(1987)1987 October27 (KOURRIS J ] 1 SCHIFFSHYPOTHEKENBANK ZU LUBECKACTIENGESELLSCHAFT 2 D E U T S C H E SCHiFFSBELEIHUNGS-BANK AKTIENGESELLSCHAFT Plaintiffs, ν T H E SHIP «PIGASSIOS», Defendant (Admiralty Action 7/87) Admiralty — Proceeds of saleof shipby public auction pendente lite — Order of pnonties of payments to be made therefrom — Whether special circumstances can justify deviation from the general order of pnonties — Contract to sellmanne dieseland fuel oil to ship providing thatthe property therein shallremain with sellersuntil payment ofpnce— Thesaidterm does not amount vis-a-vis the mortgagees of theship to «special circumstances* 5 The applicants filed an action in rem against the ship «Pigassios» as mortgagees under two mortgageson the saidvessel The ship was soldpendente lite and the proceeds lodgedinto Court On 13 2 87 theapplicantsobtained)udgmendagainsttheship On 22 5 87 1 0 Tramp Oil and Manne Ltd obtainedjudgment in another action forthevalue of 731 120 m t of manne diesel and fuel oil IF-180 {hereafter called the bunkers) which had been sold and delivered to the defendant ship at Mombassaon 15 11 86 Thesebunkerswent atMombassaintothefueltanks ofthe defendantshipandwere mixed with fuelsthenin tanksandthe mixture 15 was beingused and consumed inthe operationofthedefendant-shiptillshe amved at Limassol when she was arrested on 14th January, 1987 by the mortgagee bankers upon theirmortgages' claim At thetimeofherarrestthe defendant-ship had in her fuel tanksapproximately 170 tonsof bunkers This is an application based on rules 111, 112 and 113 of the Cyprus 2 0 Admiralty Junsdiction Order, 1893 for determining the order of pnonty b 'tween the mortgageesandTramp Oil andManne Ltd Both counsel agreed that the order of pnonties forthe payment out of the proceedsofsaleofaresbypublicauctionare{
- a)Marshal'sexpenses,(b)Costs 456 1 C.L.R. 5 10 15 *-0 Schlffshypothekenbank v. Pigassios of the producer of the fund, (
- c)damage done by a ship, (
- d)Salvage, (
- e)Seamen's wages, (0 master s wages and disbursements, (g)bottomry and respondentia, (
- h)mortgagesand (j)statutory hen and contractualclaims, but counsel for Tramp Oil and Manne Ltd argued that the determination of pnonties donotdependupon anyngidrules,buton the pnnciple that equity must bedone inthe circumstancesofeach particular case and that ageneral orderofpnonty isfollowed when there are nospecialcircumstances The special circumstances invoked bycounsel forTramp Oilwere (a)The factthatthecontractforthesaleofthebunkersprovidedthatownership ofthe product shall pass tothe customer only after the pnce hasbeen receivedby the sellers anduntil such time asthepnce isreceived bythem theperson in possession ofthe productdelivered shallholdtheproductforthem asamere bailee,and(
- b)thefactthatthemortgageebankersallowedthedefendant-ship to incur thisdebt Held, that there areno special circumstancesinthepresent case soas to deviate from the general rule and order payment The mortgagee bankers were not partiestothesaidagreementandthey hadnomeans ofknowingof the said agreement The contractualprovision hereinabove referredtodoes not amount tospecialcircumstances Order accordingly Costs in favour of applicant Casesreferredto Commercial Bank of theNearEastLtd ν PIGASSIOS III*
(1978)1 C L R 597, 25 PilefsLtd andOthersv TheCommercial Bank of theNearEastLtd
(1983)1C L R 376 Styhanouv TheFishmgTrawler *Arkissos*
(1965)1C L R 291 Application. Application by judgment creditors for an orderdeterminingthe 30 prionties of claims against the defendant ship and for an order directing thatapplicants are entitled tothepayment of thesum of U.S. $55,720.29 which is lodged into Court and which is the balance of the proceeds of the sale of the defendant ship «Pigassios». 35 St. McBnde, for the applicant. X. Xenopoullos, for judgment creditor inAction No 32/87 Cur adv. vult KOURRIS J. read the following judgment. The applicants, judgment creditors,by thepresent application pray for:- 457 KourrisJ. Schjffshypothekenbank v.Pigassios
(1987)(a)AnorderoftheCourt determiningthepnonties oftheclaims against the defendant-ship «Pigassios», (b) An order of the Court directing that the applicants are entitled to the payment of the sum of US $55,720 29 which is lodged into Court and whichisthe balance oftheproceeds ofthe 5 sale of the defendant-ship «Pigassios» The application is based on the Admiralty Jurisdiction Order, 1893, rules 111,112 and 113 The said applicants filed on the 14th January, 1987, this admiralty action in rem against the defendant-ship «Pigassios» as 10 mortgagees under two mortgages on the said vessel The first mortgage is a preferred mortgage on the defendant-ship dated 23rd May, 1984,and dulyregistered atPanama and they claimed S F 8,165,281 92 being the amount of pnncipal and interest outstanding and due as on 9th January, 1987 The second 15 mortgage is a preferred mortgage on the defendant-ship dated 17thJuly, 1984and dulyregistered atPanama and theclaimisfor Deutchrnarks 640,510 94 being the amount of pnncipal and interest outstanding and due as on 9th January, 1987 The applicants-plaintiffs also claimed vanous sums of money with 20 regard to expenses and disbursements On 6th February, 1987, an order was made for the appraisement and sale ofthedefendant-ship bypnvate auction or pnvate treaty pendente lite The Marshal of the Court sold the defendant-ship and lodged 25 the amount into Court On 13th February, 1987, the applicantsplaintiffs obtainedjudgment bydefault forDeutchrnarksandSwiss Francs for approximately US$5,782 000 upon their mortgages and master and crew claims On 27th March, 1987, the Court ordered payment out of the 30 proceeds of the sale of the ship to the judgment creditors except for thesumof US $55,720 29tomeet the claimofTrampOiland Manne Ltd inthe event of itbeingshown that the claim ofTramp Oil enjoyed pnonty in the payment out of the proceeds of sale greater than the appUcant-judgment creditors 35 On 22nd May, 1987, Tramp Oil and Manne Ltd obtained a judgment in Admiralty Action 32/87 for US $55,720 29 for the value of 731 120 m t of manne diesel and fuel oil IF-180 (hereinafter called bunkers) sold and delivered to the defendantship«PIGASSIOS» atMombassa on the 15th November, 1986 40 When Tramp Oil and Manne Ltd obtained judgment against 458 1 C.L.R. Schlffshypothekenbank v. Pigassios Kourris J. the defendant-ship it was on the understanding and agreement between Tramp Oil and Manne Ltd and the applicantsmortgagees bankers that the judgment cid not of itself create in favour of Tramp Oil a pnonty topayment out of the proceeds in 5 Court resulting from the sale of the defendant-ship greater than the mortgagee bankers The claims made by Tramp Oil in their action 32/87 to such pnonty would be left in this application for determination of pnonties The 731,120tons of bunkers were 10 (a)FuelOil IFI80701 130 m t @ 72 50 US $50 831 92 (b)Mannediesel oil 29 990 m t @ 163 4,888 37 So, there is a total of 731 180 m t valued at U S $55,720 20 These bunkers went at Mombassa into the fuel tanks of the defendant-ship and were mixed with the fuels then in the tanks 15 andthemixture was being used andconsumed intheoperationof the defendant-ship till she arrived at Limassol when she was arrested on 14th January, 1987 by the mortgagee bankers upon their mortgages' claims At the time of her arrest the defendantship had in her fuel tanks approximately 170 tonsof bunkers 20 Consequently, there are two claims to the sum of US $55,720 29 in Court the balance of the proceeds of sale of thedefendant-ship «PIGASSIOS» andtheCourthastodetermine which ofthetwojudgment creditorsisentitledtobe paidthissum 25 Counsel for the applicants argued that the relevant law is the Cyprus Law andwas expounded inthecase of Commercial Bank of the Near East Ltd ν «PIGASSIOS III»
(1978)1 C LR 597,confirmed on appeal in the case of PilefsLtd and Others ν The Commercial Bank of the Near EastLtd,
(1983)1C LR 376 and 30 he said thatthe mortgages have pnonty over the claim of Tramp Oil and Manne Ltd. which has a contractual lien Hecontended that undertheCyprus Law theorderof pnontiesfor the payment outof theproceeds of sale of a res by public auction are (a)Marshal's expenses, (b)Costs of theproducerof thefund, (
- c)35 damage done by a ship, (
- d)Salvage, (
- e)Seamen's wages, (0 master's wages and disbursements, (
- g)bottomry and respondentia, (
- h)mortgage and (
- j)statutory lien and contractual claims Counsel for Tramp Oil and Manne Ltd agreed with the 40 statementof law and the order of pnontiesset out by counsel for 459 Kourrfs J. Schlffshypothekenbank v. Pigassios
(1987)the mortgagee bankers. He argued, however, that the determination of prioritiesdonotdepend upon anyrigidrulesbut on the principle that equity must be done in the circumstancesof each particularcaseand thatageneral orderofpriorityisfollowed when there are no special circumstances. In support of his 5 proposition hereferred metoHalsbury'sLawsofEngland,3rded. vol. 35, para. 1213. He alsoreferred me to the case of Stylianou v. The Fishing Trawler«Arkissos»
(1965)1C.L.R. 291,in which case first priority was given tonecessaries over a mortgage debt. Counsel contended that there are special circumstances in this 10 casesoastogiveprioritytotheclaimofTrampOilandMarineLtd. and that these special circumstances, he went on to say, is the contract entered into between TrampOiland Marine Ltd.and the defendant-ship when they soldtoher thesaid bunker fuels which provided under paragraph 8.06 that ownership of the product 15 shallpasstothecustomeronlyafter thepricehasbeen receivedby them, and until such time as the price is received by them the person in possession of the product delivered shall hold the product forthem asamerebailee.Healsocontended thatthe fact that the mortgagee bankers allowed the defendant-ship to incur 20 thisdebt isanother instance ofspecial circumstances. Ihaveconsidered theargumentsofboth counseland1amofthe opinion thatthere arenospecialcircumstancesinthepresent case so as to deviate from the general rule and order payment of the aforesaid amount to Tramp Oiland Marine Ltd. The mortgagee 25 bankers were not parties to the said agreement and they had no means of knowing of the said agreement. The fact that the agreement provided that the defendant-ship shall hold the bunkers as bailee until payment of the price thus creating a contractual lieninfavour ofTrampOiland MarineLtd.doesnotin 30 my opinion amount tospecial circumstances. Foralltheabove reasonsIhavecometotheconclusion thatthe applicants, mortgagee bankers, have priority in the present case and Iorder and direct that payment be made by the Registrarof this Court of the sum of U.S.$55,720.29 in his hands to them. ^ Costs of these proceedings in favour of the applicants, to be assessed bythe Registrar. Orderaccordingly. 460