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

• Jurisdiction: South Africa
• Citation: 2018 (5) SA 284 (KZD)

The Seaspan Grouse
Seaspan Holdco and Others v MS Mare Tracer Schiffahrts and Another
2018 (5) SA 284 (KZD)

2018 (5) SA p284

Citation	2018 (5) SA 284 (KZD)
Case No	A 69/2016
Court	KwaZulu-Natal Local Division, Durban
Judge	Gyanda J
Heard	February 26, 2018
Judgment	February 26, 2018
Counsel	MJ Fitzgerald SC for the applicant.; SR Mullins SC (with J McKenzie) for the respondents.

Flynote : Sleutelwoorde

Shipping — Admiralty law — Maritime claim — Enforcement — Action in rem — Arrest, under protective writ, of associated ship — Ownership C of arrested ship transferred after issue of writ but before arrest — Application to set aside arrest refused — Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a), s 3(4)(b), s 3(6) and s 6.

Headnote : Kopnota

The respondents were ship-owning companies that alleged claims against Hanjin Shipping, D a prominent South Korean shipping line that went bankrupt in September 2016. To protect themselves against changes in ownership of the vessels in the Hanjin fleet, the respondents caused a series of protective writs to be issued out of coastal divisions of the High Court, citing some 70 Hanjin vessels as defendants. A vessel the applicants had acquired, Seaspan Grouse, was arrested as an associated ship under one such writ. E The applicants sought an order setting aside the arrest on the ground that they were innocent purchasers who had bought the vessel at arm's length after the writ was issued. They argued that the transfer of ownership meant that the writ was no longer effective. A similar application in respect of another ex-Hanjin vessel had earlier succeeded in the Western Cape High Court. It was reported as Tebtale Marine v MS Mare Traveller Schiffahrts GmbH & Co KG F 2018 (2) SA 490 (WCC).

The enforcement of maritime claims by the arrest of property is governed by s 3(4) and 3(5) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (the Act). Section 3(4)(b) provides that 'a maritime claim may be enforced by an action in rem . . . if the owner of the property to be arrested G would be liable to the claimant in an action in personam'. Section 3(6) allows the arrest of associated ships, that is, ships other than the ship in respect of which the claim arose, provided there was common ownership or control (see s 3(7)). Section 6(1) provides that courts exercising admiralty jurisdiction must apply English law as it stood in 1983 unless it is inconsistent with South African law. Section 1(2) provides that '(a)n H admiralty action shall for any relevant process commence . . . (iii) by the issue of any process for the institution of an action in rem'.

The parties were agreed that the sole issue the court had to decide was whether the relevant time for determining the requisite control or ownership of a vessel as an associated ship and liable to be arrested as such, was the time I of issue of the protective writs (as argued by the respondents), or both at the time of the issue of the protective writs and at the time of the arrest of the ship (as argued by the applicants). The answer depended on (i) when an action in rem against an associated ship commenced; and (ii) whether the leading English case on the matter, The Monica S [1967] 2 Lloyd's Rep 113 ([1967] 3 All ER 740 (PDA)), which favoured the respondents' position, was still binding in South Africa. The respondents accordingly J argued that The Monica S was still binding in South Africa. The applicants

2018 (5) SA p285

argued that to interpret the Act in the way argued for by the respondents A would sanction arbitrary and unconstitutional deprivation of property.

The applicants also asked the court to strike out (i) respondents' expert testimony about the law in other maritime jurisdictions; and (ii) all allegations in respondents' affidavits relating to the ownership and financial structure of the Hanjin Shipping fleet. B

Held

An action in rem brought under s 3(6) of the Act was commenced by the issue of summons, not the arrest of the associated ship (the words 'would be liable' in s 3(4)(b) did not allude to futurity but meant no more than that liability on the summons was yet to be determined at that stage) (see [14], [17], [19]). The Monica S had not been overturned in any way and still applied in South Africa (see [6] – [7], [20]). Adopting the applicants' C (contrary) position would result in a loss of rights for plaintiffs, contrary to the Act's manifest purpose to assist them (see [9], [20a], [20b], [26]). Nor would adopting the respondents' position, as argued by the applicants, result in an unconstitutional deprivation of property: the arrest of associated ships to enforce maritime claims was an accepted part of international maritime law, and purchasers could protect themselves by taking out D insurance and conducting writ searches, particularly when purchasing vessels from distressed fleets (see [24] – [27]). The court would therefore refuse the application to set aside the arrest of the Seaspan Grouse (see [28], [30]).

As to the applications to strike out: Respondents' reference to the law in foreign jurisdictions was necessary to bring the current position in those E jurisdictions to the attention of the court (see [29e]). And since the ownership and finance structure of Hanjin were relevant to the application, the application to strike out this evidence would be refused, despite the respondents' concession that the purchase of the Seaspan Grouse was a legitimate arm's-length transaction (see [30]).

Cases cited

Southern Africa F

Aprint Ltd v Gerber Goldschmidt Group South Africa (Pty) Ltd 1983 (1) SA 254 (A): referred to

Cloete Murray and Another NNO v FirstRand Bank t/a Wesbank 2015 (3) SA 438 (SCA) ([2015] ZASCA 39): dictum in para [40] applied G

Columbus Stainless (Pty) Ltd and Others v Kuehne & Nagel (Pty) Ltd and Another KZD 3580/2013: dictum in para [18] applied

Kham and Others v Electoral Commission and Another 2016 (2) SA 338 (CC) (2016 (2) BCLR 157; [2015] ZACC 37): referred to

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

Malilang and Others v MV Houda Pearl 1986 (2) SA 714 (A): dictum at 722J – 723C applied

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

MV Heavy Metal: Belfry Marine Ltd v Palm Base Maritime SDN BHD 1999 (3) SA 1083 (SCA): I discussed

MV Jute Express v Owners of the Cargo on Board the MV Jute Express 1992 (3) SA 9 (A): dictum at 16H – 17I applied

MV NYK Isabel: Northern Endeavour Shipping Pte Ltd v Owners of the MV NYK Isabel and Another 2017 (1) SA 25 (SCA): discussed and applied

MV Pasquale Della Gatta; MV Filippo Lembo; Imperial Marine Co v Deiulemar Compagnia Di Navigazione SPA 2012 (1) SA 58 (SCA) ([2011] ZASCA 131): referred to J

2018 (5) SA p286

MV A Silver Star: Owners of the MV Silver Star v Hilane Ltd 2015 (2) SA 331 (SCA) ([2014] ZASCA 195): applied

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dictum in para [18] applied

National Coalition for Gay and Lesbian Equality and Others v Minister of Home Affairs and Others B 2000 (2) SA 1 (CC) (2000 (1) BCLR 39; [1999] ZACC 17): dictum in para [23] applied

National Iranian Oil Co v Banque Paribas (Suisse) SA and Another 1993 (4) SA 1 (A): dictum at 8A – E applied

National Iranian Tanker Co v MV Pericles GC 1995 (1) SA 475 (A): dictum at 481C applied

Proctor C & Gamble SA (Pty) Ltd v Carlton Paper of South Africa (Pty) Ltd and Another 1997 (3) SA 292 (T): referred to

R v Hugo 1926 AD 268: referred to

S v Wood 1976 (1) SA 703 (A): referred to.

Australia

Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192 (157 FCR 45): D referred to.

England

Clarke-Jervoise v Scutt (1920) 1 Ch 382: referred to

Republic of India and Another v India Steamship Co Ltd (The Indian Grace) (No 2) E [1998] 1 Lloyd's Rep 1 (HL): referred to

The Banco [1971] 1 All ER 524 (CA): referred to

The Dictator [1892] P 304 ([1891 – 4] All ER Rep 360): referred to

The Monica S [1967] 2 Lloyd's Rep 113 ([1967] 3 All ER 740 (PDA)): discussed and applied.

Legislation cited

Statutes

The F Admiralty Jurisdiction Regulation Act 105 of 1983, s 1(2)(a), s 3(4)(b), s 3(6) and s 6: see Juta's Statutes of South Africa 2016/17 vol 1 at 2-90 – 2-92.

Case Information

MJ Fitzgerald SC for the applicants.

SR Mullins SC (with J McKenzie) for the respondents.

An G application for the setting-aside of the arrest of a ship.

Order

1.

The application to strike out is refused.

2.

H The application to set aside the arrests is dismissed.

3.

The applicants are ordered to pay the respondents' costs of the application, inclusive of the costs of two counsel, jointly and severally, the one paying, the other to be absolved.

Judgment

Gyanda J: I

[1] By notice dated 15 September 2017 the applicants, who had an interest in the MV Seaspan Grouse (ex MV Hanjin Gdynia) and held a cession of the right to pursue the current litigation from the first and second applicants, brought an application against the respondents in J which it sought an order —

2018 (5) SA p287

Gyanda J

(a)

that the arrests of the third applicant (the MV Seaspan Grouse) A under case Nos A69/2016 and A70/2016 be and are hereby set aside;

(b)

that the first and second respondents are directed to return the original letter of undertaking issued as security for their alleged claims to the applicant's attorney of record within two court days of this order; and B

(c)

that the respondents should pay the costs of this application.

By the time the matter served before me the security in terms of para 2 was replaced by a cash amount paid into an account opened for that purpose by the registrar of this...