21 April 2008

DANGERS OF DELAYS IN PROSECUTING AN ACTION AFTER
SECURITY HAS BEEN OBTAINED BY ARRESTING CREDITOR


In a recent admiralty decision of the South African High Court (Cape Division), the court provided useful guidelines to determine when proceedings should be struck out under Admiralty Rule 20 (1) on the grounds that that they are “vexatious or an abuse of the process of court”.

The matter concerned the arrest in rem of the mv “Visvliet” on 14 March 1997. Having received security against the release of the vessel, the claimant took no further steps after close of pleadings for a period of 10 years until the defendant, Golden International Navigation SA, made attempts in 2006 to set a trial date. This was met with opposition by the claimant, which prompted the defendant to bring a substantive application to have the claim struck out.

In approaching the question of whether the proceedings should be struck out, the court examined, amongst other things, whether the claimant had given credible reasons for the delay. On the facts, it was undisputed that during the entire period between 2001 and 2006 the claimant did not set the matter down for trial nor did it take any further steps to bring the matter to finality. The only explanation for this inactivity was that it was unable to advance the action due to “administrative funding problems”, which the court found to be wholly unacceptable and which, the court said, prejudiced the fundamental principle of the public’s interest to prompt finalisation or determination of litigation.

It was, therefore, clear to the court that the delay on the part of the claimant was unreasonable and should not be condoned, especially since no good reason had been shown why it should now more than ten years after the cause of action arose be allowed at great expense to proceed with a claim which appeared to be doomed to fail. 

The action was struck out and the Letter of Undertaking was ordered to be returned to the defendant.

While the outcome of all cases depends on their particular facts, this decision will be welcomed by ship owner defendants and providers of letters of undertaking or similar guarantees. Moreover, it ought to serve as a clear warning to arresting creditors who – comforted by an undertaking or guarantee - unreasonably delay the prosecution of their claim in South African proceedings.

 
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