Castleton Commodities Shipping Co Pte Ltd v Silver Rock Investments

A court may order payment out of sale proceeds held under an order for sale where the applicant is a judgment creditor of the person entitled to the underlying goods, subject to avoiding double recovery. The court has jurisdiction to make that order. A pre-existing maritime lien may also be transformed into, or followed into, the proceeds of sale representing the cargo. A time charterer’s lien may not confer possession of the cargo, but may support a right to direct that the vessel does not unload it.

Castleton Commodities Shipping Company Pte Limited applied for payment out of approximately US$2.113 million held by solicitors under an order for sale made in earlier proceedings. The proceeds represented iron ore carried under charterparties involving Silver Rock Investments and Grupo Minero. Castleton had obtained arbitration awards and judgments against both parties and relied alternatively on its status as judgment creditor and on maritime liens arising under the voyage charterparty and bill of lading. The principal issue was whether Castleton was entitled to the proceeds.

1. Public hearing. The arbitration proceedings and awards were effectively exhausted, and the present application concerned the disposal of sale proceeds held under the order for sale. In the absence of any effective opposition, and given the wider significance of the lien arguments, the hearing and judgment were ordered to be public pursuant to CPR 62.10.
2. Judgment creditor ground. Castleton was a judgment creditor of Silver Rock and Grupo Minero in virtually identical amounts. The proceeds represented the cargo that was the subject of those claims. It was unnecessary finally to determine which of the two parties owned the cargo because both were parties to the order for sale and to the present application, and no other party advanced a better claim. The court therefore held that Castleton was entitled to payment as judgment creditor, subject to the principle against double recovery.
3. The court relied on CMA-CGM Marseille v Petro Broker International [2011] EWCA Civ 461, holding that the court had ample jurisdiction to direct payment of sale proceeds to a judgment creditor.
4. Lien ground. The voyage charterparty lien did not entitle Castleton, as a time charterer, to take possession of the cargo. It nevertheless gave rise to a similar, though not identical, right to direct the vessel not to unload. Castleton also held by assignment a true lien in favour of the carrier against Grupo Minero under the bill of lading. Those pre-existing lien rights were transformed into, or followed into, the proceeds of sale representing the cargo.
5. The application was allowed. Castleton was entitled to the proceeds on the judgment creditor ground and, alternatively, on the lien ground. It was also entitled under paragraph 3 of the order for sale to claim its reasonable expenses, stated to be slightly over £100,000.