17 May 2018

The Marina, The Owner and The Yacht at The Bottom of The Deep Blue: A Tale of What Not to Do When Your Yacht is Held Under Lien

Spencer Slasberg
Spencer Slasberg

They say the happiest days of a boat owners life are the day they buy the boat and the day they sell it. While there is nothing more luxurious than spending a beautiful clear day on the water on your very own yacht, some of us have no idea of the sheer cost of maintaining these craft and the sting of maintenance and repairs can take an owner by surprise.

This surprise, very often, leads to disputes with marinas and marine contractors. Repairers and marinas will have the right to exercise a lien on a vessel to secure payment of their invoices. Essentially this means they can hold on to a vessel until payment of their accounts has been made in full, even when there is a dispute about those accounts.

If someone exercises a lien on another person’s property, they have certain minimum duties to ensure that property is kept relatively safe until the dispute is resolved. This can often be difficult in the situation of boat maintenance and repairs, particularly when the boat is being kept in a wet berth.

So what shouldn’t you do in that case? Absolutely nothing is the correct answer according to the recent decision of Rivergate Marina & Shipyard Pty Ltd v Morphett.

A long story short, the owner believed he was overcharged for works, the marina disagreed and exercised a lien over the vessel until its invoices were paid. The owner told the marina that if it wanted to hold the boat as security, then they should maintain it. The marina told the owner that it was their obligation to continue maintaining the yacht.

This debate went on for some time with no one maintaining the vessel, until one day it just sank.

In his decision on the issue, Judge McGill said:

In my opinion, the duty of care undertaken by a bailee in respect of a chattel which requires expensive routine maintenance in order to maintain it in working condition does not extend to the provision of that routine maintenance. Given the cost of such maintenance for a boat such as this, I regard a duty to provide it as more than what is required by reasonable care. The harm against which a bailee must take reasonable care to guard the chattel does not extend to ordinary deterioration due to the inherent nature of the chattel.

Now obviously a wooden hull is prone to constant deterioration and requires continuous upkeep, and that can be expensive. So it is the case that a marina who asserts they have done extensive works and have not been paid are not required to do further expensive works that are unlikely to be paid for either. So the owner’s inaction resulted in the complete loss of the vessel.

What should you do?

So what should or could have been done instead? There are many options available which can be considered.

  1.  Payment under protest. If you dispute the invoices that are owed, you can make payment of the invoiced amount and with it send notice that you dispute the invoices owed.  You can reserve all of your rights to continue disputing the amount owed after payment and that you paying them in no way is to be taken as admission or acceptance of your liability to pay them. That might not sound too palatable, paying the provider you’re in an active dispute with and then suing to get your money back from them. However, by taking this approach, you’ll have your boat back in your custody where you can look after it.
  2. Negotiate an agreement with the marina to have the boat removed from the water and dry berthed, pending an outcome of the dispute over fees. If you cannot reach an agreement with the marina and legal proceedings have started about the invoices, you can apply to the court under rule 250 Uniform Civil Procedure Rules 1999 (Qld) (or similar regulation in your state) for the vessel to be preserved. This means taking it out of the water and dry berthed, pending determination or resolution of the legal proceedings. Even with dry berth, there will be some deterioration, but it will be a whole lot less than if it sinks!
  3. You can apply to a court under s24 Civil Proceedings Act 2001 (QLD) for an order allowing you to pay the disputed money into court pending determination and once the money has been paid into court, the lien is released, and you can gain control of your vessel again. If you are successful in challenging the funds owed, the court will then release your money back to you, rather than having to try and get it from the marina or contractor instead. The feature of this option that makes it preferable to option one is that in option one if a marina goes into liquidation after you have paid the money, you may never get that money back. If the money is paid to the court, it sits there, essentially in trust, pending an outcome.
  4. The next option is to pay the marina to maintain the vessel for you while the dispute is ongoing or make arrangements for the marina to grant you access to do the maintenance or have another contractor maintain your vessel for you. Again if you can’t reach an agreement with the marina to grant access or maintain the vessel, you can apply for orders compelling that access under either the Uniform Civil Procedure Rules, the Civil Proceedings Act or the court’s inherent equitable powers.

If you find yourself in a situation like this, do not sit on your hands and expect the marina to look after your boat for you. You have plenty of options to ensure your boat stays safe while you duke it out with your marina. If you do find yourself locked in such a dispute, get advice as soon as possible, after all a boat is often one of the largest investments (in money and time) that you will make in your life. Protect it.

  • 1[2017] QDC 141
  • 2[2017] QDC 141

 

 


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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