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The database contains 12 case summaries relating to Ship Suppliers. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
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Supply of Bunkers in Brazil to Time Chartered Vessel - Applicable Law - Whether Supplier has Lien - Application of s. 139 MLA to Foreign Suppliers - Liability of Owner In Personam - Presumption
Norwegian Bunkers AS v. Boone Star Owners Inc., 2014 FC 1200
Précis: The Federal Court held that Brazilian law applied to a claim for bunkers supplied to a chartered vessel in Brazil and that such law gave the supplier a maritime lien but, there was no in personam claim as against the ship owner when the charterer ordered the bunkers.
Facts: The plaintiffs, Norwegian and Belgium companies respectively, supplied bunkers to the ship “Samatan”, a Maltese flagged vessel, in Brazil using a local Brazilian supplier. At the time of the supply, the vessel had been chartered and sub-chartered on the NYPE form. The NYPE form provided, among other things, that the charterer was not permitted to create maritime liens against the vessel. The bunkers were ordered from the plaintiffs by the sub-charterer. The plaintiffs acknowledged the order with a standard form that specified the bunkers had been ordered for “Master and/or Owner and/or Operator”. The plaintiffs knew the sub-charterer was not the owner of the vessel but had not been notified of the “no-lien” clause in the charter parties. The bunkers supplied by the plaintiffs were not paid for. The plaintiffs commenced this action and arrested the vessel in Canada. The plaintiffs argued that Brazilian law applied to the transaction and gave them a maritime lien against the vessel for the unpaid bunkers. The defendants argued that Canadian law applied by default (no law other than Brazilian being proven) and that pursuant to Canadian law there was no lien and no in personam action against the ship owner.
Decision: Judgment granted in part. The plaintiffs’ claim against the vessel for unpaid bunkers ranks as a maritime lien but the in personam action against the ship owner is dismissed.
Held: The parties are agreed that where, as here, there is no direct contract between the vessel owner and the supplier of the bunkers, the proper law is to be determined not by reference to the choice of law provision in the supply contract but by determining the jurisdiction with the closest and most substantial connection with the transaction. The seven factors to be considered are: (1) the place of the wrongful act; (2) the law of the flag; (3) the domicile of the plaintiff; (4) the domicile of the defendant ship owner; (5) the place where the contract was made; (6) inaccessibility of a foreign forum; and (7) the law of the forum. The defendants say Norway has the closest connection because the seller is Norwegian, the contract was made in Norway and payment was to be made in Norway. However, in a non-contractual claim such as this, it is more appropriate to consider the perspective of the parties involved in the claim rather than the contracting parties. In such a case, the place of delivery should be accorded greater weight than the other factors. The law of Brazil therefore applies and the uncontradicted expert evidence presented by the plaintiffs establishes that under such law a maritime lien exists for the bunkers supplied.
If Canadian law had applied by default, s. 139 of the Marine Liability Act (which gives persons “carrying on business in Canada” a lien against foreign vessels for goods and services “wherever supplied to the foreign vessel”) would not have applied as the plaintiffs are “foreign suppliers”.
With respect to the in personam claim against the ship owner, the plaintiffs were required to prove either that the owner was a party to the supply contract or had authorized someone to contract on its behalf. The mere fact the owner allows the charterer to accept bunkers is not sufficient. The presumption that necessaries are supplied on the credit of the ship is easily rebutted under Canadian law and is rebutted in this case. The plaintiffs knew their customer was a charterer and never inquired as to whether it had authority to bind the ship.
Priorities - Whether s.139 MLA applies to construction of ships? - Meaning of Foreign Ship - Whether personal liability of owner required?
Comfact Corporation v. Hull 717, 2012 FC 1161 2013 FCA 93
Précis: The Federal Court of Appeal agreed with the trial Judge that s. 139 of the MLA did not give a lien to a subcontractor who supplied manpower to construct a vessel.
The builder of the defendant ship became insolvent and went under the Companies Creditors Arrangement Act while in the course of constructing the ship. The plaintiff was a subcontractor of the builder who had supplied welding services to the ship but had not been paid. The ship was being built for a Norwegian corporation but was recorded in the Canadian registry. The plaintiff claimed to have a maritime lien pursuant to s. 139 of the Marine Liability Act. The mortgagee of the ship (who defended the in rem action) denied the existence of a lien. The trial Judge agreed with the mortgagee and held that the plaintiff did not have a lien. In his reasons (at 2012 FC 1161) the trial Judge noted that s. 139 of the Marine Liability Act (“MLA”) grants a maritime lien against a foreign vessel in respect of claims that arise out of the supply of goods, materials or services to the foreign vessel or out of a contract relating to the repair or equipping of the foreign vessel. He further noted that s. 139 does not expressly include ship construction. He said, as a matter of statutory construction, that the omission of a reference to ship construction in s. 139 and its inclusion in s.22(2)(n) of the Federal Courts Act gave rise to a presumption that the omission is deliberate. Further, although interesting issues were raised as to whether s. 139 of the MLA did away with the requirement that the liability of the owner be engaged before an action in rem could be maintained, the trial Judge said those issues would have to be decided another day. The plaintiff appealed.
Decision: Appeal dismissed.
Held: The court is not persuaded that providing manpower to a shipbuilder for the construction of a vessel amounts to the provision of services within the meaning of s. 139 of the MLA.
Ship Supplier – Unpaid Invoices – Interest – Legal Fees
Calogeras & Master Supplies Inc. v. Ceres Hellenic Shipping Enterprises Ltd., 2010 FC 1318 2011 FCA 334
The plaintiff in this matter was a ship chandler who had supplied various ships managed by the defendant over a number of years. This action was for payment of invoices in respect of those supplies as well as interest and legal fees, which fees were recoverable pursuant to the terms of the contract. The case primarily turned on its particular facts and, at trial (2010 FC 1318), the plaintiff was ultimately awarded approximately $100,000, which was significantly less than it had claimed. Simple interest at 5% was awarded from a specified date. With respect to the claim for legal fees, the trial Judge said that notwithstanding the contract the court always retains discretion to reduce the amount awarded for such fees when there are special circumstances. The plaintiff appealed the Trial Judge’s order on interest. The Court of Appeal, at 2011 FCA 334, allowed the appeal in part ordering that interest be calculated from 60 days after the issuance of the invoices.
Ship Building - Default Judgement
Offshore Interiors Inc. v. Worldspan Marine Inc., 2011 FC 904
This was an appeal from an order of a Prothonotary in which the Prothonotary refused to allow the defendant to file a defence out of time and gave default judgement. The underlying action was a claim by a cabinet maker for the costs of cabinets installed on a yacht. The Appeal Judge considered the issues anew and found that there was a contract between the parties the important terms of which were clear. The work was done, invoices were sent but the invoices were not paid. The Appeal Judge found that the defendants offered no evidence to contradict the existence of a contract. In result, the Prothonotary’s order was affirmed.
In Rem Actions – Time Charters – Presumption - Liens - Ship Suppliers
World Fuel Services Corporation v. Nordems (Ship), 2011 FCA 73
This case probes the extent to which American maritime liens will be recognized by Canadian courts. Essentially, the issue was whether an American maritime lien would be recognized where bunkers were supplied to a ship under time charter outside of the United States or Canada and pursuant to a contract between the supplier and the time charterer. The bunker supply contract contained terms to the effect that: the bunkers were supplied on the faith and credit of the ship and her owners; the supplier was to have a lien over the vessel; and the supply contract was subject to U.S. law. The time charter party contract, on the other hand, contained the usual terms that the charterer was responsible for fuel and was prohibited from incurring liens. At first instance (2010 FC 332
) the Judge held the charterer had no authority, express or implied, to bind the owners to the supply contract and that therefore there was no in personam liability on the part of the owners to support a claim in rem. In reaching this conclusion, the Judge noted that the presumption as to the authority of a time charterer under Canadian law is much weaker than under U.S. law. Under U.S. law the presumption can only be rebutted by showing the supplier had actual knowledge of lack of authority whereas under Canadian law less than actual knowledge is necessary. The Judge found that the supplier’s own terms and conditions referred to commercial ship registries such as Lloyds which identified the vessel’s owner and held that the supplier was therefore on notice and should have verified whether the charterer had authority. The Judge next considered whether American law applied to the transaction and looked at the various connecting factors. In doing so he noted that because the owners were not a party to the supply contract the U.S. choice of law clause in the contract was of less significance than otherwise. He ultimately found that the applicable law was the place of the supply of the bunkers, which was South Africa, and as South African law had not been pleaded or proven, he applied Canadian law. Although the Judge had held that U.S. law was not applicable to the transaction, he nevertheless continued to decide whether U.S. law would recognize a maritime lien under circumstances where bunkers were supplied to a time charterer of a non-American ship outside of a U.S. port. He reviewed the affidavits of American attorneys that had been put before him and the various U.S. authorities and ultimately concluded that U.S. law would not recognize a lien under the circumstances.
On appeal, the Federal Court of Appeal dealt first with the presumption and then with the applicable law. On the presumption issue the Appellate Court agreed with the Trial Judge that the presumption was weaker under Canadian law than under American law. The Court said that the relevant question under Canadian law is whether there was behaviour or conduct on the part of the shipowner that would lead a supplier to believe the charterer was authorized to contract on the owner’s behalf or on the credit of the ship. In the absence of any “holding out”, the owner is not liable. The Court further noted that there is a duty on the supplier to make inquiries. Applying these principles to the facts of the case the Court held that the supplier knew or ought to have known that the charterer was not the owner and ought to have made inquiries. The Court further found that there was no “holding out” by the owner. The Court then turned to the question of applicable law and specifically to the question of what weight should be given to the choice of law clause in the supply contract. The Court held that where the owner was not a party to the supply contract the choice of law clause should be given no weight. The Court further refused to interfere with the Trial Judge’s balancing of the various factors and dismissed the appeal. The Court of Appeal did not address the Trial Judge’s finding as to whether U.S. law would recognize a lien in the circumstances.
Anti-Suit Injunction - Bunker Supplies
Alpha Trading Monaco Sam v. Sarah Desgagnés (Ship), 2010 FC 695,
This was an application by the defendant owner of the subject ship for an anti-suit injunction restraining the plaintiff from continuing proceedings commenced in Belgium. The plaintiff was a bunker supplier who had supplied the defendant ship with bunkers at various ports including ports in Canada. The ship was under time charter at the time of the supplies and the time charter contained a prohibition of lien clause and a clause that charterers were responsible for bunkers. The ship was arrested by the plaintiff in this action in Montreal and was later released on the undertaking of the owner to provide bail. Before bail was actually provided, the plaintiff advised that it would amend its statement of claim and proceed with only one supply claim. The plaintiff later commenced proceedings in Italy and Belgium and had the vessel seized in Belgium. The Court noted that the reason the plaintiff was “slicing and dicing” its recovery efforts was because Canadian law required personal liability on the part of the ship owner to support an action in rem whereas under Belgium law a ship may be arrested to secure a claim by a bunker supplier without personal liability of the owner. The Court further noted that the discretion to order an anti-suit injunction should be exercised most carefully. However, the Court did exercise its discretion and granted the injunction on the basis that the plaintiff had commenced these proceedings and accepted the defendant‟s undertaking to post bail. Importantly, the Court said that if the plaintiff had not commenced this proceeding in the first instance the defendants would have no standing whatsoever to bring this motion. The Court noted that the plaintiffs could properly have made their claims in a number of jurisdictions but that having made its choice it would be held to it. Accordingly, the Court granted the anti-suit injunction and ordered the plaintiff to release the ship from arrest in Belgium. On appeal to the Federal Court of Appeal, the Court of Appeal in brief reasons merely said that the re-arrest of the ship was, in the circumstances, an attempt to take unfair advantage by forcing the owners to provide security to guarantee a judgment against a third party.
Supply of Goods and Services
Sealand Marine Electronics Sales & Services Ltd. v. The “Lukey’s Boat”, 2009 FC 32
This was a simplified action for recovery of a balance owing on an invoice relating to the supply of electrical equipment to a vessel. The main factual issue in the case was whether, when the order for the equipment was placed, the price was to include a transducer. The Court found as a fact that there was no agreement to include a transducer and the plaintiff was awarded judgment.
In Rem Actions – Service on Proceeds – Summary Judgment – Repairers/Necessaries Suppliers
Northwest Delta Yacht Services Inc. v. Sovereign Yachts et al., 2004 FC 304
The Plaintiff in this action had installed teak decking on the Defendant yacht pursuant to a contract with the builder. The Plaintiff was not paid by the builder and brought this proceeding in rem against the yacht and in personam against the builder and against the purchasers of the yacht. The statement of claim was served on one of the purchasers but was not served on the other purchaser or on the vessel. The purchaser that was served filed a defence and brought this application to dismiss the entire action. The court allowed the application in part. The in personam action against the purchaser that had been served was dismissed on the grounds that there was no contract between the Plaintiff and that purchaser. With respect to the in rem action a preliminary issue was whether the ship had been validly served. The Plaintiff admitted that the yacht itself had not been served but argued that pursuant to rule 479(1)(d) it could perfect the in rem claim by suing funds deposited into court in a separate action as bail. The court rejected this argument holding that the word “proceeds” used in rule 479(1)(d) referred to proceeds of sale and not money deposited to secure the release of property from arrest. The court, however, refused to dismiss the in rem action or the in personam action against the other purchaser. The court held that the summary judgment rules did not permit one Defendant to move to strike an action against other Defendants who had not been served and had not defended.
Liability for Bunkers Allocation of Payments
Trans Tec Services Inc. v. The “Lyubov Orlova”, 2002 FCA 275
This was an appeal from a summary trial application in which the Plaintiff’s claim was dismissed. The Plaintiff had supplied bunkers to the defendant ship pursuant to a contract between the Plaintiff and the charterer. The Defendant was a sub-charterer who had paid to the Plaintiff the amounts said to be owing in respect of bunkers. The payments specified that they were for the amounts owing in respect of bunkers delivered to the defendant ship. The Plaintiff, however, applied the payments to other invoices owing to the Plaintiff by the charterer. The Plaintiff argued it was entitled to do so by the terms of its contract with the charterer. The motions Judge held, however, that the contract between the Plaintiff and charterer did not bind the Defendant and held that by retaining the payments the Plaintiff accepted the payment terms of the Defendant. On appeal, the Federal Court of Appeal agreed with the motions Judge that the Plaintiff’s conduct made it clear that it accepted the funds in full payment of the claims against the Defendant ship.
Stevedoring Services - Liability of Agent
Logistec Stevedoring Inc. v. Amican Navigation Inc. et al., 2001 FCT 681
This was an action by the Plaintiff stevedoring company to recover $240,000.00 in stevedoring charges. The Defendants were the shipowner and the shipowner’s general agent. The shipowner did not appear at the trial and default judgment was given against it. The agent argued that it had contracted with the Plaintiff as agent only and was therefore not personally liable to the Plaintiff. On the particular facts of the case, the Court held that the agent was personally liable to the Plaintiff. The Court noted that, although some of the agent’s correspondence with the Plaintiff identified it as the “general agent” for the shipowner, the agent failed to indicate to the Plaintiff that it was contracting “as agent only”.
Necessaries Suppliers - Failure to Pay - Whether Discount to be deducted
Calogeras Marine Inc. v. Navihouse S.A., 1997 CanLII 4770
In this matter the Plaintiff ship chandler recovered the unpaid portion of an invoice relating to goods supplied to the Defendant vessel. The only issue was whether the Plaintiff was entitled to recover a discount that had been given to the Defendants. The Court held the discount was conditional on prompt payment by the Defendants and, since they did not pay the invoice in full when due they were not entitled to the discount.
Manufacturers Duty to Warn
Seamaid Fishing Ltd. v. 328174 B.C. Ltd., 1995 CanLII 254
This was an action in negligence for failure on the part of a manufacturer of rebuilt injectors to warn of defects in the injectors. In December, 1988, twelve fuel injectors, rebuilt by the Defendant, were installed in the Plaintiff's vessel. In April, 1989, one of these injectors failed after only 200 hours service when a tip broke off. In that same month another injector installed on a second ship also failed when a tip broke off. In August, 1990, another of the injectors in the Plaintiff's vessel failed when the injector tip broke off and serious engine damage resulted. The Court acknowledged that there was a duty to immediately warn of any defect or danger in the injectors. However, the Court found that the chances of a third injector failure were very remote and, accordingly, the manufacturer was under no duty to warn of this remote possibility.