Master and Crew of the MT "Argun" and Others v MT "Argun" (AC127/99, AC134/99, AC4/02) [2002] ZAWCHC 51; [2003] 1 All SA 346 (C) (12 September 2002)

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[2002] ZAWCHC 51
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Master and Crew of the MT "Argun" and Others v MT "Argun" (AC127/99, AC134/99, AC4/02) [2002] ZAWCHC 51; [2003] 1 All SA 346 (C); 2003 (3) SA 149 (C); (2003) 24 ILJ 1104 (C) (12 September 2002)

IN THE HIGH COURT OF SOUTH
AFRICA
[CAPE OF GOOD
HOPE PROVINCIAL DIVISION]
CASE NOS : AC127/99
AC134/99
AC4/02
In the matter between :
THE
MASTER AND CREW OF THE MT “
ARGUN”
claiming
under Case No AC127/99
THE
FORMER CREW OF THE MT
“ARGUN”
claiming
under Case No AC134/99
THE MASTER AND CREW OF THE MT “ARGUN”
claiming
under Case No AC4/02
Plaintiffs
and
MT
“ARGUN”
Defendant
_______________________________________________________________________
JUDGMENT DELIVERED THIS 12
TH
DAY OF SEPTEMBER, 2002
______________________________________________________________________
FOXCROFT, J :
Three
actions
in rem
against the defendant vessel, the
MT "Argun" “Argun”,
at the instance of three groupings of Plaintiffs, have run their
course. The claims, based on the maritime liens which seamen
have
for their wages, all concern unpaid wages to the master and various
crews of the
"Argun".
Although the term
“maritime
lien”
is not defined in the Admiralty Jurisdiction Regulation
Act, 105 of 1983 (“the Admiralty Act”) it is mentioned in
sections
1(1), 3(4)(a) and 11.
In the definition section 1((1)
under the definition of
“maritime claim”
is included any
claim for, arising out of or relating to
“any maritime lien,
whether or not falling under any of the preceding paragraphs”.
(Subsection (y)).
Subsection (11)(4)(e), refers to
“a claim in respect of any maritime lien on the ship not
mentioned in any of the preceding paragraphs”.
As CORBETT, JA (as he then was) said
in
TRANSOL BUNKER BV v MV ANDRICO UNITY AND OTHERS, 1989(4) SA
325 (AD) at 331D,
“
Thus
the maritime lien is by definition a type of maritime claim and its
importance lies in the facts that :
it constitutes one
of the bases upon which a claimant may found an action
in rem
(s3(4)(a)); and
it confers a
certain preference in the ranking of claims in terms of s11.”
The definition section was amended
subsequent to this judgment so that the wording and numbering of the
reference to a maritime lien
in the definition section have changed.
CORBETT, JA went on to say that
“
[It]
suffices to say that in maritime law the term “maritime lien”
denotes a legal concept which appears to have originated in
the 19
th
century and which is to be found, sometimes in a slightly different
guise or under a different name, in the legal systems
of many
maritime countries. …. Thus for example, English admiralty
law has limited the maritime lien to claims relating
to (1)
salvage, (2) collision damage, (3) seaman’s wages, (4) bottomry,
(5) master’s wages and (6) master’s disbursements.
Of these
bottomry is now obsolete.”
Our Admiralty Act provides that the
law to be applied by South African courts in matters of substance is
English admiralty law
“which would have applied with regard to
such a matter at such commencement
[1983]
insofar as that law
can be applied”.
(English admiralty law as at 1983 is to be
construed as a reference to that law including the relevant
principles of private international
law
(MARCARD STEIN & CO v
PORT MARINA CONTRACTORS (PTY) LTD & OTHERS, 1995(3) SA 663 [AD]
at 667C).
As SCOTT, JA observed in
MT
“ARGUN”, 2001(3) SA 1230 at 1240B
,
“
It
is accordingly necessary to refer to the English admiralty law as at
November 1983. But because the reference is to the law including
the
principles of private international law, the nature and effect of the
rule sought to be applied must first be classified as one
of
substance or of procedure. If the former, the English law will
apply; if the latter, the English private international rule
will
direct that the
lex
fori
is to apply, in which event the appropriate
law will be that of South Africa.”
CORBETT, JA also pointed out in the
ANDRICO UNITY
that in the United States of America, maritime
liens arise from a far wider range of maritime claims, both in
contract and in tort,
while the essential effect of the maritime lien
in English admiralty law is that
“
It
attaches
ex lege
to the ship or other property (for convenience I
shall merely refer to the ship) in respect of which the maritime
claim arose and
it follows the ship, irrespective of changes in
ownership or possession, and irrespective of the state of knowledge
of the new owner
or possessor.” (at 331 H-I)
Despite differences in American
admiralty law, there are many common positions. For instance, in the
USA the
in rem
suit is virtually unknown outside the admiralty court. In
The
Law of Admiralty
, 2
nd
Ed by GILMORE AND BLACK, p. 35,
the authors state that an understanding of its nature
“
is
not to be approximated without some conception of the substantive
concept that underlies it: the “maritime lien”. In American
admiralty law, the maritime lien is a necessary condition for success
in the suit
in
rem
.
The Canadian authorities referred to
by TETLEY,
Maritime Liens and Claims
, 2
nd
Ed.,
show that the Canadian approach has remained very much in keeping,
as one would expect, with English admiralty law.
FACTUAL BACKGROUND
The MT
"Argun"
is
a medium sea tanker used primarily for replenishment of other vessels
whilst at sea. Captain Korolev, who testified at the
trial,
confirmed that this was so, and that after her launching and until
1994, the ship was registered in the name of a Russian
State company
in the Vladivostok Marine Fishing Port. He testified that the ship
was under the control of the Russian Auxiliary
Pacific Ocean Fleet
(‘TOF’)
.
It was common cause that in or about
1992 the ship was chartered out by
TOF
to a company by the
name of National Pacific Limited (‘NPL’) in the British Virgin
Islands. That company operated the ship
in and around various ports
in the Far East.
After repairs in Singapore and the
failure to pay for those repairs, the
MT "Argun
"
was arrested in Singapore in or about 1994 and was then transferred
by
TOF
into the ownership of a Russian Joint Stock company
by the name of
“Inaqua”.
Captain Korolev was referred to his
contract of employment, which appears as Annexure ‘ARG2.1’ at
p.34 of the Particulars of
Claim in Case No AC 134. The same
annexure appears in the pleadings in the other actions before me, and
I refer to it only to
show that there was no dispute, since Captain
Korolev was not cross-examined as to the truth of this Contract of
Employment. The
Contract is dated 25 July 1995 and was for a period
of six months, capable of being extended to seven or reduced to five
months for
operational convenience.
Paragraph 6 of the Contract.
The ship remained under arrest in
Singapore and Captain Korolev and the new crew had to attend to
various duties, including the refitting
and refurbishment of the ship
outside their normal duties as sea-going crew. The chairman of
Inaqua, a certain Mr A Malyshev,
agreed with Captain Korolev that
he and his crew would be employed in accordance with written
contracts, which were concluded.
The contracts all appear in the
Pleadings as annexures.
Captain Korolev confirmed that his
crew had worked in accordance with their contracts and he testified
that he had checked the Portage
Bills. He confirmed the correctness
of the calculations showing the amount due in wages to himself and to
the crew. He also said
that after six months there had been no
replacement for him and no engineer officer to replace him as master,
and work had simply
continued. No one had come from the Inaqua
Company to tell the crew to cease work and to leave the vessel, and
the crew all carried
on working.
Captain Korolev also referred to a
settlement agreement which had come about in July 1996 when he,
Captain Korolev, was informed that
there was going to be payment of
half of the amount due to him and his crew in Russia. The offer to
pay these wages was conditional
upon the withdrawal of the crew’s
action
in rem
in Singapore for wages. Eventually a settlement agreement was
reached in the sum of US$530 300 to the crew in full and final
settlement,
but neither the instalment of US$18 300 nor any of the
equal monthly instalments for the balance were paid. (Record, p.57)
After the vessel was released from
Singapore, it continued to trade without any further legal difficulty
until 25 May 1999. On that
day, Sea Tech Pte Ltd of Singapore, one
of the ship repairers in Singapore, arrested the ship in Cape Town
under Case No AC 89/99.
The arrests and actions by First and Second
Plaintiffs under Cases AC 127/99 and 134/99 soon followed.
A great deal of litigation ensued,
and Mr
Burger,
who appeared for Plaintiffs, submitted that the
owner of the vessel, being the Russian Federation, had been
successfully delaying
the payment of wages of the crew for more than
three years, and had still paid them nothing. He pointed out that
the crew’s
claims were initially not even defended and that the
crew of the vessel in both cases – AC 127 and AC 134/99 – had
obtained default
judgments. These judgments were only set aside in
February 2002 after the Plaintiffs in the trial actions had set down
the Defendant’s
applications for rescission. He also referred to
the fact that Captain Korolev had testified that he had been
threatened by a Mr
Sokolov, who had telephoned him on two or three
occasions from Russia, telling him that he – Sokolov –
represented the Russian
Government Property Committee and saying that
if the crew continued with their action against the vessel and
attempted to sell it,
“
the
crew members and he will be prosecuted by criminal procedure in
Russia, first. Secondly they make the threats for crew members
and
to our families, that our families will have the problem in Russia in
view of this and I check this information, because that
same day I go
to my wife at home and she confirmed me that some guys from Oil
Compact come into my home and threat my wife with the
problem to
(indistinct) to my children in case I not withdraw the case here in
Cape Town and in case I will – don’t (indistinct)
order of Oil
Compact. I make the statement about this threats and blackmail and
this statement somewhere in file and it was signed
by radio officer
and (indistinct) officer which presented on the bridge when I’m
talking by phone with this guy, sorry with this
gentleman, Mr
Sokolov.” (Record, p.99-100).
Captain Korolev went on to say that
he had written a letter to the Russian Ambassador and was visited by
the Russian Consul in Cape
Town, who told him that
“
Oil
Compact didn’t do nothing to the vessel, that this company didn’t
represent the Russian Federation in their stories. But
it was the
real fact and I (indistinct) they are thinking that we might have
some problem in Russia from Oil Compact or from any
other criminals.
This way there are one of the reason for concluding the cession
agreement was to protect us when we are come back
to Russia. I think
that’s it.” (Record, p.100)
After some debate at the Bar as to
whether Captain Korolev and his crew had been threatened by the
Russian Federation, Mr
Burger,
very fairly, stated from the
Bar that the said Sokolov is head of Oil Compact, which is not part
of the Russian Federation. He did
add that the Russian Government
does have a close connection with Oil Compact and submitted that the
Russian Government would have
to take part of the blame for these
threats.
I do not accept that submission,
since the Russian Federation may have known nothing about these
threats at all and there was nothing,
on the evidence, to show any
connection between Mr Sokolov’s threats and any knowledge of those
threats on the part of the Russian
Federation. Nevertheless, the
fact that these threats took place was not disputed, and they do
provide background to the cessions
of claims, which I will deal with
in due course when considering these Special Pleas raised by
Defendant.
Despite these threats the master and
crew have persevered, and a dispute has also arisen as to who should
pay for the preservation
costs and expenses of the vessel pending the
final determination of this action. On appeal, the Sheriff and the
Russian Federation
successfully argued that the arresting creditors,
including the crew members, should pay for preservation and other
reasonable expenses.
MT “ARGUN” 2001(3) SA 1230
(SCA).
The failure of the crew to pay the
expenses ordered by the Supreme Court of Appeal resulted in the Order
of this Court that their
arrests in Cases AC 127/99 and AC 134/99
lapsed during 2001.
This Order was given in Case No AC
42/2002 on 21 June 2002.
Mr
Burger
submitted that there
can be no doubt as to the specially protected status of seamen in
Admiralty law, and he referred to the remark
of Sir WILLIAM SCOTT
in the
MADONNA D’ldra, 1 Dodson 37 (1811) at 40
, where he
said :
“
Now,
it must be taken as the universal law of this court, that mariner’s
wages take precedence of bottomry bonds.”
The same Judge also referred to
mariner’s wages as a category of
“sacred lien”,
and in
a later case, the
SYDNEY COVE, 1815 (2 Dods.11)
he continued
in the same vein, observing that
“
A
seaman’s claim for his wages was sacred so long as a single plank
of the ship remained.”
See also THOMAS,
Maritime Liens
at paragraph 423, where THOMAS also points out that
“
The
master has never enjoyed the same weight of judicial sympathy as the
seaman and although in relation to other claimants the master
and
seamen are treated as one, in relation to each other the seaman is
probably superior.”
No such difficulty arises in the
present case, the interests of master and crew being the same.
The same Judge, now Lord STOWELL,
referred to sailors as
“these men, who are the favourites of the
law”
in the
MINERVA, 1825(1) HAGGARD 347 at 358
,
leaving no doubt as to his view.
See also KAY,
Shipmasters and
Seamen
, (1895) at p.30, where it is stated that
“
A
Court of Admiralty always sought to protect them against
circumvention, oppression and injustice and even against
misapprehension
and error and was anxious that they should not be
harassed with litigation and that questions of wages should be
speedily settled.”
This passage was quoted with
approval in
Ex
parte
THE CREW, MV “CARACAS BAY”,
1977(4) SA 945(C) at 951H,
a decision which was later not
followed in the
MV MOTORIA, 1979(3) SA 616 (C)
, but in which
the Full Bench did not in any way touch on the quotation.
THE SPECIAL PLEAS
In the Minute of the pre-trial
Conference held on 2 August 2002, it was recorded in paragraph 3.7
that the parties had agreed that
“
3.7.1 Plaintiffs will bear the onus with regard to the merits
of the case.
Defendant bears the onus on the Special
Pleas.”
The Special Pleas read as follows :
“
1. The Defendant is and has at all material times been owned by
the Sovereign State of the Russian Federation.
The Plaintiffs’
claims arise from written agreements allegedly entered into with
Firetship Management (Pty) Ltd, the duly appointed
agent of MPG.
The claims of the
Plaintiffs are founded upon the existence of a maritime lien in
respect of each claim which gave the Claimants
a right of arrest in
terms of section 3(4)(a) of the Admiralty Jurisdiction Regulation
Act 105 of 1983 as amended (‘the Admiralty
Act’).
It is not alleged
that the Russian Federation is liable
in
personam
to the Claimants in respect of their
claims and that, therefore, the requirements in section 3(4)(b) of
the Admiralty Act is satisfied.
On or about 10
August 1999 the Plaintiffs irrevocably ceded, assigned and made over
all of their right, title and interest in and
to their claims to
Deneys Reitz Inc.
A copy of the
cession signed by the First Plaintiff, from which the terms of the
cession also signed by the other Claimants appear,
is annexed hereto
marked ‘PC.1’.
By reason of the
cessions aforesaid the Plaintiff in this action became Deneys Reitz
Inc proceeding in the name of the maaster and
crew of the MT
"Argun".
The maritime lien
of the master and crew of the MT "Argun" are as a matter
of law not transferable by cession or assignment.
In the premises the
Plaintiff, being Deneys Reitz Inc proceeding in the name of the
master and crew of the MT "Argun",
does not have maritime
liens in respect of the claims set out in the Particulars of Claim
and therefore no longer has an action
enforceable
in rem.”
Defendant accordingly prayed that
Plaintiffs’ claims be dismissed with costs and that judgment be
entered in Defendant’s favour.
THE NATURE OF THE CESSIONS
While it is no doubt so that the
cedents all ceded, assigned and made over to Deneys Reitz, their
attorneys, all their rights, title
and interest in and to their
claims against the MT "Argun" for unpaid crew wages and
ancillary claims, what follows
in the Cession Agreement is the
statement that
“
The
said claim is firstly ceded in part in consideration of the legal
costs and disbursements incurred to date by Deneys Reitz Inc
in
connection with the enforcement and recovery of the said claim”.
It is then said that
“
The
said claim is secondly ceded in part
‘in
securitatem debiti’
for further legal costs and disbursements to be
incurred by Deneys Reitz in connection with the enforcement and
recovery of the said
claim from date hereof”,
and then it is said that the claim is
“
Thirdly
ceded in part in consideration of Deneys Reitz Inc agreeing to pay me
all amounts realised or received by it pursuant to
its rights in
terms of this agreement less all costs and disbursements …
incurred by Deneys Reitz Inc in connection with the
enforcement and
recovery of the said claim.”
It was then provided that Deneys
Reitz
“
shall,
at its election, be entitled to enforce and prosecute the said claim
as hereby ceded in my name in any legal process which
may have been
instituted by me for such recovery as aforesaid.”
Deneys Reitz were also entitled to
“
In
turn cede the said claim to Hartless (Pty) Ltd during the course of
any legal proceedings if they wished to.”
The last paragraph of the Agreement
provides that the document constitutes
“
The
entire agreement between the parties … and no variation,
alteration, waiver, indulgence or consensual cancellation of the
terms of this agreement shall be of any force or effect unless
reduced to writing and signed by both parties to this agreement.”
Mr
Burger
made the point that
these claims were all ceded after threats had been made to the crew
and in order to secure their attorneys for
fees (as to which see the
evidence of Captain Korolev, p.99 line 2-p.100 line 12 and Ash, p.126
line 17 to p.128 line 15). The
cessions also took place after the
crew members had obtained default judgment in cases No AC 127/99 and
AC134/99. The claims
in respect of all the Plaintiffs in Case No
AC4, Plaintiffs 1 to 21 in Case AC 127/99 and Plaintiff 1 in Case No
AC 134/99 were then
re-ceded to the crew members on 18 January 2002,
before the action in Case No AC4/2002 was instituted, and also
before the aforesaid
default judgments were rescinded.
During the trial, Defendant made the
following admissions in regard to the cessions and re-cessions,
embodied in a written note :
“
1. The Defendant admits that the cessions dated August 1999
forming part of Exhibit “B” are what they purport to be and were
signed
by the parties whose names appear thereon.
The Defendant
admits that the “re-cessions” agreements dated in 2002 in
respect of the claims of the Plaintiffs in case numbers
AC4/2002 and
the first 21 Plaintiffs in case no. A127/99 were signed by the
parties whose names appear thereon prior to the issue
of the Writ of
Summons
in rem
in case no. AC4/2002.”
As a fact, recessions in respect of
the other Plaintiffs in AC127/99 (Plaintiffs 22 to 34) and AC 134/99
(Plaintiffs 2 to 6) occurred
thereafter, but before
litis
contestatio
, which according to Mr
Burger
was July 2002. Mr
Burger
referred to
The Law of South
Africa
, Vol 2 Re-issue under the title ‘Cession’, written by
P M NIENABER, para.272 at pp.167-168. NIENABER makes the point
that
“
The proper
construction of the phenomenon that one debt (the principal debt)
can be employed to secure another (the secured debt)
has long been
controversial.”
The writer refers to one view that
“
Cession
in securitatem
debiti
is an out and out cession on which an
undertaking (
pactum
fiduciae
) is super-imposed that the cessionary
would restore the principal claim to the cedent upon satisfaction of
the secured debt.”
Such an arrangement would result in a
position where the right ceded would vest in the cessionary, leaving
the cedent with a personal
right only against the cessionary arising
from the agreement to reclaim the right once the secured debt had
been repaid. One flaw
of such an arrangement is to leave the cedent
exposed to the risk of the cessionary’s insolvency.
NIENABER goes on to say that
“
This
is often not what the parties truly have in mind. What is more
likely intended is that the cessionary should “hold” rather

“own” the ceded debt pending satisfaction of the secured one.”
As is pointed out in several
references to authority in a footnote –
“
The
intention of the parties is a question of fact.
There is a practical
need to accommodate such an arrangement. The parallel between it and
the pledge of a corporeal asset led to
the notion that the principal
debt is pledged to the cessionary and that the cedent retains
ownership in the right notwithstandiing
its cession, which in the
event of his insolvency would vest in his estate. It is a
construction that has been criticised by courts
and commentators
alike. In its latest series of decisions the appellate division,
mainly for reasons of expediency, reaffirmed the
view, expressed in
the earlier cases but somewhat watered down in later ones, that the
right is transferred but its bare dominium
is not. A cession
in
securitatem debiti
must now be taken to be in the
nature of a pledge, unless the parties intended otherwise. The
doctrinal difficulty may have been
settled; many of the peripheral
ones have not.”
On the evidence in the present
matter, I have no doubt that the master and crew intended their
attorneys to “hold” rather than
“own” their ceded claim for
wages pending satisfaction of the claims for attorneys fees. Captain
Korolev and the witness Pedak
made clear that the case had not become
Deneys Reitz’s case. Mr Pedak, in imperfect English under
cross-examination by Mr
Wragge
, for Defendant, said that he
had given power to Deneys Reitz “for this case”. The next
question was,
“
Power
to run this case on your behalf, for you, to run this case on your
behalf? --- Yes?
Is that what the power
you gave with Deneys Reitz was for? --- For getting me money, help
to me.
To help you get your
money? --- Ja.”
It was clear that Mr Pedak could
neither explain the legal niceties of cession and recession, nor was
he capable of explaining the
position. I understood him to mean that
he was incapable of speaking English sufficiently well to be able to
explain what he understood.
On the facts, the evidence of Mr Ash
– Plaintiff’s attorney – puts the matter beyond doubt. His
evidence at p.127 of the
Record, line 13, is as follows :
“
So
accordingly I recommended to Captain Korolev that, in my view what
should happen is that we should take cession, and it would be
at
least a limited cession for the purposes of covering our fees and
disbursements, and I instructed Kim Rew, at that stage she was
dealing with the matter on a day to day basis, for Captain Korolev to
put the cessions together and to procure them which she did.”
At p.128, Mr Ash dealt with the
recessions which were entered into after he became concerned that
somebody might take, what he called,
“some clever point about
locus
standi
because of the existence of the
cessions”.
At p.129, he went on to say that he
“
wanted
to make it absolutely clear that the crews retained, and always have
retained ownership of these claims, and I recommended
to Captain
Korolev that, for purposes of the documentation, a recession should
be procured, and he agreed.”
The file containing recessions which
was admitted during the trial, and Captain Korolev’s evidence as to
his efforts to secure signatures
of former members of the plaintiff
crews in Russia, bore testimony to this intention.
In my view, the master and the crew
never intended to give away their rights to sue for their wages on an
outright basis. This was
very much a situation where their
attorneys, who after all were their agents, would hold the claims and
pursue them to judgment,
retaining security for their fees and
agreeing to pay to them any remaining money after expenses had been
met. The attorneys “were
acting on behalf of their clients”, to
use the words of Mr
Wragge
in cross-examination. They were
not acting for their own account.
There is another reason why the
Plaintiffs never divested themselves of their right to claim unpaid
wages against the Defendant.
I accept Mr
Wragge
’s
argument as set out in the Special Pleas aforesaid that maritime
liens are, as a matter of law, not transferable by cession
or
assignment.
THOMAS,
Maritime Liens
, p.265
para. 471, says that
“
It
has long been a common observation that a maritime lien represents an
interest which is incapable of transfer so as to convey to
the
transferee the same privilege and right
in
rem
as enjoyed by the transferor.”
In para.272 THOMAS adds that the
older Admiralty authorities in English law place emphasis on a
maritime lien as “
a privilege which enures solely to the benefit
of the person of the lienee and which is incapable of transfer.”
The oldest cited authority by THOMAS is an anonymous case in 1696,
where prohibition was granted on a suit brought by a master of
a ship
in respect of wages paid by him to the seamen. The Admiralty Court
was denied jurisdiction on the reasoning that
“…
When the master has paid the seamen and they are discharged,
there is an end of that privilege and indulgence to seamen, which is
personal and can’t be transferred.”
THOMAS (para.274) lists the
authorities in the 18
th
and 19
th
centuries, and
deals with the status and rights of third parties who, in the absence
of any pre-existing obligation, freely discharge
a seaman’s claim
for wages. He states that this has caused some difficulty in the
development of Admiralty Law. Does such a person,
“
acting
as a volunteer, who pays a seaman’s wages, thereafter stand in the
shoes of a seaman lienee, and thereby enjoy the same rights
and
privileges as would have been enjoyed by the seaman, to the extent of
the payment?”
While there is a body of judicial
pronouncement which clearly supports a quasi-subrogatory doctrine by
which, following upon payment,
the person paying “stands in the
shoes “ of the person paid and thereby enjoys the same rights
in
rem
, THOMAS says in para.475 that
“
The
great bulk of authority is however opposed to the notion that any
quasi-subrogatory doctrine exists as of right but suggests that
such
an advantage may only be assumed by a volunteer after application has
first been made to the Court and its approval given.”
Despite Dr Lushington having
seemingly approved of the “standing in the shoes” doctrine in the
WILLIAM F SAFFORD
in 1860, THOMAS points out that both
before (the
NEW EAGLE,
in 1846) and after that decision (in
the
CORNELIA HENRIETTA in 1866)
Dr LUSHINGTON firmly denied
the existence of any doctrine to the effect that a person discharging
a lien thereafter stands in the
shoes of a benefited lienee. Dr
LUSHINGTON insisted that such a volunteer could only claim such a
benefit when acting with the sanction
of the Court.
Coming into more modern times, the
authorities were exhaustively reviewed in the
PETONE
(1917)
P.198
, where HILL, J declared :
“
In
my view the weight of authority is strongly against the doctrine that
the man who has paid off the privileged claimant stands in
the shoes
of the privileged claimant and has his lien, whether it be regarded
as a general doctrine or as applied to wages only.”
Professor TETLEY in
Maritime Liens
and Claims
, 2
nd
Ed. 1998 at p.1223, is somewhat
cautious as to HILL, J’s finding in the
PETONE
, saying that
it is
“
held
out to be the strongest English authority against the assignment by
force of law of a maritime lien for wages. The
PETONE
is an
extremely didactic
and influential judgment, but its
importance and what it holds has been over-emphasised. Upon close
examination, it can be seen that
the
PETONE
is really only
authority for the proposition that a third party who pays seamen’s
wages, voluntarily and without any prior consent
by the Court, is not
subrogated
by law
in the maritime lien for wages of the
seamen.” (emphasis added).
Despite this cautionary note, TETLEY,
of course, realises that liens for wages are in a special position.
He adds that assignment
or subrogation by law of liens other than
wage liens was not decided in the
PETONE
and continues,
“
It
should be remembered that seamen’s wages have always been a special
case and have been subject to restrictions: that is, assignment
by
anticipation is forbidden. Other liens should not be subject to such
restrictions.”
The possibility of assignment or
subrogation by contract or agreement of liens, including wage liens,
was also left open in the
PETONE.
TETLEY then points out that certain
maritime liens may be assigned by operation of statute in the United
Kingdom, but also records
that in Canada
“
The
seaman’s wage lien may not be forfeited by agreement, nor may he be
deprived of any remedy for the recovery of his wages to
which he
would be entitled in the absence of such an agreement
.” [Canada
Shipping Act, R.S.C.1985, c.S-9, sect.196(1)]
.
TETLEY adds in a footnote that this
section
“is to the same effect as sect. 39(1) of the UK’s
Merchant Shipping Act 1995, U.K.1995, c.21”.
TETLEY also reflects the Canadian
position that Canadian Courts have almost without exception refused
assignment of a maritime lien
by force of law, the principal reason
given being that the maritime lien is a personal right vested in a
particular person. He makes
the point that
“
In
such cases, the Courts are usually referring to a claim for wages”.
(p.1229)
In the Canadian Case,
WILLIAM
RANKIN v THE ELIZA FISHER (1895) Ex.C.R. 461 at 469
McDOUGALL,
LJ held that the debt for wages is assignable at common law, but the
lien expires with the payment of the debt, adding
:
“
It
has always been contrary to the policy of maritime law to invest him
(the seaman) with any capacity to transfer this remedy against
the
res
to a third person.”
The decision is, of course, not in
point in the present matter, since no debt for wages was assigned and
the crews were never paid
anything by any party, thereafter claiming
to have received rights from them.
A contrary decision is
CANADIAN
DREDGING CO v THE MIKE CORRY
(1919) EX. C.R.61
, (1919) 47 D.L.R.495
,
in which it was held that after wages paid by salvors to the crew,
the crew’s lien vested in the salvors. As TETLEY points out
at
1229, this judgment was rendered before the influential decision
in the
PETONE
was reported, as the headnote editor is
careful to point out. Thereafter in
PERCY CHARLES BONHAM v THE
SARNOR (1921-22) 21 EX.C.R.183,
it was held that no transfer of a
seaman’s wage lien to an engineer was possible. The jurisprudence
was reviewed and the
PETONE
again relied on. In 1996 in
SCOTT STEEL LTD v THE ALARISSA, 1996(2) F.C.883 at 925
,
upheld in 1997 in the Federal Court of Canada, HARGRAVE P. expressed
the same view while acknowledging the possibility of such an
assignment with the leave of the court.
Canadian decisions, of course, carry
special weight, since the Canadian history in terms of the operation
of British admiralty courts
parallels our experience, and are of
great persuasive value as to what the English law would have been in
1983 which is, of course,
the law to be applied in this country in
admiralty legal questions of substance, as opposed to procedural
matters.
I was referred by Mr
Wragge
to a decision in the Hong Kong High Court in the “SPARTI”
reported in
LLOYDS REPORTS (2000) Vol.2 618
, where the owners
of the vessel had fallen into financial difficulty and had asked the
assignee, who was acting as the agent of the
vessel in Colombo, to
pay the crew. Although the assignee was under no legal duty to do
so, it agreed to pay the crew, taking
appropriate assignments from
them. Issues for decision in the matter were (1), whether the
maritime lien of wages was capable of
being assigned and, if so, (2)
whether it was invalid being prohibited by section 93(1) of the
Merchant Shipping (Seafarers) Ordinance.
WAUNG, J held that a
maritime lien as understood by the British and Hong Kong Courts was
regarded as a personal privilege which
enured to the sole benefit of
the maritime lienee and that it was not capable of being
transferred, notwithstanding the wide wording
of the Ordinance. The
PETONE
was considered and applied.
At p.622 of the Report, WAUNG, J made
the following point :
“
In
a sense Mr Smith is of course correct that Mr Justice Hill left the
point of assignability of maritime lien open but it seems to
me that
in the light of what was said and decided in the
PETONE,
there
is little room left for the contention that maritime lien
(sic
) could be acquired or transferred by
contractual assignment. Having regard to the reasons given by Mr
Justice Hill as to why no
maritime lien could be acquired or
transferred by subrogation, the same reasons would equally be
applicable against acquisition or
transfer of maritime lien by
contractual assignment. In fact I would have thought that there
would be stronger objection against
contractual assignment because in
such a case it would not even require full payment to be made by the
assignee to the assignor.
With subrogation there is at least the
merit of the person having paid off the wages and then in equity
standing in the shoes of
the crew. With contractual assignment,
there would not even be the necessity for such payment.”
I respectfully agree.
To revert to the Special Plea, Mr
Wragge
pleaded in paragraph 9 that
“
the Plaintiff, being
Deneys Reitz Inc. proceeding in the name of the master and crew of
the MT "Argun" , does not have
maritime liens in respect
of the claims set out in the Particulars of Claim and therefore no
longer has an action enforceable
in
rem.”
In my view, this is not the legal
effect of the fact that the maritime liens were not transferred to
Deneys Reitz Inc. In the
BOLD BUCCLEUGH,
(1852) 7 Moo PC 257
,
JERVIS, CJ provided what THOMAS (para 10) defines
as “the
first comprehensive and authoritative definition of the maritime
lien”.
“
A
maritime lien is well defined. ….. to mean a claim or privilege
upon a thing to be carried into effect by legal process …..,
that
process to be a proceeding
in
rem.
…
.. This claim or
privilege travels with the thing into whosoever’s possession it
may come. It is incohate
(sic
)
from the moment the claim or privilege attaches, and, when carried
into effect by legal process by a proceeding
in
rem
, relates back to the period when it first
atttached.”
The claim in this case is certainly,
as Mr
Wragge
submitted, a claim for wages, but the lien
cannot be seen as something separate from the claim. The claim
in
rem
in this case is only possible because of
the maritime lien, which is the claim upon the thing (ship in this
case) which “
travels with the thing into whosoever’s
possession it may come”,
as JERVIS, CJ said in the same
quotation from the
BOLD BUCCLEUGH.
As Lord DIPLOCK said in
referring to this case in
THE HALCYON ISLE
[1980] 3 All Erf
21887 197 at 201i,
“
JERVIS CJ, speaking
in 1852, said that a maritime lien existed in every case in which
the Court of Admiralty had jurisdiction to
entertain an action
in
rem
against a ship.
Jurisdiction
in
rem
and maritime lien went hand in hand
”.
(emphasis supplied)
I cannot conceive of the lien not
passing to Deneys Reitz in this action
in
rem
, and yet some meaningful right to sue
passing as a result of the cession. To repeat, the lien is the
foundation of the claim upon
the ship. That is the case which the
master and the crew bring to this court. If Deneys Reitz have no
lien upon which to ground
their action, they have a
“right”
to sue without any substance. Nothing has been transferred to them
by way of cession which enables them to get a judgment against
the
ship.
I therefore hold that there is no
substance in the first Special Pleas in all three actions, and they
are dismissed with costs.
It follows that there is no need to
deal with any of the purported recessions, since there was nothing of
substance to recede, no
cessions having had the effect of entitling
Deneys Reitz to proceed with actions
in
rem.
A third Special Plea in Case No AC
134/99 may be shortly disposed of.
Mr
Wragge
applied to amend
this plea to remove the words in the heading at p.81 before paragraph
10, “The Plaintiff’s Alternative Claim”.
He also wished me to
add the words
“claim and”
in the second last line of the
Plea on page 82 so that it would read
“Wherefore the Defendant
prays that the Plaintiff’s claim and alternative claim be dismissed
with costs and that judgment be entered
in the Defendant’s favour”.
Mr
Burger
submitted that this amendment should not be
allowed at such a late stage in the proceedings.
I am prepared to grant the amendment,
but cannot accept the correctness of the Plea. It is based upon
the argument that an agreement
of compromise detailed in paragraph 11
of Plaintiff’s claim in the alternative and entered into between
National Pacific Ltd and
six crew members, precluded the crew from
obtaining relief on trial. The Special Plea appears to amount to
an allegation that
the claim arises from an agreement of compromise
and that it is not enforceable since Plaintiffs do not have maritime
liens over
the Defendant.
The claim is in the alternative and
only in the event that the Court should find that the Plaintiffs had
compromised their claims
against Defendant through the Agreement of
Settlement entered into by Plaintiffs with National Pacific on 24
July, and are bound
by that compromise.
Although the compromise was entered
into, it was never given effect to. The crew did not divest
themselves of any rights whatsoever,
and no payment followed this
compromise agreement.
As I have already held, the
Plaintiffs do have maritime liens over Defendant in respect of all
their claims and were never divested
of those maritime liens. Their
claims have remained intact throughout.
As far as AC4/2002 is concerned, Mr
Wragge
stated from the Bar that Defendant does not persist
with its first Special Plea in regard to sovereign immunity.
THE QUANTUM OF THE CLAIMS
Mr
Wragge
indicated that the
Russian Federation, being the owner of the vessel, did not wish to
make any submissions regarding the arithmetic
of the claims for which
the Plaintiffs now seek judgment. Certainly, no indication during
the cross-examination of the witnesses
would suggest any such
quarrel.
Mr
Wragge
did advance an
argument in relation to Case AC134. He submitted that his
admissions in paragraph 43 of Defendant’s Plea and in
the Plea in
respect of each of the other Plaintiffs had been wrongly made and he
sought leave to withdraw them.
Certainly, the admission that
Plaintiffs (Captain Korolev and the crew)
“have a maritime
claim”
arising out of employment on board, alternatively, the
“settlement”
referred to above, is wholly at variance
with Defendant’s case, as advanced by Mr
Wragge.
I am
prepared to allow the admission to be withdrawn, but I do not accept
the consequential argument that Captain Korolev and his
crew had
contracts for 6 months and that the further 6 months work, while
Defendant was under arrest, was work for the Sheriff rather
than
their employer. If the work were, notionally, to have been
“for
the Sheriff”,
then the Sheriff would have been obliged to pay
the crew. His preservation claim against the vessel would be
that much higher.
Either way, the owner would have had to foot the
bill.
As
Mr
Burger
also
pointed out, the work done during the first 6 months
“contract”
period was done at a time when the vessel was already under
arrest.
What I have said applies with equal
force to all the Plaintiffs in Case AC.134.
INTEREST
As far as interest is cooncerned, Mr
Wragge
submitted that the prescribed statutory legal rate
should only apply to judgments and debts
“couched in South
African Rands”
. He did not refer to any authority for this
proposition. He also submitted that I have a wide discretion as
regards an award
of interest by reason of the provisions of section
5(2)(f) of the Admiralty Act. That subsection empowers the Court to
make such
order as to interest, the rate of interest and the date
from which it is to accrue, whether before or after the date of the
commencement
of the action, as to it appears just. He proceeded to
argue that the Plaintiffs claims are formulated in US dollars and
that it
would be inappropriate to award interest at the prescribed
legal rate currently prevailing in South Africa which takes into
account
the rate of inflation and other purely South African
economic factors. He added that it had become the practice among
admiralty
practitioners to agree to interest on US Dollar and
Sterling amounts at the rate of 8% per annum being the default rate
applied by
the United Kingdom Courts.
I do not see any merit in that
submission. In the
MV SEA JOY, 1998(1) SA 487 at 506,
CPD
,
THRING, J referred to sections 5(2)(f) and 6(2) of the Admiralty
Act. The latter subsection stipulates that the
“
provisions of ss(1)
shall not derogate from the provisions of any law of the Republic
applicable to any of the matters contemplated
in para (a) or (b) of
that subsection.”
The learned Judge went on to hold
that the provisions of the Prescribed Rate of Interest Act, as
amended, were
“provisions of any law of the Republic
applicable to any of the matters contemplated in para (a) or (b) of”
s.6(1) of the Admiralty Act, and that the obligation to apply
English admiralty law
“shall not derogate
” from such
provisions. In the result, THRING, J did award a lower figure, in
his discretion, which was permissible because he
was dealing with an
unliquidated claim, in terms of
s.2A(5)
of the
Prescribed Rate of
Interest Amendment Act, 7 of 1997
.
In the present matter, I am concerned
with liquidated claims and I see no reason to depart from the
prescribed rate of interest.
The law is clear that a South African
Court can give judgment in a foreign currency, and will do so when
loss is suffered in a foreign
currency. A plaintiff is entitled to
receive
mora
interest at the rate permitted by the law
(THOROUGHBRED BREEDERS’
ASSOCIATION v PRICE WATERHOUSE, 2001(4) SA 551 [SCA] at 594D-E).
The claims in this case are in
dollars and judgment should, in my view, be in dollars, with
interest, at the prescribed rate, also
in dollars.
See also
SKILYA PROPERTY INVESTMENTS (PTY) LTD v LLOYDS OF
LONDON, 2002(3) SA 765 TPD at 815D-817B.
Interest was due on these wages, if
not paid, on a monthly basis.
Mr Burger supplied schedules of
wages earned during each month and I accept these calculations for
purposes of my award, and of
interest in terms of my discretion in
terms of
s.5(2)(f).
Mr Burger also submitted that the appropriate
rate of interest is 15,5% per annum, being the rate presently
prescribed.
I consider the application of the
South African Prescribed Rate of Interest Act to be just in this
case, and I intend to apply it.
COSTS
Mr
Burger
sought an order in
terms of Admiralty Rule 8(3) that the Russian Federation be held
personally liable for the crew members’ costs
in litigating this
claim. Mr
Wragge’
s attitude was that the Plaintiffs
sought, in their Notice of Amendment, an order that the Defendant and
the owner pay costs on
the scale as between attorney and client
(Heads, para.42).
Mr
Wragge
resisted only the
scale
of costs and submitted that there was no basis for
attorney and client costs in this case since the owner had not acted
maliciously
or unconscionably. He submitted therefore that no
special order of costs, either against the Defendant or the owner,
should be
made.
As part of his argument for attorney
and client costs, Mr
Burger
submitted that many defences
raised at earlier stages in these proceedings were not
bona
fide
, and he cited a number of law points
which were raised in the rescission application and not proceeded
with. Despite Mr
Burger
’s submissions on these issues, I
am not persuaded that there is not also merit in Mr
Wragge
’s
answer, which was that as matters proceed, defences often get dropped
without that meaning foul play. He also pointed to the
fact that
difficulties experienced in obtaining proper instructions, and poor
communication with Russia, had been the cause of
much of which Mr
Burger
had complained.
I do not think it is appropriate for
an order of attorney and client costs to be made.
There was, in my view, no evidence
suggesting that the owner was guilty of misconduct warranting the
making of a punitive costs order,
or any other special considerations
which might have warranted such an order
As to the travel and subsistence
costs of Captain Korolev, Mr
Wragge
submitted that a special
order in this regard would usurp the Taxing Master’s function
and submitted that the proper course
would be for Plaintiffs to
obtain an order declaring Captain Korolev to be a necessary witness.
Mr
Burger
agreed that that would be appropriate.
THE SHERIFF’S PRESERVATION
COSTS
The Supreme Court of Appeal held
in
MT “ARGUN” 2001(3) SA 1230
that the crew were
liable to the Sheriff for preservation expenses and reasonable
remuneration (
“preservation costs”)
arising out of their
arrest of the vessel. The Sheriff stated in AC 42/2002 that by the
time that I was dealing with that matter,
his exposure had risen to
R4 654 878,53. Mr
Burger
submitted further that any
argument
that the preservation costs do not form part of the
costs recoverable against the vessel and the Russian Federation would
lead to
a startling result. If the Sheriff’s claim of more than
R4½ million is correct, then it exceeds the claims of the
Plaintiffs
in cases AC 127/99 and AC 134/99 by a large margin.
Another effect of not including the preservation costs of the vessel
in the
costs award in favour of the Plaintiffs would be that the
Sheriff, if security were to be posted at this stage by the owners,
would
not be able to recover these costs, without further litigation
and a further order.
I agree with Mr
Burger
’s
argument that as a matter of logic – and, I might add, common sense
– preservation costs must form part of a plaintiff’s
costs of
suit in a situation like this. As he said,
“
But
for the institution of an action
in
rem
, there would be no arrest of the maritime
res
.
Without such arrest, the
res
does not fall into the custody of a sheriff.
Without such custody there is no requirement on a sheriff to preserve
the
res
and consequently no cost of preservation would be incurred.”
Mr
Burger
submitted further
that the costs of preservation are incurred
“
as
a direct consequence of a plaintiff prosecuting its action
in
rem
and are therefore nothing other than costs of
suit properly so called.”
EXECUTION
Mr
Burger
also asked for a
special order in regard to execution which he said had arisen because
of the lapsing of the arrests in AC127/99 and
AC 134/99. As Mr
Burger
said, upon obtaining judgment in those two actions,
the crew – the plaintiffs – will have to execute against the
vessel presently
under arrest only in respect of the third
action. In order to give effect to this judgment and to avoid
further legal wrangling,
he submitted that this Court should give
effect to this judgment by making an order that judgment in respect
of all claims should
be executed against the vessel. He therefore
asked for a declaratory order for directions in terms of Admiralty
Rule 25.
Mr
Wragge
in turn submitted
that the Sheriff’s costs and reasonable remuneration do not
constitute part of the Plaintiff’s cost of suit
and are not
susceptible to taxation. His submission was that this should be left
to the Sheriff and the owners to sort out. In
the light of past
history in that regard I do not consider that to be a fruitful
exercise.
Mr
Wragge
also contested the
right of Plaintiffs to obtain a special order of executability in
respect of the first two actions.
In the interests of finality, I am
prepared to make such directions which I do consider proper for the
disposal of this matter.
I am satisfied that the Plaintiffs
have proved their claims in this court, as amended, and are entitled
to judgment. There will
accordingly be an order as follows :
CASE NO AC 127/99
Defendant is ordered to pay
to Plaintiffs the amount set out in the column headed
‘Totals’
(in the TOTAL amount of US$99 662.39) in the attached document
marked ‘AC127/99’ to each Plaintiff whose name and numbers

appears on the particular line.
Defendant is ordered to pay
interest at the rate of 15.5% per annum on each amount as indicated
on the attached document to each
Plaintiff whose name and number
appears on the particular line from the dates appearing above each
amount, in each of the 3 columns
headed 30/04/99, 31/05/99 and
30/06/99.
Defendant vessl MT "Argun",
and the Russian Federation are ordered to pay Plaintiff’s costs
of suit on a party and
party scale including
the necessary travel costs of
Captain Korolev, and
the Sheriff’s reasonable and
necessary costs incurred in preserving the Defendant vessel from the
date of the Plaintiff’s arrest
until the lapsing of the arrest,
and the Sheriff’s reasonable remuneration earned in respect
thereof.
The costs of discovery.
(d) It is declared that Plaintiffs are entitled to execute their
judgment
in
rem
obtained in respect of the Defendant,
against the Defendant.
CASE NO AC134/99
Defendant is ordered to pay to
Plaintiffs the amount set out in the column headed
‘Totals’
in the amount of US$176 780.06 in the attached document marked
‘AC134/99’ to each Plaintiff whose name and numbers appears
on
the particular line.
Defendant is ordered to pay
interest at the rate of 15.5% per annum on each amount as indicated
on the attached document to each
Plaintiff whose name and number
appears on the particular line from the dates appearing above each
amount in each of the 13 columns
headed 31/07/95, 31/08/95,
30/09/95, 31/10/95, 30/11/95, 31/12/95, 31/01/96, 29/02/96,
31/03/96, 30/04/96, 31/05/96, 30/06/96
and 31/07/96.
Defendant vessel MT "Argun"
and the Russian Federation are ordered to pay the costs of suit on
a party and party scale,
including
the necessary travel costs of
Captain Korolev’
the Sheriff’s reasonable and
necessary costs incurred in preserving the Defendant vessel from
the date of the Plaintiff’s arrest
until the lapsing of the
arrest, and the Sheriff’s reasonable remuneration in respect
thereof, and
the costs of discovery.
(d) Plaintiffs are entitled to execute their judgment
in
rem
obtained in respect of Defendant, against
the Defendant.
CASE NO AC 4/2002
Defendant is ordered to pay to
Plaintiffs the amount set out in the column headed
‘Totals’
in the amount of US$71 293,55 in the attached document marked
‘AC4/2002’ to each Plaintiff whose name and numbers appears on
the particular line.
Defendant is ordered to pay
interest at the rate of 15.5% per annum on each amount as indicated
on the attached document to each
Plaintiff whose name and number
appears on the particular line from the dates appearing above each
amount in each of the four columns
headed 31/07/99, 31/08/99,
30/09/99 and 14/10/99.
Defendant vessel MT "Argun"
and the Russian Federation are ordered to pay costs of suit on a
party and party scale, including
the necessary travel costs of
Captain Korolev;
the Sheriff’s reasonable and
necessary costs incurred in preserving the Defendant vessel from the
date of the Plaintiff’s arrest
until the release of the
MT
"Argun"
from arrest
and the Sheriff’s
reasonable remuneration earned in respect thereof; and
the costs of discovery.
_______________________________
J G FOXCROFT
ANNEXURES
TO JUDGMENT :
Schedules
of Wages – 3 pages
---ooo0ooo—
REPORTABLE
IN THE HIGH COURT OF SOUTH
AFRICA
[CAPE OF GOOD HOPE PROVINCIAL
DIVISION]
CASE NO : AC 42/2002
[RELATED
TO CASE NO’S : AC127/99;
AC134/99;
AC4/02]
In the matter between :
THE
OWNERS OF THE MT "ARGUN"
Applicant
and
THE MASTER AND CREW OF THE MT
‘ARGUN’
CLAIMING
UNDER CASE NO AC127/99
First
Respondent
THE
FORMER CREW OF THE MT ‘ARGUN’
CLAIMING
UNDER CASE NO AC134/99
Second Respondent
THE
MASTER AND CREW OF THE MT ‘ARGUN’
CLAIMING
UNDER CASE NO AC4/2002
Third
Respondent
THE
SHERIFF OF CAPE TOWN
Fourth
Respondent
____________________________________________________________________________
COUNSEL
FOR APPLICANT : ADV M WRAGGE
ATTORNEYS
FOR APPLICANT : WEBBER WENTZEL BOWENS,
CAPE TOWN
COUNSEL FOR RESPONDENTS : ADV
L BURGER
ATTORNEYS FOR
RESPONDENTS : DENEYS REITZ INC
CAPE
TOWN
DATE[S]
OF HEARING : 18 & 19.6.2002; 12 TO 20.8.2002
DATE
OF JUDGMENT : 12.09.2002
MASTER
AND CREW vs MT “ARGUN”