United States Trust Company of New York v Master and Crew of the Ship “Ionian Mariner”
[1997] FCA 909
•20 AUGUST 1997
FEDERAL COURT OF AUSTRALIA
SHIPPING & NAVIGATION / ADMIRALTY JURISDICTION - claim by master and crew under the Admiralty Act 1988 (the Act) asserting maritime lien for unpaid wages - whether lien for wages arose by reason of agreement between shipowner and maritime unions to which the master and crew were not parties - whether promise made by the shipowner to the unions was the subject of a trust in favour of the crew - whether crew had a right to proceed in rem under s 17 of the Act notwithstanding that the shipowner was not liable at the suit of the master and crew in an action in personam - effect of the Admiralty Act 1988.
SHIPPING & NAVIGATION / ADMIRALTY JURISDICTION - cross-appeals by master and three of the officers from declaration by trial judge that the lien for unpaid wages and other remuneration cease at particular dates - consideration of the entitlement of the crew to wages and other remuneration.
CONTRACTS - contracts for the benefit of third parties - whether promises made to the unions were the subject of a trust in favour of the crew.
Admiralty Act 1988 ss 3(1), 4(3)(t), 6, 14, 15, 17
Shell Oil Co v The Ship Lastrigoni (1974) 131 CLR 1, applied
Dalgety & Co Ltd v Aitchison; The Rose Pearl (1957) 2 FLR 219, considered
TridentGeneral Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, considered
The Elizabeth (1819) 2 Dods. 403, applied
Explanatory Memorandum to the Admiralty Bill 1988
Law Reform Commission - Australia, Report No 33, Civil Admiralty Jurisdiction, (1986)
UNITED STATES TRUST COMPANY OF NEW YORK v MASTER AND CREW OF THE SHIP “IONIAN MARINER”
AND BETWEEN: ANDREY KHARITONOV, SERGEY PANFILOV, ALEKSANDR SYCHYOV, NIKOLAI RODICHEV and UNITED STATES TRUST COMPANY OF NEW YORK
VG 389 of 1996
Black CJ, Lockhart and Burchett JJ
Sydney
20 August 1997
IN THE FEDERAL COURT OF AUSTRALIA
) ) VICTORIA DISTRICT REGISTRY ) VG 389 of 1996 ) IN ADMIRALTY )
On appeal from a single judge of the Federal Court
BETWEEN: UNITED STATES TRUST COMPANY OF NEW YORK
AppellantAND:
AND BETWEEN:
AND:
MASTER AND CREW OF THE SHIP “IONIAN MARINER”
RespondentsANDREY KHARITONOV and SERGEY PANFILOV
First Cross-appellantsALEKSANDR SYCHYOV and NIKOLAI RODICHEV
Second Cross-appellantsUNITED STATES TRUST COMPANY OF NEW YORK
Cross-respondent
JUDGES: BLACK CJ, LOCKHART & BURCHETT JJ PLACE: MELBOURNE DATED: 20 AUGUST 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
The appeal by United States Trust Company of New York be allowed.
The declaration of the Honourable Justice Ryan made on 30 July 1996 be set aside.
The matter be remitted to the Honourable Justice Ryan, or to another judge of the Court if he is not available, to be further heard and determined in accordance with the reasons for judgment of the Full Court.
The further hearing and determination of the matter be expedited.
The costs of the appeal and the cross-appeals be reserved.
Liberty be reserved to any party to apply for costs pursuant to the leave hereby reserved upon notice to the other parties.
Unless otherwise ordered by a judge, the notice required by Order 6 be given in writing not less than 21 clear days before the date proposed by the applicant for the hearing of the application for costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG 389 of 1996 ) IN ADMIRALTY )
On appeal from a single judge of the Federal Court
BETWEEN: UNITED STATES TRUST COMPANY OF NEW YORK
AppellantAND:
AND BETWEEN:
AND:
MASTER AND CREW OF THE SHIP “IONIAN MARINER”
RespondentsANDREY KHARITONOV and SERGEY PANFILOV
First Cross-appellantsALEKSANDR SYCHYOV and NIKOLAI RODICHEV
Second Cross-appellantsUNITED STATES TRUST COMPANY OF NEW YORK
Cross-respondentJUDGES: BLACK CJ, LOCKHART & BURCHETT JJ PLACE : MELBOURNE DATED : 20 AUGUST 1997
REASONS FOR JUDGMENT
BLACK CJ:
Introduction:
The appellant, United States Trust Company of New York (“US Trust”), is the mortgagee of the vessel Ionian Mariner, a vegetable oil tanker of some 6,898 gross tonnes. US Trust brings this appeal against a declaration made by a single judge of this Court, Ryan J, that:
“... the Master and each member of the crew [of the Ionian Mariner] has a lien for unpaid wages and other remuneration calculated in accordance with the Greek Collective Agreement over the proceeds of the sale of the ship up to 8 December, 1995 and for the costs of repatriation together with accommodation and subsistence expenses incurred from 8 December, 1995 to 22 December, 1995 but not thereafter.”
The respondents to the appeal comprise three groups, each separately represented. The first group of respondents comprises 14 former members of the crew of the Ionian Mariner, namely: Igor Avramchuk, Leonid Bolotov, Aleksey Danilov, Victoria Gulyaev, Vladimir Gulyaev, Vladimir Isaev, Aleksander Kravtsov, Marat Kurtayev, Konstantin Palekha, Pavel Petrov, Yuriy Petrov, Oleg Prodan, Leonid Rogasin and Andrey Syslov. The second group comprises the former Master of the ship, Captain Andrey Kharitonov, and the former First Engineer, Sergey Panfilov. The third group of respondents comprises the former Chief Engineer, Nikolai Rodichev, and former Second Officer, Aleksandr Sychyov. Only the first group of respondents made submissions in relation to the appeal and reference in these reasons to “the respondents” is a reference to this group.
The Master and the three officers who constitute the second and third groups of respondents are also cross-appellants. They claim, in substance, by way of cross-appeal that the judge should have held that they had a lien for unpaid wages and other remuneration beyond 8 December 1995 up to the date of their departure for Vladivostok and for the costs of their repatriation together with accommodation and subsistence expenses incurred between 8 December 1995 and the date of their departure.
It is necessary to outline the course of the proceedings leading up to the present appeal and cross-appeals. On 19 May 1995 Marinis Ship Supplies (Pty) Ltd issued a writ out of this Court commencing an action in rem against the Ionian Mariner claiming liquidated damages of 46,844.73 South African Rand (about $A18,000) “in respect of the supply to the ship of goods, materials or services for its operation or maintenance”. A few days later, on the application of Marinis Ship Supplies (Pty) Ltd, the ship was arrested by the Admiralty Marshall in the Port of Melbourne. On 4 September 1995 Ryan J made orders for the sale and valuation of the ship and on 24 November 1995 the judge ordered that she be sold to the highest tenderer, Balongan Maritime Ltd SA, for approximately $US2.8M.
On 29 November 1995, Ryan J ordered the Marshall to publish an advertisement of intention to determine the priorities of claims against the proceeds of the sale of the ship. The notice stated, inter alia, that anyone who had a claim against the proceeds of the sale should commence proceedings to enforce the claim within 21 days. The ship was sold on 8 December 1995 and the sale was completed a few days later.
On 19 December 1995, the Master and crew of the Ionian Mariner filed an application under Rules 48 and 50 of the rules made under the Admiralty Act 1988 (Cth) (the Act), seeking “full wages and other entitlements, pursuant to the Greek Collective Agreement”, reimbursement of the Master’s disbursements for provisions for the ship, and repatriation expenses. On 21 December 1995, Ryan J ordered:
“...
2.That the costs of repatriating the Master and crew be defrayed out of the said account [i.e. the account into which the proceeds of the sale had been paid] as part of the Marshall’s expenses of arrest.
3.That the sum of $US300,000 be paid out of the said account and be distributed to the Master and crew of the vessel on account of their claims against the vessel for remuneration in such proportions as shall be agreed between the Master and the crew or in default of agreement as the Marshall shall determine.
...
6.That the costs of all parties of this day and any accommodation expenses which may be incurred by any member of the crew who elects to remain in Australia after 22 December 1995 be reserved.”
On the same day the interim distribution of $US300,000 was made to the Master and crew. The distribution was made on a strictly pro rata basis, rather than in accordance with the respective shares of the seafarers, and this caused controversy between the Master, members of the crew and their solicitor. It appears that these were the first payments made to the Master and crew for their remuneration since September 1994, i.e. for some 15 months.
On 15 January 1996 the present appellants, US Trust, commenced a separate action in this Court against the ship. US Trust claimed that the owner had mortgaged the ship to it by way of first preferred naval mortgage as security for various obligations. US Trust claimed that there was due and owing to it from the vessel, under the mortgage and under various security documents, the sum of $US80M plus interest. It claimed against the Ionian Mariner all monies recovered from the sale.
On 2 February 1996, Ryan J made an order that the action by US Trust (and another action, not presently relevant) be heard together with the original action by Marinis Ship Supplies (Pty) Ltd. Ryan J also ordered that:
“...there be a preliminary trial of the question whether the claim of the master and crew of the vessel for unpaid remuneration should be determined in accordance with the Greek Collective Agreement which is Exhibit RHC-4 to the affidavit of Roger Harry Chapman filed on 19 December 1995 or in accordance with the Crew Management Contract which is exhibit EVB-3 to the affidavit of Ernest John Van Buren filed herein on 21 December 1995.”
By a joint application dated 8 February 1996, the former Master (Captain Kharitonov) and First Engineer (Mr Panfilov), who by then were represented separately from the other members of the crew, sought the following orders:
“1. A declaration that they have a maritime lien over the funds arising from the sale of the vessel Ionian Mariner in respect of all amounts owing to them, in priority to any claim on the fund by the United States Trust Company of New York.
2. Payment to them out of the said fund of full wages up to the date of their repatriation to Russia, sustenance and accommodation expenses whilst in Melbourne and repatriation expenses calculated in accordance with the Adriatic Collective Agreement.
3. An order that their legal costs be paid out of the fund in priority to any payment to the United States Trust Company of New York.”
Thus, the former Master and First Engineer were now seeking payment in accordance with the Adriatic Collective Agreement whilst the other members of the crew claimed an entitlement under the Greek Collective Agreement.
Although no formal application in accordance with the rules was made, the former Chief Engineer (Mr Rodichev) and Second Officer (Mr Sychyov) filed in the Court on 8 February 1996 a joint affidavit in which they said:
“1. We agree to receive our earned money according (sic) our contracts of employment to the following amounts:
Nikulay Rodichev, Chief Engineer US$35,082.18
Aleksandr Sychyov, Second Officer US$7,502.05
2. We agree to be repatriated back to Vladivoctk (sic) Russia, via South Kurea (sic) as soon as possible.
3. We have no any (sic) claims to Federal Court.”
In another joint affidavit filed with the Court on 16 February 1996, Mr Rodichev and Mr Sychyov said: “... we plead the Federal Court to ... grant our requests without fail and settle all the questions raised in the present court hearing.”Both officers were then without legal representation.
Some time later US Trust filed a statement of contentions in which it claimed that the amount of the unpaid wages of the Master and crew should be determined in accordance with the Adriatic Collective Agreement (also called “the Crew Management Contract”) and not the Greek Collective Agreement as contended by the 14 members of the crew.
On 1 March 1996 Ryan J made orders in the action brought by US Trust against the Ionian Mariner, including an order as follows:
“That there be judgment for the plaintiff [ie US Trust] in default of defence for all moneys recovered from the sale of the vessel after deducting therefrom the amount of each claim which may hereafter be adjudged to have priority over the plaintiff’s claim as registered mortgagee”.
The trial of the preliminary question took place shortly afterwards, on 1 April 1996. On 17 June 1996 Ryan J delivered his reasons for judgment and invited the parties to submit as soon as practicable minutes of orders appropriate to give effect to his reasons. The declaration appealed from, and other related orders, were made on 30 July 1996.
The issues:
It will be necessary to refer in some detail to the terms of the different agreements for which the various parties contended but it should be explained at the outset that the Greek Collective Agreement, if applicable, provided for substantially higher levels of remuneration for the crew than the Crew Management Contract for which US Trust contended. At first instance the Master and certain of the officers also argued in favour of the Crew Management Contract which made a better provision for their remuneration than the Greek Collective Agreement. As is evident from the declaration from which the appeal is brought, the primary judge found in favour of the parties who contended that there was a lien for unpaid wages and other remuneration to be calculated in accordance with the Greek Collective Agreement. The main issue is whether the trial judge was in error in so concluding.
The cross-appeals raise issues concerning the existence of a maritime lien for wages and expenses claimed by the former Master and three other officers for periods beyond the dates specified by Ryan J’s declaration. By his declaration Ryan J confined the lien of the Master and crew for wages to 8 December 1995 (the date of the sale of the vessel) and for accommodation and subsistence expenses to 22 December 1995 (the day following the interim distribution).
The factual background:
The primary judge found that at all relevant times the owner of the Ionian Mariner was European Liberty SA, a Panamanian registered company which was a subsidiary of Adriatic Holding Corporation Ltd (Adriatic), a company registered in Jersey in the Channel Islands. The judge found that Adriatic, through various subsidiaries, controlled a fleet of vessels each of which was owned by a separate subsidiary company. Another subsidiary of Adriatic, Adriatic Tankers Shipping Co SA (Adriatic Tankers), a company also registered in Panama but having its principal place of business in Greece, was the operator or manager of the fleet.
Ryan J considered the circumstances under which the relevant agreements were entered into and the following account of his Honour’s findings is taken substantially from his Honour’s reasons for judgment.
On 14 December 1993 Adriatic Tankers applied to the International Transport Workers’ Federation (the ITF) and to the Panhellenic Seamen’s Federation (the PNO) for the making of a collective agreement to cover the wages and working conditions of seamen employed on various vessels in the fleet, including the Ionian Mariner. The application was in these terms:
“As Managers and local representatives of the Owning Companies we hereby apply for the signing of ITF / PNO Collective Agreements as per attached properly filled forms for the following vessels.
Furthermore please find likely attached, list of informations of each vessel respectively covering the “14” informal points.
1.- M/T ARGOSTOLI BAY - MALTA FLAG
2.- M/T/ ASSOS BAY - PANAMA FLAG
3.- M/T ATHERAS BAY “ “ .”
A list of a further 36 vessels followed including, at number 14, the Ionian Mariner. The letter concluded:
“Yours faithfully,
for ADRIATIC TANKERS SHIPPING CO SAPanagiotis Giakoumatos”.
Over the typewritten name “Panagiotis Giakoumatos” was what appeared to be an oval-shaped rubber stamp impression bearing the legend “ADRIATIC TANKERS SHIPPING CO. S.A. *PANAMA*” surrounding a symbol in the form of a flag. The letter of application was countersigned as “Received 14-12-93” by John Halas as “General Secretary of PNO”.
His Honour found that it appeared that, as a result of that application, a collective agreement also dated 14 December 1993 (the Collective Agreement) was concluded in respect of each vessel on the list. The Collective Agreement in relation to the Ionian Mariner was in the following terms:
“COLLECTIVE AGREEMENT FOR WORK AT SEA
In Piraeus on 14th December 1993 the following signatories, on the one hand Mr PANAGIOTIS GIAKOUMATOS representative of the ‘IONIAN MARINER’
Owned by/ Manned by: EUROPEAN LIBERTY SA/ PRIMORSK SHIPPING CO of gross tons 6898.21
IDL D.W. tons 12002 with its headquarters in PANAMA
Registry of under the PANAMANIAN flag and duly
authorised by them, and on the other the General Secretary of the Panhellenic Seamen’s Federation as legitimate representative of its affiliated unions
1. Panhellenic Master’s (sic) and Mates Union
2. Panhellenic Union of Marine Engineers
3. Panhellenic Union of Radio and Radio Electronic officers
4. Panhellenic Union of Engineers of Internal Combustion Engines
5. Panhellenic Union of Electricians
6. Panhellenic Deck Hand’s (sic) Union
7. Panhellenic Union of Engine Room Ratings ‘STEFENSON’
8. Panhellenic Cook’s Union ‘AGIOS SPYRIDON’
9. Panhellenic ‘Stewards’ Union
authorised for this purpose by the decision of PNO Executive Board of 6th October 1978 have agreed upon the following terms:
1. To all Officers and ratings, of RUSSIAN nationality employed or to be employed aboard the above named ship, and to shipowners thereof as well, there shall apply the Greek Collective Agreement in force, applying to Greek flag ships of a tonnage corresponding to that of the above named ship; such Collective Agreement shall apply in all its provisions, present and future, relating to wage rates, working hours, overtime, leave, repatriation and other terms in general as well as any Greek Legislation applying to seafarers in general.
2. (a) The standards of manning, accomodation (sic), victualling and life safety at sea shall not be lower than or different from those applying to Greek flag ships of a corresponding tonnage. Moreover the provisions of the law No 4005/1929, the relavant (sic) provisions of L.D. 187/1973 ‘concerning the Code of Public Maritime Law’, and the ministerial decisions made or to be made in application of the law on victualling to be enforceable in this case.
(b) In case the ship is found undermanned, the sole competent body to deal with shall be the Panhellenic Seamen’s Federation and its representatives both at home and abroad in consultation with, the shipowner’s representative, the Maritime Consular authorities, as well as with the Master of the ship.
3. As regards the protection of seafarers for sickness or accident, it is agreed that there shall apply for the vessel the Greek legislation inforce (sic) for seafarers serving aboard Greek flag vessels in conjunction with the relavant provisions of the Greek Collective Agreement in force each time.
4. Seafarers employed or to be employed aboard the above named ship shall enjoy the social insurance coverage.
5. Any seafarer discharged from the above named ship shall be entitled to repatriation according to the provisions of the Act 3816/1958 ‘Concerning the Code of Private Maritime Law’ as amended and beeing (sic) in force as well as to the relevant collective Agreements.
6. It is also agreed that upon signing this agreement the Panhellenic Seamen’s Federation shall be paid in Piraeus, the following amounts for trade union Membership entrance fee and check - off arrangements of those serving aboard the above mentioned ship:
a) Drachmae per crew member as entrance fee.
All seafarers engaged aboard the mentioned ship in replacement of discharged ones during the period this agreement is in force, shall be subject to the above financial obligation.
The shipowners shall have, to deliver to Panhellenic Seamen’s Federation a statement containing the mames (sic) of all the men engaged aboard the vessel, their father’s names, their rank and rate, the numbers of their seamen’s books and the numbers of their diplomas and licenses as well as the individual applications for membership on the part of those who happened not to be already members of their respective branch union.
b) Drachmae to cover Trade Union monthly subscriptions of crew members to P.S.F. for the period beginning on and ending on on the basis at drachmae per crew member per month, calculated on the basis of the present manning of the ship.
The above payments covering for entrance fees and monthly Trade Union subscriptions of crewmembers (sic) to P.S.F. for the period of time beginning on and ending on shall be deducted by the Master from the wages of seafarer’s concerned according to the proviso a) of the present paragraph as soon as the present agreementis (sic) effective for those already engaged and soon after engagement of any newcomer.
c) The above under b) seafarers subscriptions per man per month paid to P.S.F. are distinct from their contribution fees to their branch Union.
7. Drachmae 240.00 to cover shipowners’ contribution to the international Special Account of PNO to meet emergency situations created by its activities in worldwide level.
8. The present Collective Agreement shall be effective until 14th December 1994.
9. LAW TO BE APPLICABLE
It is expressly agreed between the contracting parties that on any legal obligation deriving from the Articles of Agreement concluded between the shipowners and the seafarers engaged on the above vessel, shall apply the whole Greek legislation and especially the Act 3816/58 concerning work at sea as now in force, the Act 551 concerning responsibility for compensation to workers and employees having sustained a work accident as now in force as well as any relevant provisions or Regulations applying to work at sea. It is clarified that Act 1376/1983 is not applicable with respect to the present Agreement.
JURISDICTION
It is expressly agreed between the contracting parties that they extend and make competent also the Greek courts of law and especially those of the city of Piraeus for the judgement (sic) and settlement of any dispute resulting from the articles of Agreement between the shipowners and the seafarers engaged on the above vessel, independent of any eventual concurring jurisdiction for other alien judicial authorities.
10. It is clarified that the provisions of the present Collective Agreement govern all individual Articles of Agreement for work at sea that have been concluded or to be concluded in the future. Conclusion of specific terms in the individual Articles of Agreement is not excluded, provided such specific terms, as far as wage rates are concerned shall not affect nor alter the minima (sic) wage rates hereby determined or the general terms of the Collective Agreement.
11. It is agreed that the Panhellenic Seamen’s Federation shall, on signature of the Present Agreement, supply the ship with a certificate stating the names of the owner and ship, the tonnage, the flag and the currency of the Agreement, and also stating that the crew are fully organised from Trade Union point of view.
12. This Agreement has been made in three original copies, each contracting party having taken one, the third copy to be delivered to the Master of the above mentioned ship, through the care and under the responsibility of the owner’s representative; the Master shall keep the copy along with the other ship’s documents.
The present Collective Agreement has been signed in Greek and English original copies, both of them having equal validity.
THE CONTRACTING PARTIES
On behalf of shipowners On behalf of the
Panhellenic Seamen’s Federation
and its affiliated Unions
The General Secretary”.
The Collective Agreement was signed “On behalf of shipowners” by Panagiotis Giakoumatos but the rubber stamp impression over his signature bore the legend “MARINE INVESTMENTS S.A. *PANAMA*” instead of the full name of Adriatic Tankers which, as I have noted, was the company that operated the fleet, including the Ionian Mariner. The Collective Agreement was countersigned by Mr Halas as “The General Secretary” on “behalf of the Panhellenic Seamen’s Federation and its affiliated Unions”.
Also on 14 December 1993 another agreement (the Special Agreement) was executed between the ITF and “PANAGIOTIS GIAKOUMATOS repr. ADRIATIC TANKERS SHIPPING CO SA (hereinafter called ‘the Company’) whose address is 41 Akti Miaouli Piraeus - GREECE ... in respect of the Panamanian flag ship ‘IONIAN MARINER’ (hereinafter called ‘the Ship’)”.After reciting the identity of the ITF, that “the Company is the registered manager of the Ship described in Schedule 1 hereto”, and that “the ITF and the Company desire to regulate the conditions of employment of all seafarers (hereinafter individually called a ‘Seafarer’) serving from time to time aboard the Ship”, the Special Agreement continued:
“NOW IT IS AGREED:
Article 1: The Company undertakes as follows:ato employ each Seafarer in accordance with the terms of the current PNO Collective Agreement for World Wide trading (hereinafter called the ITF Collective Agreement) as amended from time to time in accordance with Article 5 below;
bto incorporate the terms and conditions of the PNO Collective Agreement into the individual contract of employment of each seafarer and into the Ship’s Articles and furnish copies of these documents to the ITF. Any seafarer, enjoying terms and conditions which are, taken as a whole, recognised by the ITF as more favourable to the seafarer, shall continue to enjoy such terms and conditions;
cto pay on behalf of each Seafarer contributions and fees at the rates shown in Schedule 2 hereto to the Seafarers’ International Welfare Protection and Assistance Fund and to the Special Seafarers’ Dept. of the ITF. The contributions and fees shall be paid to the ITF annually and in advance;
dto display aboard the Ship copies of the Special Agreement, the PNO Collective Agreement and the ITF Blue Certificate to be issued under Article 2 hereof in a prominent place to which each Seafarer shall have access at all times; and
eto grant to representatives of the ITF and of trade union organisations affiliated to the ITF free access to each Seafarer at all reasonable times whether or not aboard the Ship, whether the Ship is in berth or not.
Article 2: the ITF undertakes, having received and approved the copies of the documents referred to in Article 1(b) above, and received the fees and contributions payable under Article 1(c) above, to issue and each year to renew an ITF Blue Certificate (hereinafter called the ‘ITF Blue Certificate’) certifying that the Ship is covered by a Collective Agreement acceptable to the ITF, provided that the property in the ITF Blue Certificate shall at all times remain in the ITF.
Article 3: in the event of default by the Company of any of its undertakings herein, the ITF may determine this Special Agreement immediately upon notification to the Company. Upon such termination, the Company shall forthwith return the ITF Blue Certificate to or to the order of the ITF.
Article 4: this Special Agreement shall remain in force for a period of twelve months from the date hereof and thereafter from year to year, provided that either party may give notice of termination to the other no later than one month before any anniversary of this Special Agreement whereupon the same shall determine upon such anniversary.
Article 5: the ITF shall be entitled to change the rates in the PNO Collective Agreement and the rates shown in Schedule 2 hereto upon 2 months notice to the Company whereupon the changed rates shall come into force from the date specified.
Article 6: all notices given by the Company and the ITF hereunder shall be given in writing addressed to the ITF at its address hereinbefore described and to the Company at the address described in Schedule 1 hereto.
Article 7: this Special Agreement exists in quadruplicate of which two shall be kept by each party.
Art 8: For the purposes of the present agreement, the Greek Collective Agreement currently in force, and also any future Greek Collective Agreement concluded between owners and the Panhellenic Seamen’s Federation (PNO) is approved and recognised by the International Transport Workers’ Federation, and it is further agreed that when PNO and ITF reach an agreement on the amount to be paid by each ship for ITF’s Welfare Fund, such agreement will also apply to the (sic)
Art 9: This supplementary agreement is only valid together with a current PNO Collective Agreement for this vessel.”
The Special Agreement comprised a completed printed form of two pages. The recitals and Articles 1 to 7 were printed on the first page and the two schedules on the second. Articles 8 and 9 were typewritten beneath the printed form of Schedule 2 at the foot of the second page.
Schedule 1 to the Special Agreement identified the vessel as “IONIAN MARINER” and its registered managing owner or manager as “EUROPEAN LIBERTY SA”. Schedule 2 stipulated amounts payable to the ITF in respect of each man on board as entrance fees, membership fees and contributions to the Seafarers’ International Welfare Protection and Assistance Fund. The Special Agreement was stamped and signed by Mr Giakoumatos as “Repr of ADRIATIC TANKERS SHIP CO SA FOR THE OWNING COMPANY” and by Mr Halas as “GENERAL SECRETARY PNO”.
On 3 January 1994, Adriatic Tankers drew a cheque in favour of Mr Halas for $US184,230 by way of contribution to the ITF Welfare fund in respect of all 39 vessels listed in Adriatic Tankers’ application of 14 December 1993.
The Collective Agreement and the Special Agreement together comprise Exhibit RHC4 to the affidavit of Roger Henry Chapman filed 19 December 1995, which was the affidavit referred to in the question reserved for preliminary trial.
Ryan J found that the version of the Greek Collective Agreement that was Exhibit RHC5 to the affidavit of Mr Chapman was a document in Greek and English comprising some 19 Articles and expressed to come into force on 1 January 1995 and to remain in force until 31 December 1995. It provided for the basic wages “of sailors serving on board Greek cargo vessels of more than 4,500 dead-weight tons” divided into various classifications of officers and ratings. It also made provision for the circumstances in which allowances or other special items of remuneration, including overtime, were payable. All monetary amounts were expressed in drachmas.
The Crew Management Contract, the competing agreement which US Trust contended regulated the wages and conditions of members of the crew, was an agreement between Adriatic Tankers and Primorsk Shipping Company (“PSC”). The material parts of the Crew Management Contract are as follows:
“CREW MANAGEMENT CONTRACT
Between
ADRIATIC TANKERS SHIPPING COMPANY S.A.
Piraeus. Greece
(as MANAGERS)
and
PRIMORSK SHIPPING COMPANY
Nakhoda. Russia
(as P S C)ARTICLE 1
P S C shall provide crews to MANAGERS on condition it is mutually agreed between them for work on MANAGERS VESSELS. Russian crew shall follow MANAGERS’ and PSC’s standing regulations, procedures, lawful instructions and orders relative to the operation of the ship, provided P S C’s are not contrary to in any way to MANAGERS instructions. To provide crew for a particular vessel, and at a definate (sic) time, P S C is required.
ARTICLE 2
2.1P S C shall supply at the MANAGERS’ disposal, on certain terms and conditions, crew members (hereinafter refered (sic) to as ‘Crew’) to work on MANAGERS VESSELS (hereinafter refered to as ‘the ship’) and P S C is to remain the employer of the crews, and there shall be no contractual connection between crew and MANAGERS, howere (sic). Articles of Agreement appropriate to the flag of the vessel shall be signed by all seamen with P S C. The ‘Conditions of service’ shall form an integral part of such Articles.
2.2Before employment of crew, P S C will provide a crew list with a full list of professional details for Officers and crew. The MANAGERS reserve the right to approve or disapprove of any of them.
P S C guarantees that crew are qualified specialists and have successfully passed a thorough medical examination which shall include tests to determine use of illegal drugs or alcohol, and such examination shall be conducted and (sic) agreed medical centres, and have the required certificates and licenses confirming it. ...
2.3Within a one year period, P S C shall provide one crew for 6 months each for a vessel. The first crew shall be completely replaced by a second crew after 6 months of work on board a vessel, period can be extended by 60 calendar days, to make it more convenient, so crew to be replaced. However, P S C allows additional time if required for the normal running of the ships but time shall never exceed the 10 months and only on crews consent.
The salary for the period over 7 months will be increased as follows:
...
2.4... [Right of PSC to inspection prior to manning of vessel] ...
2.5... [Right of PSC to replace crew members] ...
2.6Terms and conditions of the present Contract are valid for a period of up to 12 months, unless a 2-month written termination notice is submitted by either party. In case major damage occurs through wilful misconduct and carelessness on the part of the crew, the MANAGERS have the right to terminate the Contract without prejudice regarding any kind of compensation, and the MANAGERS have the right to dismiss all crews.
2.7... [Crew’s entitlement if the ship is wrecked, etc]
2.8... [Transfer of crew between vessels of MANAGERS’ fleet] ...
ARTICLE 3
3.1... [Replacement of crew] ...
3.2... [Expenses of seaman left behind by the vessel] ...
ARTICLE 4
... [Inspection of vessel by experts] ...
ARTICLE 5
5.1The MANAGERS employ ships at their option to carry lawful cargoes in accordance with IMO regulations worldwide, and only between safeports in aaccordance with international regulations.
The vessel is to be always classed and in possession of all internationallyrequired certificates including safe manning certificate of the flag ship.
5.2... [Crew to follow MANAGERS’ instructions] ...
5.3... [Procedure upon dispute regarding this agreement] ...
5.4The crew shall observe laws and respect customs of the flag state and those of countries at ports of call. They are not entitled to enter in labour or any other agreements with the MANAGERS or any other juridical persons of any flag state or of third countries, which may become a cause for non-implementation of terms and conditions of this Contract.
5.5... [Crew to follow master’s orders; master to follow MANAGERS’ & PSC’s orders] ...
5.6... [MANAGERS responsible for operation of ship] ...
5.7 ... [Communication between PSC, MANAGERS and master to be in English] ...
5.8... [PSC union inspections] ...
ARTICLE 6
6.1... [Ordinary hours of crew] ...
6.2... [Public holidays] ...
6.3... [Overtime] ...
6.4... [Additional hours during emergency not overtime] ...
6.5... [Watchkeeping] ...
6.6To reimburse overtime work, each Officer shall be paid lump sum overtime allowance as stated in Appendix 1, 2 to this Contract; whereas ratings of received payment for actual overtime work done, should correspond to the scales in Appendix 1, 2.
6.7... [Tank cleaning payment] ...
ARTICLE 7
The MANAGERS shall reimburse P S C for the following expenses as per this
Contract:
7.1Monthly rates of reimbursement, specified in Appendix 1, 2 hereto. Monthly rates of reimbursement are counted as from the date of the crews’ departure from home for work on the ship, until the date of their return home.
For the purpose of calculating wages, a calendar month shall be regarded as having 30 days. From the date of crew’s departure from home for work on the ship until joining date and from the date Crew signed off until their arrival home, only basic their arrival home, only basic wages will be paid.
7.2... [Crew’s travel expenses from residence to port of engagement] ...
7.3... [Recruitment expenses; crew support fee; etc] ...
ARTICLE 8
The MANAGERS shall provide for their account.
8.1Accommodation at a suitable hotel for seamen (including payment of customary services while, waiting for transportation beyond the boundaries of the Russia on their way to ship’s anchorage or mooring place as well as while waiting for ship’s arrival to the port) when waiting for transportation on their way back to the Russia.
8.2Travelling expenses of seamen on their return home upon the completion of work under this Contract, including those by air (tickets not lower than tourist class).
8.3Provisions for seamen which should be of good quality and provided in accordance with existing practice of the MANAGERS, but not less than USD 6- per crew member.
8.4The MANAGERS shall provide, at their own expenses, working clothes for crew members as listed in Appendix 3.
ARTICLE 9
... [Mode of payment to seamen] ...
ARTICLE 10
... [Insurance; sick pay; medical care; compensation; etc] ...
ARTICLE 11
11.1 ... [Crew’s rights when ship in warlike operations] ...
11.2 ... [Right of seamen to terminate contract prior to expiration] ...
ARTICLE 12
... [Taxation and other liabilities] ...
ARTICLE 13
... [Occupational health and safety] ...
ARTICLE 14
14.1 ... [Purchase of articles from vessel’s slop chest] ...
14.2 ... [Laundry issues] ...
14.3 ... [Televisions; videos; sport and other entertainment articles] ...
ARTICLE 15
Responsibility for payment of wages or part of them, or any wage claim or differences and disputes arising out of the Contract of Employment entered into between P S C and a crew member, shall not rest with the MANAGERS. P S C, in their capacity as sole employers of the crew, are obliged to comply with the tax and social insurance regulations prevailing in the Russia.
The MANAGERS, therefore, are not liable for payment of taxes or wages and social insurance premiums of the Crew in the Russia.ARTICLE 16
All amendments and addendums to this Contract shall be valid only if they are made in written form and signed by authorised representatives of the parties.
ARTICLE 17
... [Arbitration] ...
ARTICLE 18
Appendix 1 - 6 are to be considered an integral part of this Contract.
This Contract comes into force as from the 1st of May, 1993, and shall continued evergreen until MANAGERS or P S C notify the other in writing, on or before the 1st of March, of any year of their desire to terminate the Contract.”
Appendix 1 to the Crew Management Contract provided for what was described as a “wagescale” for tanker vessels, Scale A. It provided for basic rates of pay per month for the Master, officers and crew, overtime per month and other entitlements. Eight vessels were specified, including the Ionian Mariner.
There were also individual agreements of employment between Adriatic Tankers and each of 21 men who apparently were, or had been, the Master and members of the crew of the Ionian Mariner. Those agreements had been kept on board the ship or in the custody of the Master. Each had a typewritten text in Russian on one side and a corresponding text in English on the reverse. Each agreement of employment was signed and dated by the seafarer concerned and by the Master “on behalf of the company”. The operative part of the agreement was in a standard form. In his reasons for judgment Ryan J set out, by way of illustration, the English text of the agreement of employment of Mr V.I. Isayev, an able seaman. The agreement was in the following terms:
“AGREEMENT OF EMPLOYMENT
BETWEEN
ADRIATIC TANKERS SHIPPING CO., PIRAEUS GREECEAND
MR.: ISAYEV V.I NATIONALITY: CHUVASH
DATE OF BIRTH: 05.06.62 NAME OF VSL: IONIAN MARINER
PLACE OF RESIDENCE:CHUVASHIYA TYPE OF VSL: TANKER
LICENSE: AB FLAG: PANAMA
PORT OF ENGAGEMENT: NAKHODKA DURATION OF CONTRACT:
WAGES COMMENCE ON: 08.09.94 6 - 8 MONTHSREMUNERATION - (MONTHLY OR PRO-RATA)
BASIC PAY USD 443 per month
TANKER ALLOWANCE USD 44 per month/per hour
OVERTIME ALLOWANCE USD 124/4.0 per month/per day
WEEKENDS & HOLIDAY ALLOWANCE USD 287 per month
VACATION PAY USD 164 per month
(including subsistence allowance)
TOTAL WAGE USD 1062 per monthTHE SEAFARER AGREES TO BE EMPLOYED UNDER THE TERMS AND CONDITIONS OF THE VALID ADRIATIC TANKERS COLLECTIVE AGREEMENT, WHICH HE HAS READ AND UNDERSTOOD. A COPY OF THIS COLLECTIVE AGREEMENT IS AVAILABLE ON BOARD THE VESSEL. THE SEAFARER IS AWARE OF THE COMPANY’S POLICY ON ‘DRUG & ALCOHOL’ AND AGREES TO COMPLY WITH IT. SIGNING OF THIS AGREEMENT BINDS THE SEAFARER TO SIGN THE APPROPRIATE ‘ARTICLE OF AGREEMENT’ OR ‘CREW ROLL’ OF THE SHIP TO WHICH HE MAY BE APPOINTED FROM TIME TO TIME BY THE COMPANY DURING HIS EMPLOYMENT.
AS IT IS STATED IN THE AGREEMENT, SEAFARER SHOULD BE PAYED (sic) 95% OF TOTAL WAGE STARTING FROM THE MOMENT THEY BEGIN WORKING ON THE SHIP. PROCEDURE OF PAYMENT IS DETERMINED AS FOLLOWS:-DURING THE WHOLE PERIOD OF WORKING ON THE SHIP THE SEAFARER SHOULD BE PAYED 45% OF TOTAL WAGE EVERY MONTH.
-ON THE MOMENT THE SEAFARER LEAVE THE SHIP THEY SHOULD BE PAYED THE REST.
-SEAFARER AGREES THAT 4% TOTAL WAGE SHOULD BE COVERED FOR ROUBLES EXPENSES INCLUDING HIS WAGE IN RUSSIA, AND 1% UNION FEE. THE SEAFARER SHALL BE FULLY RESPONSIBLE FOR THE DEDUCTIONS, STIPULATED BY THE LEGISLATION OF RUSSIA (TAXES, DUTIES, EXECUTIVE LISTS ETC.).
THE SEAFARER
date: Master on behalf of the company
original: seafarer
copy : Adriatic shipping co., master, Union”.
Ryan J noted that the basic pay of $US443 per month stipulated in Mr Isayev’s employment agreement corresponded with the amount stipulated in column A of the “wagescale” of Appendix No 1 to the Crew Management Contract as the basic pay per month for an able seaman. No copy of either the Collective Agreement or the Special Agreement was found on board the Ionian Mariner after its arrest, nor was there a copy of any document purporting to be the Greek Collective Agreement referred to in Article 1 of the Collective Agreement.
The reasoning of the primary judge:
Ryan J considered that the main question he had to decide turned upon s 4(3)(t) of the Act, which provides:
“(3) A reference in this Act to a general maritime claim is a reference to:
...
(t) a claim by a Master, or a member of the crew, of a ship for:(i)wages: or
(ii) an amount that a person, as employer, is under an obligation to pay a person as employee, whether the obligation arose out of the contract of employment or by operation of law, including the operation of the law of a foreign country”.
His Honour observed that s 4(3)(t) recognised a class of claims for monies payable to crew members in their capacity as such that extended considerably beyond wages recoverable under an employment contract. It was nevertheless still necessary for the claim to be legally enforceable either ex contractu in debt or for damages, or by invocation of some other legal obligation such as that arising under an industrial award or prescription. The critical question was, in his Honour’s view, whether either the Collective Agreement or the Special Agreement, or both of them in combination, imposed an obligation on some person as employer to pay to the Master and crew of the Ionian Mariner the amounts by way of wages and other entitlements stipulated by the Greek Collective Agreement in force from time to time. His Honour thought that consideration for the two agreements passed from the unions by way of a promise to provide the certificates referred to in Article 11 of the Collective Agreement and to issue the ITF Blue Certificate referred to in Article 2 of the Special Agreement. The judge considered that the relevant union parties could have obtained, in an Australian court, specific performance of the Collective Agreement and the Special Agreement to the extent that they imposed obligations on Adriatic Tankers which were enforceable while the ship was in Australian waters and he concluded that the two agreements obliged Adriatic Tankers to ensure that the Master and crew of the Ionian Mariner were accorded the rates and conditions prescribed by the Greek Collective Agreement. In these circumstances, for the purposes of s 4(3)(t)(ii), Adriatic Tankers as employer was under an obligation to pay to the Master and crew as employees amounts calculated in accordance with the Greek Collective Agreement. In his Honour’s view the interposition of PSC as employer was not effective to relieve Adriatic Tankers from liability for breach of either or both the Collective Agreement and the Special Agreement.
After pointing out that it was, strictly speaking, unnecessary to do so, his Honour went on to consider other arguments advanced on behalf of the crew. He rejected the argument that the Greek Collective Agreement was expressly incorporated into the crew’s individual contracts of employment and he also rejected an argument that the Collective Agreement and the Special Agreement had been concluded by the ITF and the PNO as agents for the seafarers then employed, or thereafter to be employed, on the Ionian Mariner. Moreover, his Honour held, even if he were wrong in the conclusion that neither the Collective Agreement nor the Special Agreement was made on behalf of future members of the crew as undisclosed principals, it was extremely doubtful whether those members by making the present claims after the arrest of the ship could be said to have ratified either agreement. Ryan J also considered, but did not express a conclusion about, a submission that the members of the crew were entitled to enforce the Greek Collective Agreement by application of the concept of a trust of a promise discussed in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107.
His Honour said that it was not necessary for him to express a preference for founding the shipowner’s obligation as employer to pay the money stipulated by the Greek Collective Agreement on the contract constituted by the Collective Agreement and the Special Agreement or on a trust of the promise thereby created of which the members of the crew became the beneficiaries. His Honour held that s 4(3)(t) of the Act, construed with benevolence towards seafarers, required recognition of the claims by the Master and the members of the crew invoking an obligation arising out of the operation of law notwithstanding that each seafarer might not be able to make out a cause of action at law or in equity by way of enforcing that obligation. It followed, his Honour considered, that the Master and crew were entitled to a lien on the proceeds of the sale of the ship in respect of unpaid wages and other remuneration calculated in accordance with the Greek Collective Agreement up to the date of the sale of the ship on 8 December 1995. The judge held, referring to principles discussed in The Elizabeth (1819) 2 Dods. 402, that there was a lien with respect to accommodation and subsistence expenses incurred to 22 December 1996.
Whether, in any event, neither the Collective Agreement nor the Special Agreement imposed any relevant obligation:
US Trust submitted that Ryan J was in error in holding that the Collective Agreement or the Special Agreement, or both of them in combination, imposed an obligation “on some person as employer” to pay the Master and crew wages and other remuneration calculated in accordance with the Greek Collective Agreement. With respect to the Collective Agreement, US Trust argued that although Article 1 of the Collective Agreement made applicable to the Ionian Mariner “the Greek Collective Agreement in force ... relating to wage rates”, it did so only for the term of the Collective Agreement, and since the Collective Agreement expired according to its terms on 14 December 1994 (Article 8) it did not apply the Greek Collective Agreement to the period that was the subject of the claim.
As to the Special Agreement, US Trust argued that it too had no effect beyond 14 December 1994. Although the Special Agreement applied the Collective Agreement to individual contracts of employment, for so long as the Collective Agreement enured, the Collective Agreement expired on 14 December 1994. Accordingly, it was submitted, the obligation under the Special Agreement expired on that date. Moreover, Article 9 of the Special Agreement expressly provided that it was “only valid together with a current PNO Collective Agreement for this vessel” and after 14 December 1994, it was argued, there was no current PNO Collective Agreement for the Ionian Mariner. (It was common ground that the reference to the PNO Collective Agreement was a reference to what I have described as the Collective Agreement.)
Further, US Trust submitted that whilst Article 8 of the Special Agreement did “approve” and “recognise” the Greek Collective Agreement in force, and also any future Greek Collective Agreement, it did so only “for the purposes of the present agreement” and those purposes were to make applicable the PNO Collective Agreement. As the PNO Collective Agreement made the Greek Collective Agreement applicable only until 14 December 1994, and since the Special Agreement ceased to apply on that date, the Greek Collective Agreement had no application after 14 December 1994.
The respondents’ answer to the submission that the Greek Collective Agreement had no application after 14 December 1994 was that the Special Agreement and the Collective Agreement were effective, according to their terms, to require the crew to be engaged on the terms set out in the Greek Collective Agreement as in force from time to time. Since, it was asserted, the members of the crew were engaged after the Special Agreement and the Collective Agreement were entered into, but before 14 December 1994, the agreements operated to require employment according to the Greek Collective Agreement. US Trust’s reply was that even if that were so, there was no enforceable obligation at the suit of anyone after 14 December 1994 except, at most, an action for damages at the suit of one or more of the union parties for past breaches.
In my view, the Collective Agreement and the Special Agreement operated together in such a way that obligations enforceable against the employer did continue beyond 14 December 1994, so that the first step in the learned judge’s reasoning has not been shown to be in error. The Collective Agreement and the Special Agreement operated together so as to require a shipowner, when a member of the crew of one of the relevant vessels was being engaged, to engage that person (or to ensure that the person was engaged) on the terms of the Greek Collective Agreement relating to wages and other specified matters. Articles 1(a) and (b) of the Special Agreement and Articles 1, 9 and 10 of the Collective Agreement do, I think, make this clear. I do not consider it necessary to work out the precise inter-relationship between the two agreements, it being sufficient for present purposes that the overall intention of both was to govern the terms upon which members of the crew of the Ionian Mariner were to be engaged during the currency of the agreements.
The learned primary judge considered that the union parties could have obtained, in an Australian court, specific performance of the Collective Agreement and the Special Agreement to the extent that they imposed obligations on Adriatic Tankers which were enforceable while the ship was in Australian waters. In this regard, it is necessary to bear in mind the distinction between an order compelling the performance of services or the maintenance of a relationship, and an order that an instrument be executed under which services were to be performed on particular conditions as to wages: see R P Meagher, W M C Gummow and J R F Lehane, Equity: Doctrines and Remedies 3rd ed (1992) at 502 and I C F Spry, Equitable Remedies 4th ed (1990) at 122. Nor could it be said, given the situation of the members of the crew as third persons in whose favour obligations were agreed to be created, that specific performance would lack utility or that damages would be an adequate remedy: see Spry at 124. I therefore do not accept US Trust’s argument that there was no enforceable obligation, at the suit of anyone, after 14 December 1994.
For the reasons advanced by US Trust, however, the Special Agreement and the Collective Agreement did not operate upon the engagement of any members of the crew at a time subsequent to 14 December 1994.
Whether there was a right to proceed in rem on a maritime lien for wages:
Section 14 of the Admiralty Act provides:
“14. In a matter of Admiralty or maritime jurisdiction, a proceeding shall not be commenced as an action in rem against a ship or other property except as provided by this Act.”
Section 15 of the Act gives a right to proceed by action in rem on a maritime lien. This section provides:
“15. (1) A proceeding on a maritime lien or other charge in respect of a ship or other property subject to the lien or charge may be commenced as an action in rem against the ship or property.
(2) A reference in subsection (1) to a maritime lien includes a reference to a lien for:
(a) salvage;
(b) damage done by a ship;
(c) wages of the master, or of a member of the crew, of a ship; or(d) master’s disbursements.”
US Trust argues that although “wages” in the context of maritime liens has a broad meaning and includes various emoluments, the concept does not extend to cases in which the Master or crew have no legally enforceable right against anyone to that which is claimed as wages. The respondents, on the other hand, contend that it is the character of the claim that matters, not the identity of the person by whom suit may be brought to enforce it and they rely upon the broad view taken of “wages” in cases such as The Halcyon Skies [1977] QB 14 and The Fairport (No. 3) [1966] 2 Lloyd’s Rep. 253.
It is of course true that the courts have taken a broad view of “wages” and that the concept extends to obligations in respect of which a crew member’s remedy lies in damages and is not confined to an obligation that is enforceable as a debt: see, for example, The Halcyon Skies. Many emoluments and other advantages to which a member of a crew has become entitled have been regarded as wages for the purpose of a maritime lien: see M Davies and A Dickey, Shipping Law 2nd ed, (1995) at 112-113, N Meeson, Admiralty Jurisdiction and Practice (1993) at 43-44 and D C Jackson, Enforcement of Maritime Claims, 2nd ed, (1996) at 36-38. A broad view of “wages” will readily accommodate emoluments that can be seen as surrounding the core concept of money paid as a recompense for work done under a contract of employment. The seafarer’s contract of employment, although not the source of the lien itself, lies at the heart of the matter. As it is said by D R Thomas, Maritime Liens, (1980) at 184, in a passage adopted by the Australian Law Reform Commission in Report No 33, Civil Admiralty Jurisdiction, (1986) at para 162:
“ ... the policy of the Admiralty has been a recognition of a large number of benefits and allowances which flow under a contract of employment, and which have tended to increase in number with changing conditions of employment and welfare, as wages. These include conditional payments; victualling allowances provided for under the contract of employment; profit sharing payments; vacational pay, sick pay and overtime payments; employee and employer pension fund contributions; national health insurance contributions; social benefit contributions; provident fund contributions; income tax; trade union dues; legal expenses, eg stamp duty, related to any head of claim.” (Footnotes omitted)
It is important to note at this point that it was not argued, at any stage, that any foreign law operated upon the agreements between the unions and the shipowners to give members of the crew an enforceable right to wages under the Greek Collective Agreement or that there was any other foreign law that gave the crew an entitlement to wages otherwise than pursuant to the individual contracts of employment into which they had entered. Nor, for these purposes, was reliance placed upon an entitlement enforceable by the crew as beneficiaries of a trust.
In these circumstances, what is involved is not the application of an existing concept to a new type of emolument or other benefit deriving from, or associated with, the contract of employment. It is not sought to rely upon entitlements derived from any industrial award or some other law, domestic or foreign, as supporting a lien for “wages”. There is no reliance, for these purposes, upon a trust of a contractual promise. Rather, it is sought to include within the core concept of “wages” an obligation that is not (as this part of the case was put) enforceable by the employees and is not derived from, or associated with, any contract of employment or any law relating to the relationship of employer and employee. In my view it is not permissible to extend the concept in this way.
Whether s 4(3)(t)(ii) of the Admiralty Act provides a foundation for the crews’ claim to be paid in accordance with the Greek Collective Agreement:
As I have noted, the learned primary judge considered that, construed with benevolence towards seafarers, s 4(3)(t)(ii) required recognition of the claims of members of the crew “invoking an obligation arising by operation of law notwithstanding that each seafarer may not be able to make out a cause of action at law or in equity by way of enforcing that obligation”.
US Trust argued that the Master and crew did not have any rights capable of assertion under s 4(3)(t)(ii) of the Act and that, in any event, even if the claim for payment in accordance with the Greek Collective Agreement did in some way fall within the ambit of a “general maritime claim” under s 4(3)(t)(ii), the crew had no right to proceed in rem against the owner upon such a claim. This was because, US Trust submitted, the requirements of s 17 of the Admiralty Act could not be satisfied in such a case. Section 17 provides:
“17. Where, in relation to a general maritime claim concerning a ship or
other property, a relevant person:
(a) was, when the cause of action arose, the owner or charterer of, or in possession or control of, the ship or property; and
(b) is, when the proceeding is commenced, the owner of the ship or property;
a proceeding on the claim may be commenced as an action in rem against the ship or property.”
The expression “relevant person” in s 17 is defined in s 3(1), to mean in relation to a maritime claim:
“... a person who would be liable on the claim in a proceeding commenced as an action in personam”.
The point made by US Trust is that, in respect of any claim based upon agreements to which the members of the crew were not parties, the owner could not be liable in a proceeding commenced as an action in personam. The Master and crew were not, of course, parties to the Collective Agreement or the Special Agreement. The respondents, on the other hand, argued that Ryan J was correct in his conclusions about the effect of s 4(3)(t)(ii) and they also argued that s 17 presents no barrier to a claim in rem because the owner would be liable in an action in personam commenced by one or more of the relevant unions who were parties to the Collective Agreement and the Special Agreement.
Leaving to one side for the moment the respondents’ contention that they were entitled to enforce the Greek Collective Agreement as the beneficiaries of the trust of a promise, their submission on this issue rests upon the foundation that s 4(3)(t)(ii) operates, in effect, to create a cause of action. Questions of trust aside, it is not suggested by the respondents that the members of the crew had any right to wages, to be calculated in accordance with the Greek Collective Agreement, that could be enforced by them in proceedings brought in Australia against a defendant present in the jurisdiction in an ordinary action in personam.
Before the enactment of the Admiralty Act it was generally accepted in Australia that the position at common law was that a statutory right of action in rem did not lie unless the owner was liable in personam on the claim or the owner could be treated as if liable by virtue of a form of implied consent: see Civil Admiralty Jurisdiction, at para 126. Thus in Shell Oil Co v The Ship Lastrigoni (1974) 131 CLR 1, Menzies J (at 5) gave the following reasons for concluding that proceedings instituted in Admiralty against the Lastrigoni, and the arrest of the vessel in those proceedings, should be set aside, his Honour having previously held that the action could not be supported as one to enforce a lien upon the vessel:
“1. The general rule of Admiralty is that an action in rem cannot be maintained when there is no liability in the owners: Rosenfeld Hillas & Co. Pty. Ltd. v The Fort Laramie and the authorities there cited. The practice that once an appearance has been entered to an action in rem it proceeds as an action in personam as well as an action in rem, is, it seems to me, an acknowledgment that, except in special circumstances, there must be liability in the owners before an action in rem lies against the ship. See too s 35 of the Admiralty Court Act 1861 (U.K.).
2. The statutory provisions under consideration should be construed in the light of the foregoing general rule.
3. That with respect to analogous claims under s 10 of the Admiralty Court Act 1861 (U.K.) it has been decided that the owner must be liable in personam before claim in rem will lie in Admiralty. See the judgment of Lord Herschell in Morgan v Castlegate Steamship Co.; The Castlegate.
...6. Proceedings in Admiralty are intended to facilitate the enforcement of liabilities, not to allow pressure to be put upon a person who is himself under no liability in respect of the liabilities of others.” (Footnotes omitted)
In The Lastrigoni, Menzies J (at 6) approved the analysis made by Kriewaldt J in Dalgety & Co Ltd v Aitchison; The Rose Pearl (1957) 2 FLR 219 (Supreme Court of the Northern Territory) of the decision of the Privy Council in Foong Tai & Co v Buchheister & Co [1908] AC 458 with respect to the relationship between an action in rem and liability in personam. The Rose Pearl was an action in rem for necessaries supplied to the vessel and in the course of his reasons Kriewaldt J said (at 226):
“But there is another requirement which is essential for the plaintiff’s success. It must be made to appear that at the time of action brought the plaintiff had a subsisting claim in personam against the persons who were at that time the owners of the ship.”
It was not suggested in argument that in any of the earlier cases an owner was regarded as liable in personam on a claim in circumstances where there was no direct liability to the plaintiff, but only a liability to a third party. Liability of the owner on the claim for these purposes involved liability to the plaintiff.
It is clear, in my view, that the Admiralty Act was not intended to change the law in this respect. The Act was enacted consequent upon the recommendations of the Australian Law Reform Commission in Report 33, Civil Admiralty Jurisdiction, and ss 4(3)(t)(ii), 14, 15 and 17 were enacted in the terms proposed by the Commission in that report. One of the questions the Commission considered was whether a new Admiralty Act for Australia should reflect what the Commission described as the long-standing status quo of there being no action in rem without the owner’s in personam liability (see Civil Admiralty Jurisdiction, paras 128 and following). The Commission concluded that, on balance, it was not desirable to go beyond the generally accepted scope of the statutory right of action in rem in comparable countries (see para 136) and the proposed legislation was drafted accordingly.
In proposing a suitable provision for Admiralty jurisdiction over wages, the Commission saw the need to define wages in such a way as to preserve the existing breadth of the concept whilst making the new legislation as clear and informative as possible: see Report 33, para 162. The Commission also noted, again citing Thomas, Maritime Liens, that these benefits and allowances included pension fund contributions and other like payments, and it concluded:
“Accordingly the legislation should specifically include claims by masters or members of the crew for any sums that a person, as employer, is under an obligation to pay to a person as employee, whether the obligations arose out of the contract of employment or under Australian or foreign law.”
In these circumstances, both the legislative history and the language of the Act itself show that whilst s 4(3)(t)(ii) was not intended to be restrictive, it was not intended to have the effect, either directly or indirectly, of creating new causes of action. Moreover, s 6(b) provides:
“6. The provisions of this Act (other than section 34) do not have effect to create:
(a) ...
(b) a cause of action that would not have existed if this Act had not been passed.”
The overall intention was summarised in the Explanatory Memorandum to the Admiralty Bill 1988 in the following terms (at 7):
“The Bill would not create new kinds of maritime liens, nor does it create new causes of action, as distinct from creating new procedures by which existing causes of action may be enforced. That is, the Bill is concerned with procedure and jurisdiction; it does not (with the exception of cl 34, dealing with wrongful arrest) create new substantive rights.”
Similarly, in determining the scope of s 17, there is no basis for construing the definition of “relevant person” in s 3(1) in such a way that it would be satisfied if a person were liable, not to the plaintiff on a claim in a proceeding commenced as an action in personam, but to a stranger to the litigation. Indeed, the notes on “relevant person” in the Explanatory Memorandum (at 4) are virtually explicit on the point:
“This means a person (not necessarily the only person) who will be liable on a maritime claim (i.e. who would be liable if the plaintiff’s case was made out). ...” (Emphasis added)
In my opinion, therefore, Ryan J was in error in concluding that s 4(3)(t)(ii) provided a foundation for the crew’s claims that their outstanding wages should be calculated in accordance with the Greek Collective Agreement.
Estoppel:
A brief submission was made on behalf of the respondents that the owner was estopped from contending that the crew were employed on terms other than those required by the Special Agreement and the Collective Agreement but the point was not developed and in any event no sufficient factual basis for an estoppel was shown.
Whether promises made to the unions were the subject of a trust in favour of the crew:
It follows from what I have already said that, subject to the issue raised by the respondents’ notice of contention, I would allow the appeal. The respondents have raised by way of notice of contention a question that Ryan J found unnecessary to decide, namely whether any of the promises made by the shipowner to the unions in the relevant agreements were the subject of a trust for the benefit of the persons who later became members of the crew of the Ionian Mariner.
It was argued on behalf of the respondents that Ryan J should have held that the benefit of the shipowner’s promises to the unions was held by the unions upon trust for the members of the crew. In this way, it was submitted, members of the crew were entitled to enforce the Greek Collective Agreement. The promisor was said to be the shipowner, the promisees were the ITF and PNO and the crew were the beneficiaries. The content of the promise was said to be “the obligation to pay wages calculated by reference to the rates prescribed in the Greek Collective Agreement from time to time”. The respondents argued that an intention to create such a trust should have been inferred from the obvious intention to benefit members of the crew in the face of competing pay regimes commonly prescribed by individual flag of convenience shipowners and operators, from the need in certain circumstances for the crew to enforce rights of their own and from the difficulties, identified by Ryan J, of securing the crew’s intended benefits by other means.
US Trust submitted that the crew could not rely upon there being any trust of the promise because essential procedural requirements had not been satisfied; the putative trustees had not been joined and no case in trust had ever been pleaded. Any claim based upon a trust therefore had to fail and the entitlements were to be calculated according to the contracts to which the members of the crew were parties, namely the individual employment agreements. It was pointed out that the ITF and PNO had sought an order that they be made parties to the proceeding but that no such order had been made and, instead, Ryan J had ordered that they have leave, if advised, to renew their application in the course of the trial of the separate issue. No such leave was sought.
The learned authors of Jacobs’ Law of Trusts in Australia (6th ed) explain the requirements (at 25) as follows:
“When courts of equity recognise such a trust in favour of a third party, that third party still has no rights to sue at law, but he may take proceedings in equity to enforce the trust by compelling (in effect) the promisee to sue the promisor either at law or in equity, as may be appropriate; the beneficiary of a trust has always been the person to whom equity has given the remedy for breach of trust even although he is not a party to the creation of the trust.”
They refer also to a more detailed summary of the procedural aspects of a beneficiary’s right to enforce a trust by J G Starke in Contracts for the Benefit of Third Parties: Part III (1948) 21 ALJ 455 at 458-9.
In the proceeding before Ryan J statements of contention of fact and law were filed on behalf of the members of the crew and also on behalf of US Trust. It is clear from those documents, and also from an examination of the transcript of the argument before Ryan J, that the crew pursued, and US Trust resisted, a claim based upon trust principles. No point was made at that stage about the absence of the ITF or PNO as parties. Some time after the filing of the statements of contentions of fact and law, an application to Ryan J to join the ITF and the PNO was made. Although his Honour had given leave for the application to be renewed, it appears that the case was argued before him, including on the trust issue, without a formal order for joinder or any point being made about the absence of parties. Dr Jessup QC who then appeared on behalf of the crew announced his appearance “should it be necessary” on behalf of the ITF and the PNO “in the event that that becomes necessary in the course of argument”.
In these circumstances, it seems clear that if a point had been taken at the hearing before Ryan J about the non-joinder of the putative trustees, a joinder order may well have been made. After all, US Trust was content to deal with the trust argument without raising, by way of answer, the absence of necessary parties or any procedural deficiencies in the formulation of a claim based upon a trust.
The fact remains, however, that the proper formulation of a claim based upon a trust, and the pursuit of that claim by the joinder where necessary of the appropriate parties in accordance with well-established principles, is no mere formality. In general, the trustee is a necessary party. There may be an exception, referred to by J G Starke in his article where the trustee is not within the jurisdiction; in such a case the cestui que trust may be able to sue the promisor directly (see 21 ALJ 455 at 459), although this exception, of possible relevance here, does not appear to have been referred to in argument before Ryan J.
There are other problems. The approach taken by Ryan J made it unnecessary for him to make any findings on the central question whether there was an intention to create a trust of the relevant promises: see Trident General Insurance Co Ltd v McNiece Bros Pty Ltd per Mason CJ and Wilson J at 121 and per Dawson J at 156. Also, there was no substantial development of the arguments in this difficult area either at first instance or on appeal. On appeal the main argument of US Trust was that a claim based upon the trust was fatally flawed for want of necessary parties and for want of any proper formulation, issues about which, as I have said, no point seems to have been taken before the primary judge.
The question that arises in these circumstances is whether it would be right to conclude, as US Trust argues, that the non-joinder of the putative trustees and the lack of any clear formulation of a claim based upon a trust of a promise in favour of a crew, are fatal to any such claim and that the questions sought to be raised by the notice of contention should be determined adversely to the respondents without further consideration of the trust for which the respondents contend.
US Trust submitted that the situation that faces the crew here is much the same as that facing the contractor in Trident where a claim based upon a trust of a promise was raised too late. But the situation here is quite different, because the claim in trust was raised at the outset, even to the extent of there being applications to join as parties the unions who were said to be trustees.
In the circumstances as I have outlined them, I do not think it would be right for us to preclude further consideration of the claim based upon a trust, unless it were reasonably clear that if properly formulated and with the proper parties, the claim was without substance.
I am not persuaded that the claim is without substance. It would no doubt be argued on behalf of US Trust that the central importance of the ITF blue certificate provided for by the Special Agreement pointed against any intention on the part of the promisee that the rights under the promises made to it were to be held on trust for the future members of the crew, but on the other hand it could well be said that the whole purpose of the agreements, and the intention of both promisee and promisor (if the latter be relevant) was to benefit members of the crew. The question then arises whether, notwithstanding that the learned primary judge made no findings on the trust issue, this Court should consider the matter for itself. In my view the Court should not adopt that course. For one thing, it would be necessary (as counsel for the respondents recognised) for attention to be given to the question of parties for that purpose and there would need to be a proper application before the Court for joinder. That would not necessarily be a simple matter and it would probably require the Court to reconvene. Moreover, this may not be a case in which the central question of the intention to create a trust could be determined only by looking at the relevant agreements: see Winterton Constructions Pty Ltd v Hambros Australia Ltd (1991) 101 ALR 350 at 370 per Gummow J. In the present case it seems to me (although I express no concluded view on the matter) that it might well be necessary to look at the whole context, including the matrix of relevant circumstances: see Trident per Mason CJ and Wilson J at 121.
Disposition of the appeal:
For the reasons I have given, the declaration appealed from should be set aside but the respondents should have an opportunity to pursue, in accordance with proper procedures as to joinder and otherwise, their claim based upon a trust. For that purpose the matter should be remitted to the primary judge for further hearing.
Finally, it is necessary to consider whether the respondents should have an opportunity to rely upon the substance of their claim, making any necessary amendments and adding any necessary parties, and that they not be limited to a single remaining basis of trust of a contractual promise. I have had the advantage of reading what Burchett J has written on this question and for the reasons he gives I would not limit the respondents at the further hearing to a single basis of trust.
The cross-appeals by the Master and certain of the officers:
As noted earlier, the former Master and First Engineer sought a declaration that they had a maritime lien over the proceeds of the sale of the Ionian Mariner for amounts owing to them and they sought payment out of the proceeds of, amongst other things, “full wages up to the date of their repatriation to Russia” which they claimed should be calculated in accordance with the Adriatic Collective Agreement. The Master and the First Engineer departed Melbourne for Vladivostok on 16 February 1996 and were represented by counsel before Ryan J.
I have also already referred to the joint affidavits filed by the former Chief Engineer, Mr Rodichev, and the former Second Officer, Mr Sychyov. Mr Rodichev remained in Australia and appeared in person before Ryan J. In a brief oral submission, with the aid of an interpreter, Mr Rodichev sought payment of all amounts outstanding to him under his individual contract of employment. Mr Sychyov was not represented before Ryan J but the matter seems to have proceeded on the basis that the claims made by the Master and the other two officers were made on his behalf too.
Ryan J was concerned to determine the extent of the lien of the Master and crew for unpaid wages and related entitlements and in doing so he acted on the view that the sale of the ship on 8 December 1995 in consequence of its arrest “brought to an end the relationship of the Master and crew as employees of the ship and defined the point at which crystallised their lien over the proceeds of sale by virtue of a claim under s 4(3)(t) of the Admiralty Act.”
The cross-appellants contend that in approaching the matter in this way his Honour was in error. Essentially, the submission made on behalf of the Master and the First Engineer (and adopted by counsel for the Chief Engineer and the Second Officer) was that having concluded that the provisions of the Greek Collective Agreement applied, the judge should have had regard to the provisions of that agreement in ascertaining the extent of their entitlements. Specifically, Article 10 of the Greek Collective Agreement included a provision that “seamen discharged from the vessel and entitled to repatriation, will be paid wages, plus victualling, up to the date of their departure from the signing off port.” If, however, the entitlements were to be determined according to the Crew Management Agreement, it was to similar effect and Article 7.1 of that agreement provided that “monthly rates of reimbursement are counted as from the date of the crews’ departure from home for work on the ship until the date of their return home.” It was also argued that although the effect of the judicial sale was to free the vessel from all encumbrances, including liens, whilst proceeds of sale remained in court, the fund represented the res and all liens that formerly attached to the res now attached to the fund. In answer, US Trust contended that because the Master and crew ceased to be employed on board the ship after she was sold and handed over to the purchaser, anything due in respect of a period after the sale could not be the subject of a lien for wages for the purposes of s 15(2)(c) of the Admiralty Act.
It has long been established that payments in the nature of wages and other expenses in relation to a period between discharge and return home are claimable under Admiralty jurisdiction. One of the leading cases is The Elizabeth. In that case Sir William Scott considered the position of seafarers discharged from a severely damaged vessel in a foreign port and of the right of the Master to discharge the crew in such circumstances. He said (at 412):
“He is not certainly, in their discharge, to act hastily or with precipitate fear. He is not to discharge but where the circumstances will make it a cause valable, a real and sufficient ground for such a procedure, still less is he to turn them adrift, penniless and without resource, in a foreign country. He is to provide them with a return home, and if he is answerable for wages up to the time of their arrival at home, they can have no right to complain; nor can his owners have a right to complain of an improvident bargain on his part, because they are exonerated from a much heavier expense, from the demurrage of all these men, who may still be considered as acting in the service of the ship, by thus contributing to lighten its burdens. On the other hand, the owners have tendered what falls short of the measure which the Court considers as the measure of justice; for it does not contain even the passage expenses, which must fall upon the owners; for they cannot discharge their crews in a foreign country on other terms than sending them home, and paying their wages up to the time of their actual arrival.”
Other instances are collected in the judgment of Sir Henry Duke in The British Trade [1924] P 104 at 109-110. Moreover, the development and expansion of the concept of wages has been accompanied by a corresponding expansion of the maritime lien for wages: see The Halycon Skies at 28-30, Thomas at 178, Davies and Dickey at 112 and Meeson at 42-44. Apart, then, from the effect of the sale, it is clear that the Master and crew would have had a maritime lien for any wages and other amounts due to them in respect of the period after their discharge in Melbourne.
As I understand the principal argument for US Trust, it is that if there were any entitlements to wages until departure for the home port, the wages became due after the judicial sale of the Ionian Mariner and thus could not be the subject of a lien. Thus, although the proceeds of the sale represented the res, in the sense that liens attaching to the ship attached to the proceeds, once the sale under the order of the Court had been completed there was no subject matter to which a lien for wages and other entitlements becoming due to the Master and crew after the date of sale could attach. No authority was cited on behalf of the cross-appellants for the opposite proposition which, in any event, would seem contrary to principle.
A maritime lien for wages attaches to a ship or freight from the time that the facts happen that give rise to it, but not before: see The Two Ellens (1872) LR 4 PC 161 at 169 and also the general discussion by Thomas at 13. Viewed, then, as a claim for “wages” being amounts earned, payable at weekly or monthly intervals after the sale, it would seem correct that no lien could attach to the proceeds of sale. (The availability of the fund to satisfy liabilities in respect of which there is no lien is of course a separate question, but the concern here is whether or not there exists a maritime lien for the Master and crew’s wages for a period after the date of sale).
It follows that I am not persuaded that Ryan J was in error in concluding that the judicial sale defined the point at which “crystallised” the lien of the Master and crew over the sale proceeds, in the sense that entitlements of the Master and crew arising after the sale would not support a lien over the proceeds. I do not understand his Honour to have excluded, by the use of the term “crystallised”, a lien in respect of entitlements that existed but which would be very difficult to quantify in monetary terms as at the date of sale. In other words, I do not understand his Honour to have excluded, for example, a lien in respect of damages, the amount of which had yet to be ascertained as at the date of sale of the Ionian Mariner.
This is not the end of the matter, however, because his Honour founded this part of his decision on two bases, the other of which was that the sale of the ship in consequence of its arrest brought to an end the relationship of the Master and crew as employees. In this respect, in my view, his Honour was in error because his approach precluded the consideration of entitlements arising by reason of the relationship of employer and employee up to the last moment at which it was possible for a lien in respect of the wages and other entitlements of the Master and crew to attach to the Ionian Mariner.
The trend of authority for a long period has been that, absent relevant fault on the part of the seafarer concerned, a seafarer who is discharged ashore in a foreign country is to be provided with a return home and wages notwithstanding that the contract of employment may be seen to have come to an end. Sometimes a term is implied in the contract of employment, as in The Madonna D’Ildra (1811) 1 Dods. 37 at 39, and sometimes the entitlement is to damages or compensation as in, for example, The Blessing (1878) 3 PD 35 and The Great Eastern (1867) LR 1A & E 384. But whatever the circumstances, it is wrong to proceed upon the basis that the substance of the entitlements of a seafarer discharged ashore in a foreign port must be lost upon the cessation of the relationship of employer and employee.
It seems to me that the course taken by his Honour has meant that there remain unresolved important questions about the precise nature of the entitlements of the Master and crew to “wages” from the date of sale until their return, within a reasonable period, to their home port. It may be that on the true construction of whichever agreement governs the matter, a liability sufficient to found a lien may be seen to have arisen, in the particular circumstances of this case, before the completion of the sale. Indeed it would be a surprising result, if on the true construction of all relevant instruments, a seafarer could be put ashore in a foreign port whilst his ship sails away with new owners and a new crew, without any entitlement to have, then and there, an amount for (or at least in respect of) wages until his departure for his home port within a reasonable time, and for accommodation in the meantime.
So far I have been concerned with the claim for wages. The cross-appellants also claim for the expenses of their accommodation and subsistence beyond 22 December 1995, the outer limit provided for by the declaration of Ryan J, until the date of their departure for their home port. As I have noted, his Honour took the view that the declaration he made was consistent with the principles discussed by Sir William Scott in The Elizabeth. In that case the court laid down, by reference to considerations of a general and practical nature, the conditions upon which the Master might discharge the crew before the voyage came to an end. (The Elizabeth, although still whole, was full of water and was what the judge described as a semi-naufragium.) His Lordship held, in the passage cited earlier in these reasons, that the master could not discharge the crew in a foreign country on terms other than sending them home and paying their wages. The guiding principle seems to me to have been what was fair and reasonable between owner and crew in all of the circumstances.
Also, The Elizabeth is open to the interpretation that an enforceable liability to provide passage home and to pay wages until arrival home arose at the time the crew was discharged, and as a condition of the discharge. On this basis the Master and crew can be seen to have a lien in the present case, arising just prior to or at the time of the sale, for accommodation and subsistence expenses, and whilst there is no difficulty in concluding (as his Honour did) that the entitlement to expenses was an entitlement until 22 December 1995 when an interim distribution of the proceeds was made and nearly all the crew were repatriated, the cross-appellants argue that the entitlement extended well beyond that date. To my mind, the principles of The Elizabeth did not justify, must less require, that in respect of any period beyond 22 December 1995 no payment be made to the Master and the officers who remained in Melbourne. If payments were to have been made by reference to the principles in The Elizabeth then, in my view, those principles justified, in the special circumstances of this case, the payment of money for sustenance and accommodation to the Master and officers until 16 February 1996 when the former Master and the First Engineer departed Melbourne for Vladivostok. Following the interim distribution the Master and other officers were, with good reason, concerned that the effect of what their solicitor had done was to favour the interests of the crew rather than their own distinct interests. Given, amongst other things, that the Ionian Mariner had been at anchor in Port Phillip Bay for upwards of seven months at that time and that the crew had not received their wages since September 1994, it was entirely understandable that when a concern arose about legal representation, a few days before Christmas, the Master and some of the officers wanted to stay behind and arrange new representation. In the position in which they found themselves, and taking into account that it was the time of the year when most Australians take summer holidays, this could well have taken some considerable time. It should also be noted that substantial sums of money were involved and that the Australian legal system was no doubt quite foreign to the Master and the other cross-appellants. It may be inferred too that English was, at best, a second language for these seafarers. The letter written on 21 December 1995, by the solicitor then retained on behalf of the Master and crew, stating that there was little or no advantage in any crew member staying in Australia beyond 22 December 1995, would be a weighty consideration in determining whether it would be reasonable for the crew to stay beyond that date but it would have much less force in relation to the Master and officers who considered that the solicitor had acted contrary to their interests.
I should mention that it was accepted by counsel for the Master and the other cross-appellants that, however their claim was put, there was no entitlement to claim any amount in respect of a period in excess of what would, in the circumstances, be a reasonable period. The outer limit of that reasonable period would of course depend upon individual circumstances and would not necessarily be the same in each case or even amongst members of what could broadly be described as the same category.
Disposition of the cross-appeals:
I now turn to consider the outcome of the cross-appeals. I have already concluded that the appeal should be allowed and the matter remitted to the learned primary judge for further consideration but the question remains whether, for the purposes of the appeal and cross-appeals, the declaration which both the appellants and the cross-appellants challenge should be severed in some way and the two parts dealt with differently. In the present circumstances, I do not consider that this would be an appropriate course. I have concluded that there was, in one respect, an error in the way in which the learned primary judge approached the matter but, clearly, the material before us is not such that the Court can make declaratory orders in favour of the cross-appellants. Moreover, if the cross-appellants do have entitlements which gave rise to a maritime lien prior to the judicial sale of the Ionian Mariner, the nature and value of those entitlements would depend, perhaps in critical respects, upon the agreement or agreements that are ultimately held to be operative with respect to the cross-appellants and that question will need to be considered by the primary judge. In these circumstances, I would not sever the declaration appealed from, which should be set aside on the appeal.
The orders that should be made:
For the reasons I have given, I consider that the declaration appealed from should be set aside and the matter remitted to the learned primary judge or, if he is not available, to another judge of this Court, for further hearing and determination in accordance with these reasons. There should also be an order for an expedited hearing.
It remains to consider costs. Although I would set aside the declaration against which US Trust has appealed, and US Trust has therefore been successful on the appeal, there remains for further consideration the question whether there was a trust of the promise that the first respondents seek to enforce, and possibly other questions as well. US Trust raised substantial procedural points in relation to the trust argument but they were not conclusive on the appeal because of the way in which the parties, including US Trust, argued the matter at first instance. The cross-appellants have also persuaded me that there was an error in the approach taken by the learned primary judge but the outcome of their claims must await a further hearing also. The position will become much clearer when, as an expedited case, the matter is dealt with at first instance. In these unusual circumstances I would reserve the question of costs and I would give leave to any party to apply for costs pursuant to the leave hereby reserved upon notice to the other parties. Unless otherwise ordered by a judge, that notice is to be given in writing not less than 21 clear days before the date proposed for the hearing of the application for costs.
I certify that this and the preceding 39 pages are a true copy of the reasons for judgment herein of the Honourable Chief Justice Black.
Associate:
Dated: 20 August 1997
GENERAL DISTRIBUTION
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG 389 of 1996 ) IN ADMIRALTY )
On appeal from a single judge of the Federal Court
BETWEEN: UNITED STATES TRUST COMPANY OF NEW YORK
AppellantAND:
AND BETWEEN:
AND:
MASTER AND CREW OF THE SHIP “IONIAN MARINER”
RespondentsANDREY KHARITONOV and SERGEY PANFILOV
First Cross-appellantsALEKSANDR SYCHYOV and NIKOLAI RODICHEV
Second Cross-appellantsUNITED STATES TRUST COMPANY OF NEW YORK
Cross-respondentJUDGES: BLACK CJ, LOCKHART & BURCHETT JJ PLACE : MELBOURNE DATED : 20 AUGUST 1997
REASONS FOR JUDGMENT
LOCKHART J:
I have had the advantage of reading the reasons for judgment of the Chief Justice. I agree with them and with the orders proposed by the Chief Justice.
I certify that this is a true copy
of the Reasons for Judgment
herein of the Honourable Justice
Lockhart.
Associate:
Dated:
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG 389 of 1996 ) IN ADMIRALTY )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: UNITED STATES TRUST COMPANY OF NEW YORK
AppellantAND:
AND BETWEEN:
AND:
MASTER AND CREW OF THE SHIP "IONIAN MARINER"
RespondentsANDREY KHARITONOV and SERGEY PANFILOV
First Cross-AppellantsALEKSANDR SYCHYOV and NIKOLAI RODICHEV
Second Cross-AppellantsUNITED STATES TRUST COMPANY OF NEW YORK
Cross RespondentJUDGES: BLACK CJ, LOCKHART and BURCHETT JJ PLACE: MELBOURNE DATED: 20 AUGUST 1997
REASONS FOR JUDGMENT
BURCHETT J
I agree with Black CJ, whose judgment I have had the advantage of reading in draft, for the reasons he has given, that s 4(3)(t)(ii) of the Admiralty Act 1988 does not operate, of its own force, to bring an obligation into existence. Nor does s 17 do so, whether alone or in combination with s 4(3)(t)(ii). I also agree with the reasons Black CJ has given for the conclusion that the way in which this matter proceeded at first instance requires, in all the circumstances, the making of an order now referring the matter back for determination of the question whether the agreements described as the Greek Special Agreement and the Greek Collective Agreement are enforceable, as entered into for the benefit of subsequent crew members of the Ionian Mariner and as being the subject of appropriate trusts. This issue was raised, but not decided, at the hearing. In the view the trial judge took, it was unnecessary to decide it. As the Chief Justice has pointed out, application had been made to join the relevant Greek unions as parties on the basis that they were trustees, and they were necessary parties. Furthermore, as the Chief Justice has also indicated, the resolution of the dispute will involve an examination of the purpose of the agreements in the context of the circumstances in which they were entered into. In my opinion, the Greek unions, which negotiated the agreements, are clearly parties with an interest in the proceedings, and in the questions they involve as to the construction and effect of the agreements.
The terms on which the matter is to be referred back seem to me to require some examination. The enforcement of promises made for the benefit of third parties to a contract is a subject of considerable academic controversy in the common law world. Solutions that have been suggested to the problem have involved doctrinal difficulties in the areas of consideration, agency and trust. It does not seem to me that the enforcement of a contract for the benefit of a third party must necessarily depend upon trust. In some circumstances, the law may be found to provide an exception to the doctrine of privity of contract: The Mahkutai (1996) AC 650 at 664-665, per Lord Goff of Chieveley, delivering the judgment of the Privy Council. Lord Goff found encouragement to take this view in the decisions of the Supreme Court of Canada in London Drugs Ltd v Kuehne & Nagel International Ltd (1992) 97 DLR (4th) 261 and of the High Court of Australia in Trident General Insurance Co Ltd v McNiece Bros. Pty Ltd (1988) 165 CLR 107. Indeed, in Darlington Borough Council v Wiltshier Northern Ltd [1995] 1 WLR 68 at 76-78, Steyn LJ (as Lord Steyn then was) made it clear, in a blistering attack on the whole concept of privity of contract, that he was in favour of going further than creating exceptions, and would abolish the rule. His Lordship pointed out (at 77) that “the civil law legal systems of other members of the European Union recognise such contracts” (ie, contracts for the benefit of third parties).
Although, as the Chief Justice has remarked, no argument was advanced at the hearing of the appeal, or seems to have been advanced before the trial Judge, in reliance upon the proposition that Greek law would enforce a contract for the benefit of a third party, joinder of the Greek unions, if permitted, might well lead to the advancement of just such an argument. Of course, that argument would require the adducing of some evidence of Greek law. It would also require the Court to be satisfied that the proper law of the contract, in the case of each of the Greek agreements, is Greek. The circumstances in which the agreements were entered into; the identity of the Greek unions, on the one hand, and the place of business of the shipping company, on the other; together with the express contractual submission to the jurisdiction of the Greek courts, might well lead to a finding that the proper law of the contract is indeed Greek law. Upon that basis, it is noteworthy that the extremely valuable report of The Law Commission, of which Mrs Justice Arden was chairman, on Privity of Contract; Contracts for the Benefit of Third Parties, presented to the Parliament of the United Kingdom by the Lord Chancellor in July 1996, which contains a detailed and wide ranging review of the subject, states in para 3.8 that the enforceability of the rights of third party beneficiaries under contracts is recognized throughout the European Union, including Scotland, except in England and Wales (and Northern Ireland) and the Republic of Ireland. Greece is specifically mentioned in that paragraph as a state which recognizes such third party rights. This proposition is confirmed by The Principles of European Contract Law edited by Ole Lando and Hugh Beale (1995) at 109, where it is stated: “A stipulation in favour of a third party beneficiary is recognized as valid in the CIVIL LAW systems”, and by the translation by Constantine Taliadoros of the Greek Civil Code, Chapter VIII of which includes the following:
“Section 410. Stipulation for the benefit of a third party. If a person has accepted a promise of performance in favour of a third party such person may demand that the promissor pay to the third party.
Section 411. Right of the third party. The third party may demand the performance directly from the promissor if it appears that such was the intention of the contracting parties or if such conclusion results from the nature and the purpose of the contract.”
There is no doubt that, in the present case, the respondents relied on the traditional doctrine of the common law system enabling a third party to enforce a benefit flowing from a contract between others, that is, the doctrine that the rights of a party to the contract may be held in trust for a third party. That formulation of the position is both traditional and orthodox: see Salmond and Williams on the Law of Contracts (1945) at 424-441. For a modern application of the principle, see Darlington Borough Council v Wiltshier Northern Ltd (supra) at 75, per Dillon LJ and 81, per Waite LJ. For a long time, there was a retreat from the early doctrine of Lord Hardwicke, LC in Tomlinson v Gill (1756) Amb. 330 at 331; 27 ER 221 at 222, imposing a trust on the promisee simply on the basis that “the promise was for the benefit of [a third party]”, a retreat which led Fullagar J in Wilson v Darling Island Stevedoring and Lighterage Company Limited (1956) 95 CLR 43 at 67 to exclaim: “It is difficult to understand the reluctance which courts have sometimes shown to infer a trust in such cases.” With this judgment of Fullagar J, Dixon CJ stated (at 52) that he “entirely agree[d]”, and it is the judgment “with every line and every word” of which Viscount Simonds expressed his own agreement in Scruttons Ltd v Midland Silicones Ltd [1962] AC 446 at 472. However, there are grounds to think that the doctrinal pendulum is swinging back towards Lord Hardwicke’s view: see the thought-provoking article of David Wright, Trusts Involving Enforceable Promises, (1996) 70 ALJ 911; Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 618-619; Trident (supra); Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 at 503, per Gummow J; Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 at 189-190, 198-199.
The substance of the respondents’ claim at first instance was simply that, in the particular circumstances, the benefit of the promises contained in the Greek agreements was intended to be conferred on them, and they sought to have the Greek unions, as the parties which had secured those benefits for them, joined in the action to enable the enforcement of their rights. The matter went off on a different point, which we hold involved error. In my opinion, in the special circumstances, at the further hearing which we are ordering, the respondents should be entitled to rely on the substance of their claim, making any necessary amendments, and not be limited to the single basis of trust of a contractual benefit. Had the trial Judge not seen the matter as he did, it is probable that the Greek unions would have become parties and would have urged the enforceability of the relevant terms irrespective of trust, in view of the provisions of the Greek Civil Code. At the same time, the view of the Privy Council in The Mahkutai (supra) - and see also the report of the Law Commission cited above which no serious examination of the topic should omit - might have been urged in support of a contention that the common law might allow an exception in cases of the present kind.
Subject to the foregoing, I agree with the judgment of Black CJ.
I certify that this and the preceding four (4) pages are a true copy of the Reasons for
Judgment herein of the Honourable Justice Burchett.
Associate:
Date:
Counsel for the Appellant: G A A Nettle QC and J L R Francis Solicitor for the Appellant: Mallesons Stephen Jaques Counsel for the fourteen crew members other than Andrey Kharitonov, Sergey Panfilov, Nikolai Rodichev and Aleksandr Sychov: R C Macaw QC and P Santamaria Solicitors for the fourteen crew members other than Andrey Kharitonov, Sergey Panfilov, Nikolai Rodichev and
Aleksandr SychovHolding Redlich Counsel for Andrey Kharitonov and
Sergey Panfilov:M S Osborne Solicitors for Andrey Kharitonov and
Sergey Panfilov:Purves Clarke Richards Counsel for Nikolai Rodichev and
Aleksandr Sychov:D G Loadman Solicitors for Nikolai Rodichev and
Aleksandr Sychov:Efrons Date of Hearing: 13 March 1997
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9
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