The MT Argun was arrested in Table Bay on 25 May 1999 at the instance of Sea-Tech Pte Ltd for unpaid repair costs. Further arrests followed by Offshore Bunkering Group Ltd (for breach of charter party), the master and crew, and former crew (both for arrear wages). No security was posted to procure the vessel's release. The Sheriff of Cape Town was obliged under Admiralty Rule 21(1) to preserve the vessel, incurring substantial expenses including bunkers, water, food, and port charges. Initially the ship's agents (appointed by registered owner National Pacific GSC SA) attended to the vessel's needs until 30 June 1999 when their mandate was terminated. The Government of the Russian Federation (GRF) later claimed ownership and was declared owner on 25 November 1999. Neither the arresting parties nor the owners contributed to preservation costs. By March 2000, the Sheriff's expenses exceeded R1.2 million. The Sheriff launched two applications: the first (30 July 1999) seeking to declare arresting parties and/or owners liable for preservation expenses; the second (28 March 2000, together with Victoria & Alfred Waterfront Co) seeking sale of the vessel. Both applications were dismissed by the courts a quo.
First appeal: Dismissed against first respondent (owners) with costs. Upheld against second to fifth respondents (arresting parties). Order set aside and replaced with: (i) declaration that each arresting party is jointly and severally liable with other arresting parties for the Sheriff's reasonable preservation expenses and remuneration during the period of their respective arrests; (ii) continued arrests made conditional on reimbursing the Sheriff within 10 days of demand. Costs awarded against arresting parties. Second appeal: Dismissed with costs.
Arresting parties are jointly and severally liable to reimburse the Sheriff for reasonable expenses incurred in preserving an arrested vessel during the period of their respective arrests. This liability exists under both Roman-Dutch law (based on principles applicable to arrests to found jurisdiction) and English admiralty law. Admiralty Rule 21(1) imposes a duty, not merely a discretion, on the Sheriff to preserve arrested property. The court has discretion under section 5(2)(c) of the Admiralty Jurisdiction Regulation Act 105 of 1983 to make arrests conditional upon arresting parties reimbursing preservation expenses within a specified time. Owners of arrested vessels are not liable for preservation expenses pendente lite on grounds of unjust enrichment, negotiorum gestio, or tacit agreement, because the arrest and preservation benefit the arresting parties (by maintaining their security) rather than the owners. Sale of an arrested vessel pendente lite will not be ordered where arresting parties can be held liable for preservation expenses and alternative remedies exist.
The Court noted, without finally deciding, the difficult question of classification (substantive versus procedural) regarding the English admiralty rule imposing liability on arresting parties, observing there was much to be said for treating it as substantive but that the issue was not fully argued. The Court observed that the practice in England, the United States, Australia and New Zealand of requiring advance payment or undertakings from arresting parties better protects marshals/sheriffs than the South African position. Scott JA noted that the end result would likely be the same regardless of whether Roman-Dutch or English law applied. The Court commented that it knew of no case in England or South Africa where owners had been compelled pendente lite to pay preservation expenses while a vessel remained under arrest. The judgment describes an order for sale pendente lite where a claim is contested as 'Draconian' and notes courts will be reluctant to make such orders where there is a reasonable prospect the owner can show no good cause of action exists.
This judgment clarifies the liability regime for preservation expenses of arrested vessels in South African admiralty law. It establishes that arresting parties, not owners, bear primary responsibility for a Sheriff's preservation expenses pendente lite. The decision protects Sheriffs from the financial burden of maintaining arrested vessels while litigants proceed at leisure. It confirms that Admiralty Rule 21(1) imposes a mandatory duty on Sheriffs to preserve arrested property. The judgment also demonstrates the interaction between English admiralty law and Roman-Dutch law under section 6 of Act 105 of 1983, and the application of conflict of laws principles to distinguish substantive from procedural rules. It recognizes the court's broad discretion under section 5(2)(c) to impose conditions on arrests, including requirements for arresting parties to reimburse preservation expenses. The decision provides important guidance on when courts will order sale of arrested vessels pendente lite (sparingly, and not where arresting parties can be held liable).