REPUBLIC OF SOUTH AFRICA

IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

Case number:
513/2001
Reportable

In the matter between:

Mv ‘IVORY TIRUPATI’
First Appellant
CASTERBRIDGE NAVIGATION
COMPANY LIMITED
Second Appellant

and

BADAN URUSAN LOGISTIK
Respondent

CORAM:
HEFER AP, SCOTT, FARLAM, CONRADIE JJA et
JONES AJA

HEARD:

19 NOVEMBER 2002

DELIVERED:
29 NOVEMBER 2002

_____________________________________________________________
JUDGMENT
Shipping – Admiralty Jurisdiction Regulation Act 105 of 1983, ss 3(6) and 3(8) – whether
maritime claim based on damage to cargo the same as claim based on judgment given in respect
of that damage – letter of undertaking, construction of.
_____________________________________________________________
FARLAM JA

[1] This is an appeal from a judgment of Davis J, sitting in the Cape of
Good Hope Provincial Division of the High Court, in which an application
brought by the appellants to set aside the arrest of the first appellant was
dismissed with costs.  The judgment of the court a quo has been reported:
see 2002(2) SA 407(C).
[2] The first appellant, the ‘Ivory Tirupati’, was arrested on 11 January
2000 in Cape Town at the instance of the respondent.  The action in rem
instituted by the arrest was for the enforcement, inter alia, of a maritime
claim arising out of a judgment given in the High Court of the Hong Kong
Special Administrative Region, Court of First Instance, on 31 May 1999 in
favour of the respondent against the owner of the ship ‘Amer Prabha’ for
payment of US$ 331 322.30.  It was alleged by the respondent that the
‘Ivory Tirupati’ was an associated ship of the ‘Amer Prabha’ as
contemplated by section 3(6) and 3(7)(a) of the Admiralty Jurisdiction

Regulation Act 105 of 1983, as amended (to which I shall refer in what
follows as ‘the Act’).
[3] Before the judgment on which the respondent’s claim against the first
appellant vessel was based was given by the Hong Kong Court, the ‘Amer
Prabha’ had been arrested in Singapore at the instance of the respondent in
connection with the claim in respect of which the respondent eventually
obtained judgment and she was released after a letter of undertaking had
been issued to the respondent on 30 October 1997 by Ocean Marine Mutual
Insurance Association Ltd (to which I shall refer in what follows as ‘Ocean
Marine’).
[4] The letter of undertaking furnished to the respondent read, as far as is
material, as follows:
‘SHIP

“AMER PRABHA”
VOYAGE

KANDLA, INDIA TO JAKARTA, INDONESIA

CARGO

15,254.444 TONNES OF INDIAN RICE
B/L
NOS 1/NY AND 2/NY BOTH DATED NEW YORK,
N.Y.26 DECEMBER, 1995
CLAIM

US $ 331,332,30’

In consideration of the owners of and other persons interested in the cargo
referred to above (hereinafter together referred to as the ‘Cargo Owners’)
consenting to the release from arrest and/or refraining from taking action resulting
in the arrest of the above-named ship or any other ship in the same or associated
ownership, management or control for the purpose of founding jurisdiction of any
claims of the said Cargo Owners concerning the cargo mentioned above, against
the above-named ship and/or Casterbridge Navigation Company Limited [the
second appellant], the owners thereof and of Cargo Owners refraining from
commencing and/or prosecuting legal or arbitration proceedings in respect of the
above claims (otherwise than before the Court referred to below) against the said
owners, we Ocean Marine Mutual Insurance Association Limited hereby
undertake to pay to you on demand such sums as may be adjudged by the
Supreme Court of Hong Kong or any appeal thereof or as may be agreed to be
recoverable from the above-named ship and/or the owners therefore in respect of
the said claims, interests and costs of the Cargo Owners provided that the total of
our liability shall not exceed the sum of United States Dollar Three Hundred and
Thirty One Thousand Three Hundred and Thirty Two and Thirty Cents (US $
331, 332.30) plus interest and costs.
And for the consideration aforesaid:-
...
2.
We further undertake that we will, within 14 days of the receipt from you
of a request so to do, instruct solicitors to accept on behalf of the owners of the
above-named ship service of proceedings brought by the Cargo Owners in the
Supreme Court of Hong Kong and to file acknowledgement of service thereto.

3.
We confirm that the Owners of the above-mentioned claims shall be
subject to Hong Kong law and to the exclusive jurisdiction of the Supreme
Court of Hong Kong.

...
This undertaking shall be governed by and construed in accordance with
English law and we agree to submit to the exclusive jurisdiction of the
English Courts for the purpose of any process for the enforcement thereof.
...’

[5] After the Hong Kong Court had given judgment against the owners of
the ‘Amer Prabha’ on 31 May 1999 the respondent’s solicitors sent a formal
demand to Ocean Marine’s solicitors asking that Ocean Marine effect
payment of the judgment amount within fourteen days and stating that
should this not be done the respondent would take steps to enforce the
judgment.

Ocean Marine did not comply with this demand.  It is common cause
on the papers that it is in provisional liquidation.
[6] Before the contentions of the appellants are considered it is
appropriate to set out the relevant sections of the Act.

Section 1(1) contains a definition of the expression ‘maritime claim’.
As far as is material it reads as follows:
‘“maritime claim” means any claim for, arising out of or relating to –
...
(g)
loss of or damage to goods ... carried or which ought to have been carried
in a ship, whether such claim arises out of any agreement or otherwise;

...
(aa)
any judgment or arbitration award relating to a maritime claim, whether
given or made in the Republic or elsewhere;

...’

As far as is material section 3(6) reads as follows:
‘... [A]n action in rem, ... may be brought by the arrest of an associated ship
instead of the ship in respect of which the maritime claim arose.’

Section 3(8) is in the following terms:
‘Property shall not be arrested and security therefor shall not be given more than
once in respect of the same maritime claim by the same claimant.’

[7] The appellants sought the setting aside of the arrest of the first
appellant on five main grounds, viz.:

(a)
the first appellant was not an associated ship of the ‘Amer
Prabha’, within the meaning of section 3(6) and (7) of the Act;
(b)
as the respondent had arrested the ‘Amer Prabha’ herself in
Singapore in connection with its claim and had been given security
therefor in order to procure the release of the ‘Amer Prabha’ from
arrest, the respondent was by reason of the provisions of section 3(6)
and (8) of the Act not entitled to arrest the first appellant;
(c)
the arrest of the first appellant was precluded by the terms of
the letter of undertaking given to the respondent to secure the release
of the ‘Amer Prabha’;
(d)
the respondent had no right to institute its action in rem in this
country because it had agreed, in return for receiving the letter of
undertaking, to submit its claims to the exclusive jurisdiction of the
Supreme Court of Hong Kong.

(e)
there could be no arrest of an associated ship where judgment
had already been obtained against the ship in respect of which the
maritime claim arose, pursuant to an arrest of that ship.
[8] The Court below rejected all the grounds on which the arrest of the
first appellant was attacked and, as has been said, dismissed the appellants’
application with costs.
[9] The first and fourth grounds of attack, viz that the first appellant is not
an associated ship of the ‘Amer Prabha’ and that the respondent’s claim had
been submitted to the exclusive jurisdiction of the Hong Kong Court, were
not persisted in on appeal and it is accordingly not necessary to say anything
more about them.
[10] The basis for the court a quo’s decision that the appellants could not
rely on section 3 (6) of the Act was that the arrest of the first appellant was
not effected in respect of the same maritime claim as the earlier arrest of the

‘Amer Prabha’.  Pointing to the fact that a claim for ‘loss of or damage to
goods ... carried or which ought to have been carried in a ship, whether such
claim arises out of any agreement or otherwise’ is covered by paragraph (g)
of the definition of ‘maritime claim’, while a claim in respect of a judgment
relating to a maritime claim falls under paragraph (aa) of the definition,
Davis J said that the Act presupposed two separate claims and that the
respondent’s claim for the enforcement of the Hong Kong judgment was a
maritime claim in its own right.  He held further that ‘although entirely a
derivative cause of action [it had] a separate and distinct existence which is
recognised expressly by the Act.’  (See the reported judgment at 419 A-C.)
[11] Davis J also said (at 418 G) that if he had not been sitting, as he put it,
‘in terms of admiralty jurisdiction’ the conclusion might well have been
different.  This was because it had been held in Trust Bank of Africa Ltd v
Dhooma 1970 (3) SA 304 (N) and Swadif (Pty) Ltd v Dyke NO 1978(1) SA

928(A) that ‘it is artificial to regard a judgment as having, in all
circumstances, the effect of a novation’.
[12] Davis J rejected the appellants’ arguments based on the provisions of
section 3(8) of the Act on two bases:  firstly, for the reasons he had given in
regard to their section 3(6) argument, because he was satisfied that the first
appellant was not arrested in respect of the same maritime claim as the claim
which formed the subject matter of the arrest of the ‘Amer Prabha’, and
secondly because, so he held, section 3(8) could not operate because the
letter of undertaking given by Ocean Marine to procure the release of the
‘Amer Prabha’ did not constitute ‘security’ within the meaning of the
subsection.  In respect of this second ground the learned judge relied on the
decision of Niles-Dunér J sitting in the Durban and Coast Local Division in
The Merak S [2000] 1 Lloyd’s Rep 619(SA Ct).  In view of the fact that this
decision has since been overruled by this Court (see The Merak S 2002(4)

SA 273 (SCA)) it was conceded by counsel for the respondent that the
second ground relied on by Davis J on this part of the case could not be
sustained on appeal.
[13]     In respect of the contentions raised by the appellants in regard to the
letter of undertaking Davis J held that as the effect of the undertaking was to
preclude the respondent from arresting the ‘Amer Prabha’ or any other ship
in the same or associated ownership, management or control ‘for the purpose
of founding jurisdiction and/or obtaining security in respect of any claim of
the said cargo owners concerning the cargo’ the dispute raised by the
respondent’s claim to enforce its judgment took the dispute outside the scope
of the undertaking.
[14] He also held that the respondent could resile from its undertaking not
to arrest an associated ship because reciprocity existed between that
undertaking and Ocean Marine’s obligation to honour the guarantee given

by it with the result that on Ocean Marine’s failure to pay the judgment on
demand the respondent became entitled to arrest the first appellant.
[15] Mr Hofmeyr, who appeared together with Mr MacWilliam on behalf
of the appellants, contended that the respondent’s claim on the Hong Kong
judgment was the same as the cargo claim on which the Amer Prabha had
been arrested in Singapore with the result that the arrest of the first appellant
was precluded by both section 3(6) and 3(8) of the Act.
[16] He contended that the reasoning of the court a quo, which has been
summarised in para [10] above, was erroneous.  In developing this
argument, he submitted that the prohibition inherent in section 3(6) is a
prohibition against the institution of the same action in rem twice, once
against the guilty ship (ie the ship in respect of which the maritime claim
arose) and also against the associated ship.  In deciding whether it is the
same action in rem which is being instituted more than once one has to have

regard to the underlying cause of action and not to the particular maritime
claims listed in the definition of maritime claim in section 1(1) which arise
from the applicable cause of action.  He pointed out that the construction
adopted by the court a quo leads to a striking anomaly which could never
have been intended by the legislature.  To demonstrate this he gave a
number of examples of which it is only necessary to mention one.  A
collision at sea usually gives rise to both a maritime claim in terms of
paragraph (e) of the definition (damage caused in the collision) and a
maritime claim in terms of paragraph (y) thereof (a maritime lien).  If the
construction adopted by the court a quo were correct a party could arrest a
ship which has caused damage on the ground that it had a maritime claim as
defined in paragraph (e) and then when the ship had been released on the
giving of security proceed on the same facts but this time allege that its
claim was as defined in paragraph (y).

[17] He conceded that where as in this case a ship is arrested for loss of or
damage to cargo (ie in respect of a maritime claim covered by paragraph (g)
of the definition) and judgment is thereafter given against the ship on the
claim for which she was arrested, a claim brought on the judgment does not
merely result from what amounts to a change of labels as in the hypothetical
case mentioned in the previous paragraph because the giving of judgment by
a competent court constitutes a new fact which would not have been present
when the cargo arrest took place.  He contended, however, that in order to
decide whether the cause of action is the same one has to look at the effect
of this new fact.  Relying on Trust Bank of Africa Ltd v Dhooma, supra, and
Swadif (Pty) Ltd v Dyke NO, supra he contended that the cause of action
relied on was still the same.  In particular he relied on the following passage
in the Swadif judgment (at 944 F-G):

‘In a case like the present, where the only purpose of taking judgment was to
enable the judgment creditor to enforce his right to payment of the debt under the
mortgage bond, by means of execution, if need be, it seems realistic, and in
accordance with the views of the Roman Dutch writers, to regard the judgment
not as novating the obligation under the bond, but rather as strengthening or
reinforcing it.  The right of action, as Fannin, J, puts it [in Trust Bank of Africa
Ltd v Dhooma, supra], is replaced by the right to execute, but the enforceable
right remains the same.’  (The words I have italicised were those on
which Mr Hofmeyr particularly relied.)

[18] The same reasoning led, so he contended, to the conclusion that the
respondent had breached the prohibition on bringing an action in rem against
more than one ship in respect of the same claim (which is contained in
section 3(8) of the Act).
[19] As far as the letter of undertaking was concerned it was contended by
counsel for the appellants that the respondent was precluded by the terms of
the letter of undertaking from arresting the first appellant ‘for the purpose of
founding jurisdiction and/or obtaining security in respect of any [of its]
claims ... concerning the cargo mentioned’ in the letter, that the arrest itself

had conferred jurisdiction on the court and provided security [cf The Argun
2001(3) SA 1230 (SCA) at 1244 E-F] and that the claim, even if a claim
based on the Hong Kong judgment was not the same as the cargo claim in
respect of which the ‘Amer Prabha’ had been arrested, was certainly a claim
concerning the cargo and therefore covered by the letter.
[20] Relying on the judgment of the English Court of Appeal in Gore v
Van der Lann [1967] 2 QB 31 (CA), they contended that the second
appellant was entitled to an order setting aside the arrest of the first
appellant.  It was further contended that the fact that Ocean Marine had not
honoured its undertaking to pay the Hong Kong judgment did not deprive
the appellants of the right to rely on the respondent’s obligation under the
letter of undertaking not to arrest the first appellant.  This was because it was
common cause on the papers that the contract contained in the letter of
undertaking had not been terminated and the security was accordingly still in

place, and furthermore because the appellants were not to blame for Ocean
Marine’s failure to honour its undertaking:  they were not in breach of any
obligations under the letter and could accordingly enforce it.
[21] Counsel for the appellants submitted further that the release of the
‘Amer Prabha’ was to be regarded as having been purchased, that the
security given took the place of the ship (see The Silvergate 1999(4) SA 405
(SCA) at 422 J – 423 D and the authority there cited) and that the respondent
was limited to proceeding against the security – good or bad – and had no
further recourse against the ship or an associated ship.
[22] Mr MacWilliam developed this submission in the reply.  He pointed
out that where a ship is arrested and the owners do not enter appearance to
defend, judgment is given against the ship and the owners are not liable
further than the value of the ship.  If it is sold for less than the judgment
amount or what is produced from any security given is less than that amount,

that is the end of the matter and once again the owners have no further
liability.
[23] A further consequence of this, so he contended, was that if, as Davis J
found (at 422 D-E), the undertaking was ‘a worthless piece of paper’ the
claim came to an end as effectively as if the ‘Amer Prabha’ had sunk,
because there was no longer a ‘guilty ship’ in respect of which the first
appellant could be said to be an ‘associated ship’.  All prospect of there
being an associated ship or ships for the respondent to arrest ended, so he
submitted, when the undertaking which took the place of the Amer Prabha
became worthless.
[24] Were the ‘Amer Prabha’ and the first appellant arrested in respect of
the same claim?  If this question is answered in the negative then the
objections to the arrest based on sections 3(6) and 3(8) will fail.

[25] In my opinion Mr Hofmeyr’s criticism of the basis on which this part
of the case was decided in the court a quo is correct.  There is in my view no
answer to the point raised by Mr Hofmeyr that the court a quo’s construction
leads to an anomaly which indicates that that construction cannot possibly be
correct.  I do not agree, however, with Mr Hofmeyr’s further submission that
the fact that a judgment was given on the cargo claim does not alter the
position.  The passage in Swadif, supra, on which this submission was based
(viz, the statement at 944 G that ‘the enforceable right remains the same’)
was, as I shall endeavour to show, obiter and was in conflict with the view of
at least one of the Roman Dutch writers to which the Court had referred with
approval earlier in the judgment.
[26] In the Swadif case a liquidator of a company in liquidation had sought
orders  (1) rescinding a judgment which had been granted against the
company before the liquidation, based on a second bond the company had

caused to be registered over its immovable property, for which it had
received no value, and  (2) cancelling the bond.  This Court held that no
legal basis had been made out for an order rescinding the judgment and an
exception to the particulars of claim in this respect was upheld.  As far as the
claim for an order cancelling the bond was concerned it was  argued on
behalf of the excipient that the registration of the bond could not be set aside
because the judgment on the bond novated the debt thereon.  This argument
was rejected and it was held that the effect of the judgment had not been to
novate the obligation under the bond but to strengthen or reinforce it (at 944
F-G).
[27] It was not necessary for the Court to pronounce on the question as to
whether the judgment which provided the strengthening or reinforcement (to
use the two metaphors employed by the Court) in itself constituted an
additional obligation or was somehow absorbed into the original obligation

which had been strengthened by such absorption.  It follows that the passage
relied on by Mr Hofmeyr was obiter and not necessary for the decision.
[28] One of the Roman Dutch writers whose views were cited with
approval by the Court was Van der Keessel.  In commenting in his
Praelectiones Juris Hodierni on Grotius’s Inleiding, 3.43.3, he discussed
whether Grotius, who had said in 3.43.1 that ‘novation takes place when an
obligation is released upon the terms that simultaneously another obligation
takes its place’ (Lee’s translation), had been correct in saying in 3.43.3 that a
novation may be concluded ‘door rechtspleging’ (which Lee translates as
‘by taking legal proceedings’).  Having stated that it was clear that a novatio
necessaria takes place on litis contestatio, Van der Keessel said that it was
equally clear that it does not terminate the antecedent obligation or those
things that were accessory to it, such as pledges, sureties or interest.  He
proceeded:

‘Daarom kan daar twyfel oor die vraag ontstaan of die omskrywing wat in para 1
gegee is by hierdie noodwendige soort [ie novatio necessaria] aangepas kan word
aangesien daar hier geen kwytskelding van die skuld geskied nie, hoewel daar
boonop ’n nuwe verbintenis aangegaan word.’ (Gonin’s translation, my italics.)

[29] There is nothing unusual about an obligation being confirmed or
reinforced by the incurrence of another obligation which is in effect an
alternative to an antecedent one, such as where a cheque is given in payment
of an existing debt without any intention to novate the existing debt.
[30] It is furthermore correct, as Mr Wallis, who appeared with Mr Wragge
for the respondent, contended, that although an original cause of action may
continue to exist in a reinforced and strengthened form a judgment (or an
arbitration award) may also give rise to a new and independent cause of
action enforceable between the same parties in another court:  see Bulsara v
Jordan and Co Ltd (Conshu Ltd) 1996(1) SA 805(A) at 808I-809B and
811A-B, EA Gani (Pty) Ltd v Francis 1984(1) SA 462 (T) at 466B-467A

and Wright v Westelike Provinsie Kelders Bpk, 2001 (4) SA 1165 (C) at
1175 D-G.
[31] As appears from the decision of Cilliers AJ in Metequity Ltd NO and
Another v Heel 1997(3) SA 432(W), at 440G to 441I, it is a controversial
question as to whether a judgment ‘in all circumstances’ creates a new and
independent debt.  What is not controversial, however, is the proposition that
a judgment furnishes the judgment creditor with a new cause of action on
which he may sue in another court (which is the aspect of the matter with
which we are here concerned: see the Metequity case, supra, at 442B and F;
whether the interpretation of the ratio decidendi of the Bulsara decision,
supra, contained in the Metequity case is correct need not be decided in this
matter.)
[32]     That a new and independent cause of action enforceable between the
same parties in another court came into existence in this case is illustrated by

a consideration of the facts which the respondent would have had to prove to
obtain judgment in its favour in the action in rem against the first appellant,
viz:
(a)
that the Hong Kong Court had international competence to
decide the action against the Amer Prabha;
(b)
that the Court’s judgment was final and conclusive;
(c)
that the judgment was not against public policy;  and (possibly)
(d)
that the judgment did not contravene the Protection of
Businesses Act 99 of 1978.

None of these facts would have had to be proved or could have been
proved in the cargo claim case brought against the ‘Amer Prabha’ in Hong
Kong.
[33] For these reasons I am satisfied that the Hong Kong judgment not
only strengthened the cargo claim but also gave rise to a new cause of action

enforceable by the respondent in another court against, inter alios, the first
appellant.
[34] It follows that the claim upon which the arrest of the first appellant
was founded was not the same claim as that which formed the subject matter
of the arrest of the Amer Prabha and that Mr Hofmeyr’s arguments based on
section 3(6) and section 3(8) must be rejected.
[35] This conclusion renders it unnecessary to consider the further
argument advanced before this Court by Mr Wallis to the effect that the
decision of Thring J in M v Fortune 22 1999(1) SA 162(C), the correctness
of which had been accepted in the court a quo, was wrong.
[36] I turn now to consider the argument advanced on behalf of the
appellants in respect of the letter of undertaking.
[37] Although the relevant words used in the letter of undertaking, viz ‘for
the purpose of founding jurisdiction and/or obtaining security in respect of

any claim of the said cargo owners concerning the cargo’, are perhaps wide
enough to cover a claim or a judgment upholding a claim for compensation
for loss of or damage to the cargo there is, in my view, an element of
vagueness in the phrase used.  When one considers the context in which the
letter of undertaking was given it seems to me that the possibility that Ocean
Marine would not satisfy on demand a judgment in favour of respondent on
the cargo claim would have been very far from the minds of the parties when
the contract embodied in the letter of undertaking was concluded.  One can
readily see what the response of the respondent would have been if during
the negotiations leading up to the giving of the letter of undertaking the more
imaginative bystander known to every student of the law relating to tacit
terms (see eg Rapp and Maister v Aronovsky 1943 WLD 68 at 74-5) had
asked the respondent, ‘Does this mean that even if you have obtained
judgment on your cargo claim and Ocean Marine then fail to satisfy the

judgment on demand you will still be precluded from executing on your
judgment by arresting the Amer Prabha or an associated ship?’
[38] In the circumstances the words used in the letter of undertaking must
be construed as extending to the cargo claim only.
[39] This conclusion renders it unnecessary for me to consider whether
Davis J was correct in holding that the respondent could resile from its
undertaking not to re-arrest the ‘Amer Prabha’ and not to arrest an
associated ship because reciprocity existed between that undertaking and
Ocean Marine’s undertaking to pay on demand any judgment given on the
cargo claim.
[40] I now proceed to consider the argument advanced for the appellants in
reply by Mr MacWilliam.  The first problem with this submission is that it is
contrary to the decision of this Court in the Heavy Metal 1999(3) SA 1083
SCA at 1098 F-J that an association can arise for the purposes of section

3(7) of the Act between two ships which have a common owner (or
controller)  (1)  who was the owner (or controller) of the guilty ship when
the claim arose and  (2)  who is the owner (or controller) of the associated
ship when she is arrested.  The fact that the guilty ship has sunk or been
disposed of since does not alter the position.
[41] The second problem with the submission arises from the facts that in
this case the owners did enter appearance and the judgment which forms the
basis of the arrest in this case was given against the vessel and the owners.
It is clearly established that where an action in rem results (as here) in a
judgment against a vessel and her owners, the judgment creditor is permitted
to levy execution against the vessel to satisfy the judgment against the
owners even if the vessel had been released at an early stage of the action
and security given in her place:  see The Gemma [1899] P 285.

[42] In the present case, as I have said, judgment was given in Hong Kong
not only against the ‘Amer Prabha’ but also against her owners.  It would
accordingly have been competent for the respondent to have sought to
execute its judgment against the ‘Amer Prabha’(if she had still belonged to
the second appellant), despite her earlier release when the letter of
undertaking was given and because of section 3(6) and section 3(7) this
procedure was also available to the respondent against the first appellant.
[43] In the circumstances the appeal must, in my view, be dismissed.
[44] The following order is made:

The appeal is dismissed with costs, including those occasioned by the
employment of two counsel.
CONCURRING:
HEFER

AP
SCOTT

JA
CONRADIE
JA
JONES

AJA
......................
IG FARLAM
JUDGE OF APPEAL