Polynesian Shipping Line Ltd v My Ship MV Ratstor HC Auckland CIV-2011-404-2177 [2011] NZHC 654 (1 July 2011)

Last Updated: 11 July 2011

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

_{CIV-2011-404-2177}

BETWEEN POLYNESIAN SHIPPING LINE LTD Plaintiff

AND THE SHIP MV RATSTOR Defendant

Hearing: (On the papers) Judgment: 1 July 2011

_{JUDGMENT OF BREWER J}

SOLICITORS

_{Lowndes Associates (Auckland) for Plaintiff}

POLYNESIAN SHIPPING LINE LTD V THE SHIP MV RATSTOR HC AK CIV-2011-404-2177 1 July 2011

[1] The plaintiff filed a notice of proceeding in rem against the defendant, the Ship MV Ratstor, on 15 April 2011. A copy of the notice was duly served on the defendant on 5 June 2011. It claimed US$755,355.42 arising out of a Charterparty dated 3 March 2010 with the plaintiff as Charterer over the defendant ship. It also claimed NZ$5,640 in legal costs.

[2] The defendant has not filed an appearance within 10 working days of the date of service of the notice of proceeding in rem as required by r 25.14 of the High Court Rules.1 The plaintiff, therefore, seeks judgment by default in the action in rem pursuant to r 25.32(4).

[3] Counsel for the plaintiff has also filed a memorandum requesting urgency in determining the application. No reason for urgency is given. The defendant ship is at anchor in Auckland harbour and has been arrested at the behest of a plaintiff in another proceeding.

[4] However, the matter has been put before me in the duty list and since I can deal with the application on the papers I will do so.

Judgment by default

[5] Rule 25.32(4) provides:

A plaintiff to an action in rem may apply to the court for judgment by default if—

(a) the defendant to the action fails to enter an appearance within the period specified for appearing; and

(b) not less than 10 working days has passed since the notice of proceeding was served; and

(c) the plaintiff has filed an affidavit proving due service of the notice of proceeding, a statement of claim (where one has not already been filed), and an affidavit verifying the facts on which the action is based.

1 No appearance has been filed as at the date of this judgment.

[6] The Court file contains the plaintiff’s affidavit proving due service of the notice of proceeding in rem. The plaintiff has also filed a statement of claim (dated

23 June 2011) in which it claims:

(a) US$116,947.72 for breach of contract; and

(b) NZ$118,579 for breach of contract cargo claims.

[7] There is a comprehensive affidavit from Michael Howard Matthew Swan sworn on 23 June 2011 verifying the facts on which the proceeding is based.

First cause of action

[8] I can deal immediately with the claim for US$116,947.72 for breach of contract. Exhibit “A” to Mr Swan’s affidavit is the final hire statement. It shows an outstanding balance of that sum after payments by the defendant ship’s owners totalling US$339,393.75. These payments were made after the termination of the Charterparty by the plaintiff.

[9] Having read the documentation on the Court file, I am satisfied that the plaintiff has established on the balance of probabilities its entitlement to the US$116,947.72 claimed in its first cause of action. I can see no defence to the plaintiff’s claim.

Second cause of action

[10] The second cause of action relates to five claims brought against the plaintiff by owners of cargo. The background is stated succinctly in Mr Swan’s affidavit as follows:

24. PSL carries cargo for its customers who are the owners and/or shippers (Cargo Owners) of cargo. After the Ratstor arrived in Auckland on 15 March 2011, we arranged for loading of the containers of cargo in the usual way. On the afternoon of 15 March we received notice from the Master of the problem with the steering gear. The Vessel could not continue on the voyage or with the Charterparty and the Vessel in fact remained at the berth for parts and repairs until 3 May 2011.

25. PSL had a legal obligation to perform the bookings with its customers. We arranged for the containers to be discharged from the Vessel and booked the containers for carriage on another ship to destination. This incurred extra costs and resulted in longer transit times than usual. The cargo was fresh produce namely, onions and potatoes.

26. PSL received a number of claims from the Cargo Owners who claimed that the cargo had arrived at destination in a damaged condition. The damage was due to decay as a result of the longer transit times. I annex at exhibit H a copy of a schedule of cargo claims which PSL prepared which covers all the claims received by PSL...

[11] Mr Swan then goes on to depose that the plaintiff has negotiated, settled and paid three of the five claims, the total amount being $83,500. In each case the paid claim was less than the sum first claimed; the percentages being 87% (approximate because a part of claim 1 was in Fijian currency), 90% and 55% respectively.

[12] There are still two claims which the plaintiff has not been able to settle. Claim 4 is for $18,461.45 and claim 5 is for $16,617.50, a total of $35,078.95.

[13] The High Court Rules establish different regimes for judgment by default where the amount claimed is liquidated2 and where the amount claimed is unliquidated.3 In the latter case the proceeding must be tried to assess damages; in the former case no trial is required.

[14] A leading decision in New Zealand on when an amount can be said to be a liquidated amount for the purpose of an application for judgment by default is Wing v Leeder.4 In this case Barrowclough CJ, discussing the rules then applicable, held:5

Generally speaking an amount is liquidated when it is made clear or plain or when it is settled and determined — usually by agreement or litigation. But in R. 226 the concept of settlement “by agreement or by litigation” is not necessarily applicable. With one exception the rule does not contemplate litigation in the sense of a judicial determination such as is envisaged by R. 230 — but the entry of judgment as an executive or administrative act...

Nor does R. 226 necessarily contemplate a settlement by agreement. The purpose of the rule and of the similar RR. 227 and 228 is clear. It is to

2 _{Rule 15.7.}

3 _{Rule 15.10.}

4 _{Wing v Leeder [1961] NZLR 30 (SC) per Barrowclough CJ.}

5 Ibid, at 33.

enable the plaintiff to recover judgment speedily and cheaply when the defendant chooses not to file a defence to the action and when the amount of the claim is settled in the sense that it is not, on the pleadings, open to any real dispute or doubt. If there is no denial of liability and no contest as to the amount of liability and if the amount of liability is clear and plain and not really open to dispute it would be unreasonable and a waste of the Court’s time and an unnecessary expense to the plaintiff to require that he should prove that which is already plain and not open to dispute. It is otherwise, of course, if the amount of liability is not clear. If the claim is for an unliquidated demand, as it so often is in an action of tort and often can be in an action on a contract, justice demands that the amount of the claim should be determined by the Court and the proper course is to proceed under R. 230 or, in some cases, under R. 232. I am of opinion that if a claim is for an amount which is settled in the sense already indicated it is a claim for a liquidated demand even though it has not been settled by litigation or by any formal agreement between the parties.

[15] I had doubts as to whether claims 4 and 5 could be said to be reasonable, in the sense that on the materials provided in Mr Swan’s affidavit it could not be said that liability for the full amounts was not open to dispute.

[16] By minute of 28 June 2011, I asked counsel for the plaintiff to make submissions on this point (inter alia). Counsel responded with a helpful memorandum dated 29 June 2011.

[17] Counsel for the plaintiff submits simply that claims 4 and 5 are liquidated demands for which judgment by default should be given.6

[18] In respect to claim 4, counsel points out that Mr Swan’s affidavit shows that the plaintiff has made an offer to settle the claim for NZ$15,000. That offer has not been accepted; but it can be taken that the claim will settle for between NZ$15,000 and NZ$18,461.45 (the full amount of the claim). Counsel goes on to submit:

9. The Plaintiff seeks judgment at NZ$18,461.45 which is the full amount claimed against it so that it is not penalised in the event it needs to make payment at a greater level than the current offer of NZ$15,000. However, if the court considers it is not in a position to grant judgment at this level on this application then the Plaintiff would seek judgment at NZ$15,000 which is the level of the current offer from the Plaintiff to Primor. The Plaintiff would then bear the risk of settlement at a higher level.

[19] With regard to claim 5, counsel submits:

11. From experience, the Plaintiff anticipates that it will need to make a starting offer of at least 70% of the amount claimed and it may need to pay the full amount claimed. An offer at 70% of the claim equates to NZ$11,632.25. The Plaintiff maintains that it should not be prejudiced and that judgment should be given for the full amount of the claim by Wai Shing Ltd for NZ$16,617.50. If the court is not in a position to grant judgment for this amount on this application, then the Plaintiff would seek judgment at a lower figure of $11,632.25 which it anticipates will be its opening settlement offer. The Plaintiff would then bear the risk of settlement at a higher level.

Decision on second cause of action

[20] Whether I can give judgment by default to the plaintiff without requiring trial of the issue of damages depends upon whether the sums claimed in the second cause of action are liquidated sums or not.

[21] I have no hesitation in holding that claims 1, 2 and 3 are liquidated sums. They are sums resulting from claims against the plaintiff which the plaintiff negotiated to resolution and then paid.

[22] The same cannot be said of claims 4 and 5. Those claims represent the full amounts of claims made against the plaintiff. They are still in the course of being negotiated and no-one can say at what levels the claims will be resolved. It cannot be said, therefore, that these claims are “settled in the sense that (they are) not, on the pleadings, open to any real dispute or doubt”.7 As pleaded, I find that claims 4 and 5 are for unliquidated sums.

[23] However, it is clear that within each claim there is a liquidated sum. It is just that it has not yet been determined. And, I am conscious that if possible I should bring certainty to the plaintiff’s claim rather than give a partial judgment requiring further applications to be made when the claims are settled.

[24] In respect to claim 4, it seems to me that I can fix as a liquidated sum the amount of NZ$15,000. A settlement offer has already been made at that amount by the plaintiff. The claim will, therefore, not settle for an amount less than that sum and the plaintiff is willing to bear the risk that a higher amount will be required.

[25] With respect to claim 5, the plaintiff anticipates making a starting offer of

70% of the claim, equating to $11,632.25. Given that the other four claims have been, or will be, settled for percentages of the original claims of 87%, 90%, 55% (on a claim of only $9,137.50) and 81% respectively, I find on the balance of probabilities that $11,632.25 can be regarded as a liquidated amount in the sense used by Barrowclough CJ.

Judgment

[26] Accordingly, I give judgment against the defendant by default in favour of the plaintiff:

(a) On the first cause of action in the sum of US$116,947.72; (b) On the second cause of action in the sum of $110,132.25.

[27] In each case the plaintiff is entitled to interest. I award interest on each cause of action at the rate of 5% from 5 June 2011 to the date of judgment.8

[28] The plaintiff is entitled to costs. I fix these on a 2B scale basis, to be paid by the defendant to the plaintiff.

_{Brewer J}

8 Judicature Act 1908, s 87.