Supreme Court orders return of bank guarantee after finding ship arrested without financial loss.

[*293] 1986 Jan. 24

(DEMETRIADES, J.)

IN THE SUPREME COURT OF CYPRUS

Scheepswerf Bodewes-Gruno,

Plaintiffs-Applicants,

v.

The ship “ALGAZERA”,

Defendants-Respondents.

(Application in Admiralty

Action No. 271/79).

Admiralty - Arrest of ship - Bank guarantee put up by plaintiffs as security in accordance with the relevant order of arrest - Application filed after conclusion of the hearing of the action for an order that the letter of guarantee be returned to plaintiffs-applicants - Finding of fact that the ship had not lost any money by reason of her arrest - Application granted.

L. Papaphilippou, for Plaintiffs-Applicants.

E. Montanios, for Defendants-Respondents.

DECISION

The decision of the Court was delivered by:-

DEMSTRIADES, J.:- By their application the plaintiffs-applicants pray for an order of the Court directing the Registrar of the Supreme Court of Cyprus to return to them, or their advocates, the letter of guarantee issued by the Hellenic Bank Ltd., on the 12th October, 1979, which was given by them as security when the warrant of arrest for the defendant ship was issued. [*294]

The application was opposed by the defendants-respondents, and/or by Cerise Maritime Co. S.A., the alleged new owners of the defendant ship.

This application was filed after the hearing of the action was concluded and the plaintiffs-applicants base it on the evidence adduced at the hearing of the action. The defendants-respondents partly relied on the record of the proceedings of the hearing and partly on the affidavit that accompanies their opposition. In the said affidavit, which is sworn by Miss P. Panayi, an advocate employed by the firm of counsel appearing on behalf of the alleged owners of the ship, nothing more is added to the evidence adduced at the hearing of the action.

The facts that led to these proceedings are, in brief, the following: On the 10th October, 1979, the defendant ship was arrested whilst lying in the port of Limassol, after an application to that effect was made by the plaintiffs, the applicants in these proceedings. By the said order the applicants had to put up a Bank guarantee for £10,000. - to be answerable in damages for the defendant ship and her owners and the owners of the cargo, if any. A further term of that order provided that the Marshal could release the ship on the filing of a security bond by or on behalf of the ship in the sum of £120,000.-.[*295]

A few days later, counsel appearing on behalf of the alleged owners of the ship stated in Court that their clients were unable to have the ship released because of lack of funds. In the meantime, actions were filed by members of the crew of the ship who claimed arrears of wages and on the 11th March, 1980, another order was issued by the Admiralty Court for the arrest of the ship on an application filed by the Master of the ship. The actions filed on behalf of the members of the crew were eventually settled and judgment was given in their favour for the wages due to them.

It is to be noted that the ship was sold pendente lite after an order of the Court dated 23rd September, 1980.

Counsel for the defendants in his address in these proceedings submitted that because the ship was arrested and was lying in the Limassol port, she was neither able to trade, nor earn money with which to pay the crew and that this resulted in the claims of the crew. This, however, does not appear to be correct when one goes through the record of the hearing of the action. From the evidence given before me by Mr. Abuzeid, the alleged owner of the Cerise company, at the hearing of the action, it appears that when the ship was arrested, she was on her way to Holland where she was going to be lengthened as, because of her size, it was difficult for her to find freight.[*296]

Counsel for the respondents submitted that a statement regarding the financial condition of the defendants is in no way an admission of liability and that that statement was not binding on them. He further submitted that until judgment is given and the facts are decided by the Court, the question of that admission could not be considered in these proceedings.

I feel that that admission, coupled with the proved inability of the defendants to meet the claims of the crew, plus the evidence given by Mr. Abuzeid that the intention behind the trip of the ship from the Persian Gulf was her lengthening in the shipyard of the plaintiffs, suffice for me to reach the conclusion that the ship could not, at that time, nor was she intended to, be engaged in trade and thus she has not lost any money by her arrest.

In the circumstances, I find that the plaintiffs’ Bank guarantee filed in this action should be released and it should be returned to them or their counsel.

There will be an order accordingly, with costs in favour of the plaintiffs-applicants.

Bank guarantee released with costs in favour of applicants.