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

FISK v BW OFFSHORE SINGAPORE PTE LTD [2020] NZHC 1134 [27 May 2020]EMBARGOED FROM PUBLICATION IN OR BY ANY MEDIUM UNTIL9.00AM ON FRIDAY, 29 MAY 2020. SEE [20] BELOW.IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2020-404-219[2020] NZHC 1134UNDER Part 19 of the High Court Rules 2016 andsection 34 of the Receiverships Act 1993BETWEEN JOHN HOWARD ROSS FISK andMALCOLM GRANT HOLLISApplicantsAND BW OFFSHORE SINGAPORE PTELIMITEDRespondentVirtual hearing: 25 May 2020Appearances: S P Pope, K M Massey, and L H Mau for the applicantsS A Barker and M A Harris for the respondentJudgment: 27 May 2020JUDGMENT OF JAGOSE JThis judgment was delivered by me on 27 May 2020 at 11.00am.Pursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors:Russell McVeagh, AucklandBuddle Findlay, Auckland[1] On 19 December 2019, the applicants were appointed receivers of TamarindTaranaki Limited ("TTL"), which extracted oil from near end-of-life wells in the Tuifield off the coast of Taranaki. Together with the respondent ("BWO"), it operated afloating production storage and offloading tanker facility, the Umuroa, from which oilmay 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 consensualdischarge of this Court's orders of 14 February 2020 (which permitted receivers to sella quantity of oil held on the Umuroa; required BWO to deliver up the same for suchsale; 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 unlawfuldetention or conversion; and ordered costs payable by BWO to the receivers).[3] Formally, the present application was brought under rule 7.49 of theHigh Court Rules 2016, for variation or rescission of the order as wrong. Unless aJudge directs otherwise, such applications "must be heard by the Judge who made theorder". The Judge was unavailable at the time, with the result the matter was set downbefore me.Background[4] On 28 November 2019, as its Director believed on clear grounds use of theofftake hose on board the Umuroa presented "an unreasonable threat of harm to themarine environment",1 Maritime New Zealand prohibited the hose's use until it hadbeen "inspected, pressure tested and recertified" in accordance with an approved planand notice given the prohibition was lifted (the "prohibition notice"). In late January2020, the receivers commissioned a report of such inspection and testing, which theyprovided to Maritime New Zealand.[5] The receivers had negotiated terms for sale of oil to a third party, to occur onMonday, 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. On10 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 2020offer to proceed on terms was met by BWO's 13 February 2020 counteroffer. Asforeshadowed to BWO in rejecting the counteroffer, on 14 February 2020, thereceivers sought interlocutory relief from this Court, on notice to BWO, and an urgenthearing that day.[6] The duty judge, Downs J, made the orders sought late that morning withouthearing from either party. On receipt of BWO's subsequent memorandum assertingthe orders to be flawed and proposing variation if offtake was to be permitted, andafter hearing briefly from the parties' counsel that afternoon, the Judge varied hisorders to require any offtake to be approved by Maritime New Zealand, and permitany 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 hosegave grounds for imminent significant risk to the safety of the environment if the hosewas used without a damaged section being replaced and the hose being recertified.On 17 February 2020, apprised of those views, Maritime New Zealand againprohibited use of the hose; this time, until the Director was satisfied the hose could beused without unreasonable risk to the marine environment.[8] The conditions of the sale were not met, and the sale and purchase agreementwas cancelled on 19 February 2020. On 23 March 2020, the receivers terminated theirreceivership 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 toensure that the application contains all relevant information, including anyopposition or defence that might be relied on by any other party, or any factsthat 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 interlocutoryinjunctions, the application also should have been supported by an undertaking as todamages.3 The receivers respond their application was not sought to be determinedwithout BWO being served, and was an application for interlocutory sale orders, notinjunctions, 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 inwhich matters transpired. It erred in granting the relief sought without holding ahearing. The receivers plainly sought a hearing, and notified BWO of such. A Judgeonly may make the on-notice orders sought without holding a hearing:5 if each respondent to an interlocutory application has stated on theapplication or in a memorandum filed in the court that the respondent consentsto, 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:6To the Registrar of the High Court at [place]andTo [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 anorder/orders* [specify orders sought, numbering them if more than 1].*Select one.2 The grounds on which each order is sought are as follows: [specifyconcisely the grounds on which each order is sought].3 The application is made in reliance on [specify any particular provision ofan enactment, principle of law, or judicial decision relied on].While it may seem obscure, both the [place] and [date] entries are subject to the HighCourt Rules 2016. The 'place' is "[t]he proper registry of the court";7 except forapplications without notice, the Registrar is to allocate a hearing date.8 However, it is3 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 Courtto mistake the application as brought without notice. The form of a without noticeapplication is quite different from that brought on notice, and (understandably) makesno provision for any hearing date.9[12] In circumstances in which respondents are not afforded at least three workingdays in advance of the hearing to file their opposition,10 absent consent, the court mayonly deal with the application as on notice if there are grounds to shorten the time forsuch opposition.11 Urgency may be such a ground, then with a correlative concern forwhat may be lost in abridgement of time. But hearing an application on short notice isnot to convert that application into an application brought without notice, howeverdesirable it may be any permitted abridgment is conditioned by comparable terms.[13] This Court's errant treatment of the receivers' application as if brought withoutnotice alone is not a sufficient basis by which to fix the receivers with the obligationsaccompanying without notice applications. The receivers' counsel, Polly Pope, saidshe was "taken by surprise" by the Court's grant of the orders, and immediatelynotified BWO of them. BWO then responded to the Court as it saw fit. There is nothingin 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 deliverup, and Maritime New Zealand's permission for the offtake. BWO's criticisms of theadequacy of those disclosures, in the context of obligations of utmost good faith in fulland 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 vMerisant Company Inc [2018] NZCA 226 at [34].14 February 2020 orders[16] Although BWO's application initially sought discharge of the 14 February2020 orders, it was common ground the operative orders were rendered moot by thepassing of the commercial opportunity. Accordingly, all that was sought to bedischarged was the order for costs. The receivers insisted it was properly made, andshould be maintained. I could not see how I could determine the propriety of the costsorder 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 directionssimilarly no longer being pursued. For all practical purposes, the proceeding isdiscontinued. The receivers therefore would be liable to pay BWO costs of andincidental 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 forindemnity costs. Instead, as the successful party in respect of that application, thereceivers would be entitled to 2B costs and disbursements on their opposition. That isbecause, from what I presently know of them, nothing in the steps taken by them onthis averagely complex application required other than a normal amount of time. But,in my preliminary view, given the receivers' countervailing liability for costs ondiscontinuance, 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 arereserved for determination on short memoranda of no more than five pages – annexinga single-page table setting out any contended allowable steps, time allocation, anddaily recovery rate – to be filed and served by BWO within ten working days of thedate of this judgment, with any response and reply to be filed within five working dayintervals after service.13 High Court Rules 2016, r 15.23.Embargo[20] Finally, I indicated I would embargo this judgment from publication for a briefperiod after its issue to enable counsel to consider if there is anything in it requiringsuppression. 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 onThursday, 28 May 2020, identifying what (if any) content of thejudgment is sought to be suppressed; and(c) a teleconference be convened before me at 2.00 pm on Thursday, 28May 2020, to determine what (if any) interim redaction may berequired in advance of determination of any application for suppressionorders.—Jagose J