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Case No 107/97
IN THE SUPREME COURT OF APPEAL OF SOUTH
AFRICA
In the appeal between:
TRADAX OCEAN
TRANSPORTATION SA Appellant
and
mv
“SILVERGATE” PROPERLY DESCRIBED AS
mv “ASTYANAX” First Respondent
ASTYANAX COMPAÑIA NAVIERA
SA Second Respondent
GARDENIA MARITIME INC Third
Respondent
Coram : Nienaber, Marais, Plewman, Streicher JJA et Farlam AJA
Heard : 1 March 1999
Delivered : 24 May 1999
Maritime law - whether a certain Greek
decision should be enforced in South Africa - whether the vessel arrested was
the property
of second respondent and therefore liable for execution in South
Africa in satisfaction of the judgment - whether issue of ownership
of the
vessel was res judicata as a consequence of a decision in US District
Court for the Central District of California - whether terms of the letter of
undertaking
furnished on behalf of third respondent to appellant to secure
release of vessel from attachment in USA precluded appellant from
bringing
proceedings in court a
quo.
_____________________________________________________________________
J U D G M E N T
_____________________________________________________________________
FARLAM AJA
FARLAM
AJA:
[1] This is an appeal, with the leave of the court a quo,
from a judgment of Booysen J, sitting in the Durban and Coast Local Division of
what was then termed the Supreme Court of South
Africa, exercising its admiralty
jurisdiction in terms of the Admiralty Jurisdiction Regulation Act 5 of
1983.
[2] In the court a quo the appellant, Tradax Ocean
Transportation SA, a company incorporated under the company laws of Panama,
claimed judgment against the first respondent
, a motor vessel flying the
Panamanian flag and thereupon registered in the Panamanian registry as the
“Silvergate”,
for payment of US $500 959,95 “together with
legal interest thereon in accordance with Greek law from 4 October 1990 to
date
of payment and legal costs as adjudged in [certain] Greek proceedings amounting
in the sum of Greek Drachmae 3 170 000". In
addition the appellant asked for
an order that it be granted leave to execute the judgment sought against
security which the third
respondent had provided in order to obtain the release
of the first respondent and that its costs of suit be paid by the first and
third respondents jointly and severally.
[3] The second respondent, which
does not oppose the appeal and against which no relief was sought in the court
below, is Astyanax Compañia Naviera SA, a company registered
under the company laws of Panama, which carried on business as a shipowner
at
Piraeus, Greece. It belongs to a group of companies known as the “Stef
Stravelakis Group of Companies”.
[4] The third respondent is Gardenia
Maritime Inc, a company registered under the company laws of Liberia. It is
registered in
the Panamanian registry as the owner of the first
respondent.
[5] In what follows I shall call the appellant
“Tradax”, the first respondent “the vessel”, the second
respondent
“Astyanax SA” and the third respondent
“Gardenia”.
[6] As appears from the terms of relief sought, the proceedings in the Durban
and Coast Local Division had been preceded
by certain proceedings in the courts of Greece. In addition there had been
proceedings,
followed by a judicial sale, in the Netherlands, and in the United
States District Court for the Central District of California and
the United
States Court of Appeals for the Ninth Circuit.
Prior to the institution of
these various legal proceedings arbitration proceedings instituted by Tradax
took place in London in
respect of claims arising from a charter party relating
to the vessel.
Before the issues which arose for decision in the court a
quo and in this court are stated it is necessary to set out in detail the
circumstances which gave rise to the litigation between the
parties in the court
a quo.
[7] On 7 July 1983 Tradax, as charterer, concluded a voyage
charter party in respect of the vessel with a contracting party described
in the
charter party as “Panagiotis Stravelakis SA Piraeus as disponent owners of
[the vessel]”. It is now common cause
between the parties that no such
entity as Panagiotis Stravelakis SA has ever existed . At the time when the
voyage charter party
was concluded and for some five years thereafter this fact
was not known to Tradax.
[8] An individual named Panagiotis Stravelakis is
according to the evidence an employee of the Stef Stravelakis group and a
relative
of Stefanos Stravelakis, who is, amongst other things, the president of
Astyanax SA and the main, if not the only, shareholder in
the companies in the
group.
[9] In terms of the voyage charter party between Tradax and
“Panagiotis Stravelakis SA” a cargo of grain was to be transported
from Bahia Blanca in the Argentine to three ports in Japan.
[10] A dispute
arose during the voyage between Tradax and the owner’s representatives,
who demanded payment of US $218 895,83
as demurrage and threatened to interrupt
the discharge of the cargo in Japan and to exercise a lien over it if this sum
was not
paid.
[11] On 22 November 1983 Tradax agreed to pay under protest
the sum demanded as demurrage on receipt of the owner’s fleet guarantee
to
repay this amount “if by written agreement signed by both owners and
charterers or by final arbitration award”.
The sum in question was
thereafter paid by Tradax to S Stravelakis SA of Piraeus Greece against the
owner’s fleet guarantee,
in which Stefanos Stravelakis, on behalf of eight
companies in the Stef Stravelakis group, bound the companies “as surety
and
co-principal debtor to and in favour of [Tradax] by way of security for the
true and proper discharge of [Astyanax SA] registered
owners of Astyanax
(hereinafter to be referred as the principal debtor) of whatever the principal
debtor may be found to be indebted
to [Tradax] by virtue of a valid London
arbitration award ... in respect of the principal amount interest and costs if
legal proceedings
in London relating to the claim against the principal debtor
for overpayment of demurrage to the principal debtor pursuant to Charter
Party
of 7.7. 1983 of MV Astyanax...”
[12] Subsequently in August 1985
arbitration proceedings commenced in London between Tradax and “Panagiotis
Stravelakis SA”
in respect of Tradax’s claim for repayment of the
demurrage it had paid under protest and for despatch it said was due to
it under
the charter party.
[13] The arbitration proceedings were resisted by the
respondent in the arbitration whose representatives did not inform either Tradax
or the arbitrators that their client, “Panagiotis Stravelakis SA”,
did not exist.
[14] On 30 May 1986 the arbitrators made an interim final
arbitration award in terms of which they ordered the respondent
in
the arbitration to pay to Tradax US $14 981,25 in respect of discharging port
despatch and £250 in respect of costs.
Subsequently, on 15 December 1987,
they made a final arbitration award in which they ordered the respondent in the
arbitration to
pay Tradax US $267 498 (being US $210 140 in respect of the
loading port demurrage which Tradax had paid under protest as previously
described and a further US $57 358 in respect of despatch) with interest thereon
from 23 November to the date of the award, plus
interest on the previous award
from 1 January 1984 to 30 May 1984, as well as certain amounts in respect of
costs.
[15] On 5 July 1988 the arbitrators made a third award, described as
a final award of costs, in which they ordered the respondent
in the arbitration
to pay Tradax £12 208,20 in respect of earlier costs and a further
amount of £385 in respect of the
costs award itself.
[16] It is common
cause between the parties that the US dollar equivalent of the total of the
three awards with interest thereon
as at 10 April 1989 amounted to
US $500
959,99.
[17] On 15 June 1986, that is to say just over two weeks after the
first award was made, the vessel was arrested in the Netherlands
pursuant to an
order of the President of the Rotterdam District Court, at the instance of the
Chase Manhattan Bank, which was the
mortgagee of the vessel.
[18] On 25 June
1986 the District Court at Rotterdam ordered Astyanax SA to pay US $139 487
734,05 to the Chase Manhattan Bank and
on 1 August 1986 at a judicial sale in
execution held at the instance of the bank the vessel was sold to Carla
Maritime Inc for
Dfls 5 170 000, an amount less than the judgment
debt.
[19] On 12 August 1986 Carla Maritime Inc sold the vessel by private
treaty to Silver Trident Shipping Co Ltd, which caused the vessel,
on 13 August
1986, to be provisionally registered in the Maltese registry as the
“Silver Trident”.
[20] On 9 July 1987 the Silver Trident
Shipping Co Ltd sold the vessel by private treaty to Gardenia, which caused her
to be deleted
from the Maltese registry on 4 August 1987 and permanently
registered as the “Silvergate” in the Panamian registry on
20
November 1987.
[21] It will be recalled that the arbitrators made their
second award in favour of Tradax and against “Panagiotis Stravelakis
SA” on 15 December 1987. On 27 April 1988 Tradax sought an order before
the Single Member First Instance Court of Piraeus against
“Panagiotis
Stravelakis SA” enforcing the two arbitration awards that had been given
at that stage.
[22] These proceedings were not defended and on 28 June 1988
the court gave judgment in Tradax’s favour and declared the two
awards
executory in Greece.
[23] As has already been said, the arbitrators’
third award was given in London against “Panagiotis Stravelakis SA”
on 5 July 1988. After the judgment of 28 June 1988 was served at the offices of
the Stef Stravelakis group Tradax’s attorney,
Emmanuel John Stephanakis,
contacted the attorney who acted for the group sometime in September 1988 and
asked why the enforcement
proceedings had not been defended and why the judgment
had not been satisfied. The reply he received was: “How should I defend
a
party which does not exist?” This was the first intimation that Tradax
received to the effect that “Panagiotis Stravelakis
SA” did not
exist. When asked why the owner’s fleet guarantee provided to Tradax
when it paid under protest the demurrage
claimed under the charter party gave
the name of Astyanax SA as the principal debtor, the attorney explained that as
the vessel was
usually traded in the name of Astyanax SA, the registered owner
of the vessel, and as the charter party had not been to hand when
the guarantee
was drafted, it had been assumed that the owner under the charter party was
Astyanax SA. No coherent reason appears
to have been furnished as to why the
arbitration had been defended in the name of a non-existent
company.
[24] Tradax then launched proceedings in Greece against all the
companies which had given the guarantee. It also instituted proceedings
against
Stefanos Stravelakis and Panagiotis Stravelakis on the basis that they were
liable in delict to Tradax for the damages sustained
by it because they had, so
it was alleged, instructed their New York brokers to insert a non-existent
company into the charter party
and they had instructed their London solicitors
to defend the arbitration on behalf of a non-existent company.
[25] On 10
April 1989 a letter was written to Tradax on behalf of Astyanax SA which I quote
as it reads:
“Dear Sirs,
‘M/V ASTYANAX - C/P dd
07.07.1983'
We refer to the above matter and wish to make clear to you
the following:
1. We confirm, as registered owners of the above mentioned vessel, that have, a long ago, recognized and accepted that we owe to you the sums awarded by the issued in accordance with the terms of said C/P of 7-7-1983 arbitration awards, namely the Interim Final Award dated 30-5-1986, the Final Award dated 15-12-1987 and the Final Award of Costs dated 5-7-1988 of the London Arbitrators Mr. M. W. Hamser, Mr. A. J. Kazantzis and Mr. B.A. Harris, plus their costs and the statutory payable interest, which as we understand are presently amounting to the sum of U.S. Dollars $500.959,99.
2. However, you must appreciate that the above vessel is no longer in our hands and because of that we find it very difficult to meet with the payment of the above indisputed sums, nevertheless we confirm that shall make our best to rectify the position, in view of the fact that our group of companies is still very much interested to maintain good business relations with your goodselves.”
The letter was signed by
Stefanos Stravelakis in his capacity as president of Astyanax SA.
[26] The
statement that Astyanax SA found it “very difficult to meet with the
payment of the above indisputed sums” appears
to have been something of an
understatement because Astyanax SA, which was a “single ship
company” whose vessel had been
sold in execution in Rotterdam over two and
a half years earlier, was clearly without any assets whatever.
[27] On 31
December 1990 the Multi Member First Instance Court of Piraeus in Decision no
2367/1990 ordered Astyanax SA to pay Tradax
US $500 959,99, plus legal interest
thereon from the date of service of the action, being 4 October 1990, and legal
costs in the
sum of 3 170 000 Greek Drachmae. It is clear from the judgment that
its order against Astyanax (which did not defend the action)
was based on the
letter of 10 April 1989.
[28] In its judgment the Multi Member First
Instance Court also dealt with a claim Tradax brought against Gardenia,
viz for an order declaring that Astyanax SA was still the owner of the
vessel.
[29] The court refused to uphold this claim on the ground that it
had no jurisdiction to grant such an order as against Gardenia.
Although the
vessel was, as I have said, registered in the name of Gardenia in the Panamanian
registry on 20 November 1987 it was
not deleted from the Greek register until 4
March 1993.
(Before that date, on 13 November 1992, the vessel was
arrested at Durban by order of Booysen J at the instance of Tradax.
She was
subsequently released after Gardenia provided security.)
[30] On 17 August
1990, before Tradax obtained its judgment in Greece against Astyanax SA in the
amount of US $500 959,99, it caused
the vessel to be arrested at Long Beach,
California, in the United States, pursuant to a writ of attachment issued by the
United
States District Court for the Central District of California. On 21
August 1990 the vessel was released after Gardenia’s
Californian attorneys
furnished Tradax on 21 August 1990 with a letter of undertaking in the following
terms:
“In consideration of your releasing the M/V SILVERGATE (ex M/V ASTYANAX) (hereinafter ‘the Vessel’), from attachment in the action entitled ‘Tradax Ocean Transportation S.A. vs Astyanax Compania Naviera S.A.’, Case No. 90-4419 RB (GHkx) filed in the United States District Court for the Central District of California, and in further consideration your agreeing not to re-attach or arrest the Vessel or any other property of Gardenia Maritime, Inc. for the claims which you have asserted in the aforesaid action, we agree to satisfy any judgment which ultimately, after appeal, if any, may be rendered in the said action against Astyanax Compania Naviera S.A. and which shall be deemed in said action enforceable against the Vessel as property or as an asset of Astyanax Compania Naviera S.A. or against any property interest which Astyanax Compania Naviera S.A. has in the Vessel, insofar as such judgment does not exceed the sum of Six Hundred Thousand U.S. Dollars ($600,000), inclusive of interest, and costs and any other expenses.
We also agree that upon written demand by you, we will cause to be filed a bond in a form acceptable to the said court in the amount and subject to the same terms and conditions set forth hereinabove. (If such bond is posted, we, the undersigned Association, shall have no further obligation under this letter).
This letter of undertaking is issued without prejudice to any right or defense presently or hereafter available to the Vessel or Gardenia Maritime, Inc., including without limitation, any defenses that the aforesaid attachment is wrongful, and that the Vessel is not property of Astyanax Compania Naviera, S.A.”
[31] A preliminary attempt by Gardenia to
obtain the release of the vessel and the return of its security having failed
and an attempt
by Tradax to obtain an order staying the proceedings until a
judgment was obtained in Greece, which would have made each of the
issues in
the action pending in the US District Court res judicata, also having
failed, the US District Court on 9 May 1991 ordered that the matter proceed to
trial.
[32] Thereafter on 11 September 1991 Spencer Letts J, a judge of the
US District Court for the Central District of California, granted
an application
brought by Gardenia for summary judgment in its favour “on the ground that
the [vessel] cannot be attached ...
because it is not property of defendant
[Astyanax SA]”. The court ordered that the attachment be vacated and that
the security
posted by it or on its behalf be exonerated and
released.
[33] He had earlier, when the case was being orally argued before
him, indicated that he proposed denying Gardenia’s motion
for summary
judgment but added that he would reconsider the matter and that if he changed
his mind he would give the parties the
chance to reargue the case. He
subsequently did change his mind and he offered to permit reargument of the
matter. This offer was
not taken up by Tradax.
[34] On 19 September 1991
the Piraeus Court of Appeal, in Decision 1153/91, upheld Tradax’s appeal
against that part of the
judgment of the Multi Member First Instance Court of
Piraeus in which Tradax’s claim as against Gardenia for an order declaring
that Astyanax SA was still the owner of the vessel was rejected.
[35] Tradax
appealed against the order granted by Letts J on 11 September 1991 to the United
States Court of Appeal for the Ninth
Circuit. Pending this appeal, it sought a
stay of the execution of the judgment of Letts J. This application was refused
on 26 September
1991 but on the next day two judges of the US Court of Appeals
for the Ninth Circuit denied as unnecessary Tradax’s emergency
motion for
a stay of the district court’s judgment pending appeal. The Court of
Appeals held that the motion was unnecessary
because it had jurisdiction to
determine whether the district court exonerated the letter of undertaking
“improperly, fraudulently
or accidentally”.
[36] While these
events were taking place in California the parties were also involved in further
legal proceedings in Greece.
[37] Decision 2367/1990 of the Multi Member
First Instance Court of Piraeus and Decision 1153/91 of the Piraeus Court of
Appeal were
both given in the absence of Gardenia. In January 1992 Gardenia, as
it was permitted to do in Greek law, brought what was described
as an Appeal in
Default in which it requested the Piraeus Court of Appeal to reconsider its
Decision 1153/91.
[38] On 16 July 1992 the Piraeus Court of Appeal gave its
judgment, Decision 1108/92, in the reconsidered appeal. It held that by
Greek
law the vessel continued to belong to Astyanax SA because the adjudication
decree of the Rotterdam District Court confirming
the judicial sale of the
vessel to Carla Maritime Inc had not been registered in the Piraeus Ship
Registry. The Court of Appeal proceeded,
however, to deal with a further
contention advanced by Gardenia, viz that Tradax’s attempt to
execute its judgment against Astyanax SA against the vessel would amount to an
abuse of right which
is prohibited by section 281 of the Greek Civil Code, which
reads as follows:
“The exercise of a right shall be prohibited if such exercise obviously exceeds the limits imposed by good faith or morality or by the social or economic purpose of the right.”
It held that if the
facts alleged by Gardenia were true the section would apply but that as they
were denied by Tradax its definite
decision on the point would be deferred until
the facts alleged by Gardenia were proved. It accordingly
“extinguished”
its decision 1153/91 (with exceptions now not
relevant) and ordered that evidence on the facts in issue should be heard by the
junior
judge of the First Instance Court of Piraeus and “in case of
impediment before the directly senior judge and so on.”
[39]
Tradax’s appeal on the merits against the judgment of Letts J, which was
set down for hearing on 5 April 1993, was never
heard. This was because
Tradax, as has already been said, caused the vessel to be arrested on 13
November 1992 at Durban and applied,
inter alia, for the enforcement in
South Africa of certain judgments of the Piraeus Multi Member Court of Appeal
and for a declarator as to
the ownership of the vessel, which application having
been sent to trial resulted in the judgment presently under appeal.
[40] On
27 November 1992, in an affidavit filed on behalf of the vessel and Gardenia,
Gardenia’s Durban attorney, Anthony John
Louis Norton, referred to the
proceedings pending in California and stated that the jurisdiction of the
California court, to which
Tradax had submitted for the resolution of its claim,
was in the circumstances a more appropriate jurisdiction than that of the
Durban court for the determination of the claim and he accordingly prayed on
behalf of his clients for the arrest of the vessel to
be set
aside.
[41] Tradax responded to this submission by filing an affidavit
deposed to by Emmanuel John Stephanakis, who, it will be remembered,
was its
Greek attorney, in which the following was said (I quote the affidavit as it
reads):
“Whilst it is correct that the appeals were pending the Applicant [Tradax]
tendered to Third Respondent [Gardenia] by open correspondence that in the event of this Honourable Court maintaining the arrest and referring the matters in dispute to trial it would cause the pending appeal to be abandoned and withdrawn and the letter of undertaking (which in any event has been vacated by the Californian Court) to be returned to the Third Respondent’s attorneys in the USA. Since making such tender the Applicant has decided there is no purpose in maintaining the Appeal and has issued instructions to its US lawyers to take the necessary formal steps to abandon that Appeal. I verily believe that by the date of the hearing of this matter in South Africa these formalities will have been completed and the Appeal will no longer be pending.
....
As indicated above the Applicant has abandoned the Appeal including any argument with regard to the reinstatement of the letter of undertaking.”
[42] On 30 March 1993
Gardenia’s Californian attorneys launched an emergency motion in the US
Court of Appeals for the Ninth
Circuit for the immediate dismissal of the appeal
on the ground of mootness. In support of this motion Gardenia relied on the
allegation
that Tradax had in the Durban proceedings “undertaken and
agreed to dismiss the appeal”.
[43] Tradax opposed this motion,
denying that it had undertaken or agreed to dismiss its appeal.
[44] On 2
April 1993 the US Court of Appeals for the Ninth Circuit gave its judgment in
the motion to dismiss the appeal. It rejected
Gardenia’s contention that
the appeal was moot but nevertheless dismissed it, under rule 42 (b) of the
Federal Rules of Appellate
Procedure, on the ground that “Tradax’s
representations to the South African Court, under oath, and Gardenia’s
motion to this court expressing willingness to dismiss constitute a voluntary
stipulated dismissal”. The reasons given by
the Court of Appeals are set
out fully in paragraph [66] below.
[45] In the court a quo Tradax led
the evidence of three witnesses, viz, Emmanuel John Stephanakis, its
Greek attorney, Professor Konstantinos Kerameus, a Greek law professor, who
testified as an expert
on Greek law, and Professor Rudolph Eric Japikse, a Dutch
professor, who testified as an expert on Dutch law.
[46] Gardenia led the
evidence of three witnesses, Constantinos Tasiopoulos, its Greek attorney, who
testified as an expert on Greek
law, Wilhelmus Verhoeven, who had acted as Chase
Manhattan’s attorney in regard to the judicial sale of the vessel in
Rotterdam
and who testified as an expert on Dutch law, and Alan Nakazawa, its
American attorney, who testified as an expert on American Law.
[47] In the
court a quo the following issues were argued by the parties:
(a) whether Decision 2367/90 which Tradax had obtained against Astyanax SA in Greece should be enforced in South Africa;
(b) whether at the time of the arrest in
South Africa the vessel, notwithstanding her sale in execution in Rotterdam and
delivery
pursuant thereto, remained the property of Astyanax SA and therefore
liable for execution in satisfaction of the judgment;
(c) whether the issue of the ownership of the vessel was res judicata as a consequence of the decision of Letts J in the US District Court for the Central District of California;
(d) whether the terms of the letter of undertaking furnished on behalf of Gardenia to Tradax to secure the release of the vessel from attachment in the Californian proceedings precluded Tradax from pursuing the proceedings in the court a quo; and
(e) whether there was a non-disclosure of the Californian proceedings in the ex parte application brought before the court a quo for the arrest of the vessel and, as a consequence thereof, whether the proceedings should have been dismissed.
[48] The learned judge in
the court a quo found in the favour of Gardenia on issues (a), (b), and
(d). In regard to issue (e) he found that, had the existence of the
proceedings
in California, the findings of Letts J and the letter of undertaking
been brought to his attention before he initially granted the
arrest, he would
not have made an order on the application. He made no finding on issue
(c).
[49] When the matter was argued in this court submissions were advanced
in respect of the issues listed above. In addition two further
issues were
debated, viz:
(f) whether appellant’s claim falls within the definition of a ”maritime claim” in section 1 of the Admiralty Jurisdiction Regulation Act 5 of 1983; and
(g) whether the doctrine expressed in the maxim pretium succedit in locum rei sub hasta is part of the law of the Netherlands and, if it does, whether the appellant’s claims in this case were transferred to the price paid by Carla Maritime Inc after the judicial sale, with the result that, even if Astyanax SA was still the owner of the vessel when it was arrested in Durban, Tradax’s claim could not be enforced by means of an action in rem brought against the vessel.
[50] When issue (b)
was debated in this court counsel also dealt with the question, which was not
dealt with in the court a quo, whether a reference to the lex situs
of the vessel to determine the legal effect of the judicial sale, in this
case the law of the Netherlands, was a reference to the
internal law of the
Netherlands or to the law of the Netherlands including its rules of private
international law, which in turn,
according to Professor Japikse, refer to the
law of Greece.
[51] In view of the fact that I have come to the conclusion
that both issues (c) and (d) have to be decided in favour of Gardenia
it is
unnecessary in my opinion to say anything further regarding the other issues
which were debated in this case.
[52] I commence with issue (c).
In
its plea Gardenia raised the defence that the issue of ownership of the vessel
was res judicata by reason of the order for summary judgment granted by
Letts J in the U S District Court for the Central District of California on
11
September 1991.
[53] Counsel were agreed that in terms of our common law for
the defence of res judicata to succeed it had to be established that:
(a) the judgment relied on was a final or definitive decision;
(b) it emanated from a competent
court;
(c) the judgment was between the same persons; and
(d) the cause
of action was the same.
Counsel were further agreed that these rules are
equally applicable where the judgment relied on was given by a foreign
court.
[54] In my view this summary of the legal position in relation to the
doctrine of res judicata can be accepted provided that the phrase
“the cause of action” in (d) above is understood as referring not
the cause
of action in the strict sense but to “the same matter in
issue” : see Voet 44.2.4; Boshoff v Union Government 1932 TPD 345
and Kommissaris van Binnelandse Inkomste v Absa Bank Bpk 1995 (1) SA 653
(A).
[55] Counsel for Tradax did not contend that the U S District Court for
the Central District of California was not a competent court
for the purposes of
the application of the rules relating to res judicata nor that the same
matter was not in issue. The parties were obviously the same. They contended,
however, that the decision given
by Letts J was not a final and definitive
decision because Tradax did not, so it was argued, have a full and fair
opportunity to
litigate the dispute in California because the Court of Appeals
for the Ninth Circuit denied it a review of the decision on the
merits.
[56] They also contended that the Californian proceedings offended,
so they argued, our principles of natural justice, in particular
the principle
of audi alteram partem, and should accordingly on that ground also not
be given effect to. In support of this submission they contended that there was
a lack of a fair hearing, referring in this regard to what was described as
“the manner in which Judge Letts arrived at his
decision and the manner in
which the appeal was dismissed”.
[57] Counsel for Tradax also argued
that faced with conflicting foreign decisions on the question of ownership of
the vessel, viz the American decision and judgments of the Greek courts,
which they submitted were “prior and clearly final and binding”,
the
court a quo should have preferred to follow the decisions of the Greek
courts. As appears from paragraph [32] and [34] above the decision of
Letts J
was given on 11 September 1991 and the first relevant Greek decision dealing
with the ownership of the vessel was given eight
days later on 19 September
1991.
[58] In their submissions on this point counsel for Gardenia referred
to section 1 F of the Protection of Business Act 99 of 1978,
which reads as
follows:
“It shall be a defence to any action brought in any court in the Republic if it is proved to the satisfaction of such court that the cause of action founding the action so brought was the subject of a judgment given by a court in a foreign country, if-
(a) in terms of the laws of the foreign country the court which gave such judgment was competent to give that judgment;
(b) in terms of such laws
such judgment is final and conclusive; and
(c) the parties to the
proceedings in which such judgment was given, or their successors in title, are
the same as the parties to
the proceedings in the
Republic”.
[59] Counsel for Gardenia contended that Parliament has
spelt out in the section when a foreign judgment will constitute res judicata
and that provided the foreign judgment relied on complies with the
provisions of the section (which they submitted was the case here)
the court has
no discretion to consider the issues raised by Tradax in regard to the manner in
which the dispute was dealt with by
Letts J and the Court of Appeals for the
Ninth Circuit.
[60] It is by no means clear to me that Parliament, in
enacting section 1 F, intended to codify the law relating to res judicata
when a foreign judgment is involved. It may well be (I state the possibility
without deciding the point) that section 1 F only applies
to such foreign
judgments as are referred to in section 1 (1) (a) read with section 1 (3) of the
Act, viz judgments delivered or given in connection with civil
proceedings arising from an act or transaction “connected with the mining,
production, importation, exportation, refinement, possession, use or sale of or
ownership to any matter or material”. Because
I am of the view, on
other grounds, that the defence of res judicata must succeed it is not
necessary for me to say anything further on the question as to whether section 1
F of Act 99 of 1978 applies
in this case.
[61] Counsel for Gardenia
contended further that the summary judgment was clearly a final and definitive
decision. They relied on
the testimony of Mr Nakazawa, who referred in his
evidence to an authoritative American treatise, Moore’s Federal
Practice, where the following appears in the commentary on Rule 56, the rule
dealing with the American federal doctrine of summary judgment:
“A
determination of a summary judgment under Rule 56 is a final adjudication of
the merits of the claim presented; if granted
in favor of a claimant it
affirmatively adjudicates the merits of the claim and if in favor of the
defendant the judgment is in
bar and not in abatement ... Matter in bar is that
which is sufficient to prevent a meritorious recovery on a
claim.”
[62] Mr Nakazawa also referred to Ruple v City of
Vermillion, South Dakota, 714 F 2d 860 (1983), a decision of the United
State Court of Appeals for the Eighth Circuit, in which it was held that for the
purposes
of res judicata a judgment entered on a motion to dismiss or for
summary judgment is just as binding as a judgment entered after a trial of the
facts.
[63] Tradax’s counsel, in support of their submission that
final and preclusive effect ought not to be given to Letts J’s
judgment,
relied on a concession made by Mr Nakazawa that in deciding whether preclusive
effect should be given to a judgment an
American Court will have regard, as an
element of the enquiry, to the question as to whether there was a full and fair
opportunity
to litigate the claim. They referred also to a statement made by
the Supreme Court of the United States, in Montana v U S, 1979, 99 S Ct
970 at 979 in note 11, which reads as follows:
“Redetermination of issues is warranted if there is reason to doubt the quality,
extensiveness, or fairness of procedures followed in
prior litigation.”
[64] Tradax’s counsel also cited in
support of their argument on this part of the case a statement by Mr Nakazawa
that in deciding
whether preclusive effect is to be given to a prior judgment a
U S Court will look at the adequacy of the hearing and the opportunity
for
review of the decision by way of an appeal to a higher court. They submitted
that Tradax did not have a full and fair opportunity
to litigate the dispute in
California
“... because the Court of Appeals denied a review of the decision not on its merits or on the ground of mootness but simply because the dispute was to be litigated at a trial in South Africa and in the circumstances it felt that Tradax should be held to the undertakings given on its behalf in South Africa by Stephanakis. In doing so on the face of it the provisions of Rule 42 (b) - on which it relied - were given a strained and unconvincing meaning.”
[65] Rule 42 (b) of the Federal Rules of
Appellate Procedure is in the following terms:
“If the parties to an
appeal or other proceeding shall sign and file with the clerk of the court of
appeals an agreement that
the proceeding be dismissed, specifying the terms as
to payment of costs, and shall pay whatever fees are due, the clerk shall
enter
the case dismissed, but no mandate or other process shall issue without an
order of the court. An appeal may be dismissed
on motion of the appellant upon
such terms as may be agreed upon by the parties or fixed by the
court”.
[66] The judgment given by the Court of Appeals when
Tradax’s appeal was dismissed reads as follows:
“Appellee Gardenia Maritime, Inc. has moved this Court for an order dismissing the appeal as moot, on the basis of representations made by counsel for Appellant Tradax Ocean Transportation, S. A. in a sworn deposition before the Durban and Coast Local Division of the Supreme Court of South Africa (the ‘South African Court’) in proceedings involving the same parties to this action. This appeal is not moot, however, in that this Court retains jurisdiction of the controversy and may grant effective relief. See Republic National Bank of Miami v. United States, 113 S. Ct. 554 (1992); Elliott v M/V Lois B., 980 F.2d 1001, 1004-05 (5th Cir. 1993).
Nevertheless, a court of appeals may, in the exercise of its plenary power, dismiss an appeal as frivolous or as not taken in good faith. Pacific Westbound Conf. v. United States, 332 F. 2d 49, 51 n.5 (9th Cir. 1964); Cohen v Curtis Publishing Co., 333 F.2d 974, 978 - 79 (8th Cir. 1964), cert. denied, 380 U. S. 921 (1964). Moreover, on motion of an appellant we may dismiss an appeal ‘upon such terms as may be ... fixed by the court.’ Fed. R. App. P. 42 (b). This circuit has approved dismissal of an action without a formal agreement signed by both parties, where there was an unqualified oral stipulation of dismissal made in open court. See Eitel v. McCool, 782 F. 2d 1470, 1473 (9th Cir. 1986). We see no reason why the same conduct may not support dismissal of an appeal in this case. Tradax’s argument that there is no settlement agreement between Gardenia and Tradax is irrelevant to whether Tradax’s counsel’s sworn representation to the South African Court should bind it.
Tradax’s counsel represented to the South African Court that Tradax had ‘decided there is no purpose in maintaining the Appeal and has issued instructions to its US lawyers to take the necessary formal steps to abandon that Appeal.’ Stephanakis Affidavit at 70 ¶ 229. Counsel did not mention that extracting a settlement of Gardenia’s counterclaims was a part of the ‘necessary formal steps.’ Counsel represented it as a done deal: Tradax ‘has abandoned the Appeal.’ Id. ¶ 230. This appears to be an expression of unqualified intent to dismiss. Furthermore, Tradax denied that it has submitted to the jurisdiction of the United States District Court or that the United States courts are an appropriate forum. Id. at 80 ¶ 261.
This presents an even stronger case for finding a mutual stipulation to dismiss than Eitel, since Tradax’s statement of intent to dismiss appears in a written document signed under oath. Gardenia, obviously, has a mutual intent to dismiss. We find Tradax’s representations to the South African Court, under oath, and Gardenia’s motion to this Court expressing willingness to dismiss constitute a voluntary stipulated dismissal under F.R.A.P. 42 (b). Accordingly, the appeal is DISMISSED.”
[67] I do not agree with Tradax’s
counsel’s submission that Tradax did not have a full and fair opportunity
to litigate
the dispute in California because the Court of Appeals denied a
review of the decision. As appears from the judgment of the Court
of Appeals the
appeal was dismissed because Tradax’s representative had said under oath
in the court a quo that Tradax had abandoned the appeal and Gardenia, as
the court said, had “a mutual intent to dismiss”. In the
circumstances,
the Court of Appeals was entitled, in the exercise of its plenary
power to dismiss the appeal “as frivolous or as not taken
in good
faith” to make the order it did. There was nothing inherently unfair or
unjust in what the court did. (Whether a
South African court would have reached
the same conclusion in the same manner is irrelevant.)
[68] Nor can Tradax
justifiably complain about the procedure followed by Letts J. It is clear that
both parties were afforded a full
hearing at the summary judgment application
and were in fact offered the opportunity of delivering further argument after
the judge
had informed the parties that he had decided to grant
Gardenia’s motion for summary judgment. Tradax after receiving this
invitation decided not to reargue the matter.
[69] The quotation from the
decision of the United States Supreme Court in Montana v U S, supra, upon
which Tradax’s counsel relied is taken from a footnote from which it
appears that the court relied expressly on the formulation
appearing in
Restatement (Second) of Judgments, Tentative Draft No 4, 1977, § 68 1
(c), the comment to which says that preclusion
should only be denied upon
“a compelling showing of unfairness”.
[70] I do not think that
it can be said in this case that there was a compelling showing of unfairness
such that the preclusive effect
of Letts J’s judgment should be denied.
Tradax appealed to the Appeals Court and at the same time it rearrested the
vessel
in Durban. In my view it clearly had to choose in which forum to proceed.
In the Durban proceedings it expressly stated that it was
in the process of
abandoning the appeal in California. By doing so it compromised its US appeal.
This led to the appeal being dismissed
and that, in turn, rendered the summary
judgment on the issue of ownership final.
[71] Although all the parties were
keen to litigate in South Africa, by not protecting its own position
vis-à-vis Gardenia, Tradax exposed itself to a plea of exceptio
rei judicatae. It could have protected itself by obtaining an
acknowledgement from Gardenia that a res judicata plea would not be
advanced, failing which it should have pursued the US appeal proceedings to
finality. I do not think that its failure
to protect its position deprives Letts
J’s decision of preclusive effect.
[72] In my view the contention
advanced by Tradax’s counsel that the Greek decisions on the ownership of
the vessel should
be preferred to the American decision must also be rejected.
In my view the only relevant Greek decision, where both Tradax and Gardenia
were
before the court, is that given by the Piraeus Court of Appeal in Decision
1153/91, on 19 September 1991, eight days after the
decision of Letts J on which
Gardenia relies. That decision was, however, (as stated in paragraph [38] above)
“extinguished”
pending a decision on Gardenia’s abuse of right
contention after evidence had been heard by a judge of the First Instance Court
of Piraeus. I do not think that any effect can be given in this country to
Decision 1153/91 while it remains “extinguished”
as a result of
Decision 1108/92.
[73] This renders it unnecessary for me to deal with a
contention advanced by Gardenia’s counsel to the effect that logic
dictates
that Letts J’s judgment, which was the earlier judgment, should
in any event be preferred to Decision 1153/91 (cf Spencer Bower,
Turner and
Handley, Res Judicata, 3rd ed, paragraph 372 and Showlag v Mansour
& Others [1995] 1 AC 431 (PC)).
[74] I am accordingly satisfied that
issue (c) has to be decided in favour of Gardenia.
[75] I am also of the
view that issue (d) was correctly decided in the court a quo in favour of
Gardenia.
[76] As the letter of undertaking was given in California in order
to secure the release of the vessel there, its interpretation
is governed by its
proper law, which in this case is the law which would be applied in a federal
court sitting in California. Counsel
did not refer us to any American legal
decisions on the point nor have we been able by our own efforts to discover any
directly in
point. It is not suggested, however, that the approach which a
federal court sitting in California would adopt differs in any way
from the
approach which a South African court would adopt in construing the terms of the
letter had it been given to secure the release
of the vessel from a South
African arrest.
[77] The terms of the letter of undertaking have been
set out in paragraph [30] above. The key portion reads as follows:
“[1] In consideration of your (i e Tradax’s) releasing [the vessel] from attachment in the action ... Case No 90-4419 RB (GHkx) ... and [2] in further consideration your agreeing not to re-attach or arrest the Vessel ... for the claims which you have asserted in the aforesaid action, [3] we agree to satisfy any judgment which ultimately, after appeal, if any, may be rendered in the said action ...”
[78] Counsel for Tradax contended
that on a proper reading of the letter of undertaking it relates only to claims
made in the Californian
proceedings and cannot be construed as an undertaking
never to re-attach or arrest the vessel.
[79] In my opinion this
interpretation of the letter of undertaking is plainly incorrect.
In terms
of the letter of undertaking Gardenia promised:
to provide a guarantee for a
sum in excess of the amount of the claim.
And Tradax promised:
(i) To
release the vessel immediately
(ii) To restrict its claim to $600
000
(iii) Not to re-arrest the vessel.
[80] If Tradax’s action in
California had been taken to its conclusion, and succeeded, the guarantor would
have paid Tradax
in terms of the letter of undertaking. If, on the other hand,
the action failed the guarantor would have been released. (As it happens
the
action was not pursued to finality and therefore the guarantor was held to be
released from its undertaking.)
[81] Interdependence or reciprocity existed
between (i) Gardenia’s promise to provide and maintain the security,
pending the
successful outcome of the current proceedings, and (ii)
Tradax’s promise, inter alia, not to re-arrest the vessel; it did not
exist between (i) the promise to provide the security, whatever the outcome of
the proceedings, even if they failed, and (ii) the
promise not to re-arrest the
vessel. The letter is not in terms limited to re-attachments or arrests in
California and no basis
exists for such an implied restriction of its express
terms. It was given to effect the release of the vessel from arrest in
California.
The parties would not have contemplated further arrests or
attachments in California for the reason, as was submitted by counsel
for
Gardenia, that, security having been given for Tradax’s claim, such
further arrest or attachment in California would have
been very remote indeed.
Gardenia would, however, have been concerned about arrests in other
jurisdictions and the undertaking not
to attach or arrest is to be read in the
light of that concern. It is therefore clear in my view that the effect of the
giving of
the letter of undertaking in this case was, in the words of Willmer J
in The Hartlepool (1950) 84 Lloyd’s List Law Reports 145 (PDA) at
146, that
“the ship’s release [was] purchased and she is free from further arrest in any country in respect of the same claim”.
(See also The Soya Margareta [1960] 2
All ER 756 (PDA) at 761 G - H, where the dictum of Willmer J was cited
with approval.)
[82] This appears also to be the effect of the case law on
the point in the United States: see Gilmore and Black, The Law of
Admiralty, 2nd ed, p 799, citing The New England (J K Welding
Co Inc v Gotham Marine Corp) 47 F 2d 332 at 335; American
Jurisprudence 2d, vol 2 “Admiralty” § 233 and
Overstreet v Water Vessel Norkong, 706 F 2d 641 (5th Cir) at
643 fn 2 : “Once a vessel is released from arrest by a bond, the vessel
itself can no longer be held to answer for
the claims the bond is designed to
meet. The bond is the claimant’s sole source of recovery”. (It seems
that the position
is the same where, as here, a letter of undertaking is given
instead of a bond: see Continental Grain Company v Federal Barge Lines
Inc 268 F 2d 240 (5th Cir) at 243.)
[83] Counsel for Tradax
also contended that if, for example, the insurer had gone into liquidation after
judgment had been given
in favour of Tradax it could hardly be contended that an
attachment of the vessel was impermissible for the purposes of execution.
The fact that cases may arise where the guarantor goes into liquidation or
is sequestrated after the release of the vessel does
not compel one to a
conclusion different from that stated above. Either the liquidation or
sequestration of the guarantor and his
or its consequent inability to honour the
guarantee will entitle the party accepting the guarantee to resile from his or
its promise
not to arrest the vessel again in respect of the claim (cf
Westminster Bank Ltd and Ano v West of England Steamship Owners’
Protection and Indemnity Association Ltd and Ano (1933) 46 Ll L Rep 101) or,
possibly, the view will be taken that as the insolvency of those giving the
letter of undertaking was
something which the person who arrested the vessel
could have foreseen, it was a risk that was taken and the vessel is still immune
from re-arrest in respect of the original claim: cf US v Ames 99 US 35
(1878), to which Gilmore and Black refer, op cit p 800 fn
466.
[84] Whatever the position may be where the grantor of the letter of
undertaking goes into liquidation or is sequestrated, nothing
of that kind
happened here. There is no reason to believe that the undertaking would not have
been honoured if Tradax had obtained
judgment in its favour in Case 90-4419 RB
(GH kx).
[85] Finally, counsel for Tradax argued that at the time of the
arrest in South Africa Gardenia’s American attorneys were contending
that
the security in question had been rendered void by the decision of the District
Court and were demanding that the letter of
undertaking be returned.
Tradax’s counsel contended further that for Gardenia to rely on the letter
of undertaking to resist
the arrest of the vessel in South Africa while at the
same time contending that the security was no longer operative amounted to
approbating and reprobating.
[86] In my view this contention cannot be
accepted. It is not correct to say that Gardenia’s attorneys were
contending that
the letter of undertaking was void. What they were contending
was that the security undertaking contained in the letter had lapsed
by reason
of Letts J’s judgment exonerating the security. In truth what had
happened was that the insurance company’s
obligation to satisfy any
judgment given in the action which was enforceable against the vessel fell away
(subject to a possible
reversal on appeal) when the judge ruled that the vessel
belonged after the judicial sale not to Astyanax SA but to Gardenia for
the
reasons stated earlier. But for the reasons stated earlier it did not and
cannot follow that Tradax’s counter promise
(not to re-arrest the vessel)
also fell away.
[87] It may be going too far to say that, as contended by
counsel for Gardenia, on a proper interpretation of the letter the parties
intended that the undertaking not to re-attach or arrest should remain effective
even although the security was no longer in place
whatever the reason for that
might be. What seems quite clear, however, is that it could never have been
intended that the undertaking
would fall away as a consequence of the fact that
the security was no longer operative by reason of a final and binding judicial
decision negating the existence of the very basis upon which the claim for, and
the provision of, security rested. If Tradax lost
the case in America, it could
not simply re-attach or arrest in another jurisdiction and continue litigating
there or elsewhere.
That could not have been the basis on which the letter of
undertaking was issued.
[88] In the circumstances I am satisfied that the
appeal must fail. The following order is made: The appeal is dismissed with
costs,
including those occasioned by the employment of two
counsel.
I G FARLAM
ACTING JUDGE OF
APPEAL
NIENABER JA )
MARAIS
JA )
PLEWMAN JA ) - Concur
STREICHER
JA )
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