Carter v Ports of Auckland Ltd

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2003-404-4815

BETWEEN
NEIL CARTER AND IRENE WRIGHT
Plaintiff

AND PORTS OF AUCKLAND LTD
Defendant

Hearing: 12 May 2004

Appearances:
Anthony Banbrook for Plaintiffs
Gerard Curry and Bevan Peachey for Defendant

Judgment: 28 May 2004
JUDGMENT OF HARRISON J

SOLICITORS:
John Holmes (Auckland) for Plaintiffs
Russell McVeagh (Auckland) for Defendant

Introduction [1] The primary issue in this case is whether the evidence satisfies the meaning of one word where used in its statutory context: did the owners of a vessel, detained for a year by the Maritime Safety Authority ("MSA") in the Port of Auckland for failing to satisfy survey requirements, abandon it within the meaning of s 208 Harbours Act 1950, entitling the port authority to exercise powers of seizure and sale?

[2] The owners, Mr Neil Carter and Ms Irene Wright, deny they had abandoned the vessel, the Nivanga, at the relevant time. Accordingly, they say, Ports of Auckland Limited ("POAL") was guilty of conversion by disposing of her. They claim damages of $138,000, being the ship's then value, together with interest and costs. POAL counterclaims for unpaid services and berthage fees of $13,941.33 together with interest.

[3] Mr Carter and Ms Wright gave evidence at trial together with six additional witnesses; POAL called three witnesses in its defence. The milestone facts were not in material dispute. The controversy relates to the construction which I should give them in the light of the surrounding circumstances. I shall set out the material background facts before summarising the competing cases and then determining liability on both the claim and counterclaim. Background Facts [4] The relevant background facts can be narrated briefly. On 8 February 1995 Mr Carter and Ms Wright purchased the Nivanga from JKS Holdings Ltd for $200,000. They had previously leased her from the vendor to ply freight between Auckland and Great Barrier Island. [5] The Nivanga was a cargo and passenger vessel built in 1962 in Hong Kong of steel welded and riveted material. She was 41.48 metres long and weighed 353.2 tons. Her cargo capacity was 250 tons and she had a 12 berth cabin. Originally she was owned by the British Government and saw service in the Gilbert and Ellice Islands. Later she was purchased by a Fijian company. Her rundown appearance from photographs depicts a condition not dissimilar to many other small island trading vessels.

[6] Shortly after purchasing the Nivanga, Mr Carter and Ms Wright became aware of defects in its hull and progressively commissioned major repairs at a cost of $100,000. However, on 19 August 1996 the MSA issued a detention notice for the vessel pursuant to ss 55 and 397 Maritime Transport Act 1994. Its validity was not in dispute in this proceeding. The notice detained the Nivanga until the existing survey certificate was revalidated and all outstanding items from the last MSA inspection on 9 January 1996 were completed.

[7] MSA arranged to tow the vessel into Auckland harbour where she was berthed in a commercial area of the port and remained under continuous detention for the next year with two exceptions. On one occasion, Mr Carter and Ms Wright, without consent, sailed her between Auckland and Great Barrier Island to discharge cargo. On the other occasion, shortly afterwards, MSA granted a dispensation for her removal to a nearby engineering workshop for repairs. While the Nivanga was detained, the owners were allowed access to continue maintenance work and people lived on board for security and safety reasons, although without POAL consent.

[8] Mr Carter and Ms Wright spent $18,001.22 on repairing the ship between 20 August 1996 and 12 December 1996. But this was not enough to satisfy certification requirements. At one stage the owners engaged Marine & Industrial Safety Inspection Services Ltd ("M&I"), a leading surveyor, to advise on survey requirements. In a letter dated 8 September 1996 M&I listed 20 substantial items requiring work. Even after further repairs were undertaken at Orams yard on 27 November 1996, M&I identified numerous structural defects, particularly in the hull, together with a number of other items outstanding from previous surveys.

[9] About this time Mr Carter and Ms Wright decided to list the Nivanga for sale with at least two marine brokers. In December 1996 they received one conditional offer which lapsed on a counter-offer. Later they offered to sell the ship back to its original vendor. But nothing came of these dealings. Although Mr Carter carried out some work on her over this time, the Nivanga continued to lie idle at her berth throughout 1997.

[10] During this period POAL charged Mr Carter and Ms Wright berthage fees for ship pursuant to s 462 Maritime Transport Act 1994. By 27 August 1997 they amounted to $13,441.83. Those charges remain unpaid.

[11] On 22 July 1997 and 27 August 1997 POAL through its solicitors, Russell McVeagh McKenzie Bartleet, issued notices of abandonment to Mr Carter and Ms Wright. The latter notice was in this form:

Notice of abandonment TO: The owner or agent of the owner of the vessel Nivanga currently located between Jellicoe and Freyberg wharves, within the Port of Auckland

WHEREAS the vessel Nivanga has been abandoned within the port related commercial undertaking of Auckland Harbour; and WHEREAS Ports of Auckland Limited intend to remove the said vessel pursuant to Section 208 of the Harbours Act 1950. TAKE NOTICE that: (a) Pursuant to Section 208(1) of the Harbours Act 1950 you are required within 7 days of the date of this notice to remove the abandoned vessel Nivanga to some place outside the port related commercial undertaking of Auckland Harbour; (b) Should you fail to remove the abandoned vessel Nivanga in accordance with this direction, the vessel will be removed pursuant to Section 208 of the Harbours Act 1950; (c) Section 208(1)(b) and (c) empower Ports of Auckland Limited to destroy an abandoned vessel, or any part of it, to take possession of it to sell the vessel for the purpose of removal and to recover the expenses of removal from the owner, or from the proceeds of sale; (d) If the owner or person on whom this notice is served under Section 208 of the Harbours Act 1950 fails to comply with the directions contained in this notice, they thereby commit an offence and shall be liable to a fine not exceeding $1,000.00. This direction is given pursuant to Section 208 of the Harbours Act 1950, and Section 31 of the Port Companies Act 1988. Dated 27 August 1997 SIGNED by PORTS OF AUCKLAND LIMITED by its duly authorised agent, Russell Mc Veagh McKenzie Bartleet & Co:

per: C P Browne

[12] Following delivery of POAL's first notice Russell McVeagh corresponded with the owners' solicitor, Mr Lynton Bates, who practises in Whangaparaoa. Mr Bates challenged the validity of the second notice without giving reasons. But he did not attempt to prevent POAL from implementing its intention. On 27 August 1997 POAL removed the vessel to a secure part of the port. It then commissioned an independent marine consultant, Wickham Marine Ltd, to conduct a tender process for sale. Five offers were received. In accordance with Wickham's advice, POAL sold the vessel to a scrap dealer for $500. [13] Mr Carter and Ms Wright did not challenge the lawfulness of POAL's actions until filing this proceeding on 26 August 2003, just within the limitation period. But they were not inactive in the interim, suing a range of entities for losses relating to their acquisition of the Nivanga. Their claims against the Attomey-General on behalf of MSA and M&I were struck out in the Court of Appeal (Attorney-General v Carter [2003] 2 NZLR 160). A separate claim against Mr Bates is at an interlocutory stage in this Court. Competing cases [14] Originally Mr Carter and Ms Wright sued for damages of $300,000, representing the loss of the ship's then value together with interest and costs on three separate causes of action - breaches of statutory and implied statutory duty, and conversion. However, at trial their counsel, Mr Tony Banbrook, sought leave to amend the claim down to $138,000 and wisely abandoned the first two causes of action. Accordingly, only the claim in conversion remained.

[15] It was common ground that the tort of conversion, which is one of strict liability, is constituted by an act or acts of wilful interference, without lawful justification, with a chattel in a manner inconsistent with another's rights, thereby depriving the latter of its use and possession. In this case there is no suggestion that POAL wrongfully took or detained the Nivanga at any stage prior to 27 August 1997. Mr Carter and Ms Wright allege, however, that the company acted wrongfully by seizing the vessel on that date and selling to a third party on 7 October 1997.

[16] POAL's counsel, Mr Gerard Curry, did not dispute the company's liability to Mr Carter and Ms Wright in conversion for the Nivanga's actual value at the time of seizure or sale unless it can establish that it acted lawfully. This critical question will be answered by my finding upon whether at the relevant times the owners had abandoned the vessel. Two subsidiary issues will arise on POAL's defence if it acted without lawful justification. One is whether Mr Carter and Ms Wright acquiesced in POAL's actions; the other is whether, even if the company acted wrongfully, the owners suffered any loss at all.

[17] It is also common ground that there is no judicial authority on the meaning of the word "abandoned" where used in s 208(1) Harbours Act 1950. That provision materially provides:

(1) If any vessel, raft, or aircraft is sunk, stranded, or abandoned in any harbour or tidal water, or on the seashore, that vessel, raft, or aircraft, together with the tackle thereof and any goods in or on it (all of which are in this section hereinafter included under the term "the wreck"), may be removed in the following manner:

(a) The Board having jurisdiction over the place where the wreck is shall give notice in writing to the owner of the vessel, raft, or aircraft, or to an agent of the owner, that he is required within a time specified in the notice either to remove the wreck in a manner satisfactory to the Board, or to undertake, under security satisfactory to the Board, to remove the wreck in a manner satisfactory to and within a time to be fixed by the Board: (b) Where the owner or agent cannot be found, or fails within the time specified in the notice to remove the whole of the wreck in a way satisfactory to the Board, or to enter into such undertaking as aforesaid to remove the same, or having undertaken to remove the wreck, fails to remove it in accordance with his undertaking, the Board may remove the wreck, and may recover from the owner, in any Court of competent jurisdiction, the expenses incurred in removing it (in this section referred to as the expenses of removal): (c) The Board may, for the purpose of removal, destroy the wreck or any part of it, and may remove and take possession of the wreck or any part of it, and may sell the same; and may out of the proceeds (if any) of the sale, without any reference to the part of the wreck from the sale of which those proceeds may accrue, reimburse itself for the whole of the expenses of removal, and shall after reimbursing itself pay over the surplus (if any) to the owner: (d) If the proceeds of the sale are insufficient to pay the whole expenses of removal the Board may recover the balance from the owner of the vessel, raft, or aircraft, if the vessel, raft, or aircraft was stranded or sunk by his fault or negligence, or from any other person by whose fault or negligence the vessel, raft, or aircraft was stranded or sunk: (e) If the Board fails, within 14 days after notice in writing from the Minister of Transport, after consultation with the Minister of Conservation, to remove or to take steps to cause the owner of the vessel, raft, or aircraft to remove the wreck, the Minister of Transport shall be deemed the proper authority to remove the same, and shall have all the powers hereby given to the Board under the foregoing provisions of this section: (f) The expenses of removal incurred by the Minister of Transport or any person by his direction or authority in pursuance of this section upon any default of the Board shall be recoverable from the Board, with full costs of suit, as a debt due to the Crown:

[Emphasis added]

[18] Mr Banbrook defined "abandonment" as "the action or process of surrendering, forsaking, giving up completely, or leaving something with someone unprotected" (Butterworths New Zealand Law Dictionary). He also relied upon this definition of an abandoned ship (William Tetley: Maritime Liens and Claims, 2nd ed., p 107 (footnote 12), quoting from Droit Maritime 12th ed.):

'Abandoned ship' is an intermediate category between a ship and a wreck, because it is still capable of floating (like a ship) but, like a wreck, it has been abandoned by its crew. Usually a ship is abandoned because it is heavily burdened with legal encumbrances and thus no longer of interest to its owner ... . The abandonment results from the absence of crew aboard or the non-existence of measures of custody or manoeuvring.

[Mr Banbrook's emphasis]

[19] Mr Curry submitted that the word "abandoned" must take its meaning from its statutory purpose. POAL's powers of removal and sale are granted for the purpose of safety; it is dangerous to have unsafe vessels in harbours and around ports. Accordingly, a wide and purposive interpretation is appropriate. By way of analogy with the powers vested by s 110 Maritime Transport Act 1994 upon MSA to remove vessels which are a hazard to navigation, Mr Curry submitted that the word "abandoned" must be given its plain, ordinary meaning in its statutory context, concerned as it is with navigational safety (Dorn v Maritime Safety Authority of New Zealand (CA300/98, unreported, 22 September 1999)).

[20] Alternatively, Mr Curry submitted that Mr Carter and Ms Wright acquiesced in POAL's seizure and sale, amounting to a complete answer to their claim. He argued the evidence established that, after the company issued its notices, the owners, seeing that it was about to commit an act allegedly infringing their right of ownership, stood by in such a manner as really induced POAL to commit the act. Consequently they led the company to believe that they assented to the conversion (Halsbury's Laws of England, 4th ed., Vol. 16(2), para 909; Permanent Trustee Co Ltd v Bernera Holdings Pty Ltd [2004] NSWSC 56 at paras 57-60). This defence is really a species of estoppel by representation. Finally, and alternatively, Mr Curry contended that the Nivanga was worth no more than $500 at the time of sale. Decision [21] As noted earlier, the critical issue is whether or not Mr Carter and Ms Wright had abandoned the Nivanga either when POAL seized it on 27 August 1997 or sold her on 4 October 1997. Both counsel agreed that this question is one of fact and degree to be answered on an objective assessment of the evidence. Apart from her two brief absences, the ship remained berthed at POAL's wharf for about a year. The evidence about the owners' conduct within that period falls into two broad stages. [22] The first stage ran from August 1996 to early February 1997. It started when MSA forcibly removed the Nivanga from Mr Carter's and Ms Wright's possession and control. I accept that for most of this time they made real attempts to return the ship to a surveyable condition or sell her. But I am satisfied that the terms of M&I's letter dated 10 December 1997 dealt the owners a mortal blow. Apart from identifying a number of substantial items awaiting rectification from earlier surveys together with those requiring further work, the surveyor observed:

The limited time on the slip obviously had a bearing on the amount of ultrasonic thickness recordings that have been taken as only a small proportion of the hull has been covered. From these readings it is evident that at the aft end of both port and starboard sides the hull plating is at half of original thickness in places. While some of the thickness readings appear to have been taken on doubler plates where the thickness of the doubler plate is not in doubt as much as what the doubler is attached to in the way of frames.

[23] Mr Brian Berrington, who purchased the Nivanga for scrap for $500, gave evidence. He was not challenged on his observations of the vessel's condition when he cut her up in late 1997. In summary, he said, this exercise revealed widespread and severe but concealed corrosion; the Nivanga was 'leaking like a sieve'. Mr Berrington found holes on the waterline which had been covered up with silver paper or newspaper and cemented over. His direct observations confirmed M&I's earlier advice that the ship's main corrosion problems were internal, and not evident from the outside surfaces.

[24] Accordingly, I am satisfied that by December 1996, first, the Nivanga's structural condition was very poor, if not beyond repair, requiring at the least a substantial injection of funds to restore it to a surveyable condition and, second, Mr Carter and Ms Wright had exhausted all available funding lines, owing more than $650,000 to various creditors including $435,000 to AGC Finance Ltd which was secured by a ship's mortgage. Reinstatement to a surveyable condition was not then a viable economic option for them. Indeed, Ms Wright volunteered that "we realised that it was highly unlikely we would ever get a survey for the Nivanga".

[25] According to Ms Wright, in September 1996 she and Mr Carter listed the Nivanga for sale with three New Zealand brokers and up to and including August 1997 they were actively pursuing the vessel's sale to overseas interests in Australia, Fiji and the Islands. Two of those three brokers, Messrs Colin Neil and James Lewis, gave evidence. Apart from eliciting an Australian offer on 31 December 1996 for A$150,000 subject to inspection, which lapsed on Mr Carter's counter-offer of A$200,000, Mr Neil did not take any other steps to sell the vessel. Neither did Mr Lewis, whose primary purpose was to assess value.

[26] On 6 February 1997 Mr Carter offered to sell the Nivanga back to the original vendor, JKS Holdings Ltd, for NZ$150,000. The price included an allowance for estimated remedial works necessary to restore the vessel to survey of NZ$20,000-$30,000. A week later Mr Lewis valued the Nivanga for AGC and the owners "as is where is" at NZ$100,000-$140,000 plus GST.

[27] A JKS representative inspected the Nivanga in early February. On 13 February 1997 the company wrote to Mr Carter in these terms:

... I have also had discussions with Marine Steel, M&I and various other parties in New Zealand with regards to the vessel. Obviously we are deeply concerned at the cost to have the vessel put back into a position to be cleared by MSA for a delivery voyage which would be compounded by the substantial cost to meet such requirements.

JKS advised that it was putting a proposal to the Fijian Government about Nivanga and requested further information including, critically, the current MSA/M&I defects list and hull plate ultrasound data. In the circumstances these requests were reasonable and prudent. But the owners did not respond to or follow up this avenue of sale. In these circumstances I reject Mr Carter's assertion that the ship was "no derelict ... [which] ... needed a bit of work to finish her off ..." or that $20,000-$30,000 was required to complete the necessary repairs.

[28] 1 accept, however, that even though they failed to pay berthage fees Mr Carter and Ms Wright did not abandon the Nivanga before early February 1997. They took a number of overt steps designed initially to repair the vessel to survey and then to sell her. Viewed objectively, their acts are inconsistent with an intention to give up or surrender possession and ownership, although of course custody had already passed to MSA or POAL.

[29] However, Mr Carter and Ms Wright's conduct over the second stage from mid February 1997 to either 27 August 1997 or 4 October 1997 falls into a different category. There was a significant evidential void about events during this time. Mr Carter said that he carried out some repairs on the Nivanga. But they must have been relatively minor given Ms Wright's concession about the unlikelihood of obtaining a survey. Mr Carter certainly was not working on the scale necessary to restore the vessel to survey order. Nor was there any evidence that he or Ms Wright attempted to challenge the detention order or sell the Nivanga after February 1997.

[30] By July 1997 Captain Ron McKenzie, POAL's manager of marine services, had concluded that the Nivanga's continued presence was posing a safety hazard to members of the public and other vessels. He was particularly concerned about the risk that it may sink at its berth, causing oil pollution. Another derelict barge had sunk there some years earlier. Captain McKenzie had never heard from either Mr Carter or Ms Wright. Berthage fees continued to remain unpaid. He concluded that the owners had abandoned the vessel.

[31] Mr Banbrook relied forcefully on the existence of two factors to negate abandonment. One was the presence of a maintenance crew who remained on board until POAL evicted them on 27 August 1997; the other was that the ship was subject to a maintenance order which prohibited removal without MSA's express authority.

[32] In my judgment neither of these factors assists the owners' cause. Mr Banbrook's reliance on the crew argument appeared to derive from Tetley's definition (supra) of an abandoned ship as one which has been abandoned by its crew on a voyage without hope of recovery or intention of returning. The notion of abandonment in that context is well known. Not infrequently, a master and crew abandon a ship at sea on account of her derelict condition or because the owner has forsaken all financial interest in her.

[33] However, the presence or otherwise of a crew does not determine whether a vessel is abandoned for the purposes of s 208(1). No such gloss is required on the word's plain meaning. The question is simply whether or not the evidence objectively establishes that the owners had surrendered, forsaken or given up the Nivanga completely. Proof that the vessel by then constituted a risk to the safety of other port users or the general public is not essential to establish abandonment. But evidence of it is relevant for that purpose.

[34] In any case, I do not accept that the vessel was staffed by a crew at the relevant time. Two people were living there with the owners' permission but without POAL authority. One was Mr Carter's son; the other, Mr Martin Burke, gave evidence. I am satisfied that they were no more than custodians. Calling them a crew does not constitute them as one. They were not employed by the owners to man or take the vessel to sea or maintain it in a serviceable condition. They were not the Nivanga's crew in the commonly understood sense of the word.

[35] The existence of a detention order does not assist Mr Carter and Ms Wright. I accept that it prevented them from removing the vessel without MSA's express authority. However, their compounding failure to comply with or alternatively challenge the order for over a year is evidence that they had abandoned the Nivanga. The order's duration coupled with evidence of the ship's condition satisfies me that by mid 1997 Mr Carter and Ms Wright had accepted that its nature and effect were permanent.

[36] This conclusion is reinforced by the owners' inactivity after POAL issued its first notice on 22 July 1997. The document recited the company's view that the owners had in fact abandoned the vessel and gave them an opportunity to remove her, failing which POAL intended to take possession and sell. On 29 July 1997 Mr Bates wrote to Russell McVeagh confirming receipt of its first notice and stating:

I assume you are aware that the vessel is under arrest by the [MSA] and therefore they are responsible for paying the rent on the vessel. I believe it would be appropriate for you to look to [MSA] for payment of wharfage. I understand the boat is up for sale but I believe that the reports handed out by the [MSA] make it very difficult to obtain a sale, although the owners have been close to obtaining a sale at one point ... . It is inappropriate that you issue a notice against Great Barrier Shipping Co Ltd and the company accordingly objects and disputes the debt.

[37] On 15 August 1997 Russell McVeagh responded by advising that POAL intended to exercise its powers of sale pursuant to s 208 Harbours Act, noting that the vessel may only be useful for scrap. On 1 September 1997, following receipt of the second notice, Mr Bates wrote to Russell McVeagh expressing his opinion that:

Your notice of abandonment is illegal but I do not wish to take that matter up at this moment. What is more important is that there are two prospective buyers of the boat and it would resolve [POAL's] concerns and Great Barrier Shipping Company Ltd's concerns if one of these sales was to proceed.

Russell McVeagh immediately requested Mr Bates to explain the basis for his view that POAL's notice was illegal. Mr Bates did not reply. [38] On 16 September 1997 Russell McVeagh wrote again to Mr Bates advising:

Our client's second notice of abandonment expired last week and your client failed to take any action. Our client has made arrangements to advertise the vessel for sale by tender and those documents and advertisements will go out today. We suggest that the two potential buyers you referred to in your earlier correspondence contact us without further delay should they still have an interest in purchasing the vessel.

Again Mr Bates did not reply. In evidence Mr Carter disclaimed knowledge of the existence of two offers then current to purchase the Nivanga. [39] Mr Carter and Ms Wright did not call Mr Bates to give evidence. Mr Carter said that he instructed Mr Bates to secure the vessel's return. The fact remains that Mr Bates was the owners' agent. POAL repeatedly placed the owners on notice of its intention to remove and sell the Nivanga. Moreover, after service of the first notice Mr Carter and Ms Wright did nothing except when the latter phoned Captain McKenzie on or about 2 September 1997 to confirm that POAL was arranging to pump the Nivanga daily including weekends. They did not, for example, give evidence of obtaining legal advice about their avenues for challenging the validity of POAL's actions, of conferring with Mr Bates or another lawyer on the subject, or of instructions to issue proceedings. In my judgment the owners' inactivity in the face of the company's notices is consistent with abandonment.

[40] Accordingly, I am satisfied that by August 1997 Mr Carter and Ms Wright were completely indifferent to the Nivanga's fate; they had given up all expectations of ever recovering her from MSA's custody, had accepted they had run out of options for reinstating or disposing of the vessel, were content to leave POAL with the responsibility for removal and sale, and had forsaken and thus abandoned the Nivanga. Additionally, I accept Captain McKenzie's evidence that the ship then presented a real risk to the safety of other port users and the general public.

[41] However, if this finding is wrong I must consider two subsidiary questions. First, has POAL made out its defence that Mr Carter and Ms Wright acquiesced in the company's conduct in seizing and subsequently selling the Nivanga? Mr Curry relied upon the exchanges of correspondence between POAL, its solicitors and Mr Bates to support a submission that Mr Carter and Ms Wright represented to the company that, whatever the legality of seizure, they wished POAL to proceed with the sale process, thereby inducing the latter to act.

[42] In my judgment POAL's affirmative defence must fail. Proof of inducement and thus reliance is essential to a defence of estoppel (Halsbury (supra) Vol. 16(2), para 909; Vol. 45(2), para 645). Captain McKenzie said that he relied throughout upon the advice of the company's solicitors when deciding to seize and sell. He gave no evidence of inducement by the owners' conduct. He did not suggest a causative effect between Mr Carter and Ms Wright's inactivity and POAL's actions. I doubt there is scope for an acquiescence defence to a claim for conversion. In my judgment the legal significance of Mr Carter and Ms Wright's inactivity over this period, either directly or through their solicitor, lies in its evidence of their abandonment of the Nivanga.

[43] Second, if POAL did convert the ship, what is the extent of its liability? I accept Mr Banbrook's submission that the measure of damages is the value of the ship when the conversion was complete (Wilson v New Brighton Panelbeaters Ltd [1989] 1 NZLR 74 at 78, Tipping J). It does not matter for these purposes whether the reference date was either 27 August 1997, when POAL shifted the vessel to a secure area in the port, or 7 October 1997, when it completed sale. There would have been no change in value in this period.

[44] Mr Carter himself was of the opinion that at $150,000 the Nivanga was a "give-away". As noted, Mr Lewis, one of the marine brokers engaged by Mr Carter and Ms Wright, appraised the ship in February 1997. He assessed her current market value as between $100,000 and $145,000 plus GST on an 'as is/where is' basis, including an allowance for necessary maintenance work. For this purpose Mr Lewis walked around the vessel, inspecting in particular the deck fittings and gear, the freight holds, the engine room, the cabin areas, and onboard records. He was aware that she was out of survey.

[45] However, under cross-examination by Mr Curry, Mr Lewis accepted that he had not been given any reports from M&I and MSA and that he was not in a position to give an opinion about the hull because he did not see the vessel out of the water or results of any recent steel thickness tests. Nevertheless, he earlier said that his valuation was a "bare minimum" assessment. Mr Lewis disagreed with Mr Curry's proposition that a tender process produces the best evidence of market value. In his opinion POAL should have conducted a "short, sharp marketing campaign into the areas where this vessel is needed". Mr Lewis did not expect there would have been any significant change in the Nivanga's value over the six months following his assessment providing routine maintenance was carried out.

[46] As noted, POAL commissioned Wickham Marine Ltd to conduct a tender process for sale. Its notice stated, among other things, that:

The former passenger cargo vessel is offered for sale by tender on a 'where is, as is' basis, either for scrap or removal from the Port of Auckland and its environs.

Mr Colin Wickham gave evidence that he carried out a general inspection of the vessel for the purpose of arranging the tender process. He found structural corrosion which satisfied him that the vessel was unseaworthy; its extent on some of the shell and deck plating and structural members was sufficient to prevent the vessel from leaving port without extensive repairs. Parts were unsafe. For example, the deck plating had corroded away completely in an area inside the accommodation, making walking dangerous. In his opinion the engines "were in a really sick condition". Mr Wickham was aware of the limitations imposed by these factors upon POAL's options for sale. Clearly the company could not accept a tender which required the Nivanga to be sailed from Auckland while out of survey and unrepaired. In his unchallenged assessment, her condition ruled out an attractive selling price.

[47] Wickham placed its notice in various publications including the NZ Shipping Gazette, the NZ Herald, and the Dominion, as well as sending copies to a number of direct mail contacts. Mr Wickham's evidence was also unchallenged that the notice was widely distributed to prospective tenderers.

[48] Tenders closed on 3 October 1997. Wickham received five offers, four of which were for scrap. Of them, three required POAL to pay the tenderer amounts ranging up to $49,800 plus GST. Only two offered a cash payment. One was for $5000 but was subject to various conditions. The other, from Mr Berrington's company, was for $500 and was accompanied by a comprehensive feasibility study. Wickham advised POAL to accept Mr Berrington's offer.

[49] Also, Wickham received inquiries from four other prospective tenderers interested in buying the Nivanga for repair and re-commissioning for use privately or in the Pacific Islands. However, after making inquiries or inspecting the vessel, none of these parties submitted a tender.

[50] I am satisfied that Wickham's tender process was designed to and did elicit the best possible price then available for the Nivanga; that, while the sale was forced, the price was also the ship's true market value; and that Mr Lewis' "short, sharp marketing campaign" would not have yielded a better return. I find that the offers reflected the evidence of Messrs Berrington and Wickham, which I accept, about the Nivanga's structural condition in August and September 1997. The conspicuous absence of any offers to buy the ship after February 1997 leads to the irresistible inference that the market, whatever it was, had decided she was beyond economic repair to restore her to operational condition. By then the Nivanga had deteriorated to such an extent that she was only of interest to scrap merchants. This conclusion is also supported by the telling silence about any subsequent negotiations for sale.

[51] Despite Mr Banbrook's spirited adoption of it, Mr Lewis' evidence did not materially assist Mr Carter and Ms Wright's case. I have no doubt that a party. interested in buying the Nivanga in or after February 1997 would, in view of her extended detention, require a comprehensive structural report. Also, Mr Carter and Ms Wright would be duty bound to disclose M&I's reports.

[52] Mr Lewis is not a marine engineer. He could only give an assessment based on what he then saw. The surveyors' reports painted a pessimistic picture. Inevitably a structural analysis would have revealed the fundamental defects inherent in the ship's structure. In my judgment there was no prospect that a third party interested in the Nivanga would pay more than a nominal value given the likely cost of repairs necessary to bring her up to survey.

[53] The futility of the owners' case is exemplified by Mr Banbrook's acknowledgement during argument that by July 1997 POAL would have been entitled to invoke the Admiralty jurisdiction of this Court to arrest the ship for unpaid berthage costs, and to enforce its judgment by sale. In that event, the market and the result would have been no different. A forced sale would have ensued, with no return to Mr Carter and Ms Wright.

[54] Accordingly, even if POAL converted the Nivanga by seizure and sale without legal justification, I am satisfied that Mr Carter and Ms Wright did not suffer any loss as a result. [55] Only POAL's counterclaim for payment of berthage charges of $13,941.83 remains for determination. Mr Banbrook's original line of defence appeared to be that MSA was liable in the first instance. He relied on s 462 Maritime Transport Act 1994. But that provision makes clear that, where any ship is detained at a port, the owner is liable for detention costs.

[56] In closing Mr Banbrook relied solely on a challenge to quantification of POAL's charges, pointing to what he submitted were conflicting invoices. But even this argument seemed to fall away. Captain McKenzie's evidence remained unchallenged that Mr Carter and Ms Wright had failed to pay any charges rendered by POAL to them throughout the year of the Nivanga's detention. Mr Banbrook did not challenge the company's quantification apart from drawing attention to internal accounting entries which appeared to write off part of the debt. However, he could not, and did not, suggest that POAL had waived payment of the fees or received satisfaction from any party other than the owners who were primarily liable. I am satisfied that the counterclaim is proven.

Conclusion

[57] In the result I dismiss Mr Carter and Ms Wright's claim for damages against POAL. I enter judgment for POAL on Mr Carter and Ms Wright's claim and its counterclaim for damages against them for the sum of $13,941.83 together with interest at the rates payable under the Judicature Act 1908 and its amendments from 23 July 1997.

[58] POAL is entitled to judgment for costs which I fix according to category 2B for one counsel.

[59] I wish to record my appreciation for the assistance given by counsel.