IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE	
CIV-2019-485-346
[2020] NZHC 1724	

IN ADMIRALTY		
BETWEEN	CHAFFERS MARINA LIMITED
Plaintiff	
AND	THE VESSEL “DEMOISELLES”
First Defendant

NEIL SPENCER MACFARQUHAR
Second Defendant	

On the papers		
Counsel:	A S Olney for Plaintiff
G A D Neil for Official Assignee No other appearances	
Judgment:	16 July 2020	

JUDGMENT OF SIMON FRANCE J

[1]	Following directions made in this Court, the vessel “Demoiselles” was sold. The proceeds of sale, being $251,000, are held by the Court.

[2]	On 27 May 2020 the plaintiffs made application for directions in relation to determining the priority of claims to the money. These directions included an advertisement in the Gazette requiring those persons having claims to lodge such a claim with the Court. It was notified that priority would not be determined until after 9 July 2020.

[3]	Three claims have been received – the Registrar and the plaintiff seeking reimbursement of costs incurred in the production of the fund; the plaintiff claims a

CHAFFERS MARINA LIMITED v THE VESSEL “DEMOISELLES” [2020] NZHC 1724 [16 July 2020]

statutory lien concerning which it has previously obtained judgment; and the Official Assignee claims the balance after the first two claims are met.

The claims by the Registrar and the plaintiff

[4]	These claims take priority. Since the sum available is more than adequate to satisfy the claims of both claimants, further analysis of the priorities within them is not required. As regards priority I am content to apply the authorities of ABC Shipbrokers v The Ship “Offi Gloria”1 and Fournier v The Ship “Margaret Z”.2

[5]	The following sums are to be paid out of the proceeds:

(a)	Expenses of the Registrar – $17,319.00;

(b)	Costs in providing the fund

(i)	the plaintiff – $47,883.10;

(c)	statutory lien

(i)	the plaintiff – $55,852.91.

The balance of the proceeds

[6]	The normal approach is that the balance of the proceeds are paid to the owner of the vessel. The registered owner at the time of the sale was Blue Lagoon Yacht Holdings Limited, a company incorporated in the Cayman Islands on 9 February 2016. Its sole shareholder is a Mr Neil Spencer MacFarquhar, who is a bankrupt. The Official Assignee claims that Mr MacFarquhar is the beneficial owner of the vessel, and claims the balance of the funds. There are no competing claims, including none from Blue Lagoon Yacht Holdings Limited.

[7]	The Official Assignee has traced the purchase of the vessel by companies associated with Mr MacFarquhar on 28 October 2015. The process shows:

1	ABC Shipbrokers v The Ship “Offi Gloria” [1993] 3 NZLR 576 (HC).
2	Fournier v The Ship “Margaret Z” [1999] 3 NZLR 111 at 116 (HC).

(a)	the funds for purchase were provided by Mr MacFarquhar by way of drawings from two companies with which he was associated. The funds went through a bank account which was in the name of another company which had in fact been struck off the register many years earlier. The evidence shows Mr MacFarquhar continued to use the account as a personal account;

(b)	ownership of the vessel was placed in the name of company A, a company now in liquidation. Mr MacFarquhar was a 33 per cent shareholder, and a director. Another shareholder and director of that company has confirmed the vessel belonged to Mr MacFarquhar personally, and company A was only an owner of convenience pending transfer to another entity;

(c)	that other entity was Blue Lagoon Yacht Holdings Limited. As noted, its incorporation was not complete until February 2016. At the point company A transferred ownership to Blue Lagoon for one euro, plus unidentified other valuable consideration;

(d)	the liquidators of company A confirm the vessel is not reflected in its accounts or asset register at any point. The former director has confirmed company A was used because the yacht needed to be purchased by a New Zealand entity. It never went through the company’s accounts, it was Mr MacFarquhar’s yacht and it was always to be transferred on.

It can also be noted insurance for the vessel was in Mr MacFarquhar’s name.

[8]	I  am  satisfied  the   beneficial   ownership   of   the   vessel   rested   with  Mr MacFarquhar and Blue Lagoons Yacht Holdings Limited held the vessel on trust. The vessel was purchased from personal funds provided by Mr MacFarquhar, the initial apparent owner never formally recorded ownership in any way and then transferred the vessel to Mr MacFarquhar’s wholly owned company for one euro.

Mr MacFarquhar dealt with the vessel as his own, the insurance was in his name, and those associated with him understood it to be his.

[9]	I order the balance of the proceeds of the sale to be paid to the Official Assignee in relation to the bankrupt estate of Mr Neil MacFarquhar.

Orders

[10]	Distribution of the funds is ordered in accordance with paragraphs [5] and [9] of this judgment.

Simon France J

Solicitors:
Morrison Mallett, Wellington for Plaintiff
Meredith Connell, Auckland for Official Assignee