Chaffers Marina Limited v The Vessel 'Demoiselles'

[2020] NZHC 516

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2019-485-346

[2020] NZHC 516

BETWEEN

CHAFFERS MARINA LIMITED

Plaintiff

AND

THE VESSEL “DEMOISELLES”

First Defendant

AND

NEIL SPENCER MACFARQUHAR

Second Defendant

Hearing:	On the papers
Counsel:	A Olney for Plaintiff
Judgment:	13 March 2020

JUDGMENT OF GRICE J

(Application without notice by Registrar for approval of Court to sell vessel)

[1]                 The Registrar of the High Court at Wellington applies for the approval of the Court to sell the first defendant vessel for the sum of $251,000 being the highest tender received for the vessel. The tender is less than the appraised value that was certified by an appraiser.

[2]                 On 6 August 2019 judgment in rem was given against Demoiselles. An order was made that the vessel be appraised and sold and the proceeds paid into court.1

[3]                 The Registrar appointed Gordon Low Marine Ltd T/A NZ Boat Sales Picton Ltd (Mr Low) as agent to appraise and sell the vessel.  On 7 October 2019, the vessel

1      Chaffers Marina  Limited  v  The  Vessel  “Demoiselles”  HC  Wellington  CIV-2019-485-346,  6 August 2019 (Minute).

CHAFFERS MARINA LIMITED v THE VESSEL “DEMOISELLES” [2020] NZHC 516 [13 March 2020]

was appraised at approximately $600,000 on the basis that the vessel’s equipment was in working order and the vessel was free from any structural defect.

[4]                 The vessel was listed on Trade Me and tenders were sought by 31 January 2020. There was considerable interest in the listing (7,500 visits to the tender notice) and there were a number of prospective purchasers (15) who boarded the vessel to inspect it. However, feedback, according to the Registrar from prospective purchasers suggested concern about the structural integrity of the vessel and the significant cost required to restore the vessel to a sea worthy standard. It had been moored at Chaffers Wharf Marina in Wellington for some time.

[5]                 Fifteen tenders were received for the vessel after 160 copies of tender documents were sent out. As at the tender closing date the Registrar had received 15 tenders for the vessel. The highest price obtained by tender was $251,000. The next highest bid was $250,000. That was the only other bid above $200,000. The bids according to the Registrar got progressively lower with the lowest bid at $5,000.

[6]                 After the tenders closed, one of the tenderers sought to increase his tender offer from $150,000 to $275,000. That late tender was subsequently withdrawn.

[7]                 It is the appraiser’s opinion that $251,000 is fair market value for the vessel in light of its poor current condition.

[8]                 The defendant vessel continues to be berthed at the plaintiff’s marina where it continues to incur berthage fees while its condition deteriorates.

[9]                 The owner of the vessel, Mr MacFarquhar, the abovenamed second defendant is presently in bankruptcy.

[10]              The Registrar has recently made further inquiries of the person making the late tender who has indicated he is no longer interested in the vessel. The Registrar does not consider retendering would be a worthwhile process given the sum involved, the costs being incurred and the likelihood that nothing higher than the $251,000 would be achieved.

[11]              Mr Low who carried out the appraisal, has reviewed the tenders and is of the view that if the vessel was in good working order and in good structural condition the tenders would have been considerably higher. However, in his opinion $251,000 is a fair market value for the vessel in light of its poor condition.

[12]              The tenders closed on 31 January 2020. The Registrar’s concern is that retendering the vessel with the attendant time and cost involved will result in no better sale price being achieved.

[13]              The Official Assignee was consulted by the Registrar over the sale price. While initially the Assignee indicated the late tender should be accepted, given developments it has now indicated it has no objection to the acceptance of the

$251,000 tender.

[14]              The Registrar is unable to conclude a sale for less than the appraised value without leave of the Court. The Court will approve the sale at less than the appraised value if satisfied that a higher price is unlikely to be achieved.2

[15]              I am satisfied on the information provided by the Registrar and the appraiser that a higher price is unlikely to be achieved at present. In addition, the costs of mooring and the deterioration of the vessel require that the sale be effected as soon as possible.

[16]              Accordingly, approval is granted to sell the vessel for an offer less than the apprised value and to accept the highest tender which was obtained in the tender process of $251,000.

Grice J

2      High Court Rules 2016, hr 25.51.03. Citing The Halcyon The Great (No 2) [1975] 1 Lloyds Rep 525 (QB).