BABCOCK FITZROY LIMITED V THE SHIP "THE M/V SOUTHERN PASIFIKA" HC AK CIV-2011-404-001906

BABCOCK FITZROY LIMITED V THE SHIP "THE M/V SOUTHERN PASIFIKA" HC AK CIV-2011-404- 001906 [2 May 2011]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2011-404-001906BETWEEN BABCOCK FITZROY LIMITEDPlaintiffAND THE SHIP "THE M/V SOUTHERNPASIFIKA"DefendantHearing: On the papersCounsel: A Sherlock for the PlaintiffNo appearance for the DefendantJudgment: 2 May 2011JUDGMENT OF WOOLFORD JThis judgment was delivered by me on Monday, 2 May 2011Pursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Hesketh Henry, Auckland – Email: alan.sherlock@heskethhenry.co.nzIntroduction[1] The plaintiff filed and served a notice of proceeding in rem against the defendant, the M/V Southern Pacifika on 4 April 2011. It claimed $1,504,192 for repair and maintenance work performed on the ship.[2] The defendant has not filed an appearance within 10 working days of the date of service of the notice of proceeding as required by r 25.14 of the High Court Rules. The plaintiff therefore now seeks judgment by default in the action in rem pursuant to r 25.32(4).[3] In addition, the plaintiff has made application for a warrant of arrest of the M/V Southern Pasifika pursuant to r 25.34. Finally, it has also requested a commission for the appraisement and sale of the M/V Southern Pasifika.Judgment by default[4] Rule 25.32(4) provides:25.32 Application for judgment by default in action in rem...(4) A plaintiff to an action in rem may apply to the court for judgment by default if—(a) the defendant to the action fails to enter an appearance within the period specified for appearing; and(b) not less than 10 working days has passed since the notice of proceeding was served; and(c) the plaintiff has filed an affidavit proving due service of the notice of proceeding, a statement of claim (where one has not already been filed), and an affidavit verifying the facts on which the action is based.[5] The plaintiff has filed an affidavit proving due service of the notice of proceeding. It has also filed a statement of claim. Finally, it has also filed an affidavit verifying the facts on which the action is based. The affidavit is a comprehensive one which annexes all relevant correspondence between the plaintiffand the ship's owners and detailed records of the repair and maintenance work performed on the ship.[6] Having read all the documentation I am satisfied that the plaintiff's claim iswell founded. Accordingly, I give judgment against the defendant by default in favour of the plaintiff in the sum of $1,523,499 plus berthing costs at the daily rate of $1,461 from 1 April 2011 to the date of judgment together with interest on all judgment sums at the rate specified in the Judicature Act 1908 from the date of judgment. I also direct that the costs of the plaintiff of and incidental to the application be fixed and paid by the defendant to the plaintiff.Application for warrant of arrest[7] The application for warrant of arrest of the M/V Southern Pasifika is specifically stated to be subject to the granting of a direction that the arrest of the ship and its resulting placement into the legal custody of the Registrar shall not affect the possessory lien maintained by the plaintiff over the ship. In support of the direction sought, the plaintiff relies on The Acacia (1880) 4 Asp MLC 254, The Tergeste [1903] P26, The Arantzazu [1939] AC 256 at 256 per Lord Atkin, The Queen of the South [1968] 1 All ER 1163 and The Dwima 1 [1996] 2 SLR 670 [1996] SCHC 83.[8] I am satisfied on the authorities cited that it is appropriate to make the direction sought. In The Acacia, Townsend J in the High Court of Admiralty (Ireland) stated:1The warrant of this court is merely a process commanding the marshall to arrest the property proceeded against, which when arrested is deemed to be in the custody of the marshal, although it may really remain in the hands of the party claiming the lien. The fact is, that in this case the vessel has never left the possession of the Messrs. Harland and Wolff, and is this moment fastened to their quay ; the marshal seems to have adopted their possession ; his possession is merely constructive and technical, for the actual possession is still with the defendants.1 At page 256[9] In The Tergeste, Phillimore J in the Probate Division of the High Court stated:2The view which the Admiralty Court took with regard to conflicting claims by shipwrights having a possessory common law lien, and claims which have been sustained by process in the Admiralty Court, has been well established, and has been accepted by this Division of the High Court of Justice. It is that it is the duty of the material man not to contend with the Admiralty marshal ; to surrender the ship to the officer of the Court, and let the officer of the Court, under the order of the Court, remove and sell her ; but when he has done that, the Court undertakes that he shall be protected, and that he shall be put exactly in the same position as if he had not surrendered the ship to the marshal.[10] In The Arantazau, Lord Atkin in the House of Lords stated:3The ship arrested does not by the mere fact of arrest pass from the possession of its then possessors to a new possession of the Marshal. His right is not possession but custody. Any interference with his custody will be properly punished as a contempt of the Court which ordered arrest, but, subject to his complete control of the custody, all the possessory rights which previously existed continue to exist, including all the remedies which are based on possession. ... a bare arrest appears to me clearly to give custody and not possession.[11] Finally, The Dwima 1, S Rajendran J in the High Court of Singapore stated4that it is now an established proposition of law that the arrest of a vessel over whicha repairer had a lien would not, by itself, result in the loss of repairer's lien.[12] Accordingly, I direct that, should the Registrar issue a warrant of arrest of the M/V Southern Pasifika, the arrest of the ship and its resulting placement into the legal custody of the Registrar shall not affect the possessory lien maintained by the plaintiff over the ship.Request for commission for appraisement and sale[13] The request of a commission for the appraisement and sale of the M/V Southern Pasifika, is also specifically stated to be subject to the granting of a direction that upon the plaintiff parting with possession of the ship during the process of sale, the plaintiff shall be entitled to a lien attaching to the proceeds of2 At page 32-333 At p 2664 At para 8sale of the ship, such lien conferring priority rights equivalent to those arising pursuant to the possessory lien maintained by the plaintiff over the ship as at the time of the request for commission.[14] Rule 25.33 provides:25.33 Judgment by default in action in rem(1) On being satisfied at the hearing that the applicant's claim in an action in rem is well founded, the court may—(a) give judgment for the claim; and(b) at the same time,—(i) order the property against which the action, or, as the case may be, the counterclaim is brought to be appraised and sold and the proceeds to be paid into court; or(ii) make any other orders it thinks just.(2) Judgment given under subclause (1) may be enforced by—(a) arrest of the property against which the action was brought:(b) committal of the party at whose instance the caveat against that property was entered.(3) The court may, on any terms it thinks just, set aside or vary any judgment by default entered in an action in rem.[15] Rule 25.51 also provides:25.51 Appraisement and sale of property(1) A party may request a commission for the appraisement and sale of any property under arrest of the court by filing a request in form AD 15.(2) The court may, either before or after final judgment, order that any property described in the request—(a) be appraised; or(b) be sold with or without appraisement, and either by public auction or by private contract.(3) If the property is deteriorating in value, the court may order that it be sold immediately.(4) If the property sold is of small value, the court may, if it thinks just, order that it be sold without a commission of sale being issued.(5) The commission for the appraisement must be in form AD 16 and must, unless the court otherwise orders, be executed by the Registrar or the Registrar's duly appointed officer or agent.(6) A commission for appraisement and sale may not be executed until an undertaking in writing, satisfactory to the Registrar, to pay the Registrar's fees and expenses on demand has been lodged in the Registrar's registry.(7) The Registrar must pay into court the gross proceeds of the sale of any property sold by the Registrar under a commission for sale, and must bring into court the account relating to the sale (with vouchers in support).[16] By reference to the same authorities cited by the plaintiff, I am satisfied that is also appropriate to make the further direction sought.[17] In The Queen of the South, Brandon J in the Probate Division of the High Court stated:5It is well established that, in an action in rem against a ship, the court haspower to sell her free of both a repairer's common law possessory lien and a mortgagee's contractual or statutory right of sale. It does so on the basis that the rights of which the ship is freed by the sale, together with any priority over other rights to which they may be entitled, are transferred to, and preserved against, the proceeds of sale in court.[18] Similarly, in The Dwima 1, S Rajendran J stated:6Where a vessel subject to a possessory lien, is arrested and sold at the instance of a third party, the courts in ordering the sale of the vessel have recognized and preserved the rights of the holder of the possessory lien.This the courts have done by transferring the lien holder's rights from thevessel to the proceeds of sale of the vessel.[19] Accordingly, I direct that, should the Registrar issue a warrant of arrest of the M/V Southern Pasifika, the ship is then to be appraised and sold and the proceeds paid into Court subject to an undertaking in writing satisfactory to the Registrar topay the Registrar's fees and expenses on demand. In the event of the ship's appraisaland sale, the plaintiff is entitled to a lien attaching to the proceeds of sale of the ship, such lien conferring priority rights equivalent to those arising pursuant to the5 At pg 461-26 At para 14possessory lien maintained by the plaintiff over the ship as at the time of the request for commission.__________________________Woolford J