Pah Farm Developments Ltd v The Registrar of Ships

IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV 2006-404-6145
IN THE MATTER OF the Ship Registration Act 1992 and "Stella"

BETWEEN PAH FARM DEVELOPMENTS LIMITED AND RHODO TRUST LIMITED
Applicants

AND THE REGISTRAR OF SHIPS
Respondent

Hearing: 25 October 2006

Appearances: N Carter for applicants
S Winsett for respondent

Judgment: 30 October 2006

JUDGMENT OF ALLAN J

In accordance with r 540(4) I direct that the Registrar endorse this judgment with the delivery time of 4.30 pm on Monday 30 October 2006

Solicitors:
Carter & Partners, Auckland
Izard Weston, PO Box 5348, Wellington

[1] This is an application for rectification of the Register of Ships, made pursuant to s 69 of the Ship Registration Act 1992. The application is unopposed. It has been served upon the Registrar of Ships who has filed a detailed affidavit, and who, through her counsel, has filed a memorandum explaining that she abides the decision of the Court. The Registrar is thanked for her assistance, which has significantly simplified the Court’s task.

Procedure

[2] The applicants seek an order pursuant to r 458D(1)(e) for leave to pursue the application by way of originating application. Given the fact that this is not an opposed application, it is appropriate to deal with the matter by way of originating application. Leave is granted accordingly.

Background

[3] The motor vessel “Stella” was formerly owned by NZ Rental Co Limited. On or about 27 July 2004, that company sold the vessel, along with other assets, to Tomarata Estates Limited. Settlement of that transaction was originally to occur on 19 November 2004, but it was delayed until 23 February 2005. Just prior to that, on 11 February 2005, Tomarata Estates Limited assigned its interest in the “Stella” to Pah Farm Developments Limited and Rhodo Trust Limited by deed of nomination executed on that day.

[4] At settlement, the assets sold by NZ Rental Co Limited were transferred into the joint names of Pah Farm Developments Limited and Rhodo Trust Limited, save that, by what has been agreed to have been an administrative error, the bill of sale in respect of the “Stella” named Tomarata Estates Limited as transferee. That error was identified at the time of settlement, but in order to save time and to ensure that the settlement was not further delayed, the solicitor then acting for the applicants advised that settlement should proceed on the basis that the transfer relating to the “Stella” would be accepted in the name of Tomarata Estates Limited, and that a subsequent transfer into the name of the applicants could be organised following settlement.

[5] Unfortunately the subsequent transfer to the applicants was overlooked. Tomarata Estates Limited was liquidated on 6 October 2005 without executing a transfer.

[6] In June 2006, when the omission had come to the attention of the applicants, they took legal advice. It was suggested to them that it would be appropriate for transfer documents to be prepared as at 15 June 2005, that is, one year earlier. They accepted that advice. A bill of sale and a declaration of ownership and nationality of transfer were prepared and executed, along with a notice of appointment of authorised officer to sign declarations. All documents were dated 15 June 2005. The bill of sale was executed by Tomarata Estates Limited through a director – that is, the company executed the bill of sale without reference to liquidation, the document appearing on its face to pre-date liquidation by several months.

[7] The back-dating of these documents, to put matters at their lowest, is of significant concern. I accept however, the affidavit evidence to the effect that the applicants relied upon legal advice and understood that the back-dating exercise was in the circumstances proper. The solicitor concerned is no longer in practice. He has suffered health adversities and will not be resuming practice.

[8] The fact the documents were effectively back-dated was not concealed from the Registrar. It was evident from the documents themselves and from the covering letter which accompanied them that the documents were not contemporary. The Registrar, having taken advice, declined to accept the bill of sale for registration. She took the view that because Tomarata Estates Limited was not the legal owner of the vessel, it was unable at law to transfer any interest to the applicants. Accordingly, she felt unable to exercise her power to correct clerical errors on the register, pursuant to s 67 of the Ship Registration Act, or her power in respect of obsolete or incorrect entries under s 68. She therefore invited the applicants to make this current application for rectification.

[9] She does not oppose the current application to rectify the register, and emphasises to the Court her interest in ensuring that the register is correct, and that there has been proper compliance with statutory requirements. Subject to the view of the Court, she deposes to be satisfied that, having now had a full explanation of the circumstances surrounding the relevant transactions, she believes it appropriate for the Court to direct rectification of the register.

Discussion

[10] As discussed earlier, the back-dating of certain of the relevant documents can only be viewed with real concern by the Court. The decision to engage in backdating arose as a result of poor legal advice, but I am satisfied the officers of the applicants and of Tomarata Estates Limited, genuinely believed that it was appropriate to follow the advice, which was after all, aimed simply at overcoming administrative difficulties arising from the fact the need to obtain a transfer from Tomarata Estates Limited had been overlooked. There is no suggestion that any person or entity has been prejudiced by what has occurred. That being so, I put the back-dating issue to one side.

[11] The present application for rectification represents, in my view, the appropriate procedural step in all the circumstances. The Registrar was perfectly correct to decline to register the transfer, given the difficulties identified by her. By the same token, there is no doubt the applicants are entitled to be registered as the legal owners of the “Stella”. The interests of justice, and the entitlements of the parties, will be served by the making of an order of rectification.

Decision

[12] For these reasons I make an order pursuant to s 69 of the Ship Registration Act 1992, rectifying the Register of Ships by deleting the name “Tomarata Estates Limited” as owner of the vessel and substituting the names of Pah Farm Developments Limited and Rhodo Trust Limited as joint owners.

[13] There will be no order as to costs.