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IN THE SUPREME COURT OF SOUTH AFRICA ( APPELLANT DIVISION )

In the matter between:

SUMMIT INDUSTRIAL CORPORATION appellant

and

CLAIANTS AGAINST THE FUND C0MPR.I.S1NC THE PROCEEDS OF

THE SALE OF THE m.v.

"JADE TRANSPORTER" respondents.

Coram: CORBETT, TRENGOVE, VILJOEN, GROSSKOPF, JJA, et NICHOLAS AJA.

Date of Hearing : 13 November 1986 and 16 February 1987 Date of Judgment: 2 March 1987

J U D G M E N T

CORBETT JA

This appeal, from a judgment of the Pull Bench of the Natal Provincial Division (per HOWARD J, MILNE JP

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and LEON ADJP concurring), which has been reported (see 1985 (4) SA 133 (N)), concerns bhe interpretation to be placed on sec. 11(8) of the Admirally Jurisdiction Regulation Act 105 of 1983 ("the Act").

According to its long title Che object of the Act

is bo provide for the vescing ot the powers of the admiralty courbs of the Republic in the provincial and local divisions

of thc Supreme Court of Soukh Africa, and for the extension

of bhose powers; for the law to be applied by, and the pro-

cedure applicable in, those divisions; for thc repeal of

the Colonial Courbs of Admiralty Act 1890, of the United

Kingdom, in so far as it applies in relabion to the Republic;

and to incidental matters.

In pursuance of bhis object the Act provides that each provincial and local division of the Supreme Court shaii have jurisdicbion (designated "admiralty jurisdiction") bo

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hear and determine any maritime claim (sec 2(l) ). The term "maritime claim" is defined in sec. I to mean any one of twenty-six categories or claim, which are listed in paras. (a) to (z) inclusive of the definition. These categories include -

(i) "any claim in respect of a mortgage, hypothe-

cation, right of retention or pledge of, or

charge on, a ship" (para (c) );

(ii) "any claim arising out of any agreement for or relating to the carriage of goods in a ship" (para (h) );

(iii) "any claim in respect of goods supplied or

services rendered to a ship for the employment or maintenance thereof" (para. (l) );

(iv) "any claim in respect of the design, con-struction, repair or equipment of any ship or any dock or harbour dues or any similar

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dues" (para. (m) );

(v) "any claim by a master or member of the crew of

a ship arising out of his employment" (para (n) );

(vi) "any claim relating to any maritime lien "

(para. (v) ).

In terms of sec. 3 a maritime claim may, subject

to certain requirements, be enforced either by an action

in personam or an action in rem. In the case of an action

in personam the requirements are jurisdictional. Thus

such an action can be instituted only against certain clas-

ses of persons, delfined by reference to specific grounds of

jurisdiction (sec. 3(2) ). One such class is a person -

"whose property within the court's area of jurisdiction has been attached to found or confirm jurisdiction".

In the case of an action in rem the section provides that a maritime claim may be enforced by such an action (which

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is instituted by the arrest within the court's area of

jurisdiction of certain property) if either (a) the claim-

ant has a maritime lien over the property to be arrested or

(b) 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 (sec 3(4) . The property which

may be arrested in order to institute an action in rem con-

sists of —

"... one or more of the following categories against or in respect of which the claim lies:

1. The ship, with or without its equip-ment; furniture, stores or bunkers;

2. the whole or any paid of the equip-ment, furniture, stores or bunkers;

3. the whole or any part of the cargo

4. the freight" (Sec. 3(5) ).

The term "maritime lien" is not defined in the Act, but its meaning has been discussed in various judgments (see eg. Euromarine international of Mauren v The Ship Berg and Others 1984 (4) SA 647 (N), at p 652 F-ll; Oriental Commercial and

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Shipping Co Ltd v M V Fidias 1986 (1) SA 714 (D); SouLhern Steamship Agency Inc and Another v M V Khalij Sky 1986 (1) SA 485 (C); and the judgment a quo, as reported, at pp 141 G - 142 D). For the purposes of this case it is not necessary to investigate the circumstances under which a claimanL acquires a maritime lien over property.

It will be noted thab in terms of the provisions of sec. 3 thus far discussed an action in rem requires the arrest of property "againsb or in respect of which Lhe claim lies". Prior to the passing of the Act this was the only basis upon which an action in rcm could be instituted in khe courts of South Africa exercising admiralty jurisdicbion. It was not, for example, permissilble to seek to institute an action in rem to enforce a claim arising in respect of ship A by the arrest of ship B, even though the two ships were owned by the same person (see Tharros Shipping Corporation SA v Owner of the Ship "Golden Ocean" 19/2 (4) SA 316 (N);

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Euromarine International case, supra, at p 658 H - 659 A) .

in this connection, however, the Act introduced an important

innovation in the form of the "associated ship" and enacted,

subject to certain quaiifications which are not presently

relevant, that an action in rem might be brought by the arrest

of an associated ship instead of the ship in respect of which

the maritime claim arose (sec. 3(6) ). And "associated ship"

was defined to mean a ship, other than the ship in respect

of which the maritime claim arose —

" (i) owned by the person who was the owner of the ship concerned at the time when the maritime claim arose;

or

(ii) owned by a company in which the shares, when the maritime claim arose, were controlled or owned by a person who then controlled or owned the shares in the company whieh owned the ship con-cerned". (Sec. 3(7)(a) ).

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These provisions thus contemplate two categories of ship: the ship in respect of which the maritime claim arose, referred to in sec. 3(7)(a) as "the ship concerned" - a convenient label - and "the associated ship", linked with the ship concerned by common ownership or control, either directly, ie. where the same person owns, and therefore controls, both ships (sec. 3(7)(a)(i) ) or indirectly, ie. where the two ships are owned by companies the shares in which are controlled or owned by the same person at the time when the maritime claim arose (sec. 3(7)(a)(ii) ). Sec. 3(7) does not specifically deal with the position where a person owns or controls one ship directly and the other indirectly, but presumably (it is not necessary to decide the point) the subsection would be interpreted as covering that situation and the one ship would be regarded as an associated ship vis-a-vis the other. Associated ships which are linked directly, ie. owned by the same person,

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are often referred to as "sister ships"; and those which are

linked indirectly, ie are owned by companies the shares

in which are controlled or owned by the same person, are

often called "group ships".

Sec. 9 of the Act provides that a court may in the exercise of its admiralty jurisdiction at any time order that any property which has been arrested in terms of the Act be sold and the proceeds thereof held as "a fund in the court" or otherwise dealt with. And sec. ll makes detailed provisions with regard to the ranking of claims in regard to a fund in the court. It is the interpretation of sec. 11, and more particularly subsec. (8) thereof, which has given rise to the dispute in the present matter. But before turning to this it is necessary to recount the relevant facts.

The case arises from the financial collapse of a group oF ship-owning companies known as the Eddie Steamship

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group. These companies are controlled and owned by a Mr W H Eddie Hsu of Taiwan. Included in the group are Outer Ocean Navigation Corporabion Ltd, which owned, in ter alia, m.v. Emerald Transporter; Far Eastern Navigation Corporation Ltd, which owned, in ter alia, m.v. Jade Transporter and m.v. Iron Transporter; and Eddie Steamship Co. Ltd, which owned, inter alia, m,v. Steel Transporter.

On 22 June 1984 Gulf Oil Trading Company ("Gulf

Oil") 06 Delaware, USA, made appilication to the Durban and Coast Local Division, in the exercise of its admirally ju-risdiction, for an order for the attachment of m.v. Jade Transporter to found jurisdiction in an action in personam to recover the cost of fuel oil and diesel oil (termed "bun-kers") and lubricating oil (termed "lubes") supplied to certain vessels within the Eddie Steamship group (case number 4565/84). On the same day a warrant of arrest in rem was issued in favour of Hollandsche Bank-Unie M V

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( "HBU" ) in respect of the m.v. Jade Transporter as the first step in an action in rem to recover amounts due in terms of a mortgage of the vessel (case number 4570/84); and in pursuance of this warrant a notice of arrest was issued.

At this time the m.v. Jade Transporter had ar-rived off Richards Bay, Natal, in order to obtain bunkers at the Richards Bay terminal. The vessel remained outside the territorial limits, however, evidently in order to evade service and execution of the attachment and arrest orders already granted. This position continued throughout June, July and the early part of August. In August two further warrants of arrest in rem in respect of various maritime claims were issued: one in favour of Gulf Oil on 3 August 1984 (case number 5368/84) and one in favour of Scallop Petroleum Company ("Scallop") on 10 August 1984 (case number 5485/84). Eventually the m.v. Jade Transporter was com-

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pelled to enter territorial waters to bake on gas oil and on 11 August 1984 service was effected simultaneously of the warrants of arrest in rem in cases 5368/84 (claimant Gulf Oil) and 4570/84 (claimanL HBU) and the application to attach in case no 4564/84 (claimant Gulf Oil). Subsequently warrants of arrest in rem of the m.v. Jade Transporter to enforce various maritime claims were issued in favour ot HBU in case number 5732/84, in favour of appellant, Summit Indus-trial Corporation ("Summit"), in case number 5894/84 and in favour of the master and crew of the vessel, in case number 5554/84. Process in these cases, together with that in case number 5485/84 (claimant Scallop), was served simul-taneously on 3 September 1984.

In the meanwhile, on the application of Gulf Oil, the Durban and Coast Local Division , in the exercise of its admiralty jurisdiction, and evidently in terms of sec. 9 of the Act, had ordered the sale ot the m.v. Jaec Transporter by public auction and had ordered khat after payment of

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certain costs and expenses the balance be held as a fund in the court to be dealt with in accordance with sec. 11 of the Act. The sale took place on 18 September 1984 and realised the sum of US $5 710 000,00 (R9 626 542,87).

On 28 September 1984 the Court (again the Durban and Coast Local Division) appointed Mr. S R Cooper of Cape Town referee for the purpose of receiving, considering and reporting to the Court on all claims against the fund constituted by the proceeds of the sale of the m.v. Jade Transporter and ordered that all such claims be filed with the referee. Mr Cooper duly carried out his mandate as referee and on 3 Decembcr 1984 submitted a lengthy report to the Court dealing with the various claims made upon the fund.

In his report the referee differentiated between what he termed "a direct claim", i.e. where the claim concerned arose in respect of the m.v. Jade Transporter

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and "an associabed claim", ie where the claim concerned arose in respect of a vessel other than the m.v. Jade Transporter, being a vessel in respect of which the m.v. Jade Transporter was an associated ship. The direct claims recommended for acceptance by the referee :included claims for outstanding salaries or wages by the master, officers and crew of the m.v. Jade Transporter; claims arising from the supply of bunkers and lubes and other requirements and services to the m.v. Jade Transporter; and claims arising from a loan secured by a mortgage bond over the m.v. Jade Transporter. The associated claims recommended for accep-tance included claims arising from the supply of bunkers, lubes and other requirements and services to ships in re-lation to which the m.v. Jade Transporter was an associated ship; claims arising from bill of lading contracts for the carriage of goods by ships in relation to which the m.v. Jade Transporter was an associated ship; and claims arising

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from loans secured by the mortgaging of ships in relation to which the m. v . Jade Transporter was an associated ship . In the case of Summit three classes of claims were recommended for acceptance by the referee: (a) direct, claims in respect of bunkers, lubes and other related products and/or services supplied to the m.v. Jade Transporter; (b) associated claims in respect of the supply of bunkers to a sister ship, the m.v. Iron Transporter; and (c) associated claims in res-pect of bunkers supplied to group ships.

Having categorized and made his recommendations as to the acceptance of claims, or portions thereof, the referee then proceeded in his report to deal with the ranking of such claims. Before setting out his recommendations in this regard it is necessary to set forth and discuss to some extent the relevant provisions of the Act.

Subsec. ll deals generally with the ranking of claims and subsections (1) and (8) thereof read as follows:

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"(1) Claims with regard to a fund in a court in

terms of this Act or security given in respect of property in connection with a maritime claim or the proceeds of property sold pursuant to an order or in the execution of a judgment, of a court in terms of this Act shall be paid in the following order:

5. Claims in respect of costs and expenses incurred to preserve the property or to procure its sale, and in respect of the distribution of the proceeds of the sale;

6. claims to a preference based on possession, whether by way of a right of retention or otherwise;

7. claims which arose within one year before the commencement of the proceedings, in respect of —

(i) wages and other sums due to or

payable in respect of the master, officers and other members of the ship's complement, in connection with their employment on the ship; (ii) port, canal and other waterways dues and pilotage dues;

(iii) loss of life or personal injury, whether occurring on land or on water, directly connected with the employment of the ship;

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(iv) loss of or damage to property, whether occurring on land or on water, resulting from delict and not capable of being based on con-tract, directly connected with the operation of the ship:

( v) the repair of a ship or the supply of goods or the rendering of ser-vices to a ship tor the employment or maintenance thereof;

(vi) salvage, removal of wreck and con-tribution in respect of a general average act or sacrifice:

(d) claims in respect of mortgages, hypothecations,
rights of retention of, and other charges

on, the ship, effected in accordance with the law of the flag of the ship;

8. claims in respect of any maritime lien not failing under any category mentioned in any of the preceding paragraphs:

9. all other claims.

(8) Where the fund arises by reason of an action in rem against an associated ship, the ranking of claims set out in this section shail, notwithstaud-ing the provisions of section 3(6), apply with

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regard to claims in respect of the associated ship, and claims in respect of the ship con-cerned shall be paid thereafter in the order

set out in this section."

In the Euromarine International case (supra, at

p 656 G) NILNE JP stated thak the meaning of sec. 11(8) was

that —

"....notwithstanding that s 3(6) gives the right to a marine claimant to bring an action in rem by the arrest of an associated ship instead of the ship in respect of which the maritime claim arose, claims of the nature described in ss (1) of s 11, which lie against the associated ship, are to he paid in preference to claims which lie against the associated ship by reason of the provisions of s 3(6). In other words, claims which lie directly against the associated ship have preference over claims for which it is, as it were, vi-cariously liable."

This difterentiation in the ranking of claims has been described as giving rise to two queues, the first queue

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which enjoys priority over the second queue, consisting of the direct claims against the vesscl and khe second queue consisting of the associated claims. To this extent bhe meaning and effect of sec. 11(8) are reasonably clear. What is not so clear is when the subsection comes into operation and what its field of operation is.

In his report the referee came to the conclusion that the system of queueing applied only where the fund arose by reason of an action in rem against an associated ship; that in this instance thc fund arose by reason of an action in personam , viz thc action instituted by Gulf Oil under case number 4564/84; that consequently sec. 11(8) had no application; and that accordingly all claims against, the fund arising from the sale of the m . v . Jade Transporter had to be "pooled" and ranked in accordance with the pro-visions of sec. 11(1), read together with other relevant sub-sections of sec. 11.

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After the submission of the referee's report HBU made application to the Durban and Coast Local Division, in terms of sec. 11(4) of the Act, for an order authorising the Registrar of the Court to distribute the fund in accordance with certain defined rankings. The system of ranking prayed for differed from that recommended by the referee. In particular, HBU took issue with the interpretation placed by the referee on sec. 11 of the Act, contending that in the instant case sec. 11(8) applied and that all direct claims in respect of the m.v. Jade Transporter had to be ranked and paid in priority to associated claims. This application was opposed by various claimants upon the fund. The Court referred the matter for hearing by the Pull Court of the Natal Provincial Division in terms of sec. I,3(l)(b) of the Supreme Court Act 59 of 1959.

It appears that at about the same time various other ships in the Eddie Steamship group had also been arrest-

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ed and sold to create funds in the court. These included the m.v. Emerald Transporter and the m.v. Steel Transporter. When the present matter came betore the Pull Court of the Natal Provincial Division the Court heard at the same time an appeal against a judgment of the Durban and Coast Local Division (per WiLSON J) relating to thc claims against the Fund comprising the proceeds of the sale of the m.v. Emerald Transporter (see Banque Paribas v The Fund comprising Proceeds of Sale of the M V Emerald Transporter 1985 (2) SA 452 (D) ) and an application in terms of sec. 11(4) of the Act to settle the ranking of certain claims against the fund comprising the proceeds of the sale of the m.v. Steel Trans-porter. Common to all these matters was the proper inter-pretation to be placed on sec. 11(8) of the Act,

The Pull Bench came to the conclusion that a literal interpretation of sec. 11(8) would result in its applicability depending upon (reported judgment at p 139

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D) —

" the mere chance that the creditor at

whose instance the ship is sold and the fund arises ("the selling creditor") happens to have an associated ship claim rather than a direct claim in respect of the ship sold and institutes an action in rem rather than an action in personam to enforce his claim."

This, the Court held, was an absurd result and one which

could never have been intended by the Legislature.

Consequently the Court considered itself justified in depart-

ing from the literal meaning of the words of the statute.

The Court further held that in order to give the subsection

efficacy and avoid the absurd consequences of a literal inter-

pretation it was necessary to imply, or read into, the opening

words of the subsection ( and after the word "where") the

words "any claim against". The opening words of the sub-

section should thus be interpreted to mean —

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"Where any claim against the fund arises by
reason of an action in rem against an
associated ship "

(see reported judgment at p 139 F-I).

Applying this extended interpretation to the facts

of the instant case the Court held that the referee's con-

struction of sec 11(8) was incorrect; that the subsection

applied; and that the direct claims in respect of the

m. v. Jade Transporter should take precedence over the asso-

ciated ship claims (see reported judgment p 145 D-F).

Accordingly the Court made an order which included the follow-

ing paragraph, numbered 3(a) (at p 146 J - 147 A):

"It is declared that the claims of Gulf Oil Trading Co, Scallop Petroleum Co and Summit Trading Industrial Corporation iu respect of the supply of goods to ships other than the mv Jade Transporter, in relation to which the mv Jade Transporter was an associa-ted ship as envisaged by g 3(7)(a)(i) or (ii) of the Act, rank for payment in terms

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of s 11(8) of the Act after the direct claims

in respect of the mv Jade Transporter " .

Summit, having obtained the necessary leave from the Court a quo, now appeals against portion of this judgment and order, viz. that portion which declares that the claims of Summit in respect of the supply of goods to ships in relation to which the m.v . Jade Transporter was an associated ship by reason of the provisions of sec. 3(7)(a)(i) of the Act rank for payment in terms of sec. 11(8) of the Act after the direct claims in respect of the vessel. In other words Summit, while accepting the Court a quo's gene-ral interpretation of sec. 11(8), contends that an associated ship claim arising in respect of a sister ship (ie. as de-fined in sec. 3(7)(a)(i)) should be treated differently from an associated ship claim arising in respect of a group ship (ie. as defined in sec. J(7)(a)(ii) ); and that the sister ship claim should fall into the first queue, together

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with the direct claims, while the group ship claim falls into

thc second queue. It accordingly asked (and here I refer

to counsels heads of argument) that para. 3 (a) of the order

of the Court be amended to include the following words at the

end thereof:

" unless such claim is a claim in

personam against the owner of the mv Jade Transporter, in which event it shall rank with the direct claims in respect of the mv Jade Transporter under section 11(1)(f) of the Act."

At the initial hearing of the appeal by this Court only Summit appeared. During the course of the argument members of the Court expressed reservations about the correctness of the Court a quo's interpretation of sec. 11(8); and in addition the Court indicated that the record did not sufficientiy evidence aud describe the sequence of events leading up to the sale of them.v.Jade Transporter

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and the creation of the fund. Eventually at the request

of counsel for Summit the matter was postponed in order

to enable Summit to supplement the record and to provide

a chronology of events; and to present argument on the

following issues (I quote from the order):

"(a) whether the interpretation by the Court a quo of Section 11(8) of the Admiralty Jurisdiction Regulation Act No 105 of 1983 ("the Act") in the manner reflected at pages 220 - 221 of the Appeal Record is correct;

(b) whether bhe interpretation by the Court a quo of Section 11(1) (c)(v) of the Act in the manner reflected at page 227 of the Record is correct;

and generally on the matters raised in Appellant's Notice of Application for Leave to Appeal."

It was also directed that the order and copies of the

additional documents be served upon the attorneys acting

for the other interested creditors.

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At the resumed hearing this Court had before it the additional documentation asked for and the chronology of events. Of the other interested creditors (ie. apart from Summit) only HBU appeared by counsel and submitted argument. Counsel for HBU also supported the Court a quo's interpre-tation of sec. 11(8).

The first question to be considered is the correct

interpretation of sec. 11(8). The argument revolved mainly

around the opening words, or "preamble" reading —

"Where the fund arises by reason of an action in rem against an associated ship

It was argued by counsel for Summit (in support of the general submission that, in interpreting the subsection, the Court should depart from the literal meaning)that a fund could not properly be described as arising "by reason of an action in rem". In my view, there is no substance

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in this argument. The phrase "by reason of" (Afrikaans "na aanleiding van") indicates a causal relationship between the arising of the fund and an action in rem taken against an associated ship (cf. Commissioner for Inland Revenue v Wi-dan, 1955 (1) SA 226 (A) at pp 233-4; Svenska Oljeslageri Aktiebolaget v Lewis Berger & Sons Ltd 1960 (2) SA 601 (A), at p 611 A-B). It is true that the institution of an action in rem does not, per se, give rise to a fund in the court. For a fund in the court to be created the court must make an appropriate order in terms of sec. 9 for the sale of the ship and the holding of the proceeds of the sale as such a fund; and in pursuance thereof the sale must take place and the proceeds duly hcld as a fund in the court. Plainly the Legislature was aware of this and consequently the words of the preamble to sec. 11(8) must be interpreted as contemplating a chain of causation consisting basically of (i) the institution of an action in rem by the arrest

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of an associated ship, (ii) an application to court an terms of sec. 9 for the sale of the arrested ship and the holding of the proceeds of the sale as a fund in the court, (iii) an order of court granting the application, (iv) the sale of the ship and (v) the holding of the proceeds of the sale as a fund in the court. Admittedly the precise nature of the causal connection between links (i) and (ii) is a matter upon which the subsection is not clear. Ob-

viously if the claimant who institutes the action in rem

referred to/in (i) applies to court for the sale of the ship,

etc. in terms of sec. 9, the causal connection is there.

But suppose that the party at whose instance the ship is

sold has instituted both an action in rem against the ship

as an associated ship and either an action in rem or an

action in personam to enforce a direct claim in respect of

the ship? One of these alternatives applies to the factual

situation in the present matter, where Gulf Oil which applied

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for the sale of the ship had instibuted an action in rem against (and arrested) the m.v. Jade Transporter as an as-sociated ship and had also attached the vessel to found jurisdiction in an action in personam against the owner (though there is no evidence of the institution of this action in personam). It may be that in such a case the action in rem against the ship as an associated ship would be regarded as a cause of the sale of the ship, aibeit not the only cause, and that this causal connection would be sufficient to bring sec 11(8) into operation. As I shail later show, however, it is not necessary to decide the point in this appeal. I might add that similar problems could arise where there are joint or simultaneous applications under sec. 9 by claimants having different types of claims.

Admittedly where applicants, under sec. 9 have only direct claims in rem and/or claims in personam, it would seem that sec. 11(8) has no application.

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And it is this consideration which is said to give rise to an absurdity justifying a departure from the literal wording of the preamble along the lines indicated by the Court a guo

The general rule is that the words of a statute

must be given their ordinary, grammatical meaning unless

to do so —

"...... would lead to absurdity so glaring

that it could never have been contemplated
by the legislature, or where it would lead
to a result contrary to the intention of
the legislature, as shown by the context or
by such other considerations as the Court
is justified in taking into account "

(per INNES CJ in Venter v Rex 1907 TS 910, at p 915).

In that event the Court may depart from the ordinary effect of the words to the extent necessary to remove the absurdity and give effect to the true intention of the legislature. (See also Kbrahim v Minister of the Interior 1977 (1) SA 665 (A), at p 678 and the authorities there cited.) The

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principle in Venter's case (supra) has generally been used in order to cut down the wide meaning of the words employed by the legislature, but in exceptional cases it may also be permissible for a court to expand the literal mean-ing of the words (see Barkett v SA National Trust & Assurance Co Ltd 1951 (2) SA 353 (A), at p 363 A-F).

As has been remarked in various judgments, it is dangerous to speculate on the intention of the legislature (see eg. the reference in Savage v CIR 1951 (4) SA 400, at p 409 A) and the court should be cautious about thus departing from the literal meaning of the words of a statute (see remarks of SOLOMON JA in Dadoo Ltd and Others v Krugers-dorp Municipal Council 1920 AD 530, at p 554-5). It should only do so whore the contrary legislative intent is clear and indubitable (see Du Plessis v Joubert 1968 (l) SA 585 (A), at pp 594-5). Moreover, it is not the function ot the court to supplement a statutory provision in order to provide for

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a casus omissus (see Walker v Carlton Hotels (SA) Ltd 1946 AU 321, at p 330; Barkett's case, supra, at p 363 F-C).

I do not think bhat a departure from the literal meaning of the preamble to sec. 11(8) is justified. Giving the words their literal meaning does not lead to any absurd-ity . It brings about a "queueing" in the very circumstances obviously intended by the Legislature, ie. where a fund in the court arises "by reason of (ie. in the manner indicated above) an action in rem against an associated ship. Counsel for Summit sought to argue that the literal interpretation gave sec. 11(8) "no practical field of ope-ration". I have difficulty in accepting this. And I notice, too, that this assertion does not accord with the views expressed in Shaw, Admiralty Jurisdiction and Practice in South Africa at p 100. Analysis shows that the so-called absurdity lies not in the application of sec. 11(8) within its stabed field of operation, but, in the fact that

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the statute does not provide for the same system of queueing where a fund arises in other circumstances,

such as where the ship is sold in pursuance of an action in rem to enforce a direct claim or an action in personam; or indeed whenever there are associated claims against a fund. It may well be that in this regard sec. 11(8) is deficient but, as I have shown, it is not the function of the court to remedy a casus omissus. If remedial action be needed, then that must be taken by the Legislature.

Furthermore, I have difficulty in accepting the interpretative modification of the preamble adopted by the Court a quo and supported by counsel before us. Grammatically, it involves substituting a new subject in the sentence con-stituting the preamble. Any claim against the fund is sub-stituted For the fund. This is a very drastic alteration and one which virtually rewrites the sentence and changes its sense. Instead of having to determine how the fund

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arose one would, in applying the preamble in accordance with this interpretation, have to enquire whether there were any claims against the fund which arose from an action in rem against an associated ship. I know of no precedent for so fundamental a change in a statutory provision being wrought by a process of interpretation. In addition, the amended wording adopted by the Court a quo introduces the anomalous concept of a claim arising from an action in rem. A claim would, in ordinary parlance, arise by reason of one or other of the transactions or events refer-red to in the definition of maritime claim; and, with res-pect, I do not find the explanation given in the judgment a quo (at p 140 A-B) entireiy convincing. And finally, as is conceded in the judgment a quo (at p 140 D-F), the con-struction adopted by it does not apparently render the sub-section applicable in all cases where the claims against a fund include one or more associated ship claims and conse-quently falls short of achieving what is conceivcd to be

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the entire object for which the subseckion was enacted.

For these reasons I am of the opinion that sec. 11(8) musb be interpreted in accordance with the ordinary meaning of the language employed by the Legislature. Ordinarily the next question would be whether, so interpreted, sec. 11(8) is applicable in the instant case. The Court a quo, on its interpretation, decided that the subsection did apply (thus rejecting the view of the referee). It may well be that even on the literal interpretation prefer-red by me - and for reasons already adumbratcd - sec. 11(8) would apply in this case. There is, however, no appeal against that part of para. 3(a) of the order of the Court a quo which declares that there should be two queues of claims; and consequently this Court is not called upon to pronounce on the correctness of that decision. Nor is it necessary to consider what effect, if any, a statement in the supporting affidavit to Gulf Oil's application for the sale

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of the m. v. Jade Transporter (to the effect that in the application Gulf Oil was proceeding in terms of its action in personam against the owner of the m.v. Jade Transporter) has upon the applicability of sec. 11(8).

What this Court is required to deal wich, however, is the contention by Summit that para. 3(a) should be amended by the addition of the rider quoted above, which in effect draws a distinction between claims arising from actions in rem against sister ships and those against group ships and places the former in the first queue and the latter in the second queue. I can find no foundation for such a distinc-tion. The only substantive provisions in thc Act relating to queueing are to be found in sec. 11(8). Once it is established that in terms of the preamble the subsection applies, then the subsection prescribes how the claims are to be divided into (a) those "in respect of" the associated ship (which is the ship whose sale has created the fund) and (b) those "in respect of" the ship concerned, and

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ordains that the claims falling under (a) shall have pre-cedence over those falling under (b). It is clear to me that when sec. 11(8) speaks of a claim "in respect of" a particular ship, it means a claim which arose in respect of that ship. Consequently in allocating claims to the two categories prescribed by sec. 11(8) the simple enquiry is: did the claim arise in respect of the associated ship or the ship concerned?

A simple example of the working of sec 11(8) may aid clarification. Claimant X has a maritime claim in respect of ship A (the ship concerned) for, say, the supply of bunkers to the ship. To enforce his claim X arrests and institutes an action in rem against ship B, an asso-ciated ship vis-a-vis ship A. X furthermore applies for and obtains a court order under sec, 9 for the sale of ship B and the creation of a fund in the court. This is done. Another claimant against the fund, Y, has a direct claim

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in respect of ship B derived from say, the supply of bunkers to ship B. When the claims against the fund come to be ranked, sec. 11(8) clearly applies and in terms thereof Y's claim falls into the first queue and X ' s claim into the second queue. And it matters not whether ship A was a sister ship vis-a-vis ship B, or merely a group ship.

This seems to me to be the plain meaning of sec. 11(8). If this is not a suitable or desirable result, then this is a further matter which might engage the atten-tion of the Legislature, if and when the Act comes to be amended.

Accordingly I hold that there is no basis for

the amendment to the order of the Court a quo which Summit

seeks to achieve by this appeal; and the appeal by Summit
must be dismissed with costs.

HBU appeared at the resumed hearing of the appeal

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in order to present argument with reference to issue (b) of the order of this Court quoted above. This is the point dealt with in the reported judgment of the Court a quo at pages 141 B to 142 I. Before us the submission of coun-sel for HBU was that the Court a quo had correctly decided the point. Briefly, the point was as follows. It had been argued on behalf of one of the parties in the Court a quo that, when sec. 11(8) applies, claims falling under sec. 11(1)(c)(v) - those of the "necessaries man" - rank in the first queue, irrespective of whether such claims are direct or associated ship claims. The argument was founded on the use in sec. 11(1)(c)(v) of the indefinite article in the phrase "a ship", as opposed to the definite article in the phrase "the ship" appearing in other paragraphs of sec. 11(1). The Court a quo rejected this argument and held that associated ship claims of thc necessaries man fell into the second

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queue. I agree, with respect, with this conclusion and the reasoning of the Court a quo in support of it and do not find it necessary to elaborate thereon. It follows that the submissions of counsel for HBU to us are ac-cepted.

This raises the question of the costs of HBU before this Court. HBU did not obtain - and did not seek to obtain - any alteration to the judgment of the Court a quo. On the other hand, this Court did invite submissions in regard to this question and it was clearly in HBU's interests that the judgment a quo on this issue be upheld. In all the circumstances I am of the view that HDU is entitled to the costs of its appearance before this Court as against the Fund.

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It is ordered as follows:

10. The appeal of Summit Industrial Corporation is dismissed with costs.

11. It is directed that for the purposes of sec. 11(7) of Act 105 of 1983 the costs attendant upon the appearance by Hollandsche Bank-Unie M V before this Court in this matter were costs reasonably incurred in the enforcement of

the claims of Hollandsche Bank-Unie M V against the Fund comprising the proceeds of the sale of the m.v. Jade Transporter.

M M Corbett.

TKENGOVE JA)

VILJOEN JA) CONCUR GROSSKOPF JA) CONCUR

NICHOLAS AJA)

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