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High Court of Fiji |
IN THE HIGH COURT OF FIJI ISLANDS
AT SUVA
CIVIL JURISDICTION
Civil Action No: HBG 5 of 2010
BETWEEN:
FIJI PORTS CORPORATION LTD
[1ST Plaintiff]
AND:
FIJI SHIPS & HEAVY INDUSTRIES LTD
[2ND Plaintiff]
WESTERN SHIPPING COMPANY [FIJI] LTD
[1ST Defendant]
THE MOTOR VESSEL "CAGI MAI BA"
[2ND Defendant]
Counsel: Neel Shivam Lawyers for the Plaintiffs
Qoro Legal for the Defendants.
Date of Judgment: 13th October, 2010
INTERLOCUTORY JUDGMENT
[1] The plaintiff by ex-parte motion dated 24.08.2010 sought an order for the arrest of the 2nd defendant Motor Vessel Cagi Mai Ba. When the case was called on 24.08.2010, Court ordered that the MV Cagi Ma Ba be arrested and kept under safe arrest until further order.
[2] In addition to that the plaintiff has also filed inter-partes summon for interim injunction seeking following relief:
[3] In support of the motion, the General Manager Finance of the 1st and the 2nd plaintiffs tendered an affidavit.
[4] The facts of the said affidavit can be summarized as follows:
The vessel Cagi Mai Ba is owned and operated by the 1st defendant. The 1st plaintiff between 09.07.2019 and 30.07.2009 provided the defendants with services which, included dockage charges, water usage, port dues and environmental levies. The defendants owed the 1st plaintiff a total sum of $15035.00.
[5] Despite several requests and demands made by the plaintiff, the defendants failed to pay the said sum. The defendant admitted the liability for the debt owed to the plaintiff and undertook to repay the sums owed, but failed to do so.
[6] In essence the plaintiff's claim is for monies due and owing to the plaintiffs for various works performed and goods supplied by the plaintiffs to the defendants.
[7] The defendant also filed an ex-parte summons for setting aside the writ and the warrant of arrest.
[8] In support of the defendant's application 2 affidavits were filed by the defendants.
[9] The defendant's contention is that since the vessel is mortgaged to a bank, the bank is the beneficial owner and therefore, it cannot be arrested. This contention is mainly based on the issue of beneficial ownership.
[10] However, the plaintiff submitted, that the issue of beneficial ownership is immaterial, so long as the defendants owed the plaintiffs the total sum of 150000.00.
[11] In the light of the above argument, the cardinal issue to be determined here is whether or not at the time of the issuance of writ, Western Shipping Ltd is the beneficial owner of all the shares; and if so can the plaintiff bring an action in rem.
[12] In the affidavit filed by the 1st defendant company, it has been admitted that the 1st defendant is registered with the Fiji Maritime Department as the owner and operator of the vessel Cagi Mai Ba. The vessel is mortgaged to ANZ through Mortgage Debenture dated 06.12.2004. The Debenture covers all the assets and undertaking of 1st defendant. It was admitted that the 1st plaintiff provided services to the defendants between 09.06.2009-0.07.20110. The 1st defendant's position is that it has paid the sum of 10000.00 to the 1st plaintiff and would settle any outstanding debts, after it has verified and vetted by both parties.
[13] In his affidavit, the operational manager of the 1st defendant admitted that the 1st plaintiff had provided services to the 2nd defendant. It was further admitted that the 2nd plaintiff had carried various repair works on the 2nd defendant.
[14] However, the 1st defendant alleged that the plaintiff did not provide competent and good workmanship of the ship for work done between 12.06.2008 and 20.06.2008. Therefore, the 1st defendant disputed the debt. But, it could be noted that the defendant failed to produce any evidence to show that there were such complains related to the repairs carried out and the services provided by the plaintiffs.
[15] Tax invoices marked as 'AS-2' clearly shows the services provided by the 1st plaintiff to the defendants. It is also clear from the document marked as 'AS-3 that a demand notice was sent to the 1st defendant by the 1st plaintiff.
[16] The document marked as AS-4 is an acknowledgment of the debt by the 1st defendant. The documents marked as AS-5 show the repairs and other services carried out to the Vessel by the 2ndplaintiff
[17] The 2nd plaintiff has sent a demand notice to the defendants and a copy of the Demand Notice is marked as AS-6. The defendant produced no evidence in order to challenge the above documents.
[18] Section 1(1) (m) and 1(1) (n) of the Administration of Justice Act reads as follows:
The admiralty jurisdiction of the High Court of Fiji shall be as follows, that is to say jurisdiction to hear and determine any of the following claims;
(m). any claim in respect of goods or materials supplied to a ship for her operation or maintenance;
(n). any claim in respect of the construction, repair or equipment of a ship or dock charges or dues;
[19] In the light of the above provision plaintiff's claim clearly falls within the above section.
[20] The 1st plaintiff's claims are pursuant to the Port Authority of Fiji Act, cap 181, Section 28. The claims by the 2nd plaintiff are in respect of repairs done on the 2nd defendant.
[21] Therefore, it is apparent that both plaintiffs have valid actions against the 2nd defendant in rem for the services provided and the repairs carried out on the 2nd defendant.
[22] The defendants mainly rely on ASD Marine Proprietary Ltd v Pacific Navigatotion Ltd [1992] FJHC 74 and Wasawasa Fisheries Ltd v. Karim's Ltd No1 [1998] FJHC 76
[23] In the light of the above cases, the defendants submitted that the court should look beyond the registered ownership of the ship in order to find the beneficial ownership.
[24] However, it could be noted that in both abovementioned cases, the applications for release of the vessels were made by the interveners who made claims on the basis of beneficial ownership, whereas in the instant case no such beneficial owner has intervened and the application for release of the vessel has been made by the registered owner.
[25] In Wasawasa Fisheries Ltd case it was stated:
'to sum up, I find that the intervener (Levestam) is the beneficial owner of the vessel within the meaning ascribed to the term under the relevant said section of the Administration of Justice Act applicable to Fiji. This ownership emanates from the Sale and Purchase Agreement entered into between the defendant and the intervener for the sale of the vessel to the defendant. This agreement inter alia, gives certain rights to the intervener in case of default in payment of the purchase price and it is clear from the evidence that there has been a default and the defendant admits that money is still owed to the intervener. The ownership of the vessel had not at any time passed to the defendant except that it had possession of it for the purpose of fishing before the arrest.
[26] Therefore, the present action is easily distinguishable from the above cases.
Section 28 of the Port Authority of Fiji Act reads as follows:
28(1) Dues known as dockage dues shall be levied by and paid to the Authority on every vessel berthed at a wharf.
(2) Dockage dues shall be prescribed by the Authority with the approval of the minister and by notification in the Gazette.
(3) The Authority may detain any vessel in a port until any dockage dues have been paid or have been secured to its satisfaction.
[27] In the light of the above section the 1st plaintiff is empowered to detain the vessel regardless of its ownership until the charges have been paid.
[28] Further, it must be stated that in an action of this nature, if the court is required to look behind the registered ownership of the vessel in order to find the beneficial ownership, it would deny the plaintiff to exercise its powers to recover debts under the above section and would frustrate the very intention of the legislature.
[29] Even after the ship was arrested neither the purported beneficial owner nor any agent representing the beneficial owner has intervened. The documents marked as A, B, and C together with the plaintiff's affidavit in reply, clearly shows that the 1st defendant has admitted the debt, has undertaken to pay the debt and has explained that the company was in financial difficulties and required time to settle the debt.
[30] The advertisement for expression of interest coupled with the statements made in the media sufficiently indicate to the court that the 1st defendant is intending to dissipate its assets and there is a real risk that the debt owed to the plaintiff may never be recovered.
[31] Therefore, the plaintiffs are legally entitled to apply for arrest of the vessel in order to recover their charges in respect of the repairs carried out and the services provided therein.
[32] However, under the Order 9 Rule 3of the Admiralty Rules the Court has the power to release a vessel so arrested.
Order 9 rule 3 reads:
'A barrister or solicitor may obtain the release of any property by paying into the registry the sum in respect of which the action has been commenced.'
[33] According to the affidavit of Luke Ratuvuki, the 1st defendant would pay the outstanding amount once it is ascertained or resolved.
[34] This vessel is used to ferry passengers between Lau and Suva. Further, it appears that there is a public demand from the passengers travelling for Upper Southern Lau. The non availability of the vessel could cause them severe hardships as it seems to be the only mode of transport they have. The continued detention of the vessel also deprives the defendants of their source of income and ability to pay the claim. Therefore, if the vessel is released subject to conditions, securing the plaintiff's claim, no injustice would be done to the plaintiff.
[35] The manner in which the court should approach to decide the release of a vessel under arrest was explained in detail by Brandon J. In Moschanthy [1971] 1 Lloyd's Rep 43 as follows:
'I formed the opinion early on in the presentation of this argument and saw no reason to change it as the argument progressed, that what the Court was being asked to do was wholly inappropriate on the hearing of an application of this kind.
I fully recognize that, on many of the questions raised by the dispute, the plaintiff may have difficulty in establishing his case and that the defendants may well succeed. I am not, however, prepared at this stage to find, either in relation to any single question of fact or law which may arise, or in relation to the claim as a whole, that the plaintiff's case is so hopeless as to be certain, or nearly certain, to fail. On the contrary, I am of the opinion that, while there are many difficulties, some of them serious, in the plaintiff's case, he has an arguable case on fact and in law which, subject to any other grounds for a stay, he is entitled in justice to have tried.'
Being of that opinion, I am not prepared to grant a stay on the first ground advanced for the defendants, and, save in so far as it may be necessary in order to deal with the defendant's complaint about excessive security, i do not propose to go further into the merits of the case, which cannot, in my view, be fairly determined at this stage.'
Brandon J. further stated;
'The plaintiff is entitled to sufficient security to cover the amount of his claim with interest and costs on the basis of his reasonably arguable best case. His best case on amount is that he is entitled to recover in substance (though not in form) the sound value of the goods to him less the freight due.'
[36] It is with these principles in mind that I consider the release of the vessel.
[37] The plaintiff has also sought injunctive relief. Once the vessel is released on a sufficient security, the plaintiff's claim against the defendants will be secured and therefore, the question of granting an injunction does not arise. I therefore, do not incline to grant an injunction at this stage.
[38] Therefore, I order that the vessel Cagi Mai Ba shall be released to the 1st defendant subject to following conditions;
Pradeep Hettiarachchi
JUDGE
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URL: http://www.paclii.org/fj/cases/FJHC/2010/459.html