Seagull Chartering and Operating Limited v MV Asean Sea 01 and Another (A32/2006) [2007] ZAKZHC 3 (9 March 2007)

CASE NO A 32/2006

IN THE HIGH COURT OF SOUTH AFRICA

DURBAN AND COAST LOCAL DIVISION

(Exercising its Admiralty Jurisdiction)

NAME OF SHIP : m.v. ‘ASEAN SEA 01”

In the matter between

SEAGULL CHARTERING AND OPERATING LIMITED Applicant

and

MV “ASEAN SEA O1 Respondent

VINASHIN PETROLEUM INVESTMENT &

TRANSPORT JOINT STOCK COMPANY Intervening Respondent

_________________________________________________________

Delivered :

March 2007

J U D G M E N T

LEVINSOHN DJP :

On 22nd March 2006 this Court ordered the arrest of the respondent. The purpose of the arrest was to provide security to the applicant in the sum of

US$679 239 plus interest and costs in respect of the applicant’s claim against the Vinashin Petroleum Investment & Transport Joint Stock Company which was to be submitted to arbitration in London.

In broad outline the case made out in the founding affidavit was the following. The respondent was previously owned by Sea Unity Limited of Piraeus and it was called the “mv Sea Unity”. Some time prior to 17th February 2006 the respondent was sold to Vinashin Petroleum Investment & Transport Joint Stock Company, also known as Shinpetrol and hereinafter referred to as “Shinpetrol”. The sale was concluded through Optima Ship Brokers. It appears that the vessel was delivered to Shinpetrol some time during the period 27th February to 2 March 2006.

Almarine Shipping acting on behalf of Metaltrade concluded a voyage charter of the respondent to carry a cargo of scrap steel from South African ports to Indonesia. On the same day, namely 20th February 2006, the applicant represented by Almarine Shipping concluded a charterparty with Shinpetrol as the owners of the respondent.

Annexure VN13 is a copy of the fixture email sent by the broker Sopas Maritime Corporation (“SOPAS”) to Almarine Shipping. In its terms the email constitutes a valid and binding contract for the charter of the vessel. Subsequently Badock representing Almarine sent the duly prepared full charterparty to SOPAS for signature. That is also put up as annexure VN 14. The charter agreement between Metaltrade and the applicant was in the exact same terms.

The deponent testified that prior to this Badock had concluded four charter parties through Sopas Corporation. These were performed without any difficulties.

On 8th March 2006 Badock received an email from SOPAS which clearly foreshadowed that the vessel owners did not intend to honour the charter agreement. Badock in turn indicated that his client would look to the owners of the vessel for damages arising from its repudiation. Badock subsequently learned that the vessel had been chartered to MUR through Optima Shipbrokers. The applicant makes the case that it has suffered damages and will pursue its claim therefor before an arbitration tribunal in London. The purpose of the present proceedings was to obtain security for the said claim.

On 23rd May 2006 the intervening respondent sought leave to intervene in the application. It also asked for an order setting aside the deemed arrest together with other consequential relief. For ease of reference I shall refer to the intervening respondent hereafter as “Shinpetrol I proceed now to summarise in broad outline the case made out in Shinpetrol’s founding affidavit.

Shinpetrol’s fundamental assertion is that SOPAS were never authorised either expressly or impliedly to act on behalf of Shinpetrol, nor indeed, were they the vessel’s managers.

Shinpetrol then goes on to set forth certain background facts. It testifies that SOPAS was the local Vietnamese correspondent of Optima Ship Brokers of Greece. The latter acted as brokers when Shinpetrol bought the respondent. A Mr Hoquoc Hung was employed by Shinpetrol as its deputy manager in the operations department. The said Hung was a minority shareholder of SOPAS. The deponent then explains that because of this relationship between Hung and SOPAS the latter became aware that the respondent would be available for hire after delivery had taken place in Mombasa Kenya. SOPAS took it upon itself without the knowledge of Shinpetrol to negotiate a charter party of the respondent to the applicant. SOPAS held itself out to be the manager of the vessel. SOPAS sought to charter the respondent from Shinpetrol on more favourable terms than that which it had negotiated with the applicant. The idea was that the charter to the applicant would in effect be a sub-charter and Shinpetrol would profit thereby. However when Shinpetrol was approached to conclude a voyage charter of the respondent to SOPAS it refused to do so. SOPAS was therefore unable to implement its scheme.

The general director and the operations manager of Shinpetrol respectively travelled from Vietnam to Mombasa, Kenya, at the end of February 2006 to take formal delivery of the respondent. At that stage no managers for the respondent had been appointed, nor had any charterparty been arranged at that stage.

On 1st March 2006 Shinpetrol’s local agent in Mombasa produced to the said general director and operations manager a purported fixture note which was dated 20th February 2006 which related to the conclusion of a charterparty in respect of the respondent concluded by Shinpetrol to “Sopas Corporation of Singapore”. Apart from the fixture note there was a draft form of charterparty containing standard terms and conditions which had already been signed on behalf of SOPAS as the charterer. The foregoing appears clearly from the documentation put up as annexures PP2 and PP3 to the founding affidavit. According to the deponent these documents were sent as attachments to an email addressed by Mr Hoquoc Hung to Mr Gachanjay on the evening of Monday, 27th February 2006 and re-sent on Wednesday, 1st March 2006.

The said general director and the operations manager were not prepared to conclude a charterparty with SOPAS. Their attitude was that the fixture note was clearly a fabrication and purported to reflect the culmination of negotiations to which Shinpetrol had not been a party. According to the deponent Hoquoc Hung had no authority whatsoever to involve himself in negotiation for the charter of Shinpetrol’s vessels. His functions were restricted to the day to day operation of the six small tankers operated by Shinpetrol. It was the function of the general director, Mr Nguyenduy Hung, to do so.

Shinpetrol had commenced negotiations to charter the respondent. It had been in contact with Optima Ship Brokers and Tramp Maritime Enterprises Ltd, the latter being the former managers of the respondent when it was owned by the seller of the vessel.

The deponent disputes that Shinpetrol had a business relationship with SOPAS. More particularly it disputes the applicant’s contention that an inference can be drawn from SOPAS’s previous dealings with the Vinashin Lines or the Vanlang Shipping Lines.

The applicant delivered an answering affidavit in opposition to the intervening respondent’s application. I do not propose to summarise this affidavit in any detail. Much of what is contained therein is in effect argument directed at demonstrating the improbability of the intervening applicant’s case. The applicant concedes that in the nature of things it would have no knowledge about the relationship between Shinpetrol and SOPAS. It would perforce have to rely on the relevant documents received by way of discovery and argue on the general probabilities arising therefrom.

In this regard the applicant’s first submission is that Hung was a servant of Shinpetrol and in doing what he did he was acting in the course and scope of his employment by Shinpetrol. If he was fraudulent Shinpetrol would be liable vicariously for this delict.

In order to demonstrate SOPAS’s apparent authority the applicant refers to an email VN 23 from SOPAS to Moztrans in Beira dated 22nd February 2006 in which SOPAS was investigating appointing Moztrans as the owner’s agent in Beira for the vessels forthcoming call there in March. This email is quoted in full hereunder : -

“HOT MESSAGE

HAVE A GOOD DAY!

THANK YOU FOR YOUR EMAIL

WE WOULD LIKE TO NOMINATE YOUR COMPANY AS OWNER AGENCY PLS, CALCULATE AND SUPPLY PORT DISBURSEMENT TO US ESTIMATED WITH INFO AS :

SHIP NAME : ASEAN SEA 01

O/A BEIRA PORT, MOZAMBIQUE : 3 – 5 MARCH 2006

TOTAL TIME LOADING CARGO AT BEIRA PORT : 2 DAY

CALLING O : BEIRA PORT FOR LOADING : 4000 MT SCRAP”

LAST PORT : MOMBASA PORT, KENYA/NEXT PORT : DURBAN FOR ARRIVAL DRAFT 6.5 M (NO CARGO ON BOARD BEFORE CALLING

………

WAITING YOUR INFORMATION SOON! (CAN ADV INFO TO US TODAY BY FAX OR EMAIL?)”

The applicant’s deponent draws attention to the fact that as at 20th June 2006 Mr Hung was still employed by Shinpetrol. Given that Shinpetrol alleges that Mr Hung perpetrated a fraud alternatively was party thereto it seems strange that some months after the event he would still be working for Shinpetrol.

The applicant highlights the fact that on Shinpetrol’s version the charterparty proposal from SOPAS was rejected by Shinpetrol on or about 1st March 2006. It was not until 8th March 2006 that SOPAS advised Almarine that Shinpetrol would not be able to perform its obligations. This was a day after Shinpetrol had concluded a charterparty agreement with MUR.

With this brief outline of what I conceive to be some of the salient facts adduced in the affidavits I proceed to consider the issues that arise in this application.

Firstly, where there is an application to set aside an arrest, the applicant for the arrest retains the onus of satisfying the Court that it is entitled to the order.

See Cargo Laden on Board the mv Thalassini AVGI v mv Dimitris 1989 (3) SA 820 at 834 D.

Apart from the onus of proof the abovementioned case dealt with the evidentiary requirements in an application under section 5(3)(a) of the Admiralty Jurisdiction Regulation Act 105 of 1983 (“the Act”). Botha JA at page 831 said the following : -

“A claimant applying for an order in terms of s 5(3)(a) should be required, in addition to nominating the forum of his choice, to show prima facie that this claim is enforceable in that forum. This requirement is closely allied to the requirement that the claimant must satisfy the Court that he has a prima facie case on the merits against the person against whom he wishes to institute proceedings.”

The learned judge then went on to hold that the test which has been laid down in applications for attachment to found jurisdiction applies equally to cases where the arrest of a vessel is sought. The learned judge of appeal referred to the dicta of Steyn J (as he then was) in Bradbury Gretorex Co (Colonial) Ltd v Standard Trading Co (Pty) Ltd 1953 (3) SA 529 (W) :

“The authorities and consideration to which I have referred seem to justify the conclusion that the requirement of a prima facie cause of action, in relation to an attachment to found jurisdiction, is satisfied where there is evidence which, if accepted, will show a cause of action. The mere fact that such evidence is contradicted would not disentitle the applicant to the remedy. Even where the probabilities are against him, the requirement would still be satisfied. It is only where it is quite clear that he has no action, or cannot succeed, that an attachment should be refused or discharged on the ground here in question.”

It seems to me that what was stated in the mv Dimitris is the law. Counsel for the intervening respondent cited cases which suggest that the mv Dimitris should be reconsidered. Sitting as a single judge I would not have the temerity to embark on that exercise.

The applicant’s cause of action is a straightforward one. It alleges an agreement of charter concluded between it and Shinpetrol. That agreement was repudiated resulting in the applicant suffering damages. The facts show that SOPAS which held itself out to be the duly authorised agent of the respondent concluded an agreement with the applicant’s agent. Shinpetrol disputes that SOPAS had the necessary authority. The respondent asserts basically that it was the victim of a fraud perpetrated by servants of SOPAS acting in concert with Mr Hung. In the nature of things the applicant would have no knowledge of whether SOPAS was authorised or not. In chartering transactions of this nature the authority of a broker is taken for granted and never questioned. Certainly from 18th February to 3rd March 2006 SOPAS performed acts which are consistent with it being the manager of the vessel or an agent duly authorised to fix charterparties. It also asserted its authority and the hearsay evidence thereof is admissible evidence in these proceedings (see section 6(3)). During this period it also made efforts to recruit a sub-agent in the port of Beira. I think counsel for the applicant is right when he argues that in considering the evidence led in support of the cause of action I would be entitled to have regard to the inherent probabilities, particularly in a case where the question of whether authority existed is a matter which is peculiarly within the knowledge of the respondent and SOPAS. It seems to me that the probabilities arising from facts adduced in the affidavits could be very important in determining whether a prima facie case exits or not.

It is inherently improbable that SOPAS would take it upon itself to fix a charterparty for this vessel, and moreover at a stage before delivery thereof had been effected, without authority from the future new owners. It strikes me as being an act of extreme recklessness for it to have done so and to jeopardise its reputation in the shipping world. There is also substance in counsel for the applicant’s contention that there was a delay before the respondent repudiated the charterparty. One would have expected decisive and unequivocal rejection of SOPAS’s acts the moment it came to Shinpetrol’s notice. It is not unlikely that the rejection took place at a stage when Shinpetrol had fixed a charter for the vessel with MUR, a charter which was more lucrative than that concluded with the applicant.

Certainly there are contradictions in the version of SOPAS. In the early stages SOPAS acts as and declares itself quite unequivocally to be an agent or manager of the vessel. There is evidence that thereafter it conceded that it did not have the necessary authority to fix the charterparty with the applicant. Shinpetrol’s counsel in argument highlighted this and submitted that this established the lack of authority beyond any doubt.

In my view there is merit in the submission that if Mr Hung had deviously perpetrated the acts which Shinpetrol says he did, it is surprising that as at 1st June 2006 he was still in its employ. Indeed, although the Vietnamese police had become involved no one had been prosecuted. The timing of the report to the police is not without significance. Shinpetrol was aware in early March of the activities of SOPAS. It only reported the matter to the police on 31 March 2006. It is important to note that at that stage the respondent had been arrested. Shinpetrol needed to extricate itself from a difficult situation. It is not unlikely that this whole episode of the police involvement may have been part of a cover-up.

In my view after weighing all the aforementioned factors I am satisfied that the applicant has adduced sufficient evidence on these papers to establish a prima facie cause of action. It follows therefore that

(1) the arrest of the respondent is confirmed;

(2) the intervening application is dismissed;

(3) the intervening respondent (Shinpetrol)

is directed to pay the applicant’s costs.

DATE OF JUDGMENT : MARCH 2007

DATE OF HEARING : 12 DECEMBER 2006

COUNSEL FOR THE APPLICANT : MR A. M. STEWART SC

INSTRUCTED BY : COX YEATS, DURBAN

COUNSEL FOR INTERVENING

RESPONDENT : MR S. R. MULLINS SC

INSTRUCTED BY : SHEPSTONE & WYLIE, DURBAN