Admiralty jurisdiction—sale pendente lite—highest closed bid tender less than valuation of ship—subsequent proprietary maritime claims—whether an order determining priorities should be made

Related proceedings were considered in the 2023 Yearbook 3 and also in Case §10 post.

The plaintiff bank proceeded in rem against the luxury cruiser Island Escape to foreclose on a mortgage as a result of default by the mortgagor’s failure to make agreed payments under the loan agreement. After Island Escape was arrested in the port of Broome, Western Australia, two other claimants filed caveats against release from arrest, one claiming that it had not been paid for services as ship manager, the other claiming that it had not been paid for the supply of provisions.4 The relevant persons (the entities that would be liable in personam), two corporations now in receivership, did not enter an appearance. The Federal Court ordered that Island Escape be sold pendente lite without a valuation, a procedure that is permitted by the Admiralty Rules 1988 (Cth), r.69(1)(c).5

(No 2): The Court ordered the Admiralty Marshal to seek closed bid tenders. There were five bids, the highest being for US$5.5m. The Marshal sought directions from the Court about whether she should accept the highest bid, given that it was for a lesser sum than some valuations of the ship that she had received.

(No 3): The plaintiff sought leave to amend its statement of claim, and for summary judgment on the amended claim. It also asked for an order determining the order of priority of claims against the ship if its application for summary judgment were to be successful.

Decision (No 2): The Marshal should accept the highest bid.