STEWART J:
1 On 11 January 2023, I ordered the judicial sale of the ship Yangtze Fortune to be effected by a closed bid tender process. The orders also directed the Admiralty Marshal to engage ship brokers for the purpose of the sale, to advertise and market the vessel for sale. They provided for the closing of bids to be at 5pm AEDT on 10 February 2023. There was also an appraisal of the value of the ship.
2 A number of bids were received and, on 14 February 2023, I directed the Marshal to accept the tender of the highest bidder, which was in the sum of US$8.5 million inclusive of GST. Under the conditions of sale, that meant that the successful bidder was to pay 10 per cent of the purchase price to the Marshal within five business banking days as reckoned in the State of New South Wales. Also within that time, the highest bidder was to execute and deliver to the Marshal duly executed and notarised conditions of sale and provide evidence by way of a power of attorney or otherwise that the successful bidder had duly executed the conditions of sale. Further, within 10 business banking days of those orders, which is to say a further five days after the deadline for payment of 10 per cent of the purchase price, the balance of the purchase price was to be paid plus an adjustment for bunker fuel, lubricants and other consumables.
3 On the day of those orders, that is 14 February 2023, the Marshal contacted the highest bidder to accept their bid and requested an executed copy of the conditions of sale and a power of attorney. The Marshal also requested the transfer of 10 per cent of the purchase price as deposit to the Marshal's nominated account within five business days.
4 On my calculation, those five days expired on 21 February 2023. On that day, the Marshal received a notarised power of attorney and certified conditions of sale from the highest bidder. Later that day, she was advised that the highest bidder was unable to remit the deposit due to "investor delay".
5 Upon request, the Marshal agreed to extend the time for receipt of the 10 per cent deposit to 24 February 2023. She also advised the bidder that if they were in default of the contract and if the amount was not received by that date, she reserved her rights to terminate the contract pursuant to clause 18 of the conditions. By that clause, the Marshal has the right to terminate the contract by notice in writing if the buyer fails to make any payment on time, and the buyer is liable for damages.
6 On 22 February 2023, the highest bidder advised that they could not guarantee that the deposit would be received by 24 February and inquired whether evidence of remittance on 23 February and SWIFT payment confirmation from a United States bank on 24 February would be acceptable to the Marshal.
7 On the morning of 23 February 2023, the Marshal advised the highest bidder that she was prepared to extend time for receipt of the 10 per cent deposit to 28 February on the condition that the highest bidder provided evidence of remittance the same day; that is, evidence of remittance on 23 February and SWIFT payment confirmation on 24 February. She also advised that she would extend time for receipt of the balance of the price to 3 March, which balance would otherwise, on my calculation, had been due to be transferred by 28 February.
8 On Friday, 24 February 2023 the Marshal filed an affidavit by which she applied for orders directing or authorising her to terminate the contract for breach. Her affidavit recorded that no evidence of remittance by the highest bidder had been provided to her. Also, the broker had tried to contact the highest bidder without success. The Marshal also seeks authorisation or a direction to accept the bid of the second highest bidder. The Marshal points out that that bid is about four per cent below the appraised value of the ship. She says also that it is notably higher than the third highest bid that was received in the closed tender process and substantially above the average amount of the remaining bids received.
9 It is important to bear in mind that, under the terms on which interested parties bid for the vessel, they agreed that their bids would remain open for acceptance for a period of 20 banking business days in the State of New South Wales. That period expires on or about 10 March 2023. There is, therefore, some urgency in resolving this question so that if the second highest bid is to be accepted, that is done as soon as possible.
10 Also pressing on the question of urgency is that 16 of the original 36 members of the crew remain on board as required for the safe manning of the ship. They have, understandably, expressed a strong desire to leave the ship as soon as possible. Mr Martens, who appears today for the Marshal, has pointed out that several members of the crew have been on board since April 2022, which is to say a period of some 10 months, and others in lesser amounts of time than that, but all, nevertheless, for considerable periods of time. It is certainly very much in the crew's interests that the sale is resolved as soon as possible so that they can go home.
11 Further, the longer the judicial sale process takes, the more the ship may deteriorate. In the meanwhile, the vessel is also uninsured and has no protection and indemnity insurance in place.
12 When the parties were notified on Friday of the Marshal's application and the orders that I have referred to, at least one of the parties who have an interest in the sale and in any fund that is established from the proceeds of the sale indicated that they were not able to take instructions that day because of time differences and the like. For that reason, I listed the matter for hearing this morning.
13 On the matter being called this morning, a number of parties interested in the sale of the ship have appeared. They include, by their counsel, the 36 crew members, being the third to thirty-eighth interested persons. No party has spoken against the orders sought by the Marshal. Everyone is desirous that the sale proceed as quickly as possible. In circumstances where the highest bidder seems to have lost interest, it is important to accept the second highest bid and move on. There is no suggestion by anyone that the process of selling the ship should be reopened. No one suggests that that would likely realise a higher price.
14 For those reasons, I will make orders directing the Marshal to terminate, for breach, the contract concluded with the highest bidder and to reserve against the highest bidder any rights of recourse against them. I will also direct the Marshal to accept the tender of the second highest bidder for the purchase of the vessel on the conditions of sale. That will have the result that, within five banking days of these orders, the second highest bidder must pay 10 per cent of the purchase price and execute the requisite documents. And, within 10 business banking days of these orders, they must pay the balance of the purchase price.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.