Tam International Inc. v. MCP Altona

Tam International Inc. v. MCP Altona
Court (s) Database
Federal Court Decisions
Date
2012-10-03
Neutral citation
2012 FC 1168
File numbers
T-424-11, T-484-11
Decision Content
Federal Court
Cour fédérale
Date: 20121003
Dockets: T-424-11
T-484-11
Citation: 2012 FC 1168
ACTION IN REM AGAINST THE SHIP “MCP ALTONA” AND IN PERSONAM
Docket: T-424-11
BETWEEN:
TAM INTERNATIONAL INC.
Plaintiff
and
THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP “MCP ALTONA”, THE SHIP “MCP ALTONA”,
MS ‘MCP ALTONA’ GMBH & CO., KG, HARTMANN SCHIFFAHRTS GMBH & CO., HARTMANN SHIPPING ASIA PTE LTD., FRASER SURREY DOCKS LP AND PACIFIC RIM STEVEDORING LTD.
Defendants
ADMIRALTY ACTION IN REM AND IN PERSONAM
Docket: T-484-11
AND BETWEEN:
CAMECO CORPORATION
Plaintiff
and
THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP “MCP ALTONA”, THE SHIP “MCP ALTONA”,
MS ‘MCP ALTONA’ GMBH & CO KG, HARTMANN SCHIFFAHRTS GMBH & CO, HARTMANN SHIPPING ASIA PTE LTD., FRASER SURREY DOCKS LP AND PACIFIC RIM STEVEDORING LTD.
Defendants
ASSESSMENT OF SHERIFF’S COSTS - REASONS
Johanne Parent, Assessment Officer
[1] The Plaintiffs in these respective court files brought actions and effected arrests for several claims for damages allegedly flowing from damage to cargo on board the Ship “MCP Altona” [the Altona]. Notices of Caveat Release by other claimants were filed. Statements of Defence, Counterclaims and Third Party Claims have been filed.
[2] The Caveator, HSH Nordbank AG [Nordbank] brought a motion for judicial sale of the Altona. The supporting evidence indicated that Nordbank had been funding the necessary expenses for the operation of the Altona since its arrest and that it sought priority for said expenses over all other competing claims.
[3] By way of Order dated August 4, 2011 [the Sale Order], the Court directed that the Altona and appurtenances, including its bunkers, which were to be sold separately as specified later, be sold on an “as-is, where-is” basis by private contract.
[4] The Sale Order provided that:
2. … The bunker fuel and diesel oil on board the Vessel shall be taken and paid for by the purchaser of the Vessel as a separate item together with the Vessel. The quantities of bunker fuel and diesel oil shall be determined and valued by an independent bunker surveyor retained by the Sheriff on the basis of market prices in effect at the Port of Vancouver, British Columbia, on the day before the sale.
3. Mr. Nick Bailey of Howe Robinson & Company Ltd. (“Howe”) shall be appointed as an acting Sheriff of this Court (hereinafter the Sheriff). The Sheriff’s commission on sale shall be 1.75 percent of the gross total sale price, which shall include payment for any brokering services provided by Howe or other agency in respect of the sale. Included in the aforesaid commission shall be the services of the Sheriff in contacting any prospective or potential purchasers, in arranging physical inspection of the Vessel, in liaising with the shipowners or managers for the ship-board attendances by potential purchasers, the negotiation of the purchase price, dealing with the deposit and the balance of the purchase price, instructing lawyers and assessing costs. The Sheriff may, in the event a situation arises in which he reasonably feels in need of independent legal advice, retain legal counsel, the cost of which shall be included as a Sheriff’s cost, payable from the sale proceeds. In the event that the Sheriff has any uncertainty as to what items are covered by the commission, he has liberty to apply to the Court on short notice for directions in that regard.
4. The Sheriff is authorized and directed to sell the Vessel by way of private contract in accordance with this Order and as set out in the Commission of Sale, a copy of which is attached as Schedule “A” hereto. The bunker fuel and diesel fuel aboard shall be sold to the purchaser of the Vessel as a separate item on the basis of the amount aboard at the market price at the Port of Vancouver, British Columbia, as determined by the Sheriff on the day before the completion of the sale as set out in paragraph 2 above, and the costs of that determination shall be a Sheriff’s cost payable out of the proceeds of the sale.
5. The Sheriff shall be required to promote the sale of the Vessel and seek out potential purchasers, and for such purposes may utilize the services of his own company. The Sheriff shall inform the solicitor for the Bank of any and all offers to purchase the Vessel. The solicitor for the Bank shall immediately forward that information to the solicitors for the other parties.
6. The Master and Crew of the Vessel, the Owner and Manager of the Vessel, and the Trustee in Bankruptcy of the Owner of the Vessel, shall provide to the Sheriff copies of any of the following documents in their possession or control: the Vessel’s general arrangement plans, capacity plans, technical documentation concerning the Vessel’s main machinery and auxiliaries and classification society certificates, and any other ship’s documents requested by the Sheriff. The costs of reproduction of those documents being a Sheriff’s cost payable out of the proceeds of the sale. The parties listed above and each of them shall provide and/or not impede access to the Vessel, and shall provide such documents to any ship broker, appraiser, surveyor, prospective purchaser or other person authorized by or on behalf of the Bank or the Sheriff to inspect, and show the Vessel to prospective purchasers, their inspectors, surveyors or agents, at any time of day and on any day of the week.
[5] Paragraphs 7-9 inclusive then instructed the Sheriff on details of advertisement of the sale of the Altona and the procedure for the filing of claims against the sale proceeds in three publications (Lloyd’s List, TradeWinds and The Vancouver Sun); set out the various steps for completion of the sale and provided for the return of deposits if the sale could not be completed.
[6] The Sale Order then provided that:
10. In the event that the sale of the Vessel is approved by the Court, the Sheriff shall sign a bill of sale transferring to the purchaser the ownership of the Vessel in the same manner and to the same extent as though the Sheriff were the registered owner thereof, but free and clear of any liens or encumbrances pursuant to Canadian Maritime law. Similarly, the Sheriff shall have the right to transfer title to bunkers and fuel on board the Vessel by a bill of sale. The Sheriff shall be entitled to deliver such bill or bills of sale to the purchaser by delivery thereof to the purchaser’s nominated agent at Vancouver, British Columbia.
11. Possession, risk and title to the Vessel, including its bunkers and fuel, shall pass to the purchaser on delivery by or on behalf of the Sheriff of an executed bill of sale to the purchaser or the purchaser’s nominated agent in Canada.
12. All reasonable expenses of advertisement of the sale, agency fees, insurances and all other costs, disbursements, commissions and other expenses such as costs of the officers and crew, insurance, costs of berthage, security, reproduction of plans, photographs, courier services, survey reports, etc., necessary or inherent to giving effect to this order and the commission of sale and for the preservation, safekeeping or maintenance of the Vessel incurred by the Sheriff and/or funded by or on behalf of the Bank from August 3, 2011 to the date of sale shall be treated as Sheriff’s costs payable immediately after taxation by an assessment officer in priority to all other claims from the proceeds of the sale. Notwithstanding Federal Courts Rules 490(5) and 490(6), the Sheriff’s account shall be submitted directly to the assessment officer who shall promptly examine it and who shall issue a certificate, authorizing all or such portion of the account as he or she deems appropriate, whereupon the amount set out in the certificate shall be paid out to the Sheriff or as the Sheriff shall direct, out of the proceeds of sale in priority to all other claims.
13. The proceeds from the sale of the Vessel, bunkers and fuel which are paid directly to Alexander Holburn Beaudin & Lang LLP in trust in United States dollars shall be held in a United States dollar interest bearing trust account and the funds so deposited shall be deemed for all purposes to be monies paid into this Court to the credit of all in rem claims against the Vessel and shall not be disbursed except in accordance with the further order of the Court.
Paragraphs 14-17 inclusive of the Sale Order then set out further and usual conditions, i.e. cross-examinations of affidavits of claim, reservation to the Court of all questions relating to the Sale Order and claims in rem and costs of the sale motion to Nordbank in priority to all other claims other than that of the Sheriff.
[7] By motion dated October 14, 2011, Nordbank moved for approval of the sale to PT Meratus Line [Meratus] for 4.8 million USD plus the value of the bunkers and other fuel oil as specified in the Sale Order. The supporting materials outlined the Sheriff’s worldwide efforts to sell the Altona in a declining market and indicated that Nordbank had been paying all of the costs of maintaining the vessel and crew, but would not continue to do so. On October 19, 2011, the Court, having taken into account that no party opposed the sale, granted the order as sought and discharged all caveats.
[8] By letter dated October 26, 2011, counsel for Nordbank indicated that Meratus needed an extension of time to November 15, 2011 for the Sheriff to execute a bill of sale and effect delivery of the vessel because of certain mandatory steps associated with transferring the Altona directly to a new Indonesian subsidiary company called Pt. Mitrarejeki Investa. Counsel urged approval of that extension of time given that 4.8 million USD (the sale price of the vessel) and 277,970 USD (an advance on the anticipated fuel price) had been paid in trust and that Pt. Mitrarejeki Investa had agreed to assume all vessel expenses effective midnight on October 28, 2011. Counsel for Nordbank subsequently advised the Registry of a refinement of the proposed arrangements, including completion date by November 14, 2011. The Court’s Order dated October 28, 2011 gave effect to said arrangements.
[9] By letter dated November 9, 2011, counsel for Pt. Mitrarejeki Investa requested an extension to November 18, 2011, to which the Court agreed, for completion of the sale because of certain additional and mandatory steps associated with transfer of the flag.
[10] A copy of the Sheriff’s Bill of Costs, showing the commission earned on the sale plus copies of the invoices for the disbursements incurred by and on behalf of the Sheriff by Nordbank as well as expenses related to the sale paid by the Sheriff’s company or on behalf of his company, is found in the affidavit of Nicholas Bailey, shipbroker with Howe Robinson & Co. Ltd and acting Sheriff in the matters before the Court, sworn December 9, 2011 and filed with the Court on December 13, 2011.
[11] The following Direction was issued to all parties on December 13, 2011:
The Senior Assessment Officer, Charles E. Stinson (the SAO), after having examined the Sheriff’s bill of costs further to paragraph 12 of the Sale Order dated August 4, 2011 and after having been advised by the Registry further to a conference convened today by the Court that at least one creditor will be objecting to an item in the bill of costs, ie. vessel operating expenses, has directed that any creditor intending to object to a given item in the bill of costs identify the item or items by name in a letter to the Registry by December 20, 2011, with a copy to all other interested parties. For greater clarity, the SAO notes that written submissions do not need to accompany said letter as the SAO will issue a schedule after December 20th for the exchange of submissions on disputed items. The SAO will however, in the interests of the expediency intended by paragraph 12 of the Sale Order, issue a Certificate of Assessment as soon as possible after December 20th, without entertaining further materials from the parties, addressing all items of costs not in dispute.
[12] Further to the issuance of this Direction and having received parties additional representations, another Direction was issued on December 22, 2011, reading:
The Senior Assessment Officer having noted correspondence that all counsel, other than counsel for Cameco Corporation, have confirmed that their respective clients take no position in respect of the sheriff’s bill of costs, and having further noted that Cameco Corporation would assert an objection to certain parts of the sheriff’s bill of costs, convened a teleconference on December 21, 2011 with counsel for Cameco Corporation and counsel for HSH Nordbank AG in which it was confirmed that Cameco Corporation asserts an objection to Exhibit No. I for 341,564.08 Euros, but otherwise does not object to the sheriff’s bill of costs. After hearing respective submissions on an approach to resolve the issues associated with Exhibit No. I, the SAO directed that counsel for HSH Nordbank AG prepare, serve on Cameco Corporation only and file, by December 28, 2011, a version of Exhibit I with page numbers and other necessary means to facilitate reference to the 87 sub-items of its 8 invoices, to be used to isolate if possible specific amounts in dispute or not in dispute. The SAO further directed that Cameco Corporation and HSH Nordbank AG need serve documents on one another only for the assessment of the sheriff’s costs. The SAO will however send to all counsel any decisions or directions arising out of the assessment of the sheriff’s costs.
[13] The same day, after the parties having been requested to discuss the form of a certificate of assessment and after having submitted such, the following Certificate of Assessment of the Sheriff’s costs was issued by the Senior Assessment Officer:
I HEREBY CERTIFY, further to a teleconference on December 21, 2011 and there being no objections, that from the proceeds from the sale of the “MCP Altona’ having been held in U.S. currency in accordance with the Order of August 4, 2011 (the Proceeds), the sum of US$88,749.64 (or its Canadian equivalent as of the date of payment) shall be paid to the Sheriff.
I HEREBY FURTHER CERTIFY that from the Proceeds the sum of C$7,309.84 (or its US equivalent as of the date of payment) and the sum of Euros 14,339.26 (or its Canadian equivalent as of the date of payment) shall be paid to HSH Nordbank AG.
[14] In light of the Senior Assessment Officer’s Direction issued on December 22, 2011, counsel for Nordbank served and filed a paginated version of Exhibit I the same day. By letter that same day, counsel for Cameco Corporation [Cameco] advised the Registry of the Court and opposing counsel of the invoices remaining in issue. Counsel for Nordbank submitted on February 21, 2012, a letter together with two schedules: “A” representing the invoices not contested by Cameco and “B” representing the claims the Sheriff and Nordbank would not pursue as Sheriff’s costs and agreeing that they are not recoverable. A Book of Contested Invoices of Hartmann Schiffahrts GmbH & Co. [Book of Contested Invoices], containing the remaining contested invoices was further filed on February 21, 2012 for ease of reference.
[15] Accordingly, on February 23, 2012, the Senior Assessment Officer issued the following Certificate of Assessment of the Sheriff’s costs:
I HEREBY CERTIFY, further to a letter dated February 21, 2012 from counsel for HSH Nordbank AG confirming an agreement between the sheriff, Cameco Corporation and HSH Nordbank AG, and there being no objections, that from the proceeds from the sale of the “MCP Altona” having been held in U.S. currency in accordance with the Order of August 4, 2011, the sum of C$19,646.85 (or its US equivalent as of the date of payment), the sum of US$145,896.41 (or its Canadian equivalent as of the date of payment) and the sum of €8,121.78 (or its Canadian equivalent as of the date of payment) shall be paid to HSH Nordbank AG.
[16] The issuance of these Certificates of Assessment permitted immediate payment out of the proceeds of the sale of the “Altona” for the items not in dispute, namely Exhibits A, B, C, D, E, F, G, H, J, K, L, M and certain items of Exhibit I of the Sheriff’s Bill of Costs.
[17] Counsel for Nordbank subsequently filed the affidavit of Joerg Schelp, Senior Vice-President of the Restructuring Unit of Nordbank, sworn March 7, 2012 [the March Affidavit]. Said affidavit provides underlying details of the invoices in the Book of Contested Invoices and confirms the invoices that were agreed as not recoverable as Sheriff’s costs, thereby removing them from the list of contested invoices. At the request of counsel for Nordbank, a conference call was scheduled between the Senior Assessment Officer and counsel for Cameco and Nordbank, to address next steps. Further to that conference call on March 28, 2012, the Senior Assessment Officer set deadlines for Cameco to serve written interrogatories and for Nordbank to provide all answers to same. An additional affidavit of Joerg Schelp sworn May 29, 2012 [the May Affidavit], including the responses of Martin Escherhaus, Manager of Hartmann Schiffahrts GmbH & Co. [Hartmann] in respect to Questions 1 to 185 to the Written Examination, was served and filed. A teleconference held on May 31, 2012 further permitted parties to endorse a timetable providing a schedule to serve and file their written representations on the Sheriff’ costs.
[18] It is noted that through the assessment process, more specifically the parties’ written representations and the List of Invoices remaining in issue found in the Affidavit of Patsy Chan sworn July 4, 2012, that some items claimed under Exhibit I were either not contested or withdrawn. The items not objected to are found in the Book of Contested Invoices at page 18 (359.71 USD), page 40 (34.24 EUR), page 42 (18.73 EUR), pages 47-52 (1350.31 EUR), page 114 (18 EUR), page 115 (34.24 EUR), page 171 (459.52 EUR), and pages 181-182 (68.48 EUR). The items withdrawn are found at page 68 (780 EUR) and page 186 (450 EUR). Considering the above, the amounts of 359.71 USD and 1983.52 EUR are allowed as expenditures not objected to by Cameco.
[19] I wish to reproduce at this stage, a portion of the letter received from counsel for Cameco dated December 20, 2011 [the December 2011 letter]. This letter sheds some light on Cameco’s objection to Exhibit I being disbursements to Hartmann for vessel operating costs from August 3 to October 28, 2011. In that letter, Cameco states that:
…Hartmann was the vessel operator or manager of the vessel. Hartmann failed to provide services to the vessel upon its arrival in Vancouver in January 2011 and following, for such items as berthage, fuel, stevedoring, cargo removal and vessel repairs during the remediation process. It is also alleged in the course of the underlying litigation that Hartmann caused or contributed to the incident or the exacerbation of the effects of the incident. Hartmann also failed to disclose the underlying financial circumstances, and specifically the bankruptcy of the vessel owning company, in a timely manner. Accordingly, it would be inequitable to allow Hartmann to recoup expenses it claims it now incurred, when it refused to provide such expenses forcing Cameco to step in on Hartman’s behalf. In the circumstances, Hartmann’s claim should not be treated as proper admiralty sheriff’s expenses, but rather as other expenses for which it may have a claim against MS MCP ALTONA GmbH & Co. KG in personam or in the priority hearing generally.
Secondly, there is no information as to why Hartmann incurred such expenses. The owners of the vessel sought bankruptcy protection as of February 14, 2011. Hartmann was not providing services to the vessel between February 14, 2011 and August 3, 2011. It would be inequitable and unjust to allow Hartmann to attempt to recoup such expenses under the guise of admiralty sheriff’s disbursements.
[20] The letter also goes into details concerning different invoices and points out that the nature, reasons and period of time for which these expenses were incurred had not been justified to Cameco’s satisfaction. The Written Examination on the Affidavit of Joerg Schelp sworn March 7, 2012 was filed in response and is part of the May Affidavit. Additionally, written representations were served and filed by Nordbank and Cameco for consideration in the assessment process of the Sheriff’s costs.
[21] A first point of contention between Cameco and Nordbank is the role of Hartmann. Counsel for Cameco points out that “Hartmann was the vessel operator or manager of the Vessel”. Counsel for Nordbank in his written representations submits that Hartmann was the Technical Manager of the MCP Altona prior to the arrest and continued to act in this role while the Vessel was under arrest. It is further asserted that Hartmann was paid by Nordbank for all of the expenses, claimed as Sheriff’s expenses by Nordbank, at the time those expenses were incurred. In support, the May Affidavit reports at paragraph 3, that in order to answer the questions in the written examination, that “Although the Bank agreed to finance the preservation, safekeeping and maintenance of the “MCP Altona” (the “Vessel”) pursuant to the Order of the Court of August 4, 2011, the Bank was not the ship manager, and therefore, we required the assistance of the Technical Manager of the Vessel, Hartmann Schiffahrts GmbH. & Co. (“Hartmann”)….”. The relevant management contract dated February 15, 2011 is provided at appendix 54 to the May Affidavit.
[22] As covered in the December 2011 letter (segment reproduced at paragraph 19 of these reasons) and paragraph 6 of Cameco’s written representations, it is contended that the “expenses at issues are ones incurred by Hartmann, the managers and operators of the Vessel”. Their reimbursements in any event are “not to be divorced from the reality of the situation in giving rise to the Vessel’s arrest, sale and the claims against the sale fund”. Cameco’s counsel further presents a broad history of the incident giving rise to the litigation to be determined by the Federal Court, emphasising that a larger and broader context must be considered upon determining the Sheriff’s costs, and argues that to favour Hartmann in the circumstances would be “inequitable and unfair”.
[23] While I appreciate that both parties made certain that the Assessment Officer, in dealing with the Sheriff’s costs, was provided with a broader context of the matter before the Federal Court, I am of the opinion that my role in the present situation is not to determine the issues of the underlying litigation, but to assess the Sheriff’s accounts as per paragraph 12 of the Sale Order of August 4, 2011 which states:
All reasonable expenses of advertisement of the sale, agency fees, insurances and all other costs, disbursements, commissions and other expenses such as costs of the officers and crew, insurance, costs of berthage, security, reproduction of plans, photographs, courier services, survey reports, etc., necessary or inherent to giving effect to this order and the commission of sale and for the preservation, safekeeping or maintenance of the Vessel incurred by the Sheriff and/or funded by or on behalf of the Bank from August 3, 2011 to the date of sale shall be treated as Sheriff’s costs payable immediately after taxation by an assessment officer in priority to all other claims from the proceeds of the sale.
I consider that the arguments raised in Cameco’s Written Representations in the paragraphs found under “The underlying facts and equities” mostly relate to the issues that are currently at suit before the Federal Court. As an Assessment Officer, I lack the jurisdiction required to determine said issues.
[24] Counsel for Cameco further points out in his representations that the purpose behind the Sheriff’s costs is the preservation of the Vessel “so that it does not deteriorate in value or become a “wasting asset” while it is awaiting the sale… This is distinct from the Vessel being treated as a normal revenue earning Vessel in the normal course of trading operations”. Accordingly, it is contended that the Vessel could not and should not have been operated as if in normal revenue service and that during the sale process, “the Sheriff, or those seeking Sheriff’s costs, have a duty to minimize expense to those which are necessary for the preservation and safe keeping of the Vessel or making it possible for the Vessel to be sold”. It is Cameco’s position that Hartmann and Nordbank have taken undue advantage of Cameco’s efforts and that Hartmann “should not be allowed to benefit, by receiving money described as “Sheriff’s expenses”.
[25] In response, counsel for Nordbank states that “when the Order for Sale was made, the Bank had been paying to Hartmann the costs of preservation, safekeeping and maintenance [PSM] of the Vessel for several months”. It is further contended that the advancing of funds pending the sale of the Vessel and priority status over the sums advanced by either party were argued before the Court and the results of those arguments are stated in paragraph 12 of the Sale Order. Considering that this decision was not appealed, the issues dealt with by the Court Order should not be opened for consideration by the Assessment Officer. Counsel for Nordbank further contends, while Cameco suggests that only preservation costs are recoverable, that the Sale Order “provides that expenses for the officers and crew and for the PSM of the Vessel paid by the Bank shall be Sheriff’s costs”.
[26] In reply, counsel for Cameco submits that the words “reasonable” and “necessary” qualify the costs incurred by the Sheriff and “not all costs that may be incurred by the Sheriff or funded by the Bank, but only those which are reasonable and necessary to the Sheriff’s mandate, which is to sell the Vessel for the benefit of all creditors.” The Sheriff had the mandate of protecting the interests of all parties who claim liens against the Vessel and this did “not mean that the Sheriff should delegate responsibility for the preservation, safekeeping and maintenance of the Vessel without any question or scrutiny of the costs”. The role of the Assessment Officer should be to determine whether the expenditures incurred by the Sheriff were reasonable and necessary.
[27] To Nordbank’s argument that the Vessel was not in harbour but at a remote anchorage in Indian Arm and that it “had to be moved twice to accommodate the cargo owners (Cameco and Saxon Energy Services Inc.)” and that, as per the May Affidavit (Question 22), it was anticipated to be moved again, Cameco’s counsel replies that the two moves were done at their expense in order “to accommodate the Vessel owner and its managers (Hartman) since both had failed or refused to discharge the cargo or deal with the situation”. It is also contended that the Bank’s submission overlooks the fact that but for Cameco’s efforts, the Vessel would still be under a Transport of Canada detention order and would be worthless due to radioactive contamination”.
[28] The entitlement to the proceeds of the sale of the Vessel is currently before the Federal Court. I consider my role as Assessment Officer to be the determination of the reasonableness and necessity of the expenditures found in the Sheriff’s Bill of Costs in light of the Sale Order and not the determination of the issues that are ultimately to be decided by the Court. In the Sale Order, the Court at paragraph 12 refers to :
All reasonable expenses of advertisement of the sale… and all other costs, disbursements, commissions and other expenses such as costs of the officers and crew, insurance, costs of berthage, security…, etc., necessary or inherent to giving effect to this order and the commission of sale and for the preservation, safekeeping or maintenance of the Vessel incurred by the Sheriff and/or funded by or on behalf of the Bank from August 3, 2011 to the date of sale….
[29] Both parties acknowledge the fact that the Vessel was moved on two occasions while under arrest. While I appreciate Cameco’s argument regarding their efforts to move the Vessel, the fact remains that the Vessel was moved while under the Sheriff’s care and therefore needed to be standing by, prepared to do so. As for Cameco’s efforts to accommodate said moves, I expect that said costs would be part of the actual litigation before the Court, not the Sheriff’s costs assessment. The parties’ submissions generated certain concerns for me, relative to the need to preserve and keep the Vessel from deteriorating to ensure the best possible state for sale. My understanding of the core dispute before me, between Cameco and Nordbank, is not that the Vessel should not have been maintained and kept from deteriorating to ensure it remains attractive for potential buyers, but the extent to which that moneys had to be spent to achieve that result. Of further dispute is whether the ship’s preservation and crew requirements during the period of sale necessitated that the Vessel be maintained to a state and level of full operational readiness.
[30] Considering the above, I will now proceed with the assessment of the Invoices remaining in issue under Exhibit I, referring to each claim by name and page number as found in the Book of Contested Invoices.
Hartmann Schiffahrts GmbH & Co. (pages 54, 70 and 138 of the Book of Contested Invoices)
[31] The March Affidavit points out at paragraph (v) that these charges are part of the Management fees as per Hartmann’s management contract for services provided towards accounting, telephone, telex, e-mail communications, IT services and for warehousing spares and equipment. Nordbank’s representations further specify that the Agency fees to Hartmann for communication charges were for services from the Hartmann office in Germany and that the other charges were for the Vessel communication’s systems. In response to the filing of the claims related to invoices at pages 54, 70 and 138, counsel for Cameco argues that the claims are not satisfactorily explained as to the charges and whether the services provided were necessary for the preservation and safekeeping of the Vessel, claiming that some expenses are duplicative and unnecessary.
[32] In evidence before me are: questions 150-159 of the Written Examination attached as Schedule A to the May Affidavit and the invoices found in the Book of Contested Invoices at pages 54, 70 and 138 covering management services for the month of September (p.54), August (p.70) and October (p.138) as per the management contract signed between the MCP Altona GmbH & Co and Hartmann Schiffahrts GmbH & Co as reproduced at Schedule 54 to the May Affidavit. Paragraph 12 of the Sale Order states that all reasonable expenses of advertisement of the sale, agency fees… necessary… for the preservation, safekeeping or maintenance of the Vessel incurred by the Sheriff and/or funded by or on behalf of the Bank from August 3, 2011 to the date of the sale, are to be treated as Sheriff’s costs. As put before me through the May Affidavit at paragraph 3, Nordbank, not being a ship manager, required the assistance of Hartmann to manage the Vessel for its preservation, safekeeping and maintenance. I am not in a position to doubt that statement, having not been provided with evidence that those services were not necessary. Further, I was not presented with any specific evidence or indication that the amounts claimed were not reasonable and considering that there was no cross-examination on the Written Examination attached to the May Affidavit, the expenditures for accounting, telephone, telex, e-mail communications, IT services and for warehousing spares and equipment covered in the invoices all seem reasonable and within the timeframe set by the Sale Order and are allowed as claimed.
Hartmann Schiffahrts GmbH & Co. (page 154 of the Book of Contested Invoices and exhibit A to the Affidavit of Patsy Chan sworn July 4, 2012)
[33] These invoices from Hartmann are claimed as management fees from April 1 to Sept 30, 2011 – Invoice dated October 18, 2011 (p.154) and from October 1, 2011 to November 18, 2011 – Invoice dated December 22, 2011 (exhibit A). As per the March Affidavit, these expenditures were necessary for the PSM of the Vessel to provide for bunkers, officers and crew, accounting services, purchasing for the vessel, arranging communications and IT, arranging to maintain the Vessel in class, to obtain the necessary certificates and arranging for bunker analysis and classification surveys as per contract for services. It is further submitted in the March Affidavit, that the amount claimed in the invoice dated October 18, 2011 should be 11,800 EUR and not 36,600 EUR to cover for the period between August 3, 2011 to September 30, 2011 i.e.59 days at 200 EUR/day. In response, counsel for Cameco argues that no real explanation has been provided to warrant an expense of 200 EUR per day or why it was necessary to the PSM of the Vessel other than the management contract. In reply, counsel for Nordbank argues that the Bank could not manage the Vessel and therefore needed to hire a technical manager. It is further alleged that 200 EUR per day is a very reasonable charge.
[34] Nordbank, as clearly stated, is not in the business of managing vessels and as contended by its counsel, no evidence was presented to me to the effect that another technical manager could have done the necessary work for a lower fee. The management contract before me was not contested and I was not provided with any evidence to compare similar services in order to help me assess the reasonableness of the expenditures claimed. Therefore, I am satisfied that the services provided by Hartmann were necessary and reasonable charges to the PSM of the Vessel. Consequently, the claim presented at page 154 is allowed 59 days at 200 EUR per day for a sub-total of 11,800 EUR. With regard to the invoice at exhibit A, it is contended in the Affidavit of Patsy Chan that “Hartmann continued to charge the Bank for their services from October 1, 2011 until after delivery of the Vessel”. Therefore, this claim is allowed at 5,600 EUR taking into consideration the period covered by the Sale Order i.e. 28 days from October 1 to October 28, 2011 at 200 EUR per day.
Air compressor unit (page 10 of the Book of Contested Invoices)
[35] The March Affidavit at paragraph 5(b) states that “this invoice is for the transportation of a replacement for the air compressor for starting the auxiliary engine, which was shipped from China on July 29, 2011, and arrived on the ship a few days later. The replacement of the compressor was required by the class surveyor Germanischer Lloyd (“GL”) in order to keep the auxiliary engine operating, and keep the vessel seaworthy”.
[36] In response, counsel for Cameco contends that the part was ordered on June 23, 2011 and invoiced on July 29, 2011, before the time period encompassed by the Sale Order. In reply, counsel for Nordbank does not argue the date the part was ordered but contends that the part was delivered to the Vessel on August 13, 2011. Referring to the Written Examination in the May Affidavit, counsel for Nordbank argues that the air compressor was “required for scheduled overhauling of equipment in range of normal maintenance” and was necessary to start the auxiliary engine to provide electricity for the Vessel when at anchor. It is further contended that the parts were invoiced to the Bank by Hartmann on September 20, 2011 and constituted an expense to the Bank for the PSM of the Vessel.
[37] I read from the Written Examination in the May Affidavit that the auxiliary engine was operational until its replacement and that there was “no class requirement” for the replacement of the air compressor. Despite the importance of this piece of equipment for the good functioning of the Vessel, the Sale Order speaks of expenditures for the “maintenance of the Vessel incurred by the Sheriff and/or funded by or on behalf of the Bank from August 3, 2011…” The invoice at page 10 from Weijia Marine Engineering Co. Ltd. indicates that the order for the service provided is July 28, 2011, while the invoice is dated July 29, 2011. Considering, that the expenditure was incurred by Hartmann on behalf of Nordbank before the period covered by the Sale Order, the claim is not allowed.
Auxiliary Engine Parts (page 19 of the Book of Contested Invoices)
[38] As per the March Affidavit at paragraph 5(f), “these parts are necessary for repair of the auxiliary engine… necessary for the operation of the Vessel”. In response, counsel for Cameco contends that the parts were not required for the PSM of the Vessel during the period it was under arrest since the “Vessel was able to do without them until after the sale of the Vessel”. Further, it is argued that the parts were delivered to the Vessel on November 13, 2011 while its sale occurred on October 28, 2011, after the time provided for in the Sale Order. In reply, counsel for Nordbank argues that the parts were ordered August 5, 2011, invoiced to Hartmann on August 6, 2011 and to Nordbank on September 20, 2011. It is Nordbank’s position that although the delivery of the parts was delayed, the costs were incurred within the period covered by the Sale Order.
[39] Paragraphs 41, 42 and 43 of the Written Examination referred to in the May Affidavit specify that these parts required to be replaced as they had ceased to be operational in July 2011, and they were necessary to keep the generators running. The Sale Order speaks of expenditures for the “maintenance of the Vessel incurred by the Sheriff and/or funded by or on behalf of the Bank from August 3, 2011…”. From the evidence provided, I consider that this part was necessary for the maintenance of the Vessel. As per invoice from Weijia Marine Engineering Co. Ltd. (page 19 of the Book of Contested Invoices), I note that the order for the parts was made on August 5, 2011 and invoiced on August 6, 2011. I consider that the expenditure was incurred by Hartmann on behalf of Nordbank within the period covered by the Sale Order and the claim is therefore allowed.
Supplies (pages 31-35 of the Book of Contested Invoices)
[40] The March Affidavit at paragraph 5(j) states that “this invoice covers purchase of chemicals and supplies necessary for the operation of the Vessel, including treatment of the potable water, anti-fooling chemicals, hand cleaner etc”. Paragraphs 66 to 68 of the Written Examination referred to in the May Affidavit refer to 2 X 25 litre of Bioguard, 2 X 25 litre of Autotreat and 4 X 5 litre of natural hand cleaner have been delivered on board the Vessel in August 2011.
[41] Referring to the quantities and rates shown on the invoice of Wilhelmsen Ships Services, counsel for Cameco objects to this expenditure arguing that no satisfactory explanation has been offered for the “large quantity of consumable supplies” ordered as well as for the discrepancies between the amounts invoiced and the amounts delivered. In surreply, counsel for Nordbank details and explains the acronyms used on the invoice and refers back to the explanation contained in the Affidavit.
[42] My understanding of the manner in which those products are sold, from reading the affidavits and the parties’ arguments, leads me to agree with the arguments provided by counsel for Nordbank, well supported by the affidavits. The necessity and the period these items were purchased are not at issue and I consider that the items purchased were required and necessary. The claim is allowed as demanded.
Braitsch (pages 36-39 of the Book of Contested Invoices)
[43] To the claim for the customs clearan