Natixis, Singapore Branch v Seshadri Rajagopalan and others

Three banks, Natixis, Singapore Branch, Societe Generale, Singapore Branch and The Hongkong and Shanghai Banking Corporation Ltd, had financed Hin Leong Trading against pledges of bills of lading that purportedly related to cargo on the Chang Bai San. The bills were issued by Ocean Tankers (Pte) Ltd as demise charterer. The ship belonged to Nan Chiau Maritime (Pte) Ltd, part of the same group, and was mortgaged to Standard Chartered Bank (Hong Kong) Ltd. In 2020 the banks issued admiralty writs in rem against the ship in Singapore (and some abroad) for misdelivery or loss of cargo, but none arrested her. Nan Chiau went into judicial management, with Seshadri Rajagopalan and Paresh Tribhovan Jotangia as judicial managers.

On 16 June 2021 the ship sailed, apparently for Cape Town, but went to Gibraltar, where the mortgagee arrested her on arrival. The Gibraltar court ordered a judicial sale to Genial Marine SA on 20 September 2021, extinguishing all liens, including the banks' rights. Documents later disclosed showed the voyage, arrest and sale had been discussed and agreed between the judicial managers and the mortgagee, and that Nan Chiau had agreed with the buyer on a sale through a judicial process. The banks sought declarations that they held security, that the judicial managers had breached s 100(2) of the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) by disposing of the ship without court permission, and that the net proceeds be applied subject to their security. The High Court dismissed the applications, and the banks appealed in Civil Appeals Nos 39, 40 and 41 of 2024.

1. Whether the judicial managers disposed of the ship as if it were not subject to the banks' security, engaging s 100(2) of the IRDA
2. Whether issuing a writ in rem gave the banks security in the ship within the meaning of s 100(2)
3. Whether the banks should be granted relief under the principle in Ex parte James, In re Condon

On disposal, which decided the appeals, the court gave two reasons. First, a statutory lien survives any private sale, even to a bona fide purchaser; only a judicial sale, a judgment in rem binding the world, could have cleared the ship. A sale by the judicial managers could never have done so, so the extinction of the liens came from the Gibraltar court's order, not from any disposal by them, following Castrique v Imrie (1870) LR 4 HL 414 and The Goulandris. Second, the IRDA separates a secured creditor's enforcement, to which a judicial manager may consent under s 96(4)(e)(i), from a disposal requiring court permission. The mortgagee's arrest and sale was enforcement of its security, and the judicial managers' agreement and help, without a formal request, did not change that.

On security, though strictly academic, the court held that a statutory lien is only an accrued right to obtain security, which arises on arrest, as Brandon J explained in The Monica S [1968] P 741. Unlike a chargee, a claimant cannot compel the owner to make the ship available, and the lien has no force outside Singapore and cannot be traced into sale proceeds. Cases calling such claimants secured creditors, such as In re Aro Co Ltd [1980] Ch 196, used the phrase for a limited purpose. Treating every writ, which may name many ships, as security would undermine insolvency law's dislike of hidden interests and force judicial managers to search the world for writs.

On Ex parte James, the court said the standard is objective unfairness by the measure of right-thinking people, and kept it distinct from the unfair prejudice remedy in s 115. The banks were the architects of their own misfortune: they never arrested the ship despite it calling at Singapore several times, including two nine-day stays. Nan Chiau was too insolvent to take redelivery without the mortgagee's funding, which was tied to a timetable allowing two months for negotiation. A judicial sale's clean title was essential to selling a Hin Leong-linked ship, and s 100(2) was an untested route. The banks were creditors of the charterer, not of Nan Chiau, and the judicial managers owed duties to Nan Chiau's creditors.

The Court of Appeal dismissed the appeals, holding that the judicial managers did not dispose of the ship, that a statutory lien from a writ in rem is not security under s 100(2), and that the judicial managers did not act unfairly. It fixed costs of the appeals at $120,000 in aggregate, payable by the banks to the respondents.