This was a dispute about the determination of priorities of claims against the judicial sale proceeds of the OSV Beas Dolphin in accordance with ss 9 and 10 of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 (the Act). The Court awarded the seafarers' wages claims first priority as a wages maritime lien under s 9(1)(a) of the Act (based on art 4.1.a of the MLM Convention 1993).

The main issue was whether the interest of 8% pa awarded by the Court on the unpaid wages from the date of the institution of the suit until payment and/or realisation, and the costs awarded to the seafarers also commanded the same priority as the wages claims themselves. The seafarers argued that they did; the other creditors disagreed.

Held: The interest and costs awarded by the Court enjoy the same priority as the wages claims, and must be paid out to the seafarers accordingly.

The seafarers relied on the judgment of the Federal Court of Australia in Patrick Stevedores No 2 Pty Ltd v Proceeds of Sale of the Vessel MV 'Skulptor Konenkov' [1997] FCA 1625 (CMI1467), which was followed by the High Court of Singapore in The Songa Venus [2020] SGHC 74. The seafarers further submitted that in Chrisomar Corp v MJR Steels Pvt Ltd [2017] INSC 781 (CMI149), the Supreme Court of India approved a judgment of the Calcutta High Court wherein interest and costs were held to be part of a maritime lien.

In opposition, the other creditors argued that under s 9(1)(a) of the Act, only the wages and other sums due to the crew members were clothed with the character of maritime lien. The cases cited by the seafarers were either not persuasive authority or did not address the issue squarely. If huge claims of lienholders and mortgagees were allowed with substantial interest and costs, and the same priority was afforded to the interest and costs it would have a cascading adverse effect on the claims of the other claimants who stood lower in priority.

The nature and character of interest and costs awarded by the Court while decreeing a claim of crew members for wages must be appreciated. First and foremost, the character of the claim for wages itself. It is trite that in an admiralty action the wages of the crew command the highest priority. The crew members are entitled to proceed in rem against the vessel and its sale proceeds irrespective of any change in ownership of the vessel. From the very text of s 9(1)(a) of the Act, the highest priority accorded to the claim for wages and other sums due to the crew members becomes abundantly clear. The enormity of the situation in which the crew is often called upon to discharge functions on board the vessel is recognised by according the highest priority to the wages of the crew members.

The legislature has taken care to provide for a definite timeline for payment of wages of crew members on board and at the time of discharge. If this is kept in view, the nature of the action, upon failure on the part of the owner of the vessel to pay wages when they become due, for enforcement of the claim for wages becomes clear. The award of interest in such a suit cannot be considered dehors the unpaid wages. The interest awarded by the Court for depriving the crew members of their legitimate claim for wages can only be considered to be a part of the wages to which the crew is otherwise entitled.

Since the costs are awarded by the Court as a measure to compensate a party for having been compelled to approach the Court for enforcement of a legitimate claim, costs ought to take on the same colour as the claim for the enforcement of which the proceedings, in which the costs were awarded, were instituted.