Universal Group Ltd t/a Island View Shipping Co v the Fund Created by the Sale of the MV Maharani, Ex MV Claire A Tsavliris, and Another

• Jurisdiction: South Africa
• Citation: 1990 (2) SA 480 (N)

Universal Group Ltd t/a Island View Shipping Co v the Fund Created by the Sale of the MV Maharani, Ex MV Claire A Tsavliris, and Another
1990 (2) SA 480 (N)

1990 (2) SA p480

Citation	1990 (2) SA 480 (N)
Court	Natal Provincial Division
Judge	Thirion J, Bristowe J and Hugo J
Heard	June 5, 1989
Judgment	November 6, 1989

Flynote : Sleutelwoorde

C Shipping — Time charter-party — Bunkers on board vessel at commencement of hire period — Sale and transfer of to charterer — Clause 53 of charter-party providing that 'on delivery charterer to take over and pay for bunkers remaining on board the vessel' at fixed unit price — Further provisions that, with certain exceptions, charterer to D provide and pay for all bunkers consumed during hire period — Vessel arrested on day after commencement of hire period at instance of mortgagee — Charterer remitting to owner payment for initial hire period and for bunkers on board vessel — Vessel thereafter remaining under arrest, and charterer treating charter-party as 'frustrated by E operation of law' — Diesel oil on board consumed during period of arrest to provide electricity to vessel to comply with port safety regulations — Fuel oil on board not consumed — By agreement between charterer and mortgagee, fuel oil sold and proceeds held as separate fund — Vessel sold in terms of s 9 of Admiralty Jurisdiction Regulation F Act 105 of 1983 and proceeds held as fund in Court — Charterer contending that it had become owner of bunkers on 'delivery' of vessel at commencement of hire period — Charterer claiming entire proceeds of fuel oil fund and claiming payment in respect of diesel oil consumed against fund in Court — Charterer contending that claim in respect of G diesel oil falling under either s 11(1)(a), as being expenses incurred in preserving the vessel, or s 11(1)(c)(v), as being for the supply of goods for maintenance of vessel, and that claim thus ranking in priority to mortgagee's claim under s 11(1)(d) — Mortgagee contending that charterer had never become owner of bunkers — Court holding that, in H context of charter-party as whole, clause 53 constituting contract for sale of bunkers on board by owner to charterer at commencement of hire period — As possession of vessel never passing to charterer under time charter-party, question arising whether bunkers delivered to charterer, pursuant to sale, by constitutum possessorium — Court finding that I wider terms of charter-party creating contractual relationship under which master of vessel became detentor of bunkers on behalf of charterer, and imposing upon charterer obligation to provide bunkers for running the vessel, thus necessitating that bunkers remain in detentio of master — Such providing sufficient causa detentionis or external manifestation of intention to hold bunkers as detentor for charterer to J effect

1990 (2) SA p481

A constitutum possessorium — Ownership of bunkers thus transferred to charterer — On evidence, charterer proving that it had never intended transferring ownership of bunkers to owner of vessel upon cancellation of charter-party — Delivery of bunkers brevi manu thus not having taken place, and charterer retaining ownership of bunkers — Charterer, as B owner, accordingly entitled to proceeds of sale of fuel oil — As to whether claim in respect of diesel oil falling under s 11(1)(a), Court finding that diesel oil used to preserve vessel while under arrest, and that charterer suffering loss in respect thereof — Word 'expense' in s 11(1)(a) to be construed as including loss such as that incurred by charterer — Charterer's claim in respect of diesel oil thus falling C under s 11(1)(a) and ranking prior to mortgagee's claim.

Headnote : Kopnota

In terms of a time charter-party agreement with the owner of a ship, the ship came on hire to the appellant on 26 February 1987. On 27 February, the second respondent, as mortgagee of the ship, had it arrested in an action in rem. On 4 March, the appellant remitted to the owner payment D for the initial hire of the ship and for the bunkers on board the ship. Clause 53 of the charter-party, in terms of which payment for the bunkers had been made, provided that '(b)unkers on delivery about 250/350 metric tons intermediate fuel oil and about 100/150 metric tons marine diesel oil with bunkers on redelivery about same quantities as actually on board on delivery. On delivery charterers to take over and pay for bunkers remaining on board the vessel, prices both ends US$ 95 E per metric ton fuel oil, US$ 150 per metric ton diesel oil.' The charter-party provided, further, that all bunkers consumed during the hire period (with certain specified exceptions) would be provided and paid for by the charterer. The owner did not appear to be able to have the arrest set aside, and negotiations between the appellant and second respondent with a view to solving the difficulties created by the arrest of the vessel broke down. The appellant informed the owner on 12 March that it was proceeding on the basis that the owner could not perform its F obligations under the charter-party, and proceeded to transship the cargo it had already loaded on board. On 23 March, when transshipment had been completed, the appellant informed the owner that its view was that the charter-party had been 'frustrated on 1 March 1987 by operation of law and (had come) to an end'. The vessel remained under arrest.

During that time an estimated 118,08 metric tons of diesel oil, which had formed part of the bunkers on board when the vessel had come on G hire, were consumed to supply the vessel with electricity to comply with port safety requirements. The vessel was subsequently sold by order of Court in terms of s 9 of the Admiralty Jurisdiction Regulation Act 105 of 1983, and the proceeds were held as a fund in the Court. By agreement between the appellant and second respondent, the fuel oil on board the vessel (none of which had been consumed) was sold and held as a separate fund. The appellant filed against the fund (created from the proceeds of the sale of the vessel) a claim in respect of the diesel oil consumed by H the vessel while it had been under arrest. The appellant contended that its claim was a claim in respect of expenses incurred to preserve the vessel as provided for in s 11(1)(a) of the Act; alternatively, that it was a claim in respect of the supply of goods to the vessel for its maintenance as provided for in s 11(1)(c)(v), and that its claim therefore ranked in priority to the respondent's claim, which was one under s 11(1)(d) of the Act. The referee rejected the appellant's contentions, as did the Local Division to which the appellant had I applied for a variation of the referee's recommendations.

An application for an order that the appellant was the owner of the fuel oil on board the vessel at the time of its arrest, and was consequently entitled to be paid all the moneys in the fund constituted by the proceeds of the sale of the fuel oil, was heard with the appeal to a Provincial Division against the finding of the Court a quo. The appellant contended that it had become the owner of the bunkers on 'delivery' of the vessel in terms of the charter-party; that it had J remained the owner of the fuel oil

1990 (2) SA p482

A until it had been sold; that it had remained the owner of the diesel oil until it had been consumed in running the vessel's generators; that it was consequently entitled to be paid by the fund created by the sale of the fuel oil and, in respect of the diesel oil, that it had a claim as provided in s 11(1)(a), alternatively s 11(1)(c)(v), of the Act against the fund created by the sale of the vessel. The respondent's argument was that the appellant had at no time become the owner of the bunkers and that, in any event, its claim in respect of the diesel oil was not a B claim falling under either s 11(1)(a) or s 11(1)(c)(v) of the Act.

The following were the issues on the appeal: (1) whether clause 53 of the charter-party, properly construed, constituted an agreement for the sale to the appellant of the bunkers on board the vessel at the inception of the charter-party; and, if so, (2) whether pursuant to the sale in clause 53 there had been delivery of the bunkers to the appellant by the owner of the vessel, because only if there had been delivery (traditio ) of the bunkers in one of the modes recognised by C South African law would ownership of the bunkers have passed to the appellant; if so, (3) whether the appellant had ceased to be the owner of the bunkers on cancellation of the charter-party, the bunkers having been transferred back to the owner by traditio brevi manu in terms of clause 53 under which, on 'redelivery' of the vessel, the bunkers then on board the vessel were to be 'resold' to the owner; and, if not, then (4) whether, in respect of the diesel oil consumed while the vessel was under arrest, the appellant had a claim falling under either s 11(1)(a) D or s 11(1)(c)(v) of the Act so as to give its claim priority ranking over the respondent's claim under s 11(1)(d).

Held, (per Thirion J; Bristowe J and Hugo J concurring), as to (1), that, in the context of the charter-party, clause 53 constituted, by itself, a contract for the sale by the owner to the charterer of the bunkers on board the vessel at the commencement of the hire period and for the sale by the charterer to the owner at the termination of the hire period of the bunkers then on board the vessel.

E Held, further, as to (2) (whether, pursuant to the sale there had been delivery of the bunkers to the appellant), that, despite the terminology used in the agreement (for example 'delivery' and 'redelivery'), possession of the vessel was not, in the case of a time charter, delivered to the charterer, and it could therefore not be said that there had been actual...