Jebmed S.R.L v Capitalease S.P.A. Owners of M.v Trading Fabrizia

• Jurisdiction: Jamaica
• Court: Supreme Court (Jamaica)
• Judge: Simmons J
• Judgment Date: 03 July 2020
• Docket Number: CLAIM NO. 2016A00003
• Date: 03 July 2020

[2020] JMCC Comm 131

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

ADMIRALTY DIVISION

CLAIM NO. 2016A00003

CLAIM NO. 2017A00006

Between

Jebmed S.R.L

Claimant

and

Capitalease S.P.A. Owners of M.V Trading Fabrizia

Defendant

Consolidated with:

Between

Elburg Ship Management

Claimant

and

Enterprise Shipping Agency

1 ^st Defendant

and

Captilease S.P.A.

2 ^nd Defendant

and

The Motor Ship Trading Fabrizia

3 ^rd Defendant

Mr. Vincent Chen and Mr. Makene Brown instructed by Chen, Green & company for the claimant/respondent (Jebmed)

Mr. Krishna Desai and Miss Amanda Montague instructed by Myers, Fletcher & Gordon for the defendant/applicant (Capitalease)

Mr. Remone Foster instructed by Foster Galloway for Bluefin

Mr. Emile Leiba instructed by DunnCox (former Attorneys-at-law for Jebmed)

Mr. Ramon Clayton instructed by Samuda and Johnson for Elberg Ship Management

Admiralty law — Judicial sale — Application by the previous owner for payment of the remainder of the proceeds of sale — Shipping Act, sections 89(2)(c) and (d) — Civil Procedure Rules, 2002, rule 70.13 (9)

Simmons J

Background

1 On 30 October 2016, a warrant of arrest was ordered in respect of the M/V Trading Fabrizia. The application was based on the applicant's alleged failure to honour the terms of a mortgage between Jebmed S.R.L. (“Jebmed”) and Capitalease S.P.A. (“Capitalease”), which was its owner.

2 On 5 May 2016 Capitalease and Jebmed entered into a Master Agreement by which Jebmed agreed to take over the commercial operation of the M/V Trading Fabrizia and to advance certain sums described as “financial expenses”. In exchange, Capitalease agreed to grant a first preferred mortgage to Jebmed in the amount of United States Nine Hundred Thousand Dollars (US$900,000.00). The M/V Trading Fabrizia was the collateral for that loan. The mortgage was executed on 11 May 2016 and is supported by a Deed of Covenants which provided that in the event of a default the security would become immediately enforceable. The applicant it was said, defaulted in its payments.

3 A claim was filed in rem seeking the repayment of United States Six Hundred and Ninety-Nine Thousand and Forty-Six Dollars and Thirty-Eight Cents (US$699,046.38) plus compound interest at the rate of 8% per annum. In the alternative, damages were claimed for breach of contract.

4 On 28 June 2017 the following order was made by Edwards J (as she then was):

• “1. The application for sale is granted on condition.

• 2. Provided that the defendant fails to provide alternate security in the amount of USD$450,000.00, USD$778,497.79 and USD$537,836.00 in the form of bonds, guarantees or undertakings satisfactory to Jebmed S.R.L., Ligabue S.P.A., Elburg Ship management and XO Shipping A/S respectively, the admiralty bailiff is empowered to proceed to appraisemnt (sic) and sale of the M/V “trading Fabrizia” within 30 days of this order.

• 3. Should the Defendant comply with the conditions at (2) before the expiration of 30 days following upon the date of this order, the vessel shall be release (sic) from arrest.

• 4. Liberty to apply.

• 5. Costs to the Claimant Jebmed S.R.L. to be agreed or taxed.”

5 The condition was not satisfied and the M/V Trading Fabrizia was sold by the Admiralty Bailiff (free from encumbrances) 1 to Bluefin Marine Limited (“Bluefin”) for United States Ten Million Three Hundred Thousand Dollars (US$10,300,000.00) and renamed M/V Bright Star (“the vessel”).

6 Judgment debts owed to Elburg Ship Management (claim no. 2017 A 00006) 2, XO Shipping A/S (claim no. 2016 A 0005) 3, Ligabue S.P.A. (claim no. 2016 A 00004) 4 as well as the Admiralty Bailiffs fees were satisfied from the proceeds of sale.

7 The remaining sum of United States Three Million Dollars (US$3,000,000.00) was paid into court. By order dated 22 October 2018 the sum of United States Two Million Dollars (US$2,000,000.00) was returned to Capitalease in accordance with the order of Edwards J dated 5 March 2018.

8 It is from the remaining United States One Million Dollars (US$1,000,000.00) which Jebmed's claim was to be satisfied.

9 Capitalease also instituted proceedings in Malta in respect of the same mortgage debt and the vessel was arrested. In order to secure its release, Bluefin paid €779,346.61 claimed by Jebmed as cash security to the Maltese court. This action by Capitalease, whilst not prohibited is in my view, unfortunate. Bluefin having purchased the M/V Trading Fabrizia ‘free from encumbrances” was required to pay a handsome sum to secure its release from the Maltese authorities. In order to avoid such an injustice in the future, it may be desirable for claimants to give an undertaking to the court not to commence similar proceedings in another jurisdiction where the debt has already been secured in this jurisdiction by the arrest and sale of the ship.

10 Bluefin subsequently filed an action in that court for a declaration that the warrant was illegal and/or void under Maltese law. That application was unsuccessful. Consequently, Bluefin sought and obtained an order to be added as an interested party in these proceedings. No further steps have been taken by Bluefin.

The application

11 Pursuant to sections 89 (2) (c) and (d) of the Shipping Act (“the Act”) and rule 70.13 (9) of the Civil Procedure Rules, 2002 (CPR), Capitalease has applied for the payment of the residue of the proceeds of sale.

12 The grounds on which the application is made are as follows:

• (i) All but one of the claims filed against the vessel since its arrest on October 30, 2016 have been satisfied, discontinued or adjudged with Orders for payment out made to all the Judgment Creditors.

• (ii) The only remaining Claimant is Jebmed SRL, whose claim is secured by a sum of US$1,000,000.00 held in Court by order of Edwards J.

• (iii) Jebmed's claim has subsequently been satisfied by a sum of €779,346.61 (approximately US$910,000.00 at the exchange rate of €1:US$1.17) held in First Hall Civil Court of Malta following the arrest by Jebmed of M/V Bright Star (formerly the M/V Trading Fabrizia).

• (iv) Jebmed's claim at its highest does not exceed US$900,000.00 and that was the sum secured by the mortgage.

• (v) This Honourable Court has previously been satisfied that there were no other claims pending against the fund.

• (vi) The remaining sum of US$1,000,000.00 represents the residue of the proceeds of sale and section 89(2)(d) of the Shipping Act provides that the residue of the proceeds of sale shall be paid to the immediately previous owner and it shall be freely transferable.

• (vii) Capitalease, as the immediately previous owner of the vessel is entitled to have the residue of the proceeds of sale promptly returned to it.

13 The application is supported by the affidavits of Litrow Hickson filed on 9 August 2018 and 8 July 2019. In addition to setting out the history of this matter, Mr. Hickson stated that the matter in Malta was litigated up to its Court of Appeal where Bluefin was unsuccessful and there is no further appeal from that court. He also indicated that the sums paid by Bluefin to secure the vessel's release, remain in that court and Jebmed is at liberty to withdraw those sums although it has not yet done so. In effect the claim by Jebmed is secured in both Jamaica and Malta.

14 Mr. Hickson also stated that Jebmed has taken no further steps to prosecute its claim in Jamaica and the remaining sum of US$1,000,000.00 represents the residue of the proceeds of sale which in accordance with the Act is to be paid to the previous owner which in this case is Capitalease.

15 He has also asserted that bearing in mind Jebmed's conduct in Malta and in Italy 5, there appears to be no sustainable basis on which it could claim to be entitled to the sums in Jamaica. It has also been stated that Capitalease is in urgent need of the funds.

16 In response, Mr. Makene Brown on behalf of Jebmed stated that his client is entitled to recover its costs associated with the arrest of the vessel. He pointed out that Capitalease, as a foreign company, is out of the jurisdiction of this court and has no assets or interests in this jurisdiction from which an order for costs made against it can be satisfied. He stated that if the remaining sum is paid out to Capitalease there is no prospect of the arresting Attorneys recovering their fees or for the parties who have had costs awarded in their favour, recovering same.

17 In the circumstances, he requested that the court retain the remainder of the res in order to protect the costs incurred in the arrest and subsequent maters arising therefrom. Bills of costs from Capitalease 6 and Elberg 7 as well as a judgment in default of acknowledgment of service in favour of DunnCox 8 were exhibited to the affidavit.

Capitalease's submissions

18 Counsel for Capitalease, Miss Montague submitted that the funds should be returned to Capitalease in accordance with section 89 (2) of the Act for the following reasons:

• (a) Jebmed's claim has been satisfied in Malta and it is not entitled to double recovery;

• (b) Bluefin has no sustainable claim which may be raised against the fund;

• (c) Bluefin has no existing claim against Jebmed, Capitalease or the fund;

• (d) Bluefin cannot sustain a claim against Capitalease for unjust enrichment.

A. Jebmed's claim under the Mortgage has been satisfied in Malta and Jebmed is not entitled to double recovery

19 Miss Montague stated that the claim in Jamaica between Jebmed and Capitalease has not been determined and as such the funds held in court, which represent the res, have not been found to be due to Jebmed.

20 Counsel gave a brief outline of the proceedings and stated that in respect of the funds held in Malta 9, Jebmed has commenced proceedings for the withdrawal of those funds. 10 She stated that although Dr. Borg, counsel for Jebmed in Malta, in his affidavit has stated that...