Rajasingam Gothandapani January 25 2023 Seafarer's employment agreement breach and liability Shearn Delamore & Co | Shipping & Transport - Malaysia Rajasingam Gothandapani Shipping & Transport FactsDecisionFactsPlaintiff one was the master of the ship "Oriental Dragon" of the Port of Panama (the ship). Plaintiff two was the 194 crew members working or employed onboard the ship. The defendant was the registered owner of the ship and/or was in possession or control of the ship.In the statement of claim, plaintiff one's claim against the defendant was for outstanding wages due to him and for outstanding master's disbursements made on account of the ship. Plaintiff two's claim against the defendant was for outstanding wages due to them. The defendant failed to file and serve its defence.Plaintiff two applied to the court for a judgment in default of defence to be entered against the defendant for the claims stated in the statement of claim. Intervener three objected to plaintiff two's application on the following grounds:although intervener three had not filed its defence, it was their right to challenge the premise of the disbursements claimed by plaintiff one;the disbursements claimed by plaintiff one had previously been made and/or paid by Thomas Miller Claims Management Ltd (TMCM) and thus were not master's disbursements; andthe plaintiffs' application was not the proper forum for the issue of ranking of maritime liens and should instead be raised at the hearing of determination of priorities.DecisionOutstanding wages due to plaintiffsThe court first examined the seafarer's employment agreement (SEA) between the plaintiffs and the defendant. Pursuant to the SEA, the defendant was responsible for promptly paying the seafarers their monthly wages and providing subsistence to them whilst on board the vessel, consistent with good maritime standards and practices, at no costs to the seafarers. It was also a term of the SEA that the master (plaintiff one) was responsible for ensuring that he ran a seaworthy vessel with safe and proper navigation for the seafarers and for taking all reasonable precautions to prevent accident, injury or sickness to the seafarers.As the ship was registered in Panama, which is a signatory of the Maritime Labour Convention 2006, as amended, the ship and the defendant were also subject to the Maritime Labour Convention 2006, as amended, which provides that all seafarers be paid for their work regularly and in full in accordance with their employment agreements.The court held that the defendant had breached the SEA and its obligations under the Maritime Labour Convention 2006, as amended, and, therefore, the plaintiffs were entitled to claim for the outstanding wages due to them.Plaintiff one's claim The issue to be determined by the court was whether plaintiff one, as master of the ship, had the power to pledge the owner's credit in respect of the disbursements made on account of the ship, and thus have the disbursements incurred be classified as master's disbursements.The court held that the disbursements incurred by plaintiff one as master of the ship qualified as master's disbursements on the following grounds:The correspondence between plaintiff one and TMCM clearly showed that the items requested by plaintiff one from TMCM were for necessities such as food, fresh water and bunkers. Such items were urgently required for the 194 crew members stranded onboard the ship, which had been abandoned by the defendant.Plaintiffs one and the 194 crew members were stranded onboard the ship and could not have obtained the supplies for the ship any other way. From a practical and obvious perspective, plaintiff one had to turn to TMCM for such supplies on the condition that TMCM would hold the master and/or the owners and/or the ship responsible for the costs of supplying the ship.However, this could not be taken to mean that TMCM had loaned plaintiff one such funds due to any obligation under the certificate of seafarer abandonment insurance. The disbursements were incurred by plaintiff one by pledging the owner's credit as the master of the ship.The fact that TMCM had paid for the disbursements was not sufficient to show that the disbursements were not master's disbursements. The fact that the suppliers were sourced by TMCM's local agents and not by plaintiff one was not a sufficient ground either.These were necessary disbursements incurred in the ordinary course of plaintiff one's employment as master of the ship. Pursuant to the SEA, plaintiff one, as master of the ship, had implied authority from the ship's owners to incur such disbursements.The allegations of exorbitant disbursements raised by intervener three, which were not raised in their affidavits, did not constitute a valid contention as there was clear and cogent evidence that TMCM had taken the necessary steps to confirm the reasonableness of the price of the supplies to the ship. The court also took judicial notice of the covid-19 pandemic at the material time, which had led to limited supplies at a higher price.With regards to the intervener three's contention that master's disbursements are not a maritime lien under Malaysian legislation, the court held that this was not an argument supported by any authority. The English position on maritime liens, which recognised master's disbursements as a valid maritime lien, applied in Malaysia. There was, therefore, no proper legal basis or foundation to cease to treat master's disbursements as a maritime lien in the Malaysian jurisdiction. The plaintiffs' application for a judgment in default of defence against the defendant was allowed.For further information on this topic please contact Rajasingam Gothandapani at Shearn Delamore & Co by telephone (+60 3 2027 2911) or email ([email protected]). The Shearn Delamore & Co website can be accessed at www.shearndelamore.com.