Fisk v BW Offshore Singapore Pte Limited

[2020] NZHC 1134

EMBARGOED FROM PUBLICATION IN OR BY ANY MEDIUM UNTIL 9.00AM ON FRIDAY, 29 MAY 2020. SEE [20] BELOW.

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-219

[2020] NZHC 1134

UNDER

Part 19 of the High Court Rules 2016 and section 34 of the Receiverships Act 1993

BETWEEN

JOHN HOWARD ROSS FISK and MALCOLM GRANT HOLLIS

Applicants

AND

BW OFFSHORE SINGAPORE PTE LIMITED

Respondent

Virtual hearing:	25 May 2020
Appearances:	S P Pope, K M Massey, and L H Mau for the applicants S A Barker and M A Harris for the respondent
Judgment:	27 May 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 27 May 2020 at 11.00am.

Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors:

Russell McVeagh, Auckland Buddle Findlay, Auckland

FISK v BW OFFSHORE SINGAPORE PTE LTD [2020] NZHC 1134 [27 May 2020]

[1]                  On 19 December 2019, the applicants were appointed receivers of Tamarind Taranaki Limited (“TTL”), which extracted oil from near end-of-life wells in the Tui field off the coast of Taranaki. Together with the respondent (“BWO”), it operated a floating production storage and offloading tanker facility, the Umuroa, from which oil may be pumped to third-party purchasers by an offtake hose, owned by TTL.

[2]                  Before me is BWO’s application for indemnity costs, on ultimately consensual discharge of this Court’s orders of 14 February 2020 (which permitted receivers to sell a quantity of oil held on the Umuroa; required BWO to deliver up the same for such sale; US$250,000 from such sale to be retained pending resolution of the receivers’ substantive application for terms of such delivery and compensation for any unlawful detention or conversion; and ordered costs payable by BWO to the receivers).

[3]                  Formally, the present application  was  brought  under  rule  7.49  of  the  High Court Rules 2016, for variation or rescission of the order as wrong. Unless a Judge directs otherwise, such applications “must be heard by the Judge who made the order”. The Judge was unavailable at the time, with the result the matter was set down before me.

Background

[4]                  On 28 November 2019, as its Director believed on clear grounds use of the offtake hose on board the Umuroa presented “an unreasonable threat of harm to the marine environment”,1 Maritime New Zealand prohibited the hose’s use until it had been “inspected, pressure tested and recertified” in accordance with an approved plan and notice given the prohibition was lifted (the “prohibition notice”). In late January 2020, the receivers commissioned a report of such inspection and testing, which they provided to Maritime New Zealand.

[5]                  The receivers had negotiated terms for sale of oil to a third party, to occur on Monday, 17 February 2020, for confirmation by the receivers by 5.00 pm on Friday, 14 February 2020. Another opportunity to sell would not arise until April 2020. On 10 February 2020, BWO sought to be recompensed for facilitating the oil’s offtake,

1      Maritime Transport Act 1994, s 397(2)(g).

but the receivers disputed their entitlement to do so. The receivers’ 12 February 2020 offer to proceed on terms was met by BWO’s 13 February 2020 counteroffer. As foreshadowed to BWO in rejecting the counteroffer, on 14 February 2020, the receivers sought interlocutory relief from this Court, on notice to BWO, and an urgent hearing that day.

[6]                  The duty judge, Downs J, made the orders sought late that morning without hearing from either party. On receipt of BWO’s subsequent memorandum asserting the orders to be flawed and proposing variation if offtake was to be permitted, and after hearing briefly from the parties’ counsel that afternoon, the Judge varied his orders to require any offtake to be approved by Maritime New Zealand, and permit any offtake to be refused by the person in charge of the Umuroa on grounds of “imminent, significant” safety risk.

[7]                  Earlier that day, Maritime New Zealand had withdrawn the prohibition notice. But the person in charge of the Umuroa considered renewed inspection of the hose gave grounds for imminent significant risk to the safety of the environment if the hose was used without a damaged section being replaced and the hose being recertified. On 17 February 2020, apprised of those views, Maritime New Zealand again prohibited use of the hose; this time, until the Director was satisfied the hose could be used without unreasonable risk to the marine environment.

[8]                  The conditions of the sale were not met, and the sale and purchase agreement was cancelled on 19 February 2020. On 23 March 2020, the receivers terminated their receivership of the oil.

Discussion

[9]                  BWO’s application for indemnity costs is brought on the basis the receivers’ interlocutory application was sought without notice, but failed either to certify:2

[A]  ll reasonable inquiries and all reasonable steps have been made or taken to ensure that the application contains all relevant information, including any opposition or defence that might be relied on by any other party, or any facts that would support the position of any other party.

2      High Court Rules 2016, rr 7.19(4), 7.23(1) and form G 32.

or to make those enquiries and take those steps. As an application for interlocutory injunctions, the application also should have been supported by an undertaking as to damages.3 The receivers respond their application was not sought to be determined without BWO being served, and was an application for interlocutory sale orders, not injunctions, for which there is no mandatory requirement for any undertaking.4

[10]              As I said to counsel, this Court has considerable responsibility for the way in which matters transpired. It erred in granting the relief sought without holding a hearing. The receivers plainly sought a hearing, and notified BWO of such. A Judge only may make the on-notice orders sought without holding a hearing:5

… if each respondent to an interlocutory application has stated on the application or in a memorandum filed in the court that the respondent consents to, or does not oppose, the orders sought in the application.

Otherwise, the application is to be heard on its allocated hearing date.

[11]              Here, a hearing date of 14 February 2020 was nominated by the receivers’ solicitors, in completing the standard form of an interlocutory application on notice:6

To the Registrar of the High Court at [place] and

To [name of party/parties to be served with this application]

This document notifies you that—

1     The applicant, [name], will on [date] apply to the court for an order/orders* [specify orders sought, numbering them if more than 1].

*Select one.

2     The grounds on which each order is sought are as follows: [specify concisely the grounds on which each order is sought].

3     The application is made in reliance on [specify any particular provision of an enactment, principle of law, or judicial decision relied on].

While it may seem obscure, both the [place] and [date] entries are subject to the High Court Rules 2016. The ‘place’ is “[t]he proper registry of the court”;7 except for applications without notice, the Registrar is to allocate a hearing date.8 However, it is

3      Rule 7.54.

4      Rule 7.56.

5      Rule 7.37(1).

6      Form G 31.

7      Rule 5.1.

8      Rule 7.33.

unlikely the presence of the date nominated by counsel on the application led the Court to mistake the application as brought without notice. The form of a without notice application is quite different from that brought on notice, and (understandably) makes no provision for any hearing date.9

[12]              In circumstances in which respondents are not afforded at least three working days in advance of the hearing to file their opposition,10 absent consent, the court may only deal with the application as on notice if there are grounds to shorten the time for such opposition.11 Urgency may be such a ground, then with a correlative concern for what may be lost in abridgement of time. But hearing an application on short notice is not to convert that application into an application brought without notice, however desirable it may be any permitted abridgment is conditioned by comparable terms.

[13]              This Court’s errant treatment of the receivers’ application as if brought without notice alone is not a sufficient basis by which to fix the receivers with the obligations accompanying without notice applications. The receivers’ counsel, Polly Pope, said she was “taken by surprise” by the Court’s grant of the orders, and immediately notified BWO of them. BWO then responded to the Court as it saw fit. There is nothing in the receivers’ conduct of the case constituting the “flagrant” or “very unreasonable” misconduct threshold for consideration of indemnity costs.12

[14]              To the contrary, to secure a time-bound commercial opportunity, the receivers’ application expressly identified its two barriers were BWO’s non-agreement to deliver up, and Maritime New Zealand’s permission for the offtake. BWO’s criticisms of the adequacy of those disclosures, in the context of obligations of utmost good faith in full and frank disclosure on without notice applications, are immaterial on the receivers’ application on notice. There is no foundation for an award of indemnity costs.

Result

[15]BWO’s application is dismissed.

9      Form G 32.

10     Rule 7.24.

11     Rule 1.19(1).

12     Prebble v Huata (No 2) [2005] NZSC 18, [2005] 2 NZLR 467 at [6]; Flujo Holdings Pty Ltd v Merisant Company Inc [2018] NZCA 226 at [34].

14 February 2020 orders

[16]              Although BWO’s application initially sought discharge of the 14 February 2020 orders, it was common ground the operative orders were rendered moot by the passing of the commercial opportunity. Accordingly, all that was sought to be discharged was the order for costs. The receivers insisted it was properly made, and should be maintained. I could not see how I could determine the propriety of the costs order without reconsidering the foundation for the operative orders. At my suggestion, counsel agreed the 14 February 2020 orders could be discharged in whole. I so order.

Costs

[17]              That effectively means the proceeding is at an end, the substantive directions similarly no longer being pursued. For all practical purposes, the proceeding is discontinued. The receivers therefore would be liable to pay BWO costs of and incidental to the proceeding up to and including the discontinuance.13 BWO’s counsel, Scott Barker, protests BWO practically took no steps susceptible to an award of costs.

[18]              Such liability should exclude costs on BWO’s unsuccessful application for indemnity costs. Instead, as the successful party in respect of that application, the receivers would be entitled to 2B costs and disbursements on their opposition. That is because, from what I presently know of them, nothing in the steps taken by them on this averagely complex application required other than a normal amount of time. But, in my preliminary view, given the receivers’ countervailing liability for costs on discontinuance, costs on the application and the proceeding should lie where they fall.

[19]              If that is not accepted by the parties, and they cannot otherwise agree, costs are reserved for determination on short memoranda of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by BWO within ten working days of the date of this judgment, with any response and reply to be filed within five working day intervals after service.

13     High Court Rules 2016, r 15.23.

Embargo

[20]              Finally, I indicated I would embargo this judgment from publication for a brief period after its issue to enable counsel to consider if there is anything in it requiring suppression. I therefore direct:

(a)this judgment is embargoed from publication until 9.00 am on Friday, 29 May 2020;

(b)counsel are to file a joint memorandum no later than midday on Thursday, 28 May 2020, identifying what (if any) content of the judgment is sought to be suppressed; and

(c)a teleconference be convened before me at 2.00 pm on Thursday, 28 May 2020, to determine what (if any) interim redaction may be required in advance of determination of any application for suppression orders.

—Jagose J