The MV “Silver Star”: Are Arresting Parties Liable to Pay for the Crew’s Wages?

By Wesley Wood, Partner in the International Transport, Trade & Energy department

The arrest of the MV “Silver Star” (“the vessel”) in Port Elizabeth was fraught with complex legal issues disputed in various interlocutory applications and even an appeal to the Supreme Court of Appeal.

Of interest, was the ruling of the High Court in Port Elizabeth that the arresting party be liable, not only for the costs incurred by the Sheriff (as custodian of the vessel whilst under arrest) for preservation costs, but also for the wages of the crew.

After the owners of the vessel (“the Owners”) had unsuccessfully applied to set aside the arrest of the vessel, and pursuant to a request as to their intentions, the Owners advised the arresting party’s attorneys that they had effectively ceased all payments in respect of the vessel as it was the responsibility of the Sheriff to preserve and maintain the vessel while she was under arrest. The arresting party then brought an application that the Owners, inter alia, pay the Sheriff for, or alternatively provide security in an acceptable form for, certain amounts for the preservation of the vessel including the costs (and future costs) of provisions, supplies, fresh water and bunkers. The Owners brought a counter-application in which they sought an order that the arresting party be liable for the wages of the crew while the vessel remained under arrest. The arresting party thereafter also sought security from the Owners for the wages of the crew as they fall due. At the hearing of the matter, the arresting party abandoned the principal relief sought (i.e. that the Owners pay the Sheriff for the abovementioned items) and sought only the alternative relief, being the security from the Owners for such costs.

The Court reiterated, with reference to the Rules Regulating the Conduct of Admiralty Proceedings and case law, that the Sheriff is obliged to take all steps appropriate for the custody and preservation of the ship and that a claim in respect of the preservation costs would be a first charge on the fund that would be established if the vessel were to be sold. The Court noted further that the arresting party would be obliged to reimburse the Sheriff in respect of such costs but would acquire the preference that accrues to the Sheriff if the vessel was ultimately sold. The Court accordingly held that the arresting party already enjoys security for the preservation costs as the ship itself serves as security. If the ship was sold, a fund would be established and the priority that the claim for preservation costs enjoys in the ranking of claims provides the security for the recovery of the costs sought by the arresting party.

The Court then went on to consider the more interesting position of the crew’s wages. Relying heavily on the judgment in the Ocean King (No 1), the Court concurred with the views expressed by King J where he held that matters affecting the master and crew, particularly termination of their employment and payment of their wages and other expenses are directly concerned with the preservation and maintenance of the ship which are the preserve of the Sheriff and that it is properly the function of the Sheriff as custodian to decide these matters. The counter-application by the Owners therefore succeeded and the arresting creditor was ordered to pay to the Sheriff, whilst the vessel was under arrest, an amount equal to the wages of the crew of the vessel for the preceding month, failing which the arrest of the vessel by the arresting party would lapse and be of no force and effect. To add insult to injury, the arresting creditor was ordered to pay the costs of the application and counter-application, including the costs of two counsel.

For more information on the above, please contact:

Wesley Wood
Partner in the International Transport, Trade & Energy department
Shepstone & Wylie Attorneys
wood@wylie.co.za
+27 79 503 6133