The Swiber Concorde

Image source: https://www.marinetraffic.com/en/photos/of/ships/shipid:2979194/#forward (accessed 23 September 2018)

The Swiber Concorde [2018] SGHC 197

Coram = Pang Khang Chau JC

Plaintiff = United Overseas Bank Limited (“UOB”) = Mortgagee of “the Vessel” – Swiber Concorde (“SC”) = Arrestor

Defendant = Owner of the Vessel

UOB arrested SC. Sheriff conducted sale twice with all biddings below appraised value. Pursuant to cl 8 of the Sheriff’s usual terms and conditions of sale (“the Conditions of Sale”), all bidders paid USD 50,000 to bid for the Vessel. The Court agreed with UOB to sell SC below appraised value to the highest bidder in the second round of bidding, Valentine Maritime Ltd (“VML”) for USD 5,000,100. VML, was required to pay the balance 90% of the purchase sum by 14 November 2017.

On 28 November 2017, the Sheriff accepted VML’s repudiation of the sale and forfeited VML’s deposit pursuant to cl 16 of the Conditions of Sale. A third round of bidding ensued and the Vessel was, with leave, sold below the appraised value to Thien Nam Offshore Services Joint Stock Company (“Thein Nam”) for USD 4,599,769 plus USD 11,683 bunkers on board. The sale completed on 31 January 2018.

The Account-General of Singapore held the above amounts; and the Sheriff’s office held VML’s USD 50,000 deposit.

Pang JC had to address the issue of whether the Sheriff’s forfeiture of the deposit had the effect of forfeiting it to the State (as opposed to forfeiting it to the benefit of persons having a claim to the proceeds of sale).[1] His Honour decided that it has not and provided the following:[2]

1. Being public officer, the Sheriff does not contract on behalf of the State when he enters into a contract for the sale of an arrested vessel. This is because the arrested vessel is still owned by her [original] owners until completion of judicial sale by the Sheriff: Elinoil-Hellenic Petroleum Co SA v Wee Ramayah & Partners [1999] 1 SLR(R) 977; at [41] – [44].

2. The Sheriff’s representative role is to sell the [arrested] vessel at the highest possible price to benefit persons having in rem claims (“the Interested Parties”): The Turtle Bay [2013] 4 SLR 615 at [17] and [19]. Hence, the Sherriff’s forfeited sums from the Buyer, in this case, VML is done for the benefit of the Interested Parties.

3. Cl 16(d) of the Conditions of Sale gives claimants in rem and the Vessel owner rights to enforce and seek the remedies stipulated therein.

Pang JC thus ordered to treat the above deposit forfeited by the Sheriff as part of the proceeds of sale of the Vessel.

Comment

Value of vessel in a judicial sale is usually quite low as compared to her prevailing market value.[3] Such value is divided amongst claimants in rem according to priority of claims when the total sum of all claims exceeds the arrested vessel’s sale proceed. Meaning, most, if not all claimants, will not get the full amount owed to them. Worse still, more claimants commensurate with lower available dividends respectively. This case is a straightforward breach of the Conditions of Sale by VML where the latter has no way of redeeming its deposit as bidder[4] after becoming a buyer.[5] The shipping community and stakeholders concerned, in this case UOB, should laud the Court’s decision when despite limited apportionments, they are able to obtain a bigger piece of the pie. Without statutory provision, the forfeited deposit should be ‘put in good use’ to mitigate the aggrieved parties’ loss.