Tsarkov Oleg Igorevich & 23 Ors v Owner and/or Demise Charterer of the vessel AMBASSADOR (IMO No. 9127148)

Facts

The master, officers and crew of the vessel Ambassador sued its owner, Nautical Challenge Ltd, for wages in Admiralty in Rem No 17 of 2017. The owner did not appear. The crew arrested the vessel on 19 January 2017, obtained default judgment, and the vessel and bunkers were sold on 27 April 2017 for S$10,297,300. After earlier payments out, the balance in court as of 3 November 2022 was S$8,600,459.01.

Ten parties intervened. Evergreen Marine (UK) Ltd held a first priority mortgage, but it was given only to secure what the owner might owe Evergreen under a final judgment on a 2015 collision between the two companies' vessels, and in the English proceedings it was Evergreen that was held liable to the owner for US$6,754,309.24 plus interest. Drydocks World – Dubai LLC (DDW) held a second priority mortgage securing a deferred payment agreement, together with an assignment of the benefit of a Gard letter of undertaking and of the owner's collision recoveries, including that English judgment debt. DDW obtained default judgment against the owner in HC/ADM 51/2017. Bunker suppliers Shipoil Ltd and Island Oil Ltd also had claims.

DDW applied in HC/SUM 3316/2022 to determine priorities and for payment out of the balance to meet its judgment. Shipoil and Island Oil filed no affidavit and did not attend the hearing on 9 November 2022. Their later request for further arguments was rejected, they appealed, and these are the grounds of decision.

Issues

1. Whether DDW's mortgage claim had priority over the other interveners' claims to the balance sale proceeds.
2. Whether DDW could be required to enforce the assigned English judgment debt or the Gard letter of undertaking before resorting to the sale proceeds.
3. Whether paying the balance to DDW risked double recovery.

Holding

The High Court allowed DDW's application, deciding that its claim to the balance sale proceeds had priority over the other interveners and ordering the balance to be paid out to DDW's solicitors. It rejected the request by Shipoil and Island Oil for further arguments and affirmed its decision of 9 November 2022.

Reasoning

On priority, none of the interveners challenged DDW's claim to rank first, and Shipoil and Island Oil did not dispute it in their request either. Evergreen's earlier mortgage could not be enforced because it secured only sums the owner might owe Evergreen, whereas the English judgment went the other way.

On the order of enforcement, Shipoil and Island Oil argued that if DDW first collected the English judgment debt, only a shortfall would need to come from the fund and the rest would be left for other creditors. The court held that this would compel DDW to pursue its other securities first, and no authority supported that. Citing The Myrto [1977] 2 Lloyd's Rep 243, a secured creditor may elect which remedy to enforce, subject to no double recovery. The sale proceeds represented the vessel, and DDW was entitled to proceed against them. There were also practical reasons: DDW's claim to the English judgment debt was the subject of interpleader proceedings in England in which Clyde & Co LLP had challenged its priority, and those proceedings had been stayed. Why they were stayed did not matter.

On double recovery, DDW said on affidavit that it would look to the English judgment debt only for its remaining debt, and in any case the assignments were security for the same obligations, so every payment from the fund reduced what DDW could claim under them. DDW had no duty to choose the course that suited the bunker suppliers, who were left to pursue the owner.

From the judgment