Galsworthy Ltd v Pretty Time Shipping SA and Others, Pretty Time Shipping SA and Others v Galsworthy Ltd (A72/09, A77/09) [2009] ZAKZDHC 10 (30 April 2009)

IN THE HIGH COURT OF SOUTH AFRICA

KWA-ZULU HIGH COURT, DURBAN

Case No A72/09

NAME OF SHIP : MV “PRETTY TIME”

In the matter between :

GALSWORTHY LIMITED Applicant

and

PRETTY TIME SHIPPING SA First Respondent

MV “PRETTY TIME” Second Respondent

THE MASTER OF THE “PRETTY TIME” Third Respondent

AND

Case No A77/09

PRETTY TIME SHIPPING SA First Applicant

MV “PRETTY TIME” Second Applicant

THE MASTER OF THE MV “PRETTY TIME” Third Applicant

GALSWORTHY LIMITED Respondent

_____________________________________________________________________

J U D G M E N T

______________________________________________________________________

LEVINSOHN AJP

[1] On 27th of March 2009 the applicant Galsworthy by way of an urgent ex parte application obtained the arrest of the m v Pretty Time (“the vessel”). What serves before me now is an application to set aside that arrest. For convenience I shall refer to the various parties by their respective designations in the original application for the arrest. This matter was set down for an urgent opposed hearing on 24th April 2009 and after hearing argument judgment was reserved. This judgment is prepared in some haste recognising the inherent urgency which inevitably arises from the detention of a ship in our waters.

[2] The applicant sought the arrest of the vessel to obtain security for a claim made by it which is the subject matter of pending

arbitration proceedings in London. In its founding papers in support of the arrest the applicant makes the case that Parakou Shipping Pte Limited of Singapore (“ Parakou) concluded a Charter party contract with it in terms of which Parakou agreed to charter the vessel mv Canton Trader (to be renamed Jin Kang.) It is alleged that Parakou repudiated its obligations in terms of the charter party in that it refused to accept delivery of the hired vessel. Accordingly, the applicant has suffered damages and claims these in the said arbitration.

[3] Arising from its conclusion of the said charter party Parakou is deemed in terms of Section 3(6) and 3(7) of the Admiralty

Jurisdiction Regulation Act no 105 of 1983 (the Act) to be the owner of the mv Canton Trader. The case is then made out that but for the agreement to arbitrate the applicants claim is enforceable in rem against an associated ship of the Canton Trader.

[4] It is said that the vessel in casu is an associated ship .It is owned by Pretty Time Shipping SA which in turn is controlled by Parakou International Limited and/or Parakou Shipping Limited. All these entities are ultimately controlled by Mr C C Liu.

[5] The charterer of the Canton Trader (Parakou) being the deemed owner was likewise controlled by CC Liu at the time when the claim arose. Hence the association.

[6] The applicant’s deponent relies on the annual returns filed in regard to Pretty Time SA. It is averred that the documentation shows that CC Liu is ultimately in control of Pretty Time SA which is the owner of the vessel herein.

[7] A crucial averment in support of the case made in regard to association is that CC Liu as the majority shareholder of Parakou

(the deemed owner of the Canton Trader) is also the person who both owns and controls the vessel .

[8] Annexure QVDM 6 was put up by the applicant to prove that CC Liu controlled Parakou at the relevant date. This document is the annual return filed for Parakou Shipping.

[9] Finally, the applicant makes the case that it has a genuine and reasonable need to obtain security for its claim. It is unnecessary

to summarise the averments made in that regard.

[10] I turn now to the application to set aside the arrest.

[11] In this application the respondents dispute that a charter party agreement as alleged was concluded between the applicant and Parakou. They therefore seek to neutralise the applicant’s case in regard to the deemed ownership of the Canton Trader.

[12] The respondents point out that the applicant has misinterpreted Annexure QVDM 6. Ex facie the report the shareholders and directors of Parakou as at 22nd December 2008 and 18th February 2009 were Por Liu and Jian Guo Yang. Both Por and Yang were appointed on the 18th December 2008 and their shareholding is reflected as 840 00 and 360 000 respectively.

[13] It follows from this that the allegation made that CC Liu was in control of Parakou at the relevant time was made in error. The applicants’ attorney in his replying affidavit says the following :

“I should say that accept that the allegation in my founding affidavit that Annexure QVDM 6 indicates that Mr CC Liu is at present

a shareholder in the company Parakou Shipping Pte Limited is incorrect. I apologise for this error and regret to say that I overlooked the contents of pages 102 and 103 of the founding papers with regards to changes.”

[14] The respondents also take the point that the applicant was guilty of a material non-disclosure when it moved the arrest application. An e-mail is put up which reflects on the 17th June 1008 one Sabrina Qian concluded a charter party fixture with an entity called Ocean Glory Shipping Limited. This charter party was also in respect of the MV Canton Trader. The charter party relied upon by the applicant in the founding affidavit was purportedly concluded on 18th June 2008. An e-mail sent by Ms Qian records the terms of the charter concerned.

[15] The applicant avers that the first mentioned charter party ought to have been drawn to the attention of the Court. If it was the Court may not have granted the order seeing that that document created some doubt as to whether Parakou could be regarded as the deemed owner of the MV Canton Trader.

[16] Mr Gordon SC argued in limine that inasmuch as no case was made out on the founding papers to justify the arrest, I should without further ado set it aside. Mr Gordon relied on an unreported judgment “The Doxa” delivered by me on 22nd December 2003. In that case citing two judgments of this Court namely Hart v Pinetown Drive-In Cinema (Pty) Ltd 1972(1) SA 464 at 469 C – E and Pearson v Magrep Investments (Pty) Ltd 1975(1) SA 186 (D), I found that it is open to a respondent in application proceedings to argue in limine that the applicant has not made out a case in the founding affidavit to support the relief claimed. It is appropriate that I set forth once again the dicta of Howard J (as he then was) in the Magrep Investments case at page 187:

“In the view I take of the matter it is only necessary to deal with one of the objections, namely that the founding affidavits do not make out a prima facie case for the relief claimed. It is open to the respondents to apply for the dismissal of the application on this ground notwithstanding that they have delivered affidavits dealing with the merits of the application. The approach to the decision of this objection is similar to that adopted in deciding an exception to a pleading in that (a) the founding affidavits alone fall to be considered and (b) the averments contained in those affidavits must be accepted as being true (see Taylor v Welkom Theatres (Pty) Ltd and Others 1954(3) SA 339 (O)at p 345; Bader and Another v Weston and Another 1967(1) SA 134 (C) at p 136; Aspek Pipe Co (Pty) Ltd and Another v Mauerberger and Others 1968(1) SA 517 (C) at p 519; Hart v Pinetown Drive-in Cinema (Pty) Ltd 1972(1) SA 464 (D) at p 465). There is however one important difference between an exception and the objection taken by the respondents, as appears from the following passage in the judgment of Miller J in Hart’s case, supra at p 469 :

“It has been said (see Aspek Pipe Co, supra at p 529) that in the case of an objection in limine of the kind now under consideration, the enquiry is only whether a prima facie case has been made out in the petition. It must be borne in mind, however, that where proceedings are brought by way of application,

the petition is not the equivalent of the declaration in proceedings by way of action. What might be sufficient in a declaration to foil an exception, would not necessarily, in a petition, by sufficient to resist an objection that a case has not been adequately made out. The petition takes the place not only of the declaration but also of the essential evidence which would be led at a trial and if there are absent from the petition such facts as would be necessary for determination of the issue in the petitioner’s favour, an objection that it does not support the relief claimed is sound.”

[17] In the Doxa (supra) I referred also to the case of Yorigami Maritime Construction Co v Nissho-Iwai Co Ltd 1978(2) SA 391 (CPD). In that decision Watermeyer J (as he then was) highlighted the distinction between the enquiry as to whether a case is made out in the ex parte application and whether the original order ought to have been granted as opposed to the enquiry after all the affidavits have been exchanged as to whether the attachment order ought to be set aside.

[18] I think that this is an important distinction because I understood Mr Shaw QC to submit that his side was entitled in reply to shift its ground and attempt to maintain a case based on CC Liu’s constructive control of the various entities.

[19] As I have indicated Mr Gordon has clearly elected to argue the point in limine such as envisaged in the Hart case supra and the Magrep Investments case supra.

[20] In my view Mr Gordon’s submission is well-founded. The founding affidavit read with the various annexures that were put up simply did not make out a case that CC Liu by virtue of his shareholding of Parakou exercised control over that company. The applicants clearly relied on the documentation it had put up. It made its bed and is forced to lie on it. No case whatsoever was made in the alternative to suggest that Mr CC Liu notwithstanding that he did not control Parakou by virtue of his shareholding nevertheless was still the puppet master pulling the strings and controlling that company as well.

[21] It will not be out of place if I repeat once again the dicta of Didcott J in Katagum Wholesale Commodities v The MV Paz 1984(3) SA 261 (N) at 269.

“It is a serious business to attach a ship. To stop or delay its departure from one of out ports, to interrupt its voyage for longer than the period it was due to remain, can have and usually has consequences which are commercially damaging to its owner or charterer, not to mention those who are relying upon its arrival at other ports to load or discharge cargo. Especially when the attachment is sought ex parte, as can be and almost always is done, the Court must therefore be given sufficient information to show that a measure with results so harmful to others is nevertheless necessary for the protection of the applicant’s legitimate interests.”

The above dicta were cited with approval by Corbett CJ in Bocimar NV v Kotor Overseas Shipping Ltd 1994(2) SA 563 at 581.

[22] I am satisfied that the order should not have been granted in the first place and it should accordingly be set aside on this ground alone.

[23] In the result I find it unnecessary to decide the issue in regard to the alleged non-disclosure. After hearing the argument my prima facie view was that the applicant was not a party to a non-disclosure. In any even the applicant’s deponent explained that the first mentioned e-mail was sent in error and there is nothing to suggest that that explanation is not true.

[24] On the assumption that my foregoing conclusion is an incorrect one I proceed now to consider briefly Mr Shaw’s submission that the application be referred for the hearing of oral evidence. This submission is obviously made on a conspectus of all the affidavits that are before the Court. In my opinion the applicant has succeeded in establishing all the elements of its cause of action for the arrest of the vessel save for the one important one, namely whether the vessel is an associated ship. In view of the urgency of this matter I shall not traverse and analyse the affidavits that have been delivered on both sides. In my view the applicant has not discharged the onus on the papers. It is not surprising therefore that in these circumstances the applicant seeks a referral for the hearing of oral evidence on the disputed issues.

[25] I have a discretion whether to refer the matter or not. That discretion is exercised having regard to a number of factors. In the instant case the probabilities do not favour the applicant. The direct and basically uncontroverted evidence of Por Liu supported by the registry documents points in one direction only and that is that CC Liu divested himself of control of Parakou. The evidence adduced by the respondents provides a rational, and on the face of it, probable explanation for the actions taken by Mr CC Liu. Mr Shaw has however argued that there were a number of surrounding features and circumstances which create the suspicion that CC Liu still

exercised control. I am not persuaded that these features are of such a nature that they disturb the direct evidence that is adduced

by the respondents. Indeed in these circumstances the dicta of Corbett CJ in Kalil v Decotex (Pty) Ltd and Another 1988(1) SA 943 (A) at 979 H – I are apposite :

“Naturally, in exercising this discretion the Court should be guided to a large extent by the prospects of viva voce evidence tipping the balance in favour of the applicant. Thus, if on the affidavits the probabilities are evenly balanced, the Court would be more inclined to allow the hearing or oral evidence than if the balance were against the applicant. And the more the scales are depressed against the applicant the less likely the Court would be to exercise the discretion in his favour. Indeed, I think that only in rare cases would the Court order the hearing of oral evidence where the preponderance of probabilities on the affidavits favoured the respondent.”

[26] A further factor which weighs with me in the exercise of my discretion is that the vessel is under arrest and if the hearing of oral evidence is ordered it will remain so for an indefinite period. Having regard to the size of the applicant’s claim in the arbitration and the evidence of a depressed economic climate the first respondent has not been able to put up security and obtain the release of the vessel. In the Bocimar NV case supra at 587 H – J Corbett CJ said the following :

“A peculiar feature of arrests granted ex parte under the Act is that, pending the final determination of whether an arrest should have been granted, the applicant enjoys the relief sought, viz the arrest, in this case, of the vessel in question. This is in contrast to the usual position in applications where the relief is granted only after hearing both parties. As appellant’s counsel conceded, this is also a factor to be considered in making an order for the hearing of oral evidence which will inevitably prolong to a considerable extent the status quo, viz the arrest of the vessel. Appellant’s counsel argued that Kotor could have mitigated the prolonged arrest of the Kordun by providing security and thus obtaining its release from arrest. The fact of the matter is that for reasons unknown this has not been done. And in any event, it costs money to provide security.:

[27] Accordingly I would have exercised my discretion against the applicant and refused the application to refer the matter for the hearing of oral evidence.

[28] In the premises I make the following order

1. The application brought under case number A77/2009 is hereby granted.

2. The arrest of the second respondent namely the vessel MV Pretty Time is hereby set aside.

3. The interdict issued against the third respondent namely the Master of the MV Pretty Time in A 72/09 is hereby discharged.

[29] The applicant Galsworthy Limited is directed to pay the costs on both the applications under case numbers A72/09 and A77/09

respectively such costs to include the costs occasioned by the employment of two counsel.

Date of hearing : 24th April 2009

Date of judgment : 30th April 2009

Counsel for the Applicant (case no A72\09) : Mr D J Shaw QC with Mr S I Wallace (instructed by Shepstone & Wylie)

Counsel for the Respondents (case no A72\09) : Mr D A Gordon SC with Ms D Donnelly (instructed by Deneys Reitz)

Counsel for the Applicants (case no A77/09) : Mr D A Gordon SC with Ms D Donnelly (instructed by Deneys Reitz)

Counsel for the Respondent (case no A77/09) : Mr D J Shaw QC with Mr S I Wallace (instructed by Shepstone & Wylie)