SOUTH AFRICA

Craig Forrest*

350. CH Offshore Ltd v PDV Marina Sa, The Right, Title and Interest of the First
Respondent in and to the Mt Rio Caroni including all Bunkers, Lubricating and other
Oils, Spare Parts, Provisions and other Equipment and Others 1
Security arrestnature of interest under demise charterparty

CH Offshore Ltd (CHO), a Singaporean provider of offshore support services, entered into a
four-year charterparty for two anchor-handling and supply tugs with PDV Marina SA (PDV), a
wholly owned subsidiary and the shipping arm of Petroleos de Venezuela SA, Venezuelas state
oil company. PDV assigned the charterparties to Astilleros De Venezuela CA (Astilleros), with
the agreement of CHO, on the basis that PDV would remain liable, with Astilleros, for payment of
the hire charges. Astilleros subsequently defaulted on the hire payments and, when the tugs were
eventually redelivered to CHO, its claim for arrear hire, additional hire and demobilisation charges
exceeded US$50 million. The claim was not paid and the applicant instituted proceedings in
London against PDV and Astilleros. Seeking security in relation to these proceedings, CHO had
the MT Rio Caroni, a crude oil tanker lying at anchor outside Durban harbour, arrested. PDV was
the demise charterer of the MT Rio Caroni, and sought to have the arrest reconsidered (as it had
been made ex parte and in their absence) on the basis that their rights in the vessel were
contractual rights and not located within the jurisdiction of the court.
Decision: Application succeeds.
Held: (1) Section 5(3) of the Admiralty Jurisdiction Regulation Act2 provides that a court may in
the exercise of its admiralty jurisdiction order the arrest of any property for the purpose of
providing security for a claim which is or may be the subject of an arbitration or any proceedings
contemplated, pending or proceeding, either in the Republic or elsewhere, and whether or not it is
subject to the law of the Republic, if the person seeking the arrest has a claim enforceable by an
action in personam against the owner of the property concerned or an action in rem against such
property or which would be so enforceable but for any such arbitration or proceedings. In an
application for a reconsideration of the order for such an arrest, the applicant who obtained the
order for the arrest retains the onus of satisfying the court that it was entitled to the order.3
* Director of the Marine and Shipping Law Unit and Reader, TC Beirne School of Law, University of
Queensland, Australia.
1. Case no: A113/2013, 5 November 2013, High Court of South Africa (KwaZulu-Natal).
2. Act No 105 of 1983.
3. Citing Cargo Laden and Lately Laden on Board the MV Thalassini Avgi v MV Dimitris 1989 (3) SA 820 (A),
833G and MV Orient Stride: Asiatic Shipping Services Inc v Elgina Marine Co Ltd 2009 (1) SA 246 (SCA), [5].

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INTERNATIONAL MARITIME AND COMMERCIAL LAW YEARBOOK
(2) A security arrest in terms of the Admiralty Jurisdiction Regulation Act, s.5(3) is not a
proceeding in rem but is a stand-alone procedure unconnected with any action before a South

African court.4 As such, those provisions of the Act that provide that, for the purposes of an
action in rem, a charterer by demise shall be deemed to be, or to have been, the owner of the ship
for the period of the charter by demise, are inapplicable.
(3) A demise charterer does not during the period of the charter step into the shoes of the owner in
all respects, and the statement that the charterer becomes, for the time, the owner of the vessel
should not be taken literally. The statement that the demise charterer is regarded as the owner refer
generally to his obligations arising out of the operation of the vessel and as the employer of the
master and crew, rather than to his rights in the vessel.
(4) When considering the rights the demise charterer has in the vessel, a distinction must be drawn
between the right to possess something (ius possidendi) and the entitlements and privileges that
flow from the fact of possession (ius possessionis). A ius possidendi can flow from either a
personal right (such as a contract) or a real right (eg, ownership). On the other hand, a ius
possessionis denotes all powers and privileges flowing from the mere basis of being in possession
of a thing.5 A lessee of movables, unlike that of immovables, does not have a real right by virtue
of his possession of it.6 As such, the lessee of a ship, which is by demise charter, does not have a
real right in the vessel, only contractual rights. As such, the situs is where the owner of the ship
resides as the party against whom the contractual right can be enforced. PDVs possessory rights
in the vessel (as opposed to its ius possidendi in terms of the charterparty) cannot be arrested as
security for the applicants claim.
(5) This accords with the intent of the security arrest provisions, which seek to ensure that the
property arrested can ultimately be sold to satisfy a claim.7

351. Kalahari Mining Logistics (Pty) Ltd and

Others v Wilest International 8
In rem actionvindicatory claim to cargo

Wilest International PVT Co Ltd (Wilest) had arranged to acquire bulk iron ore from a mine
operated by Timasani (Pty) Ltd. Wilest negotiated with Baobab Holdings (Pty) Ltd (Baobab) to
collect the ore from the mine, transport it to the Port of Saldanha Bay and retain it there for
shipment abroad. Baobab was one of a number of companies operating as part of the Independent
Freight Carrier (Pty) Ltd (IFC) group. Whilst Wilest and Baobab had extensive negotiations in
relation to the shipment, no formal written agreement had been concluded. Nevertheless, the ore
was collected and transported to the Port. When Wilest failed to pay for the shipment, IFC
indicated that it would exercise its lien and
4. Citing M Wallis, The Associated Ship and South African Admiralty Jurisdiction (Siber Inc, South Africa,
2010), 309; J Hare, Shipping Law and Admiralty Jurisdiction in South Africa (Juta, Cape Town, 2009), 84;
and MV Rizcun Trader v Manley Appledore Shipping Ltd 2000 (3) SA 776 (C), 785G.
5. Citing Silberberg & Schoeman: The Law of Property, 5th edn (LexisNexis, Durban, 2006), 273.
6. Citing AJ Kerr, The Law of Sale and Lease, 3rd edn (Butterworths, Durban 2004), 437 and Silberberg &
Schoeman: The Law of Property, 5th edn (2006), 432; R Zimmerman, The Law of Obligations (1996), 351, and
CG Van der Merwe, Sakereg, 2nd edn (Butterworths, Durban, 1989), 68 and 599.
7. Citing Zygos Corp v Salen Rederierna AB1984 (4) SA 444 (C), 461E.
8. Case No A18/2013, 30 May 2013, High Court of South Africa (KwaZulu-Natal).

SOUTH AFRICA

189
sell the ore, which it subsequently did. The ore was comingled with ore owned by IFC, sold to
Metmar Trading (Pty) Ltd and loaded aboard the MV Hua Qiang at the Port of Saldanha. Wilest
obtained an interdict subject to a rule nisi, preventing the IFC Group companies from alienating or
otherwise disposing of the ore and authorising the sheriff to attach the ore. The rule nisi included a
provision that the iron ore be redelivered to Wilest against payment of an admitted liability and
the provision of security. However, the sheriff was unable to effect the attachment, as the vessel
had already departed the Port of Saldahna en route for China, though it was also to call at the
South African Port of Richards Bay. Wilest therefore commenced an in rem action, with the
defendant being the cargo of iron ore aboard the MV Hua Qiang. The in rem summons contained
the allegation that the plaintiff is the owner of the defendant cargo and the prayer was for
delivery of the aforesaid Defendant cargo or payment equivalent value of the cargo. The arrest
was effected, security was subsequently provided and the vessel sailed though the cargo was
subject to a deemed arrest in accordance with s.3(10) of the Admiralty Jurisdiction Regulation
Act.9
The relevant companies within the IFC group brought an application, as a matter urgency, for the
setting aside of the deemed arrest and return of the security. This challenge to the arrest was based
upon the contentions that Wilest was not the owner of the iron ore in question; that claim to
ownership and the entitlement to vindicate the iron ore was not a recognised maritime claim as
defined in the Admiralty Jurisdiction Regulation Act, s.1(1) and that, notwithstanding the issue as
to the nature of the claim, a vindicatory claim with regard to movable property other than a ship
was not recognised as enforceable by way of an action in rem.
Decision: Application approved; deemed arrest set aside.
Held: (1) The party which obtained and seeks to sustain the arrest (Wilest) must satisfy the court
that, on a balance of probabilities, it has a maritime claim as defined in the Admiralty Jurisdiction
Regulation Act, s.1 which is enforceable in rem and that the defendant cargo is the property
against or in respect of which its vindicatory claim lies; and that, prima facie it has a valid
vindicatory claim in that it is the owner of the defendant cargo and entitled to delivery
thereof.10Where the question is a matter of law, Wilest must satisfy the court that its contentions
are correct if it is to sustain the arrest.
(2) Wilest discharged the burden of establishing prima facie that it had acquired ownership of the
iron ore and, as the relevant ore had been comingled with that of IFC, Wilest became the co-owner
of the comingled whole in proportion to the share which belonged to each before the
merger.11 The property is therefore capable of arrest even if it is co-owned by a third party.12
(3) The Admiralty Jurisdiction Regulation Act, s.3(4) provides that a maritime claim may be
enforced by an action in rem (a) if the claimant has a maritime lien over the property to be
arrested; or (b) if the owner of the property to be arrested would be liable to the claimant in an
action in personam in respect of the cause of action concerned.
9. Act No 105 of 1983.
10. Citing The Thalassini Avgi 1989 (3) SA 820 (A).
11. Citing Grotius 2.8.8 and Voet 41.1.23.
12. Citing The Wisdom (No 2) SCOSA B 201 (D), 214215.

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INTERNATIONAL MARITIME AND COMMERCIAL LAW YEARBOOK

This section does not create a numerus clausus of actions in rem and the provisions of the
Admiralty Jurisdiction Regulation Act, s.6(1)(a) applies, such that any matter in respect of which
a court of Admiralty of the Republic referred to in the Colonial Courts of Admiralty Act, 1890, of
the United Kingdom, had jurisdiction immediately before the commencement of this Act is
admissible.
(4) As English admiralty law recognises that a vindicatory claim by an alleged owner of a ship
may be enforced by action in rem,13 such an action is available in South Africa.14 However, the
remedy of an action in rem to enforce a vindicatory claim is limited to an action in rem against a
ship and cannot extend to cargo. 15 An action in rem cannot then be used by Wilest as a means of
vindicating its claim to the iron ore.
(5) That being the case, it was not necessary to deal with the question whether Wilests
vindicatory claim is a maritime claim.

352. Kuwiba Shipping Hong Kong Ltd v Prima

Shipping Co Ltd (MV Alina II) 16
Construction of charterpartymeaning of disponent owner

In October 2009, the bulk carrier MV Alina II was berthed at the Langebaan iron ore terminal in
the Port of Saldanha Bay, having loaded a cargo of iron ore. A port list was discovered shortly
after loading was completed, attributed to an ingress of water into a ballast tank due to a fracture
in the hull. As the vessel was rendered unseaworthy, the cargo had to be transferred to other,
smaller vessels, which entailed a difficult and time-consuming process. The MV Alina IIonly left
the berth five months later. This resulted in delays in the export of ore for a lengthy period of time
and has resulted in claims of many hundreds of millions of US dollars.17 Kumba Shipping Hong
Kong Ltd (Kumba) had chartered the vessel from Prima Shipping Co Ltd (Prima), the first
respondent. Kumba alleged that it had a maritime claim against Prima in excess of US$500
million for the losses suffered by it as a consequence of the inability of the vessel to complete its
voyage to China.
Pursuant to s.5(3) of the Admiralty Jurisdiction Regulation Act,18 Kumba successfully applied to
have the bunkers on board the MV Alina II arrested in order to obtain security in relation to
arbitral proceedings in London. The vessel was released from arrest pursuant to security put up by
Prima. Prima subsequently launched an application in terms of the Admiralty Jurisdiction
Regulation Act, s.5(2) to set aside the arrest, and for return of the letter of undertaking, on the
basis that it was not the owner of the bunkers.
13. Citing Roscoe, The Admiralty Jurisdiction and Practice of the High Court of Justice, 5th edn (Stevens,
London, 1931).
14. Citing Dias Compania Naviera SA v mv Al Kaziemah & others 1994 (1) SA 570 (D) and Great River
Shipping Inc v Sunnyface Marine Ltd 1994 (1) SA 65 (C).
15. Citing The Atlantic Pride SCOSA B224 (C).
16. Case No AC47/2010, 28 January 2013, High Court of South Africa (Western Cape).

17. As to one of these claims, see Transnet Ltd v The Owner of the MV Alina II and Another [2011] ZASCA
129; Case No 898/10, 15 September 2011, Supreme Court of Appeal of South Africa; digested [2012] IMCLY
191.
18. Act No 105 of 1983.

SOUTH AFRICA
191
The contract between Prima and Kumba for the carriage of goods, concluded on 21 September
2009, was a voyage charterparty, and Prima was described therein as the disponent owner of the
vessel. Prima, however, contended that the MV Alina II was owned by Pompey Shipping Corp
(Pompey) and managed by Polembros Shipping Ltd (Polembros), and that Pompey had
concluded a voyage charterparty with Prima on 21 September 2009. Prima contended that the
bunkers had been placed on board the vessel in Singapore by Polembros on behalf of Pompey, and
was therefore owned by Pompey and not Prima. As such, Prima sought to have the arrest set aside.
Decision: Application to set aside the arrest dismissed.
Held: (1) The question of ownership of the bunkers fell to be determined by considering the terms
of the charterparty arrangement between Prima and Pompey. Prima, Pompey and Polemis19 are all
part of a loosely related family-owned group of companies. The charterparty between Prima and
Pompey was fixed orally internally such that the written charterparty purporting to be a voyage
charterparty was only reduced to writing after the vessel had been arrested in South Africa, and its
existence was only communicated to Kumba eight weeks after the arrest. That it had been reduced
to writing after the arrest was only revealed for the first time to the court with the filing of the
replying affidavit in the set-aside applicationnearly one and a half years after the bunkers were
arrested. There was therefore no plausible, independent documentation which supported the
evidence of a voyage charterparty between Prima and Pompey and it was improbable that so large
a shipping company would conclude oral charterparties that were not contemporaneously reduced
to writing. Furthermore, there were no double taxation advantages to concluding a voyage
charterparty rather than any other form of charterparty. In these circumstances, the necessity to
conclude the charterparty is misconceived and affords Prima no discernible reason for having had
to conclude a sub-voyage charterparty with Kumba. Rather, the probabilities point strongly to
the ex post facto creation of a purported charterparty with the express purpose of procuring the
release of the bunkers from arrest.
(2) The insurance cover over the vessel had features which suggest that it was contemplated by
Pompey that the vessel would be used for time or bareboat charters, rather than voyage charters.
(3) Primas description of itself as a disponent owner in the charterparty with Kumba leads to the
reasonable conclusion that its use of the vessel (belonging to Pompey) was pursuant to either a
demise or time charterparty concluded with Pompey.
(4) In the absence of relevant provisions to the contrary in a demise charterparty, the demise
charterer would, during the period of the charter, purchase and become the owner of the
bunkers.20 Time charters usually provide that the charterer shall provide and pay for all bunker
fuel, which is, so far as unconsumed, to be taken over by the owners on redelivery at an agreed
price. It is a question of construction whether such bunkers remain the property of the charterer
until consumed, and whether any remaining unconsumed vest in the owner on the termination of
the charter.21 There being no other basis advanced for

19. Citing JP Morgan Chase Bank v Springwell Navigation Corp [2008] EWHC 1186 (Comm).
20. Citing G Hofmeyr, Admiralty Jurisdiction, Law and Practice in South Africa (Juta, Cape Town, 2006), 105.
21. Citing Sir AA Mocatta, Sir MJ Mustill and SC Boyd, Scrutton on Charterparties, 19th edn (Sweet &
Maxwell, London, 1984), 373.

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the possible ownership of the bunkers, and further while bearing in mind the customary use of the
term disponent owner, the only reasonable inference to be drawn in the circumstances is that
Prima had the vessel on a time or bareboat charter from Pompey and, as such, was the owner of
the bunkers.

353. Lorcom Thirteen (Pty) Td v Zurich Insurance Co

South Africa Ltd 22
Marine insuranceinsurable interest

Lorcom Thirteen (Pty) Ltd (Lorcom) held all the shares in Gansbaai Fishing Wholesalers (Pty)
Ltd (GFW), the owner of the fishing vessel Buccaneer. A Mr Crous, through his 100 per cent
members interest in a close corporation called Millivent Thirty Four (Pty) Ltd (Millivent), and
Crous wife together owned 62.5 per cent of the shares in Lorcom. The other 37.5 per cent of
Lorcom was owned by the Buccaneer Crew Trust. Mr Crous agreed to sell the Buccaneer to a Mr
Theart. Crous and Theart agreed that the way in which Theart acquired the vessel was by buying
the members interest in Millivent from Crous, with the latter having arranged for Millivent to
acquire Mrs Crous shares in Lorcom, giving Millivent a 62.5 per cent shareholding in Lorcom.
Payment was made by a deposit and 39 instalments. Control of the assets as defined (including
the vessel, the fishing permit and the shares in Lorcom) would be given to Theart upon signature
and payment of the deposit. The members interest in Millivent would continue to vest in Crous
until the date of the final payment, although the risk, profit and loss in the members interest and
the assets would pass to Theart upon signature and payment of the deposit. In accordance with the
contract, Theart had to insure the assets and cede the policy to Crous. The loss of the vessel would
not affect Thearts obligation to make payment of the purchase price of the members interest. De
facto, Theart viewed himself as obtaining the entire interest in Lorcom, GFW and the vessel.
The insurance contract was concluded by Theart with Zurich Insurance Co South Africa Ltd
(Zurich) with Lorcom as the insured. The Buccaneer was insured for R3 million on Institute
Fishing Vessel Clauses issued by the Institute of London Underwriters. The proposal form did not
state that Lorcom was the owner of the vessel, nor did the form contain questions directed at
ascertaining the identity of the owner or the nature of Lorcoms interest in the vessel. Various
certificates were furnished to Zurich as part of the proposal, indicating or at least suggesting that
GFW was the owner rather than Lorcom. The Buccaneer was lost at sea in 2008.
Zurich refused to pay the claim, and Lorcom brought this action in which Zurich contended that
Lorcom did not have an insurable interest in the vessel and in any event, the loss fell outside the
ambit of the insurance cover.
Decision: Plaintiff succeeds.

Held: (1) There is no South African statute which lays down the need for a so-called insurable
interest. An enforceable insurance contract must, however, be distinguished from an
unenforceable betting transaction.23 The latter is a contract by which two persons
22. Case No 504/08, 29 April 2013, High Court of South Africa (Western Cape).
23. Citing Voet, Commentarius ad Pandectas, 11.5.2.

SOUTH AFRICA
193
agree that, dependent upon a future uncertain event, one shall win from the other, and the other
shall pay a sum of money or other stake, neither party having any other interest in the contract
than the stake he will win or lose, and there being no other real consideration for the
contract.24 What distinguishes an insurance contract from a wager is that there is a reason (apart
from the contract) why the happening of the event matters to the insured party. A contract of
insurance should be enforceable if it is not a gambling contract at common law.25
(2) If the insured can show that he stands to lose something of an appreciable commercial value by
the destruction of the thing insured, then, even though he has neither a jus in re nor a jus ad rem to
the thing insured, his interest will be an insurable one.26
(3) However, one cannot say, merely because the insured party has an insurable interest in an
asset, that he has an insurable interest sufficient to sustain cover of the kind for which the
particular policy provides in respect of the asset. Where, for example, a contract of insurance
promises to pay the market value of an asset upon its destruction, the question will be whether the
insurable interest the insured has in the asset is an insurable interest which will sustain insurance
against the loss of the market value of the asset.27
(4) An insurance contract which promises to pay a sum which may differ from (and exceed) the
insured partys patrimonial loss is enforceable.28 As such, the policy does not require Lorcom to
prove that the loss of the vessel caused it to suffer a patrimonial loss, whether in the amount of R3
million or any other sum, or to prove that Lorcom lost the vessel (in the sense of ceasing to own
it). On the assumption that an insurable interest is an independent requirement of our law, Lorcom
has a sufficient interest with reference to the value of the vessel. On the conventional view of
insurable interest, Lorcoms temporary right of use of the vessel and its right to earn profits from
the vessels exploitation would not be sufficient to sustain cover measured with reference to the
market value of the vessel. The temporary right of use would sustain cover related to the cost of
hiring a comparable vessel and for loss of profits, neither of which the policy in the present case
purported to provide. However, Lorcoms right of use did not stand alone. Lorcom had an interest
in the vessel via its 100 per cent shareholding in GFW. The combination of Lorcoms right of use,
its well-founded expectation that such use would continue until it became the owner of the vessel,
and its well-founded expectation that Lorcom would become the owner of the vessel by the date
of the last instalment gave Lorcom an insurable interest in cover measured with reference to the
market value of the vessel.
(5) At least in the case of a 100 per cent shareholder, there would appear to be a direct correlation
between the companys financial welfare and the shareholders financial welfare.29 Lorcoms 100
per cent shareholding in GFW, taken together with its right of use and its expectancy of becoming
owner on the date of the last instalment, is sufficient
24. Citing R v Bernstein 1927 TPD 487 and R v Theodosiou 1935 TPD 72, 7475.

25. Citing Phillips v General Accident Insurance Co (Pty) Ltd 1983 (4) 652 (W), 659F660E; Steyn v AA
Onderlinge Assuransie Assosiasie Bpk 1985 (4) SA 7 (T), 10E12I; Brightside Enterprises (Pvt) Ltd v Zimnat
Insurance Co Ltd 2003 (1) SA 318 (ZHC), 324BE.
26. Citing Armstrong v Bhamjee 1991 (3) SA 195 (A).
27. Citing Manderson t/a Hillcrest Electrical v Standard General Insurance Co Ltd 1996 (3) SA 434 (D).
28. Citing Littlejohn v Norwich Union Fire Insurance Soc 1905 TH 374.
29. Citing Stellenbosch Farmers Winery Ltd v Distillers Corp (SA) Ltd & Another 1962 (1) 458 (A).

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interest to render enforceable an insurance contract providing for payment of a loss of the market
value of the vessel.

354. Silver Star (The Owners of the MV) v Hilane

Ltd 30
Associated ship arrestburden of proof

Phiniqia International Shipping LLC (Phiniqia), a subsidiary and chartering arm of Trade Line
LLC (Trade), incorporated in the United Arab Emirates, entered into a charterparty on the
GENCON 1994 form with Hilane Ltd (Hilane), the owners of the MV Sheng Mu, to carry a
cargo of coking coal from Bandar Abbas, Iran to Vizag, India. A dispute arose in respect of the
charter of the vessel by Phiniqia and the breach by Phiniqia of its obligations, inter alia, in terms
of certain letters of indemnity issued by Phiniqia to the respondent in respect of bills of lading
relating to the cargo and its delivery. Prior to the shipment, the owners of the cargo had concluded
an agreement to sell it to Trade; and, as a result of the alleged breach by Phiniqia, a dispute arose
between the sellers of the cargo and Trade, giving rise to further disputes between Hilane and the
sellers of the cargo, and between Hilane and Phiniqia.
The sellers of the cargo instituted arbitration proceedings in London against Hilane in respect of
the latters alleged misdelivery of the cargo in terms of bills of lading issued and signed by the
master of the vessel. The sellers of the cargo then caused the Sheng Mu to be arrested in New
Zealand as security for the arbitration, which in turn caused Hilane to suffer further damages. In
order to enforce the indemnities furnished by Phiniqia to Hilane in terms of the GENCON 1994
charterparty, Hilane successfully prosecuted arbitration proceedings in London against Phiniqia,
pursuant to which it was directed that Hilane was entitled to the enforcement of its indemnities
and to the payment of its damages in the total amount of US$3,843,927.10.
To enforce the arbitration award, Hilane caused the MV Silver Star to be arrested in Port
Elizabeth, South Africa. Hilane contended that the registered owner of the Silver Star, Action
Partner Ltd (Action) was owned and/or controlled by Trade and that, on the basis of s.3(6) and
(7) of the Admiralty Jurisdiction Regulation Act,31 the MV Silver Star is an associated ship to
the Sheng Mu, as Trade, being the charter of the latter, is deemed to be the owner of the ship in
respect of any relevant maritime claim for which the charterer, and not the owner, is alleged to be
liable. Action, as owners of the Silver Star, applied to have the arrest set aside and for Hilane, the
respondent, to provide security for the applicants claim for damages against the respondent for
the wrongful arrest of the vessel without reasonable and probable cause. This application rested on

two assertions. The first was that, once an award in arbitration has been made the award itself
creates a new cause of action which replaces the original cause of action and therefore a claim in
rem against the vessel , such as the claim which the respondents seeks to enforce, does not arise
in respect of the Sheng Mu or indeed of any ship, but rather it arises from an award made in
arbitration as against Phiniqia. As such Hilane was not entitled to proceed with an
30. Case No A2282/2013, 28 August 2013, High Court of South Africa (Eastern Cape).
31. Act No 105 of 1983.

SOUTH AFRICA
195
associated ship arrest in the circumstances of the respondents claim. The second assertion denied
that the Silver Star was an associated ship in respect of the respondents claim.
Decision: Application dismissed.
Held: (1) Where the only purpose of the judgment is to enable the creditor to enforce his right of
payment, it was realistic, and in accordance with the view of the Roman-Dutch writers, to regard
the judgment not as novating the obligation, but rather as strengthening or re-enforcing
it.32 Where a novatio necessaria takes place on litis contestatio, it is clear that it does not
terminate the antecedent obligation or those things that were accessory to it, such as pledges,
sureties or interest.33 There is nothing unusual about an obligation being confirmed or re-enforced
by the incurrence of another obligation which is in effect an alternative to an antecedent one. The
position in South African law is that, although the original cause of action may survive in a reenforced and strengthened form, a judgment (or an arbitration award) may also give rise to a new,
independent cause of action enforceable between the parties in another court. The award therefore
creates an alternative obligation which exists alongside the original one. On this basis South
African law differs from English law as expressed in The Bumbesti.34 Moreover, the Admiralty
Jurisdiction Regulation Act, s.1(1)(aa) defines a maritime claim to include a claim arising out of
or in relation to any judgment or arbitration award relating to a maritime claim, whether given or
made in the Republic or elsewhere. As the arbitration award does not in South African law
extinguish the underlying cause of action, the arbitration award does arise in respect of the MV
Sheng Mu as envisaged in the associated ship regime.
(2) A dispute of fact on issues which arise in motion proceedings is to be approached in line with
what was stated in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd,35 which provides
that:
where in proceedings on notice of motion disputes of fact have arisen on the affidavits, a final
order . . . may be granted if those facts averred in the applicants affidavits which have been
admitted by the respondent, together with the facts alleged by the respondent, justify such an
order. The power of the Court to give such final relief on the papers before it is, however, not
confined to such a situation. In certain instances the denial by a respondent of a fact alleged by the
applicant may not be such as to raise a real, genuine or bona fide dispute of fact . . . If in such a
case the respondent has not availed himself of his right to apply for the deponents concerned to be
called for cross-examination . . . and the Court is satisfied as to the inherent credibility of the
applicants factual averment, it may proceed on the basis of the correctness thereof and include
this fact among those upon which it determines whether the applicant is entitled to the final relief
which he seeks . . . Moreover, there may be exceptions to this general rule, as, for example, where

the allegations or denials of the respondent are so far-fetched or clearly untenable that the Court is
justified in rejecting them merely on the papers . . .
(3) An applicant cannot by obtaining ex parte an order in his favour secure a more advantageous
position than he would have been in had the other party had an opportunity
32. Swadif v Dyke NO 1978 (1) SA 928 (A), 944G.
33. MV Ivory Tirupati v Badan Urusan Logistik (aka BULOG) 2003 (3) SA 104 (A).
34. [1999] 2 Lloyds Rep 481.
35. 1984 (3) SA 623 (A), 634H635C

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of putting counter allegations before the court. Consequently, if the other party applies for setting
aside the order, the original applicant retains the onus of satisfying the court that he was entitled to
it.36 As such, the respondent (Hilane) retains the onus to establish his entitlement to the arrest of
the vessel. In light of the evidence, there was no genuine, or bona fide, dispute of fact and the
vessel is accordingly an associated ship in respect of the respondents claim.

355. Sino West Shipping Co Ltd v NykHinode Line

Ltd 37
Associated ship arrestmeaning of control in asserting association

Hinode Line Ltd (Hinode) had entered into a sub-charter with the time charterer of the MV
Asian Forest. Hinode then sub-chartered the vessel to CPM Corp Ltd (CPM), which in turn
voyage chartered it to Sundial Shipping Co Ltd. The latter then ordered the vessel to sail for New
Mangalore, India, where it loaded a cargo of iron ore fines. Shortly after its departure for her
destination, Zhang Jia Gang (China), she developed a list and sank 3 nautical miles off New
Mangalore. The sinking was caused by the liquefaction of a cargo of iron ore fines due to moisture
content in excess of her transportable limit. Hinode (the respondent) contended that the cargo
constituted dangerous goods and its loading constituted a breach of the charterparty.
Alternatively, Hinode alleged that CPM was in breach of an implied indemnity. For the purpose of
obtaining security in arbitration contemplated in London, Hinode had the MV Sino Westarrested
on the basis that she was an associated ship to the MV Asian Forest. The contention was that the
same individual, Mr Wang, controlled both CPM and Sino West Shipping Co Ltd (Sino), the
owner of the MV Sino West.
Mr Wang was the sole shareholder in Smoothie Goodie Ltd, which in turn owned all the shares in
Sino. CPM had two shareholders, both of whom had full-time employment at Vasteast, a company
owned by Mr Wang. The shareholders of CPM had purchased the shares from a company owned
by Mr Wang, for a nominal amount, and only obtained the share certificates after the arrest of the
MV Sino West.
Sino sought an order setting aside the (deemed) arrest on the basis that no association existed.
Decision: Application dismissed.
Held: (1) Hinode has a claim enforceable in terms of s.5(3) of the Admiralty Jurisdiction
Regulation Act38 by an action in rem against a ship which purported to be an associated ship of the

ship concerned arising out of the breaches of the time charterparty concluded between it and
CPM.
(2) As applicant for the arrest of the associated ship, Hinode bears the burden of proving, on a
balance of probabilities, that the vessel arrested is an associated ship.
36. Citing Bradbury Gretorex Co (Colonial) Ltd v Standard Trading Company (Pty) Ltd 1953 (3) SA 529 (W)
and Cargo Laden on Board the mv. Thalassini Avgi v mv Dimitris 1989 (3) SA 820 (A).
37. [2013] ZAKZDHC 7.
38. Act No 105 of 1983.

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(3) The Admiralty Jurisdiction Regulation Act, s.7(a) provides that an associated ship means a
ship, other than the ship in respect of which the maritime claim arose . . . owned, at the time when
the action is commenced, by a company which is controlled by a person who owned the ship
concerned or controlled the company which owned the ship concerned, when the maritime claim
arose. Section 3(7)(b)(ii) provides that a person shall be deemed to control a company if he has
power, directly or indirectly, to control the company. Control relates to overall control, such as is
exercisable by a majority shareholder of the assets and destiny of the company and does not refer
to its day-to-day management and administration. Indirect power refers to the de facto position
of the person who commands or exerts authority over the person who is recognised to possess de
jure power. Direct power refers to a person who wields direct power vis--vis the company and
the outside world and who therefore in the eyes of the law controls the shareholding and directs
the fate of the company. In the case of an incorporated company, the person in control is the
person who in accordance with the appropriate legal system is regarded as controlling the affairs
of the company for the purposes of the law. Given that the shareholders of CPM purchased their
shares from a company owned by Mr Wang for a nominal amount, and were employees of Mr
Wang, and that no share certificates were issued until after the arrest of the MV Sino West, then
Mr Wang controlled CPM. This was further supported by the fact that Mr Wang held himself out
to be the owner of CPM in dealings with third parties, and effectively acted a guarantor of CPM
loans.
(4) The Admiralty Jurisdiction Regulation Act, s.3(7)(c) provides that: If at any time a ship was
the subject of a charter-party the charterer or sub charterer, as the case may be, shall. . . be deemed
to be the owner of the ship concerned in respect of any relevant maritime claim for which the
charterer or the sub charterer, and not the owner, is alleged to be liable. Since CPM had chartered
the MV Asian Forest vessel to Sundial Shipping Co Ltd and the latter ordered it to sail and load a
cargo of iron ore fines at New Mangalore, CPM is the deemed owner of the Asian Forest.
(5) In the case of an incorporated company, a person in control is the person who is in accordance
with the appropriate legal system regarded as controlling the affairs of the company for the
purposes of the law. The Admiralty Jurisdiction Regulation Act, s.3(7)(b)(ii) requires that the
claimant need establish no more than that the person concerned has the power to control the
company concerned, directly or indirectly.39 In this, the legislature came to the aid of the claimant
who seeks to rely on the associated ship provisions of the act in order to recover money due to him
from the owner of an associated ship. It is frequently difficult for a claimant in this position to
establish and prove who the beneficial owners of the shares in a particular shipowning company

are, because they are concealed from him. As Mr Wang was the sole shareholder of Smoothie
Goodie, which owned all the shares in Sino, Mr Wang had the controlling interest in Sino.40 On
the balance of probabilities, Mr Wang was, at the time when the claim arose, in control of CPM,
was the deemed owner of the Asian Forest, and, at the time of the arrest of Sino West vessel,
was de jurein control over Sino West Shipping Co Ltd, the company owning the arrested
39. Citing MV Heavy Metal Palm Base Maritime CDN BHD v Dahlia Maritime 1998(4) SA 479 (CPD), 491A
B.
40. Citing Inland Revenue Commissioners v Bibby and Sons Ltd [1945] 1 All ER 667, 668 670.

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vessel. As a consequence the Sino West was an associated ship of the Asian Forest at the time of
its arrest.

356. Snow Petrel (The MV) and Another v Ex-Ex

Travel CC 41
Security arrestconditions for such arrest

Ex Ex Travel CC (Ex Ex) concluded a charterparty with Blue Waters Marine LLC (Blue
Waters), the owners of the MV Snow Petrel, for the charter of that vessel for two months. Ex Ex
claimed a breach of the charterparty in that Blue Waters failed to deliver the vessel on the date
agreed and in the condition agreed in the charterparty. In support of this claim, Ex Ex had
the Snow Petrel arrested, and it remained under deemed arrest after security was furnished in
accordance with s.3(10) of the Admiralty Jurisdiction Regulation Act.42 Blue Waters instituted a
counterclaim against Ex Ex for damages arising from an alleged repudiation of the charterparty
and applied for security for costs in relation to the defence of the main claim. The applicants
sought counter-security for its counterclaim as well as security for costs in relation to the defence
of the main claim in accordance with the Admiralty Jurisdiction Regulation Act, s.5(2).
Decision: Application dismissed.
Held: (1) The Admiralty Jurisdiction Regulation Act, s.5(2) provides that a court may in the
exercise of its admiralty jurisdiction. . . (b) order any person to give security for costs or for 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 otherwise. The courts power extends to the granting of counter-security in an
admiralty action. In such a case, the applicant must establish a prima facie case in respect of its
counterclaim and that it has a genuine and reasonable need for security. In exercising its discretion
to order such security, the court is guided by the general principles applicable to ordering security
for a claim.
(2) The requirement to establish a prima facie case is satisfied if it is shown that there is evidence
which, if accepted, will establish a cause of action.43 In the context of attachment to found or
confirm jurisdiction, the mere fact that such evidence is contradicted will not disentitle the
applicant to reliefnot even if the probabilities are against him; it is only where it is quite clear
that the applicant has no action, or cannot succeed, that an attachment should be refused.44 This

test is applied also to security arrests in accordance with the Admiralty Jurisdiction Regulation
Act, s.5(3) in addition to arrest to found or confirm jurisdiction.45 However, the low-level test to
found or confirm jurisdiction is not relevant to cases for security arrest and the court can take into
account evidence that is not or cannot be disputed, even though the facts will be considered at a
later stage at
41. Case No ECD 1971/11, 18 July 2013, High Court of South Africa (Eastern Cape).
42. Act No 105 of 1983.
43. Citing Hulse-Rutter and Others v Godde 2001 (4) SA 1336 (SCA).
44. Hulse-Rutter and Others v Godde 2001 (4) SA 1336 (SCA), [12], per Scott JA, citing Bradbury Gretorex
Co (Colonial) Ltd v Standard Trading Co (Pty) Ltd 1953 (3) SA 529 (W)
45. Citing The Thalassini Avgi 1989 (3) SA 820 (A).

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trial.46 Furthermore, when the court is asked to draw factual inferences from the evidence, they
must be inferences that can reasonably be drawn for those facts, even if they are not the only
possible inferences. If the inferences are tenuous or far-fetched, the onus is not discharged.
Second, the drawing of inferences from the facts must be based on proven facts and not matters of
speculation.
(3) Moreover, in such cases for counter-security, where the court has a wide power, an applicant
may be required to show more than merely a prima facie case.47 In this case, the allegation that the
vessel was delivered in accordance with the agreement was crucial to the applicants defence in
convention and its claim in reconvention; and, as such, the higher burden was imposed. Blue
Waters had failed to provide evidence that the vessel was delivered in accordance with the
agreement, merely asserting that it had done so; and, as such, it had failed to discharge this
burden.
46. Citing The MV Pasqualle 2012 (1) SA 58 (SCA).
47. Citing MV Heavy Metal Belfry Marine Ltd v Palm Base Maritime SDN BHD 2000 (1) SA 286 (C).