The "Long Bright"

• Jurisdiction: Singapore
• Judge: Pang Khang Chau JC
• Judgment Date: 03 October 2018
• Neutral Citation: [2018] SGHC 216
• Plaintiff Counsel: Alvin Ong Chee Keong and Mohan s/o Ramamirtha Subbaraman (Resource Law LLC)
• Docket Number: Admiralty in Rem No 31 of 2018 (Summons No 3828 of 2018)
• Date: 03 October 2018
• Hearing Date: 04 September 2018,03 September 2018
• Subject Matter: judicial sale of vessel,release,practice and procedure of action in rem,Admiralty and Shipping,sale pendente lite
• Year: 2018
• Defendant Counsel: Paul Tan,V Bala (Rajah & Tann Singapore LLP),Song Swee Lian Corina and Parveen Kaur (Allen & Gledhill LLP),Tan Thye Hoe Timothy (AsiaLegal LLC)
• Court: High Court (Singapore)
• Citation: [2018] SGHC 216
• Published date: 06 October 2018

Pang Khang Chau JC:

After the court has ordered the sale of an arrested vessel and after bids from potential buyers have been received by the Sheriff, is a plaintiff entitled to release the vessel and stop the judicial sale as a matter of right? I held that a plaintiff is not entitled to do so as of right, and must apply to the court for a discharge of the order of sale before releasing the vessel. Nevertheless, on the facts of the present case, I found that it was appropriate to exercise my discretion to discharge the sale order. I now provide my reasons.

The parties

The plaintiff’s claim against the owner of the vessel “Long Bright” (“the Vessel”) was for wharfage and related charges incurred by the Vessel at the plaintiff’s shipyard amounting to approximately S$ 300,000. The 1st intervener is the mortgagee of the Vessel. Its claim against the Vessel is for an outstanding loan of RMB 200 million. The 2nd to 11th interveners are members of the crew of the Vessel. They claim unpaid wages amounting to approximately USD 295,000. There were two other caveators - SAL Shipping Pte Ltd (“SAL Shipping”) and Transatlantica Commodities S.A. (“Transatlantica”). SAL Shipping is the local agent for the Vessel. Its claim is in the region of S$ 50,000. I have no information concerning Transatlantica’s claim as it had withdrawn its caveat and was not present at the hearing before me. The defendant did not enter appearance in the present action.

Procedural history

After issuing the present proceedings and arresting the Vessel, the plaintiff applied for judgment in default of appearance and an order for appraisement and sale of the Vessel. At the hearing on 25 June 2018 before Belinda Ang J, the plaintiff informed the court that, as the 1st intervener planned to file a defence to challenge the plaintiff’s claim, the plaintiff would withdraw its application for judgment in default and seek only an order for sale pendente lite. The 1st intervener informed the court that, while it supported the application for sale pendente lite, it was disputing the plaintiff’s claim that it had a possessory lien (which would have ranked in priority over the 1st intervener’s claim). The 1st intervener may therefore be applying to strike out the plaintiff’s claim and take up a claim of wrongful arrest against the plaintiff.

After the court pointed out that it would be inconsistent for the 1st intervener to claim wrongful arrest while supporting the sale pendente lite, the 1st intervener sought a one-week adjournment to take instructions. The adjournment was granted on the condition that the costs and expenses of keeping the Vessel under arrest during the one-week adjournment were to be borne by the 1st intervener.

At the resumed hearing on 2 July 2018 before Belinda Ang J, parties informed the court that the 1st intervener no longer wished to set aside the arrest. The 1st intervener also did not object to the plaintiff’s application for sale pendente lite. The court proceeded to grant the order for sale of the Vessel pendente lite. The plaintiff filed the commission for appraisement and sale on 9 July 2018, pursuant to which the Sheriff advertised the Vessel for sale on 6 August 2018. The deadline for submission of bids was set at 3:00 pm on Monday 20 August 2018.

On Saturday 18 August 2018, the plaintiff filed an application for discharge of the sale order and for release of the Vessel. The supporting affidavit for the application explained that: the plaintiff wished to release the Vessel and discontinue the present action as it had reached a settlement with the 1st intervener on 17 August 2018; and the 1st intervener supported the application as it planned to commence a separate in rem action to arrest the Vessel for the 1st intervener’s claim.

By the time the application was accepted by the Registry for filing, the deadline for submission of bids had passed, and five potential buyers had submitted bids for the Vessel. The bids remained unopened pending the disposal of the application.

I heard the application on 3 September 2018 and gave my decision on 4 September 2018.

Parties’ submissions The plaintiff’s submissions

In summary, the plaintiff’s submissions were: Following the settlement of the plaintiff’s claim by the 1st intervener, the plaintiff no longer had any claim against the Vessel or the defendant, or any interest in the Vessel’s continued arrest; Where a plaintiff, as opposed to a defendant shipowner, seeks the release of an arrested vessel following the settlement of its claim, the release must issue as of right. There was no explicit requirement for a plaintiff to apply for a discharge of the order for sale of the vessel as a condition for release of the vessel; The considerations discussed in The “Sahand” and other applications [2011] 2 SLR 1093 (“The “Sahand””) at [17] and The “Acrux” [1961] 1 Lloyd’s Rep 471 (at 472) did not apply here as those cases involved applications for discharge of sale orders and release of vessels by defendant shipowners without the plaintiffs’ consent. There would be a critical difference if release was sought by the plaintiffs instead. Therefore, the only concern in the present case was whether the plaintiff’s claim has been settled, following which the Vessel must be released; Since the plaintiff was entitled to discontinue the present action without leave (given that no defence had yet been filed), it followed that the sale order could no longer operate and the sale process could no longer continue once the plaintiff filed a notice of discontinuance. By logical extension, as long as the execution of the sale order had not been completed, the release of the Vessel could not be subject to or be conditional upon the sale order being discharged; In any event, even if the discharge of the sale order was a necessary condition for release of the Vessel, the sale order had to be discharged as the plaintiff no longer had a valid in rem claim against the Vessel or the defendant; Granting the plaintiff’s application would not prejudice the rights of other creditors. As the 1st intervener planned to re-arrest the Vessel, the Vessel would remain within jurisdiction, which meant the rights of the remaining claimants would be protected as they could file caveats and intervene in the action under which the 1st intervener’s re-arrest was effected; Conversely, dismissal of the application would result in severe prejudice to the plaintiff as it would be effectively compelled to bear the costs and risks involved in the completion of the sale process for the benefit of the other creditors even though it no longer had any interest in the Vessel; and The plaintiff was also concerned that its inability to release the Vessel despite not having any basis for maintaining the arrest could expose the plaintiff to a claim for wrongful continuation of arrest or abuse of process of court.

The 1st intervener’s submission

The 1st intervener supported the application because it was concerned that the highest price may not be obtained in the present circumstances. The 1st intervener explained that, after the plaintiff filed the commission for appraisement and sale, it tried to help drum up interest in the sale of the Vessel, in order to increase the chances of obtaining a higher sale price. It even wrote to the Sheriff to request that the advertisement period be extended to six weeks (from the usual two weeks), to allow sufficient time for three potential buyers whom the 1st intervener was in talks with to put in a bid. The Sheriff turned down this request because no details of the “alleged potential bidders” were provided by the 1st intervener to the Sheriff. The 1st intervener subsequently explained to the court that it was not at liberty to disclose the identities of the potential buyers due to commercial confidentiality. As a result, the three potential buyers were not able to bid on the Vessel within the two-week advertisement period.

The 1st intervener also discovered after the commission for appraisement and sale had been filed that the Vessel was out of class. As a vessel which is retained in class is likely to fetch a higher price, the 1st intervener would like to have the opportunity to conduct a cost-benefit analysis of putting the Vessel back in class before the Vessel was advertised again for the sale.

The 1st intervener explained that, as the value of the plaintiff’s claim was only a small fraction of the value of the Vessel while the value of 1st intervener’s claim exceeded the value of the Vessel, the 1st Intervener would suffer prejudice if the Vessel was not sold at the highest price which could be obtained while the plaintiff would not. This was because, given its relatively small value, it was clear that the plaintiff’s claim could be satisfied in full from the proceeds of sale of the Vessel even if the Vessel is not sold at a good price (assuming the plaintiff was right that it had a possessory lien which ranked in priority over the 1st intervener’s claim). For this reason, while it may not have been important to the plaintiff whether the sale process it initiated would obtain the highest price, it is a matter of great importance to the 1st intervener. To the extent that the 2nd to 11th interveners were opposed to the discharge of the sale order, the same points may be made in relation to the 2nd to 11th interveners’ claims, which were relatively small in value and ranked in priority to the 1st intervener’s claim.

For the foregoing reasons, the 1st intervener supported the discharge of the existing sale order so that the Vessel could be re-advertised for sale after it was re-arrested in the 1st intervener’s own in rem action against the Vessel. This would have given other potential buyers the time and opportunity to put in a bid and also given the 1st intervener the time and opportunity to consider whether to put the Vessel back in...