The plaintiffs, the master and crew members of the Panamanian-flagged cruise ship, the Oriental Dragon, brought claims in respect of unpaid wages, master's disbursements, and repatriation costs. The plaintiffs brought their claims pursuant to s 24(b) of the Courts of Judicature Act 1964 (Malaysia) and in particular pursuant to ss 20(2)(o) and 20(2)(p) of the Senior Courts Act 1981 (UK). Asia Capital Commodities Trade Sdn Bhd (ACCT), the third intervener, challenged the premise of the master's disbursements, alleging that they were made and/or paid by Thomas Miller Claims Management Ltd (TMCM) rather than by the master. ACCT also argued that this was not the proper forum for the issue of ranking of maritime liens, which should instead be raised at a hearing for priorities.

Held: Judgment for the plaintiffs.

It is not disputed that a Seafarer's Employment Agreement (SEA) exists between the plaintiffs and the defendant shipowner. It is clear from that agreement that the shipowner/employer has the responsibility to promptly pay the seafarers, among other things, their monthly wages not later than 10 days of the succeeding month, and provide subsistence to them while on board the vessel, consistent with good maritime standards and practices, at no cost to the seafarers. It is also a term of the SEA that the master will be responsible to ensure that he runs a seaworthy vessel with safe and proper navigation for the seafarers, and to take all reasonable precautions to prevent accident, injury, or sickness of the seafarers. As the ship is registered in Panama, and Panama is a signatory of the Maritime Labour Convention 2006 (the MLC), the ship and the defendant are subject to, and are required to comply with, the MLC, which provides that all seafarers shall be paid for their work regularly and in full in accordance with their employment agreements: reg 2.2 para 1. The defendant has breached the SEA between the plaintiffs and the defendant as well as its obligations under the MLC. The plaintiffs served on the ship and performed their obligations which entitled them to claim for their wages during the period of employment on the ship.

The first plaintiff, as the master of the ship, incurred disbursements for and on account of the ship, but what is in dispute is whether he had the power to pledge the owner's credit in respect of them. The master submits that TMCM had assisted the ship with the requisite disbursements on condition that TMCM will hold the master and/or the shipowners and/or the ship responsible for the costs of supplying the ship:

We/underwriters will cover these costs as per the attached which have been requested by the Master - for and on behalf of the vessel and/or the vessel owners.

We/underwriters hold the Master and/or vessel owners and/or the vessel responsible for the costs of supplying the vessel and will issue the necessary invoice for the supply in due course.

This condition would make the master liable personally within the meaning of 'disbursements', and thus be recoverable as master's disbursements. As to what master's disbursements are, this Court was referred to The Orienta [1895] P 49 where the UK Court of Appeal held:

The real meaning of the word 'disbursements' in Admiralty practice is disbursements by the master, which he makes himself liable for in respect of necessary things for the ship, for the purposes of navigation, which he, as master of the ship, is there to carry out - necessary in the sense that they must be had immediately - and when the owner is not there, able to give the order, and he is not so near to the master that the master can ask for his authority, and the master is therefore obliged, necessarily, to render himself liable in order to carry out his duty as master.

ACCT further submitted that master’s disbursements must be that which the master has authority to pledge the owner's credit: The Feronia (1868) LR 2 A & E 65.

From the facts, it would appear that the supplies or things for the ship were for necessities, such as food, fresh water, bunkers, etc, and which were required to be had immediately and on an urgent basis for and on account of the ship, as there were 194 crew members who were stranded on the ship, and who had suffered extreme hardship after being abandoned by the defendant, although the supplies were paid by TMCM. The expenditure incurred by the master is therefore proper and necessary and should qualify as master's disbursements.

As the master and the crew on the ship were abandoned, how else could the master obtain supplies or things for the ship? It appears to be abundantly clear that the master had to turn to TMCM, as the claims handler of the Certificate of Seafarer Abandonment Insurance issued by Seacurus, acting on behalf of certain underwriters at Lloyd's of London, for such supplies, albeit on the express condition that TMCM would hold the master liable for the costs. This does not, however, mean that TMCM had loaned the master funds due to any obligation under the Certificate of Seafarer Abandonment Insurance. Master's disbursements were incurred by the master by pledging the owner/defendant's credit based on the authority given under the SEA.

There is no legal requirement that liabilities incurred by the master as master's disbursements must first be paid by the master himself before they are to be termed master's disbursements. The disbursements incurred by the master were incurred in the ordinary course of his employment as master of the ship. The master had implied authority from the shipowner to incur the disbursements.

ACCT argued that the master had not ordered the supplies directly from the suppliers, or that the master had acted on the Chief Engineer's judgment, and thus these were not master's disbursements: The Mons [1932] P 109. The Mons is not authority that the master has to order the supplies directly from the suppliers. There is also clear and cogent evidence that TMCM had taken the necessary steps to confirm with its local agent the reasonableness of the price for the supplies to the ship, as well as the proper quantities, thereby minimising the costs of the disbursements. The disbursements claimed are not exorbitant, overcharged, and/or unreasonable.

ACCT finally argued that master's disbursements do not constitute a maritime lien under Peninsular Malaysian law. Malaysian Admiralty courts have always applied the English position on maritime liens. The case of Ocean Gain Shipping Pte Ltd v Owner And/or Charterer of Demise of Vessel Dong Nai Registered at Haiphong port, Vietnam (The Dong Nai) [1996] 4 MLJ 454 has recognised that there is no relevant difference between the law of Singapore, the law of England, and the law of Malaysia in the exercise of its admiralty jurisdiction, and thus the position of maritime liens as held in The Halycon Isle: Bankers Trust International Ltd v Todd Shipyard Corp [1980] 2 MLJ 217 is equally applicable in Malaysia. The correct proposition of law on this point is as expounded in Lee Wong Yu v The Owners of the Ship or Vessel 'MV Hua Hong Satu' [1999] 6 CLJ 197:

Only a limited class of maritime liens are recognised in English law. In The 'Bold Buccleugh' four categories were listed:
(i) damage done by a ship;
(ii) salvage;
(iii) seamen's wages;
(iv) bottomry and respondentia.
To these must be added a fifth, statutory category:
(v) Master's wages and disbursements.

After scrutinising the Explanatory Note in the Bill on the Merchant Shipping Ordinance (Amendment) Act 2016, and after reading Hansard, this Court holds that Parliament's intention in amending s 145 of the Merchant Shipping Ordinance 1952 was to provide new provisions which were in line with the MLC:

Cadangan penggantian ini akan memasukkan peruntukan baru selaras dengan kehandak MLC 2006 yang mana Malaysia merupakan ahli baru dan bagi tujuan melaraskan perlaksanaan Bahagian III Ops 1952. [This replacement proposal will include new provisions in line with the requirements of the MLC 2006 of which Malaysia is a new member and for the purpose of adjusting the implementation of Part III Ops 1952.]

Consequently, there is nothing to indicate in Hansard that Parliament intended to delete the aforementioned 'statutory category' referred to in The Hua Hong Satu. There does not appear to be any proper legal basis or foundation to cease to treat master's disbursements as a maritime lien in Malaysia.