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[2015] ZAKZDHC 30
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Windrush Intercontinental SA and Another v UACC Bergshav Tankers AS (A111/2012) [2015] ZAKZDHC 30; 2015 (4) SA 381 (KZD) (9 April 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL DIVISION,
DURBAN
(Exercising Admiralty
Jurisdiction)
CASE NO. A111/2012
DATE: 09 APRIL 2015
NAME OF SHIP: Mt “ASPHALT
VENTURE”
In the matter between:
WINDRUSH INTERCONTINENTAL
SA
....................................................................
First
Applicant
MT “ASPHALT
VENTURE”
.....................................................................................
Second
Applicant
versus
UACC BERGSHAV TANKERS
AS
.....................................................................................
Respondent
JUDGMENT
Delivered on : 09 APRIL 2015
OLSEN J
[1] On 21 September 2012 the vessel
Asphalt Venture (now the second applicant) was arrested at the
instance of UACC Bergshav Tankers
AS (now the respondent). Security
was furnished in order to secure the release of the Asphalt Venture.
The first applicant (Windrush
Intercontinental SA, the bareboat
charterer of the Asphalt Venture) now joins the second applicant in
an application to set aside
the resultant deemed arrest of the second
applicant, and for an order for the return of the security furnished.
[2] In the action in rem instituted
against the second applicant by the respondent it claims to be
cessionary of the rights of seven
members (or former members) of the
crew of the Asphalt Venture. A discussion of the cause of action
pleaded, and of the basis
upon which it is challenged in the current
proceedings, is best preceded by an outline of the facts.
[3] In May 2008 the first applicant
entered into a bareboat charterparty with the registered owner of the
Asphalt Venture, Bitumen
Invest A/S (“Bitumen”), in
terms of which the first applicant took the vessel on charter from 7
May 2008 to 7 November
2015. The first applicant in turn entered
into a sub-bareboat charterparty with Concord Worldwide Inc.
(“Concord”)
for the same period.
[4] Concord (represented by its ship
managers) entered into contracts of employment with the complement of
fifteen crew members
of the Asphalt Venture. (The contracts relating
to the seven crew members who are central to the current dispute were
concluded
between April and August 2010.) The vessel was at that
stage employed under a time charterparty to carry bitumen, apparently
principally
between Durban and the Indian Ocean Islands.
[5] On 28 September 2010 the vessel was
hijacked by Somali pirates when it was about 100 nautical miles east
of Mombassa. The vessel
and its crew became prisoners of the Somali
pirates. Concord then followed what, according to the founding
affidavit, has become
standard practice in such matters, by engaging
with its insurers, instructing solicitors, consulting security
advisers and, most
importantly, appointing a negotiator to deal with
the pirates.
[6] By these means an agreement was
reached which resulted in a ransom of some USD 3.4 million being paid
to the pirates on about
15 April 2011 in exchange for the promised
release of the vessel and the fifteen crew members. The vessel was
released with eight
of the crew members. The pirates reneged on the
negotiated arrangement by retaining seven Indian crew members as
hostages. They
offered the release of these seven remaining crew
members against the release of some one hundred and twenty Somali
detainees held
in India awaiting trial, presumably on charges of or
relating to piracy. Unfortunately, from the perspective of the seven
Indian
hostages, their government does not negotiate with pirates.
The seven crewmen remained in captivity.
[7] Each of the seven crew members had
been employed by Concord in terms of a written agreement specifically
for service on the
Asphalt Venture. The contracts were concluded at
different times between April 2010 and August 2010, and the fixed
periods of
employment varied between four months and nine months.
The latest expiry date amongst the seven contracts was the end of
February
2011. Accordingly, the specified period of employment of
each of the seven hostages had terminated by the time the vessel was
released in mid-April 2011. Notwithstanding this, Concord continued
to pay the wages of all the crew up to 15 April 2011, when
the ship
and eight crew members were released. The eight crew members who were
released were discharged from the vessel and Concord
paid for their
repatriation. Concord then continued to pay amounts equivalent to
the wages of the seven detained crew members
to their families up to
and including October 2011. It is said that this was done on a
voluntary basis. But at that stage Concord
ran out of money and paid
no more to or for the benefit of the seven hostages.
[8] Concord had run into difficulties
before the end of October 2011. It could not meet its obligations in
terms of the sub-bareboat
charterparty as a result of which the first
applicant terminated the sub-bareboat charterparty on or about 17
June 2011. Given
what is set out above, the position as at 17 June
2011 was that
(a) none of the original fifteen of
Concord’s crew were in service on or of the vessel;
(b) upon the assumption that Concord
retained an obligation to pay the wages of the seven crew members
held hostage, notwithstanding
all that had gone before, all such
obligations to date had been discharged.
[9] If after 31st October 2011 Concord
had continued on its earlier course, the next income the families of
the seven hostages would
have received would have been paid to them
at the end of November 2011. The fact that this was not done
obviously caused them
considerable hardship.
[10] On 17 January 2012 a vessel
belonging to the respondent, the UACC Eagle, was arrested in Mumbai,
India by the dependent relatives
of the seven crew members still in
captivity, stating that they represented the crew members in that
litigation. The arrest was
sought to be justified upon the basis
that under Indian law the UACC Eagle was a sister ship of the Asphalt
Venture. It is common
cause between the applicants and the
respondent that in fact there is and was no such relationship between
the two vessels.
[11] Be that as it may, the sum of the
claims made by the families was USD 6,787 million, and the quantum
was premised upon the
proposition that the plaintiffs were entitled
to seek in respect of each of the hostages a “decree for daily
wages”
which each hostage would be entitled to be paid from
November 2011 until each reached the age of 70 years. As the
deponent to
the respondent’s answering affidavit put it, at a
practical level, given the size of the claims that had been made
against
the respondent’s vessel, and given (the deponent says)
the time-consuming nature of litigation in the Indian courts, the
respondent had little alternative but to reach a settlement with the
dependant relatives of the seven crewmen. This was done in
February
2012. The respondent undertook to pay the claims for crew wages for
the period 1 November 2011 to 29 February 2012, to
pay USD 306,000
into an escrow account to cover future wages to the end of December
2012, and to undertake to pay and guarantee
the payment of crew wages
for the period 1 January 2013 to 31 December 2013. (This latter
obligation to cover the wage claim during
2013 was subject to a right
on the part of the respondent to call for arbitration on the issue as
to whether in terms of their
service contracts the seven crew members
were entitled to wages pending repatriation for the period covered by
the agreement, i.e.
until 31 December 2013). Against that the crew
members held hostage, represented by their families, ceded their
claims paid or
guaranteed under the settlement agreement to the
respondent, together with what they contended to be their associated
maritime
liens. Following the settlement agreement the respondent’s
vessel was released by order of the court in Mumbai.
[12] As cessionary of the claims
acquired in the manner set out above, in September 2012 the
respondent issued a summons in rem
out of this court against the
second applicant. The respondent sought payment of what it had
already paid to the families of the
seven hostages, and an order
declaring the respondent’s entitlement as against the second
applicant to payment of the amounts
still to be paid in terms of the
settlement agreement. (By the time that this application was first
argued in August 2014 the
due date of the final payment under the
settlement agreement had of course passed.) The summons and the
particulars of claim which
followed asserted that the seven hostages
were and remained entitled to be paid the wages reflected in their
employment contracts
during the currency of those contracts and,
following any valid determination thereof, until such time as each of
them might be
repatriated. It was alleged that the crew had been
employed by Bitumen as owner; alternatively by Concord as
sub-bareboat charterer;
or further alternatively by the first
applicant as bareboat charterer. It was alleged in the main that the
claim by the seven
hostages was for unpaid wages which gives rise to
a maritime lien against the second applicant; and in the alternative
that the
action in rem could be maintained because one of Bitumen,
Concord or the first applicant was both the owner of the second
applicant
and liable in personam to the crew (and consequently to the
respondent as cessionary) for payment of the wages. In this latter
regard the respondent pleaded its reliance on s 3(4)(b) of the
Admiralty Jurisdiction Regulation Act, 1983, read with s 1(3).
[13] I should deal first with the
alternative basis for the claim, to get it out of the way. The first
applicant has stated in
its founding affidavit that
(a) at the time of the arrest it was
the deemed owner of the vessel as contemplated by s 1(3) of the Act;
but that
(b) it had never concluded any
employment contract with any of the hostages, that having been done
by Concord.
Mr Mullins SC, who appeared for the
respondent, has fairly conceded that a case has not been made out for
the alternative claim
on the papers before me, as a result of which
the respondent must establish the existence of the maritime lien upon
which it relies.
[14] The seven crewmen remained in
captivity when this case was first argued in August 2014. Further
written argument was delivered
thereafter, the last instalment of
which arrived in December 2014. Fortunately by then the parties were
able to inform the court
that the crewmen had been released.
THE BASIS OF THE RESPONDENT’S
CLAIM
[15] According to its summons and
particulars of claim it is the respondent’s contention that the
seven detained crew members
were and remained entitled to be paid
their wages as mentioned already. Alternative employers were
identified in the pleadings,
but this case has to be determined upon
the basis that Concord was the employer party to the contracts of
employment.
[16] The pleadings themselves lack
particularity concerning the precise basis upon which the obligation
to pay wages in these peculiar
circumstances is to be discerned from
the contract. However, copies of each of the single page written
agreements signed by each
crew member and on behalf of Concord are
annexed to the particulars of claim. Each contract records that the
member of the crew
is employed under “the attached terms and
conditions”, a copy of which is also annexed to the summons and
particulars
of claim. That document is the collective bargaining
agreement for Indian officers of the International Bargaining Forum.
It
contains detailed provisions governing the employment of the crew
of the Asphalt Venture.
[17] The single page contract actually
signed records the personal particulars of the crew member, his rank,
the vessel and the
period of employment as well as details regarding
wages. It also contains two simple provisions, one of which reads as
follows.
“In the event of the seafarer
being stranded, the company undertakes to repatriate him to his port
of engagement.”
[18] In its answering affidavit the
respondent asserts, and it is not disputed by the applicants, that
the employment contracts
are governed by Indian law. Article 34 of
the collective agreement confirms that.
[19] In its answering affidavit the
respondent accepts and asserts that the articles of the collective
bargaining agreement which
have a bearing on the crew’s claim
for wages are articles 5, 18 and 19.
[20] Article 5 is headed “Duration
of Employment”. It reads as follows.
“An officer shall be engaged for
the period specified in Appendix – 1 to this Agreement and such
period may be extended
or reduced by the amount shown in Appendix –
1 for operational convenience. The employment shall be automatically
terminated
upon the terms of this Agreement at the first arrival of
the ship in port after expiration of that period, unless the company
operates
a permanent employment system.”
The respondent accepts that the
specified periods in respect of each member of the crew had expired
prior to the release of the
vessel by the pirates on 15 April 2011.
Thereafter and on 28 April 2011 the vessel arrived in the port at
Mombassa, but without
the seven crew members on board.
[21] Article 18 of the collective
bargaining agreement is headed “Termination of Employment”
and Article 18.1a is to
the effect that employment shall be
terminated upon the expiry of the agreed period of service identified
in Appendix – 1.
Nothing is said in Article 18 about the first
arrival of the ship in port after expiration of the agreed period.
Neither is anything
said along those lines in Appendix – 1
which, under the heading “Duration of Employment” reads
as follows in
its material part.
“The maximum period of engagement
referred to in Article 5 shall be nine months, which may be extended
to ten months or reduced
to eight months for operational convenience.
Thereafter, the Officer’s engagement shall be automatically
terminated in accordance
with Article 18 of this Agreement.”
[22] There is no allegation made that
Concord operated what Article 5.1 calls a “permanent employment
system”. Reading
Articles 5 and 18.1a of the collective
bargaining agreement together with Appendix – 1, it would
appear that the employment
of the seven crew members ended with the
arrival of the Asphalt Venture in Mombassa on 28 April 2011. That
contention was advanced
in the applicants’ founding papers.
The respondent’s answering affidavit contains no express
admission of that fact;
neither does it contain any express assertion
to the contrary, nor any explanation as to why these articles of the
employment agreements
would not have had their intended effect in
this particular case.
[23] Instead the respondent asserts
that none of these circumstances deprived the seven crew members of
their right to payment of
wages until their repatriation. In this
regard reliance is placed in the first instance on Article 19 of the
collective agreement
which is headed “Repatriation”. It
reads as follows.
“19.1. Repatriation shall take
place in such a manner that it takes into account the needs and
reasonable requirements for
comfort of the Officer.
19.2.During repatriation for normal
reasons, the company shall be liable for the following costs:
(a) payment of basic wages between the
time of discharge and the arrival of the Officer at their place of
original engagement or
home;
(b) the cost of maintaining the Officer
ashore until repatriation takes;
(c) reasonable personal travel and
subsistence costs during the travel period;
(d) transport of the Officer’s
personal effects up to the amount allowed free of charge by the
relevant carrier.
19.3. An Officer shall be entitled to
repatriation at the Company’s expense on termination of
employment as per Article 18
except where such termination arises
under Clause 18.2 (b) and 18.3 (a).”
(Articles 18.2 (b) and 18.3 (a) are not
relevant to the present enquiry.)
[24] Unsurprisingly, whilst the
applicants appear to recognise Concord’s original obligation to
effect repatriation (given
Articles 19.1 and 19.3), they take the
view that the provisions of Article 19.2 cannot apply as this is not
a case of repatriation
for “normal reasons”.
[25] The respondent’s answering
affidavit was accompanied by the opinion of a senior advocate
practising in Mumbai, Mr S Venkiteswaran
who was asked to address
questions of Indian law arising in this matter. In his opinion Mr
Venkiteswaran makes the following statement.
“In accordance with the Indian
law and the terms of the contracts of employment, the 7 crew members
would be deemed to be
continued to be employed till their employment
is terminated; and the employment can be terminated only
simultaneously with their
repatriation.”
There is no explanation given in the
opinion for this statement, which flies in the face of the provisions
of the crew contracts
which clearly contemplate repatriation, and the
employer’s obligations with respect to it, occurring and
arising only after
employment has terminated. Foreign law is a
question of fact. An expert opinion which seeks to establish it must
at the least
state the witness’s reasons for the contentions
advanced as to the state of foreign law. And if a decision of a
foreign
court is relied on to support the conclusion the expert
reaches, that will be insufficient if the ratio of the decision
relied
on is not given. (As to these propositions see Continental
Illinois National Bank and Trust Company of Chicago v Greek Seamen’s
Pension Fund
1989 (2) SA 515
(D) at 544.)
[26] Unfortunately Mr Venkiteswaran
died after he had furnished his opinion referred to above, and a
second one. This led to the
respondent furnishing a further opinion
by an advocate practising in Mumbai, Mr S K Mukherji, who supports Mr
Venkiteswaran’s
opinion on the issue as to whether the crews’
right to receive wages survived the seizure of the vessel by pirates
in September
2010, and their continued detention after 15 April 2011.
Mr Mukherji went on to express the view that the employment (as
opposed
to merely a right to receive wages) survived, relying in that
regard on the decision of the Indian Supreme Court in the matter of
O
Konavalov v Commander, Coast Guard Region
2006 (4) SCC 620
, a
judgment to which I will revert. Like Mr Venkiteswaran, Mr Mukherji
did not properly address the question of the particular
contracts in
this case, and the provisions of the collective bargaining agreement
which contained the conditions of employment.
[27] In reply the applicants also
tendered an opinion of an expert in Indian law, namely that of
Justice V N Khare, a retired Chief
Justice of India. What he says
may be summarised with this extract from his opinion.
“After reading the contract for
employment along with Clauses 5 and 19 of the Collective Bargaining
Agreement, my considered
opinion is that the 7 crew members remain
entitled to be paid their wages until repatriation. However, based
upon the facts of
this case, and as will be elaborated herein below,
I consider that the contracts for employment would have come to an
end because
of impossibility/frustration.”
Justice Khare gives no explanation for
his apparent view that the obligation on Concord in this case to
effect repatriation falls
within the provisions of article 19.2 which
obliges the payment of basic wages between the time of discharge and
the arrival of
the officer at home in the course of repatriation “for
normal reasons”. However, given that the term “normal
reasons” is inexact, and that Justice Khare has no apparent
difficulty with the proposition that what happened in this case
is
not “abnormal”, one must accept that on the evidence of
the applicant’s own witness on Indian law there is
a prima
facie case for the proposition that, impossibilty of performance
aside, the contract compels the payment of the wage claim
in issue in
this case.
[28] It seems to me that it may
ultimately become important to observe that there is a difference
between a contention, on the one
hand, that the crew members
continued to be employed, and a contention on the other hand that
they continued to be entitled to
receive wages despite the fact that
their employment had ended.
[29] Subject only to what Mr Mukherji
has had to say about the implications of the decision of the Indian
Supreme Court in Konavalov,
it seems to me that the respondent has
failed to establish a prima facie case for the proposition that the
seven detained crew
members were employed as such beyond the date in
April 2011 when the Asphalt Venture docked in Mombassa.
[30] In his first opinion Mr
Venkiteswaran went on to point out that the seven crewmen are also
protected by the provisions of the
Merchant Shipping Act, No. 44 of
1958 (India). It was not argued before me that this protection was
not afforded to the seven
crewmen in this case, and both Mr
Venkiteswaran and Mr Mukherji make reference to s 141 (1) of that Act
which reads as follows.
“Where the service of any seaman
engaged under this Act terminates before the date contemplated in the
agreement by reason
of the wreck, loss or abandonment of the ship or
by reason of his being left on shore at any place outside India under
a certificate
granted under this Act of his unfitness or inability to
proceed on the voyage, the seaman shall be entitled to receive –
(a) in the case of wreck, loss or
abandonment of the ship –
(i) wages at the rate to which he was
entitled at the date of termination of his service for the period
from the date his service
is so terminated until he is returned to
and arrives at a proper return port; …”
Although the provisions of this section
are a little confusing, it seems to me that what it provides is that
when service terminates
before the arrival of the date for
termination of employment contemplated by the agreement, and that
premature termination of service
arises, inter alia, by reason of
wreck, loss or abandonment of the ship, then, notwithstanding the
termination of service, wages
must continue to be paid until
repatriation. Both of Messrs Venkiteswaran and Mukherji appear to
express the view, based on the
judgment in Konavalov, that Indian law
would regard the Asphalt Venture as having been “lost” as
contemplated by s
141 of the Merchant Shipping Act (India); as a
result of which an obligation to pay wages followed until the
repatriation of the
seven crewmen. In my view there is merit in
this, if only at the required prima facie level. It is arguable that
the vessel was
lost to pirates, albeit temporarily. Assuming the
seven crewmen were kept on board until shortly before the vessel
sailed (after
the ransom had been paid), the service of the affected
crewmen (as seamen engaged on the vessel) terminated when they were
removed
from the vessel. That was in advance of the date of
termination of employment contemplated in their contracts (i.e.
apparently
upon the first docking of the vessel in Mombassa on 28
April 2011).
[31] It is correct that Justice Khare
has in effect said that no claim to wages can be sustained because
with effect from 15 April
2011, when the vessel sailed without the
crewmen, the performance of Concord’s obligation to effect
repatriation became impossible.
He relies in that regard on a
decision of the House of Lords in Horlock v Beal [1916 –
17]
All ER 81
which concerned wage claims relating to the imprisoned crew
of a British ship seized by Germany at the outbreak of the first
world
war. The opinions produced by the respondent go the other way,
citing the progress of Indian law over the last one hundred years
and
the differences between Section 141 (1) of the Merchant Shipping Act
(India) and the legislation which prevailed in England
in 1914.
Unless it is established with certainty that Indian law would
recognise impossibility of performance or frustration as
having
released Concord from its obligation to pay wages pending
repatriation, I must confine myself, at least more or less, to
what
has been stated by the respondent as regards this issue. This, it
seems to me, follows from what was said in Hülse-Reutter
and
Others v Gödde
2001 (4) SA 1336
(SCA) para [12] in the context
of an attachment to found or confirm jurisdiction (where the
requirement of a prima facie case is
the same as it is in the case of
an arrest). Omitting authorities the paragraph reads as follows.
“The requirement of a prima facie
case in relation to attachments to found or confirm jurisdictions has
over the years been
said to be satisfied if an applicant shows that
there is evidence which, if accepted, will establish a cause of
action and that
the mere fact that such evidence is contradicted will
not disentitle the applicant to relief – not even if the
probabilities
are against him; it is only where it is quite clear
that the applicant has no action, or cannot succeed, that an
attachment should
be refused. … One of the considerations
justifying what has been described as generally speaking a low-level
test …
is that the primary object of an attachment is to
establish jurisdiction; once that is done the cause of action will in
due course
have to be established in accordance with the ordinary
standard of proof in subsequent proceedings. … No doubt for
this
reason Nestadt JA … warned that a court “must be
careful not to enter into the merits of the case or at this stage
to
attempt to adjudicate on credibility, probabilities or the prospects
of success.”
In this case the issue as to whether
wages must be paid concerns the application of foreign law, a
question of fact, to a given
set of circumstances. Justice Khare may
well be right. But that must be tested in due course.
[32] To summarise thus far, I conclude
(a) that the respondent has established
a prima facie case for the proposition that Concord has been liable
at all material times
since October 2011 to pay wages to the seven
crewmen detained by the pirates, whether by reason of article 19.2 of
the conditions
of employment, or by reason of the provisions of the
Merchant Shipping Act, No. 44 of 1958 (India), or both;
(b) that, subject to any contrary
conclusion to be drawn from the case of Konavalov (still to be dealt
with hereunder), the respondent
has failed to establish a prima facie
case for the proposition that the crewmen had been “employed”
through that period,
in the ordinary sense of the word, in terms of
their contracts with Concord.
[33] An account of what the respondent
has pleaded in its action against the second applicant may be
completed briefly as follows.
(a) The respondent asserts that by
virtue of their employment as members of the crew of the Asphalt
Venture, any claim by the seven
crew members for unpaid wages gives
rise to a maritime lien and is accordingly enforceable by an action
in rem.
(b) By the settlement concluded in
Mumbai, all the amounts paid and secured in respect of the wages of
the crew members in terms
of that settlement, together with the
maritime liens said to arise in respect of those claims, were
assigned to the respondent.
(c) The High Court at Bombay approved
the terms of the settlement agreement on 10 February 2012, thereby
recognising and sanctioning
the assignment of the claims and
associated maritime liens to the plaintiff.
THE BASIS OF THE APPLICATION
[34] The second applicant was arrested
in the ordinary course without the applicants being heard. As is
their right they now approach
the court for an order setting aside
the arrest.
[35] Stated in broad terms, the bases
upon which the applicants seek to set aside the deemed arrest of the
second applicant are
as follows.
[a] Firstly, no claim for the wages
which were allegedly ceded by the seven crew members to the
respondent ever existed.
[b] Whether or not the seven crew
members had monetary claims for amounts expressed as “wages”,
no maritime lien arose
in favour of the seven crew members because
their employment was at an end, and because they rendered no service
to the second
applicant in respect of which such monies may be
claimed.
[c] If the claims and maritime liens
existed, the assignment of them under the settlement agreement was
not valid; and if it was
capable of being done with the sanction of
the court, the Indian court did not in fact sanction the assignment.
[d] If the aforegoing challenges are
not upheld, then a London arbitration and agreement conducted and
concluded after the arrest
divested the respondent of its claim and
lien as a result of which the deemed arrest must now be set aside.
[36] I propose, as far as it is
possible to do so, to deal with the applicants challenges to the case
made by the respondent under
four headings coinciding with the
statement of the applicants’ case set out above.
DID A CLAIM FOR WAGES ARISE?
[37] It is not disputed between the
parties that the respondent was obliged to establish a prima facie
case for the existence of
the money claim which it pursues against
the second applicant. I have already concluded that the respondent
has discharged that
obligation.
[38] However, it is appropriate at this
stage to deal with the case of Konavalov which is relied upon in the
opinions provided by
the respondent to support its contentions
regarding Indian law. In his opinion Mr Mukherji has provided a
lucid account of the
facts in Konavalov, and I shall borrow from it.
(a) In December 1999 Indian customs
officials boarded the vessel Kobe Queen 1
off the coast of Tamil Nadu and found
contraband on board. The vessel was brought to Chennai where two
days later she was arrested
by the Madras High Court at the instance
of the owners of the ship’s cargo. The owners of the ship
could not be traced
and appeared to have abandoned it.
(b) Thereafter and on 11 February 2000
the crew lodged a claim for wages out of the anticipated proceeds of
the sale of the vessel.
In March 2000 customs officials acting in
terms of the Customs Act (India) seized the vessel and her cargo.
The crew remained
on board the ship.
(c) Then followed three further
applications before the Madras High Court, in which the crew sought
to be paid their wages from
the proceeds of the sale of the cargo,
or, alternatively, an order that the ship be sold so that they could
be paid their wages
out of those proceeds. They had been on board
the ship since May 1999 and had not been paid. Customs opposed the
grant of the
relief but on 7 September 2000 the court found in favour
of the crew by directing the coastguard authorities and the customs
authorities
to pay the wages and see to the repatriation of the crew,
such expenses to be met out of the funds retained from the sale of
the
cargo. Customs appealed against that order with which it did not
comply.
(d) The customs authority went one step
further on 26 September 2000, whilst the appeal was still pending, by
making final orders
confiscating the vessel.
(e) Given these circumstances the
crew’s consulate made arrangements for their repatriation, and
all of them had left by the
time the appeal of the customs authority
came to be decided in January 2001.
(f) The High Court allowed the appeal
by the customs authorities in January 2001. It held that the effect
of the confiscation order
made on 26 September 2000 was to vest the
ship in the government, as a result of which the crew had no rights
against the vessel.
(g) The case accordingly got to the
Supreme Court on an appeal by the crew against the order that their
claim for wages did not
lie against the ship.
[39] It will be seen immediately that
there is at least one material difference between the facts in this
case and those in Konavalov.
In Konavalov the crew were on board the
vessel throughout the period in respect of which they claimed wages.
In this case the
crew were not on board the vessel at all during the
period in respect of which the wage claim is said to arise. The
first month
in respect of which the claim is made is November 2011,
some seven months after the seven crew members were last on board.
[40] A consideration of the judgment of
the Supreme Court in Konavalov reveals that there was no enquiry into
the question as to
whether the crew had a claim for wages against a
specific person. The issue of the wage claim was dealt with
exclusively in conjunction
with the issue as to whether there was a
maritime lien for service to the vessel. It is in that context that
the following was
said by the court in paragraph [19] of the judgment
(excluding authorties).
“In our view, the members of the
ship in question from the day of the engagement till their
deportation were lawfully in the
employment of the ship. In maritime
law, the ship or the vessel is personified and attached with several
liabilities …
. One of the distinctive features of admiralty
practice is proceedings in rem which are against maritime property
i.e. vessel,
cargo or freight as the case may be. This rests on the
principle that the ship is the matter causing harm, loss or damage to
others
or to their property.”
It is this passage upon which the
opinions presented by the respondent rely in contending that the
employment of the seven crewmen
under their contracts continued
throughout the period in issue in this case, and could not terminate
in advance of repatriation.
In my view neither this passage nor
anything else said in Konavalov supports that contention.
[41] The relationship between a
seaman’s employment contract and a seaman’s lien for
wages was discussed in The Ever
Success [1999] 1 Lloyd’s Rep
824. The court endorsed the views expressed by Thomas : British
Shipping Laws – Maritime
Liens on the subject of the
relationship between the employment contract and the crewmen’s
lien. The following extracts
from paragraph 311 of the work quoted
by the learned Judge explain the position.
“The lien of the seaman has
regularly been supported by reference to considerations of public
policy and jurisprudentially
explained by reference to a seaman’s
“service to the ship”. It was the “service”
and not the “contract
of employment” which procured the
lien and pledged the security of the ship.”
“Despite the judicial tendency on
occasions to associate the wages lien loosely with the contract, it
is not the case that
the maritime lien arises out of the contract.
The lien is established by reference solely to the maritime law and
its existence
is not wholly dependent upon an express or implied
contractual term”.
[42] Clark J continued as follows at
page 831.
“The maritime lien is in respect
of service to the ship. In the absence of some very unusual
contractual provision, that
service will ordinarily be measured by
reference to the seaman’s contract of service (not it may be
noted services) under
which he was hired, whether by the shipowner,
or (as in this case) the putative shipowner, provided of course that
there is sufficient
connection between the service and the ship in
the sense discussed below. It follows that I accept Mr Lord’s
submission
that it is never appropriate for the court to evaluate the
services of each seaman on a quantum meruit basis. The proper
approach
is to ask whether in the relevant period the claimant was
rendering a service to the ship as a member of the crew. If he was,
he was entitled to a maritime lien in respect of his wages in respect
of that period assessed in accordance with his contract.”
[43] It seems to me that the decision
of the Indian Supreme Court in Konavalov is consistent with what was
said on the subject of
a lien for wages in The Ever Success. One
assumes that in Konavalov the measure of wages ordered to be paid was
taken from the
original contracts of employment of the crew.
[44] The answer of the court in
Konavalov to the contention that the confiscation of the vessel by
the customs authority put paid
to any claim for wages or a lien in
respect of them, is relied upon in the opinions provided by the
respondent, where it is contended
that Indian law would take a view
favourable to the seven crewmen in question here where they rely both
on their contracts of employment
and on s 141 of the Merchant
Shipping Act (India) to make their claims for wages up to the date of
their repatriation. The court
in Konavalov noted the “high
pedestal” upon which the seamen’s right to wages has been
put by law, and said the
following in paragraph 50 of the judgment
(page 642).
“The argument advanced by learned
counsel for the first respondent that the maritime lien is
extinguished by confiscation
has no force and is without any merit.
The courts have recognised and upheld the welfare of the citizens and
have always recognised
the rights of those who are the lowest strata
of society especially when it comes to workers and their wages. The
seamen have
suffered a lot without wages from May 1999 till the time
they were deported by the Consulate. They have suffered a lot of
mental
and physical agony in spite of that they have not been given
their wages to a date due to a narrow approach. The State should
always be fair and reasonable in settling the lawful claims.”
In determining, as I have, that the
respondent has made out a prima facie case for the proposition that
Indian law would recognise
the wage claims of the seven crewmen which
are in issue in this case, I have taken into account this generous
attitude to crew
claims evidenced by the judgment of the court in
Konavalov. But, as already stated, I cannot see how Konavalov
supports the proposition
that the seven crew members would be
regarded as employed (presumably by Concord) at any time during which
the claims in issue
in this case are said to have arisen.
IS THE CLAIM (ESTABLISHED PRIMA FACIE)
SUPPORTED BY A MARITIME LIEN?
[45] The parties are in agreement that
the question as to whether the benefit of the maritime lien has been
established by the respondent
is to be determined applying the lex
fori. (Transol Bunker BV v N V Andrico Unity and Others
1989 (4) SA
325
(A))
[46] Section 6 of the Admiralty
Jurisdiction Regulation Act deals with the law to be applied in South
Africa by admiralty courts.
The first two sub-sections should be
quoted.
“(1) Notwithstanding anything to
the contrary in any law or the common law contained a court in the
exercise of its admiralty
jurisdiction shall –
(a) with regard to any matter in
respect of which a court of admiralty of the Republic referred to in
the Colonial Courts of Admiralty
Act, 1890, of the United Kingdom,
had jurisdiction immediately before the commencement of this Act,
apply the law which the High
Court of Justice of the United Kingdom
in the exercise of its admiralty jurisdiction would have applied with
regard to such a matter
at such commencement, in so far as that law
can be applied;
(b) with regard to any other matter,
apply the Roman-Dutch law applicable in the Republic.
(2) The provisions of sub-section 1
shall not derogate from the provisions of any law of the Republic
applicable to any of the matters
contemplated in paragraph (a) or (b)
of that sub-section.”
Subject to the provisions of s 6 (2),
the law in the United Kingdom as at November 1983 must be applied by
this court in determining
the issue as to whether the seven crewmen
enjoyed the benefit of a maritime lien. The applicants of course
stress the facts that,
at the time these claims are said to have
arisen, the contracts in terms of which the seven crewmen had been
employed had terminated,
and that no service to the vessel at all was
performed by the seven crewmen during the whole of the period during
which the claims
are said to have accrued. It is stressed in the
applicants’ affidavits that the touchstone of the maritime lien
in respect
of wages is the benefit to the vessel of the service of
the crew, and that without it no maritime lien can arise.
[47] Referring to such cases as The
Tacoma City [1991] 1 Lloyd’s Rep 330 (CA), The Arosa Star
[1959] Lloyd’s Rep 396
at 402, and The Westport (No. 4) [1968]
2 Lloyd’s Rep 559 counsel for the respondent argues that the
concept of “wages”
is given an extended meaning when
considering the related maritime lien, and includes such things as
shore leave, sick leave, or
repatriation expenses; all of which
illustrate that actual service to the vessel is no longer a necessary
condition for the establishment
of a maritime lien for wages. But
those examples are in my view at a distance from the facts of this
case where during the period
of accrual of the claim no service at
all was rendered.
[48] Nevertheless, the cases to which
counsel for the respondent refers establish the principle that what
is encompassed within
the word “wages” is what may
fairly be described as a benefit due to the member of the crew “as
recompense for
the execution of his duty”. (See The Westport
at 562.) If it is correct, as the respondent contends, that the
seven crewmen
were engaged in terms of a contract governed by and
subject to Indian law, which promised them wages from the date of
termination
of their employment to date of repatriation, without
regard to the duration of the delay and without regard to the fact
that the
employer giving the undertaking might not be at fault with
regard to any delay in repatriation, then that promise must, it seems
to me, be one given as recompense for service actually rendered
during the course of employment under the contract, and therefor
one
supported by a maritime lien. One would think that this proposition
would be entirely uncontentious if raised in more mundane
circumstances where common dilatoriness or ordinary logistical
problems delay repatriation for, say, a month or two. The difficulty
in this case, and the anomalies which appear to arise from it, are
not in my view a product of the attempt to attach a maritime
lien to
the claim. They arise, I would suggest, primarily from the
application of the provisions of the employment contracts and
the
Indian statute to circumstances to which they may not have been
intended to apply; with serious consequences for the second
applicant
which, if there is merit in the respondent’s claim, has sailed
since its release by the pirates with an ever increasing
burden of
debt on it, entirely unconnected with the business of anyone but
Concord which disappeared from the scene in June 2011,
some 5 months
before the debt began to accrue against the second applicant.
[49] The admiralty jurisdiction of this
court is established by s 2 of the Admiralty Jurisdiction Regulation
Act. The fundamental
feature of a claim that may be decided in
admiralty is that it is a “maritime claim”. Section 1 of
the Act contains
the list of matters classified as maritime claims
and the one relating to the crew’s claim is contained in
paragraph (s)
which may be rendered as follows.
“…any claim for, arising
out of or relating to-
(s) the employment of any master,
officer or seaman of a ship in connection with or in relation to a
ship, including the remuneration
of any such person and contributions
in respect of any such person to any pension fund, provident fund,
medical aid fund, benefit
fund, similar fund, association or
institution in relation to or for the benefit of any master, officer
or seaman”.
The applicant accepts that the claim
made by the seven crewmen is a maritime claim. Counsel for the
respondent goes further, and
argues that the decision as to whether
the claim is supported by a lien must take into account the ambit of
the definition of the
maritime claim.
[50] In The Halcyon Skies [1976] 1
Lloyd’s Rep 461 (QB) the question before the court was as to
whether, in an action for
wages, and with the priority accorded to a
wages claim of a maritime lien, a seaman could claim pension fund
contributions which
his employer should have paid on his behalf. In
reaching the conclusion that the claim did give rise to a maritime
lien the court
held (at 470) that whilst legislation extending the
jurisdiction of admiralty courts to new claims did not give rise to
maritime
liens in respect of those claims, legislation enlarging
existing jurisdiction with respect to existing claims carrying the
benefit
of maritime liens had the effect of enlarging the ambit of
the lien.
[51] In The Tacoma City (supra) the
following passage from paragraph 313 of Thomas (op cit) is quoted
with apparent approval.
“…As with the case arising
from the statutory expansion of the court’s jurisdiction so
also the judicial expansion
of a substantive concept of a wage has
been accompanied by corresponding expansion in the maritime lien. To
the extent that a
claim is in the nature of a “wage” it
is accompanied by a maritime lien.”
[52] The Halcyon Skies and The Tacoma
City straddle November 1983. It seems to me that at that time the
law of the United Kingdom
applicable in terms of s 6 (1) of the
Admiralty Jurisdiction Regulation Act held that a statutory expansion
of the jurisdiction
of our admiralty courts with regard to a claim
which has the benefit of a lien also extends the ambit of the lien in
our law, so
that the two may coincide. If the amendment of the
definition of a crew claim in 1992 expanded the ambit of the claim
beyond what
the law of the United Kingdom then allowed, then in terms
of s 6 (2) of the Act our statute prevails; the lien follows the
claim
as newly defined. Reading the Act, as we must now, in the
light of the provisions of the Constitution may generate a different
interpretation of the definition to the one which would have been
apparent in the pre-constitutional era. In my view the lien
our law
would recognise would follow the current interpretation of the
definition of the claim which establishes jurisdiction.
(I would
accordingly respectfully disagree with the view expressed by the
learned author Hofmeyr, Admiralty Jurisdiction Law and
Practice in
South Africa, 2ed, pgs 265 – 266, that the Act defines the
limits of jurisdiction in respect of seamen’s
wages, and
English law the ambit of the supporting lien.) Looked at from this
perspective, the complaint in this case that there
was no service to
the ship appears to rest on a contention that the claims do not arise
out of or relate to the employment of the
crew in relation to the
Asphalt Venture. If I am correct in my understanding of the
implications for our law of The Halcyon Skies
and The Tacoma City,
the argument is contradicted by the concession that the claim is a
maritime claim. However, notwithsanding
the aforegoing, I am of the
view (expressed earlier) that the claim, established prima facie in
these proceedings, passes the traditional
test of recompense for
execution of duty, with the result that the lien supports the claim.
[53] Nevertheless it is worth observing
that similar support for the respondent’s argument that the
definition of a crew claim
materially affects the question as to the
existence of a supporting lien may be found along another route. In
Bankers Trust International
Ltd v Todd Shipyards Corporation : The
Halcyon Isle
[1980] 3 All ER 197
(PC) the Privy Council considered
the question as to whether a maritime lien afforded by the law of the
United States of America
to a ship repairer should be recognised in
the distribution of a fund generated by the sale of a ship arrested
in Singapore, the
law of that state being in all material respects
the same as English law. In Transol Bunker BV v MV Andrico Unity and
Others (supra)
the Appellate Division was confronted with the same
question, on this occasion as to the recognition of a maritime lien
established
by Argentinian law. Both cases concerned liens of a type
which would not be recognised by the lex fori. The majority in the
case
of The Halcyon Isle denied recognition to the foreign lien, and
in The Andrico Unity the Appellate Division came to the conclusion
that The Halcyon Isle established that according to English admiralty
law, as it was in November 1983, a South African court exercising
admiralty jurisdiction would not recognise the Argentinian maritime
lien.
[54] The analysis of the reasoning of
the majority in The Halcyon Isle which is made at page 338 of the
judgment in The Andrico
Unity is a central feature of the decision in
The Andrico Unity to follow the judgment of the Privy Council in The
Halcyon Isle.
Corbett J pointed out that in dealing with the issue
of priorities
“Lord Diplock emphasised the dual
characteristics of a maritime lien : namely, its enforceability by an
action in rem against
the ship, notwithstanding the subsequent sale
of the ship to a third party and the ignorance of such third party;
and secondly,
its status in the order of priorities and the
distribution of a limited fund (…). His Lordship further
warned (…)
that the recognition of any new class of claim
arising under foreign law as giving rise to a maritime lien in
English law because
it does so under its own lex causae would not
only affect the question of priorities but also extend the classes of
persons entitled
to bring an action in rem against a particular
ship.”
Corbett J continued as follows after
quoting passages from the judgment in The Halcyon Isle.
“It is thus clear that in the
view of the majority in The Halcyon Isle (supra) these two
characteristics of a maritime lien
go hand in hand; and that if legal
effect be given to a foreign maritime lien (not recognised by the
domestic rules of English
law) because it enjoys status as such
according to the lex loci contractus, this will be so for the purpose
of both priorities
and the right to bring an action in rem; and vice
versa. There is no possibility of recognition or non-recognition of
a foreign
lien for one of these purposes and not for the other.
Indeed, it seems most unlikely that English law, or any other cognate
system
of law, would have one rule for priorities and another
(different) rule for locus standi to bring the action in rem.”
[55] The current definition of a
maritime claim for crew’s remuneration (reproduced earlier) was
introduced by amendment to
the Admiralty Jurisdiction Regulation Act
by Act 87 of 1992. The same amending Act substituted s 11 which
deals with the ranking
of claims (i.e. priorities) and, unlike the
earlier section, expressed the ranking of the crew claim simply by
reference to paragraph
(s) of the definition of “maritime
claim” in s 1 of the Act. If, as was held in The Andrico
Unity, it is most unlikely
that English law (and accordingly our
admiralty law) would have different rules for ranking and for locus
standi to bring an action
in rem, then it is unsurprising that in our
law we would recognise the right of crew members to launch an action
in rem for a claim
which falls within and ranks as a component of
paragraph (s) of the definition of “maritime claim” in s
1 of the Act.
The privileged priority afforded to crew claims is
justified by similar, if not the same, considerations which result in
them
being supported by the maritime lien.
[56] In his written argument counsel
for the applicants has raised what he calls the issue of a “lien
for future wages”.
As I understand it the argument has two
contexts, one of which should be dealt with here. Counsel points out
that when the ship
sailed (after the ransom had been paid) the
position was that the hostages could not then provide any further
services to the ship,
and it was absolutely impossible for them to do
so in the future. Their wage claims at that stage had been
discharged in full.
(Indeed they continued to be discharged until
October 2011.) When the ship sailed there was no lien on it for
wages as none were
accrued and unpaid. One may extend the
propositions relied upon by counsel by referring to the fact that
when the second applicant
passed from the deemed ownership of Concord
to the deemed ownership of the first applicant in June 2011, no
burden of unpaid wages
travelled with the vessel into its new deemed
ownership because there were at that time no unpaid wages. As I
understand it the
argument is that as the law recognises no lien for
future wages, and as the seven crewmen could render no service to the
vessel
in order in the future to earn wages, no lien could arise in
respect of the claims made now, which commenced their accruals in
November 2011. However, in my view the acceptance in our law (and
British admiralty law) of a crewman’s lien with respect
to
financial obligations to be discharged by the employer after the
crewman has terminated his employment and left the ship (of
which
repatriation expenses are the obvious example, as to which see The
Kingston 1991 SCOSA D80 (D) at D88), means that the time
when the
debt arises is not material; the material question is as to whether,
when it arises, it has the qualities which place
it within the scope
of the maritime lien (over the vessel concerned) for wages.
[57] I conclude that a maritime lien
arose in the hands of or for the benefit of the seven crewmen with
respect to their wage claims,
the existence of which they have
established at a prima facie level, and which still remain to be
proved in the action.
WERE THE CLAIMS AND MARITIME LIENS
ASSIGNED TO THE RESPONDENT?
[58] Counsel for the applicants has
argued that if assignment of the claims was legally possible with the
sanction of the Indian
court, then, as a matter of fact, the Indian
court did not sanction the assignment. He refers in support of this
argument to the
terms of the order of the Indian court, which is
reproduced in the papers together with some account of the basis upon
which the
matter was presented to the court. The order does not
approve the assignment of the wage claims and associated liens with
clarity.
[59] Interpreting the written account
we have of the proceedings in India, which resulted in the release of
the respondent’s
vessel by reason of the settlement with the
families of the seven crewmen, is difficult without knowledge of
Indian practice and
procedure. Justice Khare, whose opinion has been
put up by the applicants, had this to say.
“A maritime lien for wages though
not generally assignable, can be assigned with the leave of the
court. In the present case
the Bombay High Court has categorically
granted liberty to the plaintiffs to assign their maritime lien, to
the extent of the settlement
agreement.”
[60] Furthermore, in its replying
affidavit (with which the opinion of Justice Khare was delivered) the
following was said by Mr
Clark on behalf of the applicants.
“Having regard to the opinion of
Mr Khare filed evenly herewith, the first applicant no longer takes
issue with the assignment
to the respondent of the claims for the
payment of wages and the accompanying maritime liens, to the extent
that such existed at
the time, on the basis that these were
sanctioned by the Bombay High Court.”
[61] I accordingly conclude that it is
not open to the applicants now to argue that if a valid assignment
depended on the sanction
of the court in India, such was not made or
given.
[62] In his written argument counsel
for the applicants argues that in any event the maritime lien could
not as a matter of law
be transferred by a cession or assignment. In
support of this proposition I was referred to The MT Argun
2003 (3)
SA 139
(C); The Petone (1917) P.198 / Aspinall Vol 14, New Series
283; The James W Elwell (1921) 15 Aspinall MAR.LAW.CAS 418 and The
Sparti
[2000] 2 Lloyd’s Rep 619. In essence the argument is
that a maritime lien is a personal right and that, certainly in the
case of a crew claim, it is personal to its holder and cannot be
transferred. I will deal with this argument, notwithstanding
the
concession made in reply by the applicants.
[63] I am not at all sure that the
judgment in The Argun stands as authority for the proposition that
the crew’s lien is not
transferable. As the learned Judge in
that case himself pointed out, the view of Tetley, Maritime Liens and
Claims, is that The
Petone is only authority for the proposition that
a volunteer who pays a seaman’s wages without the prior consent
of the
court does not merely by that act acquire the maritime lien
associated with the wage claim. As I understand the facts in The
Argun, the learned Judge held that there was no payment or assignment
of the debt for wages and the crew were never paid. If that
is
correct it is not clear that the learned Judge’s analysis of
the various cases referred to (which are referred to again
in this
case by counsel for the applicants) should be regarded as
authoritative.
[64] I have difficulty in following the
reasoning in The Sparti where there was a very simple assignment of
the claims of the crew,
whether they lay against the employer or the
vessel. The learned Judge in that case found it unnecessary to
decide what the position
might have been had the court sanctioned the
transaction.
[65] However, it seems to me that the
authorities to which the applicants’ counsel has referred do
not determine the issue
in South African law. Section 11 (8) of the
Admiralty Jurisdiction Regulation Act reads as follows.
“Any person who has, at any time,
paid any claim or any part thereof which, if not paid, would have
ranked under this section,
shall be entitled to all the rights,
privileges and preferences to which the person paid would have been
entitled if the claim
had not been paid”.
[66] It might be argued that the phrase
“all the rights, privileges and preferences”, despite its
wide terms, should
be narrowly construed by reason of the provision
being part of the section dealing with the ranking of claims. But
one would have
thought the word “preferences” would have
been sufficient, or that the word “ranking” would have
been used
instead of “rights, privileges and preferences”,
if it was intended in s 11 (8) merely to deal with the subject of the
ranking of the claim. This, it seems to me, is the way in which the
section was viewed by Scott J in Mak Mediterranee Sarl v The
Fund
Constituting the Proceeds of the Judicial Sale of MC Thunder
1994 (3)
SA 599
(C) at 607 – 608 where the judgment reads as follows.
“A question which caused some
difficulty in the past was whether a person who voluntarily pays a
seaman’s claim for
wages acquired the latter’s lien and
priority. By the early 20th century, however, and particularly
following the judgment
of Hill J in The Petone
[1917] P 198
, it had
become established that a person who voluntarily pays the claim of a
seaman does not acquire the latter’s lien and
priority unless,
before making such payment, he obtains the leave of the court. In
other words without the consent of the court,
the seaman’s
maritime lien with all its advantages is not transferrable (…).
Seen against this background, it would
appear likely that the purpose of s 11 (8) was to obviate the need of
a person who voluntarily
pays the claim of a lienee such as a seaman,
to have to obtain the leave of the court before being able to step
into the shoes
of the lienee”.
(See also The Olympic Countess
2008 (1)
SA 376
(SCA), paras 9 – 11.)
[67] In this case, of course, I proceed
upon the basis that the leave of the court was indeed obtained.
[68] I accordingly conclude that the
maritime lien afforded to the seven crewmen in respect of their claim
for wages was indeed
ceded or assigned to the respondent, and that
this court must recognise the respondent’s title.
[69] I must deal with one further issue
under the present heading, and that is the other aspect of the
applicants’ argument
based upon a proposition that there is no
lien for future wages. Their contention is that, there being no lien
for future wages,
the “future element” of the claims of
the seven crew members at the time of the assignment in India, and
again at the
time of the arrest of the second applicant in South
Africa, could not be assigned (in India) or justify an arrest (in
South Africa)
because no lien had come into existence, the wage
claims not yet having fallen due in each case. The argument was
first raised
in written argument submitted by counsel for the
applicants. It elicited a protest from counsel for the respondent
that it could
not be considered as it had not been raised in the
papers. Counsel for the respondent contends that the argument has a
factual
element, and that the conclusion sought to be drawn from it
is one which could have been dealt with on affidavit if the issue had
been raised. The conclusion or aim of the argument made by counsel
for the applicants is that as there is no proper evidence of
what
part of the total claim in respect of which security was given
related to claims already accrued, and what part to claims
yet to
accrue, the arrest must be set aside and the whole of the security
returned.
[70] I agree that this issue is one
which ought to have been raised on the papers. My own view is that
upon a proper construction
of the settlement agreement (which is
included in the papers) the parties must have intended that the
monthly wage claims would
pass with their associated liens to the
respondent as and when each was paid by the respondent. The
settlement agreement provided
for its termination in the event of the
release of a member of the crew, to the extent that his claims had
not yet accrued and
been paid by the respondent. However this
argument, and any others which go to the issue, have not been
properly traversed.
[71] As far as the issue of “future
wages” is raised in connection with the arrest of the vessel in
South Africa, on
the face of it the applicants’ tender of
security for the whole of the claim has not been dealt with as an
issue on the papers.
At the time of tendering security the point
could have been taken, but was not taken, that a lien could not
possibly exist in
respect of wage claims not yet accrued. Of course,
if that point had been taken and conceded, the risk facing the
applicants was
repeated arrests of the second applicant as, with the
passage of time, further claims accrued. The fact that security in
full
was provided seems to suggest that there may have been a
compromise as regards the quantum of the security, which would have
amounted
to a compromise on the issue as to whether an action in rem
could be sustained in respect of wage claims not yet accrued. None
of this was canvassed on the papers.
[72] In my view if the defence the
applicants wish to raise in the action includes issues relating to
“future wage claims”,
then these must be raised in the
plea yet to be delivered, and dealt with in the action.
THE LONDON ARBITRATION AND AGREEMENT
[73] When the UACC Eagle was arrested
in Mumbai it was under a bareboat charter to United Arab Chemical
Carriers Limited (“UACC”).
UACC and the respondent were
the parties to a London arbitration and a subsequent settlement
agreement which were raised as an
issue by the applicants in a fourth
set of affidavits delivered in July 2014. The settlement agreement
was included as an annexure
to the fourth set. The award was not,
apparently because it was confidential, and therefore not available
to the applicants.
However the orders and declarations made by the
arbitrator are reproduced in written argument produced after the
hearing by applicants’
counsel, without objection from the
respondent.
[74] Judging from the orders made by
the arbitrator the arbitration concerned both unpaid hire and an
indemnity (presumably contractual)
claimed by the respondent against
UACC with regard to the respondent’s disbursements to the
families of the seven crew members
made in terms of the Indian
settlement agreement. Paragraph 4 of the arbitrator’s order
directed UACC to pay the respondent
USD705,100.81 “by way of
indemnity”, and paragraph 6 declared UACC to be “liable
to indemnify” the respondent
in respect of the remaining
payments due under the Indian settlement agreement.
[75] After the award was made and on 7
August 2013 UACC and the respondent concluded a settlement agreement
with respect to the
indemnity which was the subject of the orders of
the arbitrator. It involved payment to the respondent of what it had
expended
in acquiring the claims of the crew members. The agreement
required the respondent to continue with the litigation against the
applicants in South Africa, and unconditionally to pay to UACC
whatever the respondent may recover from the applicants. Clause
10
of the settlement agreement read as follows.
“This agreement is not intended
to cede or assign to UACC, [the respondent’s] claim or right of
action in the South
African proceedings”.
[76] The points raised by the
applicants are best stated by quoting from the two material
paragraphs of its affidavit dealing with
the London issues.
“It is submitted, that as a
consequence of the aforegoing, [the respondent] no longer has locus
standi to continue with the
South African proceedings alternatively,
[the respondent] has suffered no loss recoverable under the South
African proceedings
and, notwithstanding clause 10 of the London
settlement, has in effect ceded its claim and cause of action
entirely to [UACC].”
“It further follows, that in
terms of the dealings between [the respondent] and [UACC], [the
respondent] has been settled
and discharged in full in respect of its
payments and undertakings to the Indian families in respect of the
crew’s wages
and any claim based on the maritime lien is not
enforceable against [the applicants].”
[77] The terms of the indemnity owed by
UACC to the respondent are not before me. They will presumably be
available in the action,
as might also the full award of the
arbitrator. The decision in these proceedings must be based on what
is available on the papers.
[78] In answer to the applicants’
contentions quoted above, the respondent has alleged and pleaded in
its further affidavit
that two claims are involved, the one made by
the respondent in its action in rem instituted out of this court, and
the other one
made before the arbitrator in London under a contract
which afforded the respondent an indemnity from UACC. The obligation
arising
from the contractual indemnity has been discharged. The
obligation which arises in respect of the crew’s wage claim has
not.
[79] In effect it is the respondent’s
contention that all the London arbitration and the London agreement
brought about was
to establish where the loss will lie if the
respondent is unsuccessful in its action against the applicants. In
my view that is
the correct analysis of the position.
[80] The applicants’ alternative
contention, that the respondent must fail because the London
arbitration and agreement brought
about that it has suffered no
“loss”, is in my view without merit. The respondent does
not prosecute the present litigation
in order to recover “loss”
or damages arising out of what transpired in India. It in effect
bought the claims of the
seven crew members in India, and prosecutes
them here. It does not sue for the price it paid for the claims. It
sues to enforce
the claims themselves. When in London it extracted
performance of the indemnity owed to it by UACC the respondent took
care to
ensure that it did not “on-sell” the claims of
the seven crew members to UACC. There is no reason to doubt that if
UACC had sought to commence proceedings in South Africa alleging
title to the claims of the seven crewmen, and done so on the basis
of
the documents before me relating to the London arbitration and
agreement, the applicants would have objected to their locus
standi
to do so, and would have done so successfully because
(a) what was discharged by UACC was the
obligation as to the indemnity, not the crew claims; and
(b) it was expressly agreed that the
crew claims would not be transferred to UACC.
CONCLUSION
[81] I conclude that this application
cannot succeed. It would appear that my decision that a maritime
lien attaches to the money
claim, which the respondent has only
established at a prima facie level at this stage, will have to be
revisited (if the respondent
is successful in proving its money claim
on a balance of probabilities at trial) in the light of the findings
ultimately made by
the trial court as to the nature of the money
claim. The issues to be decided in the action are not yet certain,
as a plea must
still be delivered.
I make the following order.
The application is dismissed with
costs, including the costs of submitting written arguments after the
hearing on 6 August 2014,
all such costs to include the costs of
senior counsel.
OLSEN J
DATE OF HEARING : Wednesday, 06
August 2014
DATE OF JUDGMENT: Thursday, 09 APRIL
2015
FOR THE APPLICANTS: MR D A GORDON SC
INSTRUCTED BY :COX YEATS
21 RICHEFOND CIRCLE
RIDGESIDE OFFICE PARK
UMHLANGA ROCKS
DURBAN
(REF.: A Clark/09W925001/tv
(TEL.: 031 – 536 8500)
FOR THE RESPONDENT : MR S R MULLINS
SC
INSTRUCTED BY : SHEPSTONE &
WYLIE ATTORNEYS
24 RICHEFOND CIRCLE
RIDGESIDE OFFICE PARK
UMHLANGA ROCKS
DURBAN
(REF.: S Dwyer/T Edwards/GARD3.30)
(TEL.: 031 – 575 7000)