The appellant and the respondent, as joint borrowers, obtained a loan facility from the bank. The loan was secured by three vessels, including one owned by the appellant and two owned by the respondent. Of the US$29 million that was drawn down under the loan facility, 29 per cent was used for the refinancing of the appellant’s vessel and 71 per cent was used for the refinancing of the respondent’s vessels. The appellant’s vessel was sold for approximately US$21 million. The sale proceeds were utilised for paying off the appellant’s portion of the debt and partially paying off the respondent’s portion of the debt, with the remaining sum being applied towards costs and expenses incurred by the bank. Subsequently, when the bank took legal action to recover the remaining debt, the two vessels owned by the respondent were also sold, through court orders. After the court had determined the priorities between the bank and other creditors, and on the basis that the bank took priority over the other creditors, part of the sale proceeds were paid out of court to the bank to settle the respondent’s debt owed to the bank, and the remaining proceeds were held in court. The appellant commenced civil action to recover from the proceeds held in court the amount corresponding to the portion of the respondent’s debt that was settled using the proceeds from the sale of the appellant’s vessel. The appellant sought a declaration that it was entitled to be subrogated to the bank’s extinguished security rights over the respondent’s vessels.