In Rem and in Personam claims update - Noble Shipping successful in having appeal dismissed - Spamat S.R.L v. The Owners and all persons claiming an interest in the M.V. Almirante Storni

On 9 March 2020 the Court of Appeal dismissed the appeal by Spamat S.R.L. against the ex tempore  judgment of McDonald J on 24 May 2019.  The judgment of the Court of Appeal highlights again the relationship between in rem and in personam claims.

 

In the High Court proceedings, the appellant had claimed the sum of €38,314.07 from the respondent in respect of a debt claimed to be due and owing in respect of disbursements made by the appellant allegedly on behalf of the vessel the MV Almirante Storni (the “Vessel”) during its call at the port of Bari in March 2018.  It was not disputed by the appellant that the services allegedly provided to the Vessel were services ordered by the then time charterer of the Vessel, G.K. Shipping. The appellant was appointed as ship’s agent for the Vessel by the time charterer by email. Subsequently the respondent separately contacted the appellant requesting for funds to be forwarded to the Master of the Vessel and for other assistance such as crew changes. The appellant billed G.K. Shipping for the services it rendered to the Vessel and that were procured at the request of the time charterer.  This invoice and email correspondence regarding the charges levied were not copied to the disponent owners.  No demand was made of the respondent for payment. The time charterer failed to settle the invoice and ultimately the appellant arrested the Vessel in Ireland seeking security for the unpaid time charterer expenses. The separate services rendered by the appellant agent to the disponent owner were invoiced separately to the disponent owners and were paid in full by the disponent owner.

 

In the High Court, McDonald J. concluded that on the basis of the exchange of e-mails at the time, the appellant was aware of the distinction between G.K. Shipping on the one hand and the owners of the Vessel (the respondent) on the other. The trial judge held that the agent was not entitled to pursue its claim in rem to the point of having recourse to the Vessel to satisfy its claim as such a right would require personal liability on behalf of the owner.

 

Mr Justice McGovern giving the judgment of the Court of Appeal noted that it was quite clear that the disbursements were for the benefit of G.K. Shipping. “They were for the purposes of facilitating the operation of the Vessel so as to enable the time charterer to earn freight. “

 

In assessing the question as to whether the appellant was entitled to pursue its claim in rem to the point of having recourse to the Vessel to satisfy its claim, Mr Justice McGovern in the judgment of the Court of Appeal , highlighted the difference between maritime claims that give rise to a maritime lien and those which do not. He noted that in Irish law a maritime lien is created in respect of claims for: salvage, collision damage, seaman’s wages, master’s wages, and master’s disbursements. Quoting Hewson J. in The St. Merriel (1963)  1 ALL ER 537 at page 543: “It is a fundamental rule that the basis of maritime liens lies in the personal liability of the owner.”

 

The Court of Appeal noted the claim before it was not a claim in relation to matters giving rise to a maritime lien referring to the authority of Meeson & Kimbell on Admiralty Jurisdiction and Practice (5th Edition 2018) where the authors state at para 2.97 that “Ordinary towage does not give rise to a maritime lien,” and at para 2.136: “There is no maritime lien for disbursements incurred by a shipper, charterer or agent.

 

The appellant argued before the Court of Appeal that because their claim was an in rem claim it can be maintained against the ship (and effectively against the owner) independently of any personal liability on the part of the owner.  The Court of Appeal noted that there was no authority to support this proposition and in fact the preponderance of authority was against this proposition.  The appeal judges noted that: “If the disbursements made do not create a maritime lien then nothing in the Arrest Convention can be construed as creating any maritime lien under the law of this State where such does not already exist. This is the clear effect of Article 9 of the Arrest Convention.”

 

In delivering the judgment of the Court of Appeal, Mr Justice McGovern noted that where a claimant has a maritime claim within the meaning of the 1952 Arrest Convention, it can arrest the vessel and thereby obtain security for its claim. The admiralty proceedings that follow the arrest thereafter will however involve the court determining whether or not the claimant may have recourse to the vessel (or the security offered). Mr Justice McGovern stated: “Following arrest, the vessel or the security offered in lieu thereof is no more than an assets against which a successful claimant can recover on foot of a judgment.”

 

The judgment continues thereafter to note that there was no privity of contract between the appellant and the respondent nor was it established at the trial in the High Court that the time charterer was acting as agent for the respondent. In those circumstances the trial judge was correct in dismissing the claim and once the claim was dismissed there could be no basis on which the appellant could seek to have the Vessel or the security condemned. The Court of Appeal noted that: “A maritime claim like any other claim has to be proved before the execution process can take place. “

 

The Court of Appeal in their judgment noted, in light of the arguments raised by the appellant, it was desirable to determine whether the facts of the matter established that there was a “maritime claim” as defined in the 1952 Arrest Convention.  Referring to the late renowned expert in the field, Professor Berlingieri and leading textbook on ship arrests, Arrest of Ships (4th Edition), it is noted in the judgment of the Court of Appeal that Berlingieri says that disbursements made on behalf of a person other than the owner of a ship, such as the bareboat charterer or the time or voyage charterer, do not qualify as maritime claims unless made on behalf of the ship. Accepting the observations made by the late Professor Berlingieri, Mr Justice McGovern stated he was satisfied on the evidence that the appellant’s claim was not a “maritime claim.”


In concluding the judgment of the Court of Appeal, Mr Justice McGovern stated:


  •  The finding of McDonald J that the services were ordered by G.K. Shipping was entirely supported by the evidence and there was no evidence to support the claim by the appellant that the contract had been ratified by the owners or that G.K. Shipping were acting as agent for the owners.
  • The High Court judge was correct in determining that the onus or proof lay on the appellant to establish the owner of the vessel had a personal liability in respect of the services that were provided and they had failed to discharge this burden.
  • The appellant did not establish it had a “maritime claim” within the meaning of the Arrest Convention giving right to an in rem  claim against the Vessel.

 

Noble Shipping Law successfully acted for the disponent owner of the Vessel in the High Court and Court of Appeal.