The Governor and Company of the Bank of Scotland v. The

In Maritime Liens, Mortgages & Priorities on (Updated )

This was motion by in rem creditors of the Defendant vessel to compel production from the Plaintiff mortgagee of various documents relating to the financing of the Defendant ship and of a sister ship. In the course of his reasons the Prothonotary considered at length the doctrine of marshalling and whether it could apply to the benefit of in rem creditors. The Prothonotary held that notwithstanding some Canadian case law to the contrary, unsecured creditors, and particularly in rem creditors could benefit from marshalling. (Note: The application of the doctrine of marshalling forces a secured creditor with two funds or securities, one of which other claimants have a claim against, to exhaust his rights against the fund or security that the other claimants have no access to before proceeding against the "shared" fund or security.)