CATCHWORDS
SHIPPING AND NAVIGATION - Admiralty - sale of vessel pursuant to order for appraisement and sale - claims in rem by creditors against the fund - determination of order of priorities - whether one claim based on maritime lien created by agreement in United States was to be afforded priority as a maritime lien in Australia - whether claims otherwise general maritime claims - whether recovery of moneys pursuant to distribution of proceeds of sale of a vessel under same ownership in another jurisdiction in respect of the same causes of action precludes a claimant proceeding against the fund in this jurisdiction - construction of s.20 Admiralty Act 1988 - circumstances in which ship’s agent will have a general maritime claim - whether claims by attorneys or solicitors for costs incurred in resisting proceedings involving arrest and potential sale of owner’s vessels general maritime claims - adequacy of proof of claims.
Admiralty Act 1988, paras 4(3)(m) and (r), ss. 20, 24
Admiralty Rules, Rule 18
Morlines Maritime Agency Limited & Ors v The Proceeds of Sale of the Ship “Skulptor Vuchetich”
No. NG 730 of 1995
CORAM: SHEPPARD J
PLACE: SYDNEY
DATE: 15 MAY 1997
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IN THE FEDERAL COURT OF AUSTRALIA |
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GENERAL DIVISION IN ADMIRALTY |
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HIS HONOUR: This judgment should be read in conjunction with the judgment published yesterday in the matter of the Skulptor Konenkov and also with the judgment of this Court in Morlines Maritime Agency Limited v The Ship Skulptor Vuchetich (1996) 64 FCR 223. That judgment contains the background to the matter which I shall not repeat in this one. I propose to come directly to the claims of the various plaintiffs. Some of these are not contested and have already been the subject of judgments. Others raise points dealt with in the Skulptor Konenkov judgment. Still others raise new questions.
Morlines Maritime Agency Limited
The first claim with which I deal is that of the original plaintiff in the action, Morlines Maritime Agency Limited (“Morlines”). The claim is for $708,708.96 and is opposed on a number of grounds. The principal evidence given in support of the claim is to be found in affidavits of Mr Brian Jones of Montreal in Canada who is a director of Morlines. In an affidavit sworn on 13 December 1995, Mr Jones said that, on 29 April 1992, Morlines as agent and Baltic Shipping Company as owner, entered into an agency agreement whereby it was agreed between the parties that the agent, i.e. Morlines, would act as general agents for Baltic’s vessels and provide maritime services in respect of them. A copy of the agency agreement is annexed to the affidavit. On 1 May 1992 four addenda were entered into and annexed to the agreement. I shall refer briefly to the agency agreement and the addenda in a moment.
Mr Jones said that, during the course of the agency agreement, Morlines provided maritime services in respect of Baltic’s vessels. Seven vessels were referred to, none of which was either the Skulptor Konenkov or the Skulptor Vuchetich. Mr Jones said that between May 1992 and July 1995 Morlines incurred expenses on behalf of Baltic in respect of maritime services provided by it to the various vessels. A statement of account is annexed to the affidavit. Mr Jones said that on 26 July 1995, Baltic wrote a letter to Morlines acknowledging the debt owed by Baltic in the sum of CDN$1,594,945.00. A copy of the letter is annexed to Mr Jones’s affidavit. Credit was given for a sum of CDN$404,100 paid by Baltic in reduction of the debt. The amount outstanding at the time of the swearing of the affidavit was CDN$1,190,845. Mr Jones said that Baltic had failed to keep Morlines in funds to meet the financial obligations incurred by it pursuant to clause 5.14 of the agreement.
The agreement itself is in a usual form. There are some general obligations undertaken by Morlines in clause 2a. I do not refer to the detail of these. Part b of clause 2 deals with the agency services to Baltic vessels. These include arranging for berths, pilotage, towage, mooring and unmooring and customs, sanitary and immigration services. Morlines was also to organise, co-ordinate and control cargo operation and tally cargo according to local custom and practice. It was to arrange for fuel, lubricants, fresh water, provisions and “technical supply”, repair and medical attendance to crew members and passengers. A number of other matters were dealt with which are relevant but to which it is unnecessary to refer in detail. Clause 5 dealt with financial obligations. Part a of clause 5 obliged Morlines to collect and remit freight, demurrage, passage money and other amounts due to Baltic. Morlines was to check and settle local accounts. Clause 5.11 provided for agency commission. Clause 5.14 mentioned by Mr Jones provided that all payments between Baltic and Morlines were to be effected in freely convertible currency. Baltic was to ensure that Morlines was placed in funds at all times to meet Baltic’s financial obligations.
Addendum 1 to the agreement provided for the agency fee. Addendum 2 dealt with aspects of Morlines’ commission. Addendum 3 dealt with settlement of freights and disbursements. It provided that freights usually payable by Morlines to Baltic would be used by Morlines to settle Baltic’s disbursements. Any balance due to Baltic was to be paid on request. Any balance in favour of Morlines was to be carried forward. But Morlines could claim settlement of any balance at any time. Addendum 4 made further provisions about Morlines’ remuneration.
In a more detailed affidavit sworn on 12 June 1996 Mr Jones said that the services provided by Morlines in respect of each of the vessels included collecting revenue on behalf of Baltic, paying, on behalf of Baltic, invoices for services provided by third parties during particular voyages by each of the vessels to ports in Canada, and making direct payments to masters and crew on behalf of Baltic. Mr Jones dealt with the method of recording payments. I do not refer to the detail of this.
Mr Jones said that voyages by the vessels for which Morlines had paid invoices which had not been reimbursed were voyages by five vessels including the Skulptor Vuchetich. Annexed to his affidavit is an analysis, carried out under his direction from the computerised records of Morlines, of the expenses paid by Morlines on behalf of Baltic in relation to each of the voyages to which he referred. Annexures A and B deal with voyages by the Aleksandr Starostenko referred to in the Konenkov judgment. The annexures are tabulations or schedules which refer to the detail of the voyage and then itemise various matters in respect of which services were provided. In relation to the first of the voyages by the Starostenko there are references to tonnage dues, berthing dues, pilotage, towage, mooring, stevedoring, cargo delivery, the securing of cargo, the survey of cargo, container expenses, wharfage and handling. There are some items under the heading “Agency”. I mention these particularly because there is an argument about agency expenses. Under the agency heading there are some abbreviations “W/B” and “E/B”. These stand for west bound and east bound respectively.
The schedule contains figures and the total of the expenses is said to be $10,163. The other schedules are in much the same form whether in respect of the Starostenko or the other vessels and I do not refer to the detail of them.
Also annexed to Mr Jones’s affidavit is a schedule showing US dollar revenue earned by Baltic from each of the voyages. All revenue figures, including the amounts charged to cover the costs of inland transportation, have been determined by the bill of lading under which each item of cargo on each vessel was shipped. A schedule of revenue collected by Morlines on behalf of Baltic is annexed.
Mr Jones said that there had been prepared from Morlines’ computerised records a “vessel manifest summary list” in respect of each of the voyages to which he had referred. There are then exhibited to Mr Jones’s affidavit various computer printouts which I have looked at but which I have not considered in detail. The reason I have not is that there was no submission in opposition to the Morlines’ claim based on any inadequacy in its proof.
Finally, copies of each of the original invoices referred to in the computer printout were made available for inspection during the week prior to the hearing. These were marked for identification but not tendered.
In an affidavit sworn on 22 May 1996, Mr Jones said that, at the beginning of 1996, the Aleksandr Starostenko was sold pursuant to an order of the Canadian Federal Court. On 4 March 1996 Nadon J of that Court made orders for the distribution of the proceeds of sale of the Starostenko. Morlines received a sum of CDN$479,473 as part of that distribution. The amount was applied in reduction of the original amount claimed by Morlines against the sale proceeds of the Vuchetich. Mr Jones said that Morlines had also received the sum of $US50,000 as an inducement to lift a caveat on another Baltic vessel, the “Mekhanik Yevgarfov”. That amount had also been applied in reduction of the original claim. Mr Jones said that Morlines had not received any further payments from Baltic in reduction of the outstanding claim brought by it. Nor had it received any other distribution of proceeds of sale of any vessels owned by Baltic. At the time of swearing the affidavit, the amount owing by Baltic to Morlines was CDN$708,708.96. This did not include interest which is also claimed.
Ms T.A. Humphreys is a solicitor in the employ of Morlines’ Australian solicitors. She swore an affidavit on 9 February 1996 in which she said that on 11 January 1996, the solicitors for Baltic provided to her a Confession of Judgment signed by Baltic in favour of Morlines. A copy of the Confession of Judgment dated 28 December 1995 is annexed to Ms Humphreys’ affidavit. Ms Humphreys said that, pursuant to the terms of the Confession of Judgment, she had calculated interest at the rate of 10 per cent per annum on the amount confessed of $1,190,854.04. A copy of her calculations was annexed to the affidavit. The calculations were made of course prior to the further payments received by Morlines referred to in Mr Jones’s affidavit of 22 May 1996.
The Confession of Judgment is printed in two columns. The left hand column is written in Russian and the right hand column in English. It is unnecessary to refer to the detail of the Confession but it effectively admits that, at the time it was signed, Baltic owed Morlines the sum of CDN$1,190,854.04.
The evidence to which I have referred is the totality of the evidence in support of Morlines’ claim. The first submission with which I deal is a submission that Morlines is not entitled to sue in rem in these proceedings because it has sued and recovered in rem in the Canadian proceedings. This was a matter dealt with in relation to the claim of Bergen Bunkers AS in the Konenkov judgment.
For reasons given in the Konenkov judgment, the submission is rejected. Participating in the distribution of the proceeds of the sale of the Starostenko does not prevent Morlines from pursuing a claim in rem in this Court for the balance owing to it. But for a submission made by counsel for Morlines in relation to s.24 of the Admiralty Act 1988, it would not have been necessary to say any more about this aspect of the matter.
Counsel for Morlines pressed upon me an argument which would have involved my accepting a different interpretation of the place of s.24 of the Admiralty Act in the overall scheme of legislation which there is from that which I adopted in the 1996 judgment. As I understood the submission, it was that s.24 should not have an operation limited to placing a party with an in rem claim in the same position against a fund arising from the sale of a vessel by the Court as it would have been in against the ship had it not been sold. Counsel submitted that s.24 was a section whereby claims could be made against a fund so that there was no problem about the bringing of a second action in rem against the fund or in recovering against two vessels whether in Australia or elsewhere. It was contended that the intention of s.20 of the Act was to prohibit a single claimant from arresting numerous ships in respect of that claim. This, if allowed, would hinder the operation of shipping lines. But, so it was submitted, s.20 was not intended to prejudice the rights of claimants to seek payments from the sales proceeds of a multiplicity of ships which had been arrested and sold by diverse parties in separate proceedings.
What concerned me about the submission was that it would, if accepted, permit recovery from the proceeds of sale of more than one vessel where all relevant arrests were in Australia as well as where one or more of them was outside the jurisdiction.
For reasons given in the judgment delivered in 1996, I do not accept the submission. The difficulty is that the submission runs counter to the meaning and effect that the relevant provisions of the Act were intended to have. Paragraphs 210 and 214 of the Australian Law Reform Commission Report (ALRC 33) indicate what was intended; reference may also be made to para. 109. The submission also runs counter to the approach taken in England particularly in The Banco [1971] P 137.
The submission is accordingly rejected. Nevertheless, for the reasons given in the Konenkov judgment, Morlines is entitled to maintain its claim as a general maritime claim notwithstanding the recovery of part of what is owing to it from the fund in Canada created by the sale of the Starostenko.
There are two matters to be dealt with before I conclude my treatment of the Morlines’ claim. The first concerns another submission made in opposition to the claim to have a general maritime claim based upon the circumstance that the cause of action upon which Morlines sued was to recover moneys due under an agency agreement. A similar argument was dealt with in the Konenkov judgment.
The submission was that, because the claim was made under an agency agreement, it was not a claim recognised by any of the paragraphs of subsec. 4(3) of the Act dealing with general maritime claims. I rejected this argument in the Konenkov case and, subject to one qualification, I reject it in this one. My qualification arises because part of Morlines’ claim appears to be for agent’s commission. The claim should be reduced by the amount of commission included in it.
The second matter with which I need to deal concerns the question whether Morlines already has a judgment. On 17 February 1996 I made an order by consent that judgment be entered in favour of Morlines in the sum of $1,263,853.30. Consent orders to this effect had been filed in Court on 9 February 1996. The solicitors who signed the consent orders were the solicitors for Morlines and the solicitor for Baltic. The heading shown in the orders named two defendants. One was the vessel and the other the Baltic Shipping Company. The form of the orders was that there be judgment for the plaintiff in the sum to which I have referred and that “The Defendant” was to pay the plaintiff’s costs. There was no indication whether the judgment was intended to be against both the vessel and the company or only against one of them. My note of the judgment made on 19 February 1996 does not clarify the position. The action itself was commenced against both the vessel and the company.
After the order had been made, I realised that Morlines had purported to sue both the vessel and the company in the one action. It had thus purported to bring an action in rem and an action in personam in the one proceeding. This was contrary to Rule 18 of the Admiralty Rules which provides that a proceeding commenced as an action in personam shall not be commenced by the same initiating process as the process by which a proceeding is commenced as an action in rem. I informed counsel for Morlines of this. He said that the position would be rectified.
The matter was mentioned by counsel for Morlines at the hearing on 19 June 1996. He said that he had raised with me the need to vacate orders which were made as a result of an application made “erroneously” on 19 February. He made reference to Rule 18. He said that he had prepared a notice of motion which he sought to file in court. The notice sought an order that Order 3 made on 19 February 1996 be vacated in so far as leave was granted to the plaintiff to enter judgment against Baltic in personam in proceedings No. NG 730 of 1995, i.e. these proceedings.
After some discussion, I gave counsel leave to file the notice of motion in Court. I asked if there was any opposition to it from anybody. It did not appear that there was. Counsel asked that the order referred to in the notice of motion be set aside. I said that I would leave it until I had had an opportunity of looking at my note book for 19 February. I said I would deal with it later on.
In the result, the matter was not again mentioned. I have made no relevant order since 19 February 1996. If the order were made, it may be that it would have the effect of leaving the order made on 19 February 1996 as an order for a judgment in rem.
I think it may be wise for the order made on 19 February 1996 to be set aside and an order made for the entry of what will clearly be a judgment in rem. Whether Morlines also seeks a judgment in personam in separate proceedings is a matter for it and its legal advisers. The judgment ordered to be entered on 19 June 1996 has not in fact been entered. So that the position may be held, I direct the Registrar not to enter such judgment in the absence of any further order by a judge of this Court.
J. Fenwick & Co. Pty Limited and Dyno Wesfarmers Limited
These two matters were the subject of judgments in rem in the sums of $9,720 and $14,994 respectively. There was no opposition to the claims made by these plaintiffs.
Dupont Australia Limited and Adrilon SPA
There is no issue in this matter except that arising as a consequence of a claim made by the plaintiffs against the proceeds of sale of a Baltic vessel which had been arrested in Texas in the United States. The vessel was the “Kostroma”. Judgment for the two plaintiffs was obtained following the filing of an unopposed motion by them to intervene as plaintiffs.
So far as the evidence discloses, there has been no recovery of any moneys as a consequence of the arrest of the “Kostroma”.
For the reasons given in the Konenkov judgment in relation to the claim by Bergen Bunkers AS, the existence of the claim made by the two plaintiffs in the United States proceedings does not bar their right to proceed here to enforce the claim as a general maritime claim. They are therefore entitled to the relief which they seek.
There was one other point raised in written submissions with which I should deal briefly. It was submitted that the claimant who had obtained judgment elsewhere was not entitled to sue on the original causes of action which gave rise to the judgment entered as a consequence of the proceedings. Its right was limited to an action on the judgment. However, the law is that a plaintiff who has secured a foreign judgment in his favour is not obliged to sue on that judgment but may elect to sue again on the original cause of action. This is said to be because the doctrine that a cause of action that merges in a judgment does not apply to foreign judgments. A plaintiff may, if it so wishes, sue both on the foreign judgment and on the original cause of action; see Australian Private International Law, Sykes and Pryles, 3rd ed (1991) at 109, Hall v Odber (1809) 11 East. 118; 103 E.R. 949 and the decision of Walsh J, when a judge of the Supreme Court of New South Wales, in Delfino v Trevis (No. 2) [1963] NSWR 194. As mentioned in the Konenkov judgment, there are understandable reasons why a claimant would not sue on a foreign judgment. If it were to do so, its rights would be limited to the ship whose acts or omissions were responsible for the loss or damage which the claimant had suffered. The provisions of s.19 of the Admiralty Act dealing with surrogate ships would not apply.
Bergen Bunkers A/S
It is not clear to me whether the claim which is made is the same claim as was made in relation to the Skulptor Konenkov. If the same cause of action is relied upon, the claim must be refused because it is the second vessel within the jurisdiction against which Bergen Bunkers has purported to bring a claim in rem. The earlier judgment delivered in 1996 and the judgment delivered in the Konenkov establish that this course is not permitted. If, however, the claim is based on a different cause of action, the plaintiff is entitled to judgment in rem in respect of it. In that event the only submission against the allowance of the claim would be that based upon the recovery by Bergen Bunkers against the proceeds of the sale of the Starostenko in Canada. That submission cannot succeed. The position can be clarified when this matter is finalised by orders.
Stork Services BV
Again, this case raises only one issue. It is similar to that raised in the Dupont matter. The net amount owing to Baltic is the sum of NLG 283,150.88. The plaintiff has attempted to recover this sum. It has obtained a default judgment in the District Court of Rotterdam. The proceedings were not contested by Baltic. Legal costs were incurred in an attempt to recover the debt. These amount to NLG 13,838.40.
It is not clear to me that the proceedings in the Rotterdam Court are in the nature of an action in rem but even if they are, the plaintiff is not prevented from recovering as a claimant with a general maritime claim in these proceedings by reason of having commenced those proceedings. I do not recall any submission being made about the amount claimed for costs. I would have thought that the costs may not be made the subject of a general maritime claim. This is a matter that can be discussed when orders are being made.
Sydney Ports Corporation
Judgment was entered without opposition in favour of Sydney Ports Corporation on 18 June 1996. The amount of the judgment was $64,500 together with interest and costs.
Transworld Marine Agency Company NV
By its statement of claim filed on 22 April 1996, Transworld Marine Agency Company NV (“Transworld”) sued on an agreement said to have been made on 15 January 1992 between Baltic and Transworld whereby Baltic appointed Transworld as its agent for the purpose of providing services in relation to, or arranging for services to be provided in relation to, ships owned or operated by Baltic. The action was said to be brought pursuant to s.24 of the Admiralty Act against the proceeds of sale of the Skulptor Vuchetich. Services provided were said to have included the engagement of stevedores, terminal operators, mooring services, and the services of pilots and other contractors and sub-contractors providing services essential to the operation, berthing, loading and unloading of ships. A document which is appended summarises particulars of the claim. The claim is for 96,661,901 Belgian francs. Interest and costs are sought. Paragraph 8 of the statement of claim alleges that on or about 10 October 1995 Transworld and Baltic settled an account stated between them by which Baltic agreed that it had an outstanding debt to Transworld in the sum claimed and that that debt was a maritime debt.
Mr Patrick Backx is the managing director of Transworld. He is resident in Antwerp in Belgium. He said that Transworld was a corporation incorporated under the laws of Belgium. In January 1992 it entered into an agency agreement with Baltic. A copy of the agreement is annexed to his affidavit. There were four addenda to the agreement dated respectively 15 January 1992, 17 February 1992, 15 March 1993 and 14 January 1994.
Mr Backx said that, by the terms of the agency agreement, Baltic appointed Transworld to act as shipping agents to provide or arrange for the provision of goods and services to ships owned or chartered by Baltic that called at ports in Belgium and the Netherlands. The agreement commenced on 1 January 1992. Transworld had acted for Baltic prior to the written agreement coming into force. Mr Backx said that, in performance of its obligations under the agency agreement commencing in about January 1992 and ending in about October 1995, Transworld provided or arranged for the provision of goods and services to ships owned or chartered by Baltic. At the times of the provision of the various goods and services Baltic was the owner of both the Vuchetich and the Konenkov.
Mr Backx said that in October 1995 Transworld and Baltic executed an agreement whereby Baltic acknowledged that as at 10 October 1995 Baltic was indebted to Transworld in the amount of 93,414,464 Belgian francs and that the debt was a maritime debt. A copy of the agreement is annexed to his affidavit. The agreement records that the parties acknowledged that Baltic had an outstanding debt to Transworld for the amount referred to. It has also acknowledged that the debt is proved by invoices and disbursement accounts and that the debt is a maritime debt. Attached to the agreement is a statement of the account from which this figure is derived.
Also annexed to Mr Backx’ affidavit are a number of disbursement accounts relating to ships which visited ports in either the Netherlands or Belgium. There was some further evidence given about the make-up of the moneys which are said to be owing and some further documentation to which I do not refer. Mr Backx said that, although Transworld had taken legal action in various places where vessels owned by Baltic had been arrested, nothing had been recovered by Transworld as a consequence of any of these proceedings and there had been no reduction of the indebtedness for which it claimed.
There are some further affidavits filed in support of the Transworld claim but I do not find it necessary to refer to them.
There are two matters relied upon in opposition to the claim. These raise respectively what I may call the double claims point and the agency agreement point. Subject to one matter, I am against the objection based upon the agency point. It is covered by the reasons I have given in relation to other claims and I do not propose to repeat what I have previously said. There is included as a component of the claim an amount for agents commission which is said to total 15,169,797 Belgian Francs. In accordance with what I have previously said, that sum should come out of the claim so that it will be reduced by that amount. Otherwise, subject to the double claim point, the claim succeeds.
I have referred to Mr Backx’ evidence which refers to legal action taken elsewhere by Transworld. No recovery has been made as a consequence of any of these proceedings, but of course it is possible that there may be recovery at a later point of time.
In accordance with the approach I have taken in relation to other claims, I am of opinion that the claims made by the plaintiff against other Baltic vessels do not affect its right to pursue its claim in rem in these proceedings. Subject to what I have said about commission, the claim will result in a judgment for approximately $US3 million or a little less.
Waratah Towage Pty Limited
In this matter the plaintiff has recovered judgment in the sum of $3,130 together with interest and costs. There was no opposition to the entry of the judgment.
Adelaide Steamship Industries Pty Limited & Anor T/As Fremantle Tug Operators
In this matter a judgment in rem has been entered in the sum of $12,360 together with interest and costs. There was no opposition to an order directing the entry of judgment for Adelaide Steamship.
Stannard Bros Launch Services Pty Limited
This matter has also been the subject of the entry of a judgment, this time for $9,433 together with interest and costs. Again there was no opposition to the entry of the judgment.
Tramp Oil Marine Limited
In this matter the plaintiff claims judgment in the sum of $US289,000 together with interest and costs. The claim is for bunkers. There is no issue between the parties but that the claim is a general maritime claim and that, subject to one matter, the plaintiff should have the judgment in rem which it seeks. The one question again raises the double claim point. In support of the claim there has been filed an affidavit of Mr Roberto Bartolozzi who is a lawyer practising in Genoa in Italy. He said that, in accordance with instructions received on behalf of the plaintiff, he caused a writ to be issued in the Court at Livorno in Italy for the seizure of another Baltic vessel, the “Stakhanovets Yermolenko”. The writ was issued on 8 February 1996. Mr Bartolozzi said that the purpose of the seizure was to obtain security for the plaintiff’s claim against Baltic for the supply of bunker fuels to the Skulptor Konenkov at Las Palmas on 2 June 1995. The Yermolenko was detained on 10 February and remains in port subject to the order of the Court.
Mr Bartolozzi said that, in accordance with Italian law, the courts of Italy had no jurisdiction to consider the claim from the plaintiff against Baltic or the vessel on its merits. There was jurisdiction only in order to facilitate the provision of security by the detention or seizure of assets belonging to the defendant, i.e. Baltic. Substantive proceedings must be taken elsewhere. He said that, to avail themselves of the sale proceeds of the vessel, the plaintiff would first have to enforce the English judgment in Italy. He said that he did not believe that the proceedings taken in Italy against the Yermolenko could be considered to be, or to be analogous to, proceedings in rem.
Whether or not the proceedings in Italy are proceedings in rem is of no consequence because of my conclusions in the Konenkov matter about the effect of an in rem proceeding taken in a country other than Australia on the ability of the plaintiff to bring proceedings here. The plaintiff is entitled to the judgment which it seeks.
Jotun AS and Jotun Sverige AB
These two claims may be dealt with together. They involve similar considerations. Jotun AS seeks judgment in the sum of $440,629.62 together with interest and costs. Jotun Sverige AB seeks judgment in the sum of $338,703.99 also inclusive of interest and costs. Jotun AS is a Norwegian company. It carries on the business of producing marine, protective and decorative paints, powder coatings, polymers and “sacrificial” anodes. Between January and December 1993 it received orders from Baltic for the supply of paints to the vessels listed in an annexure to an affidavit sworn by Mr Meland who is Group Executive Vice President of Jotun AS. Invoices were produced. They establish the claim which the plaintiff makes.
Jotun AS has brought proceedings in rem in the United Kingdom. Proceedings have been served. Service has not been set aside nor have the proceedings been discontinued, dismissed or struck out. The plaintiffs have not received any distribution in the proceedings. Submissions were made that the claim should be refused because of the existence of the United Kingdom proceedings. For the reasons given in the judgment delivered in the Skulptor Konenkov, I reject this submission. The claim succeeds and the plaintiff is entitled to the judgment which it seeks.
Jotun Sverige AB also carries on the business of a marine paint supplier. Between 1994 and 1995 it received orders from Baltic for the supply of marine paint to vessels which are listed in an annexure to the affidavit of the company’s managing director. The goods were supplied. The amount outstanding is the amount earlier mentioned.
Jotun Sverige AB is also a claimant in the United Kingdom proceedings in rem. For similar reasons given in the Konenkov judgment, that is not a matter which disentitles Jotun Sverige AB to relief. There will accordingly be judgment for the amount claimed by it including interest and costs.
Transamerica Leasing Inc.
By its amended statement of claim the plaintiff in this matter alleges that at all material times agreements with Baltic were entered into by its agent, Transglobe Container Service GmbH (“Transglobe”) on its behalf. Paragraph 5 of the statement of claim pleads that Transamerica was the lessor of containers hired to Baltic as lessee pursuant to various agreements entered into between the plaintiff and Baltic under which Baltic agreed to pay rent and return the containers to the plaintiff. Reference is made to two agreements, an agreement described as a “Master Lease Agreement” made between Transamerica ICS Inc. and Transglobe on 1 May 1991 and an agreement signed by Transglobe on 1 September 1990 together with amendments made on 1 March 1992 and 1 February 1994. Transamerica ICS Inc. was the name under which Transamerica Leasing previously carried on business.
Paragraph 5A of the statement of claim alleges that, in the premises, Transamerica has, within the meaning of para. 4(3)(m) of the Admiralty Act, supplied goods to a ship or ships owned, chartered or controlled by Baltic for the operation of the said ships. Paragraph 6 claims a maritime lien under the master lease agreement. Reference is made to clause 17 thereof. Paragraph 7 says that, in or about March 1994, Transamerica acquired the business of a company, Tiphook Container Rental Co. Ltd, and took an assignment of the rights and obligations of Tiphook under a lease plan dated 1 October 1992 which had an addendum dated 1 October 1993 and which was signed by Transglobe.
Paragraph 8 of the statement of claim pleads that, pursuant to all these agreements, Transamerica hired containers to Baltic for rents which became due and payable. Baltic was also required to return the containers to Transamerica. In breach of those agreements Baltic failed to make the rent payments or return the containers.
The principal affidavits relied upon to support the claim are two affidavits of Mr E.T. Salvatori, the first sworn on 19 April 1996 and the second on 11 June 1996. Mr Salvatori is the Vice-President, Credit and Collections, of Transamerica. His responsibilities include the supervision of all credit facilities of Transamerica and the collection of moneys owed to it. He said that he has personal knowledge of and is familiar with the debt that is owed by Baltic to Transamerica.
Mr Salvatori referred to the master lease agreement entered into with Transglobe for the supply of containers and chassis through “a worldwide Transamerica ICS Inc’s depot system.” A copy of the master lease agreement is exhibited to Mr Salvatori’s affidavit. It recites that Transamerica ICS (now Transamerica but referred to as ICS throughout the agreement) had available, on a rental basis, a supply of containers and chassis through a worldwide ICS depot system and that the lessee, i.e. Transglobe, desired or might desire to avail itself of such equipment. Clause 1 of the agreement provided that Transglobe might, from time to time, or as might otherwise be mutually agreed between the parties, lease Transamerica equipment. The right to obtain the equipment was subject to availability. Clause 2 of the agreement provided that all equipment obtained by Transglobe from an authorised Transamerica depot was to be returned to the depot which had been agreed by the parties in writing. Clause 3 provided for rent which was to be payable at such rates as were mutually agreed upon at or prior to the receipt of any equipment. Clause 6 dealt with the consequences of damage to containers beyond repair. By clause 11 the equipment was to remain at all times the property of Transamerica. Transglobe was not to acquire any ownership rights, title or interest of any nature in it by virtue of paying rental, the cost of repairs or for other matters.
Clause 17 is the clause pursuant to which Transamerica claims a maritime lien. It is in the following terms:
“17.If any of the following events shall occur and be continuing:
A. Lessee shall fail to pay any sum or sums to be paid hereunder when the same become due; or
B. Lessee shall fail to observe or perform any term or condition of this Lease in the manner and at the time or times required herein, and any such failure remains unremedied for ten days after written notice thereof to Lessee by ICS; or
C. Lessee shall admit in writing its inability to pay its debts, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against Lessee seeking to adjudicate it a bankrupt or insolvent (i.e., unable to pay its debts as they fall due), or seeking reorganization, arrangement, adjustment, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief to debtors, or seeking appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property; or Lessee shall take any corporate action to authorize any of the actions set forth above;
then, in any such event,
(i) Lessee’s rights to possession of all Equipment leased hereunder shall terminate and ICS shall have the right to take immediate possession of all such Equipment, and any damages occasioned by any such taking of possession are hereby specifically waived by Lessee;
(ii)If Equipment is on lease for a stated term, the entire unpaid balance of the rent for the entire term of the lease shall forthwith become due and payable; and
(iii) ICS shall have the right to rent the Equipment or any portion thereof to such persons and under such terms as ICS may elect and after deducting all costs and expenses incurred in connection therewith, apply any rent received to the rent due from Lessee to ICS hereunder by acceleration or otherwise.
No express or implied waiver by ICS of any default hereunder shall in any way be construed to be a waiver of any future or subsequent default of Lessee, or a waiver of any rights of ICS hereunder, or a modification of any of the terms of this Lease or any extension or enlargement of Lessee’s rights hereunder.
If
Lessee is an ocean carrier, then ICS and Lessee agree that the primary and
paramount purpose of the lease of Equipment hereunder is to enable Lessee to
offer international ocean carriage of containerized cargo aboard vessels owned,
chartered or operated by Lessee and that such leased Equipment is essential and
necessary for that service; the parties further agree that this Lease is a
maritime contract. Equipment is furnished by ICS to vessels owned or operated
by Lessee and ICS is expressly relying upon the credit of the vessels, even if
final delivery to the vessels is effected by Lessee. ICSICS
reserves and Lessee recognizes and grants to ICS anan
express maritime lien against said vessels and ththeir
pending freight, to secure all obligations rrunning
from Lessee to ICS under this Lease. In aaddition
and not in limitation of all other remedies eenumerated
in this Lease, ICS may execute its mmaritime
lien on vessels owned or operated by Lessee bby
appropriate process in any court of any country hhaving
general admiralty and maritime jurisdiction.”
The emphasis is added.
There are some further provisions of the master lease. I do not find it necessary to refer to the detail of them.
Mr Salvatori referred to the agreement of 1 September 1990 mentioned in the statement of claim. He referred to it as an agreement between Transamerica and Transglobe relating to open top containers on hire “to the agent for defendant.” A copy of that agreement is exhibited to Mr Salvatori’s affidavit. The agreement is between Transamerica and Transglobe. The original term of the agreement was for one year commencing on 1 September 1990. There were provisions dealing with pick up of containers, redelivery and interchange of units. Daily rates of hire and depot handling fees were provided for. There was provision for invoicing and payment conditions. These were followed by some general terms and conditions. I do not find it necessary to refer to the detail of these.
Mr Salvatori then referred to the addenda to the agreement of 1 September 1990. This made an amendment to fees and charges and I do not refer to it further. The second made some amendments to rates. It provided that the term of the agreement had been extended to 31 January 1995.
Mr Salvatori said that, in or about March 1994, Transamerica acquired the business of Tiphook and took an assignment of the rights and obligations of Tiphook under a lease plan dated 1 October 1992 and an addendum thereto dated 1 October 1992. These are exhibited to his affidavit.
The agreement with Tiphook is described as a master lease agreement. It is dated 1 October 1992 and is said to be concluded by Transglobe on behalf of a number of “Lease Participants”. These are eight shipping companies all of which are or were apparently based in Russia or the Ukraine except for some which appear to be Latvian or Estonian. Baltic is one of the eight companies. The agreement was effective for a term of 12 months from 1 October 1992 and was to continue subject to either party having the right to give 90 days written notice of termination. Clause 2 refers to the equipment which was the subject of the lease and clause 3 to the rental which was to be charged. By clause 5 Tiphook was to deliver the containers on the dates and at the places agreed with Transglobe. The schedule annexed to the agreement showed the depots at which equipment might be obtained. There are then what are described as Tiphook standard terms and conditions of business. I do not refer to the detail of these.
Mr Salvatori concluded his affidavit by saying that Baltic owed Transamerica an amount of $US1,002,798.12 for rent and repair charges and for the value of unreturned containers. There is a statement of how the amount is arrived at. The statement begins with a sum of just over $US3 million which is attributed to Transamerica’s “account receivables” dated 23 October 1995, a statement of equipment on-hire prepared as at 23 October 1995 and an invoice numbered JO8801. Credit was given for payments which had been received of just over $US2 million. That left the amount presently claimed outstanding.
In his second affidavit, Mr Salvatori said that, at all material times, “the agreements with the plaintiff” (i.e. Transamerica) were entered into by Baltic by its agent Transglobe. Mr Salvatori said that Transamerica was the lessor of containers hired to Baltic as lessee pursuant to various agreements entered into between Transamerica and Baltic under which Baltic agreed to pay rent and return the containers to Transamerica. Particulars refer to the master lease agreement and the agreement signed by Transglobe on 1 September 1990 together with the two addenda. There was then reference to the Tiphook agreement. Paragraph 10 of the affidavit says that, pursuant to all these agreements, Transamerica hired containers to Baltic for rents which became due and payable; Baltic was required to return the containers to Transamerica; and Baltic required the containers for the purpose of operating container vessels. Mr Salvatori said that, in breach of the agreements, Baltic failed to make rent payments due to Transamerica or return the containers to it.
Mr Salvatori said that the value of Transamerica’s claim against Baltic for rent and repair charges and for the value of its unreturned equipment was in the amount of $US3,051,289.63 as at 23 October 1995. In addition there were interest charges. Exhibited to Mr Salvatori’s affidavit are statements referred to in his earlier affidavit where he explained how the amount claimed was made up. The first of these statements is described as “Statement of Equipment on Hire”. It shows an amount of $2,364,900 outstanding in respect of 558 containers. The account receivable is attached. It is described as “Account Receivable Aged [meaning agreed] Totals - Report.” It contains a long list of items the meaning of which is not apparent without further explanation. No such explanation was given.
Finally, there is the invoice numbered JO8801 which is headed “Per diem Billing”. It is an account for interest which totals $20,827.08. It was sent to Baltic Shipping.
Mr Salvatori said that Baltic did not pay the amounts which were claimed. He instructed attorneys in Montreal to request information from Baltic as to when or if Transamerica’s containers would be returned. A copy of a letter dated 26 September 1993 sent by the attorneys to attorneys in Montreal instructed by Baltic is exhibited as exhibit C to the affidavit. The letter says that Transamerica’s attorneys will be referring its “request” with respect to the Houston Containers to Transamerica. It was also said that, as at 29 August 1995, Baltic still had 642 containers in its possession. A list of these was attached. Reference was made to 21 containers referred to in a letter from Baltic’s solicitors which is not in evidence. It was said that, if these were returned, there remained 621 containers “out there”. There is more of the letter but I fail to see that it is of any particular help in relation to this claim except that it shows that Baltic’s attorneys were corresponding with Transamerica’s attorneys. This may yield an inference that the two were in a contractual relationship, something that is not apparent on the face of the contractual documents to which I have referred.
A further exhibit to the affidavit is a list of containers. After referring to this document and some other letters that were exhibited as exhibit D, Mr Salvatori said that, from the documents attached as exhibits C and D and from explanations provided to the plaintiff “via Mr Tarte” (of the firm of attorneys instructed by Baltic) it was his belief that the locations of many of Transamerica’s containers on lease to Baltic had been unknown to Baltic for a long time, “up to several years”. He believed that all containers which had not so far been returned were probably lost, unrecoverable or destroyed.
There are exhibited to the affidavit some further statements of account and a facsimile with a statement of account showing that the amount owing to Transamerica at that stage was $US1,049,000.
Mr M.A. Mitchell is a solicitor in the employ of Transamerica’s solicitors in Sydney. He said that he had been instructed by Transamerica that it had previously commenced proceedings in rem and in personam in relation to the cause of action which is the subject of the proceedings. There is a list of the proceedings. The proceedings include a claim made in respect of the proceeds arising from the sale of the vessel “Aleksandr Starostenko”. $US1.6 million had been recovered from Baltic as a consequence of the sale of that vessel. This amount had been included in the credit of over $2 million earlier referred to. Transamerica had also had Baltic vessels arrested in Rotterdam, Antwerp and Quebec City.
Mr A.J. Gennarelli is manager, collections, of Transamerica in New York. He said that he was fully familiar with the matter and with Transamerica’s books and records. He said that Baltic owed Transamerica $1,090,000. A summary indicates how this amount is made up.
The evidence to which I have referred is the evidence in support of the claim which Transamerica makes.
Transamerica claims a maritime lien. If this claim were acceded to, Transamerica would have priority over other creditors who succeed in establishing that they have general maritime claims. Alternatively, it claims to have a general maritime claim. Whatever may be the position in the United States, the evidence does not, in my opinion establish that it has a maritime lien or a general maritime claim recognised by Australian law.
Its claim for a lien is based upon clause 17 of the master lease agreement earlier quoted. It may be that that clause gives rise to a maritime lien in the United States. I do not need to reach a decision on that matter because I am of opinion that I should follow the majority of the Judicial Committee of the Privy Council in The Halcyon Isle [1981] AC 221. The majority held that, in proceedings in rem against a ship, the order of priority between claims and the recognition of a right to enforce a maritime lien were matters to be determined according to the lex fori of the country whose court was distributing the proceeds of sale of the ship. Accordingly, in deciding whether to recognise a maritime lien which would have been enforceable against a ship under a foreign system of law, the Singapore Court, from which the appeal to the Privy Council came, had to consider whether the events which had given rise to the lien would have been sufficient to create a maritime lien had they occurred within the jurisdiction of the Court. The claim was for the price of repairs to a ship. It was held that it did not fall within any of the classes of claims recognised as giving rise to a maritime lien. The Court was not able to extend those classes. Accordingly, the ship-repairers’ claim was not enforceable as a maritime lien.
The majority comprised Lord Diplock, Lord Elwyn-Jones and Lord Lane. Lord Salmon and Lord Scarman dissented. The majority’s decision has been followed by the New Zealand Court of Appeal (Cooke P, McKay and McGechnan JJ) in The ship “Betty Ott” v General Bills Limited [1992] 1 NZLR 655; and by Holland J in ABC Ship Brokers v The ship “Offi Gloria” [1993] 3 NZLR 576. It was followed in South Africa by the Appellate Division of the Supreme Court in Transol Bunker BV v MV Andrico Unity (1989) (4) SA 325. It was followed in Canada by the Federal Court of Appeal in Marlex Petroleum Inc v The ship “Har Rai” (1984) 4 DLR (4th) 739; see particularly the judgment of Le Dain J at 743-746. It is to be observed that his Lordship discussed some United States authorities in the course of what he said.
The decision of the majority in The Halcyon Isle has been criticised by a number of commentators. I refer to a comment by Mr C.A. Ying in 8 Adelaide Law Review (1982-1983) at 95 and to what Professor Tetley said in a comment entitled “In Defence of the Ioannis Daskalelis” Lloyd’s Maritime and Commercial Law Quarterly 1989 at 11.
The judgment of the Court of Appeal in the Betty Ott was delivered by McKay J. An analysis of his judgment suggests that it is not entirely in accord with the approach of the majority of the Privy Council in the Halcyon Isle but it is sufficiently in accord with it to warrant the conclusion that the New Zealand Court of Appeal and the Privy Council both thought that the determination of priorities was for the lex fori.
Having considered the various authorities to which I have referred and also given weight to the academic comment in the journals which I have mentioned, I have reached the conclusion that I should prefer the approach taken by the majority of the Privy Council in The Halcyon Isle. I do not think the question which counsel’s submission poses is easy of resolution and it has certainly yielded a deal of both judicial and academic disagreement. On balance, however, I propose to take the course which I have indicated. On that basis the question becomes whether the claim which the plaintiff says is based on a true maritime lien has priority over general maritime claims.
The claims currently recognised as giving rise to maritime liens in this country are damage done by a ship, claims for salvage, claims for seamen’s wages, claims for master’s wages and disbursements, and for bottomry and respondentia; see Maritime Liens, Thomas (1993) at 12-13. I refer also to Admiralty Jurisdiction and Practice, Nigel Meeson (1993) at 71 where Meeson’s treatment of the subject is to the same effect as that of Thomas.
The claim based on clause 17 of the master lease agreement does not fall within any of these categories. It is not recognised as a maritime lien by the law in force in Australia. Accordingly, it will not be treated as entitled to the priority afforded maritime liens in this country.
Before leaving this aspect of the case I should say that it is by no means clear on the face of the evidence that Baltic was bound by clause 17 of the Master Lease Agreement. It may be that it was, but, if the matter had had to be considered, I think there would have been a real question whether such lien as there is would have bound Baltic. I say no more about the matter because the conclusion I have reached denies priority on the basis of a maritime lien in any event.
There is then the question whether there is a general maritime claim. This matter runs into more serious problems than did the claim of Opal Maritime in the Konenkov case. I find the evidence quite unsatisfactory. I am unable really to draw any conclusions about the precise nature of the claim which is made. In the Konenkov judgment I discussed the decision of the House of Lords in The Riva Rima [1988] 2 Lloyd’s Rep. 193. I do not wish to repeat the analysis of that case which I made there. In order to succeed, Transamerica needed to bring itself within Lord Brandon’s first category. Otherwise the contract will be regarded, not as a contract for goods or materials to be supplied to a ship but as a contract for the supply of goods or materials to a shipowner; see at 196.
In the result the claim brought by Transamerica is rejected.
McMaster Meighen and Terriberry Carroll & Yancey
I propose to deal with the claim by Terriberry Carroll & Yancey (“Terriberry”) first of all. The Terriberry claim is particularised as a claim for unpaid legal fees and expenses incurred by Terriberry when acting as solicitors on behalf of Baltic in relation to the defence of the arrest of three vessels owned by Baltic. The claim is in the sum of $US174,040.35.
The statement of claim pleads that Terriberry is a partnership established in accordance with the laws of the State of Louisiana in the United States. The proceedings are bought pursuant to s.24 of the Admiralty Act. Reference is made to the ownership by Baltic of the Vuchetich and also of three other vessels, the “Ulan Bator”, the “Sverdlovsk” and the “Nikolay Karylenko”. It is alleged that on dates from July 1995 to March 1996 Terriberry performed work and provided advice and services on the instructions of Baltic in relation to the defence of three arrest actions brought against the vessels in the United States District Court for the Middle District of Louisiana. Paragraph 6 of the statement of claim pleads that Terriberry has rendered various accounts to Baltic in respect of the work, services and advices provided by it to Baltic. The claim is particularised. Payment of it has been demanded but the demand has not been met.
The principal evidence in support of the claim is to be found in the affidavit of Mr J.L. Schupp Jr of New Orleans. He describes himself as a solicitor. He is a member of the Terriberry firm. He said that his firm had been taking instructions and acting on behalf of Baltic since February 1995. He said that the claim related to unpaid fees and disbursements which were rendered to or on behalf of Baltic in respect of defending Baltic’s interests when three separate admiralty actions were brought against ships owned by Baltic in the United States District Court. In July 1995 Terriberry received instructions from Baltic to act on its behalf in respect of the arrests of two of its ships by Triton Container International Limited. They were the Ulan Bator and the Budapesht. Invoices for the work which was done are annexed to Mr Schupp’s affidavit. I have taken these into account but I do not refer to the detail of them except to say that they establish that legal work was done by Terriberry in the circumstances deposed to by Mr Schupp.
In April 1995, Terriberry received instructions from Baltic to act on its behalf when the ship Sverdlovsk was arrested by the Latvian Shipping Company. Again there are annexed invoices rendered by Terriberry in respect of work done in defending these proceedings.
Mr Schupp said that in July 1995, Terriberry received instructions to act on behalf of Baltic in defending a claim brought by a crew member of the ship Sverdlovsk whilst working on board the vessel. The action was brought in the State Court and another ship owned by Baltic, the Nikolay Krylenko which was “attached” as a surrogate ship. A judgment was obtained in the State Court by the member of the crew. A claim was also made against the proceeds of sale of the Sverdlovsk to satisfy the judgment obtained. Invoices are annexed to the affidavit in relation to this work. Mr Schupp said that no payment had been received in reduction of the outstanding amount.
The only other affidavit filed in support of the claim is that of Ms T.A. Humphreys. She attached a copy of the Lloyds Shipping Register for the period 1992-93 to 1995-96 which sets out the vessels owned by Baltic Shipping Company during that time. There is no issue about this matter and I do not refer to the detail of the Register.
The contest between the parties is whether Terriberry has a general maritime claim. The paragraphs of subsec. 4(3) of the Act which are relied upon are paras (m) and (r). The former is a claim in respect of goods, materials or services (including stevedoring and lighterage services) supplied or to be supplied to a ship for its operation or maintenance and the latter a claim by a master, shipper, charterer or agent in respect of disbursements on account of a ship. Again the question is whether the services were supplied to the ship or to the shipowner.
Likewise para. (r) concerns a claim, relevantly, by an agent in respect of disbursements on account of a ship, not the shipowner. I have referred to the fact that the distinction is a fine one in some situations. There are two authorities directly in point. The first is a decision of the High Court of Hong Kong in its Admiralty Jurisdiction. It is the judgment of Mayo J in Clifford Chance v Owners of the Vessel “Atlantic Trader” [1991] 2 Lloyd’s Rep. 324. Mayo J said that the question was whether the plaintiffs’ fees in respect of professional services rendered came within the Admiralty Jurisdiction. The words of the statutory provision which he had to consider were similar to those of para. (r) of subsec. 4(3) of the Act here. Relevantly the words were any claim by an agent in respect of disbursements made on account of a ship.
Mayo J said (at 325) that he thought it clear from the wide range of persons who were included in the relevant paragraph that what was intended by the legislature when it referred to “agents” was any agent who was performing a service specifically for the benefit of a ship. He added, “I can see no reason in logic or on the interpretation of the section to exclude solicitors or barristers from this class of persons so long as it can be demonstrated that the services which have been undertaken are definitely referable to the ship in question.” Mayo J added that it was clear to him that the services which were performed were referable to the Atlantic Trader. He held that the claim could be pursued as an action in rem.
The other authority is the decision of the Court of Appeal in England in Bain Clarkson Limited v The Owners of the Ship “Sea Friends” [1991] 2 Lloyd’s Rep. 322. The plaintiffs were a firm of Lloyd’s brokers and had incurred liability to Lloyd’s underwriters in respect of hull insurance on the vessel “Sea Friends”. They claimed the amount paid from the owners. The question for decision was whether the plaintiff’s claim was a claim as agent in respect of disbursements made on account of a ship within the meaning of para. (b) of s.20(2) of the Supreme Court Act 1981 (UK). The paragraph uses similar words to para. (r) of subsec. 4(3) of the Act here, namely, “disbursements on account of a ship”.
Lloyd LJ referred to the judgment of Lord Wilberforce in Gatoil International Inc. v Arkwright-Boston Manufacturers Mutual Insurance Co. [1985] AC 255 where Lord Wilberforce had pointed out (at 264) that the point had arisen for discussion at the Diplomatic Conference in 1952 which led to the Arrest Convention. His Lordship said that it was decided at the Conference as a matter of policy that a claim for insurance premiums should not be included among the list of maritime claims. Lloyd LJ commented that, if the legislative intention behind the 1956 Act which was the predecessor of the 1981 Act, was to exclude claims for insurance premiums from the list of maritime claims, it would be an odd result if they were included by a “side-wind” under para. (p) by the interposition of an insurance broker between the insurers and the shipowners.
Later Lloyd LJ said (at 324):
“Put in simple and non-technical language, bunkers are, to take just one example, a disbursement within (p) because bunkers are needed to keep the ship going. But insurance is not needed to keep the ship going. Insurance is needed to reimburse the shipowners in case a ship is lost or damaged. The ship could very well sail uninsured, although of course it never in fact does. The disbursement in this case is, in my view, no more a disbursement on account of the ship than it would have been if the premium were in respect of insurance on freight.”
Lloyd LJ concluded his judgment by saying that the words of the relevant paragraph were reasonably clear. He thought that they were not wide enough to cover the case before him.
Sir Christopher Slade agreed in his judgment. He also said (at 324):
“I merely add, for the sake of the record, that Mr. Meeson referred us to the decision of Mr. Justice Mayo in the Supreme Court of Hong Kong on Jan. 29, 1991 in the case of Clifford Chance v The Owners of the Ship or Vessel Atlantic Trader, [1991] 2 Lloyd’s Rep. 324. In that case, which concerned a statutory provision in the same terms, Mr Justice Mayo held that the plaintiffs’ fees in respect of professional services given as solicitors came within the Admiralty jurisdiction of the Court. He said that he could see no reason in logic or in the interpretation of the section to exclude solicitors or barristers from the class of agents referred to in the paragraph, so long as it could be demonstrated that the services which had been undertaken were definitely referable to the ship in question.
But for the reasons given by Lord Justice Lloyd I do not, with respect to Mr Justice Mayo, feel able to accept his broad construction of the subsection and agree that this appeal should be dismissed.”
Questions of the application of paragraphs such as paras (m) and (r) of subsec. 4(3) to various factual situations often involve fine distinctions and give rise to differences of judicial opinion. I do not find this exercise without difficulty any more than I have some of the other similar exercises I have had to engage in in resolving the various questions in this case and also in the Konenkov. Nevertheless, I have reached the conclusion that this case is not within either paragraph. I do not think that para. (r) is wide enough to cover the claim. I also think that there is a question about the significance of the word “disbursements”. Substantially this is a claim for fees. The word could be construed widely enough to include “fees” but I think the better view is that “disbursements” covers out of pocket expenses or moneys paid on behalf of the ship by the claimant. That is not this case. I also think there is a question whether a legal representative such as an attorney or a solicitor is an agent within the meaning of that word in para. (r). But I think the essential difficulty which confronts the claimant in this case is the fact that the service was in reality for the shipowner and not the ship. Similar considerations apply in relation to para. (m). Were the services supplied to a ship for its operation and maintenance? They could not have been. Counsel for Terriberry submitted that they concerned the possible release of the vessels from arrest and in that sense did relate to their operation. But I think that that is drawing too long a bow.
There is another problem which affects the application of both paragraphs to the facts of the case. The legal services which were provided were given in a situation in which, so far as I can tell from the evidence, each of the ships was under arrest. The actions against the ships were actions in rem. The actions could not have been defended or they would have become actions in personam against Baltic rather than actions in rem against the ships. That consideration tends to reinforce my view that the services were for the shipowner and not the ship.
In all the circumstances I have reached the conclusion that the claim must fail as a claim in rem because it is not a general maritime claim.
The evidence in the matter involving McMaster Meighen was given principally by Mr S.J. Harrington who is a partner in the firm. He said that the claim related to unpaid fees which were rendered to Baltic in respect of defending Baltic’s interests when three admiralty actions were brought in the Federal Court of Canada by creditors of Baltic. In August 1994 the firm was instructed by Baltic to defend its interests when the ship “Nikolay Golovanov” was arrested by Textainer Equipment Management BV. A motion was brought by Baltic for the sale of that ship and of another vessel, the “Khudozhnik Romas”. The motion was granted.
In December 1994 the firm received instructions to defend Baltic’s interests in separate proceedings brought by Triton Container International Limited in which a writ for the arrest of the “Aleksandr Starostenko” was issued by the Federal Court of Canada. Triton ultimately released the vessel from arrest because it had obtained a judgment and judicial sale of the Budapesht in New Orleans in the United States.
In August 1995 the firm received instructions to defend Baltic’s interests in further separate proceedings which were brought by Transamerica Leasing Inc. for the arrest of the Starostenko.
Annexed to Mr Harrington’s affidavit are a number of interim accounts. I have looked at these but I do not refer to the detail of them. The claim is for the amount of $CDN78,467.48. This is a balance of account after the firm received a distribution of the fund resulting from the sale of the Starostenko.
Mr Harrington swore a supplementary affidavit on 13 June 1996. It dealt with action taken by the firm to recover sums owing to it by Baltic. He said that the only action which had resulted in the collection of any money was disclosed in his previous affidavit. In addition, the firm had taken action in Poland. The ship “Magnitogorsk” was “seized” in Gdansk in November 1995. The firm’s claim was to considered by the court in Poland later in 1996.
Mr Harrington dealt with some other matters but I do not find it necessary to refer to these. There is again an affidavit of Ms T.A. Humphreys which establishes the ownership of the various vessels by Baltic. I do not refer to the detail of this.
The considerations in relation to this claim are similar to those which applied in relation to the claim brought by Terriberry Carroll & Yancey. For reasons given when dealing with that claim, I am of opinion that it cannot be brought as an action in rem because McMaster Meighen do not have a general maritime claim. The claim must be dismissed.
Conclusion
My conclusion is that all claimants, other than Transamerica Leasing Inc., McMaster Meighen and Terriberry Carroll & Yancey, have general maritime claims. To the extent that the successful claimants have not yet recovered judgment in rem, each is entitled to recover such a judgment. As in the case of the Konenkov the matter will stand over for a short time to enable the parties and their legal advisers to consider what I have said. When the matter is again in the list short minutes are to be brought in to give effect to my conclusions. The amounts of the claims of those who have succeeded are to be converted into United States dollars.
I certify that this and the preceding forty-nine (49) pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.
Associate
Dated
APPEARANCES
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Counsel for the Plaintiff: |
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Mr S. Wheelhouse |
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Solicitors for the Plaintiffs: |
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Holmes & Bevan |
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Counsel for J. Fenwick & Co. Pty Limited: Solicitors for J. Fenwick & Co. Pty Limited:
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Mr P. Braham
A.J. Law & Co.
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Solicitors for Dyno Wesfarmers Limited:
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Phillips Fox |
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Solicitors for Dupont (Australia) Limited and Adrilon SPA:
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Conway O’Reilly |
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Counsel for Bergen Bunkers A/S: - 18 June 1996 - 19 June 1996 Solicitors for Bergen Bunkers A/S:
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Mr K.P. Smark Mr M.P. Sindone Withnell & Co. |
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Counsel for Stork Services BV: Solicitors for Stork Services BV: |
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Mr K.P. Smark Withnell & Co.
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Counsel for Sydney Ports Corporation: Solicitors for Sydney Ports Corporation:
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Mr R.G. Forster SC
Abbott Tout |
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Counsel for Transworld Marine Agency Company NV: Solicitors for Transworld Marine Agency Company NV:
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Mr H. Jolsun QC and Mr S. Glacken Opat Goldsmith & Goldsmith |
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Counsel for McMaster Meighen: Solicitors for McMaster Meighen:
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Mr M.A. Ashhurst Holmes & Bevan |
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Counsel for Terriberry Carroll & Yancey: Solicitors for Terriberry Carroll & Yancey:
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Mr M.A. Ashhurst
Holmes & Bevan |
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Solicitors for Waratah Towage Pty Limited:
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Ebsworth & Ebsworth |
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Solicitors for Adelaide Steamship Industries Pty Limited & Anor T/as Fremantle Tug Operators
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Ebsworth & Ebsworth |
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Solicitors Stannard Bros Launch Services Pty Limited:
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Ebsworth & Ebsworth |
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Solicitors for Tramp Oil Marine Limited:
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Ebsworth & Ebsworth |
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Counsel for Jotun AS: Solicitors for Jotun AS:
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Mr A.W. Street Holman Webb |
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Counsel for Jotun Sverige AB: Solicitors for Jotun Sverige AB:
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Mr A.W. Street Holman Webb |
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Counsel for Transamerica Leasing Inc.: Solicitors for Transamerica Leasing Inc.: |
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Mr J.B. Whittle
Levingstons Solicitors |
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Counsel for the receiver of Baltic Shipping Co.:
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Mr M.A. Wigney
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Place of Hearing: |
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Sydney |
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Dates of Hearing: |
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18 and 19 June 1996 |
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Date of Judgment: |
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15 May 1997 |
