Afitos Compania Naviera SA v The Ship Hang Zhou Wan

[2012] NZHC 1847

IN THE HIGH COURT OF NEW ZEALAND IN ADMIRALTY

AUCKLAND REGISTRY

CIV 2012-404-003289 [2012] NZHC 1847

BETWEEN  AFITOS COMPANIA NAVIERA SA Plaintiff

AND  THE SHIP HANG ZHOU WAN

Defendant

Hearing:        (On the papers)

Counsel:         M W McCarthey for Plaintiff

KFT Stolberger for Hongkong Ruihe Shipping Co Limited (the owner of the ship MV Hang Zhou Wan)

Judgment:      26 July 2012

JUDGMENT OF THE HON JUSTICE KOS

This judgment was delivered by me on 26 July 2012 at 4:15 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Solicitors:
Mr W M McCarthy, Lowndes Associates, Solicitors, Auckland

Mr KFT Stolberger, Lowndes Jordan, Solicitors, Auckland

AFITOS COMPANIA NAVIERA SA V THE SHIP HANG ZHOU WAN HC AK CIV 2012-404-003289 [26 July

2012]

[1]      On 13 June 2012 the vessel Hang Zhou Wan was arrested on a warrant issued by a Registrar of this Court. The vessel was in the process of discharging a cargo of hot bitumen at berth 16 at the Port of Tauranga. It was permitted to continue to do so notwithstanding arrest.

[2]      The vessel was arrested at the suit of the plaintiff, a Liberian company. The plaintiff  pleads  that  it  is  the  legal  owner  of  the  ship.  It  says  it  had  entered  into agreements with non-parties in 2007 to buy the vessel. It says, too, that it has paid deposits exceeding US$2,650,000, but that the non-parties have defaulted and sold the vessel to Hongkong Ruihe Shipping Co Ltd, a Hong Kong company. On 27 June 2012 that company entered a conditional appearance. It claims that it is the true legal owner of the vessel.

[3]      As required by High Court Rule 25.34(4)(b), the plaintiff gave an indemnity to the Registrar before the ship was arrested. The indemnity expressly covers “any fees and expenses (including harbour dues) that may be incurred ... in executing the warrant of arrest issued against [the vessel]”. On 19 June 2012 the plaintiff’s solicitors contributed

$10,000 on account of Registrar’s costs of arrest. On 27 June 2012 a further $50,000 was contributed. Berthage at the Port of Tauranga is not inexpensive. Berthage costs are approximately $1,800 per day. The Port has already invoiced the Registrar for $25,200. A further invoice for about $45,000 for berthage costs from 1 July 2012 to date may confidently   be   anticipated.   The   Registrar   has   also   incurred   sundry   costs   of approximately $7,100 for insurance and inspection costs. The net result is that the fund contributed is already approximately $17,000 short of the amount required to meet costs to date.

[4]      Rule 25.35 provides that the Registrar may require additional security to cover fees, expenses and harbour dues (if any). On 12 July 2012 the Registrar advised the plaintiff’s solicitors that he required a further sum of $100,000 to cover future costs of arrest. Such a sum would meet berthage costs for less than two months. The harbourmaster at the Port is also insisting on a greater level of manning than the present skeleton crew. This is said to be needed lest the vessel accidentally break free from its berth, or need to be moved urgently in an emergency.   Instead of the two officers and

single crewman presently on board, the harbourmaster is insisting that the vessel be manned by a master, deck officer, two engineering officers and five crew.

[5]      Payment  of  the  $100,000  security sum  was  required  by 19  July 2012. The Registrar did not receive a satisfactory response by then. So he wrote again to the plaintiff’s solicitors stating that he intended to seek the assistance of the Court under Rule 25.55 if the funds requested were not received by Monday 23 July 2012.

[6]      The funds have not been received.

[7]      The non-party Hongkong Ruihe Shipping Co Ltd has not applied for discharge from arrest. But its solicitors have written to the Registrar to say that “our client supports any direction by the Court to the Registrar to release the vessel from arrest”. This is carefully worded. Rule 25.44(5) requires a party applying for an instrument of release to meet the costs of keeping the vessel in custody during the period of arrest.

[8]      Yesterday the plaintiff’s solicitors also wrote to the Registrar. They said:

We are instructed that the only asset of Afitos is the [vessel]. As will be apparent  from  the  documents  filed  in  Court  our  client  has  paid  a considerable sum as the deposit for the vessel. Our client advises that it does not have further funds to fund the Registrar’s costs of arrest. Accordingly, the Court is respectfully requested to discharge the arrest.

[9]      The Registrar has now, in light of recent events and the positions taken by the parties, requested the Court issue an order discharging the vessel from arrest.

[10]     High Court Rule 25.55 provides:

Registrar may seek court’s assistance

(1)    The  Registrar  may  apply  to  the  court  for  orders  to  assist  the Registrar in the performance or exercise of any function, duty, right, or power conferred or imposed on the Registrar by this Part.

(2)  The court may make any orders it thinks just concerning the performance or exercise of that function, duty, right or power.

[11]     There is no good reason in the circumstances why such an order should not be made, in accordance with High Court Rule 25.55(2).

Disposition

[12]     I order that the vessel Hang Zhou Wan be discharged from arrest.

Stephen Kós J