Kareltrust v Wallace and Cooper Engineering Ltd and Anr - Court of Appeal of New Zealand (Richardson P, Gault, Keith, Blanchard and Tipping JJ) - 17 December 1999

Admiralty and in rem jurisdiction - Claim in rem by supplier of necessaries - Vessels sold to associated company between date cause of action arose and date proceedings commenced - Whether beneficial ownership of vessels remained in vendor company notwithstanding that legal title had passed to purchaser company

The plaintiffs made claims against four Russian owned fishing vessels for work done and goods supplied between 1 August and 8 December 1997. At that time the vessels were owned by a Russian company, Karelrybflot. Proceedings were commenced in July 1998 and were in rem against the fishing vessels and in personam against the second defendant, Karelrybflot. On 23 February 1998 - after the work was carried out but before the proceedings were commenced - the four vessels were forfeited to the Crown under the Fisheries Act. On 3 April 1998 an agreement was entered into between Karelrybflot and another Russian company, Kareltrust, which provided that, in the event that the vessels were redeemed by the Minister of Fisheries, they would be immediately acquired by Kareltrust. In the result, the vessels were redeemed on 12 June 1998. The effect of the April 1998 Agreement was that title immediately passed to Kareltrust for a ‘purchase price’ which in the event amounted to $NZ800,000, made up of $500,000 which had to be paid to redeem the vessels and $300,000 which related to wages claims from seamen. The agreement made provision for Karelrybflot to repurchase the vessels following the expiration of six months. The option to purchaser had not yet been exercised. Thus, at the time the proceedings were commenced, the vessels were ostensibly owned by Kareltrust.