Bajpayee v The Ship "Estancia"

[2003] FCA 1640

FEDERAL COURT OF AUSTRALIA

Bajpayee & Ors v The Ship "Estancia" [2003] FCA 1640

ADMIRALTY AND MARITIME – application of proceeds of sale of arrested vessel – lien for unpaid wages – whether a component of wages may be given priority over other part thereof – whether just and equitable to provide priority for payment of ordinary wages over payment of provident fund contributions

Admiralty Act 1988 (Cth), s 15(1)

The “Halcyon Skies” [1977] 1 QB 14 cited
The “Ruta” [2000] Lloyds Law Reports 359 cited

RAJESH KUMAR BAJPAYEE, AKHTAR HOSSAIN, CHOWDHURY MOHAMMED MOHSIN, ROY KURISINGAL MATHAI, NARASIMHA RAO VUYYURU, MAR JOE CAJAYON CANONASO, BENJAMIN TOGUENO VALENZUELA, RAMON ROSALES DELA CRUZ, RANULFO AUSEJO UBAG, ROY VILLAGRA CIA ESTORES, MELBOURNE BASA CANLAS, GERARDO ABIERA DIANA, RESTE CALDERON MECARTE v THE SHIP "ESTANCIA"

W166 OF 2003

LEE J
21 NOVEMBER 2003

PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 166 OF 2003

IN ADMIRALTY

BETWEEN:

RAJESH KUMAR BAJPAYEE
FIRST PLAINTIFF

AKHTAR HOSSAIN
SECOND PLAINTIFF

CHOWDHURY MOHAMMED MOHSIN
THIRD PLAINTIFF

ROY KURISINGAL MATHAI
FOURTH PLAINTIFF

NARASIMHA RAO VUYYURU
FIFTH PLAINTIFF

MAR JOE CAJAYON CANONASO
SIXTH PLAINTIFF

BENJAMIN TOGUENO VALENZUELA
SEVENTH PLAINTIFF

RAMON ROSALES DELA CRUZ
EIGHTH PLAINTIFF

RANULFO AUSEJO UBAG
NINTH PLAINTIFF

ROY VILLAGRA CIA ESTORES
TENTH PLAINTIFF

MELBOURNE BASA CANLAS
ELEVENTH PLAINTIFF

GERARDO ABIERA DIANA
TWELFTH PLAINTIFF

RESTE CALDERON MECARTE
THIRTEENTH PLAINTIFF

AND:

THE SHIP "ESTANCIA"
DEFENDANT

JUDGE:

LEE J

DATE OF ORDER:

21 NOVEMBER 2003

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The plaintiffs have leave to amend the writ by adding the five persons identified in paragraph 3 of the affidavit of Akhtar Hossain sworn 6 November 2003 as additional plaintiffs.

2.The plaintiffs have leave to amend the Statement of Claim to include the claims of those additional plaintiffs to unpaid wages in a sum of US$1,402.56.

3.The judgment entered in favour of the plaintiffs be amended by adding the additional plaintiffs and by including in the judgment sum the further amount of US$1,402.56 referred to in the preceding paragraph.

4.The proceeds of sale of the defendant ship (“the vessel”) received by the Admiralty Marshal be applied in the discharge of claims against the vessel in the following order of priority:

First:payment of the fees and expenses of the Marshal set out in the affidavit of the Marshal sworn 21 November 2003 and any further bank charges or other sundry expenses incurred by the Marshal;

Second:payment to the plaintiffs and the additional plaintiffs of the judgment sum payable to the plaintiffs and the additional plaintiffs less so much thereof as relates to unpaid provident fund contributions the respective amounts payable to the plaintiffs and the additional plaintiffs to rank pari passu;

Third:payment of the remainder of the judgment sum relating to unpaid provident fund contributions and payment of unpaid provident fund contributions payable in respect of crew members other than the plaintiffs who served on the vessel as set out in paragraph 18(c) of the affidavit of David Charles Leask sworn 20 August 2003, all such amounts payable to the provident fund to rank pari passu.

5.There be liberty to apply.

Note:   Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 166 OF 2003

IN ADMIRALTY

BETWEEN:

RAJESH KUMAR BAJPAYEE
FIRST PLAINTIFF

AKHTAR HOSSAIN
SECOND PLAINTIFF

CHOWDHURY MOHAMMED MOHSIN
THIRD PLAINTIFF

ROY KURISINGAL MATHAI
FOURTH PLAINTIFF

NARASIMHA RAO VUYYURU
FIFTH PLAINTIFF

MAR JOE CAJAYON CANONASO
SIXTH PLAINTIFF

BENJAMIN TOGUENO VALENZUELA
SEVENTH PLAINTIFF

RAMON ROSALES DELA CRUZ
EIGHTH PLAINTIFF

RANULFO AUSEJO UBAG
NINTH PLAINTIFF

ROY VILLAGRA CIA ESTORES
TENTH PLAINTIFF

MELBOURNE BASA CANLAS
ELEVENTH PLAINTIFF

GERARDO ABIERA DIANA
TWELFTH PLAINTIFF

RESTE CALDERON MECARTE
THIRTEENTH PLAINTIFF

AND:

THE SHIP "ESTANCIA"
DEFENDANT

JUDGE:	LEE J
DATE:	21 NOVEMBER 2003
PLACE:	PERTH

REASONS FOR JUDGMENT

LEE J:

1. This is an application to vary orders made by the Court on 29 August 2003. The matter concerns a proceeding in Admiralty under s 15(1) of the Admiralty Act 1988 (Cth) (“the Act”) commenced by a writ in rem issued by members of the crew of the ship the "Estancia" (“the vessel”) against the vessel to enforce a maritime lien for unpaid wages.  The sum of the wages payable to the crew each month was in the order of US$22,000.  Since March 2003 no wages had been paid to the crew directly and nor were allotments therefrom forwarded to family members in the Philippines as required under the contract of service entered into between the crew and the owner of the vessel.  As at 30 June 2003 the amount of wages outstanding was said to be approximately US$110,000. 

2. On 30 July 2003 a warrant was issued by the Court directing the Admiralty Marshal to arrest the vessel.  The vessel was arrested on 31 July 2003.  For several months prior to arrest, the vessel, a live-stock carrier registered in Malta, had been lying within the Port of Fremantle, either at berth or at anchor. 

3. The plaintiffs filed a Statement of Claim on 15 August 2003.  The owner, as the “Relevant Person”, filed an appearance on 21 August.  No defence was filed thereafter.

4. On 29 August 2003 the Court ordered that the Marshal sell the vessel.  It was also ordered that provisions supplied to the vessel at the direction of, or under the authority of, the Marshal between arrest and sale of the vessel be costs or expenses incurred by the Marshal for the purposes of the arrest.  It was further ordered that the Marshal be authorised to retain a skeleton crew to maintain the vessel (subject, of course, to the requirements of the port authority) and to arrange for the repatriation of the remainder of the crew, the expense thereof to be a cost or expense of the Marshal in the arrest.  In due course the cost of repatriation of the crew was met by a seamen’s union in the Philippines.  It was also ordered that determination of the order of priority of claims against the proceeds of sale of the vessel not proceed until after the expiration of 30 days from the date of payment into court of the proceeds of sale and that 7 days after that payment the Marshal publish in a national newspaper notice of the application to determine priorities. 

5. The gross tonnage of the vessel, built in 1975, was 2,199.  The evidence before the Court showed that it was unlikely that sale of the vessel would realise US$200,000.  As at the date of the order for sale the amount sought to be recovered by the plaintiffs was approximately US$230,000.  In addition, caveats had been lodged by third parties giving notice of further claims against the vessel and substantial cost and expense had been incurred by the Marshal.  It was clear that there was a real risk that the amount of the plaintiffs’ claims could not be satisfied from the proceeds of sale of the vessel after discharge of the costs and expenses of the arrest and that delay in effecting such a sale was likely to be to the prejudice of those interests. 

6. On 27 October 2003, by consent, it was ordered that judgment be entered for the plaintiffs against the defendant for damages to be assessed. 

7. On 28 October 2003 the vessel was sold by the Marshal  by private treaty for a sum of US$176,000.  The Marshal sold fuel and lubricants on the vessel for AUD$17,235.10.  Prior to 28 October 2003 the Marshal put the vessel up for sale by tender on two occasions.  On the first occasion only one offer was received.  It was rejected by the Marshal, being substantially less than the valuation of the vessel provided to the Marshal by a broker.  On the second occasion  two parties offered to purchase the vessel for a price of US$150,000.  The Marshal invited both tenderers to submit revised offers.  As a result of that step an offer of US$176,000 was presented to and accepted by the Marshal. 

8. On 7 November 2003 the Court ordered that part of the order made on 29 August 2003 be varied by reducing from 30 days to 14 days the period to elapse before determination of the priority of claims could proceed and by removing the requirement that the Marshal advertise notice of the application to determine priorities.  The Court was satisfied that no useful purpose would be served by incurring the cost of advertisement in circumstances where it was apparent that the amount secured by plaintiffs’ lien would not be discharged by the funds realised from the sale of the vessel. 

9. In the application now before the Court, the plaintiffs seek leave to add further plaintiffs and an order that the claims of the plaintiffs for the recovery of their ordinary monthly earnings (“wages”) be accorded priority over the provident fund contributions the defendant failed to pay on behalf of the plaintiffs as part of their remuneration. 

10. As anticipated the plaintiffs’ claims against the defendant, together with the Marshal’s costs and expenses, have exceeded the gross proceeds of sale paid into Court, approximately US$186,000.  The plaintiffs, therefore, wish to maximize the amount available for the payment of “wages” by distinguishing provident fund contributions as a separate component of their remuneration entitlement and by obtaining an order that payment of “wages” be given priority over the payment of provident fund contributions. 

11. The plaintiffs concede that provident fund contributions would be regarded as coming within the term wages as used in s 15 of the Act for the purpose of a maritime lien and further concede that, ordinarily, such contributions would rank pari passu with “wages”.  (See:  The “Halcyon Skies” [1977] 1 QB 14 per Brandon J at 25-26). The plaintiffs submit, however, that in determining the priority of claims against the proceeds of sale of a vessel the Court has a discretion to make an order that, in all the circumstances, is just and equitable. In support of that submission the plaintiffs rely upon the following passage from The “Ruta” [2000] Lloyds Law Reports 359 per David Steel J at 364:

    ‘I spoke at the beginning of this section of my judgment of the suggestion in some of the text books that there is a rule whereby a damage lien has priority over a wages’ lien.  It is clear even from the restricted citation of authority set out above that questions of priority are not capable of being compartmentalized in the form of strict rules of ranking.  The general approach is accurately summarized in Thomas, Maritime Liens, B.S.L. vol. 14 at par. 418:

    “[T]he Admiralty and Appellate Courts have adopted a broad discretionary approach with rival claims ranked by reference to considerations of equity, public policy and commercial expediency, with the ultimate aim of doing that which is just in the circumstance of each case.”...’

12. If it is accepted that in a given case, for reasons of justice and equity, the priority of a class of lien may be postponed in favour of a lower-ranking class of lien it should be taken to follow that, if it is just and equitable to do so, it is permissible to order priority amongst discrete components of a particular class of lien. 

13. The Court was advised by counsel for the plaintiffs that the plaintiffs retained by the Marshal to maintain the vessel during the period of arrest waived their entitlement to priority in respect of provident fund contributions payable by the Marshal on their behalf in respect of that period.  In other words they would not seek to have those contributions included in the priority accorded to the Marshal’s costs and expenses and would not require the Marshal to pay such contributions to the provident fund on their behalf as part of the Marshal’s obligation to pay their remuneration. 

14. The amount of unpaid provident fund contributions in respect of crew members who served on the vessel between 1999 and 2003 is US$23,509.26 of which US$3,016.80 is payable by reason of service provided by the plaintiffs. 

15. By reason of the shortfall between the funds available from the proceeds of sale and the sums payable to the plaintiffs, the plaintiffs will receive only part of their wage entitlements even if provident fund contributions are excluded, and substantially less if those unpaid contributions are not subordinated. 

16. I am satisfied that the plaintiffs should be granted the orders they seek in respect of the “wages” they have been denied, a circumstance that has visited hardship on them and on the family members dependent upon allotments therefrom that have not been remitted.  Of course, those crew members other than the plaintiffs whose provident fund contributions are outstanding, received their “wages” in full.  The unpaid provident fund contributions in respect of all crew members, including the plaintiffs, should rank pari passu but be subordinated to the payment of the “wages” due to the plaintiffs. 

17. I am satisfied that in all the circumstances it is just and equitable that it be ordered that priority be accorded to payment of the “wages” of the plaintiffs before payment is made

    
    
    

    of the provident fund contributions due on behalf of the plaintiffs and others.  Orders will be made accordingly. 

I certify that the preceding seventeen  (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Associate:

Dated:            21 November 2003

Counsel for the Plaintiffs:	D.C. Leask
Solicitors for the Plaintiffs:	Leask & Co
Date of Hearing:	21 November 2003
Date of Judgment:	21 November 2003