MALAYAN BANKING BERHAD V PROCEEDS OF THE SALE OF THE SHIP “TERAS BANDICOOT”

[2021] FCA 285, Federal Court of Australia, McKerracher J, 16 March 2021

Admiralty – Ship sale – Proceeds of sale – Application for default or summary judgment against proceeds – Orders for the judicial sale of the vessel made in related proceedings – Court holding proceeds of sale pending determination of priorities – Whether but for the judicial sale of the vessel the plaintiff could have commenced an action in rem – Whether plaintiff's claim for repayment and interest under ship's mortgage a proprietary maritime claim – Whether summary judgment or default judgment the appropriate mechanism in circumstances where owner of vessel has not filed an appearance and has evinced no intention to participate in or defend proceedings

The vessel Teras Bandicoot had been arrested and sold upon the application of an unrelated creditor and the court held the sale proceeds. The plaintiff bank held a ship's mortgage over the ship and sought default or summary judgment so that its claim could be included in the determination of priorities. The defendant had not appeared. The bank claimed that the mortgages were enforceable because events of default had occurred. It sought full repayment of the outstanding sums secured by the mortgages, including interest.