AKER INVEST AS v. THE OWNERS OF THE SHIP "SAGA SEA"

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REASONS

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1. On the 31st of July 1997 ("July Order") I made an order that the 3 vessels, Saga Sea, Claymore Sea and Claymore Sea ("Vessels") be appraised and sold pendente lite and 1 refused otherwise the Notices of Motion of the Plaintiff dated 18th July and 24th July 1997. Basically I refused to order private sale as desired by the Plaintiff and I ordered that the sale is to be by of public sale and according to the usual practice of this Court by way of public tender.

2. By the Notice of Motion dated 5th August 1997 the Plaintiff sought to set aside or vary my July Order and ask for the Vessels to be sold to its associated company RGI Seafoods Russia Inc. for the roughly US$2.5 million for each Vessel. At the hearing on the 7th August 1997, the hearing was adjourned to Monday 11th August 1997 to enable Affidavits to be filed and I gave various directions including that the Court appointed appraisers should furnish the Court with urgent appraisement of the values of the Vessels by 11th August 1997.

3. On the 11th August 1997, at the commencement of the hearing of Motions, the Court pointing out to Mr. Smith for the Plaintiff that:-

it is unlikely that the Court would make an order in favour of the Plaintiff unless extensive evidence is heard and that in these circumstances, the Plaintiff might wish to consider withdrawing the application for private sales as sought in the Motions of 5th August 1997. After an adjournment, Mr. Smith informed me that the Plaintiff in the circumstances cannot ask for private sales and would be content with public sale of the Vessel.

4. The Plaintiff however asked for the public sale to be by way of public auction as opposed to the usual court sales by way of public tender. This was not sought in the Motion of 5th August 1997 nor even in the previous Notices of Motions dated 18th July or 24th July 1997, which in fact asked in the alternative for sales by usual public tender. Mr. McGowan for the Interveners Crew took a somewhat neutral position on this and said his clients wanted to maximum the sales proceeds. The Chief Bailiff of the Court in his usual helpful manner was able to give the Court much assistance and pointed out the many advantages of the well known Admiralty Court sale by public tender. The debate was whether the public sales should be by way of usual public tender or by the desired special sale of public auction.

5. The starting point of the consideration of Court sales is the well established long practice of the Admiralty Court in Hong Kong of ordering sales by way of public tender. The Court and the Chief Bailiff had long experience of this mode of sale and had always been assisted by court appointed brokers and experts. It has the virtues of flexibility and ensuring the last say in the Court of whether a tender should be accepted or not. This is a practice and mode of sale well known to the Court. But in the last year or so, sitting as the Admiralty Judge, I had also on occasions when the special facts of a case warranted such a course, also granted order for sale by private treaty or by public auction. But such departures from the usual practice of sales by public tender require special circumstances, such as the particular low value of the ship or the certainty of the Court knowing that particular mode of sale so sanctioned would meet the primary requirement of the Court that any sale ordered by the Court would ensure the maximum price of the ship is realised. But the primary and usual order of sales must be by way of public tender and if a particular mode of sale is required, it must be justified and on evidence.

6. In the exercise of my discretion on this application, I have in this case no such powerful evidence which convinced me that I must or even ought to depart from the usual practice of ordering sales by way of public tender. Indeed such application was not even sought in the Notice of Motion dated 5th August 1997 and there was no proper Affidavit evidence placed before me to persuade the Court that the public auction now suddenly desired by the Plaintiff would give certainty better result than the usual method of sale by public tender.

7. It was put to me that I should take into account the following factors:-

8. These points (some highly speculative and/or not supported by Affidavit evidence) are of course relevant considerations but equally the Court must take note of the fact that there is no maritime auctioneer expertise in Hong Kong and that selling three highly specialised vessels with a very limited market in a short space of time does requires extreme caution, specially when we are talking about very expensive vessels whose values being so uncertain as to range when sold from as low as US$2.5 million for each vessel as contended by the Plaintiff to as high as over US$15 million for each vessel (the Court appraisal put Saga at well beyond US$20 million which is more in line with the US$26-23 million of the finance figures of 1989 and 1995 and the US$31 million insurance figure seen in the Affidavits). The Court must also weigh in the exercise of the discretion the fact that the public tender method is well tried and known to the Court and to the Bailiff and that with the assistance of the Court appointed appraisers brokers the Court is given the flexibility to ensure the best is done by the method of public tender. Apart from flexibility there are also many other virtues to a public tender sale such as it induces each genuine buyer of a particular ship to put the best offer forward blind and that it avoids the possible distortion to the price of a particular vessel when three ships are auctioned one after each other and when the mere fact of which vessel is selected to be auctioned first might have an impact on the individual price realised at auction of each vessel.

9. It therefore seems to me that in the particular circumstances of this case and having regard to all the factors that I should exercise my discretion by staying with the traditional and well tried out sales by public tender and not accede to the request by the Plaintiff to sell by public auction. I am not satisfied on the totality of the material put before me that a strong case had been put forward so that I should abandon the traditional and usual method of sale and I therefore decline to make the order orally requested by Mr. Smith.