CLOSE BROTHERS LTD V AIS (MARINE) 2 LTD (IN LIQUIDATION) AND ANOTHER (THE "OCEAN WIND 8 OF HARTLEPOOL")

[2018] EWHC B14 (Admlty), Queen's Bench Division, Admiralty Court, Admiralty Registrar Jervis Kay QC, 17 September 2018

Admiralty - Ship mortgage - Ship repossessed and sold by mortgagee at less than valuation - Mortgagee's duty to mortgagor and guarantor - Appointment of ship broker

The claimant bank had made a loan to the first defendant, now in liquidation, against the security of its wholly owned vessel Ocean Wind 8 of Hartlepool, with the second defendant, a director of the first defendant, as personal guarantor. Following failure to make repayments, the vessel was repossessed and sold through a shipbroker at a price less than the loan valuation, leaving a balance to be paid which the bank claimed from the defendants. The action against the first defendant had been stayed under the Insolvency Act, section 130. The vessel had been sold by an independent broker appointed by the bank, to one of the bank's clients following marketing via email. The only higher bid was conditioned upon receiving a 100 per cent loan from the bank. The defendants had at trial abandoned the argument that the sale to the bank's client was a sale to a connected person, which would have placed the burden of proof on the bank to show that the sale price was reasonable.