Admiralty Practice

Possessory Liens - Practice - Court Ordered Inspection

Chadwick et al. v. Philbrooks Boatyard Ltd., 2006 BCSC 1607, 

This was an application by the Plaintiff for an order that it be permitted to inspect two engines in the possession of the Defendant. The Defendant opposed the application on the grounds that it had a possessory lien over the engines which would be lost if the engines were removed from its possession for inspection. The Court agreed with the Defendant that the possessory lien would be extinguished if the engines were removed from its possession. The Court did, however, grant the application ordering that the Plaintiff post security in an amount sufficient to cover the work done to the engines by the Defendant. No security was ordered in respect of amounts attributable to work done on the vessel (as opposed to the engines) since the Defendant was not in possession of the vessel and did not have a possessory lien for those amounts.

Application to Strike – Lis Pendens – Stay of Proceedings – Forum non conveniens – Arrest – Amount of Security - Motions – Foreign Affidavits

A. Paschos K. Katsikopoulos S.A.  v.  The “Polar” et al., 2003 FCT 584, 

This was an application to strike out the Statement of Claim because the Plaintiff had commenced an earlier action in Greece involving the same parties or, in the alternative, to stay the proceedings on the basis of forum non conveniens. The court was also requested to review the amount of the security that had been provided by the Defendants to obtain the release of the “Polar” from arrest. The application to strike on the basis of lis pendens was not granted because the Plaintiff was prepared to withdraw its action in Greece in favour of maintaining its action in Canada alone. However, the Court did order that the action be stayed on the grounds that there was no connection between any aspect of the litigation and Canada other than the temporary presence of the vessel in Canada. This order was subject to the condition that the letter of credit in place in relation to the Canadian litigation be maintained and amended to include payment of any judgment that may emanate from the Greek courts. Finally, regarding the amount of security, the Court declined to interfere because the bond reflected an amount sufficient to cover the reasonably arguable best case of the Plaintiff together with interest and costs.

As a preliminary motion to the application to strike out the Statement of Claim, the Defendant sought to strike out the Plaintiff’s affidavits because the notary public who took the affidavits failed to comply with the requirements of Greek law, the law of the place where they were taken, as to the terms and conditions that ought to surround the administration of oaths to affiants. Even on the assumption that the Defendants were right in their criticism of the work performed by the Greek notary public, it did not follow that the affidavits should be struck. There was no evidence of any collusion between the affiants and the notary public with a view to contravening the requirements of Greek law. The record indicated that at all relevant times the affiants wished to file some allegations that they considered true and, “within the context of [his] residual discretion”, the Prothonotary considered this to be the essential thing. To strike out the impugned affidavits owing to deficiencies attributable to the notary public would, in the circumstances, be akin to elevating form over substance, and this the Prothonotary refused to do.

Contempt – Conditions for Show Cause Order

Goodman Yachts LLC v. The “Gertrude Oldendorff” et al.,  2003 FCT 752, 

This was an application for a first stage contempt order, pursuant to Rule 467, brought against two Defendants by the Applicant, also a Defendant in the action. The underlying action involved the loss of a yacht being carried on the deck of the Defendant vessel from Singapore for delivery at Vancouver. The alleged contempt arose out of a loss of various items which the two Defendants had been ordered to retain and preserve. The two Defendants arranged for the items to be placed in locked storage by Western Stevedoring. However, after all parties except the Applicant had inspected the items they were inadvertently lost during a regular clean-up of the facility conducted by Western Stevedoring. The Prothonotary concluded that at worst the loss of the opportunity to inspect these items might have proved critical to the Applicant mounting a knowledgeable and effective defence and at best the Applicant had been prejudiced. Nevertheless, the Prothonotary held that this did not provide a prima facie case leading to a contempt proceeding. The Prothonotary held that to obtain a show cause oeffect demonstrate a prima facie wilful disobedience or wilful refusal to comply with a court order; evidence of mere non-compliance due to a casual or accidental unintentional act, was not sufficient. As the Applicant was unable to establish a prima facie case that the destruction of the material was wilful or deliberate, no show cause order was made.

Offshore Accord – Summary Trial – Credibility

Mil Davie Inc. v. Hibernia Management and Development Co. Ltd., 2003 FCT 297, 

This was an application by the Defendant for summary judgment dismissing the Plaintiff's action. In the underlying action the Plaintiff, a ship repair yard, alleged that the Defendant awarded contracts to a competitor without seeking tenders and in violation of the Competition Act and the Offshore Accord Acts. The motions Judge reviewed the jurisprudence on summary judgments and noted in particular that summary judgment applications are not appropriate where credibility is in issue. The motions Judge found that there were genuine issues for trial and that issues of credibility had been raised and he therefore declined to grant summary judgment.

Effect of Mutual Release - Rule 220

Gearbulk Pool Ltd. v.  Scac Transport Canada Ltd., 2002 FCT 353, 

This was an appeal from a determination of a point of law under Rule 220 of the Federal Court Rules, 1998 which proceeded under an Agreed Statement of Facts. The issue was whether a mutual release in a cargo action was a bar to the claim by Gearbulk, the Plaintiff in the present action, for damages for loss of freight arising out of a breach of a voyage agreement note. Gearbulk had entered into the voyage agreement note with the Defendants for the transportation of 10 transformers. The first of the transformers was damaged during loading. It was subsequently determined that all of the remaining transformers were packaged similarly to the first and were unsuitable for transportation. Accordingly, the remaining transformers were not loaded. The owner of the damaged transformer brought an action against Gearbulk and the other Defendants for the damage sustained to the transformer. This action was settled and a mutual release was signed. The cargo owner was paid $75,000, of which $10,311.48 was to be paid by the cargo owner to Gearbulk. The payment of $10,311.48 to Gearbulk was on account of costs incurred to clean up the spilled contents of the transformer. The mutual release provided that it was “with respect to any damage to the Cargo”. Based on the wording of the release, the court held that it related only to claims arising out of the damage to the cargo and did not extend to bar the present action which was for freight. A noteworthy aspect of this case is that it illustrates the potential dangers of proceeding under Rule 220 on an Agreed Statement of Facts. The Judge on appeal noted that there was a significant possibility that the record before the court was defective but nevertheless proceeded to hear and decide the matter without correcting the defects as he considered that any injustice was “created by the parties who had ample opportunity to put the complete record before the court”.

Solicitor’s Affidavits

Shipdock Amsterdam B.V. v. Cast Group Inc., 2000 CanLII 15071, 

This case is of importance in that it reiterates that a solicitor should not file his or her own affidavit on a motion when the solicitor or a member of his or her firm argues the motion. The Court noted that there are exceptions to this rule such as where the solicitor is the only person who can depose to the facts.

Practice - Motions by Telephone Conference Call

The Governor and Company of the Bank of Scotland v. The Nel, (February 16, 1998), No.T-2416-97, 

This was an appeal from an order of the Prothonotary in which the Prothonotary refused an adjournment of a pending motion and refused to allow counsel to appear by telephone conference call on short notice. The appeal was denied. The Judge on appeal noted, as did the Prothonotary, that the Court often tries to proceed by telephone conference call when feasible but noted that there was no absolute right in a party to be heard by telephone conference. The Court further noted that when there are multiple counsel present in court the appropriate procedure is to be represented by a local agent.

Assessors

Porto Seguro Companhia De Seguros Gerais  v. Belcan S.A. et.al.,,  [1997] 3 SCR 1278, 

This was an appeal from the Federal Court of Appeal. The issue was whether a party may call expert evidence when the Court has appointed assessors. At trial, the trial Judge applied a well established rule of admiralty and, pursuant to that rule, she refused to disclose to the parties the questions put to assessors and refused the parties the right to call their own expert evidence. On appeal, the Court of Appeal held that the admiralty rule prohibiting expert evidence was restricted to situations where the issues the assessors were seamen appointed to deal with were issues of navigation and seamanship. The Court of Appeal nevertheless refused the appeal as there had been no prejudice to the Appellant. On further appeal to the Supreme Court of Canada, the Supreme Court allowed the appeal and ordered that there be a new trial. The Supreme Court of Canada held that there was a strong argument that procedural matters, such as the admiralty rule prohibiting expert evidence, were not incorporated into Canadian Maritime Law by s. 42 of the Federal Court Act. Section 42 of the Federal Court Act, and its predecessor provisions, incorporate only the substantive aspects of admiralty law as administered by the High Court of England on its Admiralty side. Further, the Court held that even if the rule against expert evidence was incorporated as part of Canadian Maritime Law it was not immutable. "The Courts may change common law rules where this is necessary to achieve justice and fairness by bringing the law into harmony with social, moral and economic changes in society, and where the change will not have complex and unforeseeable consequences". Such changes are more readily made where the rules are procedural rather than substantive. Applying this test the Court found the rule against expert evidence required modification as it violated the parties right to be heard and was out of step with modern trial practice. The Court therefore modified the rule to permit assessors to give the Judge assistance on technical matters and even to give advice on matters of fact but, such advice is to be disclosed to the parties who are to have a right of response. Further, in all cases, the parties are at liberty to call their own expert evidence.

Discontinuance by Plaintiff

Olbert Metal Sales Limited v.  The "Harmac Dawn" et.al.,  [1997] 1 FC 899, 

This was a carriage of goods case in which both the shipper and consignee were initially added as Plaintiffs. The Plaintiff, shipper, later brought this motion for leave to discontinue its action against the Defendant carriers. The grounds were that both Plaintiffs were initially joined because of uncertainty as to who had title when the goods were damaged but it had now been determined when risk and title passed and it was therefore no longer necessary for the shipper to remain a party. The Court refused the Plaintiff leave to discontinue holding that to do so would prejudice the Defendants who would be deprived of their right to discover the shipper. The case contains a good discussion of when title and risk pass under an FOB sale.

Workers Compensation

Tan  v. The "Pacific Brilliance" et.al., 1996 CanLII 3865 , 

This was an application to strike out a Third Party Claim. The main action arose out of the death of a shipyard employee who fell from a gangplank while disembarking from the vessel. The dependents of the deceased commenced action against the owners and operators of the ship who, in turn, sought to third party the terminal where the ship was moored at the material time. The Court found that both the shipyard and the terminal were employers registered under the Workers Compensation Act of British Columbia and that the Act prevented the Defendants from bringing the Third Party proceedings.