No	376/18; [2019] ZASCA 2
Court	Supreme Court of Appeal
Judge	Maya P, Wallis JA, Molemela JA, Makgoka JA and Schippers JA
Heard	February 1, 2019
Judgment	February 1, 2019
Counsel	MJ Fitzgerald SC (with R Fitzgerald) for the appellants.; S Mullins SC (with J McKenzie) for the respondents.

Flynote : Sleutelwoorde

Shipping — Admiralty law — Maritime claim — Enforcement — Action in rem C — Protective writ — May be issued in South Africa and served when vessel comes within jurisdiction — Not protecting claimant against intervening bona fide change in ownership — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a)(i), s 3(7).

Shipping — Admiralty law — Maritime claim — Enforcement — Action in rem — Arrest, under protective writ, of associated ship — Ownership of arrested D ship changed after issue of writ but before service or arrest — Whether action against ship can still proceed — Conflicting High Court decisions — Supreme Court of Appeal finding that action commencing on date of arrest — Action not surviving change in ownership — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a)(i), s 3(7).

Shipping — Admiralty law — Maritime claim — Enforcement — Action in rem — E Commencement — Protective writ — Whether action commenced by issue or service of writ — Conflicting High Court decisions — Supreme Court of Appeal deciding that action in rem commenced by service of writ — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a)(i).

Headnote : Kopnota

Shortly after Hanjin Shipping, a large South Korean container line, filed for F bankruptcy in South Korea in September 2016, first and second respondents, Mare Tracer and Mare Traveller, issued, in order to protect their claims against changes in ownership of Hanjin-owned vessels, a series of protective writs in rem out of coastal divisions of the High Court. The writs cited the entire 70-ship Hanjin fleet as 'associated ships'. The respondents' G claims were claims in personam based on breaches of charterparties concluded with Hanjin-owned charterers. They issued the protective writs in the expectation that they would preserve their claims in the face of the inevitable sale of the Hanjin fleet.

When a vessel recently bought by the appellants, Seaspan Grouse, was arrested as H an associated ship under one of the writs, they approached the Durban High Court for an order setting the arrest aside on the ground that they were innocent purchasers who had bought the ship at arm's length, and that its transfer to them rendered the writ ineffective. The parties were agreed that the sole issue before court was whether the mere issuance of a writ of arrest was sufficient to commence an admiralty action, thereby protecting I the claimants against a change in ownership, or whether physical service of the writ was required, thereby leaving the claimants without a cause of action. The appellants favoured the second interpretation, arguing that it preserved the underlying purpose of the associated ship, which was that liability should be imposed where it properly resided due to common ownership or control. They also pointed out that an interpretation that permitted the arrest of vessels as associated ships even in the absence of any J

2019 (4) SA p484

connection A between the person liable in personam on the claim and the ship being arrested, would be unconstitutional. The respondents in turn argued for the first interpretation, which kept alive their right to arrest Seaspan Grouse despite the change in ownership.

Under s 3(7) of the Admiralty Jurisdiction Regulation Act 105 of 1983 the B respondents, as claimants, had to establish that Hanjin Shipping controlled the vessels named in the writs 'at the time when the action [was] commenced'. Section 1(2)(a) regulates the commencement of an action. It provides that '(a)n admiralty action shall for any relevant purpose commence . . . (i) by the service of any process by which that action is instituted . . . (iii) by the issue of any process for the institution of an action in rem' (emphasis supplied).

While C the court a quo — relying on The Monica S [1967] 2 Lloyd's Rep 113 (QB Adm) ([1967] 3 All ER 740 (PDA)), which it said correctly reflected South African law — found that the action in rem was commenced by the issue of the protective writ, and that a later arm's-length transfer did not destroy the claimants' (respondents') action in rem, the Cape High Court in another D Hanjin case found that the mere issue without service of the papers was insufficient to protect against changes in ownership, and that a subsequent sale was indeed destructive of the claimant's action. [*]

These conflicting High Court views were resolved by the present judgment.

Held per Wallis JA and Schippers JA (Maya P and Molemela JA concurring)

Section 1(2)(a) E did not fix a single commencement date for every admiralty action but required the court to apply a flexible standard by selecting the appropriate commencement date depending on the 'relevant purpose' of the enquiry (see [33], [44], [47] – [48]). The relevant purpose in the present matter was the arrest of Seaspan Grouse as an associated ship, which required that, at the commencement of the action, Seaspan Grouse was F owned by a company controlled at the time by Hanjin Shipping (see [49]). This purpose was better served by selecting the date of arrest (s 2(1)(a)(i)), rather than the date of issue of the protective writs (s 2(1)(a)(iii)), as the relevant date (see [49]). Such an approach was, moreover, in line with the requirement of s 3(4) and s 3(5) that the owner of the property to be arrested also had to be the person liable to the claimant in an action in G personam (see [47], [50]), and with the basic purpose of associated-ship jurisdiction, which required a connection between the arrested ship and the ship concerned, or the person liable in personam on the claim (see [51]). It would in addition avoid a series of difficulties that would otherwise arise (see [61]).

While the Act's arrest provisions were incompatible with the decision in H The Monica S, which was therefore not applicable to South African admiralty law (whether in relation to the arrest of the ship concerned or an associated ship), this did not mean that protective writs could not be issued in South Africa and served when the vessel came within its jurisdiction. It merely meant that such a writ gave no protection to a claimant against an I intervening bona fide change of ownership (see [63]).

2019 (4) SA p485

The appeal would accordingly succeed, and the order of the High Court replaced A with one setting aside the arrest of Seaspan Grouse, releasing the cash held as security for the respondents' claims (see [64]).

Held per Makgoka JA dissenting

The appellants' interpretation, favoured by the majority, entailed a radical departure from existing law, and would remove from the maritime claimants the right to issue protective writs (see [101]). It was not supported by B the express wording of the relevant provisions of the Act, especially s 1(2), s 3(6) and s 3(7), which permitted only of the construction favoured by the respondents (see [103]).

Cases cited

Southern Africa C

Airports Company South Africa v Big Five Duty Free (Pty) Ltd [2018] ZACC 33: dictum in para [29] applied

Cloete Murray and Another NNO v FirstRand Bank Ltd t/a Wesbank 2015 (3) SA 438 (SCA) ([2015] ZASCA 39): referred to

Dave Zick Timbers (Pty) Ltd v Progress Steamship Co Ltd 1974 (4) SA 381 (D): referred to D

Euromarine International of Mauren v The Ship Berg and Others 1986 (2) SA 700 (A): dictum at 712A applied

Ewing McDonald & Co Ltd v M & M Products Co 1991 (1) SA 252 (A): referred to

Ex parte Minister of Justice: In re R v Bolon 1941 AD 345: referred to E

Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others 1996 (1) SA 984 (CC) (1996 (1) BCLR 1; [1995] ZACC 13): referred to

Intercontinental Export Company (Pty) Ltd v MV Dien Danielsen 1982 (3) SA 534 (N): referred to

Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others F 2001 (1) SA 545 (CC) (2000 (2) SACR 349; 2000 (10) BCLR 1079; [2000] ZACC 12): referred to

Kleynhans v Yorkshire Insurance Co Ltd 1957 (3) SA 544 (A): referred to

Krauze v Van Wyk en Andere 1986 (1) SA 158 (A): referred to G

Labuschagne v Labuschagne; Labuschagne v Minister van Justisie 1967 (2) SA 575 (A): referred to

Lendalease Finance (Pty) Ltd v Corporacion De Mercadeo Agricola and Others 1976 (4) SA 464 (A): referred to

Liquidators Union and Rhodesia Wholesale Ltd v Brown & Co 1922 AD 549: referred to H

Marcard Stein & Co v Port Marine Contractors (Pty) Ltd and Others 1995 (3) SA 663 (A): referred to

Marine & Trade Insurance Co Ltd v Reddinger 1966 (2) SA 407 (A): referred to

MS Mare Traveller: Tebtale Marine Inc v MS Mare Traveller Schiffahrts GmbH & Co KG 2018 (2) SA 490 (WCC): approved I

MT Argun: Sheriff of Cape Town v MT Argun, Her Owners and All Persons Interested in Her and Others; Sheriff of Cape Town and Another v MT Argun, Her Owners and All Persons Interested in Her and Another 2001 (3) SA 1230 (SCA): referred to

MT Cape Spirit: Owners of the Cargo Lately Laden on Board the MT Cape Spirit v MT Cape Spirit and Others 1999 (4) SA 321 (SCA): referred to J

2019 (4) SA p486

MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD A 1999 (3) SA 1083 (SCA) ([1999] ZASCA 44): referred to

MV Jute Express v Owners of the Cargo on Board the MV Jute Express 1992 (3) SA 9 (A)...