Bank of New Zealand (Security Trustee) v The vessel MY "Island Escape"

In the case of Bank of New Zealand (Security Trustee) v The vessel MY "Island Escape", the plaintiff, the Bank of New Zealand, applied for an order for the sale of a luxury cruise vessel, MY "Island Escape", which was currently subject to a mortgage held by the Bank. The defendants, including the vessel's owner, Seasons Shipping, did not enter an appearance, and the caveators, who had interests in the vessel, filed appearances against the release of the vessel. The court was required to determine whether to grant the plaintiff's application for a judicial sale of the ship pendente lite and whether a valuation should be required before the sale.

The court held that the principles guiding a judicial sale pendente lite are well established and were clearly set out in the case of The "Myrto". The court emphasised that such orders should only be made for good reason, and where the action is defended, the court should critically examine whether there is good reason for making such an order. The court found that the heavy and continuing costs of maintaining the arrest, with the consequent substantial diminution in the value of the plaintiffs’ security for their claim, could constitute a good reason for ordering a sale. The court also noted that the defendants had not entered an appearance within the required timeframe, which was a factor that supported the making of such an order.

The court ordered that the vessel MY "Island Escape" be sold under the Admiralty Rules 1988 (Cth), with the method of sale to be determined by the court. The Marshal was to engage a shipbroker experienced in the sale of similar vessels to advise on the method of sale and to value the ship if necessary. The court also made provisions for the retention of a solicitor experienced in the judicial sale of ships and for the confidentiality of any valuations. The costs and expenses of the appraisement and sale were to be paid out of the proceeds of the sale. The parties and caveators were granted liberty to apply for further directions or orders regarding the valuation and sale of the ship, and the costs of the application were reserved.

In summary, the court granted the plaintiff's application for the judicial sale of the vessel MY "Island Escape" pendente lite, with specific provisions for the valuation and sale process, and reserved the costs of the application.