Court divides price of ship among creditors

Mr Justice Joseph Azzopardi, in the case Dr Kris Borg -v- Piraeus Bank AE et on 30 January, 2015 listed the order in which creditors of a ship had to be paid following its sale.

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Malcolm Mifsud
13 February 2015, 8:00am
Dr Louis Cassar Pullicino on behalf of Piraeus Bank filed an application in order for it to withdraw from court €2,685,781.12 and a further €14,218.88 in favour of Francis E. Sullivan Company Limited.

The bank explained that €3,200,000 was deposited in court representing the price of a ship, the mv Triantafillos. From the acts of the case it resulted that Piraeus Bank was owed €30,024,326, €14,218.88 to Francis E. Sullivan Co Ltd, Dr Philip Manduca on behalf of Hempel Coating (Hellas) SA was owed €18,704, Dr Keither Borg on behalf of Thermaikos Shipping & Trading Ltd was owed €16,519, Dr David Gonzi on behalf of Destel Marine Limited was owed €81,053.24, Dr Joseph Mizzi on behalf of Global Marine Supplies Spa was owed €12,198.62, Dr Larry Gauci on behalf of KPI Bridge Oil Limited was owed €163,696.49 and Dr Tonio Grech, who represented Taxidia Tourismos Anyland Travel Ltd €28,544, Issam Zeitone €25,035, Paoiutis Charalmobos €19,932 and Elia Papageergiou €16,506 and Maroulis Spyidon for €5,000.

The bank further explained that the debt concerned a mortgage, which was converted into an executive title and the other debts that the vessel incurred amounted to €377,188.48. The bank argued that even if the other creditors ranked before, the bank would be still entitled to withdraw the balance and therefore, it did not make sense that such a considerable sum did not remain in court with a loss in interest.

"According to the Merchant Shipping Act, the wages of the captain and crew ranked first"
Taxidia objected to Francis E. Sullivan being allowed to withdraw its debt, since it was a creditor as the other creditors were and did not fall under the criteria of withdrawal of monies mentioned in Article 422 of the Code of Organisation and Civil Procedure. The same company also objected that the bank withdraw any sum according to Article 416 of the Code of Organisation and Civil Procedure, other claims may be filed within one month from the opening of the competition of creditors and this has not taken place yet.

The bank declared in court that it had paid €237,894 to the crew and was subrogated with their rights. The Court listed the four debts which ranked in the competition of creditors of the price of the vessel. These were Dr Cassar Pullicino on behalf of Piraeus Bank and the subrogated rights of the crew after paying their wages, Dr Grech who represented the captain and four engineers for the salaries and repatriation expenses, Dr Keith Borg for Thermaikos Shipping & Trading Ltd and Dr Joseph Mizzi for merchandise as represented by global Marine Supplies Spa.

The Court pointed out that according to Articles 50 and 54A of the Merchant Shipping Act, the wages of the captain and crew ranked first. The travel expenses for the repatriation of the crew does not fall under the same category, but is found in Article 50(h) of the same Act which states: “wages and other sums due to the master, officers and other members of the vessel’s complement in respect of their employment on the vessel, including costs of repatriation and social insurance contributions payable on their behalf”.

The Court held that the whole amount claimed by Dr Grech should be ranked in the same way as the subrogated claim of Dr Cassar Pullicino. Then ranked after it, was the bank, and following this, the other creditors.

The court ruled that court expenses rank first according to law and therefore, should be paid first, then ranked second is the subrogated rights of the crew’s wages and repatriation expenses. Ranking third is the mortgage of €30,024,326 in favour of the bank and then fourth ranked Dr Keith Borg and Dr Joseph Mizzi’s clients.

Malcolm Mifsud, Partner,
Mifsud & Mifsud Advocates


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Malcolm Mifsud is a partner at Mifsud & Associates.