In re Ownership of MV Endeavour [1997] FJHC 166; HBG0004d.1997s (4 November 1997)

Fiji Islands - In re the ownership of MV Endeavour - Pacific Law Materials

IN THE HIGH COURT OF FIJI

AT SUVA

ADMIRALTY JURISDICTION

ADMIRALTY ACTION NO. 0004 OF 1997

IN THE MATTER
of the ownership of the motor vessel "ENDEAVOUR"

AND

IN THE MATTER
of the Register of Vessels under the MARINE ACT 1986

AND

IN THE MATTER of the winding-up of
ENDEAVOUR FISHING ENTERPRISES (FIJI) LIMITED (In Liquidation)

BETWEEN:

OTTO BUTTULLA
Applicant

AND:

1. THE REGISTRAR OF SHIPS
2. THE OFFICIAL RECEIVER OF FIJI
3. THE ATTORNEY GENERAL OF FIJI
Respondents

RULING

This is an application by the Official Receiver made pursuant to Order 18 r.18(1) of the High Court Rules and the Court's inherent jurisdiction for an order that the Admiralty proceedings commenced by OTTO BUTTULLA be dismissed on the grounds (as amended) that it discloses no reasonable cause of action; or is an abuse of process; or is frivolous and vexatious; or may prejudice, embarrass and delay the fair conduct of the winding-up of Endeavour Fishing Enterprises (Fiji) Limited ('the company').

There is a relevant chronology to this application which may be briefly summarised as follows:

(1) On the 12th of April 1989 'the company' was incorporated with the objective 'to go into commercial deep sea fishing in Fiji waters';

(2) On the 19th July 1989 OTTO BUTTULLA purchased from the Admiralty Marshall "sixty four (64) shares being the entirety of the vessel called 'M.V. Astrolab'".

(3) On the 10th May 1990 OTTO BUTTULLA as the duly appointed agent of 'the company' having requested a change of name, applied 'for the registration of the vessel M.V. Endeavour at the Port of Suva'.

(4) On 22nd February 1991 the 'M.V. Endeavour' was duly registered by the Registrar of Ships wherein the owner was recorded as:

"ENDEAVOUR FISHING COMPANY LIMITED SIXTY
OF VILLA 109, PACIFIC HARBOUR, DEUBAFOUR
SHARES."

(5) Almost four (4) years to the date of incorporation, on the 16th day of April 1993 'the company' was ordered to be wound-up by the Court in Winding-Up Action No. 12 of 1993 with the Official Receiver appointed as provisional liquidator;

(6) Then almost four (4) years later on 17th of March 1997 this Court, on an ex-parte application by the Official Receiver, ordered pursuant to Section 241 of the Companies Act that the motor vessel 'Endeavour' ('the ship') be vested in the Official Receiver (the 'vesting order');

(7) On the 29th of September 1997, five (5) months after the 'vesting order' and six (6) years after 'the ship's' registration, OTTO BUTTULLA issued an Originating Motion unsupported by an affidavit seeking the following relief in the Court's Admiralty Jurisdiction;

(1) Declaration that the plaintiff OTTO BUTTULLA was and is at all times the owner of 64 shares being the entirety of the motor vessel 'Endeavour' formerly known as 'ASTROLAB'.

(2) Order that the Registrar of Ships rectify the register of ships in respect of MV Endeavour by vacating therefrom the name of Endeavour Fishing Company Limited as owner and recording the name Otto Buttulla in place thereof as the owner of MV Endeavour and 64 shares therein.

(3) Order that the Official Receiver, forthwith cease selling MV Endeavour as liquidator of Endeavour Fishing Enterprises (Fiji) Limited and forthwith return MV Endeavour to the applicant free of all charges and other encumbrances that he may have imposed or attached upon MV Endeavour or by any other persons authorised by him."

The necessary affidavit in support was subsequently filed on the 17th October 1997.

(8) On 21st October 1997 the present application to dismiss the Originating Motion in (7) above supported by an affidavit of the Official Receiver was filed;

(9) On 22nd October 1997 OTTO BUTTULLA filed an affidavit opposing the Official Receiver's application in (8) above; and

(10) On 23rd October 1997 an affidavit in reply of the Shipping Officer in the Marine Department was filed.

The Official Receiver's application in (8) above was heard and argued before me on the 24th of October 1997.

Counsel for the Official Receiver in support of the application argued all grounds together but his submissions may be conveniently summarised under the following five (5) headings:

(1) Incorrect form of proceedings;

(2) Presence of Existing proceedings;

(3) Disguised appeal against vesting order;

(4) Issue estoppel; and

(5) Absence of a 'cause of action'.

As to (1) counsel's brief submission is that OTTO BUTTULLA has quite wrongly and improperly invoked the Court's Admiralty jurisdiction insofar as the nature of his claim and the reliefs sought 'do not involve questions concerning the liability of a ship or it's arrest'. I cannot agree.

There is not the slightest doubt that the primary question raised in the Originating Motion concerns the ownership of 'the ship', the M.V. Endeavour, which is the very first 'question or claim' recognised under

Section 1 of Administration of Justice Act 1956 (Imp.) which is applicable in Fiji [See: The 'M.V. Voseleai' Suva Admiralty Action No. 6 of 1994 (unreported) at pp. 3 & 4] and which sets out this Court's jurisdiction in Admiralty. The Section reads:

"(1) The Admiralty Jurisdiction of the High Court shall be as follows, that is to say, jurisdiction to hear and determine any of the following questions or claims -

(a) any claim to the possession or ownership of a ship or to the ownership of any share therein;

As to (2) counsel submits that it is an abuse of process to institute a completely separate substantive action where the same remedy might just as conveniently be had by an appropriate application in an earlier and subsisting action.

In the present context counsel submits that the Winding-Up proceedings No. 12 of 1993 pre-dates the Originating Motion by several years and is still progressing, and therefore, the present application could have been brought in the winding-up proceedings insofar as OTTO BUTTULLA was a director and still is a contributory of 'the company'. (See: Section 252 of the Companies Act.)

In particular, and as to (3), counsel submits that the third order sought by OTTO BUTTULLA is, in effect, a disguised appeal against the 'vesting order' made by the court on the 17th March 1997, which being an 'ex-parte' order should more appropriately have been made the subject of an 'inter-partes' application for dissolution filed in the winding-up proceedings.

In considering this submission I am mindful that the ex-parte application for a 'vesting order' of 'the ship' was made by the Official Receiver in seeking to fulfil his statutory duty under Section 240 of the Companies Act: "(to) ... take into his custody or under his control all the property ... to which the company is or appears to be entitled". In similar vein the Court's power under Section 241 of the Companies Act to make a 'vesting order' refers to: '... property of whatsoever description belonging to the company'.

Needless to say the underlined expressions 'appears to be entitled' and 'belonging to' are, in my opinion, wider in their import than words or expressions of strict legal ownership or title and accordingly the 'vesting order' made was and is in the circumstances, prima facie lawful. That is not to say however that such an order cannot be subsequently challenged but the evidence would need to be quite unequivocal.

Having considered however the affidavit evidence and the competing submissions of both counsels and mindful of counsel's concession as to form, I am firmly of the opinion that the third order sought in the Originating Motion is not only misconceived but also an 'abuse of process' and is accordingly struck out.

As to (4) counsel referred to an earlier 'interpleader proceedings' namely, Civil Action No. 399 of 1993 where 'the company' successfully sued a High Court bailiff for the recovery of various items seized under a Writ of Fi fa issued against OTTO BUTTULLA.

Counsel highlighted a passage in the court's judgment and pointed to various cryptic statements deposed in affidavits filed by OTTO BUTTULLA and submitted that such 'statements' determined or settled the issue of the ownership of 'the ship' in favour of 'the company' and cannot now be re-litigated or denied in the present proceedings. Again, I cannot agree. The ownership of 'the ship' was never a live issue before the Court in the 'interpleader proceedings' and therefore no 'issue estoppel' can arise therefrom.

Needless to say OTTO BUTTULLA deposed the above-mentioned affidavits in his capacity as director and secretary of 'the company' and not in his personal capacity. Furthermore he has deposed that in the present proceedings, 'the company' merely operated 'the ship' of which he was always the legal and beneficial owner as evidenced by the Admiralty Marshall's Bill of Sale dated 10th July 1989 wherein OTTO BUTTULLA purchased for $60,000 all sixty four (64) shares in the 'M.V. Astrolab' which vessel was subsequently renamed the 'M.V. Endeavour' when it was registered in Fiji under the provisions of the Marine Act 1986.

The legal relationship (if any) between 'the company' and 'the ship' however, and what is comprised in the above expression 'merely operated' or in the more specific expressions to be found in the primary affidavit of OTTO BUTTULLA namely, 'using my vessel' and 'gave her to EFEFL to operate' are and remains unclear.

I turn finally to the fifth head of counsel's submission based upon the absence of a 'cause of action'. In this regard counsel's simple submission is that rectification of an Official Register created and maintained pursuant to an Act of Parliament is not a known remedy or 'cause of action' in the court's Admiralty jurisdiction nor does it arise in common law.

In particular, counsel submits that the Marine Act 1986 recognises only two (2) types of registrations, namely, registration of a local agent of a partly foreign-owned vessel that regularly calls into Fiji ports or provides a regular shipping service within Fiji waters (under Section 15); and, registration of a Fiji-owned vessel either by the owner or an authorised agent acting on his behalf (under Section 22).

In this latter regard Section 13 of the Marine Act provides that:

"(1) A vessel is not capable of being registered under this Act unless it is-

(a) owned wholly by a qualified person; and

(b) not registered in another country."

and Section 5 defines a 'qualified person' as being (so far as relevant for present purposes) either a 'citizen of Fiji' or 'a corporation established by or under a law of Fiji whose principal place of business is in Fiji'.

It is common ground that OTTO BUTTULLA is not a 'citizen of Fiji' and is therefore not a 'qualified person' and any vessel beneficially and legally owned by him is 'incapable of being registered under the Act'. On the other hand, Endeavour Fishing Enterprises (Fiji) Limited ('the company') having been incorporated in Fiji with its registered office in Fiji is 'qualified' to be the owner of a Fiji-registered vessel under Section 22. It is also common ground that prior to the registration of the M.V. Endeavour in the Fiji Register of Vessels it's previous registration in the Port of Southampton was cancelled thereby rendering it an unregistered vessel in fulfilment of the requirement of Section 13(1)(b) above.

In light of the foregoing the rectification order sought in the Originating Summons, if granted as prayed, would be in breach of Section 13 of the Marine Act and with that, this Court can have no part. It is accordingly struck-out as giving rise to an illegality.

It is deposed in the affidavit of the Shipping Officer of the Marine Department that the application for registration of 'the ship' was made in terms of Section 22 of the Marine Act which provides (so far as relevant):

"(1) An application to the Registrar for the registration of a vessel under this Act shall be in the prescribed form and shall be made -

(a) where the owner is a corporation - by the agent of the corporation; ...

(See: Annexure 'A' to the Shipping Officer's affidavit of 23.10.97)

(2) The authority of an agent referred to in paragraph (1)(a) ... must be in writing, and must -

(a) in the case of an agent acting for a corporation - be under the common seal of that corporation; ...

(See: Annexure 'B' to the Shipping Officer's affidavit of 23.10.97)

(3) When the Registrar receives an application under subsection (1) he shall satisfy himself as to the ownership ... of the vessel to which the application relates before proceeding with its registration.

(4) An application for registration of a vessel must be accompanied by such evidence in respect of that vessel as is prescribed and by such other evidence as it necessary to satisfy the Registrar under subsection (3)."

and in this latter regard Section 24 provides:

"A person shall not be entitled to be registered as the owner of a registered vessel until he, or in the case of a corporation, a person authorised by the corporation to make declarations on its behalf, has made and signed a declaration of ownership in the prescribed form referring to the vessel as described in the tonnage certificate."

In this instance the relevant statutory Declaration of Ownership dated 10th May 1990 (See: Annexure 'D' to the Shipping Officer's affidavit of 23.10.97) is declared by OTTO BUTTULLA and reads (in its relevant parts):

'2.*I am a resident of Fiji and the principal of Endeavour Fishing Enterprises Limited

*The corporation is -

(a) established under and subject to the laws of Fiji, and has its principal place of business in Fiji; and

*The vessel in respect of which registration is sought will be regularly employed in operations involving calls at ports or places in Fiji. (Queare: Is this a reference to a Section 15 registration?)

3. The above general description of the vessel is correct and I am entitled to be registered

(a)*as owner of 100% share(s) in the vessel;

4. Other than the shares described in Clause 3 above the shares in the vessel are owned as follows -

Name of Owner:......OTTO BUTTULLA

Address of Owner:......VILLA 109 PACIFIC HARBOUR

Number of Shares:......100%

5. To the best of my knowledge and belief no person or corporation other than a person or corporation that is a qualified person as defined in the Act is entitled as owner to any legal or beneficial interest in the vessel.' (Quaere: Is this clause inserted to satisfy the requirements of Section 13?)

In the face of that Declaration of Ownership and notwithstanding Clause 5, counsel for OTTO BUTTULLA forcefully submits that the Registrar of Ships could not be satisfied that 'the ship' was 'owned wholly by a qualified person' or, at the very least, he would have entertained a sufficient doubt in his mind as to require him to seek further evidence or conduct further enquiries to verify the ownership of 'the ship' before registering it as owned by 'the company'.

Such enquiries might include sighting a Bill of Sale of 'the ship' from OTTO BUTTULLA to 'the company', or requiring a Declaration of Transfer from OTTO BUTTULLA of all his shares in 'the ship' to 'the company' in terms of Sections 33 and 34 of the Marine Act and, in the absence of such evidence, counsel submits that a 'triable issue' has been raised such as to render the summary dismissal of the Originating Motion inappropriate.

I accept that the above matters may give rise to a 'cause of action' against the Registrar of Ships but I cannot accept that the same necessarily gives rise to a 'cause of action' against the Official Receiver who is presently registered as the owner of 'the ship' pursuant to a 'vesting order' which remains extant. With all due regard to counsel for the applicant, it is not simply a question of 'Nemo dat qui non habet'!

Needless to say if as claimed, 'the ship' is wholly owned by OTTO BUTTULLA (a non-Fiji citizen) then it would 'not be capable of being registered under the Act'. Furthermore registration under Section 15 would not be possible since the Section only applies to a registered vessel which is not wholly owned by a 'qualified person' and in this instance, 'the ship' is wholly owned by an unqualified person. The end result of a successful application by OTTO BUTTULLA in his personal capacity would be that 'the ship' would be de-registered which seems to contradict all his efforts in the first place.

The power to inquire into the ownership of a Fiji-registered vessel and 'to direct that the registration be closed' is expressly given to 'the Minister' under Section 45 of the Marine Act and it is therefore doubtful that this Court has jurisdiction to grant the second order sought at least not until such statutory procedure has been first exhausted and then, only by way of an application for judicial review.

What's more even if I accept that an 'order for rectification' may be granted by the Court, such a remedy is undoubtedly in the nature of equitable relief and may be withheld at the discretion of the Court according to general equitable principles including the doctrine of 'laches and acquiescence'; prejudice to innocent third parties; and absence of clean hands to name but a few.

In this latter regard the Official Receiver in his comprehensive 7 page affidavit in support of the application to dismiss has traced the history of 'the company'; the history of the 'winding-up proceedings'; and the history of 'the ship' and deposed in this latter regard:

"... that the vessel M V Endeavour, has since 1990 or prior to that date, been at all material times in the apparent possession and ownership of the Endeavour Fishing Enterprises (Fiji) Limited (in liquidation) ..." [para. 9(a) to (j)]

Furthermore at para. 12(c)(iv) the Official Receiver deposed to the various unsuccessful attempts he made to sell 'the ship' but "... none are prepared to pay as much as $20,000.00 which is the price offered and accepted by the Official Receiver's Office for the sale of the vessel."

OTTO BUTTULLA in his 2 page affidavit in reply without answering each paragraph seriatim merely deposed that the Official Receiver's claim in para. 9 (above) is 'based on evidence that at best is hearsay' (para. 2) and further that the Official Receiver's concerns with delay and the price factor 'are immaterial' (para. 4).

I cannot agree.

In the light of the above and bearing in mind the inordinate delay on OTTO BUTTULLA'S part to challenge the registration of 'the ship' and the 'vesting order', and mindful that the Official Receiver has effectively sold 'the ship', there is no doubt in my mind that the Originating Motion is an 'abuse of process' designed to frustrate and further delay the orderly winding up of 'the company'.

The Originating Motion is accordingly dismissed with costs to the Official Receiver.

D.V. Fatiaki
JUDGE

At Suva,
4th November, 1997.

Hbg0004d.97s