Jeyang International Company Ltd v Owners of the Motor Vessel Kao Ya No 1 and Kao Ya No. 137 [2002] FJHC 33; HBG0009d.2001s (12 July 2002)

IN THE HIGH COURT OF FIJI
(AT SUVA)
ADMIRALTY JURISDICTION

ACTION NO. HBG 009 OF 2001S

Between:

JEYANG INTERNATIONAL COMPANY
LIMITED & OTHERS
Plaintiffs

and

THE OWNERS OF THE MOTOR VESSEL “KAO YA NO. 1”
AND “KAO YA NO. 137”
Defendants

V. Kapadia for the First Plaintiff
Fa for the Land Bank of Taiwan, Intervening
K. R. Bulewa for Yan Chi Chien, Intervening
K. Keteca for the Attorney-General

DECISION

The two vessels “KAO YA NO. 1” and “KAO YA NO. 137” were arrested on 9 November 2001. After the sale of the vessels took place pursuant to the order of this court the proceeds amounting to approximately F$1,803,823.00 were paid into court.

The only matter now before the court for determination is the priority of the various claimants to the funds paid in. Whether any party will in fact succeed in establishing its claim is a separate question.

Jeyang International Limited, the first Plaintiff at whose instance the vessels were arrested says that it represents the crew’s claims. The only intervener seeking priority over this claim is the Land Bank of Taiwan to which it appears the vessels were mortgaged.

In the “Halcyon Isle” [1980] 2 Lloyd’s Rep 325 Lord Diplock explained that six classes of claims are treated as giving rise to maritime liens on ships. The are, in order of priority:

(i) Salvage
(ii) Collision damages;
(iii) Seaman’s wages;
(iv) Bottomry (now obsolete);
(v) Master’s wages; and
(vi) Master’s disbursements.

Although the ranking for the purposes of priority in the distribution of a limited fund is described as complicated Lord Diplock, at page 329 pointed out that:

“In English Admiralty law and practice claims of all those 6 classes that have hitherto been treated as giving rise to a maritime lien take priority over claims under mortgages in the distribution of a limited fund by the court and mortgages themselves rank in priority to all classes of claims that have not been treated as giving rise to maritime liens.”

Although the relevant volume of British Shipping Laws dealing with Admiralty Practice, referred to by Lord Diplock is unfortunately missing from our library Mr. Kapadia helpfully referred me to Meeson’s Admiralty Jurisdiction and Practice, Lloyds 1993 which at page 160 states:

“the claim of a mortgagee is postponed to a claim with a maritime lien whether arising before or after the mortgage (The “Royal Arch” (1857) Swa. 269).

In the face of these authorities Mr. Fa asserted that the Land Bank of Taiwan was entitled to claim priority over the crews wages since the vessels themselves had only been constructed with funds lent by the Land Bank . Therefore, he argued, in a variation of the reasoning of Langton J in the “Mons” [1932] P 109, 111 (and substituting the mortgagee for the salvor) that:

“It accords with ones natural view of justice that the salvor who has preserved the whole of the res should have his claim considered in priority to the various creditors of the ship who had nothing on which to claim if the exertions of the salvor had not been made.”

In support of his argument Mr. Fa cited the “Pickanniny” [1960] 1 Lloyd’s Rep 533 and Faurnier v. the ship “Margaret 2” [1999] 3 NZLR 117.

I have read both these cases but do not find that they assist Mr. Fa. The first, in which the Court was asked to determine priorities as between mortgagees and necessaries men is authority for the proposal (at 537) that:

“the Court must be slow to depart from the usual order of priorities.”

It does not deal with the rival claims of a ship’s crew and a mortgagee.

The second case usefully reproduces Sections 4 & 5 of the New Zealand Admiralty Act 1973. This Act ranks seamens' wages and master’s wages at (d) and (e) while ranking mortgagees at (k). It involves competing claims between a mortgagee, personal injuries claimants and a supplier of fuel and lubricants. Seamens' wages were not in issue.

A further and fundamental difficulty faced Mr. Fa. In presenting the Land Bank’s case he relied principally on an affidavit filed on 31 January 2002. This affidavit appears to be largely written in some form of Chinese or other oriental script. The part written in English may or may not be a translation of the parts written in this oriental script. I do not know. The parts written in English at best appeared to show that “Kao Ya No. 137” was the subject of a right of hypothecation registered in August 1990 prior to the launch of the ship in October 1990. I can find no reference at all to “Kao Ya No. 1”.

There will be a declaration that the crew’s claim if properly established in respect of both vessels ranks in priority to the claims of the Land Bank.

M.D. Scott
Judge

12 July 2002