Vostochnaia Fishing (NZ) Ltd v Bikoulov

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY

CIV-2005-404-2171

BETWEEN VOSTOCHNAIA FISHING (NZ) LIMITED
Plaintiff

AND IOURI ALEXEEVITCH BIKOULOV AND ANTON IGOREVITCH MITSKEVITCH
First Defendants

AND IGOR VICTOROVITCH MITSKEVITCH
Second Defendant

Hearing: 24 August 2005

Counsel: D B Murton for Plaintiff
M Logan for Defendants

Judgment: 27 October 2005

JUDGMENT OF BARAGWANATH J

Solicitors:
Upper Harbour Law Centre, Auckland for Plaintiff
Oceanlaw New Zealand, Nelson for Defendants

Background

[1] This case concerns a fishing vessel, the Chatham Explorer, constructed of steel and of something over 27 m in length and of gross tonnage of 119 tonnes. There are competing claims by the plaintiff (“VFL”), which is currently registered under the Ship Registration Act 1992 as owner of its 64 shares and asserts beneficial entitlement to all of them and by the first defendants which claim such entitlement to 13 shares. The plaintiff applies under s 53 for an order that a caveat lodged by the second defendant, Mr Mitskevitch, on behalf of the first defendants who are his son, Anton Mitskevitch and a Mr Bikoulov, claiming the 13 shares should be discharged.

[2] The dramatis personae include as well Mr Karpenko, the sole director/shareholder of VFL, Frontier Fishing Co Ltd (“Frontier”), the original owner of the vessel the shares in which were held by Mr Murison, a Ukrainian company and Elena Industrial and Commercial Company (“Elena”), owned by Mr Mitskevitch’s family. Sophia International Limited (“Sophia”) was registered by Mr Mitskevitch for the purposes of a proposed joint venture with VFL. There is also reference in the evidence to Delmarine Limited, a consulting company providing services to operating companies, its director being Mr Seal.

The legislation

[3] The Ship Registration Act defines “owner” of shares as the registered owner (s 2). The owner has power, subject to the Act and registered rights of others, to dispose of the ship or share (s 46). Notices of any trust are not registerable (s 49), but subject to ss 46 and 49:

…nothing in this Act shall affect any power to enforce any beneficial interest in a ship, or in a share of a ship, in the same manner as in respect of any other personal property.

[4] A caveat may be registered by a person claiming an interest in a ship or in a share of a ship under any unregistered instrument or by operation of law (s 51).

[5] The scheme of the legislation appears to have some analogy to that of the Land Transfer Act 1952 which is more familiar, not least in generally prohibiting entry of trusts but permitting the lodgement of caveats claiming beneficial interests. Registration is however only evidence of title and is not necessarily conclusive: registration is not a route of title and ownership of a ship or a share of it is a question of independent fact: Garrow and Fenton Law of Personal Property in New Zealand (6th ed) p 619 para 11.010.

The registered interests

[6] Since December 1996 the 64 shares in Chatham Explorer had been registered under the Act in the name of Frontier subject to a charge in favour of Australian Guarantee Corporation (“AGC”). On 28 February 2000 the register was amended to record Frontier’s holding as reduced to 12 and VFL as holding the other 52 shares. On 26 August 2002 VFL was recorded as owner of all 64 shares.

[7] The sum at stake is relatively small, being at most a 20% interest in the vessel for which the evidence suggests the parties had agreed price of some $900,000. I attempted during argument to analyse the facts in order to discover whether there is such a clear picture of what has taken place as to be able to give immediate final judgment today. But I concluded and Mr Murton very properly acknowledged that the differences between the parties, each supported on oath, are too deep-seated for that to be possible. I am satisfied that the defendants have established such arguable case as would in principle allow the caveat (or an injunction to like effect) to remain or be imposed to protect the defendants’ position. But since it is common ground that the plaintiff is entitled to at least 80% of the equity and ownership in the vessel its dominant position must be recognised in the nature and form of the Court’s order.

[8] Garrow and Fenton at p 602 para 11.002 record the principle that ships are chattels albeit subject to certain special rules.

[9] Mr Murton advised that it is the desire of the plaintiff as soon as practicable to sell the vessel, which is apparently moored in the port of Tauranga. The defendants also wish there to be a sale and have their caveat against the ship to be converted into an appropriate security against the proceeds of sale. They wish to be secured against sale on other than commercial terms.

Decision

[10] I have decided that it is impracticable at this stage to do more than decline the plaintiff’s application to discharge the caveat but it is imperative in relation to what will in the end be a relatively modest sum to handle the future conduct of this litigation efficiently. I have in mind that when a suitable sale prospect emerges the caveat should be discharged to enable such sale to proceed at market price subject to terms to be agreed between counsel or fixed by this Court on application in writing and if necessary telephone conference to ensure that a suitable security is substituted over 20% of the net sale proceeds.

[11] It may be practicable to remove the substantive dispute into the District Court for resolution but I think it premature to make such a direction at this stage. It is better sense for this Court to remain seised of the matter.

Procedure

[12] No chronology had been filed by either party as is now required by Schedule 6 Standard directions for appeals, item 8. For the efficient future conduct of the case I directed that such chronology, agreed if possible, should be provided.

[13] After some delay each party has now filed its chronology. I direct that the Registrar now arrange a telephone conference before me to determine procedures as to future conduct of the proceeding including fixing costs of the hearing on 24 August.