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Demetries Karamanlis et al. (Plaintiffs)
v.
The Norsland (Defendant)
Trial Division, Pratte J.—Montreal, August 16 and September 21; Ottawa, December 1, 1971
Maritime law—Jurisdiction—Seamen's claims for wages and repatriation against ship—Action in rem for wrongful dismissal, jurisdiction—Maritime lien, whether seamen enti tled to for wrongful dismissal.
Following its arrival at Montreal the Norsland was arrest ed on June 11, 1971, by S, who later desisted from the proceeding. On August 6 the master and crew brought action against the ship for wages, repatriation costs, etc. No defence was entered and plaintiffs moved for judgment by default. Their employment contracts provided for payment of three months' wages if the owners broke the contract.
Held: (1) The master and crew did not lose their right to wages on the arrest of the ship by S on June 11. The Carolina 3 Asp. M.L.C. 141, distinguished; The Fairport 2 [1966] 2 Lloyd's Rep. 7, referred to.
(2) This Court has jurisdiction to entertain a claim in rem by a seaman for compensation for wrongful dismissal, viz, the three months' wages which were payable as liquidated damages under the contracts of employment for the owners' breach of contract.
(3) Plaintiffs were not entitled to a maritime lien for the three months' damages for wrongful dismissal, at any rate in the absence of proof that they had actually sustained such damages. The British Trade [1924] P. 104, 18 Lloyd's Rep. 65; The Sara (1889) 14 App. Cas. 209, discussed.
MOTIONS for default judgment (Montreal, August 16, 1971) and respecting distribution of proceeds of sale of vessel (Montreal, September 21, 1971).
August 16, 1971.
Michael Davis for plaintiffs. S. Hyndman for a mortgagee. September 21, 1971.
Edouard Baudry, David Marler, Vincent Prajer, Luc Mousseau, Colin Gravenor for
claimants.
PRATTE J.—This is an application for default judgment in an action in rem taken by the master and the crew of the ship Norsland.
The Norsland reached the port of Montreal on June 7, 1971. She had just been discharged when, on June 11, she was arrested by Sivaco Wire and Nail Company Ltd. in another case. As Sivaco did not proceed with its action and as, at the end of July, it appeared that the ship had been abandoned by its owners, the captain and the crew, who had remained on board and had kept on maintaining the ship despite the fact that they had not been paid since the begin ning of May, took the present action and arrest ed the ship. By this action, which was com menced on August 6, the captain and the crew claim, in addition to wages, repatriation costs, damages and the reimbursement of disburse ments and liabilities allegedly made or incurred on account of the ship.
The whole crew remained on board till August 18. On this date, eleven members of the crew were repatriated; the captain, a third engi neer, an oiler and two A.B.'s stayed on board and maintained the ship till September 15, 1971, the date on which she was sold before judgment pursuant to an order of this Court dated August 18, 1971.
On September 13, the plaintiffs made two motions: the first one being the motion for default judgment with which I am now con cerned, and the second one (which was certain ly premature since, at that time, the ship had not yet been sold) being an application to be paid immediately by preference out of the pro ceeds of the sale of the ship. These motions were adjourned to September 21 and plaintiffs' solicitors were directed to notify all creditors of this adjournment.
The two motions were therefore heard on September 21 in the presence of all interested creditors. All counsel then acknowledged that the plaintiffs were entitled to their repatriation costs and to their wages (excluding overtime) up to June 11, 1971, the date on which the ship
had first been arrested by Sivaco. As counsel also agreed that, to this extent, the plaintiffs' claim was secured by a maritime lien, they consented to the issuance of an order granting in part the motion for immediate payment and ordering that the sum of $10,460.75 be paid immediately to the plaintiffs out of the proceeds of the sale of the ship.
As to the motion for default judgment, it must be said that, while all counsel obviously agreed that it should be granted, they could not reach an agreement as to the amount to which the plaintiffs were entitled. At the hearing, the master of the ship was heard as a witness and was cross-examined by solicitors for the other creditors. Then, plaintiffs' counsel and counsel for The First Pennsylvania Banking and Trust Company (which, allegedly, held a mortgage on the ship) asked for and were granted leave to argue this motion in writing. Plaintiffs' counsel filed his written argument on October 13, 1971, while counsel for The First Pennsylvania Bank ing and Trust Company filed his on November 2.
As counsel, in their written submissions, dis cussed at length the question whether or not the plaintiffs' claims were secured by a maritime lien, it is not superfluous to point out that this question is not in issue here. The owners of the arrested ship did not file a statement of defence; the plaintiffs are therefore entitled to get judgment for any amount which, according to the evidence, would be owed to them, wheth er or not the debt be secured by a maritime lien, provided that their claims be of such a nature that they can be enforced by an action in rem.
It is admitted that the plaintiffs are entitled to the costs of their repatriation and to their monthly wages up to June 11, 1971, the date on which the Norsland was first arrested. As a matter of fact these costs and wages have already been paid pursuant to the consent order that I made on September 21, 1971. Moreover, counsel for The First Pennsylvania Banking and Trust Company has conceded that the members of the skeleton crew who maintained the ship
till she was sold on September 15, should, in addition, be awarded their regular monthly wages from the day of the first arrest of the ship up to September 15. It is clear, therefore, that the plaintiffs should get judgment at least for these amounts.
The questions which remain to be answered are the following:
1. Are the members of the crew which were repatriated on August 18 entitled to their regular wages for the period extending from June 11, 1971 (the date of the first arrest) to the date of their repatriation?
2. Are the captain and members of the crew entitled to compensation for wrongful dismissal?
3. Are the nine members of the crew who allegedly worked overtime entitled to the additional remuneration that they claim in this respect?
4. Is the master entitled to the sum of $1872 that he claims for "port expenses"?
5. Is the master entitled to recover the vari ous amounts claimed as disbursements and liabilities made or incurred on account of the ship?
These questions will now be considered in the order they have just been put.
1. The regular wages of the members of the crew who were repatriated on August 18, 1971, for the period extending from June 11 to the date of the repatriation.
It was argued that these members of the crew ceased to be entitled to their wages when the ship was first arrested by Sivaco Wire and Nail Company Ltd., on June 11, 1971. In support of this contention, apart from American authori ties that need not be discussed here, I was referred to two precedents, Horlock v. Beal [1916] 1 A.C. 486 and The Carolina 3 Asp. M.L.C. 141, which, in my opinion, have no application here.
In Horlock v. Beal (supra), the House of Lords simply held that the contracts of service of a seaman is terminated when, without any
fault of the contracting parties, its further per formance becomes impossible. It seems obvious that this rule applies only when the further performance of the contract has become impossible and when this impossibility arises from a cause that cannot be imputed to the owners of the ship. If I now revert to the case under consideration, I must say that the first arrest of the ship did not, in itself, create an impossibility of performance of the contracts of service of the crew since it was always possible for the owners to make arrangements for the release of the arrested ship; moreover, in my view, when the further performance of the con tracts of service of the crew became impossible due to the owners' decision to abandon the ship, this impossibility of performance proceeded from a cause that could be imputed to the owners.
The judgment of Sir Robert Phillimore in The Carolina (supra), which was also quoted by counsel for The First Pennsylvania Banking and Trust Company, is no authority for the proposi tion that the seamen cease to be entitled to their wages the moment their ship is arrested. In that case, which has since been overruled (The Fair- port (No. 2) [1966] 2 Lloyd's Rep. 7), it was decided that when a seaman institutes a suit for wages he ceases to have any claim for subse quent wages; it was not decided that a seaman ceases to be entitled to his wages when the ship is arrested by a third party and, actually, the plaintiffs in that case, who had remained on board The Carolina after she had been arrested in a cause of necessaries and who had later sued for their wages, were allowed their wages up to the time of commencement of their suit.
It appears, therefore, that the crew of the Norsland did not cease to be entitled to their wages on June 11, for the sole reason that the ship was then arrested. In my view, those mem bers of the crew who remained on board till August 18 are entitled to their wages up to that date provided that their contracts of service did not terminate earlier.
When did the contracts of service of these seamen come to an end? In order to answer this question, the following facts must be borne in mind:
(a) The master and all members of the crew had been hired for a fixed period of twelve months under written contracts which, in each case, contained the following clauses:
If discharged on my own request before expiration of this contract, I agree to pay my own repatriation.
In case owners or any other reason broken this con tract, I must receive my wages, plus overtime if any, plus three months wages as vacation, and repatriation.
(b) The master expected that, upon arrival in Montreal, all wages due to him and to the crew would be paid by the local agent of the owners, Lillis Marine Agencies Ltd. When he realized that the agent could not pay these wages, he telephoned the owners who gave him the assurance that the money would soon be forthcoming and that the necessary arrangements would be made to secure the release of the ship; he was therefore told to keep the crew and to maintain the ship. How ever, at the end of July, more precisely on July 23 or 24, the master, who kept telephon ing the owners, was told that they were unable to raise any money and had decided to abandon the ship.
(c) From June 11, to August 18, the whole crew remained on board the ship and did some maintenance work.
In my opinion, when the master was notified, on July 24, that the owners had decided to abandon the ship, it became clear that his con tract of service as well as those of the crew had been "broken"; consequently, under the above- quoted clauses of their contracts of service, the plaintiffs were then entitled to their "wages, plus overtime if any, plus three months wages as vacation, and repatriation". Even if the mem bers of the crew chose to remain on board after the owner had repudiated their contracts of service, they nevertheless were no longer enti tled to any wages since their contracts of ser vice had then been terminated.
For these reasons, I am of the opinion that those of the plaintiffs who were repatriated on
August 18 are entitled to their wages up to July 24, 1971.
2. The compensation for wrongful dismissal.
The plaintiffs, apart from their regular wages, also claim the additional "three months wages" to which they were entitled by virtue of the above-quoted stipulations of their contracts of service.
It is clear that these additional wages are, in fact, liquidated damages. It is also clear that there was a breach of the contracts of service on the part of the owners. Consequently, under the terms of their contracts of service, the master and the crew are entitled to the indemni ty that had been agreed upon. The sole issue to be determined in this connection is whether this claim could be enforced by an action in rem.
I believe that this Court has jurisdiction to entertain a claim in rem by a seaman for com pensation for wrongful discharge (The Great Eastern (1867) L.R. 1A. & E. 384; The Blessing (1873) 3 P.D. 35; The British Trade [1924] P. 104; Federal Court Act S.C. 1970, c. 1, secs. 22 and 43). I therefore conclude that this part of the plaintiffs' claim should be allowed. I point out, however, that I do not mean to say that the plaintiffs' rights to these liquidated damages are secured by maritime liens; this is an altogether different question that need not be determined here.
[The judgment is not reported on the three remaining questions mentioned by the learned Judge, which involved no questions of law. In result, His Lordship gave judgment against defendant for $32,325.17 apportioned in speci fied amounts among the twelve plaintiffs, in addition to their costs.—Ed.]
* * *
On September 15, 1971, pursuant to an order of the Court dated August 18, 1971, the defend ant ship was sold for the price of $111,000. As this amount was insufficient to meet all the claims made against the ship, all claimants appeared before me on September 21st to dis cuss the way in which it should be distributed. All interested parties then agreed that the fol-
lowing categories of claims were secured by a maritime lien and should be paid by preference in the following order:
1) Registrar and Marshal's fees and expenses re: the arrest and bringing the funds into Court;
2) Costs of the arrest by the plaintiffs and bringing the funds into Court;
3) Costs of the first arrest of the ship by Sivaco Wire and Nail Company Ltd. in case No. T-2118-71;
4) Wages of seamen with party costs with respect to the proof of the lien for wages of seamen;
5) Wages of captain with costs of proof;
6) The claim of the National Harbours Board.
Concerning these six classes of claims it was agreed (and ordered) that the parties contending to have a claim falling within the first three classes should have their bills of costs taxed in the usual manner. Counsel also told me that the amount of the claim of the National Harbours Board was not contested and it appears from affidavits filed since then that this claim amounts to $195.32. As to the amount of the claims of the seamen and master of the ship, however, which fall within the 4th and 5th above-mentioned classes, the parties could not agree. After the parties had adduced all evi dence they deemed relevant, I ordered that this issue be argued in writing.
As to the other claims, I was told that the only difficulty to be solved arose from the fact that one of the creditors, The First Pennsyl- vania Banking and Trust Company (hereinafter called "The Bank") which allegedly had a mort gage on the ship for an amount of $110,000, claimed to be paid before other claimants. For this reason, further to a suggestion made by all interested parties, I ordered this issue to be also argued in writing. On October 13, 1971, how ever, I granted a motion made on behalf of the
plaintiffs and rescinded this order because it had then become obvious that the rank of The Bank's claim could not be discussed in the abstract before The Bank had established the validity of its mortgage.
I intend to indicate here the amounts of the claims of the captain and of the crew which I propose to consider as secured by a maritime lien and as ranking immediately before the claim of the National Harbours Board.
By a judgment dated the 1st day of December 1971, I granted the motion for default judgment made by the captain and the crew (the plaintiffs herein) and ordered the defendant ship to pay them a sum of $32,325.17. This sum comprised:
1. The wages (regular and overtime) of the skeleton crew which maintained the ship till she was sold on September 15th.
This part of the plaintiffs' claim is, in my view, secured by the maritime liens of the master and of the seamen.
2. The wages (regular and overtime) of the remaining members of the crew up to July 24, 1971.
This part of the plaintiffs' claim is also, in my opinion, covered by the maritime lien of the seamen.
3. The repatriation costs of the captain and of the crew.
All interested parties agreed that this part of the plaintiffs' claim was secured by their maritime liens.
4. An indemnity equal to the three months wages, for wrongful dismissal.
I am of the opinion that the full amount of this indemnity is not covered by the mari time liens of the seamen and of the master. In my view, if the maritime lien of seamen extends to damages for wrongful dismissal, whether or not they were hired under "the ordinary mariner's contract", it only extends to the compensation of damages that have actually been sustained by the seamen. In this case, we do not know
whether or not the members of the crew who maintained the vessel till September 15th (and to whom I awarded their wages up to that date) did suffer damages in consequence of their dismissal; for this reason I would say that the compensation that I awarded them in this respect is not secured by their maritime lien. As to the other members of the crew, who stayed on board till August 18th and to whom I awarded their wages (and overtime) only up to July 24th, their situation is different. Indeed, it cannot be denied that they lost, in consequence of their dismissal, an amount equivalent to the amount of their wages (plus overtime) for the period extending from July 24th to August 18, 1971. Consequently, I consider that the compensation that I awarded them is, to this extent, secured by their maritime lien.
In short, I propose to decide that the mari time liens of the master and of the crew cover, in addition to the repatriation costs, an amount equivalent to the amount of the wages (and overtime) that they claimed.
In his written argument, counsel for The Bank put forward two propositions:
1. No maritime lien can be created once a vessel is arrested.
2. The maritime lien for wages does not include compensation for unlawful dismissal unless the suit is brought (and this is not the case here) upon the "ordinary mariner's contract".
As one may gather from what I already said, I consider these two contentions to be ill-found ed. However, it is perhaps not useless for me to state briefly the reasons which lead me to this conclusion.
Of the first proposition, I need not say more than that it is not supported by any authority.
As to the second proposition, it is founded on the authority of the judgment of Sir Henry Duke in The British Trade [1924] P. 104; (1924) 18 Lloyd's Rep. 65, which, itself, was based on the decision of the House of Lords in The Sara (1889) 14 A.C. 209. It was indeed decided in
The British Trade that the maritime lien for wages of a seaman does not include compensa tion for unlawful dismissal unless the suit is brought upon the "ordinary mariner's contract". But if Sir Henry Duke felt bound to reach this decision it was for the sole reason that he considered that it had been held in The Sara that "section 10 of the Admiralty Court Act, 1861, did not create any maritime lien which had not existed before that Act, but merely conferred upon the Court of Admiralty jurisdic tion in cases where previously it had not juris diction". Now, one need only to read the deci sion of the House of Lords in The Sara to realize that it was misinterpreted by Sir Henry Duke. For this reason, I think that The British Trade was wrongly decided. And even if it were not so I would hesitate to follow a precedent which makes the rights of seamen dependent on their having been hired at conditions which were perhaps ordinary in the 18th century but which are certainly not common now (See The Arosa Star [1959] 2 Lloyd's Rep. 396 at p. 403; The Sara (1889) supra at p. 215).
If I revert now to the problem raised by the contention of The First Pennsylvania Banking and Trust Company that it is entitled to be paid before all claimants who do not have maritime liens, I think that the proper procedure to be followed would be for The Bank to prove its claim, its mortgage and all factual elements on which its contention rests. If, within fifteen days, counsel for The Bank has not, in agree ment with counsel for the other interested creditors, made the necessary arrangements with the Registry to determine a date on which he will make this proof and submit all relevant legal arguments, any other interested party will be at liberty to make a motion to have this Court determine a date on which The Bank will be enjoined to prove its claim.
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