Hunt v Queenstown Lakes District Council [2023] NZHC 364 (1 March 2023)

Last Updated: 10 May 2023

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-001610 [2023] NZHC 364

BETWEEN	GEOFFREY GERARD HUNT Applicant
AND	QUEENSTOWN LAKES DISTRICT COUNCIL Respondent

Hearing:	1 February 2023
Appearances:	S R Carey for Applicant T J McGuigan and Z L Trapski for Respondent
Judgment:	1 March 2023

JUDGMENT OF ANDREW J

This judgment was delivered by Justice Andrew on 1 March 2023 at 4.00 pm

pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar

Date ...................................

HUNT v QUEENSTOWN LAKES DISTRICT COUNCIL [2023] NZHC 364 [1 March 2023]

Introduction

[1] NZL 14 is a large yacht originally built to be raced in the America’s Cup. It has been moored on Lake Wakatipu since approximately 2005. Until 2019, it was owned by the applicant, Mr Geoffrey Hunt.

[2] In September 2018, NZL 14 broke its mooring and became a hazard to other vessels. Since then, the Queenstown Lakes District Council¹ has been mooring the vessel. Demands to remove it have not been met by Mr Hunt.

[3] In February 2020, QLDC obtained a formal proof judgment from this Court declaring that NZL 14 had been abandoned by Mr Hunt for the purposes of s 33L of the Maritime Transport Act 1994.² Whata J concluded that Mr Hunt’s inactivity over a lengthy period, in the face of clear demands by QLDC, with corresponding risk of sale of the boat by the Council, strongly indicated he had forsaken responsibility for the vessel. A case for removal and sale was therefore made out.³

[4] In November 2022, QLDC arranged for the disposal of the vessel. Mr Hunt subsequently filed the present interlocutory applications, namely:

(a) An interim injunction restraining QLDC or its agents from selling or otherwise disposing of NZL 14 until further order of the Court; and

(b) An application to set aside the formal proof judgment of Whata J.

[5] Mr Hunt says that the formal proof judgment was irregularly obtained because he is not the owner of NZL 14 for the purposes of ss 2 and 33L of the MTA. Mr Hunt says that the vessel is owned by the NZL 14 Youth Aid Foundation,⁴ through its trustee, NZL 14 Youth Aid Ltd.⁵ Even if the formal proof judgment was regularly obtained, Mr Hunt says it should nevertheless be set aside because he has a substantial ground of defence, namely that the vessel had not been abandoned.

¹ QLDC.

² MTA.

³ Queenstown Lakes District Council v Hunt [2020] NZHC 285 at [13].

⁴ The Foundation.

⁵ NZL 14 YAL.

[6] The parties agree the interim injunction application has been superseded by the application to set aside. I therefore only need to address that second application.

[7] The critical issues for determination are:

(a) Was the formal proof judgment irregularly obtained?

(b) If not, should the judgment be set aside as a matter of discretion under r 15.10 of the High Court Rules 2016? This question turns largely on the issue of whether Mr Hunt has a substantial ground of defence, namely that NZL 14 has not been abandoned.

Factual background

[8] On 12 March 2018, Mr Hunt emailed QLDC’s harbourmaster, Mr Black, enquiring about a suitable location on Lake Wakatipu to moor NZL 14. At the time, Mr Hunt owned the vessel.

[9] In August 2018, a resource consent application to establish and occupy a mooring was lodged by Southern Planning Group Ltd in the name of Mr Hunt. That application was incomplete, including the fact that the initial deposit fee was not paid.

[10] When it broke from its mooring in September 2018, QLDC’s harbourmaster, Mr Black, re-located the yacht to a temporary mooring. It has since been moved to a more suitable mooring adjacent to the Queenstown Gardens.

[11] NZL 14 is an unregistered ship for the purposes of the MTA.

[12] In the period between September 2018 and July 2019, Mr Black issued four directives to Mr Hunt directing him to (among other things) re-locate the yacht, pay the costs of re-locating, remove the yacht to a permanent mooring, to pay the costs of temporary mooring and not to use the yacht. Those directives were issued pursuant to cl 55 of the Queenstown Lakes District Council Navigation Safety Bylaw 2018.

[13] Mr Hunt responded by email to the first and second directives. He signalled in those emails that he was taking steps to find a place to re-locate the vessel and have it repaired.

[14] On 12 October 2018, NZL 14 Youth Aid Ltd was incorporated. At that time, the company’s sole director and shareholder was Mr Hunt.

[15] On 15 October 2018, Izard Weston, solicitors, contacted Mr Black advising that it acted for Mr Hunt. On 18 October 2018, Izard Weston advised that it was no longer acting.

[16] On 24 November 2018, the Youth Aid Foundation Queenstown was registered on the Charities Register.

[17] On 23 April 2019, Mr Hunt sold the vessel to NZL 14 Youth Aid Ltd. QLDC was not aware of this transfer until after the formal proof judgment of Whata J.

[18] Following Mr Hunt’s failure to comply with the final direction issued by Mr Black, he was served with QLDC’s High Court claim for a declaratory judgment.

[19] In November 2019, Mr Hunt approached Doug Cowan, barristers and solicitors, in relation to the proceeding. Those solicitors subsequently confirmed that they were not acting.

[20] In late November 2019, QLDC was informed that a person called Mr Duncan Faulkner was assisting Mr Hunt to re-locate NZL 14 to a permanent mooring. Mr Faulkner subsequently advised QLDC that he was assisting Mr Hunt with lodging a resource consent application.

[21] On 6 December 2019, Mr Faulkner advised QLDC that he was not in a position to lodge a resource consent because he had not been paid for his services by Mr Hunt.

[22] The declaratory judgment of Whata J was issued (formal proof) on 26 February 2020. His Honour granted the order sought, namely a declaration that

Mr Hunt had abandoned NZL 14 for the purposes of s 33L of the MTA. His Honour noted: ⁶

I record for completeness that the declaration relates only to the operation of s 33L of the Maritime Act. It has no wider legal significance. Furthermore, QLDC must still comply with the necessary procedure, including the notice requirements of s 33L before any removal and/or sale of the boat ...

[23] On 28 February 2020, a resource consent application to establish and occupy a mooring on Lake Wakatipu for NZL 14 was lodged by NZL 14 Youth Aid Foundation Queenstown. On 2 March 2020, the Southern Planning Group Ltd informed QLDC that it did not have permission to use its reports assessing environmental effects that were filed in respect of that consent application because Mr Hunt had not paid its invoice. The next day QLDC advised Mr Hunt that the second consent application was incomplete. On 13 March 2020, Mr Hunt advised QLDC that he wished to place the second consent application on hold.

[24] On 21 May 2020, QLDC notified Mr Hunt of its intention to remove, sell or otherwise dispose of NZ L14. On the same day Mr Hunt emailed QLDC advising that the yacht had not been abandoned.

[25] On 26 May 2020, Mr Ian McLennan of McDonald Vague, an insolvency practitioner, informed QLDC that Mr Hunt was a secured creditor of NZL 14 Youth Aid Ltd, the owner of the yacht. Mr McLennan advised that Mr Hunt was reviewing his options as a secured creditor.

[26] On 3 June 2020, QLDC published in the Otago Daily Times notice of its intention to remove, sell or otherwise dispose of NZL 14.

[27] In June 2020, Mr Shane Elliott, barrister, advised QLDC that Mr Hunt wished to apply to set aside the formal proof judgment of Whata J. In September 2020, Mr Elliott confirmed that he was never formally instructed by Mr Hunt.

⁶ Queenstown Lakes District Council v Hunt above n 3, at [14].

[28] In late October 2020, Mr McLennan held further discussions with QLDC’s solicitors in relation to resolution of the issues regarding NZL 14. However, no resolution was achieved.

[29] In December 2020, Mr Hunt emailed QLDC advising that he had instructed a barrister to set aside the formal proof judgment. No communication or application was received by QLDC.

[30] On 12 March 2021, QLDC was advised by Mr Hunt that NZL 14 Youth Aid Foundation Queenstown was proposing to syndicate the yacht.

[31] On 11 March 2022, QLDC invited expressions of interest from parties who were able to dispose of NZL 14.

[32] On 21 March 2022, Mr Hunt wrote to QLDC informing the Council that NZL 14 YAL was willing to pay the reasonable charges for mooring the yacht on Lake Wakatipu. No payment was ever received.

[33] On 6 May 2022, QLDC received a letter from Haigh Lyon, solicitors, who had been engaged by Mr Hunt. Haigh Lyon sought a resolution of the ongoing mooring issue. QLDC replied on 23 May 2022. The same day they were advised that Haigh Lyon was no longer instructed by Mr Hunt.

[34] On 30 September 2022, Mr Hunt provided QLDC with the following documents:

(a) A sale and purchase agreement dated 23 April 2019. Mr Hunt was the vendor. NZL 14 YAL was the purchaser;

(b) A General Security Agreement dated 23 April 2019.⁷ NZL 14 YAL was the debtor. Mr Hunt was the security holder. The GSA provided Mr Hunt with a security interest in NZL 14 for the purchase price of

$600,000 under the sale and purchase agreement;

⁷ GSA.

(c) A term loan agreement between Mr Hunt and NZL 14 YAL. Under that agreement, Mr Hunt loaned NZL 14 YAL the purchase price sum of

$600,000.

[35] In September 2022, QLDC contacted Rennie Cox, solicitors. The Council understood Rennie Cox was acting for Mr Hunt. Correspondence was exchanged. In October 2022, Rennie Cox advised that they had no instructions from Mr Hunt. About the same time, QLDC received a letter from BDO Tauranga, who were apparently acting for Mr Hunt.

[36] There were without prejudice discussions between Mr Hunt and QLDC in early November 2022 with a view to trying to avert the destruction of the yacht.

[37] On 4 November 2022, Mr Hunt filed his application for an interim injunction. QLDC subsequently gave an undertaking not to dispose of the yacht pending determination of these proceedings.

Relevant legal principles

[38] Rule 15.10 of the High Court Rules reads:

15.10 Judgment may be set aside or varied

Any judgment obtained by default under rule 15.7, 15.8, or 15.9 may be set aside or varied by the court on such terms as it thinks just, if it appears to the court that there has been, or may have been, a miscarriage of justice.

[39] Where a judgment has been irregularly obtained, there will almost always be a miscarriage of justice such that the judgment should be set aside without considering the merits.⁸ However, that is not an inflexible rule that must be applied in every case. If the Court can safely conclude that there is no risk of miscarriage of justice, it might properly decline to set aside the judgment.

⁸ EA v Rennie Cox Lawyers [2018] NZCA 33, [2018] 3 NZLR 202 at [20].

[40] The discretion contained in r 15.10 is unfettered. There are three important considerations =in determining whether, as a matter of discretion, a regularly obtained judgment should be set aside: ⁹

(a) Whether the defendant has a substantial ground of defence;

(b) Whether the defendant’s failure, earlier, to take any steps is reasonably explained;

(c) Whether the plaintiff will suffer irreparable harm if the judgment is set aside.

Analysis and decision

Issue (a) – Was the formal proof judgment irregularly obtained?

[41] Mr Hunt contends that the formal proof judgment was irregularly obtained because he was not the owner of NZL 14 and the owner, namely NZL 14 YAL, was not a named defendant. It was submitted that the only evidence of ownership produced by QLDC to Whata J was that of Mr Black, who said that he knew “Mr Hunt owned NZL 14 because Mr Hunt had sought support in setting up a trust to take children sailing”. Mr Hunt says that that statement is not evidence of ownership and in any event is incorrect.

[42] As Whata J held, the process of removing, selling or otherwise disposing of a ship (including a yacht) is provided for by s 33L of the MTA:¹⁰

33L Removal of abandoned ships

• (1) This section applies where any ship (including a ship that is anchored or moored) –

(a) is in waters within the region of a regional council; and

(b) appears to have been abandoned by its owner.

• (2) The regional council may remove, store, sell, or otherwise dispose of the ship in accordance with this section.

⁹ McGechan on Procedure HR15.10.05.

¹⁰ Queenstown Lakes District Council v Hunt, above n 3, at [8].

• (3) The regional council may remove and store the ship (pending sale or other disposal) if –

(a) the council has notified the New Zealand Police of the proposal to remove the ship; and

(b) more than 1 month has elapsed since the council affixed a notice to the ship advising the owner that the ship may be removed, and sold or otherwise disposed of, in accordance with this section.

• (4) The regional council must make reasonable efforts to –

(a) identify the owner ant the ship’s port of registry (if any) by reference to any of the following particulars if they are on or in the ship:

(i) the ship’s name:

(ii) any distinctive number or letters:

(iii) the ship’s IMO ship identification number:

(iv) the ship’s port of registry:

(v) the ship’s registration certificate:

(vi) any other certificate issued in respect or the ship in accordance with an international maritime convention:

(vii) if the ship is moored, any mooring or berthing contracts; and

(b) give notice to the owner of the ship of the council’s intention to sell or otherwise dispose of the ship.

• (5) The regional council must notify its intention to sell or otherwise dispose of the ship in 2 issues of a daily newspaper circulating in the region in which the ship is situated.

• (6) Any notice under this section must contain –

(a) the name of the ship (if known); and

(b) a reasonable description of the ship, including its length and any distinctive numbers or letters; and

(c) the ship’s IMO ship identification number (if known); and

(d) if applicable, the place from which the ship was removed under subsection (3); and

(e) if the ship is currently registered under the Ship Registration Act 1992, the name of its owner.

• (7) If, after a search of the relevant ship register, the ship is found to be subject to a security interest, the regional council must, before selling or otherwise disposing of the ship, notify the holder of that interest of its intention to sell or otherwise dispose of the ship.

...

(9) A person to whom a ship is sold or disposed of under subsection (8) becomes the lawful owner of the ship.

...

[43] Section 33L and the term “owner” is to be interpreted in accordance with the scheme of the statute and the definition of owner in s 2. That definition is critical. Owner is defined:

Interpretation

(1) In this Act, unless the context otherwise requires –

...

owner, –

(a) in relation to a ship registered in New Zealand under the Ship Registration Act 1992, means the registered owner of the ship:

(b) in relation to a ship registered in any place outside New Zealand, means the registered owner of the ship:

(c) in relation to a fishing ship, other than one to which paragraph (a) or paragraph (b) applies, means the person registered as the owner in the Fishing Vessel Register kept under s 98 of the Fisheries Act 1996:

(d) in relation to a ship to which paragraph (a) or paragraph (b) or paragraph (c) applies, where, by virtue of any charger or demise of for any other reason, the registered owner is not responsible for the management of the ship, includes the charterer or other person who is for the time being so responsible:

(e) in relation to an unregistered ship or a registered ship that does not have a registered owner, means the person who is for the time being responsible for the management of the ship.

[44] For the purposes of ss 2 and 33L it is clear that in the case of an unregistered ship (i.e. NZL 14) the owner is the person who is for the time being responsible for its management.

[45] I agree with the submission of QLDC that the policy underpinning the more expansive definition of “owner” in s 2 and in the case of unregistered ships, is that a harbourmaster may often have no way to determine or identify the legal owner. That is demonstrated in this case by the fact the private transfer/sale documents transferring NZL 14 from Mr Hunt to the company are not public and were not disclosed to QLDC until after the formal proof judgment was obtained.

[46] I reject the submission of Mr Carey, for Mr Hunt, that the QLDC obtained the judgment on the basis that Mr Hunt was the legal owner of NZL 14. QLDC may have understood Mr Hunt to be the legal owner, but it proceeded with its High Court claim on the basis that he was the owner for the purposes of ss 2 and 33L read together, as they must be. It is not possible to infer from the bald pleading in the statement of claim that Mr Hunt was the owner, that QLDC was somehow excluding the wider definition of ownership. The evidence for the Council was not simply confined to Mr Black’s observation that he knew “Mr Hunt owned NZL 14”.

[47] It is clear from the evidence before Whata J and the uncontested evidence before me, that Mr Hunt was always the person who liaised with and dealt with the harbourmaster and managed NZL 14. In terms of s 2 of the MTA, he was the person “responsible for the management” of the yacht. He applied for a resource consent in his own name, liaised with QLDC in his own name, dealt with the harbourmaster in his own name, and carried out other tasks consistent with the ownership, control and management of NZL 14. Additionally, the solicitors who were engaged on his behalf to correspond and negotiate with QLDC, were always acting on behalf of Mr Hunt.

[48] It may be that Mr Black was expressly advised by Mr Hunt in his email of 3 November 2018, that the Foundation was “taking responsibility as the owner”. However, that evidence cannot be considered in isolation. As Ms Loges, for QLDC, states, there was “only one person at the centre of everything, namely Mr Hunt”. By his conduct, Mr Hunt clearly represented to the world that he was the owner of NZL 14 in the sense that he had management and control over the yacht.

[49] I note that at all material times Mr Hunt was the director and shareholder of NZL 14 Youth Aid Ltd – he was its controlling mind. He was also served with the

proceedings. At no stage has the company engaged with the legal proceedings or QLDC despite having ample opportunity to do so. Mr Hunt was always the key player, being the person responsible for the yacht’s management. In any event, the statutory scheme provides that the person with responsibility for the management and control of a vessel can be recognised as an owner while being a separate entity from the legal owner.

[50] Furthermore, and importantly, the Council expressly sought a declaration of abandonment in terms of s 33L. It expressly acknowledges there may be a different legal owner and, as noted above, Whata J took care to confine his declaration to the statutory scheme of s 33L of the MTA.¹¹

[51] I conclude that the judgment of Whata J was not irregularly obtained.

Issue (b) – Miscarriage of justice

[52] As noted at [40] above, where a judgment is regularly obtained, there are three important considerations in determining whether there has been a miscarriage of justice under r 15.10 and therefore whether the judgment should be set aside.

[53] I accept Mr Hunt’s evidence that given his mental health and related family issues, he was not well placed to respond to the proceedings when they were served on him. There is a reasonable explanation for his failure to defend the original proceedings. Having said that, there has been clear delay in bringing the application to set aside. It has been foreshadowed for some time, although understandably, perhaps, not brought until there was a risk of imminent destruction of the vessel.

[54] As to the irreparable harm threshold, I find that it is not made out here. QLDC is incurring not insignificant ongoing costs associated with NZL 14, however, that does not constitute, in the circumstances, irreparable harm. I acknowledge that QLDC has been paying expenses for a considerable time and it is not reasonable to expect the Council to do so indefinitely.

¹¹ Queenstown Lakes District Council v Hunt, above n 3.

[55] I turn to the critical issue of whether Mr Hunt has a substantial defence, namely a reasonably arguable claim that the vessel was not abandoned.

[56] Mr Hunt says that NZL 14 was not abandoned prior to the formal proof judgment. He says that in the years prior to the judgment he visited the boat regularly. He lived in Auckland but travelled to Queenstown multiple times each year. He also says that the Foundation engaged and paid a local, Mr Blake Round, to manage the boat. Mr Round would inspect the lines and pump water from the vessel. Mr Hunt says Mr Round checked the boat frequently. Mr Hunt further claims that the previous owner had not done work on the boat for a considerable time and the motor would not start when the Foundation bought it. The Foundation engaged a company from Dunedin to carry out an assessment of the boat and inspect the winches and mast. He notes that in 2018 the Foundation was exploring sites for a permanent mooring.

[57] In addressing the issue of abandonment, Whata J referred to the Court of Appeal decision Carter v Ports of Auckland.¹² The issue for the Court was whether Ports of Auckland were entitled to sell the ship (a 41-metre long vessel) berthed at the commercial area of the port, under the Harbours Act 1908. Section 208 of the Harbours Act 1950 provided that a Harbour Board could remove a vessel if it was abandoned. The Court held that for the purposes of s 208 the question of whether a vessel has been abandoned must be judged objectively. The subjective intentions of the owner will not be decisive. A port authority is entitled to act if outward indications show that a vessel has been abandoned in the sense of having been forsaken, given up or surrendered. The Court further held: ¹³

Because of the financial constraints the owners faced and the condition of the ship, there seems to have been no foreseeable prospect that she would leave her berth. However, it could not be said that the owners had given up hope that a solution might be found. They were doing what they could to preserve their asset. They remained in possession. They asserted their rights as owners. Their actions in these respects were the antithesis of abandonment.

[58] In concluding that NZL 14 had been abandoned, Whata J acknowledged that Mr Hunt’s communications with Mr Black, Mr Martens’ contact and the visits to the boat by a Queenstown local, Mr Round, suggested an ongoing interest in the boat.

¹² Carter v Ports of Auckland [2005] CA122/04, 29 August 2005.

¹³ Carter v Ports of Auckland, above n 12, at [22].

However, on balance he concluded that QLDC had made out a case of apparent abandonment.¹⁴

[59] As the Court of Appeal make clear in Carter,¹⁵ the issue of abandonment must be judged objectively. Subjective intentions are not decisive. QLDC is entitled to act if outward indications show that the boat has been abandoned.¹⁶

[60] The Harbours Act, at issue in Carter, simply refers to “abandonment”. By contrast, the MTA contains the words “appears to have been abandoned”. The reference to the appearance of abandonment reinforces in my view the objective nature of the test.

[61] I find that Mr Hunt has not established a substantial defence in response to the claim that he has abandoned NZL 14. His subjective intention to try and recover possession of the vessel may have been genuine. However, as Whata J held, the outward indications demonstrate that the boat had been “forsaken, given up or surrendered”. In applying an objective test, the steps Mr Hunt did take were of no consequence and in the face of the repeated demands by QLDC there was a complete abdication of responsibility. In substance, Mr Hunt was unable, for whatever reason, to take any meaningful steps to ensure the safekeeping of the vessel and to meet his associated legal obligations. He was given ample opportunity to do so. Mr Hunt failed to take any meaningful steps in circumstances where he knew or must have known that there was a high risk of a sale of the boat by the QLDC.

[62] Any actions taken, for example to try and obtain a resource consent, that occurred prior to the vessel breaking its mooring, are irrelevant. Even if Mr Hunt did visit the vessel from time to time and Mr Round did make the odd inspection visit, Mr Hunt cannot establish an arguable basis for concluding that he had not forsaken responsibility.

[63] Having concluded that Mr Hunt does not have a substantial ground of defence, I also find that there has been no miscarriage of justice.

¹⁴ Queenstown Lakes District Council v Hunt, above n 3, at [12]–[13]. .

¹⁵ Carter v Ports of Auckland, above n 12.

¹⁶ Queenstown Lakes District Council v Hunt, above n 3, at [10].

[64] If the result of this judgment is the destruction of the yacht, that would, of course, be a sad outcome. The use of the yacht as a training vessel for the youth of Queenstown is no doubt a laudable community project. However, the QLDC has acted within its statutory powers, and it is Mr Hunt who has failed to make use of the ample opportunities provided to him to keep his sailing project alive.

[65] If the result of the judgment is the destruction of the yacht that would, of course, be a sad outcome. The use of the yacht as a training vessel for the youth of Queenstown is no doubt a laudable community project. However, the QLDC has acted within its statutory powers and since the judgment of Whata J has given Mr Hunt yet further opportunity to try and keep his sailing project alive. There is no basis for setting aside the judgment of Whata J.

Result

[66] The application to set aside the judgment of Whata J is dismissed. I also dismiss the application for an interim injunction.

[67] As to costs, having succeeded, I am of the preliminary view that QLDC is entitled to costs on a 2B basis, plus disbursements. If the parties cannot agree on costs, then submissions (no more than three pages) are to be filed and served within 14 days.

Andrew J