Sub 20 Ltd v Royalton Investment Limited & Ors
[2024] EWHC 907 (Comm)
Eurobank SA v Momentum Maritime SA & Ors
29 January 2024
[2024] EWHC 210 (Comm)
High Court
A bank sued borrowers and guarantors for unpaid loans secured by ships. The borrowers argued the bank mishandled the sale of the ships after they were seized by authorities in Djibouti. The judge ruled the bank did nothing wrong, as it only seized the ships and didn't sell them, and ordered the borrowers to pay the debt and the bank's legal costs.
Key Facts
- •Eurobank S.A. (Claimant) sought summary judgment against borrowers (Momentum Maritime S.A., Titan Maritime Ltd, Maximum Marine Ltd) and guarantors (Alexandros E. Tsakos, Pangiotis I. Meramvelliotakis, Ioannis P. Meramvelliotakis) for unpaid loans secured by ship mortgages and personal guarantees.
- •Borrowers defaulted on loan payments and insurance policies, triggering acceleration of the loan.
- •Two mortgaged vessels were arrested in Djibouti by third-party creditors and subsequently sold by the Djibouti Port Authority (DPA) without the claimant's prior knowledge.
- •Defendants argued the claimant breached equitable duties by failing to obtain the true market value for the vessels during the sale.
- •The claimant only arrested the vessels; it did not take possession or conduct the sale.
Legal Principles
Summary judgment test: Defendants must demonstrate a real, not fanciful, prospect of success. The court should not conduct a mini-trial but should not accept everything a defendant says at face value.
Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch)
Duty of a marine mortgagee who arrests a vessel: The sole duty is to act in good faith to obtain repayment under the loan agreement.
Case Law
Duties of a mortgagee upon taking possession or exercising a power of sale: If a mortgagee takes possession, it assumes a duty to take reasonable care of the property. If a mortgagee exercises a power of sale, it has a duty to obtain the true market price at the date of sale.
Silven Properties v RBS [2004] 1 WLR 997; The Tropical Reefer [2004] 1 All ER (Comm) 904
A mortgagee has an unfettered discretion whether to sell or not, and if it decides to sell, when to sell.
Silven Properties (ibid.) at [14]
Medforth v Blake [2000] Ch 87 does not apply to the duties of a marine mortgagee upon arrest or sale.
Medforth v Blake [2000] Ch 87; The Tropical Reefer (ibid)
Outcomes
Summary judgment granted to the claimant.
The defendants failed to demonstrate a real prospect of success. The claimant only arrested the vessels and did not take possession or conduct the sale that resulted in the vessels being scrapped. The claimant did not breach any relevant duty.
Claimant's costs assessed on an indemnity basis.
Clause 20.3 of the loan agreement allows for recovery of costs on an indemnity basis, subject to court assessment of reasonableness.
Permission to appeal refused.
The grounds for appeal (duty to consider offers) are unarguable in law.
Similar Cases
King Crude Carriers SA & Ors v Ridgebury November LLC & Ors
[2023] EWHC 3220 (Comm)
Credit Suisse AG v Burgundy Sea Ltd & Ors
[2023] EWHC 809 (Comm)
India Infrastructure Finance Company (UK) Limited v Reliance Naval & Engineering Limited & Ors
[2023] EWHC 1612 (KB)
European Bank for Reconstruction and Development v Tatiana Vysokova & Ors
[2023] EWHC 3554 (Comm)