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.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.