JUDICIAL SALE PROCESS

Preliminaries

(1) Order for Sale

To sell a vessel by judicial sale, the arresting party must first obtain an Order for Sale, that is
and order for the vessel to be appraised and sold by way of private treaty first, and if
necessary, by public auction, free from all liens, charges and encumbrances. The Order does
not stipulate any time limit for the appraisement and sale.

Costs relating to the appraisement and sale of the Vessel are to be treated as Sheriff’s
expenses and paid to the Plaintiff out of the proceeds of sale as if they formed part of the
Sheriff’s costs and expenses. All other incidental costs relating to the Order for Sale are to
rank immediately after Sheriff's expenses and to be paid in priority to all other claims (after
Sheriff's expenses).

As the sale is made through the Court Sheriff, all steps taken in the sale are to be done with
the knowledge and consent of the Sheriff and accordingly all correspondence is to be copied
to Court.

No. Steps Time frame Costs (RM)

Step 1 APPRAISEMENT AND SALE

(a) Application made by Notice of Application Can obtain

supported by Affidavit Order for sale
within 2 weeks
Application must be served on the Owners of (if Application not
the vessel contested; or if
contested can be
up to 2 months)

(b) Court orders appraisement and sale and Order 3 days

to be sealed (Court Registry to
process)

Step 2 COMMISSION FOR APPRAISEMENT

AND SALE

(a) Sheriff to issue Commission for 3 days

Appraisement and Sale after Plaintiff files: (Court Registry to
process)
(i) Praecipe for Commission for
Appraisement and Sale of vessel; and

(ii) Undertaking to the Sheriff to pay the fees

 and expenses under the commission for
appraisement and sale

Step 3 APPRAISAL AND VALUATION OF

VESSEL

(a) Appointment of valuer As soon as

Court may appoint valuer themselves OR possible after
may consent to arresting party appointing Order for Sale is
their own valuer and commission report to be obtained
submitted directly to the Sheriff.
Usually within 1
week

(b) Preparation of Valuation Report 1 - 2 weeks

(depending on
location /
condition of
vessel)

(b) Submit the Valuation Report to Court Once received

(c) Settle the valuers’ invoice and keep a record As agreed

of this to be accounted to court later
(valuation costs are to be treated as Sheriff’s
expenses and paid out of the proceeds of sale)

Step 4 PRIVATE TREATY: TENDER

EXERCISE

(a) Since sale is by private treaty at 1st instance, According to

Plaintiff is at liberty to open tender and accept Plaintiff’s
the highest bid which must be above the timelines. A
appraised value. standard tender
period is usually
1 – 2 months

(b) This process may be repeated several times if 1 – 2 months

there are no favourable bidders.

(c) Despite genuine efforts, if a bid above 1 – 2 weeks

appraised value cannot be obtained, to apply Notice of
to Court for an Order to sell below appraised Application can
value. be filed together
with a Certificate
Apply by Notice of Application supported by of Urgency and
affidavit. To serve on all parties to the action heard within 1
as they have a right to be heard on this issue. week (if there are
Court will usually grant Order so long as no serious
 there is no serious prejudice to any of the objections)
potential claimants.

(d) The Court Order to be sealed. 1 week

Step 5 TERMS AND CONDITIONS OF SALE

(a) Once the highest bid is confirmed, the 1 – 2 weeks

Sheriff’s Conditions of Sale in draft will be Application can
prepared and Plaintiff will apply to Court for be filed together
approval of the Sheriff’s Conditions of Sale. with a Certificate
Application is by Notice of Application of Urgency and
supported by affidavit and the DRAFT heard within 1
Conditions of Sale annexed thereto. week (if there are
no serious
objections).
The Conditions of Sale are standard terms
which can be modified according to the sale
concerned.

(b) Under the standard terms, payment of the

purchase price is structured as follows:

10% as deposit immediately upon acceptance

of the offer
Balance 90% within 1 week of acceptance of
the offer

(c) Currency of payment will follow what is

stipulated in the Order for Sale. If for any
reason there needs to be a deviation from the
currency ordered by Court (eg. foreign
buyer), Plaintiff may apply in the same
application for approval of the Conditions of
Sale for the currency to be amended. Reasons
for the change must be stated in the affidavit.

(d) Delivery of the vessel is immediate upon

completion of payment of the full purchase
price.
On delivery, the Buyer shall have the
Sheriff’s Bill of Sale together with any vessel
documents in his possession.

(e) The Court may also on its own initiative

impose or vary any of the terms and
conditions in the DRAFT Conditions for Sale.
(f) Court Order to be sealed. 3 days
(Court Registry to
process)

(g) A copy of the Court Order and Conditions of

Sale to be given to the Buyer.

Step 6 SALE CONCLUDED

(a) Upon acceptance of the highest bid, the Buyer Immediate

will pay 10%. Payment will usually be made
to the Plaintiff who will then (through their
solicitors) forward the cheque/bank draft to
the Sheriff.

(b) Within 1 week thereafter (or such other time Within (7) days
prescribed in the Conditions of Sale), Buyer from payment of
will settle the balance 90% purchase price. deposit
Payment will usually be made to the Plaintiff
who will then (through their solicitors)
forward the cheque/bank draft to the Sheriff.

(c) If the 90% balance purchase price is not paid Approx 2 weeks
within the prescribed time, the Sheriff is at
liberty to cancel the sale and forfeit the
deposit.

In practice, it is common for parties, with the

consent of the Sheriff to agree on reasonable
extensions of time for payment of balance
purchase price.

(d) Upon sale, if there are bunkers/fuel/lubricants 1 week

on board the vessel, arresting party to carry
out bunker survey and price and successful
buyer to pay for this.

[Sale of vessel is together with her bunkers]

(e) Pursuant to the Order for Sale, the proceeds Immediate

of sale will be paid to the Sheriff.

(f) Arresting party will prepare the Bill of Sale ASAP

(on behalf of the Sheriff) and have it duly 1-2 days
notarised before a Notary Public. The Bill of
Sale will then be given to the Buyer. (the Court will
look into this
 (Under the Merchant Shipping Ordinance ASAP as the
1952, any sale or transfer of a ship must be by Buyer is entitled
way of a bill of sale duly registered with to take delivery of
Registrar of the port of registry). the vessel
immediately upon
payment of full
purchase price and
the Bill of Sale is
a requisite
document to be
given to the Buyer
upon delivery).

Step 8 PAYMENT OF PROCEEDS OF SALE

INTO COURT

(a) Once the sale is completed (whether by

private treaty or public auction), the proceeds
of sale are paid to the Sheriff.

(b) Within (7) days after payment into Court, the 1 week
Sheriff will take out a Notice in the Gazette
which states the following:

(i) vessel has been sold by Court Order

(ii) amount of proceeds
(iii) order of priorities to be determined when
(iv) any person with a claim to do so before
expiration of the said date

Step 9 VERIFYING SHERIFF’S COSTS AND

EXPENSES

(a) After proceeds are paid into court, the next

step according to the Order for Sale is for the
Sheriff to deduct his commission, costs and
expenses (including the expenses incurred by
the Plaintiff to be treated as Sheriff’s costs
and expenses)

The arresting party (on behalf of the Sheriff)

will make out a list of his expenses incurred
in relation to the proceedings

(b) The Plaintiff to file in Court a Bill of Costs: 2 weeks

Plaintiffs’ Bill as Sheriff’s Expenses,
supported by invoices, statement of accounts,
bills, payment vouchers, receipts, and other
supporting documents.
(c) The Sheriff will verify these expenses and Usually within
issue a Certificate verifying accounts in the same 2 weeks
respect of Sheriff’s expenses. By this above
Certificate, the Sheriff confirms that he has
examined all bills, payment vouchers, receipts
etc. and this is a full and true account of
Sheriff’s expenses.

Step 10 DEDUCTION OF SHERIFF’S COSTS

AND EXPENSES

(a) Pursuant to the Order for Sale, once the 2 weeks

Sheriff’s expenses is verified, this sum will be
deducted from the proceeds and the balance
sum will be deposited in an interest bearing
account pending determination of priority of
claims.

(b) Pursuant to the Order of Sale, the Sheriff is

empowered to pay out the Sheriff’s expenses
to:

(i) the Sheriff

(ii) the Plaintiff

Step 11 DETERMINATION OF PRIORITIES

(a) The Order for Sale usually stipulates that 90 days

priorities are to be determined after 90 days
from payment of proceeds of sale into court
(or such other shorter term as may be order
by Court).

(b) To KIV any claims to the proceeds by any

party before expiration of the 90 days (or
other shorter time)

(c) After 90 days, to apply to Court to determine 2 weeks

priorities of claims and payment out. (subject to how
Application is made by Notice of Application many other claims
supported by affidavit. there are and
whether priorities
The usual order of priorities is as follows: highly contested)

(i) Sheriff’s commission

(ii) Sheriff’s costs and expenses
(iii) Arresting party’s cost of arrest
(iv) Possessory lien claim
(v) Salvage claim
(vi) Collision damage claim
 (vii) Wages and disbursements of master and
crew
(viii) Mortgage claim
(vi) Other claims, in pari passu

(d) Court Order to be sealed 3 days

(Court Registry to
process)

(e) The Sheriff will make payment out to the 1 – 2 months

various claimants based on the Court Order