Berthing and storage: What to do when boat owners don’t pay their fees
Jonathan Hadley-Piggin, consultant solicitor at Keystone Law, explains what marina operators should do when owners aren’t paying their berthing and storage fees.
Non-payment of berthing or storage fees, by boat owners, is an all-too-familiar scenario faced by marina operators. Outstanding payments are chased and correspondence remains unanswered, which can often result in an abandoned boat left in the marina premises, which prevents the berth or storage space from being let.
In this guide, I provide a number of remedies that can assist marinas in recovering fees, as well as with removing a boat from their premises.
Arrest the boat
The arrest of a boat prevents it from moving, pending the resolution of a court action, in which usually the boat to be arrested is the subject of the claim. This gives the marina security in that, if it is successful in court, there will be something that can be sold to recover the amount of the judgment plus costs – assuming there is sufficient value in the boat.
The marina will need to file a claim in the Admiralty Court for the outstanding berthing or storage fees. At the same time, or once the claim has been issued, it can also apply for an Arrest Warrant. Once the warrant is issued, it will be sent to HM Revenue & Customs, which will arrest the boat by affixing the Claim Form and Arrest Warrant to it.
Following this, the boat is under the control of the Admiralty Marshall and cannot be released without his permission. If the fees remain outstanding and the marina obtains judgment in its favour, which is unpaid by the boat owner, the Admiralty Marshall will sell the boat and use the proceeds of sale to pay his expenses, the outstanding fees and the legal costs incurred by the marina subject to any other claims that may rank in priority.
However, the cost of bringing a claim in the Admiralty Court and of arresting a boat is high and only appropriate if the outstanding fees are significant. It is important, therefore, that the marina is confident that the boat’s value is sufficient to satisfy the debt due, the Admiralty Marshall’s fees and part of the estimated costs of bringing the claim and arresting the boat.
The court may order that the boat owner pay a certain percentage of the costs incurred by the marina.
Court proceedings can be issued against the boat owner, claiming the amount of the outstanding fees. However, as the proceedings are against the boat owner personally, the marina will need to know where the boat owner is living before proceedings can be commenced. If the marina is aware that the boat owner has moved and does not have the new address, it will be necessary to instruct tracing agents to trace the owner’s new address.
Additionally, prior to proceedings being issued, the marina (or its solicitor) must write to the boat owner confirming the amount owed and that if the fees are not paid within a specified period, such as seven days, proceedings will be issued against him or her.
If the amount of the outstanding fees is below £10,000, the marina will not be able to recover the costs incurred in bringing the claim. However, if the amount of the outstanding fees is above £10,000 and the marina is successful in its claim, the court may order that the boat owner pay a certain percentage of the costs incurred by the marina.
Bringing a claim in the county court can be a time-consuming and expensive process, particularly if the claim is defended. Further, even where judgment is given in the marina’s favour, the boat owner may still not pay the amount awarded and the marina will therefore have to take action to enforce the judgment.
While a debt recovery claim may result in recovery of the outstanding fees, it does not provide for the removal of the boat from the marina premises.
The threat of bankruptcy or winding up often prompts payment.
The marina could issue a petition for the bankruptcy of the boat owner if he is an individual or, if the owner is a company, a petition to wind the company up, provided that, in both cases, the amount outstanding is more than £5,000 (£750 for a company).
Prior to issuing such proceedings, a Statutory Demand must be served on the owner. This must be served personally, and therefore it is necessary to instruct process servers to serve it. The Statutory Demand provides that payment (or agreement to pay) must be made within 21 days of the date of the Demand, failing which the marina is entitled to file a petition for bankruptcy or winding up.
The threat of bankruptcy or winding up often prompts payment, particularly in the case of an individual as a result of the stigma associated with bankruptcy. While issuing and serving a Statutory Demand is relatively inexpensive, insolvency proceedings are expensive, although they do not need to be pursued following the Statutory Demand. However, these proceedings do not provide for the removal of the boat from the marina premises and are, therefore, more likely to be used when the boat has already left the marina.
The marina is able to bring a claim for trespass seeking an order for possession of the boat as well as payment of the outstanding fees. If the order for possession is granted by the court, the marina will need to instruct a bailiff to remove the boat. The bailiff is able to sell the boat if the owner does not pay the sum of the court judgment, and the proceeds of sale will be used to satisfy this. The marina is also able to seek an injunction against the boat and the boat owner to prevent them from being in or berthing in the marina, if such an injunction is necessary.
However, a claim in trespass can be time-consuming and expensive, particularly if the claim is defended.
Harbours, Docks & Piers Clauses Act 1847
The boat can be detained until the fees are paid.
This Act applies to marinas that were created by special Acts of Parliament and are therefore usually commercial or fishing ports.
The marina can arrest or detain any boat that is berthed or stored in the marina in respect of which there are outstanding fees (known as “rates” under the Act). The boat can be detained until the fees are paid or, in the event that they are not paid, the marina can sell the boat. The marina is entitled to do so without authorisation from the court. The action is taken against the boat and not the owner so it does not matter if the current location of the owner is not known by the marina.
To exercise the power, the marina must make a formal demand for the outstanding fees. If they remain unpaid, the marina can then arrest the boat by serving a notice that it has been seized in accordance with the Act. The notice is served by placing it on the boat. The notice should also be sent to the owner (if the marina knows where he is). If the fees are not paid within seven days of serving the notice of arrest, the marina can have the boat valued by two independent valuers and sold. The proceeds of sale will be used to pay the outstanding fees and the marina will have to account to the owner for the balance.
Torts (Interference with Goods) Act 1977
The marina is entitled to sell the boat at “market” price and use the proceeds to pay the outstanding fees
The Act provides that, in certain circumstances, the marina can dispose of a boat itself, without the need for a court order. To be able to do so, the Act should be incorporated into the marina’s terms and conditions so that the boat owner has notice that the marina may rely on the Act. There may, however, be limited circumstances where the marina can still rely on the Act even if it is not incorporated into its terms and conditions. The procedure provided by the Act is particularly useful when the licence period has expired and the boat owner refuses to pay the outstanding fees but the boat remains in the marina. It is also useful when the amount of outstanding fees does not justify the costs of arrest. For these reasons, it is this procedure that is most often used by marinas when fees are outstanding.
Under the Act, the marina must give written notice to the boat owner that the licence has come to an end and that the owner is required to remove his boat from the marina. The notice must also state that, in the event that he fails to do so, the marina is entitled to sell it, under the provisions of this Act.
In order for the notice to be effective, there are certain requirements that it must satisfy. The notice must identify the vessel, state where it is lying and the amount of outstanding fees, if any. Where fees are outstanding, the marina cannot sell the vessel until three months after the date of the notice. The notice must state the date after which the vessel may be sold. If the marina does not know where the boat owner is, it must take reasonable steps to contact him, for example by placing an advert in the local paper and at the marina.
The marina is entitled to sell the boat at “market” price and use the proceeds to pay the outstanding fees and the costs incurred by it in the sale. Any remaining proceeds of sale must be paid to the owner. The marina will need to have the boat valued by two independent brokers, prior to sale, to demonstrate the market value of the boat.
Action prior to commencing proceedings
Prior to taking any of the above courses of action, the marina, or its solicitor, must write to the boat owner advising that, if the fees remain outstanding, one of these courses of action will be taken and giving him at least seven days to pay. This is to ensure that, if the matter does go to court, the marina can demonstrate that it acted reasonably before commencing proceedings.
Additionally, it may be possible to get the owner’s consent to the marina selling his boat, and the marina should therefore include in the letter to the boat owner a request to this effect and a letter drafted on the owner’s behalf confirming his consent to the sale of the boat by the marina. This will save the marina incurring the costs of proceedings and may result in the boat being advertised for sale earlier than it otherwise would have been.
In respect of moving the vessel to a cheaper berth, or alternative storage area prior to the sale of the boat or its removal from the marina premises, the marina will not be able to do this without the owner’s consent unless its terms and conditions provide that it is able to move the boat in certain circumstances, such as when it is necessary for the business operation of the marina. If the terms and conditions contain such a clause, the marina should write to the owner advising that it is going to move the boat, stating when, where and why they will be moving it.
Originally published by Keystone Law. You can find out more about Keystone Law at www.keystonelaw.co.uk and contact Jonathan at [email protected]
Subscribe to our free newsletter
For more opinions from Superyacht Investor, subscribe to our email newsletter.