Cough & Flu Shipping Empire Pty Ltd (“Cough & Flu”) is one of the fastest
growing ship-owning companies in Australia. From its humble beginning in
2008 with 8 ships in its fleet, in 2019, it owns 30 ships. In January 2020,
its management decided to acquire three more ships. To diversify legal
risks, the management further resolved that two special-purpose
companies, which Cough & Flu is to become their majority shareholder,
should be set up in Liberia. Hence, in March 2020, Cough Shipping Limited
(“Cough”) and Flu Shipping Limited (“Flu”) were incorporated in Liberia.
Cough became the registered owner of two ships – The Beta and The
Gamma. Flu became the registered owner of the ship – The Delta.
Since 17 April 2020, The Beta, which was equipped with twin engines, was
put on a two-year time charter party to Isolated Shipping Co Ltd of Liberia.
On 30 April 2020, while on the voyage from Monrovia to Yangon, with
20,000 tons of heavy fuel oil on board, The Beta faced heavy weather
condition which caused the failure to one of her engines. The Master
decided to engage the service of The Superman, a tug owned by Superman
& Wonderwoman Limited (“Superman & Wonderwoman”), with the hope
that The Beta can be towed to the nearest port so that she could have the
failed engine replaced. For two days, The Superman tried to tow The Beta
but the operation failed. The Beta sank on 3 May 2020. Even so, The
Superman could manage to prevent the leakage of the 20,000 tons of
heavy fuel oil while all 21 crewmen on board The Beta all abandoned the
ship and they were airlifted to the nearest port.
This caused Superman & Wonderwoman to believe that at least it should be
compensated for expenses, equipment and personnel used during this
operation. It estimated such compensation to be in the region of
US$1,000,000. It asked for this compensation from Cough Cough refused
to pay this.
In fact, following the sinking of The Beta, Cough faced claims for a loss of
cargoes from a bill of lading holder in Yangon in the amount of
US$9,802,000. It also faced claims from 21 crewmen on board The Beta for
the unpaid wages and the master’s disbursements in the total amount of
In January 2021, Superman & Wonderwoman heard that the only
remaining asset of Cough The Gamma, will stop at Fremantle Port in
Australia to take on bunkers. It knows that the estimated value of The
Gamma, if she is sold by auction, will be at most US$1,900,000 –
insufficient to pay all creditors. At the same time, it also heard that The
Delta will also stop at the port of Melbourne for discharging cargoes in
February 2021. It knows that The Delta has better value than The Gamma
since it is bigger in size and it is more well-designed and equipped. Its
estimated value can be up to US$12,000,000 – sufficient to pay all
Superman & Wonderwoman is now seeking your advice:
a) Is it possible for Superman & Wonderwoman to arrest The Delta in
b) In the event that it is not possible to arrest The Delta, it is
considering to arrest The Gamma instead. However, it received an advice
from a shipbroker in Liberia that it would be a waste of time and money to
arrest The Gamma because once the vessel is sold by judicial sale by a
court in Australia, the proceeds of sale will go to those 21 crewmen for
their unpaid wages and master’s disbursements and Superman &
Wonderwoman will be left with nothing. Superman & Wonderwoman wants
to know whether this understanding of the shipbroker is correct. Discuss.
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