South Africa: Recent Significant Admiralty Court Judgments

Last Updated: 9 March 2012
Article by Edward Nathan Sonnenbergs

Most Read Contributor in South Africa, September 2016

The Supreme Court of Appeal clarifies the approach to making out a prima facie case in security arrest proceedings

The requirement of a prima facie case has been said to be satisfied if a claimant shows that there is evidence which, if accepted, will establish a cause of action and that the mere fact that such evidence put up by the claimant is contradicted will not mean that the test has not been satisfied - not even if the probabilities are against it; it is only where it is quite clear that the claimant has no action, or cannot succeed, that a prima facie case will not be made out. In this judgment the Supreme Court of Appeal indicated that there is much to be said for taking into account facts established by the debtor that the claimant does not contradict, at least where there is no reason to believe that in future proceedings, with the advantages of discovery those facts are capable of being challenged.

It, furthermore, held, first, that where the claimant asks the court to draw factual inferences from the evidence they must be inferences that can reasonably be drawn from it, even if they need not be the only possible inferences from that evidence. If they are tenuous or far-fetched the onus is not discharged. Second, the drawing of inferences from the facts must be based on objective proven facts and not conjecture or speculation.

With regard to expert evidence, including foreign law, the court referred with approval to the judgment in the matter of National Justice Compania Naviera S.A. v Prudential Assurance Co Ltd (the "Ikarian Reefer") [1993] 2 Lloyd's Rep 68 [QB (Com)] at 81 to 82 for the duties and responsibilities of expert witnesses and reiterated that it is undesirable that a representative of the parties give such evidence. In relation to whether a prima facie case is made out in respect of expert evidence the court held that the underlying facts relied on by the witness must have been established on a prima facie basis. If not then the expert's opinion is worthless and must be disregarded because it is purely hypothetical, based on facts that cannot be demonstrated even on a prima facie basis. If the relevant facts and any others that are undisputed or cannot be disputed are established on a prima facie basis then the expert's view must be one that can reasonably be held on the basis of those facts. If the opinion is one that can reasonably be held on the basis of the facts and the chain of reasoning of the expert a prima facie case is made in that respect. This is so even though that is not the only opinion that can reasonably be expressed on the basis of those facts. However, if the opinion is far-fetched and based on unproven hypotheses then a prima facie case has not been made.

Foreign law is treated as a fact required to be proved by tendering the evidence of a witness who can speak to the contents of that law. However, such evidence is unnecessary where the law in question, such as English admiralty and maritime law, can be ascertained readily and with sufficient certainty without recourse to the evidence of an expert, because the court is then entitled to take judicial notice of such law. In those circumstances it should generally speaking be unnecessary for it to be presented through affidavits from practitioners.

With regard to the quantum of the claim the court held that the claimant is entitled to security in an amount determined on the basis of its reasonably arguable best case but that this is subject to proving a need for security in the amount claimed on a balance of probabilities in terms of the further requirement that the claimant show a genuine and reasonable need for security.

MVS "Pasquale della Gatta" and "Filippo Lembo" : Imperial Marine Co v Deiulemar Compagnia di Navigazione SPA 2012 (1) SA 58 (SCA)

The Supreme Court of Appeal clarifies the principles applicable to determining whether counter-security ought to be granted

Section 5(2) of the Admiralty Jurisdiction Regulation Act, No. 105 of 1983 ("the Act") provides -

"A court may in the exercise of its admiralty jurisdiction -
(a) ...;
(b) order any person to give security for costs or 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 the liability for costs, expenses, loss or damage caused or likely to be caused, or otherwise; ...."

The Supreme Court of Appeal referred with approval to the judgment in the matter of mv "Heavy Metal" : Belfry Marine Ltd v Palm Base Maritime SDN BHD 2000 (1) SA 286 (C) where the court said:

'In the first place, it is evident that s 5(2)(a) – (c) of the statute vests the Court with a wide power, in its discretion, to order that security or counter-security be furnished for claims and counterclaims. Secondly, confining myself to counterclaims, clearly the Court must have jurisdiction, which is invariably present in the circumstances. Thirdly, it seems to me that an applicant must show at least a prima facie case in respect of its counterclaim(s). I say at least because less would not warrant security, while in my view more may be required in an appropriate case. Fourthly, I think an applicant must show a genuine and reasonable need for security .... Finally, the Court has a discretion which in my opinion should not be unduly circumscribed. All sorts of factors can arise in different cases which may affect the exercise of the discretion, such as whether the arrest was in terms of s 5(3); the location of the forum; whether the arresting party is a peregrinus of this Court; the nature of the counterclaims; and the effect that a forfeiture order may have on the arrestor's position.... The list is not exhaustive. The Court may find itself weighing and balancing competing interests. The strength of the counterclaimant's case on the merits may then become a factor to be weighed in the balance. It follows from all this that I do not necessarily find myself in the sparing school of thought, but that I do recognise a substantial need for caution.'

The Supreme Court went on to say that in determining the quantum of any counter-security the court may also have to exercise a discretion. A litigant is entitled to security in an amount determined on the basis of its reasonably arguable best case. That requires the existence of the claim to be established on a prima facie basis and the quantum of security to be determined on the basis of the amount representing the reasonably arguable best case in respect of that claim. The need for security in the amounts claimed must be established on a balance of probabilities. However, the computation of those amounts may not always be straightforward and may require the court to exercise a discretion in determining the quantum of the counter-security to which the litigant is entitled.

MVS "Pasquale della Gatta" and "Filippo Lembo" : Imperial Marine Co v Deiulemar Compagnia di Navigazione SPA 2012 (1) SA 58 (SCA)

Arrests for Security for Costs and the South African Associated Ship Provisions

The claimant arrested the mv "Behice" for security for the costs of an arbitration and appeal proceedings against a yard in respect of a ship building dispute, the principal claim and interest having already been secured. The owner of the arrested vessel set the arrest application down for reconsideration. It argued that costs are not "enforceable" as required by the South African security arrest provisions until an award or judgment for costs is made or granted and the costs assessed. The KwaZulu Natal High Court, Durban disagreed, holding that as the claim was provable together with the principal claim it was enforceable.

Owners of the arrested vessel also argued that the claim in respect of costs had not arisen at a time when the new building concerned was owned by Furtrans (being a prerequisite for proceeding with an associated ship arrest in South Africa) but only after the vessel had been sold on by it to another party. In that respect the court again disagreed, holding that the original source of the undertaking to pay costs could be found in the agreement to arbitrate which existed at the time the yard owned the new building.

MV "Behice" : Plaus Shipping Ltd v Augusta Due SRL (unreported judgment, Kwazulu Natal High Court, Durban, Case No, A112/2011, 25 November 2011).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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