The Turiddu
| Jurisdiction | England & Wales |
| Judge | Lord Justice Brooke,Lord Justice Schiemann,Lord Justice Nourse |
| Judgment Date | 29 June 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0629-7 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 June 1999 |
| Docket Number | QBADI 1998/1266/3 |
[1999] EWCA Civ J0629-7
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
(Mr Justice Rix)
Royal Courts of Justice
Strand, London WC2
Lord Justice Nourse
Lord Justice Schiemann
and
Lord Justice Brooke
QBADI 1998/1266/3
Admiralty action in rem against the ship "Turiddu"
and
and
and
MR B EDER QC (instructed by Messrs Watson Farley & Williams, London EC2) appeared on behalf of the Appellant Intervener.
MR T BRENTON QC and MR T MACEY-DARE (instructed by Messrs Clifford Chance, London EC1) appeared on behalf of the Respondent Plaintiffs.
Tuesday, 29th June 1999
This is an appeal by the First National Bank of Maryland, as intervener, from the judgment of Rix J dated 23rd April 1998 when he made a declaration that the first to thirty-third plaintiffs, who were the members or former members of the crew of the ship "Turiddu", were entitled to a maritime lien over the proceeds of sale of the ship in priority to the intervener's mortgage. Judgment was entered for these plaintiffs in respect of wages due to them from the defendants, who were the owners of the ship, and directions were made in relation to sums which had been paid into court by agreement out of the proceeds of sale of the ship.
The owners of the vessel were the Malta-based Pius Shipping Company ("Pius"). They wished to recruit a Cuban crew. There are two state-owned Cuban agencies, both based in Havana, which come into the picture on a transaction of this kind. The owners will approach the Guincho Crewing Agency ("Guincho") with their request for a crew, and Guincho will in turn approach an employment company called Agemarca, which provides Cuban manpower for foreign business. In turn, Agemarca will have a number of potential crew members in its books, although it has no responsibility for paying them anything except in the context of the arrangements which I will describe.
In the present case Agemarca supplied the crew pursuant to the terms of a Contract of Hire with Guincho. Guincho supplied them to Pius pursuant to the terms of a Crewing Contract, and Pius entered into individual Embarkation Contracts with each member of the crew it recruited. A fourth set of contractual relationships existed between Agemarca and those on their books, but the evidence showed that these arrangements were largely oral.
There is a sample Embarkation Contract with the court's papers. It is in familiar terms, defining the length of service at sea and the monthly remuneration (together with overtime rates) for the crew member, and also including provisions covering such matters as working hours, breaks, holidays and days off; subsistence; repatriation; sickness or accident; rescission; loss of baggage and personal documents; and applicable law (being the labour legislation of the Republic of Cuba).
The length of service at sea was to be nine months (which Pius was entitled to lengthen or shorten by three months for operational reasons). Clause 4 provided that:
"4.1 [Pius] will pay US$1,900 a month for the crew member's services.
4.2 The crew member will receive from the Captain on board the vessel US$570 a month.
4.3 [Pius] will, with the crew member's agreement, pay US$1,330 a month to [Guincho]."
The Embarkation Contract defines as "the Employer" the Employing Company from whose personnel the Crew Member is drawn, and Clause 3.3 provides:
"The salary in national currency, holidays and Social Security, will be determined by the Employer to which the crew member belongs, and paid to him accordingly."
The allotment of a seaman's wages in the manner described by Clause 4 of the Embarkation Contract is a very familiar concept. Under English law, Sections 36 and 37 of the Merchant Shipping Act 1995 make express provision for allotment notes, and give a person to whom any part of a seaman's wages has been allotted:
"..the right to recover that part in his own name and for that purpose [he] shall have the same remedies as the seaman has for the recovery of his wages."
Similarly, Section 20 of the Supreme Court Act 1981, on which the modern Admiralty jurisdiction of the High Court is founded, gives it jurisdiction by sub-sections (1)(a) and (2)(o) to hear and determine:
" any claim by … a member of the crew of a ship for wages (including any sum allotted out of wages …)."
The first to fifteenth plaintiffs in this action are Cuban nationals who were engaged in July or August 1996 by Pius pursuant to Embarkation Contracts made in the terms I have described to serve as officers and crew on board the "Turiddu". They were serving in that capacity when the vessel was arrested at New Holland, near Grimsby, in early May 1997. The sixteenth to thirty-third plaintiffs are Cuban nationals who had served on the vessel on the same or similar terms between October 1994 and January 1997. Schedules 4 and 6 to the Amended Statement of Claim show that Pius started to default on payment of wages to the vessel's officers and crew as early as June 1995, and by the time the vessel was arrested the current crew members claimed to be entitled to arrears of wages in excess of US$150,000 and the former crew members entitled to arrears of US$60,400.
After the vessel's arrest the intervener bank claimed to be entitled to over $1,650,000, the arrest constituting an event of default under a loan agreement made in January 1997 which was secured by a mortgage of all the shares in the vessel. The bank did not dispute that the current crew members, who had to spend ten idle weeks in Hull while the lawyers were arguing, were entitled to rely on a maritime lien in respect of the 30% of their wages which should have been paid to them on board the vessel pursuant to Clause 4.2 of their contracts, but it maintained that a lien did not extend to the Clause 4.3 payments or to the wages due to the former crew, and that in those circumstances its mortgage took priority. On 15th July the current crew were persuaded to accept the 30% element (which amounted to just over US$58,000) under protest and without prejudice to their claim for the full wages, in return for arrangements to be made for their immediate repatriation, which took place two days later.
On 27th June 1997, Clarke J, when giving judgment in favour of the intervener for over US$1,670,000, ordered the sale of the vessel and required the outstanding wages of the current crew to be agreed and paid, together with the expenses of their repatriation, by the Admiralty Marshal, as costs of the arrest. When the parties were unable to agree the amount of the wages to be attributed to the judge's order, they agreed that following the sale of the vessel (which took place on 24th September 1997) US$225,000 should be paid into court as security for the plaintiffs' claims pending the resolution of the dispute.
The bank based its contentions on the provisions of the Pius-Guincho contract and more particularly the Guincho-Agemarca contract. The first, which was governed by English law, made provision as to what was to happen to the 70% of the crew's wages which were to be paid each month by Pius to Guincho with the relevant crew member's agreement. The relevant provisions of this contract were as follows:
"Article No 5: Payment
5.01 [Pius] undertakes to pay monthly to [Guincho's] Bank account as per Side Letter attached to this Crewing Contract which cover:
(a) 70% of Basic Wages
5.02 The only other cost not included in the lump sum which shall be for [Pius's] account are:
(l) Agency Fees USD50 per month per crew member, which cover
Scanning, recruitment
Training
….
Union Fees
Bank Fees
Communication relative to crewing
Insurance and Social Security in Cuba.
Article No 6: Cash Advance Method
6.01 At [Guincho's] request [Pius] shall deliver to the crew cash advance money up to 30% of monthly wage in USD plus 2.5 days as leave pay plus [US$]120 fixed overtime … for no more than 80 hours, in accordance with Side Letter attached to this contract.
6.02 Cash advance money will be paid in USD.
….
6.04 Seafarers under this Contract have declared on Enlistment Contract their acceptance to transfer to [Guincho's] Bank Account 70% of his monthly wage (as per Side Letter attached to this contract).
Article No 7: Payment Method
7.01 Due Monthly Payment to [Guincho] should be made within 45 days of correspondent month by telegraphic transfer in the currency agreed.
If said payment is made from abroad, then it should be effected in British Pounds as follows:
Transfer to Banco Financiero Internacional, Havana, Cuba, in favour of:
Account Number:
402.01.2394
Ref:
Guincho Crews."
The Side Letter contained a statement of the basic wages for each category of crew member, broken down in three columns as to 100%, 70% to be sent to [Guincho], and 30% respectively. It also included a few other details such as overtime rates.
The bank also placed reliance on Article No 11 (General) which begins:
"11.01 It is understood that the crew are the employees of [Guincho] who agrees to place at the disposal of [Pius] for the duration of this Contract in order to ensure satisfactory operation of the vessel. So during the period of embarking contract the seafarer will be subject to owner's and flag's regulations and under owner-master's orders …
11.02 It is understood that...
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