09th Aug 2018
Richard Sarll recently acted as Counsel for the crewmembers of the “MALAVIYA TWENTY”, an offshore supply vessel lying at the Port of Great Yarmouth, in their action for the recovery of unpaid wages.
On 26 July 2018 Richard successfully obtained for the crewmembers an order for the appraisement and sale of the vessel, which was duly arrested. The crewmembers are soon to be repatriated, having arrived at Great Yarmouth as long ago as June 2016.
The problems stemmed from the shipowner having gone insolvent. At the time of the order, the Indian crewmembers were owed considerable back pay and were reluctant to leave the vessel derelict. Richard acted on a CFA, so too did his instructing solicitors, Birketts LLP.
The case has received considerable press coverage, in which reference is made to a “complex series of legal disputes”. For Admiralty practitioners wishing to know the issues, they can be described briefly as follows.
Seafarers’ Rights in English law
Publications on seafarers’ rights do not record any particular difficulty in the pursuit of claims for unpaid wages before English courts. However, one problem encountered by the seafarers related to the need to put up a solicitors’ undertaking in order to obtain an order for the arrest and sale of the vessel, out of whose proceeds their wages might be paid. Firms are notoriously wary of giving solicitors’ undertakings and ordinarily give them only when provided with appropriate security by the applicant for the arrest. The seafarers aboard MALAVIYA TWENTY were not in a position to provide any such security, and they were therefore in a “Catch 22” situation. The Civil Procedure Rules clearly state that an undertaking must be given upon an arrest, yet the seafarers could not procure one.
Various solutions were canvassed before the Admiralty Court, including the postponement of the arrest until the time of the sale, as well as a Human Rights Act challenge to the Rules themselves. Ultimately, a remedy was found in the giving of a cross-undertaking to the seafarers’ solicitors by the solicitors for the Port of Great Yarmouth, to whom port dues were owed.
Port Dues and “super-priorities”
The Port of Great Yarmouth were themselves interested in the ship by reason of unpaid port dues and other charges pursuant to the Harbours Docks and Piers Clauses Act 1847. They had distrained the vessel accordingly. Various avenues existed for the recovery of the port dues, including the exercise of the Port’s own statutory power of sale; a claim in the Admiralty Court in pursuit of a statutory right in rem; and finally, for them to be paid by the Admiralty Marshal as an expense of sale under the so-called “Queen of the South” regime. (See  1 Lloyd’s Rep. 182)
Of these options, the Port was unwilling to pursue the first, apparently out of concern that it might not be able to give a good title free of all encumbrances as on a sale by the Admiralty Court, or else for fear that the sale price would be depressed if it were sold by the Port rather than by the Admiralty Court. As for a claim in the Admiralty Court for port dues, this would rank lower in priority than the mortgagee’s claim, such that it could lead to no pay-out. This would tend to explain why, although the Port was pursuing a claim in the Admiralty Court, it was doing so with no great alacrity. As for the “Queen of the South” regime, the Port needed another claimant to obtain an order for sale, in order for its port charges then to be paid by the Marshal in satisfaction of its own prior statutory right of distraint and sale. This would explain why the Port was ultimately willing to put up a cross-undertaking to the crew: in this way, it could take advantage of the “super-priority” afforded by The Queen of the South Regime, and therefore be paid first. Otherwise, its claim would rank beneath that of the mortgagee, in which case it might obtain nothing.
It is regrettable to think that the pragmatic solution favoured by Brandon, J. in The Queen of the South to the problem of there being conflicting powers of sale vested in a Port Authority and in the Admiralty Court may in fact result in unpaid seafarers languishing longer aboard ships than they would otherwise have to. Given that a ship is anyway incurring daily port dues, there is little incentive for a Port Authority who is unwilling to exercise its own power of sale to pursue a statutory right in rem before the Admiralty Court, rather than to wait and see what other claims might come along, which could afford it the “super-priority” available under The Queen of the South regime.
It was out of concern for the possibility of gridlock that Richard Sarll and Paul Haworth of Birketts made their successful intervention.
Payment of an advance
As for the crewmembers, the Order for Sale included a direction that the Admiralty Marshal be authorised to pay the repatriation expenses and also to pay such advances in respect of wages as he finds himself able to do, such expenditures to form part of the Marshal’s cost of arrest. Such a direction had previously been made in The General Serret (1925) 23 Lloyd’s Rep. 14.
Given their high-ranking claim to wages, it is anticipated that the crewmembers will be paid their wages in full from the proceeds, once the sale has been completed.
Richard Sarll is the Vice-Chairman of the Admiralty Bar Group and a member of the Admiralty Court Users’ Committee. According to Chambers & Partners he is “particularly well regarded for his admiralty law expertise”.