OOO DV RYBOPRODUKT V UAB GARANT CA CA52/2008

OOO DV RYBOPRODUKT V UAB GARANT CA CA52/2008 26 May 2008IN THE COURT OF APPEAL OF NEW ZEALAND CA52/2008 [2008] NZCA 136BETWEEN OOO DV RYBOPRODUKT Appellant AND UAB GARANT Respondent Hearing: 30 April 2008 Court: Hammond, Chambers and Ellen France JJ Counsel: P W David and M Heard for Appellant B C Versfelt and K J Sparrow for Respondent Judgment: 26 May 2008 at 4 pmJUDGMENT OF THE COURT A The appeal is dismissed, save in the respect noted in order C. B The stay of the proceedings (High Court, Auckland, CIV2006-404-4167) is vacated. C The appellant's notice of opposition to the respondent's application for sale before final judgment is reinstated. D The appellant must pay to the respondent interim costs in this court of $6,000, plus usual disbursements. We certify for second counsel. E Liberty is reserved to the respondent to apply in due course for "top-up" costs in the event it establishes in the High Court that the appellant agreed to pay the respondent's costs on an indemnity basis.REASONS OF THE COURT(Given by Chambers J)Table of ContentsPara NoArrest of the Aleksandr Ksenofontov [1]Issues on the appeal [9]Was the notice of proceeding a nullity? [16]Was there a proper basis for the exercise of the jurisdiction to re-arrest in this case? [32]The claim was no longer in the High Court's admiralty jurisdiction [35]Wrong procedure [49]Failure to disclose material facts [58]Adequate security had been supplied [64]Conclusion [77]Was Williams J right to dismiss Ryboprodukt's opposition to the application for sale? [79]The ongoing costs of arrest [83]Result [86]Arrest of the Aleksandr Ksenofontov[1] UAB Garant, the respondent, is a shipyard and repairer based in Klaipeda, Lithuania. In 2005, Garant undertook repair work on the Aleksandr Ksenofontov, a Russian-flagged shipping vessel owned by OOO DV Ryboprodukt, the appellant. According to Garant, the original contract sum was €150,000, but, in the course of repairs, additional work was required. The total repair bill eventually came to over€600,000. [2] According to Garant, Ryboprodukt accepted the vessel in good order on 1 December 2005. Garant allowed the vessel to leave its premises even though it had been paid only in part; €356,214 remained outstanding. According to Garant, Ryboprodukt promised to pay the balance by instalments.[3] Ryboprodukt did not pay. Eventually, Garant lost patience. When theKsenofontov was at Lyttelton Wharf, Garant brought a proceeding in rem against the ship in the High Court's admiralty jurisdiction. At the same time, Garant applied to arrest the ship. That application was granted. In due course, an agreement was entered into between the parties under which Ryboprodukt made a part payment on the claim and agreed to pay the balance in September and October 2006. In return, the vessel was released from arrest, although Garant reserved the right to seek the re-arrest of the vessel should Ryboprodukt default. [4] Ryboprodukt did not pay the balance. Garant sought the vessel's re-arrest, which was granted. A further agreement was made, under which Garant agreed to the vessel's release from arrest. Again, however, according to Garant, Ryboprodukt failed to fulfil its promises. This led to a third arrest in April 2007. Yet another agreement was entered into, resulting in the vessel's release from arrest. [5] Still Ryboprodukt did not honour its promises. Garant applied for the fourth time to arrest the Ksenofontov. Potter J granted that application on 16 August last year. The ship has been under arrest at Lyttelton ever since. [6] On 13 September last year, Ryboprodukt entered an unconditional appearance on behalf of the Ksenofontov, asserting its title as owner of the vessel. On 4 October, Garant applied under r 784 of the High Court Rules for an order that the vessel be appraised and sold before judgment. This prompted Ryboprodukt to apply to the High Court for an order setting aside or striking out Garant's notice of proceeding and for an order setting aside the (fourth) warrant of arrest. Ryboprodukt also filed a notice of opposition to Garant's sale application. [7] Garant's application and Ryboprodukt's counter-application were heard by Williams J on 24 October last year. He subsequently delivered a reserved judgment:UAB Garant v The Ship "Aleksandr Ksenofontov" HC AK CIV2006-404-4167 21 December 2007. His Honour dismissed Ryboprodukt's application to set aside or strike out Garant's proceeding. He granted Garant's application for appraisement of the ship, but adjourned its application for sale before judgment. Notwithstandingthat adjournment, he struck out Ryboprodukt's opposition to Garant's application for appraisement and sale. [8] Ryboprodukt then appealed against the dismissal of its application to set aside or strike out the proceedings. It also appealed against the judge's dismissal of its opposition to Garant's application for appraisement and sale. Appraisement has in fact since taken place.Issues on the appeal[9] Mr David, for Ryboprodukt, helpfully set out the issues arising on the appeal. [10] The first was whether the proceeding was a nullity because of an incorrect claim for costs in Garant's notice of proceeding. Williams J held that the notice was not necessarily wrong but, even if it was, the error did not render the entire proceeding a nullity. Mr David submitted he was wrong so to hold. An associated argument was that the notice of proceeding subsequently became a nullity because the amount of Garant's claim changed following a payment by Ryboprodukt. [11] The second issue was whether there was a proper basis for the exercise of the jurisdiction to re-arrest in this case. Mr David submitted there was not, but Williams J rejected that argument. [12] In the event Mr David failed to persuade this court on either of the first two issues, he next considered the judge's decisions on appraisement and sale before judgment. So far as appraisement is concerned, events have rather overtaken the challenge: appraisement has taken place. In light of that, Mr David concentrated his attack on the sale decision and explained, both in the notice of appeal and in his written submissions, why sale was inappropriate. He submitted "the judge [had] wrongly exercised jurisdiction to order the sale of the vessel" and advanced several reasons in support. But the judge did not make an order for sale: he adjourned that part of the application. We have no jurisdiction to review a decision which has not been made.[13] When we pointed out that all the judge had formally done was adjourn the application for sale, Mr David submitted he had been wrong to adjourn it: he should have dismissed the application outright. We are not at all sure we have jurisdiction to entertain an appeal against a decision to adjourn an interlocutory application: seeAssociation of Dispensing Opticians of New Zealand Inc v Opticians Board [2000] 1 NZLR 158 at [22] (CA). But, even if we do, we decline to exercise such jurisdiction in this case. The sale application should be heard in the High Court in light of the appraisement that has taken place since Williams J's decision. As well, other parties who have filed caveats in this matter should be heard. [14] Mr David's next fallback argument under this head was that, even if the judge's decision to adjourn the sale application was right or unchallengeable, the judge was wrong to "dismiss" Ryboprodukt's "opposition to the application for appraisement and sale". That is a proper issue for us to grapple with, at least so far as sale is concerned. The appropriateness of that decision is the third issue. [15] We shall deal with those issues in turn. Having done so, we shall deal with a further matter Mr David raised, but which we think was not open to him on this appeal. That was an argument that the ship should now be released from arrest because Garant had failed to meet the ongoing costs of arrest.Was the notice of proceeding a nullity?[16] It is important to note at the outset that proceedings in admiralty, while they have some special features, are in essence High Court civil proceedings. That is made clear by r 766 of the High Court Rules, which provides that the provisions of other Parts of the rules, and the general practice of the High Court, apply to admiralty proceedings, except so far as they are modified by or inconsistent with the Admiralty Act 1973 or Part 14 (dealing with proceedings in admiralty). This means, for instance, that rr 5 (non-compliance with rules) and 11 (power to amend defects and errors) apply. We shall return to those provisions shortly. [17] Like most civil proceedings in the High Court, a proceeding in admiralty is commenced by a notice of proceeding: r 769(2). The notice is in a different formfrom the general notice, but serves exactly the same purpose. In general proceedings, a notice of proceeding is served with a statement of claim. In admiralty proceedings, the statement of claim, at least initially, is not in a separate document but is "endorsed" on the notice of proceeding itself. In addition, it is in short form: "a concise statement of [claim]". It need contain only the nature of the claim, the relief or remedy required, and the amount claimed (if any). [18] The matter in issue here relates to the claim for costs Garant made in the concise statement. Garant claimed "costs for and incidental to the trial of the matter in the amount of NZ$100,000". Mr David submitted it was wrong to claim costs at all. As a fallback, he submitted Garant had claimed too much by way of costs: it was not entitled to claim costs up to and including the trial itself. [19] We have no hesitation in rejecting this submission. The general notice of proceeding, as originally enacted in the High Court Rules, contained a paragraph to this effect:The plaintiff claims the sum of $_____ for costs of and incidental to issuing this proceeding.[20] The rules themselves did not specify the sum to be included, but the practice was to claim the scale sum for "preparing, filing, and serving statement of claim and notice of proceeding, and matters preliminary thereto", namely $290 (in the case of a claim not exceeding $20,000) and $400 (in other cases): see the Second Schedule of the High Court Rules (as originally enacted), item 1. The claim for costs was invariably repeated in the statement of claim, although not there limited to any specific amount. In general, the formula used by plaintiffs' solicitors was a claim for "costs of and incidental to the proceeding" or, more simply, "costs". There was, in fact, nothing to prevent a plaintiff claiming a specific amount by way of costs in the statement of claim, but it would have been foolhardy so to do, as the case might take unexpected turns, which might result in too little being claimed. [21] In 2001, the costs paragraph which we have set out at [19] above was removed from the general notice of proceeding: see the High Court Amendment Rules 2001, r 12. As the explanatory note to those rules explained, the reference tocosts in the notice of proceeding was "no longer necessary in light of changes to the costs rules". That was a reference to the new High Court costs regime introduced by the High Court Amendment Rules 1999. Now the sole place where costs were claimed was the statement of claim. [22] The admiralty rules have followed a similar course. When those rules were first formally introduced as part of the High Court Rules (by r 16 of the High Court Amendment Rules 1997), the notice of proceeding in rem (form 69) contained a paragraph similar to the costs paragraph in the general notice of proceeding:3. The plaintiff claims the sum of $[Insert sum] for [Specify]. The plaintiff also claims the same of $[Insert sum] for the costs of and incidental to service of this notice of proceeding.[23] Again, as with the general rules, no admiralty rule specified the sum to be claimed by way of costs. In due course, paragraph 3 of form 69 was revoked: see r 20(1) of the High Court Amendment Rules 2002. The explanatory note to these rules made it clear that removing the reference to costs was a consequence of the new costs regime, which applied, of course, to admiralty proceedings in the same way it applied to general civil proceedings. [24] This amendment did not mean, however, that a plaintiff in its "concise statement of claim" should not specify that it was making a claim for costs. On the contrary, we think an admiralty plaintiff should claim costs if it wants them, just as a general plaintiff should claim costs in its statement of claim if it wants them. Garant's claim for "costs for and incidental to the trial of the matter in the amount of NZ$100,000" was included, not in the notice of proceeding per se, but rather as part of the "concise statement" required by r 769(2). Since that rule requires the concise statement to state "the relief or remedy required" and "the amount claimed", we see nothing wrong with Garant having claimed costs. While it was not necessary for it to specify the amount of costs claimed, there was nothing to prevent it claiming whatever figure it liked. Whether the High Court would ultimately agree with the claim is another matter. [25] In short, therefore, Garant was entitled to claim costs in its concise statement of claim. It was entitled to specify the amount of costs it claimed, although it wasnot required so to specify and, indeed, best practice would suggest that admiralty plaintiffs, like general plaintiffs, should simply claim "costs". The notice of proceeding and its endorsed concise statement of claim were in proper form. [26] This is sufficient to dispose of Mr David's argument on the first issue. But, for the sake of completeness, we make three further points. First, the concise statement of claim, of which the allegedly offending costs claim forms part, has in any event been amended. Garant's concise statement of claim is now history, having been overtaken by the "full and explicit statement of claim" required by r 774(2). That statement of claim, dated 24 September 2007, claims in its prayer for relief:(e) Costs of enforcement of the agreement as varied on 21 December 2006 on an indemnity basis. (f) Costs.[27] Garant is no longer claiming NZ$100,000. It has amended that claim, as it was entitled to do. [28] Secondly, the above analysis shows the error in Mr David's alternative argument. Mr David submitted that, even if the notice of proceeding was initially correct, it ceased to be correct when the amount claimed for repair costs changed. The original claim for repair costs was €356,214. That sum dropped as a result of a part payment Ryboprodukt made. Because "the notice of proceedings no longer stated the [correct] amount claimed", Mr David argued it "was stale" and "a nullity". That is not correct. The amount claimed (€356,214) was never part of the notice of proceeding: it was part of "the concise statement of claim" endorsed on it. Like any allegation or claim made in a statement of claim, it could subsequently be amended. Amending a statement of claim never requires the plaintiff to file and serve a fresh notice of proceeding. Notices of proceeding and statements of claim have quite different functions. [29] Thirdly, Mr David's argument took no account of rr 5 and 11. Rule 5(1) provides:(1) Where, in beginning or purporting to begin any proceeding or at any stage in the course of or in connection with any proceeding there has,by reason of any thing done or left undone, been a failure to comply with the requirements of these rules, whether in respect of time, place, manner, form, or content or in any other respect, the failure – (a) Shall be treated as an irregularity; and (b) Shall not nullify – (i) The proceeding; or (ii) Any step taken in the proceeding; or (iii) Any document, judgment, or order in the proceeding.[30] At best, if Mr David's argument had been right, this would have been simply an error of form. In addition, he should not have been permitted to take the point owing to delay. In that regard, we refer to r 5(4), which reads as follows:(4) The Court shall not set aside any proceeding or any step taken in a proceeding or any document, judgment, or order in any proceeding on the ground of a failure to which subclause (1) applies on the application of any party unless the application is made within a reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity.[31] Had there been anything in the complaint, we would have seen fit to exercise the Court's powers under r 11 to validate the procedure Garant had adopted. An example of the High Court exercising its powers under rules 5 and 11 in somewhat similar circumstances is Attorney-General v The Ship "Tosa Maru" (1992) 5 PRNZ 661.Was there a proper basis for the exercise of the jurisdiction to re-arrest in this case?[32] Garant, in the concise statement endorsed on its notice of proceeding in rem, stipulated that its claim came within s 4(1)(l) and (m) of the Admiralty Act. Those paragraphs read as follows:(l) Any claim in respect of goods, materials, or services (including stevedoring and lighterage services) supplied or to be supplied to a ship in its operation or maintenance: (m) Any claim in respect of the construction, repair, or equipment of a ship or for dock or port or harbour charges or dues:[33] Mr David accepted that Garant's original claim fell within the High Court's admiralty jurisdiction. He further accepted, in the event his argument on the first issue failed (as it has), that the original arrest of the ship was lawful. But he submitted the fourth arrest, under which the Ksenofontov is currently held, should not have been ordered. He made four propositions in support of that contention: (a) By 16 August 2007, Garant's claim no longer fell within s 4(1)(l) or (m). Accordingly the jurisdiction to arrest no longer existed. (b) Garant had followed the wrong procedure. (c) Garant failed to disclose material facts when applying for the fourth arrest. (d) The ship should not have been arrested again as adequate security for Garant's claim had been supplied. [34] We shall consider these four propositions in turn.The claim was no longer in the High Court's admiralty jurisdiction[35] In a nutshell, Mr David's argument was that, by the time of the application for the fourth warrant (16 August 2007), Garant's claim had changed from a claim for repair costs to a claim based on "what are, in effect, refinancing agreements". In order for the reader to understand that submission, we need to provide some additional factual information. [36] Following the first arrest, Ryboprodukt made a part-payment of the money due to Garant. On 27 July 2006, Garant and Ryboprodukt entered into an agreement under which Garant gave Ryboprodukt more time in which to pay the balance owing. Ryboprodukt also agreed to pay additional "penalties" at specified rates in respect of the delays in payment. By clause 12 of the agreement, Garant reserved the right, in the event of breach by Ryboprodukt, "to undertake any necessary legal measures toprotect its own interests including, but not restricting, re-arrest of the vessel". Clause 13 of the agreement provided:The present agreement is the basis for release from arrest the vessel "Aleksandr Ksenofontov" in the Lyttelton Port (New Zealand). Thus the parties state, that the legal procedure started in New Zealand 18-07-2007 remains valid and, in case of breach of the present agreement, mighty [sic] be renewed at any moment.[37] Pursuant to that agreement, the Ksenofontov was released from arrest. Ryboprodukt failed to fulfil its promises under the 27 July 2006 agreement. That then led to the second arrest. Following the second arrest, Ryboprodukt made a further part-payment, this time €76,000. The parties, on 21 December 2006, then entered into a further agreement. This again set out a timetable for repayment of what was owing, together with agreed "penalties" in respect of late payment. Clause 13 of the agreement required Ryboprodukt to procure Fish Market Limited, at that time a charterer of the vessel, to provide "a guarantee and indemnity". Clauses 14 and 15 were in the same terms as clauses 12 and 13 of the 27 July 2006 agreement. [38] So far as appears from the record, Fish Market never provided the guarantee Ryboprodukt had promised to procure. Further, while Ryboprodukt made a small payment towards its debt, it did not comply with the timetable for repayments. [39] Those failings led in April 2007 to the third arrest of the ship. The ship was released from arrest the day after, following what Kerryn Sparrow, a solicitor for Garant, said were "promises of payment, supported by a personal guarantee from Mr Boltik, the interest holder in [Ryboprodukt]". But nothing was paid. This led to the fourth arrest, under which the Ksenofontov is still held. [40] While all this was going on, Ryboprodukt took no steps in the proceeding. It did not enter an appearance until 13 September 2007, almost a month after the fourth arrest. It was not entitled to enter an appearance as of right at that stage. Under r 773(5), an appearance at that stage could have been entered only with Garant's consent or by leave of a High Court judge. The latter was never obtained. So far as the record shows, nor was Garant's consent. Be that as it may, no point appears tohave been taken about this, and the appearance has been treated as valid. It was an unconditional appearance, a point to which we shall return. [41] With that background, we turn to Mr David's argument. He submits that, by virtue of the 27 July 2006 agreement and/or the 21 December 2006 agreement and/or the agreement following the third arrest, Garant's claim has become a claim based on "what are, in effect, refinancing agreements". Ms Versfelt, for Garant, disputes this. She submits the claim remains a claim for repairs. All that has happened is the original repair contract has been varied so that, in return for Ryboprodukt being given more time to pay and the release of the vessel, Ryboprodukt agreed to pay additional interest. [42] It is not possible for us to resolve this dispute at this interlocutory stage. Nor is it required. When proceedings in rem are commenced and a warrant of arrest is sought, the registrar tests jurisdiction against the claim, as deposed to in the r 776(4)(a) affidavit. Obviously, at times, wrongful claims will be made. In due course, if the arrest can be shown to be wrongful (because, for instance, the claim was not an admiralty one), remedies may be obtained for the wrongful arrest: see Meeson Admiralty Jurisdiction and Practice (3ed 2003) at [4.29]-[4.34]. [43] The position is slightly different on an application for re-arrest. At that time, the court will look at all the circumstances in order to determine whether the ship should be re-arrested. But, even in this situation, the court will not be in a position, or required, to make a definitive ruling as to whether the claim comes within the admiralty jurisdiction. It is sufficient if the applicant makes out a reasonably arguable case that the claim is within admiralty jurisdiction. It is not necessary for the applicant to prove on the balance of probabilities that its claim is within admiralty jurisdiction. That is a question for trial. [44] The present case is a prime example of why this should be the case. All the relevant contracts in this case were made either in Lithuania or in Russia. There is no doubt the law of the original repair contract is Lithuanian law. It is, perhaps, less clear what law applies to the subsequent agreements. That will be a matter for trial; appropriate expert evidence as to foreign law might be required. It would be quiteimpossible to work out questions of that sort on an interlocutory application to re-arrest. [45] In our view, there is a strongly arguable case that Garant's claim remains within the admiralty jurisdiction. We reach this conclusion for three main reasons. First, Ryboprodukt, after all these agreements had been entered into, entered an unconditional appearance in the action. The effect of an unconditional appearance is an acceptance of the court's admiralty jurisdiction in the matter. If a ship owner wishes to dispute admiralty jurisdiction, it must apply to set aside the notice of proceeding "before entering an appearance in the action, or, if the defendant has entered a conditional appearance, within 10 days after the day on which that conditional appearance is entered": see r 773(7). [46] When we put this to Mr David, he replied that the unconditional appearance had been entered "in error". There is no evidence to support that submission, however. Further, Ryboprodukt has at no time applied to have its unconditional appearance set aside: cf Rothmans of Pall Mall (Overseas) Limited v Saudi Arabian Airlines Corporation [1981] 1 QB 369 at 373 (CA). This reason alone would have satisfied us that there was a reasonably arguable case that the matter remained in admiralty jurisdiction. [47] Secondly, Ryboprodukt acknowledged in the later contracts that re-arrest remained possible if it failed to comply with the new terms. Those acknowledgements are an important pointer to the true nature of the later agreements, as Ryboprodukt presumably would not have agreed that the original admiralty proceeding remained valid and that re-arrest was possible if it truly considered the nature of the underlying contract had changed. [48] Thirdly, on their face, the later agreements do not appear to change the nature of the underlying claim. Ms Versfelt's argument, namely that all that has happened is that Ryboprodukt has been given more time to pay the outstanding repair bill in return for additional interest, seems eminently arguable. Of course, once all the evidence (including expert evidence as to foreign law) is in, and cross-examinationhas occurred, that view may change. But, as we have explained, definitive determinations are not required at this stage.Wrong procedure[49] Mr David's second argument was that Garant had adopted the wrong procedure when it applied to re-arrest for the fourth time. Its application was made under r 776, but that rule is applicable only to first-time arrests. Mr David submitted that "the proper course for [Garant] to adopt was for it to make an interlocutory application on notice to [Ryboprodukt] to re-arrest the vessel". For reasons we shall now give, we think Mr David was right in that submission (save in one respect), but we also think no injustice has in the end arisen from the use of the wrong procedure. [50] It appears indisputable that Garant did consider its application to re-arrest could be brought under r 776, the rule permitting original arrest. Initially, we thought this course may have been appropriate in light of s 16 of the Interpretation Act 1999. Section 16 reads as follows:16 Exercise of powers and duties more than once –(1) A power conferred by an enactment may be exercised from time to time. (2) A duty or function imposed by an enactment may be performed from time to time.[51] Does s 16 permit the power to arrest conferred by r 776 to be re-exercised from time to time? In the end, we have decided Mr David is right and that the context of r 776 does not permit the power conferred by r 776(7) to be exercised more than once. In those circumstances, s 16 of the Interpretation Act must yield: see s 4(1) of the Interpretation Act. [52] What leads us to that conclusion is this. It is well established that, provided the applicant for a warrant of arrest has filed the affidavit required by r 776(4)(a) and the indemnity to the High Court registrar in form 73 and the requisite security, the registrar is bound to complete the certificate on the application for a warrant of arrest and to issue a warrant of arrest: see r 776(7). The issue of the arrest warrant is as ofright, not discretionary: see The "Varna" [1993] 2 Lloyd's Rep 253 (CA) and Mobil Oil New Zealand Limited v The ship "Rangiora" [2000] 1 NZLR 49 at 65 (HC), and see also Mandaraka-Sheppard Modern Maritime Law and Risk Management (2ed 2007) at 117 and David Maritime Law: Admiralty (The Laws of New Zealand 2003) at [183]. It is, however, well-established admiralty law that, while the court has jurisdiction to order a re-arrest, that decision is discretionary: see Det Norske Vertas AS v The Ship "Clarabelle" [2002] 3 NZLR 52 at [26]-[33] (CA). It follows that r 776(7) cannot be the source of that power. It must be a power flowing from the court's inherent admiralty jurisdiction, which was expressly preserved by s 4(2) of the Admiralty Act. Since there is no express rule in Part 14 dealing with applications for re-arrest, such applications have to be dealt with in accordance with "the provisions of other Parts of these rules, and the general practice of the Court": see r 766. [53] It follows that, as Mr David submitted, if a plaintiff wishes to re-arrest a ship, the plaintiff should apply to the High Court utilising the normal procedure for a notice of interlocutory application. That is what Garant should have done here. [54] The one point on which we disagree with Mr David's submission is that we do not consider the application should have been on notice. Ryboprodukt had not filed an appearance. Ryboprodukt, so far as the record shows, had no place of business in New Zealand and had not instructed New Zealand lawyers. The 27 July 2006 agreement and the 21 December 2006 agreement had both been negotiated and signed on the other side of the world. Indeed, it would seem that even Garant's New Zealand lawyers, the Auckland firm of Wilson Harle, played no role in their negotiation and drafting: they were simply provided in each case with a fait accompli from their Lithuanian principals. In those circumstances, we consider Garant was entitled to proceed on an ex parte basis. The position would have been different had Ryboprodukt filed an appearance or if, to Wilson Harle's knowledge, Ryboprodukt had instructed New Zealand lawyers. [55] As it turns out, no real harm arose from the fact that Garant filed a r 776 application instead of a notice of interlocutory application to re-arrest. Garant did, after all, file a memorandum and an affidavit in support of its application, setting outthe relevant circumstances. (Whether there was full disclosure of relevant circumstances will be considered in the next section of these reasons for judgment.) And, as it turned out, the application to re-arrest was considered and determined by a judge, not the registrar. This was a serendipitous outcome from Garant's point of view. The registrar appears to have referred the matter to Potter J because of his uncertainty as to his powers under r 776. [56] What could Ryboprodukt have done once it found out about the order? It could have appealed. It could have applied to have the order rescinded under r 259. It could have applied to have the order quashed under r 261 on the basis that the order had been "improperly obtained". As it turns out, it took none of those steps. Instead, it applied to have the order "set aside", apparently pursuant to "inherent jurisdiction". That was not the proper course. There is no inherent jurisdiction to ask one High Court judge to investigate whether another High Court judge has correctly exercised his or her discretion to make an interlocutory order. Notwithstanding that, Williams J does appear to have looked at the entire matter afresh. Even if, therefore, contrary to our view, the original application should have been on notice, that error has effectively been overcome. [57] Both sides, therefore, made procedural errors, but the end result has not prejudiced either side. Ultimately, a High Court judge, on an inter partes basis, has looked at whether it was proper to permit the Ksenofontov to be re-arrested for a fourth time. Williams J determined it had been appropriate to order re-arrest. Whether he was right so to find is now properly the subject of an appeal to this court. The procedural errors made on both sides have effectively been cured.Failure to disclose material facts[58] Where a party applies for an interlocutory order ex parte, that party owes the court a duty of utmost good faith to make the fullest disclosure to the court of all facts relevant to the application. In particular, the applicant has a duty to disclose to the court any known defence to the application, together with the facts on which it is based. If subsequently it emerges the successful applicant breached that duty, that initself can be grounds for rescission of the order the applicant obtained. For further detail, see the discussion in McGechan on Procedure (looseleaf ed) at [HR259.03]. [59] There can be no doubt that this duty fell on Garant when it elected to apply ex parte for the fourth arrest. [60] In the High Court, Mr David apparently took the point that Garant had breached this duty in applying for the fourth arrest: see judgment at [32]. So far as we can see, however, Williams J made no express finding on this point. Mr David renewed this attack before us. He submitted Garant had failed to provide to the court two pieces of information: (a) The original repair contract; (b) The fact that alternative security in the form of a personal guarantee had been provided. [61] It is true that the original repair contract was not exhibited to any affidavit. But we cannot see any significance in that omission. Mr David does not point to any term of that repair contract which has a bearing on any matter in issue. Further, Garant did exhibit the subsequent agreements, which acknowledged the repair contract and agreed how much was owing under it. There is nothing in this point. [62] As for the second point, Garant did disclose that Mr Boltik had promised to guarantee the obligations of Ryboprodukt. See paragraph 3 of Ms Sparrow's affidavit of 16 August 2007. It transpires the promise to guarantee was merely oral. Accordingly, there was no document to attach. Mr David's submission, therefore, in this regard is not factually based. [63] In our view, there was no material non-disclosure on Garant's part.Adequate security had been supplied[64] Mr David's final argument was that the fourth arrest should not have been ordered because by then Garant had "alternative security" in the form of a "personal guarantee". Mr David relied upon The Christiansborg (1885) 10 PD 141 (CA) in support of this proposition. [65] It seems Williams J misunderstood what Mr David was referring to as the alternative security. His Honour appears to have thought Mr David was referring to the Fish Market guarantee referred to in the 21 December 2006 agreement. That was not the guarantee to which Mr David was referring: it could hardly be, as, so far as the record shows, it was never provided. Since the obligation was on Ryboprodukt to procure that guarantee, the failure to provide it represents yet a further breach of that agreement by Ryboprodukt. Rather, Mr David was relying upon the alleged guarantee from Mr Boltik, said to have been given in April 2007. [66] Instances of re-arrest are rare. That is not because the courts have, for doctrinal reasons, made such orders difficult to obtain. Rather, it is because admiralty plaintiffs almost invariably will agree to a vessel's release following arrest only once full security for their claim has been provided. If full security has been provided, then only rarely should an admiralty plaintiff get a second bite of the cherry. [67] This admiralty plaintiff has, however, acted rather unusually. Ms Versfelt referred to her client's actions as benevolent or lenient. It agreed to theKsenofontov's release following the first three arrests on terms which did not require Ryboprodukt to provide any immediate security at all. Instead, Garant appeared willing, for what reason we know not, to allow the releases simply upon assurances to pay by Ryboprodukt. True it is that Garant sought additional "penalties" if Ryboprodukt breached the new timetables for payment, but no security was provided. The 21 December 2006 agreement provided for Ryboprodukt to procure a guarantee from Fish Market, but even then the release was not conditional upon such guarantee being provided. As it turns out, as we have already said, Ryboprodukt did not procure that guarantee.[68] What then of Mr Boltik's alleged guarantee? The evidence concerning this is extremely scanty. Ms Sparrow refers to it in her affidavit of 16 August 2007, but the statement is hearsay. Interestingly, in none of the affidavits filed on behalf of Ryboprodukt is there any reference whatever to this alleged guarantee. Ryboprodukt's deponent (Vladimir Filatov) has provided no assurance that Mr Boltik is standing behind any alleged "personal guarantee". And nothing has been heard from Mr Boltik, despite his being apparently "the interest holder" in Ryboprodukt. In those circumstances, we do not consider there is satisfactory evidence regarding Mr Boltik's alleged guarantee. We would not regard it as satisfactory alternative security. [69] We also consider it very significant that, in the agreements of 27 July 2006 and 21 December 2006, Ryboprodukt expressly agreed that Garant could re-apply for the vessel to be arrested if Ryboprodukt breached the agreements. It is fair to infer that, but for that acknowledgement on Ryboprodukt's part, Garant would not have agreed to the release of the ship. [70] The Christiansborg, on which Mr David strongly relied, is to be distinguished on the facts. The Christiansborg and a German steamship called Jessica collided on the high seas. The Jessica sank. The owners of the Jessica and her cargo had theChristiansborg arrested in Holland and commenced an action in the Royal Court of Holland. A week later, the agents of the Christiansborg gave a guarantee in the following form:We the undersigned, the private underwriters in Copenhagen, hereby guarantee to the parties interested in the steamer Jessica of Hamburg and to her cargo up to the amount of 175,000 gulchen for the compensation which the steamer Christiansborg may eventually have to pay by legal decision in Holland.[71] That guarantee was satisfactory to the Jessica's agent in Holland, one Van Oppen. The Christiansborg was then released. It went to England, where it was arrested again at the suit of the Jessica's owners, who then began an action in the English courts as well.[72] The owners of the Christiansborg sought a stay of the English proceedings on the basis that proceedings had already been commenced in Holland. They also sought release of the vessel on the basis that adequate security had been given. TheJessica's owners responded that they now intended to discontinue the Dutch proceedings because, they said, "there were great difficulties in trying such an action as this in Holland": at 142. [73] Sir James Hannen, at first instance, stayed the English proceedings and ordered the vessel's release. He said that, while "the agent of the plaintiffs in the English proceedings [had said] that there are great difficulties in proceeding with the suit in Holland", he had not said what those difficulties were: at 143. Sir James did not accept there were any such difficulties. He said at 144:I have no doubt that justice will be as much done in Holland as here.[74] He also referred to the fact that the security that had been provided in Holland was a proper security "according to the law of that country" and had been seen as "satisfactory to the plaintiffs' agents in that country": at 144. [75] The majority of the Court of Appeal upheld Sir James's decision. In particular, Fry LJ pointed out that the Jessica's owners had not shown that the guarantee was inoperative. Indeed, they had not indicated they desired "to be free from it or to repudiate it": at 157. There was no suggestion that Mr van Oppen had exceeded his authority in accepting the guarantee and releasing the ship. [76] In The Christiansborg, therefore, a formal guarantee had been given. It was a valid security under Dutch law. There was no suggestion the guarantors were not good for the money. There was no suggestion that the amount of the guarantee was inadequate. Indeed, the Jessica's owners were not releasing the underwriters from the guarantee. What they were really seeking to do was recommence their litigation in England, which for some reason they now thought would be a more favourable forum than Holland. We can well understand why Sir James Hannen and the English Court of Appeal considered the English proceedings should be stayed and why the Jessica's owners should be content with the security which their Dutchagent had deemed adequate. The circumstances of The Christiansborg are far removed from the situation here.Conclusion[77] We have rejected all four of Mr David's arguments on the second issue. We consider there was a proper basis for the exercise of the jurisdiction to re-arrest in this case. [78] Had we reached a different view on any of Mr David's arguments on this issue, we would have called for further submissions on another matter which might have rendered release from arrest inappropriate. It was not a matter on which we received other than fleeting submissions. After the Ksenofontov was arrested for the fourth time, Portside Logistics (Timaru) Limited, Port Lyttelton, and Mobil Oil New Zealand Limited all filed caveats against the vessel's release. Those caveats are still in force. We would have needed to hear from those parties before releasing the vessel.Was Williams J right to dismiss Ryboprodukt's opposition to the application for sale?[79] As we have indicated, Ryboprodukt challenged Garant's application for appraisement and sale before judgment. Williams J ordered appraisement, but adjourned the application for sale. That part of Garant's application has still not been heard. At the same time, the judge "dismissed" Ryboprodukt's "opposition to the application for appraisement and sale". [80] Appraisement has now occurred. According to Mr David, that appraisement valued the Ksenofontov at USD2.5 million. (Apparently, Ryboprodukt believes it is worth more than this.) It is obviously too late to do anything about an appraisement now. Mr David's argument focused therefore on Williams J's dismissal of Ryboprodukt's notice of opposition to Garant's application for sale before final judgment. Ryboprodukt had, in its notice of opposition, relied on the following grounds:1 There is no jurisdiction on the claim in these proceedings on the grounds set out in the notice of application. 2 Without prejudice to 1 above, an order for sale pendente lite should only be granted for good reason and in exceptional circumstances because it involves the removal of property rights before judgment. 3 There is no evidence that the vessel is deteriorating in value, nor any evidence that the condition of the vessel will deteriorate during any lay- up. The vessel is well maintained and in class. Crew costs are being met by Owners. 4 Any order for appraisement and sale will affect both the contracts of employment of the crew as well as the property rights of the Owner. 5 The Plaintiff shows no good reason to order the appraisement and sale of the vessel pendente lite.6 It is not in the interests of justice and all the parties to order the sale of the vessel pendente lite. 7 There is no power in the Registrar or Court to order discharge/repatriation of the crew. In any event, there is no good reason in the circumstances for such orders. [81] We can see that the jurisdictional argument (ground 1) should no longer be available to Ryboprodukt, in view of Williams J's decision on that issue, now confirmed by this court. But the remaining grounds should be considered when Garant's application for sale comes on again for hearing. We can see no basis for those grounds being struck out at this stage when the application for sale remains undetermined. [82] Accordingly, we have reinstated Ryboprodukt's notice of opposition so that it can advance a proper argument at the hearing of the application for sale: see order C.Obviously, Ryboprodukt will not be able to advance grounds of opposition contrary to what this court has determined by this judgment.The ongoing costs of arrest[83] We now turn to deal with an argument Mr David raised to the effect that the warrant of arrest should now be set aside because Garant had failed to meet the registrar's ongoing requirements for security. We do not consider that argument is open to Ryboprodukt on this appeal. [84] This argument has nothing to do with the validity of the warrant of arrest made on 16 August last year. The argument was not signalled in Ryboprodukt's amended application to set aside and/or strike out. Accordingly, it was not the subject of evidence. If this matter is to be pursued, it must be the subject of a fresh application in the High Court. [85] We should add that Ms Versfelt strenuously disputed the assertion that Garant had failed to comply with the registrar's requirements for security. We can take that matter no further.Result[86] For the reasons given above, we dismiss the appeal, save in the respect noted in order C. [87] Following the hearing in this court on 30 April, we ordered a stay of the proceedings pending the substantive judgment. We now vacate that stay. [88] We turn to costs. Clause 8 of the 27 July 2006 agreement and clause 9 of the 21 December 2006 agreement arguably permit Garant to recover costs on an indemnity basis. Whether that is the case will be a matter for trial. The correct course, we think, is to allow Garant interim costs in the normal amount for a one day appeal, namely $6,000. But we reserve to Garant the right to apply in due course for"top-up" costs in the event it establishes in the High Court that Ryboprodukt did agree to pay Garant's costs on an indemnity basis: see orders D and E.Solicitors: Dawson & Associates, Nelson, for Appellant Wilson Harle, Auckland, for Respondent