The Shipping Corporation of Polynesia was advised the Princess Ashika was unseaworthy before its purchase, a court in Tonga has been told.
The ferry sank on its fifth voyage in waters off Tonga, killing 74 people in August 2009.
Four men, including New Zealander John Jonesse, are accused of manslaughter by negligence over the sinking of the Princess Ashika.
The Shipping Corporation of Polynesia, which Mr Jonesse headed, is also charged. The men and the company face 27 charges in total.
The trial began in Tonga on Monday after a week's delay.
The Crown's first witness, Captain Vaku'ata Pola Vi, worked for the corporation before the Princess Ashika arrived in Tonga.
Captain Vi said when Mr Jonesse asked his advice, he told him the ship was not seaworthy, particularly in Tongan waters.
He made notes on the pictures Mr Jonesse showed him, identifying deficiencies and recommending refurbishment work to be done.