Admiralty Practice

Introduction

For an overview of the law of Admiralty practice and procedure review the paper entitled Admiralty Practice and Procedure: An Overview - 2005.

NOTE: The Rules of the Federal Court, including the Admiralty Rules were substantially amended in 1998. The new rules, now called the Federal Court Rules, 1998 came into effect for existing and future proceedings on April 25, 1998.The full text of the Admiralty Rules, may be found here. The text of the Federal Court Act can be found here.

Case Summaries

Synopsis of significant developments in 2009-2010

The supply of bunkers also gave rise to an interesting practice case in Alpha Trading Monaco Sam v. The “Sarah Desgagnés”, 2010 FC 695, affd. 2011 FCA 41, where the Federal Court granted an anti-suit injunction restraining a foreign bunker supplier from continuing proceedings in Belgium and Italy. The fact that the foreign bunker supplier initially commenced the Canadian proceeding was the determining factor that led to the granting of the injunction. Other practice cases of interest include: Artificial Reef Society of Nova Scotia v Canada, 2010 FC 865, where it was confirmed that in rem actions are not permissible against Crown ships; Keybank National Association v. The “Atchafalaya”, 2010 FC 406, where an in rem judgement was set aside for failure to give notice to another claimant against the ship; Morecorp Holdings Ltd. v Island Tug & Barge Ltd., 2009 BCSC 1614, where an arrest was set aside and an in rem claim dismissed on the grounds that the claims did not relate to the ship; Olsen v. The Bank of Nova Scotia, 2011 BCSC 111, where an injunction was sought, and denied, to restrain payment under a letter of credit that had been given to secure the release of a vessel from arrest; and Shell Canada Energy v. General MPP Carriers, 2011 FC 217, where, in an action in rem, the plaintiff was refused leave to add an in personam claim against the owners after the expiry of the limitation period.

Synopsis of significant developments in 2007-2008

Notable developments in 2007-2008 in relation to Admiralty practice include: Phoenix Bulk Carriers Ltd. v. Kremikovtzi Trade, 2007 SCC 13, where the Supreme Court of Canada adopted a broad interpretation of s.43(2) of the Federal Court Act; Hansen v. The Trinity (Ship), 2007 BCSC 225, where the British Columbia Supreme Court held that there is a requirement to make full disclosure in an affidavit to lead warrant; Aosta Shipping Co. v. Gulf Overseas General Trading LLC, 2007 BCSC 354, where a mareva injunction was refused, inter alia, on the grounds that there was no substantial connection to the jurisdiction; and, Labrador Sea Products Incorporated v. Northern Auk (Ship), 2007 FC 679, where a party was found guilty of contempt of court for removing equipment from a vessel under arrest.

In Rem Actions

Practice – In Rem Proceeding – Intervention by Mortgagee – Collateral Attack

F.C. Yachts Ltd. v. P.R. Yacht Builders Ltd. (2010), 2010 FC 1066

This was an application by the mortgagee of a vessel under construction for intervenor status. The vessel was being built under a contract between the purchaser, NWEY, and the builder, PRYB. This contract contained an arbitration clause. PRYB had, however, sub-contracted the labour part of the build to a related company, FCY. The subcontract contained no arbitration clause. The funds for the build came from the mortgagee who was eventually to be the ultimate user of the vessel. Disputes arose during the course of the construction. Arbitration was initiated between NWEY and PRYB. FCY commenced this proceeding in Federal Court and had the vessel arrested. Later, pursuant to an agreement between NWEY, PRYB and FCY, the vessel was released from arrest upon the posting of security and this proceeding was stayed in favour of arbitration. FCY was ultimately successful in the arbitration and in the B.C. Supreme Court where aspects of the arbitration had been challenged. After the decision of the arbitrator and the B.C. Supreme Court, this application was brought for intervenor status. The purpose of the intervenor status was so that the applicant could then apply to set aside the arrest even though the vessel had already been released and was no longer in the jurisdiction. The Court noted that the granting of intervenor status is highly discretionary and listed some of the relevant factors. The Court further noted that the intervenor must take the case as the parties have framed it and cannot “hijack the parties’ dispute”. The Court said that the central theme of the proposed intervenor’s case was that the transaction between FCY and PRYB was a sham and this went well beyond the matters the parties had put in issue. The Court further said that the proposed intervention had all the hallmarks of an end-run on the arbitration and B.C. Supreme Court proceedings and noted the absence of any evidence of fraud. Accordingly, the application was dismissed.

In Rem Proceedings - Arrest - Breach of Charter - Failure to Load Cargo - Appeals

Phoenix Bulk Carriers Ltd. v. Kremikovtzi Trade, 2007 SCC 13, reversing 2006 FCA 1

By contract of affreightment between the Appellant and the Respondent, the Respondent agreed to ship a cargo of coal on the Appellant's vessel. In alleged breach of this contract, the Respondent entered into a second contract of carriage with another shipowner and loaded the coal on board that shipowner's vessel. The Appellant commenced an in rem proceeding against the cargo and caused the cargo to be arrested while on board the other ship. The Respondent then brought an application to strike the Statement of Claim in rem and set aside the arrest. At first instance the application was refused but, on appeal to the Federal Court of Appeal, the appeal was allowed and the Court ordered that the Statement of Claim in rem be struck and the arrest set aside. The Court of Appeal held that it was bound by its decision in Paramount Enterprises International Inc. v The “An Xin Jiang”, [2001] 2 F.C. 551, which was indistinguishable from the facts in the present case. However, and most interestingly, the Court of Appeal wrote that Paramount Enterprises International Inc. v The “An Xin Jiang” had been wrongly decided. The issue in both cases was the interpretation of s. 43(2) of the Federal Court Act which permits in rem jurisdiciton against “the property that is the subject of the action”. In the Paramount case it was held that the cargo was not “the subject of the action” because the Plaintiff never had physical possession, referred to as the “physicial nexus” test. This was considered to be too narrow an interpretation. The Court said it preferred a broader “identifiability” test, meaning the action in rem must relate to the specific property contemplated in the contract at issue. However, the Court of Appeal held that it could not overrule a prior decision of another panel of the court unless the decision was manifestly wrong in the sense that the other panel had overlooked a relevant statutory provision or a case that ought to have been followed. As this test had not been met, the Court of Appeal said it was bound by its prior decision.

The Appellant appealed to the Supreme Court of Canada. The Supreme Court in very short reasons said that they agreed that the words in s. 43(2) “subject of the action” should not be given a narrow interpretation. The “physical nexus” test of Paramount Enterprises International Inc. v The “An Xin Jiang” should be rejected in favour of an “identifiability” test that asks whether the cargo is the cargo designated in the contract of affreightment alleged to be breached. Applying this approach s.43(2) was satisfied.

Admiralty Practice - Arrest of Cargo - Sufficiency of Affidavit to Lead Warrant - Pleadings

Kremikovtzi Trade v Phoenix Bulk Carriers Ltd., 2007 FCA 381

This was a claim in rem against the owners and all others interested in a particular cargo. This particular application was a re-hearing of various issues that had been referred back to the Court of Appeal after the Supreme Court of Canada overturned the Court of Appeal on the issue of in rem jurisdiction in Phoenix Bulk Carriers Ltd. v. Kremikovtzi Trade, 2007 SCC 13 (CanLII). The issues now considered were first, whether the affidavit to lead warrant was sufficient and second whether the Statement of Claim should be struck on the grounds that did not disclose a cause of action or was otherwise scandalous, frivolous or vexatious. Regarding the Affidavit to Lead Warrant, the Defendant argued that the affidavit did not disclose the basis for invoking the court’s in rem jurisdiction as required by the Rules. However, the affidavit specifically referred to the subsections of s.22 and 43 relied upon and the Court held that this was sufficient. With respect to the Statement of Claim, it was alleged the claim was deficient in that it did not contain an in personam claim to support the in rem claim. The Court agreed that there could be no in rem claim without an in personam claim however the Court noted the Statement of Claim contained an allegation that the owners of the cargo at the time of the breach of contract were the owners at the time of the commencement of the action and held that this supported an in personam claim. Finally the Court considered whether Kremikovtzi was the beneficial owner of the cargo at the time the cause of action arose and at the time of commencement of the action. The Court noted that the issue was a difficult one but ultimately concluded that it was at least arguable and hence the Statement of Claim was not frivolous and vexatious.

Admiralty Practice - In Rem Actions – Stay

Maritima de Ecologia, S.A. de C.V. v. Maersk Defender (Ship), 2007 FCA 194

In this matter Secunda discussed with the Appellant an arrangement whereby Secunda, or a company controlled by it, would purchase the Maersk Defender, modify the vessel to meet the requirements of the Appellant and then charter the vessel to the Appellant. Subsequently Atlantic, a company controlled by Secunda, entered into an agreement with Maersk to purchase the vessel and entered into a charter party with the Appellant. However, before the purchase could take effect, Secunda and Atlantic learned that Mexican authorities would not issue the required permits for longer than two years. As a result, Atlantic advised the Appellant that the charter party had been frustrated and in response the Appellant commenced arbitration proceedings. On 4 December 2006 the Appellant commenced an action in the Federal Court against the Maersk Defender in rem and against Secunda and Atlantic in personam. On 12 December the Maersk Defender was sold by Maersk to a company called Pacific. Also, on 12 December 2006 a second action was commenced in the Federal Court against the Maersk Defender in rem and against Secunda, Atlantic and Pacific in personam. Both actions were said to be “for the sole purpose of obtaining interim protective orders”. The Maersk Defender was arrested in the second action; however title had already been transferred to Pacific by the time of the arrest. The Respondents brought an application to strike the in rem and the in personam proceedings against Secunda and Pacific. At first instance, the motions Judge struck the in rem proceeding and stayed the in personam proceedings. On appeal, the Court of Appeal held that the in rem proceedings should be struck on two grounds. First, at the time of the commencement of the second action the vessel had been sold and therefore the requirement of s.43(2) that there be the same beneficial owner at the time of commencement of the action as at the time the cause of action arose had not been met. Second, and in any event, there was no personal liability on the part of the owner of the vessel to support the in rem jurisdiction. The Appellants claim in the arbitration was only against Atlantic and Atlantic was never the owner of the vessel. With respect to the in personam claims, the Court of Appeal held that because the actions were commenced solely for the purpose of obtaining security for the arbitration proceeding against Atlantic, there was no remedy sought against Secunda and Atlantic and the in personam claims against them must be struck.

In Rem Proceedings - Arrest – Sistership

F.C. Yachts Ltd. v. Vessel Bearing Hull No. QFY10703E709 (Yacht), 2007 FC 1257

The Plaintiff builder was building two yachts for the Defendant. The first yacht was substantially completed and payments were up to date. The Defendant was, however, alleged to be in arrears on the payments in respect of the second yacht. The builder commenced proceedings in respect of the second yacht but arrested the first yacht as a sistership to the second yacht. The Defendant brought this application to set aside the in rem action and the arrest. The Defendant argued that it was not the “beneficial owner” of the first yacht or the owner of the second yacht. The recorded owner of both yachts was the Plaintiff but the construction contracts provided that title was to be transferred to the Defendant upon completion. Moreover, the Defendant was the mortgagee in respect of both yachts. On these facts, the Court held that the Defendant’s interest in the first yacht was exactly what the contract documents said, it was the mortgagee and not the beneficial owner. In result, the in rem actions were struck and the arrest was set aside.

Arrest of Ships – Whether Sister Ships – Setting Bail

Norcan Electrical Systems Inc. v. Feeding Systems A/S et al., 2003 FCT 702

These were two actions for necessaries. The first was for necessaries supplied to the vessels “FB XIX” and “FB XX” . The second action was for necessaries supplied to the vessels “FB XXII” and “FB XXIII”, which were alleged to be sister ships of “FB XIX” and “FB XX”. The vessels “FB XIX” and “FB XX” were arrested pursuant to warrants of arrest issued in both actions. An application was brought in the first action to have bail set and an application was brought in the second action to have the claims struck on the ground that the arrested vessels were not sister ships of the vessels to which the necessaries were supplied. Regarding the setting of bail, the Prothonotary applied the general rule that a Plaintiff is entitled to bail in an amount sufficient to cover his or her reasonably arguable best case, together with interest and costs, but limited by the value of the vessel. The Prothonotary noted, however, that in the event that security demanded and posted was excessive, there is a separate remedy for wrongful demand of excessive security. Regarding the sistership issue, the Prothonotary found as facts that the arrested vessels were owned by Feeding Systems A/S, that the wrongdoing vessels were owned by Feeding Systems Chile Ltda. and that all the shares in Feeding Systems Chile Ltda. were owned by Feeding Systems A/S. Moreover, the Prothonotary found that Feeding Systems Chile Ltda. was an agent of and fully controlled by Feeding Systems A/S and that Feeding Systems A/S had guaranteed the Chilean debts of Feeding Systems Chile Ltda. The Prothonotary reviewed the English and French versions of s. 43(8) of the Federal Court Act and concluded that the two versions were different and irreconcilable. Under the English version, which looked to registered ownership, the vessels arrested in the second action would not be sister ships of the wrongdoing vessels. However, under the French version, which looked at beneficial ownership, there was a substantial and reasonably arguable case that these vessels were sister ships. In the event, the Prothonotary concluded that it was not plain, obvious and beyond doubt that the Plaintiff’s case would not succeed and he was not prepared to strike the claim. (Note: See also Royal Bank of Scotland PLC v The “Golden Trinity” et al., 2004 FC 795, which is summarized below.)

In Rem Proceedings – Striking – Arrest

ICS Petroleum (Montreal) Ltd. v Les Dauphins du St. Laurent et al., 2005 FC 251

The Plaintiff in this action was a fuel supplier that had supplied fuel to a shore tank for use in three ships allegedly owned by the now bankrupt in personam Defendant. Two of the ships were in fact owned by the Defendant but the third ship, the “Corona Borealis”, was merely demise chartered to the Defendant. When the Defendant defaulted in its payments the Plaintiff arrested all three ships in this action to recover the price of fuel sold. The owner of the “Corona Borealis” brought this application to set aside the arrest and strike the in rem claim as against the “Corona Borealis”. The motion was successful. The Prothonotary found that the fuel was supplied by the Plaintiff pursuant to standard contractual terms that contained a clause creating an unspecified lien “over the vessel” and that acknowledged the Plaintiff/Seller was relying upon the credit of the vessel. The Prothonotary acknowledged that this clause created a lien of some description over the ships in fact owned by the Defendant, however, it was held not to create a lien over the “Corona Borealis” which was not owned by the Defendant. Moreover, the Prothonotary noted that the fuel was not supplied to “a ship” as required by section 22(2(m) of the Federal Court Act, but to a storage tank. Accordingly, the arrest was set aside and the in rem action against the “Corona Borealis” was struck. A further procedural point discussed in this matter concerned the use of affidavit evidence on a motion to strike. The Plaintiff argued that such evidence was not permitted. The Prothonotary, however, held that affidavit evidence is allowed on a motion going to jurisdiction.

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.

In Rem Action – Striking – Arrest – Commission Contract

Atlantic Yacht 7 Ship Inc. v Sovereign Yachts Inc. et al., 2003 FC 965

The Plaintiff in this matter alleged that it was owed commission by the Defendant yacht builder in respect of the Defendant yacht, the purchaser of which had been introduced by the Plaintiff to the Defendant. To secure its claim the Plaintiff effected an arrest of the Defendant yacht. The purchaser of that yacht brought this application to set aside the arrest and strike the in rem action. The Prothonotary granted the application holding that the brokerage services contract between the Plaintiff and Defendant did not give rise to a cause of action in rem.

In Rem Actions – Striking – Fishing Licenses

Roberts v Andrews, 2003 BCSC 1002

This was an application to set aside a warrant of arrest and strike an in rem action. The case concerned a joint venture fishing operation in which the Plaintiff provided fishing licenses and the Defendant provided, inter alia, a fish packing vessel. A dispute arose as to the distribution of profits and the Plaintiff commenced this proceeding and arrested the fish packer. The motions Judge held that the fishing licenses were privileges granted to persons and not vessels and the Plaintiff's supply of the licenses to the joint operation was neither a supply of necessaries nor services and, even if they were, they were not supplied to the fish packer. In the result the in rem action was struck and the arrest set aside.

In Rem Actions - Arrest - Dispensing with Service

Brooks Aviation Inc. v Wrecked and Abandoned Boeing Sb-17g Aircraft, 2002 FCT 503

This very interesting application was for an order dispensing with service of the Statement of Claim, Affidavit to Lead Warrant and Warrant. The res was a B-17 aircraft that had crash landed on a lake in Labrador during the winter of 1947. The following year the aircraft sank during the spring thaw and it remains submerged. The wreck was discovered by the Plaintiff in July 1998. The story of the discovery of the wreck was widely publicized in both print and by a television documentary. The Plaintiff in its statement of claim alleged salvage rights to the wreck and, because it was impossible to serve the res brought this application. Given the special circumstances of the case, the court allowed the Plaintiff’s application. In doing so the court noted that the Plaintiff had provided Federal and Provincial authorities with the court documents and that notice of the discovery and the salvage claim had been or would be given to all interested persons.

In Rem Actions - Service - Default Judgment - Interest - Costs for Lay Litigants

Coath v The “Bruno Gerussi”, 2002 FCT 385

This was an application for default judgment in personam and in rem. The Prothonotary granted the judgment in personam but refused the judgement in rem as the Statement of Claim had not been served on the vessel but instead had merely been given to the person in charge of the vessel. The Prothonotary noted that such service would only be effective if the affidavit material disclosed that access to the ship was not possible. The Plaintiff requested interest on the judgment at 12.5% per annum compounded semi-annually. The Prothonotary noted that interest is governed by the principle of restitution and that interest is normally awarded at prevailing commercial rates. In the absence of any evidence as to prevailing rates, the Prothonotary awarded interest at the rate paid on monies paid into the Federal Court ie. 3.6%. With respect to compound interest, the Prothonotary again noted that this is discretionary and allowed compound interest as the Plaintiff would have received compound interest if it had been paid and the monies were deposited in a bank account. Finally, the Plaintiff, who was self-represented, requested costs of $500.00. The Prothonotary held that a lay litigant may receive out of pocket expenses for time spent pursuing his legitimate interests and awarded the Plaintiff $300.00.

In Rem Actions - Striking

Trawlercat Marine Inc. v The “Amity”, 2002 FCT 1181

The Defendant obtained plans from the Plaintiff for a 55' catamaran which the Defendant intended to build. The Defendant decided not to proceed with the project and later retained a naval architect to design a 70' catamaran. The Plaintiff subsequently commenced this in personam and in rem action alleging breach of a contract to execute a purchase and construction agreement and breach of copyright. The Plaintiff arrested the 70' catamaran which was in the process of being built. The Defendant then brought this motion to strike the in rem portions of the Statement of Claim. The motion was allowed by the Prothonotary. The Prothonotary held that the copyright claim could not sound in rem and further held that the in rem contract claim against the 70' catamaran could not be supported by section 22(2) (m) (necessaries) or (n) (contracts relating the repair or building of a ship) of the Federal Court Act since the ship did not exist at the material time.

Action In Rem - Necessaries

Balcan ehf v The “Atlas”, 2001 FCT 1328

At issue in this case was the validity of the Plaintiff’s claim against the Defendant ship. The Plaintiff alleged it had a valid claim as a supplier of necessaries. The Court held, however, that the Plaintiff had neither supplied necessaries to the ship nor had it paid for the necessaries that were supplied by third parties. Consequently, the Plaintiff was not a necessaries claimant and the Statement of Claim and Warrant of Arrest were struck.

Sister Ships - Action In Rem - Striking Out

Adecon Ship Management Inc. v The "Calix" et al., (May 15, 2000) No. T-267-00 (F.C.T.D.)

Roxford Enterprises S.A. v The "Calix" et al., (May 15, 2000) No. T-123-00 (F.C.T.D.), [2000] F.C.J. No. 671

These matters were applications to strike an action in rem and to set aside the arrest of an alleged sister ship. The underlying claims were for breach of contract of sale. The Plaintiff alleged that it had purchased the "Calix" free and clear of encumbrances but that after the sale it had to pay off liens and encumbrances. The Plaintiff arrested an alleged sister ship to secure its claim. The Court noted that in rem sister ship jurisdiction under s. 43(8) of the Federal Court Act required that the arrested sister ship be beneficially owned by the owner of the "Calix", the ship that is the subject of the action, at the time the action was commenced. The Court held that at the time the action was commenced the "Calix" was owned by the Plaintiff and, therefore, there was no right to sister ship arrest. In the result the Court ordered that the action in rem be struck and that the arrest be set aside.

Action In Rem - Striking out

Paramount Enterprises International Inc. v The "An Xin Jiang" et al., (December 15, 2000) No. A-924-97 & A-929-97 (F.C.A.), [2000] F.C.J. No. 2066

The issue on this appeal was whether the claims in rem against the Defendant ship and her cargo should be struck. The underlying action was for breach of contract against one Defendant and for wrongful interference with contractual relations against the other Defendant. The facts were that the Plaintiff had entered into a contract with the one Defendant for the carriage of that Defendant’s cargo on board the vessel "Len Speer". The Plaintiff positioned the "Len Speer" for the carriage but the Defendant did not supply the cargo. Instead the Defendant had the cargo carried on board the "An Xin Jiang". The Plaintiff then commenced this action and arrested the "An Xin Jiang" and the cargo. The issue before the Court was whether this was a proper exercise of the in rem procedure. The Court of Appeal held that in order to support an action in rem the property arrested must be the "subject" of the "cause" of the action. Applying this test to the facts of the case the Court of Appeal held that the actions in rem had to be struck. The "An Xin Jiang" was not the subject of the contract relied upon by the Plaintiff. Further, the Plaintiff never had possession of the cargo and had no lien on the cargo and therefore there was no basis for an in rem action against the cargo.

Action In Rem - Arrest - Claim for Improvident Sale by Mortgagee

Middleton v The "Ocean Tribune", (2000] B.C.J. No. 2271 (B.C.S.C.)

This was a motion to strike out the action in rem. The Plaintiff’s action was to set aside a sale of the Defendant vessel by the mortgagee to a company controlled by the mortgagee at a price that was substantially less than the value of the vessel as appraised at the time the mortgagee took possession. The Plaintiff pleaded that the sale of the vessel was part of a plan to deprive the plaintiff of its equity in its vessel and was null and void. The Defendant argued that the Plaintiff’s claim was primarily a contractual dispute between a borrower and a lender and that the court did not have in rem jurisdiction. The Court held that the claim was properly one in rem and dismissed the Defendant’s motion.

Sisterships

North Star Ship Chandler Inc. v The "Giuseppe Di Vittorio", (June 3, 1998) No.T-1057-98 (F.C.T.D.)

This was a motion to dismiss the action in rem and set aside the arrest of a sistership. The Defendant maintained that the alleged sistership, the "Lynx", had a different owner from the "Giuseppe Di Vittorio", the ship was the subject of the action. The Defendant relied on the Lloyd's List of Shipowners and Monthly Supplement which showed Black Sea Shipping Co. as the owner of the "Giuseppe Di Vittorio" and Stockwell as the owner of the "Lynx". The Plaintiff presented evidence in the form of an invoice which mentioned Black Sea Shipping Co. and also presented an excerpt from Lloyd's Maritime Directory 1998 listing the "Lynx" under the name Black Sea Shipping Co., albeit with the name "Stockwell" in parenthesis. The Prothonotary held that there was sufficient evidence for the Plaintiff to conclude the "Lynx" had the same beneficial ownership as the "Giuseppe Di Vittorio" and dismissed the motion.

Quashing Warrants to Arrest - In Rem Claims

Cold Ocean Inc. v The "Gornostaevka" et al., (1999), 168 F.T.R. 269, (F.C.T.D.)

This action concerned a claim by the Plaintiff for breach of a fishing agreement by the Defendant who was the demise charterer of the two Defendant ships. The Plaintiff arrested the ships and the cargo on board one of the vessels. The moving party, the sub-charterer of the ships and the owner of the cargo that had been arrested, brought the present motion for orders setting aside the warrants of arrest and striking out the Statement of Claim. The court reviewed the evidence and noted that it was clear that the Defendant was not the owner of the ships or cargo. Accordingly, the court held there was no in personam claim against the owner and an in rem action could therefore not be supported. The court set aside the arrest warrants and struck out the statement of claim.

Stay of Proceedings - In Rem Proceedings - Change of Ownership

Fibreco Pulp Inc. et.al v Star Shipping A/S et.al.,
(February 9, 1998) No. T-153-98 (F.C.T.D.), affirmed (October 20, 1998)

This case involved damage to two shipments of pulp. The significant issue in this case was whether the action should be stayed against not only parties to an arbitration agreement but also against Defendants not parties to the agreement. The Court held that the action could be stayed against all Defendants.

A secondary issue in this case was whether the in rem action against one of the Defendant ships ought to be set aside and the security given by the shipowner returned. The grounds were that there had been a change in the beneficial ownership of the ship after the voyage in question but before the action was commenced. (For certain specified claims, including cargo claims, section 43(3) of the Federal Court Act requires that the ship's beneficial ownership be the same at the time of commencement of the action as it was when the cause of action arose.) The Court granted the motion and ordered that the in rem proceeding be struck and that the security be returned.

Breach of Agency Contract

Scandia Shipping Agencies Inc. v. The "Alam Veracruz" (December 23, 1997) No. T-2472-97 (F.C.T.D.)

The issue in this case was whether an action In Rem is available against all property of a Defendant or only against the property that is the subject of the action. The underlying action involved a claim by the Plaintiff agent alleging that the Defendant shipping line had wrongfully terminated the brokerage agreement between them. The agent commenced In Rem proceedings and arrested the bunkers and freight of the "Alam Veracruz". Before the Prothonotary and on appeal, the Court struk out the In Rem action and set aside the arrest. The Court held that an In Rem action was available only against property that is the subject of the action. The Court further held that since the action was merely for breach of a brokerage contract there was no In Rem action and no right of arrest.

Renewal of Writ and Sisterships

Belgo Nineira Commercial Exportadora S.A. et. al. v. Hadley Shipping Co. Ltd. et.al., (May 12, 1997), No. T-2161-94 (F.C.T.D.)

In this matter the Plaintiff had commenced action against the wrong-doing vessel and three sister ships. One of the sister ships had been in the jurisdiction but it had not been served by the Plaintiff who subsequently obtained an order extending the time for service of the Statement of Claim. The same sister ship later returned to the jurisdiction. The Defendant brought a motion to set aside the time extension and strike the Statement of Claim as against that sister ship. Counsel agreed that the time extension should be set aside but could not agree on whether the Statement of Claim should be struck as against that sister ship. The Prothonotary noted that a Plaintiff could renew a Statement of Claim as against only those ships that had not come in the jurisdiction. The Prothonotary ordered that the Plaintiff file an amended Statement of Claim deleting the sister ship from the style of cause.

Charterparty

Margem Chartering Co. Inc. v Cosena SRL and The "Bocsa", (March 5, 1997) T-2418-96 (F.C.T.D.)

This was a motion by the shipowner to strike out the In Rem Statement of Claim and set aside the arrest . The Plaintiff had entered into a charter party agreement with the "disponent owner" of the ship for the carriage of coal. Upon arrival at the port of loading the vessel was detained by Coast Guard and was unable to load her cargo. The Plaintiff then commenced the action against the owners and arrested the ship for the breach of charter party. The main issue in the case was whether the charterparty was with the shipowner or with the "disponent owner". Upon reviewing the evidence the Prothonotary held that the charterparty was with the "disponent owner" and struck out those portions of the Statement of Claim alleging breach of contract by the shipowner. The Prothonotary, however, did not set aside the warrant for arrest as the Plaintiff had a possible cause of action against the shipowner in tort and such a claim was enforceable In Rem pursuant to section 22(2)(i) of the Federal Court Act.

Booking Note

Domtar Inc. v. Lineas De Navigation Gema S.A. et.al., (April 11, 1997), No. T-2873-96 (F.C.T.D.)

This was a motion by the Defendant shipowner to set aside an arrest and strike the in rem portions of the claim. The Plaintiff's action was for breach of a booking note contract. The Defendant shipowner argued that the vessel could not be arrested as it was not a party to the booking note contract. The shipowner argued the booking note was between the Plaintiff and the other Defendant. The Court, however, noted that there was some evidence suggesting a close relationship between the shipowner and the other Defendant. The Court held that it was not obvious on the evidence that the shipowners were not liable in contract to the Plaintiff and refused to set aside the warrant or dismiss the in rem claim.

Sisterships

Elecnor S.A. v The "Soren Tourbo" et.al.,(May 30, 1996) T-152-95 (F.C.T.D.)

This case addresses the issue of whether the Plaintiff must name all sisterships in a Statement of Claim. The action was originally commenced on January 25, 1995, against the ship "Soren Turbo". The Statement of Claim was renewed on January 15, 1996 for a further twelve months. This renewal was, however, subject to the proviso that if the "Soren Tourbo" had been within the jurisdiction, the Order could be set aside. The owner subsequently moved to set aside the Order on the grounds that a sistership of the "Soren Tourbo" had been within the jurisdiction during the initial currency of the Statement of Claim. The owner argued that the Plaintiff's failure to include the sistership in the Statement of Claim and to serve her while she was in the jurisdiction disentitled it to a renewal of the pleading. The Prothonotary held, however, that the sistership provisions in the Federal Court Act and Rules were permissive and not mandatory. The fact that a sistership not named in the Statement of Claim had been in the jurisdiction did not disentitle the Plaintiff to a renewal of the pleading.

Summary Judgement - Sale of Bunkers

Feoso Oil Limited v The "Sarla", [1995] F.C. 68, (F.C.A.)

This was a motion for summary judgment involving a claim by the Plaintiff for non-payment of an invoice relating to bunkers supplied to the Defendant ship. The ship had been under a time charter although it was not clear whether the charter had come to an end before the bunkers were ordered. The Defendant owners resisted the claim and the motion for summary judgment on the grounds that the bunkers were not ordered by or on behalf of the owners. The Court of Appeal re-affirmed the general principle that an action in rem cannot be sustained unless the bunkers (or other necessaries) were supplied to the ship at the request of owners or by someone acting on their behalf and with authority to bind them. The Court held, however, that the evidence as to who ordered the bunkers was contradictory and that there was an issue of credibility that could not be resolved on a motion for summary judgment. In result, the Court held that there was a genuine issue for trial.

Effect of Service on Ship

Key Marine Industries Ltd. v The "Glen Coe",(1995), 92 F.T.R. 313, (F.C.T.D.)

The Plaintiff in this matter applied for default judgment against the Defendants. The Plaintiff had effected service of the Statement of Claim on the ship but had not served the owners and no Statement of Defence had been filed. The filing of a defence would have amounted to an appearance in the action by the owners and would have converted the In Rem action into an In Personam action. The Court held that because the owners had not been served and had not filed a defence the Plaintiff was not entitled to judgment against them.

Arrest

Admiralty Practice - In Rem Actions - Arrest

Dragage Verreault Inc. v The M/V "Atchafalaya", 2009 FC 273

This matter arose out of a contract for the dredging of a channel. The plaintiff was the head contractor under the dredging contract. The plaintiff subcontracted the job to a company known as B+B Dredging. The contract specified the work was to be done by the "Atchafalaya" which was owned by a company called Proteus and under bareboat charter to B+B. The plaintiff alleged there was delay on the part of the defendants in bringing the "Atchafalaya" on site as a consequence of which the plaintiff incurred liabilities under the head contract. The plaintiff commenced this in rem action and arrested the "Atchafalaya". The owner of the "Atchafalaya" brought this motion to set aside the arrest and strike the in rem action on the grounds that there was no in personam liability of the owner to support the action in rem. The motions Judge however found that there were some representations during the course of the contract negotiations that indicated the principal of B+B (who was also the principal of Proteus) had the authority to contract on the credit of the ship. Accordingly, the motion was refused. (See the associated action Keybank National Assoc. v The “Atchafalaya”, 2010 FC 406)

Practice - In Rem Actions - Arrest - Setting Aside

Morecorp Holdings Ltd. v Island Tug & Barge Ltd., 2009 BCSC 1614

This was an application to set aside the arrest of the “ITB Pioneer”. The case concerned various allegations of breaches of a share purchase agreement between the parties. The plaintiff alleged, inter alia, that it was a term of the share purchase agreement that the parties would enter into a further agreement whereby the plaintiff‟s tugs would be used to deliver cargo to smaller communities on the British Columbia coast. This further agreement was never concluded and the defendants used their own tug, the “ITB Pioneer”, to supply these communities. The Court held that none of the plaintiff‟s claims related to any aspect of maritime law in which the “ITB Pioneer” can be said to have been involved. The Court noted that there may have been a maritime claim against the cargo under s.22(1)(i) of the Federal Courts Act but did not decide on that issue. The Court set aside the arrest warrant and dismissed the in rem claims.

Practice - Arrest - Setting Aside - Crown Immunity

Artificial Reef Society of Nova Scotia v Canada, 2010 FC 865

The plaintiff in this matter arrested a decommissioned naval vessel. Although it is not obvious from the reported reasons, the plaintiff appears to have alleged an agreement with the Crown for the transfer of the vessel to it but the Crown intended to have the vessel scrapped. In any event, the vessel was arrested at the instance of the plaintiff and the Crown brought this application to set aside the arrest. The Court held that pursuant to s. 14 of the Crown Liability and Proceedings Act proceedings against the Crown must be in personam only and in rem actions are not permissible. Accordingly, the arrest was set aside.

Arrest – Contempt

Labrador Sea Products Incorporated v. Northern Auk (Ship), 2007 FC 679

In this matter the Defendants had apparently removed fishing gear and other equipment from a vessel that was under arrest. The Court found the Defendants guilty of contempt, fined them $5,000 each and ordered that they pay costs fixed at $15,000. The Court noted that the requirements for contempt are: 1. the party alleging contempt has the burden of proving it; 2. the elements must be proved beyond a reasonable doubt; 3. what must be established is knowledge of the existence of the Order and knowing disobedience; and 4. mens rea or good faith is relevant only as to mitigation.

Arrest - Full Disclosure

Hansen v. The Trinity (Ship), 2007 BCSC 225

This was an application to set aside a warrant of arrest on the grounds of material non-disclosure by the Plaintiffs. The material non-disclosure was an earlier action for the same damages in which the Plaintiffs had applied for and been refused a mareva injunction. The Court held, for the first time, that full and frank disclosure is required when an application for arrest is made under the Rules of the British Columbia Supreme Court and further held that the Plaintiffs had failed to make such disclosure. In result, the arrest was set aside. (Note: This decision stands on its own, and is arguably incorrect, in requiring full disclosure to support an arrest. The Federal Court decisions on this issue suggest that such disclosure is not required. [See for example: Streibel v The “Chairman” 2002 FC 545, Magnolia Ocean Shipping v The “Soledad Maria”, [1982] 1 FC 205, and Kiku Fisheries Ltd. v. Canadian North Pacific Ocean Corporation, (1998) 137 F.T.R. 192.] )

Admiralty Practice - Arrest of Cargo - Sufficiency of Affidavit to Lead Warrant - Pleadings

Kremikovtzi Trade v Phoenix Bulk Carriers Ltd., 2007 FCA 381

Bail – Amount – Proof

Canadian Sub Sea Hydraulics Limited v The “Cormorant”, 2006 FC 1051

This was an application by the Defendant to set bail for the release of its ship from arrest. The underlying claim of the Plaintiff was for unpaid invoices relating to the provision of goods and services to the ship. There was also a counterclaim by the Defendant. The Court noted that bail was to be determined based on the Plaintiff's reasonably arguable best case and further noted that ordinarily this would be the amount of the Plaintiff's claim. However, the Court further noted that it could set bail at a lesser amount where the circumstances warranted. The Court was particularly troubled by a detailed affidavit filed by the Defendant containing serious allegations against the Plaintiff and which was not challenged or contradicted by any evidence from the Plaintiff. In light of this affidavit, the Court set bail at an amount equal to approximately one-half of the Plaintiff's claim.

Bail – Amount – Standard of Proof – Caveat Warrants

Calogeras & Master Supplies Inc. v. Ceres Hellenic Shipping Enterprises Ltd., 2006 FC 764

This was an application to set the amount of bail. The Court noted that the general rule was that bail should be sufficient to cover the Plaintiff's reasonably arguable best case including interest and costs but limited by the value of the arrested vessel. An apparently novel point raised in the motion was the standard that should be applied by the court when weighing the evidence. The Defendant argued that the standard should be similar to that applied in summary judgment motions, namely, that the Plaintiff is prima facie entitled to the amount claimed but once the Defendant files a motion to set bail the Plaintiff must put its best case forward to show that the amount claimed constitutes a genuine issue for trial. The Court questioned whether that standard was too high but concluded that even applying that standard the bail should not be reduced. A further novel point was raised in the motion in relation to the costs. Specifically, even though unsuccessful in the motion, the Defendant took the position that the Plaintiff should pay the costs since the Plaintiff had obtained a warrant of arrest notwithstanding the existence of a Caveat warrant. The Court reviewed Rule 494 relating to Caveat warrants and recognized that a Plaintiff was entitled to obtain the issuance of a valid warrant when a Caveat warrant had been filed but would be liable for all resulting costs and damages. The Court found, however, that there were no damages as the parties had agreed to security prior to the arrival of the vessel and the vessel was not, in fact, arrested.

Arrest – Release without Bail – Security – Security for Costs

Fish Maker LLC v The “Zodiak” et al., 2004 FC 6700

The Defendants brought this application to release the Defendant vessel from arrest without bail or, alternatively, to set bail. The Prothonotary refused to release the ship without bail noting that this will only be done in rare instances where the circumstances are quite extraordinary or where the case is beyond doubt hopeless. Accordingly, the Prothonotary set security at an amount determined by the Plaintiff's reasonably arguable best case plus three years interest at 5% and costs. The Prothonotary also granted the Defendant security for costs on the basis that the Plaintiff was an American company not ordinarily resident in Canada.

Arrest – Bail

Norgate Marine Management v. Genfreight Limited (The “Conti Will”), 2003 FCT 444

This was an application, inter alia, to reduce the amount of security posted to release the vessel from arrest. The Court reduced the amount of security by 20% on the basis that the Court was satisfied that the claim would not succeed in full. The Court noted that the right of a Plaintiff to full security must be balanced so as not to be oppressive.

Arrest – Bail – Mitigation

Zhoushan Zhongchang Shipping Co. v The “Otello Manship” et al., 2004 FC 1181 affirming 2004 FC 1135

This was an application to set bail. The underlying action was for breach of contract for the sale and delivery of a bulk carrier. By the contract of sale the Defendant was required to deliver the vessel in China by 20 January 2004 which was later extended to 12 February 2004. The Defendants did not deliver the vessel as required but tendered a one day notice of delivery on 28 April 2004. The vessel was not delivered within the one day time period and the contract was repudiated on 7 May 2004. The vessel was later arrested in Vancouver at which time the parties apparently again entered into discussions for the sale of the vessel at that time. Those discussions were not successful. The main issue in the application was whether the amount of bail should be reduced by the Plaintiff's failure to mitigate its loss. Specifically, the Defendant argued that the Plaintiff should have accepted a sale and delivery of the vessel at Vancouver which would reduce the Plaintiff's damages to a loss of use claim. At first instance, the Prothonotary accepted that mitigation was a special circumstance that should be taken into account when setting bail at a Plaintiff's reasonably arguable best case. However, on the conflicting and incomplete evidence before him the Prothonotary considered it was not advisable to moderate the bail based on the alleged failure to mitigate. Accordingly, bail was set at the difference between the agreed purchase price and the value of the vessel on the last date the vessel was to have been delivered plus costs of $300,000 and interest for one year at 6%. On appeal, the appeal Judge held that the obligation on a Plaintiff to mitigate its loss and accept a lesser security was not applicable in the circumstances given the conduct of the Defendant. The appeal Judge confirmed the order of the Prothonotary and dismissed the appeal.

Arrest – Bail – Delivery – Solicitor Client Costs

NHM Internatinal Inc. v F.C. Yachts Ltd. et al., 2003 FCT 53, 2003 FCT 373

This matter concerned a dispute over the construction of a vessel. The Defendant had agreed to construct the vessel for a fixed price and progress payments were made by the Plaintiff during the course of construction. The vessel was, however, not completed on time and the Plaintiff went into possession as mortgagee under a builder's mortgage. The Plaintiff also arrested the vessel and brought this motion to set bail. The Plaintiff proposed that bail be set at the amount owing under the fixed price contract plus the hold back amount. The Defendant argued that the fixed price contract was not valid as it had not been signed and that bail should be set on the basis of a cost plus contract. The Court noted that bail was to be set at an amount equal to the claimants best arguable case plus interest and costs but also noted that a proper balance must be struck and the power to arrest must not be exercised oppressively. The Court held that the Defendant's argument that the fixed price contract was invalid was unreasonable, inconceivable and extravagant and refused to set bail on the basis of a cost plus arrangement. The Court also considered an argument advanced by the Defendant that the taking of possession of the vessel by the Plaintiff as mortgagee was a delivery of the vessel in Canada which attracted a liability for the payment of provincial sales tax and goods and services tax. The Court rejected this argument holding that neither going into possession as mortgagee nor arresting the vessel constituted delivery. In later Reasons (2003 FCT 373) the Court dealt with a request by the Plaintiff for an award of costs of the motion in the amount of $14,000. The Court reviewed the case law as to when solicitor client costs might be awarded and noted that it is only done in exceptional cases or where there has been misconduct. The Court declined to order solicitor client costs in the requested amount of $14,000 but did consider that the extreme positions taken by the Defendant justified a “deterrent element” and ordered lump sum costs in the amount of $9,000.

Arrest – Abuse of Process – Security

North King Lodge v The “Gowlland Chief” et al., 2003 BCSC 947

This was an application to set aside the arrest of the Defendant vessel or alternatively for setting the form and amount of security. The underlying action concerned the sinking of the Plaintiff's vessel due to the alleged negligence of the Defendants. The motions Judge considered first whether the arrest should be set aside due to abuse of process and noted in this regard that an abuse of process would be an arrest done for some purpose other than a legitimate desire to secure the claim, for example, to leverage a defendant into an improvident settlement. The motions Judge found there was no evidence of abuse of process. With respect to the form of security required, the motions Judge noted that the Rules contemplated security in the form of a payment into court, a surety bond, letter of credit or letter of undertaking and held that these forms of security should not be departed from absent a very good reason. He specifically declined to order posting of security by way of a mortgage on the Defendant vessel. Turning to the maximum amount of security, the motions Judge found that the parties were in agreement that the Defendant vessel had a market value of between $350,000 and $360,000. He next considered the amount of security that should actually be posted and found that the Plaintiff's best arguable case was the value of its vessel at $700,000. However, applying a contingency of 50% , he reduced this amount to $350,000. He also refused to apply a mark-up to take into account interest and costs. (Note: Rule 55(26) of the British Columbia Supreme Court Rules does not permit security to be given by way of a letter of undertaking as this judgment suggests. Also, the reduction in the amount of security from the Plaintiff's best arguable case by taking into account contingencies is questionable given the existing authorities. Similarly, the refusal to take into account interest and costs in setting security would seem to be contrary to the weight of authority. Nevertheless, the result arrived at is justifiable given the value of the Defendant vessel, and therefore the upper limit on security, was approximately $350,000)

Arrest - Ship’s Equipment - Contempt

Whyte v The “Sandpiper VI”, 2002 FCT 271

In this matter the Plaintiff had arrested the Defendant dredge and afterwards learned that the “spoils pipeline” had been rented to a third party and moved. The Plaintiff thereafter brought this motion which was treated as an application to show cause order. The Defendant argued that the rented pipeline was not caught by the arrest warrant. However, the Prothonotary held that an arrest warrant catches all of a ship’s equipment including equipment not on board the ship. The Prothonotary further held that the Plaintiff had made a prima facie case for contempt and a show cause order was issued.

Arrest- Sheriff in Possession - Movement of Arrested Vessel - Building Contracts

Striebel v The “Chairman”, 2002 FCT 545

This case concerned a ship building contract that went awry. The Plaintiffs, the mortgagees and intended owners of the defendant ship, commenced this action against the shipbuilder for damages. The Defendant shipbuilder counterclaimed for lost opportunity to complete the construction of the vessel. These reasons deal with three interlocutory motions. The first was an ex parte motion brought by the Plaintiffs for an order that the sheriff go into possession of the defendant vessel. The second motion was by the Defendant to set aside the ex parte Order. The third motion was by the Plaintiff for an order to move the Defendant vessel to the premises of another shipyard for completion. The Prothonotary allowed the motions by the Plaintiffs and dismissed the motion by the Defendant. With respect to the motion to put the sheriff into possession the Prothonotary noted that there was no authority setting a test to be met to put a sheriff or marshal into possession. The Prothonotary thought that the test should be set at a very low threshold and held that an appropriate test should be “reasonably plausible evidence that the vessel should have the protection afforded by a sheriff in possession”. The Prothonotary found this test was met in the this case as there was evidence of petty vandalism and obstructionism by the Defendant’s employees. With respect to the motion to set aside the ex parte Order, the Defendant argued, inter alia, that the Order should be set aside because the Plaintiffs did not give full disclosure. The Prothonotary held that the facts relied upon by the Defendant were not material and further noted that the setting aside of an ex parte order putting a sheriff into possession should be upheld if there is any possibility that possession in the sheriff may be of reasonable value. Finally, with respect to the motion to move the vessel to another shipyard for completion, the Prothonotary allowed the motion noting that the Plaintiffs had exercised their right to take possession of the vessel as mortgagees which they were entitled to do and further that any damages the Defendant might suffer would be secured by a bond to be supplied by the Plaintiffs.

Arrest - Bail

Striebel v The “Chairman”, 2002 FCT 925

The issue in this motion concerned the amount of security to be provided to a shipbuilder who had failed to complete construction of a yacht within the time frame required by the building contract. The purchasers took possession of the yacht as mortgagees and moved it to the yard of another builder for completion. The shipbuilder counterclaimed for lost profits in the amount of $1.8 million and sought security in the amount $2 million. The Prothonotary reviewed the evidence of the shipbuilder’s counterclaim and found it contradictory and incomplete and concluded that the claim would not succeed in the amount presented. The Prothonotary therefore set the security required at $1 million.

Arrest - Letter of Guarantee - Interpretation

Richardson International Ltd. v The “MYS CHIKHACHEVA” et al., 2002 FCT 482

The issue in this motion was the interpretation of a letter of guarantee given by the Royal Bank of Canada to secure the release of the defendant vessel from arrest. By the letter of guarantee the bank agreed that if the owners did not pay a judgment against them execution could issue against the bank. The Plaintiff in due course obtained a judgment against the owners which was not paid and, consequently, made demand under the guarantee. The bank refused payment because the beneficiary of the guarantee was stated as being the Federal Court of Canada. Notwithstanding this wording, the Prothonotary held that the bank was liable under the guarantee. The Prothonotary stated that given the factual background it ought to have been clear to the bank that the guarantee was to secure the Plaintiff and not the Federal Court and he interpreted the guarantee accordingly. With respect to costs, the Prothonotary declined to award costs against the bank, a non-party.

Arrest - Release - Security - Arbitration

Cyber Sea Technologies Inc. v Underwater Harvester, 2002 FCT 794

In this matter a submersible was arrested and the Defendant brought an application, inter alia, to release the submersible without bail or, in the alternative, to post security. The grounds for the Defendant’s application were that the action was without merit and that the dispute was subject to arbitration. The Prothonotary held that it is only in exceptional circumstances that a vessel will be released from arrest without bail. Moreover, the fact that the dispute was subject to arbitration did not disentitle the Plaintiff to security. The fact of arbitration was, however, relevant to the amount of security. In setting the amount of the security the Prothonotary took into account that each party was required to pay its own costs of the arbitration.

Arrest - Security

C.P. Ships (Bermuda) Ltd. v The “Panther Max”, 2002 FCT 406

This was an appeal from an order of a Prothonotary requiring the Defendants to pay $780,500.00 as security to obtain the release from arrest of the Defendant vessel and an additional 20% as a provision for interest and costs. The appeal Judge affirmed the award of the Prothonotary holding that he had properly understood and applied the correct test, namely, that the Plaintiff was entitled to security in an amount sufficient to cover its reasonably arguable best case.

Release from Arrest

Ed Wahl Boat Builders and Repairs Ltd. v Holm, (August 28, 2000) No. T-627-00 (F.C.T.D.), [2000] F.C.J. No. 1381

In this matter the Plaintiff boat builder commenced proceedings for an amount said to be owing by the Defendants in respect of a boat under construction and had the boat arrested. The Defendants counterclaimed for defective construction. During the course of the proceedings the Plaintiff ran into various difficulties with creditors, its counsel and its sole officer and director. As a result, the Plaintiff was unrepresented and the Defendants had no way of dealing with the matter. As a consequence the Defendants brought a motion for the release of the ship from arrest without posting security. The Release was granted.

Arrest of Freight

Third Ocean Marine Navigation LLC v The "GTS Katie", (October 23, 2000) No. T-1383-00 (F.C.T.D.), [2000] F.C.J. No. 1704

This matter arose out of the much publicized events surrounding the return of Canadian military equipment on board the "GTS Katie" from overseas peacekeeping operations. During the course of that voyage a dispute arose concerning payment of freight and, as a consequence, the "GTS Katie" refused to sail to the delivery port to deliver the military equipment on board. The impasse was resolved when the Canadian military boarded the vessel on the high seas and forced her to sail to port. The owners of the "GTS Katie" commenced this action for payment of freight and obtained a Warrant of Arrest of the freights and sub-freights and served the Warrant on the solicitors acting for the Crown and other Defendants. The Defendants brought the present application to set aside that Warrant of Arrest. The Court set aside the warrant on various grounds. First, the Court held that Crown immunity applied. Secondly, the Court held that although the time charter contained a clause giving the owner a lien on freight and sub-freight the contracts of affreightment contained no such clause. Finally, the Court held that the clause in the bill of lading giving the carrier a lien for any amounts due was a lien on cargo and not on freight.

Arrest of Cargo - Setting Aside

Campbell’s Meat Market Ltd. v The "Merak", (July 21, 2000) No. T-926-00 (F.C.T.D.), [2000] F.C.J. No. 1224

The issue in this case was whether an arrest of a cargo of shrimp should be set aside on the grounds that the cargo had been sold prior to the service of the Statement of Claim and Warrant of Arrest. The Court reviewed the evidence and found as a fact that the cargo had been sold prior to the arrest and, therefore, set aside the arrest.

Arrest of Cargo - Costs

Trade Arbed Inc. v Toles Ltd., (November 7, 2000) No. T-636-99 (F.C.T.D.), [2000] F.C.J. No. 1934

This was an appeal from an order of a Prothonotary in which the Prothonotary refused to award solicitor-client costs payable by the solicitor personally after the Statement of Claim in rem was ordered struck and an arrest of cargo set aside. On appeal, the Motions Judge held that the seizure of cargo is an extraordinary procedure that constitutes an interference with someone else’s property and agreed that solicitor-client costs were appropriate. The Motions Judge, however, refused to order that the costs be paid personally by the solicitor.

Quashing Warrants to Arrest - In Rem Claims

Trade Arbed Inc. v Toles Limited et al., (October 20, 1999) No. T-636-99 (F.C.T.D.)

This was an application to set aside the arrest of certain cargo belonging to the second Defendant. The underlying action was for breach of charter party. The Plaintiff had entered into a Gencon charter party with the first Defendant, the owner of the ship "Ideal", for the carriage of used axles to Newark on board the "Ideal". The second Defendant guaranteed the performance of the charter party by the owner and was also the shipper of a second cargo on the "Ideal". During the course of the voyage to Newark, the "Ideal" broke down and the Plaintiff was required to charter a second vessel to complete the voyage. The Plaintiff commenced arbitration against the Defendants in New York pursuant to the charter party and then brought this action against the Defendants in personam and against the cargo belonging to the second Defendant in rem to obtain security for the arbitration. The Plaintiff arrested the cargo belonging to the second Defendant. The court noted that the only claim against the second Defendant was that it had guaranteed the performance of the charter party by the vessel owner. The court held that this did not make the second Defendant's cargo "the subject of the action" within the meaning of section 43(2) of the Federal Court Act. Accordingly, the court set aside the arrest and struck out the in rem portions of the Statement of Claim.

Arrest Warrants - Setting Aside - Extension of Time for Service

Abitibi-Price Sales v C.V. The "Bontegracht",(October 14, 1998) No.T-1270-97(F.C.T.D.)

This was an appeal from a decision of a Prothonotary. The Statement of Claim had been issued on July 11, 1997. On August 14, 1998, after the Statement of Claim had expired, the Plaintiff obtained a Warrant of Arrest and threatened to arrest the "Bontegracht" at Baie Comeau, Quebec. The Defendants provided a letter of undertaking to prevent the arrest. The Defendants subsequently brought this motion to set aside the Warrant and the Plaintiffs brought a motion for an extension of time to serve the vessel. Both the Prothonotary at first instance and the appeal judge held that the Arrest Warrant had been issued out of time. The arrest was set aside and the Plaintiff was ordered to return the letter of undertaking. The Plaintiff was, however, allowed an additional six months in which to properly serve the Statement of Claim on the vessel. The fact that the vessel had been in Canadian waters on two prior occasions was not sufficient to disentitle the Plaintiff to the relief sought as the Plaintiff had taken reasonable measures to track the vessel.

Breach of Contract of Sale - Specific Performance - Setting Aside Arrest

Gleason v. The "Dawn Light" et.al., (January 29, 1998), No. A-438-97 (F.C.A.)

This was a summary judgment application to dismiss the Plaintiff's claim for specific performance of an agreement of purchase and sale of the Defendant vessel and an application to set aside the arrest of the vessel. The Plaintiff alleged that the Defendant had agreed to sell the Defendant vessel to him but then sold it to the intervenor. The motions Judge held the evidence did not show the vessel was unique or irreplaceable and further held that the fact the vessel had been sold to a bona fide purchaser for value without notice was a strong discretionary reason not to grant specific performance. With respect to the application to set aside the arrest of the vessel, the Motions Judge held that the arrest could not be set aside as the Plaintiff still had a claim in damages for breach of contract. On appeal, the Court of Appeal held that the arrest ought to be set aside because the effect of the sale to a bona fide purchaser for value was that the vessel could not be used to satisfy any potential award of damages.

Arrest - Application to Set Aside

Viktor Overseas Ltd. v The "Filomena Lembo" et.al., (November 7, 1997) No. T-2241-97 (F.C.T.D.)

This was an application to set aside a Warrant for arrest in a claim for unpaid repairs to the vessel. The shipowner argued that the Plaintiff had no right to arrest because the repairs were ordered by the bareboat charterer who had no authority to contract on behalf of the owner. However, the Court noted that the Statement of Claim alleged that the repairs were ordered on behalf of the owner and that the repair contract itself stated that the repairs were ordered on behalf of the owner. In the result, the Court dismissed the application.

Bail

Amican Navigation Inc. v The "Necat A et.al., (October 21, 1997) No. T-1357-97 (F.C.T.D.)

This was an appeal from the Prothonotary. The original motion was by the shipowner to reduce the amount of bail that had been posted to secure the release of the ship from arrest. The underlying action was for breach of charterparty. The Plaintiff alleged the Defendant failed to provide a ship to load a cargo the Plaintiff had undertaken to transport. The Plaintiff claimed damages of $337,000.00 for loss of profit, $130,000.00 for Suez Canal fees and $114,000.0 for the balance owing on the hire statement. Bail was initially given in the amount of $605,000.00. The Prothonotary reduced this bail to $124,000.00 holding that the Plaintiff was not entitled to bail in respect of the loss of profits claim or in respect of the canal fees. On appeal, the Court reinstated bail for the loss of profits claim holding that the Plaintiff was entitled to bail based on its best arguable case and that speculative calculations should not be used to determine this. The Court did, however, find that the best arguable case on the loss of profits claim was 30% of revenues rather than the 60% the Plaintiff claimed. With respect to the canal fees, the Court held that the fact that the Plaintiff had not paid these fees was not relevant as the Plaintiff was obliged to pay them and, in fact, was being sued for them. The Plaintiff was held to also be entitled to bail in respect of these fees.

Wrongful Arrest

Armada Lines Ltd. v. Chaleur Fertilizers Ltd., (June 26, 1997) No. 24351 (S.C.C.)

This important case concerns when an arresting party is liable for wrongful arrest. In a ground breaking decision reported at [1995] 1 F.C. 3, the Federal Court of Appeal held that an arresting party could be liable for wrongful arrest merely upon a finding that the arrest was "illegal" or "without legal justification". The Supreme Court of Canada, however, reversed this ruling and re-established the rule from The "Evangelismos"(1858) 14 E.R. 945, that damages for wrongful arrest may only be awarded where the arresting party acts with either bad faith or gross negligence. The Supreme Court noted that a change in such a long standing rule should only be made by the legislature.

Arrest and Equipment

Pacific Tractor Rentals (V.I.)Ltd. v The "Palaquin", (June 14, 1996) No. T-2616-95 (F.C.T.D.)

The issues in this case were whether an arrest warrant extends to property taken off a vessel prior to arrest and whether repairs to a vessel under arrest paid for by the vessel's owner form part of the arresting party's security. The case concerned machinery owned by the Plaintiff that had been lost overboard from the "Palaquin" during alleged heavy weather. The heavy weather also damaged the engine of the "Palaquin". Subsequent to the accident, but before action had been commenced, the engine was removed from the "Palaquin" for repair and the electronics were removed for safekeeping. A Warrant for Arrest was served on the vessel after the removal of these items. The Plaintiff brought a motion before the Prothonotary for an order that the arrest warrant extended to the engine and electronics removed from the vessel. The Court held that the arrest warrant extended to items that had been removed from the ship before the arrest. A second aspect of the case concerned whether the increase in the value of the ship as a consequence of the engine repairs would benefit the Plaintiff. The Court held that repairs done and paid for by the owner subsequent to the accident, but before arrest, increased the value of the res to the benefit of the arresting party. However, the value of repairs done and paid for by the owner after the arrest did not form part of the arresting party's security.

Right to Re-Arrest

Atlantic Shipping (London) Ltd. v The "Captain Forever", (June 12, 1995), No. T-1165-95, (F.C.T.D.)

In this matter the Plaintiff had commenced arbitration proceedings in England for reimbursement of moneys paid for bunkers under a charter party, and had negotiated security for the bunkers claim. The Plaintiff later commenced action for breach of charter party and for the bunkers claim. The Plaintiff sought a much higher sum as security. The issue in the case was whether the Plaintiff was entitled to re-arrest the ship and to claim a higher sum as security. The Court held that there was nothing preventing the Plaintiff from doing so in respect of the claims not included in the arbitration.

Judicial Sales

Practice - Intervenors – Judicial Sale

Keybank National Association v. The “Atchafalaya”, 2010 FC 406

This was a motion to intervene and to set aside an in rem judgment and order for sale. The intervenor was Dragage Verreault (“DV”), the plaintiff in another action who had a claim against the same vessel. The plaintiff in this action, Keybank, had been advised of the other action. Keybank obtained a judgment in this action on consent and provided DV with a copy of that judgment. Keybank later brought a motion for sale which DV attempted to delay but because DV did not obtain intervenor status its requests were refused and the order for sale was granted. DV then brought this application. The Court held first that DV as an arresting party had an interest in the ship and was entitled to intervene. The Court further held that the judgment should be set aside, primarily on the grounds that Keybank ought to have given DV prior notice of its application for judgment. With respect to setting aside the order for sale, the Court said that this should be determined by the justice who ordered the sale.

Ownership - Matrimonial Dispute – Sale – Stay of Proceedings

Ricci v. Tully, 2009 FC 493

This was a dispute between a husband and wife involved in divorce proceedings as to the ownership of a sailboat named “Forever Lost”. The boat was purchased with funds raised by the plaintiff/wife from a mortgage on her home but was registered in the name of the defendant/husband. The plaintiff claimed that she was the equitable owner of the boat and the defendant claimed that the boat was a gift to him from the plaintiff. The defendant/husband was living on the boat but had failed to make payments as required by a previous court order and had failed to maintain insurance on the vessel as required. The issue before the Court was whether to grant the plaintiff an order of sale. The defendant argued that the Federal Court should stay the proceedings to permit the issues to be determined in the divorce proceedings in the Provincial Family Court. The Court held that it clearly had jurisdiction to deal with the sailboat but noted that it should not become “a surrogate divorce court for warring spouses”. The Court ordered the sale of the vessel and directed how the proceeds were to be applied with the balance, if any, to be paid into the Court to await the outcome of the divorce proceedings.

Extension of time for Service and Arrest – Order for Sale Pendente Lite

Franklin Lumber Ltd. v. The “Essington II” et al., 2005 FC 95

This was an application by a mortgagee for a substantial extension of time (more than six years) within which to serve and arrest the vessel and a further application for Court approval of a private sale pendente lite. In deciding to grant the time extension, the Prothonotary applied the three-part test from Registered Public Accountants Association of Alberta v. Society of Professional Accountants of Canada, (2000) 5 C.P.R. (4th) 527 that the applicant must demonstrate a continuing intention to pursue the claim, that there is an arguable case and that there is no prejudice to the defendant by granting the extension. This test was to be applied within the context of the “overarching” principle of ensuring justice is done between the parties. In this case, the Prothonotary considered the fact that the dispute was essentially between family members to be particularly significant. In view of the fact that the vessel owner had not found a buyer in seven or eight years, but had at one time agreed to sell the vessel to the present buyer at the same price, the Prothonotary also made an Order for the private sale of the vessel pendente lite without appraisal and on the terms that a down payment of just under 8% of the sale price would be paid into Court immediately with closing approximately four months thereafter. The elements to be considered in deciding whether to order a sale pendente lite are open-ended, but the Prothonotary noted that they include: 1) the value of the vessel compared to the amount of the claim; 2) whether there is an arguable defence; 3) whether the owner can carry on, that is, whether there must be a sale at some point; 4) whether there will be any diminution in the value of the vessel or of the sale price by the delay; 5) whether the vessel with depreciate by further delay; and 6) whether there is any good reason for a sale before trial.

Extension of time - Stay

Global Enterprises International v The “Aquarius”, “Sagran” and “Admiral Arciszewski”, 2001 FCT 605

This was an application by the Polish trustee in bankruptcy of the Defendant shipowner for an extension of time in which to file an appeal of an order authorizing the sale of the Defendant ships and for a stay of the sale proceedings. The Prothonotary reviewed the case authorities on time extensions and noted that an applicant must generally show an intention to appeal before the time ran out, that the appeal has merit, a reasonable explanation for the delay and that the other parties are not prejudiced. The Prothonotary held that the applicant had failed to address these issues in its affidavit evidence and further found that there was prejudice to the other parties given that the vessels were incurring substantial expenses and a delay might frustrate a sale. The Prothonotary next considered the stay application. The proper test on such an application is that there must be a serious question to be tried, there must be irreparable harm if the application is refused and the balance of convenience must be considered. The Prothonotary noted that the applicant’s material did not suggest the sale order was in error and was silent as to irreparable harm. On the matter of balance of convenience, the Prothonotary was of the view that the balance of convenience favoured an early sale of the ships.

Sale - Delay in Payment - Forfeiture

Nedship Bank N.V. v The "Zoodotis", (March 24, 1999) No. T-186-99 (F.C.T.D.)

This was an application by the second highest bidder for the Defendant vessel to set aside an ex parte order that extended by two days the deadline by which the successful bidder was to pay the purchase price. The ex parte order was granted because there had been a transfer error by bankers. The court refused the application holding that forfeiture is a drastic event and should not be ordered "to penalize a bona fide buyer who has run afoul of a bank clerk who cannot cope with a bank transfer".

Reconsideration of Sale Order

Annacis Auto Terminals (1997) Ltd. v The "Cali", (1999) 163 F.T.R. 139, (F.C.T.D.)

This was a motion by the mortgagee to vary an order of sale. The motion arose because one of the terms of the sale order was that any moorage charges from the date of the sale order to the time the ship left the berth were to be given priority as sheriff's costs. At the time it was contemplated that the ship would leave the berth within 45 days of the sale. However, the ship remained at the berth 75 days after the sale and it was not apparent that she would be leaving any time soon. This resulted in ever increasing moorage charges which, as each day passed, meant a smaller recovery for the mortgagee. Although the court clearly had sympathy for the mortgagee, it held that the words "liberty to apply" in the sale order did not confer a right to vary the order. The court held that the order was final and binding. The court did, however, suggest that if a motion was brought pursuant to Rule 399(2) that the mortgagee might obtain some relief by way of an assignment of the claim of the dock owner against the purchaser of the ship.

Court Ordered Sale

Annacis Auto Terminals v The "Cali",(August 26, 1998) No.T-1261-98 (F.C.T.D.)

This was an application for reconsideration of an Order in which the court gave the owners until October 31, 1998 to complete a private sale of the ship failing which the ship would then be sold by the Court. The applicant was of the view that the order was deficient in that it ought to name the Sheriff who would conduct the court ordered sale and provide the Sheriff's address as the place where the Sheriff would receive bids. The Prothonotary held, however, that given the circumstances it was premature to include such particulars in the Order and Commission for Sale.

Sale Pendente Lite

The Governor and Company of the Bank of Scotland v The "Nel", (December 9, 1997) No. T-2416-97 (F.C.T.D.)

This was an application by the mortgagee of the Defendant vessel for Court approval of a private sale. The mortgage covered four vessels and was outstanding in the amount of US$12 million. All of the vessels were in various stages of sale proceedings and it appeared likely that there would be a deficiency under the mortgage even after all the vessels were sold. The Court noted that a sale pendente lite could be ordered "for good reason". The Court found good reason in the fact that the "Nel" was loaded with sulfur, a cargo that is notorious for causing corrosion damage. The Court therefore approved the sale.

Sale Pendente Lite

Mario Neves et.al. v. The "Kristina Logos" et.al.,(January 16, 1997) No.T-1041-95 (F.C.T.D.)

This was an application by the Crown for leave to sell the Defendant vessel pendente lite. The application was granted on the grounds that the costs of maintaining the vessel amounted to over $500,000.00 and the ongoing cost was $60,000.00 per year. Further, there was evidence the vessel was deteriorating in value and its classification certificate would soon expire.

Sale Pendente Lite

The Queen v The "Western Horizon" et.al.,(November 19, 1996) No.T-1620-96 (F.C.T.D.)

This was a motion by the Plaintiff to sell the "Western Horizon" pendente lite and a motion by the Defendant to stay any such sale. The Plaintiff was the holder of a registered mortgage against the vessel in the amount of $200,000.00. The vessel, however, was only valued at approximately $60,000.00. The Plaintiff's motion was allowed by the Court on the grounds that: there was a large discrepancy between the value of the ship and the mortgage; the ongoing cost of moorage could exceed the value of the vessel by the conclusion of a trial; the vessel was deteriorating; and, the Defendant had not come forward to offer to share the moorage or maintain the vessel or put up security of $60,000.00. The Court also declined to order a stay of the sale finding that there was no serious issue to be determined and that the balance of convenience did not favour a stay.

Parties and Pleadings

Practice – Motion to Strike Statement of Claim

Freightlift Private Limited v. Entrepot DMS Warehouse Inc., 2011 FC 280

The plaintiff in this action was an Indian freight forwarder who had been retained to arrange shipment of four containers of clothing to Montreal. The bills of lading for the containers named the plaintiff as consignee because the purchaser had not paid for the cargo. The purchaser was in fact unable to pay for the cargo when it arrived and, as a consequence, arrangements were made by the purchaser and its freight forwarder for the containers to be stored while another buyer could be found. The cargo, however, mysteriously disappeared from the warehouse. The plaintiff brought this action alleging the defendants had conspired to release the goods to the purchaser. The defendants brought this motion to strike the Statement of Claim on the grounds that it was premature in that the plaintiff was not the owner of the goods and had not suffered a loss. The plaintiff was, in fact, being sued by its customer in India and was defending that suit. At first instance and on appeal the motion was dismissed.

Practice – Service – Addition of Parties - Limitation Periods

Shell Canada Energy v. General MPP Carriers, 2011 FC 217

This was an application by the owner of one of the defendant ships to set aside service and a corollary application to amend the Statement of Claim. The plaintiff had filed a Statement of Claim for damage to cargo on the last day of the one year limitation period. The Statement of Claim included the ship as a defendant but not the owner in personam. The Statement of Claim was sent by courier and fax to the owner but as service had to be effected in accordance with the Hague Convention the plaintiff obtained an ex parte order extending the time for service “on the owners” and ultimately effected service on the owner in Germany. The Court predictably held that service of the Statement of Claim on the owner was not service on the ship. The Court further held that the ex parte order extending the time for service did not indirectly create a right of action “in personam”. With respect to the plaintiff‟s motion to amend the Statement of Claim by adding the owner as an in personam defendant, the Court refused the application on the basis that it was not the correction of a misnomer and the limitation period had passed.

Pleadings - Amendment - Limitation Period

Bank of the West v. The 26' Well Craft Scarab (Ship), 2007 FC 1112

The Defendant marine insurer sought leave to amend its pleading to plead a limitation period contained in its policy. At first instance the Prothonotary denied the application without giving reasons. On appeal, the motions Judge noted the general rule is to allow amendments at any stage of an action provided there is no prejudice or injustice to the other party that cannot be compensated for in costs. Given that the proceeding had not advanced significantly and the Plaintiff was unable to identify any particular prejudice, the Judge allowed the appeal and gave leave to the Defendant to plead the limitation period defence.

Pleadings – Reasonable Cause of Action – Security for Costs – Solicitor's Affidavits

Addo v OT Africa Line et al., 2006 FC 1099

The Plaintiff was the owner of goods that were damaged when the container in which the goods were stowed was dropped at the Port of Antwerp. The Plaintiff commenced proceedings against various parties including the operator of the port where the container was dropped. That Defendant brought this motion to strike the Plaintiff's claim on the basis that it disclosed no reasonable cause of action and, in the alternative, for security for costs. The Court held that the fact that the container was dropped in a foreign location did not deprive it of jurisdiction and that there were a number of significant factors tying the claim to Canada. The Court concluded that it was not “plain and obvious” that it was without jurisdiction and dismissed that part of the motion. With respect to the application for security for costs, the Court ordered that the Plaintiff post security of $5,000 because the Court was “concerned as to the plaintiff's credibility”. A final matter that was considered in the course of the Reasons was the admissibility of an affidavit prepared by one of the plaintiffs' solicitors. The Court reviewed Rule 82 of the Federal Court Rules noting that it was quite explicit and that case law had held that it was a violation of this rule for a lawyer to submit an affidavit when another lawyer in the same firm will argue the motion.

Pleadings – Striking Statement of Claim

Canada Steamship Lines Inc. v Elliott, 2006 FC 609

This was a motion to strike a counterclaim on the grounds that it failed to disclose a reasonable cause of action. The counterclaim alleged an intentional interference with contractual relations relating to the use of a ship. The motion was denied by the Prothonotary who reviewed the relevant authorities and concluded that the impugned pleading contained allegations of the essential elements of the tort of interference with economic relations, namely: an intention to injure; interference by illegal means; and economic loss as a consequence. Unlike the tort of inducing breach of contract, there was no requirement to plead or prove knowledge of a specific contract or that the actions of the defendants resulted in a breach of a specific contract.

Pleading – Striking – Jurisdiction

Kona Concept Inc. v Guimond Boats Limited, 2005 FC 214

In this matter the Plaintiff commenced proceedings against the Defendant in Hawaii in relation to a contract for the design, manufacture and sale of a tuna fishing boat. The Defendant initially contested the jurisdiction of the Hawaiian courts but after having lost its jurisdiction motion withdrew from that action. The Plaintiff subsequently obtained a default judgment against the Defendant and commenced these proceedings for breach of contract and for enforcement of the U.S. default judgment. The Defendant brought this motion to strike the entire Statement of Claim on the grounds that the Plaintiff was a dissolved company when the Statement of Claim was issued and on the grounds that the Federal Court lacked jurisdiction. On the first issue the Court found that the Defendant had dealt with and was paid by the principal of the Plaintiff and held that fairness dictated that the Plaintiff be permitted to substitute the correct party. On the second issue the Court held that pursuant to s. 22(2)(n) of the Federal Court Act it had jurisdiction over claims for the construction of a ship and that the Plaintiff had pleaded sufficient facts to bring it within that jurisdiction. The Court declined to rule on the claim for the enforcement of the U.S. judgment as its status was in some doubt and this issue was better dealt with in a motion for summary judgment. (Note: The comments of the Court on jurisdiction were approved and adopted in a later motion for summary judgment summarized below under “Miscellaneous”.)

Pleadings – Striking – Economic Loss

1340232 Ontario Inc. v St. Lawrence Seaway Management Corp., 2004 FC 209

This was an application to strike the claim of the Plaintiff. The Plaintiff's claim was for damages for business losses incurred as a result of the closure of a bridge over the Welland Canal, which closure it was alleged was due to the negligence of the Defendant. The Plaintiff had no proprietary interest in the bridge and none of the Plaintiff's own property was damaged. The Prothonotary allowed the application and struck the claim noting that similar claims to recover pure economic loss because of negligent damage to a bridge have been consistently rejected by the courts.

Motion to Strike Statement of Claim

Berhad v The Queen, 2003 FC 992

This was an application to strike out the Statement of Claim. The underlying action was a claim by the owner of the vessel “Lantau Peak” against the Federal government and two steamship inspectors. The two inspectors detained the vessel and would not allow it to be moved until repairs were completed. The Plaintiff wanted to move the vessel to another jurisdiction where the repairs could be done more economically than in Canada. The application to strike was dismissed for two reasons. It was an important and complex case involving the overlap and interplay of the Canada Shipping Act, two international Memorandums of Understanding, and the SOLAS Convention and therefore ought not to be decided on a motion to strike out. Secondly, it was far from plain and obvious that the Plaintiff would certainly fail at trial. (Note: In fact, the action was successful. The trial judgment is summarized below.)

Parties – Addition – Amendment of Pleadings – After Limitation Period

Budget Steel Ltd. v FMW Towing Ltd., 2004 FC 1140

This matter concerned the capsizing of a barge and the consequential loss of her cargo. The Plaintiff, the owner of the cargo, originally commenced these proceedings against the owners of the barge and the tugs towing her. More than two years after the capsize the Plaintiff brought this application to add the owners of a passing ship and to amend the Statement of Claim to allege that the wake of the passing ship caused the capsize. The proposed Defendants contested the application arguing that the limitation period had expired and that they had been prejudiced by the lapse of time in that they did not have the opportunity to properly investigate the incident. With respect to the limitation period issue the Prothonotary held that the running of the limitation period did not prevent the addition of the Defendants as they would be entitled to plead and argue the limitation defence. The Prothonotary had more difficulty with the prejudice issue since the Plaintiff had written to the proposed Defendants advising them that they considered the cause of the capsize to be the unseaworthiness of the barge. However, the proposed Defendants had been aware of the incident from the time of the capsize and had been added as Third Party Defendants. The Prothonotary ultimately held that although there had been some prejudice this prejudice was self inflicted in that it was due to an oversight or lack of initial assessment and investigation on the part of the proposed Defendants. In result, the proposed Defendants were added as parties.

Joinder of Parties – Owners of Salved Property

Early Recovered Resources Ltd. v. Gulf Log Salvage Co-operative Association et al., 2003 FCT 549

This was a motion to add two associations of forestry companies who were owners of logs as either interveners or defendants in the Plaintiff’s action for salvage in respect of 17 unidentified logs from the BC coast. In the original action, the Province had been named as a Defendant but had a limited interest to stumpage fees which had likely already been paid prior to salvage. After noting that the style of cause should have been in rem to name the 17 unidentified logs, the Prothonotary held that the owners of the salved property, who would be liable for the salvage claim, should be defendants as they should have notice and be afforded the chance to protect their position. The two associations had an interest in rem in the logs (although ownership was unidentified) and an interest in protecting the existing log recovery system. The motion was granted adding the associations as defendants.

Simplified Action Procedures – Pleadings – Amendment – Evidence

Valentino Gennarini SRL v. Andromeda Navigation Inc., 2003 FCT 567

This was a simplified action for disbursements incurred and for ship agency services rendered by the Plaintiff at the port of Taranto, Italy. The case is of interest because of the way a number of procedural matters were decided. The Defendant sought to adduce affidavit evidence that it was acting as agent for a third party. The Plaintiff applied to strike this evidence on the basis that the agency relationship the Defendant sought to prove was never pleaded. The Court agreed and struck the evidence, holding that “the Court should not consider any evidence which is irrelevant to the pleadings as they are formulated or which contradicts the pleadings”. The Defendant also applied for short leave to bring a motion to amend its pleadings. The Court reiterated the general rule that an amendment should be allowed for the purpose of determining the real question in controversy between the parties provided that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice. The Court denied the Defendant’s motion to amend its Statement of Defence because the motion was presented one day before trial when it could have been brought many months earlier, the amendment was not being made to refocus and particularize points in controversy but rather sought to introduce a distinct and entirely new cause of defence, and the proposed amendments would inevitably delay an expeditious trial. At the hearing on the merits the Plaintiff sought to introduce documents by way of an affidavit which effectively incorporated by reference every document listed in the Plaintiff’s Affidavit of Documents which the Plaintiff wished to introduce as evidence in chief. Despite the objections of the Defendant the Court accepted as filed the original documents incorporated by reference in the affidavit since they had been listed in the Plaintiff’s Affidavit of Documents and served on the Defendant over one year earlier together with copies of the documents themselves. As a final procedural point, the Court permitted the Plaintiff to read in excerpts from the transcript of an oral examination for discovery conducted before the action was converted to a simplified action. While the rules on simplified procedures do not provide for read-ins of oral discovery because there can be no oral examination for discovery, they do not preclude such read-ins when the oral examination was conducted before the action was converted to a simplified action.

Pleadings - Amendment - Striking Out - Length of Written Argument

Berhad v Canada, 2002 FCT 298

In this matter the Defendant brought a motion to strike the Statement of Claim on various grounds including that it failed to disclose a reasonable cause of action and was frivolous and vexatious. The Defendant additionally brought a motion for leave to amend its Statement of Defence to plead that the Statement of Claim failed to disclose a reasonable cause of action and was frivolous and vexatious. The amendments to the Statement of Defence were necessary as the case law establishes that a motion to strike out a Statement of Claim on any basis other than for failure to disclose a reasonable cause of action must be brought before the Defendant has pleaded and may only be brought subsequently if the Statement of Defence contained a reservation. The Statement of Defence in this matter contained no such reservation and hence the need for the amendment. The Prothonotary held that the Defendant did not need to amend its Statement of Defence to plead want of a reasonable cause of action in the Statement of Claim since this went to jurisdiction which could always be challenged regardless of whether the Defendant had filed a Statement of Defence. With respect to the amendment to plead that the Statement of Claim was frivolous and vexatious, the Prothonotary noted that such an amendment was of a merely procedural or technical nature and disallowed the amendment. Alternatively, the Prothonotary held that the Defendant ought to have applied for the amendment much earlier. A secondary issue in this case concerned the written argument filed by the Defendant for use on the later motion to strike which comprised 145 pages in length. The Prothonotary noted that such written arguments should generally not exceed 30 pages in length and ordered the Defendant to redraft the argument so that it did not exceed 45 pages.

Pleadings - Striking Out - Unjust Enrichment

Ed Wahl Boat Builders and Repairs Ltd. v Holm, (July 12, 2000) No. T-627-00 (F.C.T.D.), [2000] F.C.J. No. 1184

This was an application to strike out a paragraph of the Statement of Claim pleading a claim for unjust enrichment in the alternative to a main claim for breach of contract for the building of a boat. The Court allowed the application and struck out the offending paragraph on the basis that facts in support of the claim for unjust enrichment had not been pleaded and, more importantly, because the building contract which was specifically pleaded by the Plaintiff provided a juristic reason for any alleged unjust enrichment.

Limitation Proceedings - Pleadings

Bayside Towing Ltd. v Canadian Pacific Railway Company, (February 2, 2000) No. T-1692-99 (F.C.T.D.)

This was a limitation action by the owner of the tug "Sheena M" in relation to a collision between the barge "Rivtow 101" in tow of the "Sheena M" and a railway bridge owned by the Defendant. The Defendant challenged the right of the Plaintiff to limit liability pursuant to the 1976 Convention. The Plaintiff brought this application to strike out portions of the Statement of Defence. The court ordered that those portions of the Statement of Defence referring to faults allegedly committed by the owners of the tow be struck on the grounds that they were not relevant to whether the tug owner could limit liability. The court also struck out those portions of the Statement of Defence alleging mere negligence on the grounds that negligence has nothing to do with the test set out in Article 4 of the Convention for breaking limitation (i.e. personal act or omission committed with intent to cause loss, or recklessly, with the knowledge that loss would probably result). The court also struck out pleas of res ipsa loquitur, on the grounds that it was no longer applicable in Canada, and breach of statutory duty, on the grounds that it was not a recognized tort and was to be considered in the context of the general law of negligence. The court refused to strike out allegations of "wilful defaults", noting that concepts of wilfulness may be close to the test under the Convention. The court further refused to strike out an allegation that the tonnage for limitation purposes should be calculated on the combined tonnage of the tug and tow. The court doubted that the plea could succeed in the absence of common ownership of the tug and tow but it was not something that plainly and obviously would fail.

Adding Plaintiffs

State of Alaska v. John Doe et.al,(November 3, 1997) No. T-1552-97 (F.C.T.D.)

This is the second volley in the litigation surrounding the blockade of the Alaskan ferry "Malaspina" by B.C. fishermen in July of 1997. The motion was brought by various fishermen for an order that the action was not properly commenced as against them. The Statement of Claim initially named 17 vessels, John Doe, Jane Doe, and other persons and ships unknown. In a subsequent amendment pursuant to Rule 421 and without a Court order, the Plaintiff purported to add 94 ships and their owners. The added Defendants argued that this was the addition of parties and could only be done with a Court order pursuant to rule 1716. The Plaintiff argued that they were not adding new parties but were merely correcting a misnomer. The Court held that for the Plaintiff to prevail the burden was on it to lead evidence showing the new ships were in the path of the "Malaspina". As the Plaintiff led no such evidence, the application was allowed and the Court ordered the action against these additional Defendants had not been properly commenced.

Addition of Defendant by Defendant

Ferguson v Arctic Transportation Ltd., (December 7, 1995), No. T-1941-93, (F.C.T.D.)

This was an action by the Plaintiff against the Defendant shipowner for personal injuries suffered by the Plaintiff while the Defendant ship was transiting the Panama Canal. At the time of the accident the Plaintiff was employed as a Pilot by the Panama Canal Commission. The Defendant in the case had previously joined the Panama Canal Commission as a Third Party and now sought leave, against the wishes of the Plaintiff, to have it added as a Defendant. The Court refused the Defendant's motion. In doing so, the Court held that the Plaintiff has the prima facie right to choose the Defendants against whom it wishes to proceed and that this right should only be departed from in exceptional circumstances.

Discovery

Practice – Discovery- Appeals from Prothonotary

Galerie au Chocolat Inc. v. Orient Overseas Container Line Ltd., 2010 FC 327

Technically this was an application to appeal a case management order of a prothonotary, however, it raised issues relating to discovery. Specifically, the defendant had requested a case management conference to address whether the plaintiff had failed to provide satisfactory answers to requests/undertakings given at discovery. The prothonotary refused the request and ordered the defendant to produce a pre-trial conference memorandum. The appeal Judge noted that “a discretionary order of a prothonotary ought not to be disturbed unless the issues it raises are vital to the final disposition of the case or the prothonotary exercised his or her discretion on the basis of a wrong principle or of a misapprehension of the facts”. The Judge held that issues relating to discovery are not “vital to the final disposition of the case”. The appeal was accordingly dismissed.

Discovery – Non-Parties

The Administrator of the Ship-Source Oil Pollution Fund v The “Anangel Splendour”, 2006 FCA 212 affg. 2005 FC 942

This was an action by the Administrator of the Ship-Source Oil Pollution Fund to recover pollution clean-up costs it had paid to two claimants, QCM and the Department of Fisheries and Oceans (DFO), pursuant to the statutory scheme in the Marine Liability Act. The Defendant brought this motion for an order that the Administrator put forward as its discovery representatives individuals from QCM and DFO. The motion was denied by the Prothonotary on the grounds that QCM and DFO were not parties to the proceeding. However, the Prothonotary did allow for the possibility of an examination of QCM and DFO in the future as non-parties pursuant to Rule 238 if the Defendants were able to satisfy the Court that were not able to obtain the information informally from these entities. Appeals from the Prothonotary's order to a Judge and then to the Court of Appeal were dismissed.

Discovery – Examination of Non-Parties

Thyssenkrupp Materials NA Inc. v The “Stewart Island”, 2005 FC 23

The Plaintiff brought this application for leave to examine the Chief Engineer of the Defendant vessel under Rule 238 of the Federal Court Rules, 1998. The Prothonotary at first instance accepted that the Chief Engineer had relevant information and that his examination would not cause undue delay, inconvenience or expense but nevertheless denied the application on the grounds that the information could be obtained from other sources such as production of documents or examination for discovery. On appeal, the appeal Judge dismissed the appeal holding that the Plaintiff had failed to demonstrate that the Prothonotary's order was clearly wrong in the sense that it was made upon an incorrect principle of law or misapprehension of the facts.

Discovery – Implied Undertaking Rule – Contempt

N.M. Patterson & Sons Limited v The St. Lawrence Seaway Mgt. Corp., 2004 FCA 210

This was an appeal from a motion in which a solicitor was found in contempt of court for disclosing to the media information obtained on examination for discovery. The appeal was dismissed. This important case reminds practitioners that documents and information received through the discovery process are subject to an implied obligation of confidentiality. Such documents and information may not be disclosed to any third parties or used for any purpose other than the litigation in which it is produced or given. The implied undertaking is only released if and when the document or information becomes publicly available by being tendered as evidence at trial. The Court of Appeal judgment clarifies that the public availability of the information is a defence to the charge of contempt and not an element of the offence. Therefore, the onus is on the accused to prove the information is publicly available.

Examination for Discovery – Production of Documents – Scope

Seaspan International Ltd. et al. v The Ship “Ewa”, 2004 FC 124

This was a motion by the Defendant to compel the re-attendance of various discovery witnesses to answer questions which had been refused at examinations for discovery. The questions related generally to claims and settlement agreements as between the Plaintiffs and sought the production of any settlement agreements. As a preliminary point the Prothonotary considered whether the scope of production of documents under the Federal Court Rules, 1998 was narrower than under the previous rules. Relying on Smithkline Beecham Animal Health Inc. v The Queen [2002] 4 C.T.C. 93, he held that the “train of inquiry” test under the old rules was substantially the same as the current test requiring production of documents that a party intends to rely on or that tends to adversely affect the party's case or support another party's case. With respect to the substance of the motion the Prothonotary referred to various authorities and concluded that settlement agreements are, for the most part, privileged. However, provisions as to release or not to sue or reservation of rights ought to be disclosed and evidentiary arrangements in those agreements might also be required to be disclosed at or shortly before trial.

Discovery – Written and Oral Examination

Haylock et al. v. Norwegian Cruise Lines et al., 2003 FC 932

This was an application by the Defendant shipowner in two actions for an Order that examinations for discovery of the 16 Plaintiffs, all cruise ship medical officers claiming wages for overtime, take place by way of written examination and then by such oral examination as the Defendant may reasonably require. The Prothonotary acknowledged that this was not a usual approach in the Federal Court but granted the Order because it had the substantial promise of saving both time and money. The Prothonotary considered, in particular, the use of both written and oral examinations in the Supreme Court of British Columbia and the “general move to encourage written discovery “ in the Federal Court.

Examination for Discovery – Prior Practices – Opinions

Seatech Construction Ltd. v “Inlet Challenger”, 2003 FC 1186

This was an application by the Defendant for an order that the Plaintiff's representative re-attend to answer questions objected to at the examination for discovery. The case involved a claim by the Plaintiff for damage to a barge towed from Campbell River to Mimmo Bay. The Plaintiff was not required to answer questions related to its prior practices or that asked for the opinions of witnesses who were not experts.

Discovery - Failure to Provide Documents - Contempt of Court

Island Tug & Barge Ltd. v The “99 Haedong Star”, 2002 FCT 432

This case once again illustrates the dangers of failing to comply with court orders. The Prothonotary had ordered that the Defendants provide the Plaintiff with originals of various documents and that the Plaintiff’s surveyor be allowed to inspect the defendant vessel. The Defendants failed to provide all of the documents required and failed to allow the Plaintiff’s surveyor to conduct the required inspection. As a consequence, the Defendants were found in contempt. The corporate Defendants were fined $25,000.00 and the Master of the defendant ship was fined $5,000.00.

Discovery Witness Travel Expenses - Business Class

> Goodman Yachts Llc. v The “Gertrude Oldendorff”, 2002 FCT1168

The sole issue in this matter was whether discovery witnesses travelling from India and Singapore to Vancouver were entitled to Business Class air travel. The Prothonotary held that in the circumstances of the case Business Class was appropriate. The Prothonotary cautioned, however, that such a premium mode of travel would not be appropriate in all instances.

Documents - Production - Average Adjusters Reports

Fiddler Enterprises Ltd. et al. v Allied Shipbuilders Ltd., 2002 FCT 44

This was an application by the Defendant shipyard for production of a Statement of Particular Average. The underlying case was for fire damage caused to the Plaintiffs’ vessel. The Defendant sought production of the adjuster’s report as it would disclose owner’s work from fire damage work. The Prothonotary ordered that the report be produced. In so doing he noted that although reports of average adjusters have no legal effect they are rarely questioned by the courts and are often looked upon as prima facie evidence of the matters disclosed.

Dismissal for Failure to Produce Documents

Finora Canada Ltd. v Clipper Spirit Shipping Ltd., 2001 BCSC 862, [2001] B.C.J. No. 1266

This was an application by the Defendant carrier to dismiss the claims of three Plaintiffs for failure to produce documents which had previously been ordered to be produced. Two of the Plaintiffs had produced the required documents but did so after the deadline imposed by the order requiring production. The other Plaintiff had failed to produce the invoices but advised that the documents had been destroyed. The Court dismissed the claim of the Plaintiff that had failed to produce the documents but declined to mete out this “drastic remedy” for the other two Plaintiffs.

Examinations for Discovery - Second Examination

Ghadban v The "Cleo D", (April 5, 2000) No. T-1288-95 (F.C.T.D.), [2000] F.C.J. No. 420

This was an application by the Defendant for leave to continue the examination for discovery of the Plaintiff. The ground advanced in support of the application was that the Defendant’s former solicitors had not dealt properly with the various issues relevant to the case. The Court declined the application holding that there must be special reasons to order a further discovery and that the reason given by the Defendant was not sufficient.

Discovery - Examination of a Non-Party

Bayside Towing Ltd. v Canadian Pacific Railway, (August 22, 2000) No. T-1692-99 (F.C.T.D.), [2000] F.C.J. No. 1534

This was an application to examine a non-party for discovery pursuant to Rule 238 of the Federal Court Rules. The underlying action was a limitation action brought by the tug owner to limit its liability for damage done to a bridge owned by the Defendant. The Defendant brought this motion to examine an experienced tug boat operator who had transited the bridge on various occasions. The Defendant wished to have this evidence to show the general practice of tug boat operators in transiting the bridge. The application was refused on the basis that the Defendant had not shown that it could not obtain the required information from other sources.

Dismissal for Failure to Produce Documents

Pioneer Grain Company Ltd. v Far Eastern Shipping Co. et al., (December 15, 1999)No.T-891-94 (F.C.T.D.), affirmed (February 23, 2000)

This was an application to dismiss the Plaintiff's action on the grounds that the Plaintiff failed to comply with four successive orders of the court requiring production of specified documents. The court granted the order holding that the actions of the Plaintiff in ignoring the court orders amounted to an abuse of process.

Discovery - Production of Report -Privilege

B.C. Hydro & Power Authority v The "CSL Cabo" et al., (December 31, 1999) No.T-1194-98 (F.C.T.D.)

This was a motion to compel production of a report prepared by the Plaintiff. The evidence established that the Plaintiff was requested to prepare the report by its counsel. Plaintiff's counsel requested the report "for use in litigation". A later memo of the Plaintiff recorded that the report was required "for file and legal purposes". The Plaintiff claimed the report was protected from production by litigation privilege. The major issue on the motion was whose intention was relevant in determining whether the dominant purpose for the preparation of the report was for use in contemplated litigation. The court held that it was Plaintiff's counsel that procured the genesis of the report and that his intention ought to govern. Accordingly, the report was held to be privileged.

Production of Documents

Galehead Inc. v The "Trinity", (November 3, 1998) No. T-1074-97 (F.C.T.D.)

This was a motion for production of documents. The significant issue in the motion was whether production of documents under the Federal Court Rules, 1998 was wider than under the old rules. The Prothonotary reviewed Rules 223(1) and 222(2) and determined that the definition of relevancy under the new rules was, if anything, narrower than under the old rules. Nevertheless, under either set of rules, the Prothonotary held that a party seeking additional production must produce persuasive evidence that additional documents are available or relevant information has been suppressed. A mere suspicion is not enough.

Duty to Inform

Shinwa Kaiun K.K.. v "The Queen of Alberni" et.al., (August 27, 1997) No. T-659-92 (F.C.T.D.)

The issue in this motion was whether the representative of a party on examination for discovery could be required to locate and inform himself from former employees. The Court ordered the party to use best efforts to locate the former employees and obtain the requested information.

Survey Reports

Pusan Pipe America Inc. v The "Nicole" et.al., (September 6, 1996) No. T-205-95(F.C.T.D.)

This application before the Prothonotary at Vancouver concerned production of documents. The Court upheld a claim for privilege over various survey reports which the Court found were prepared on the instructions of counsel in anticipation of litigation and not as a matter of routine.

Adjuster's Reports

Jordan v Towns Marine Electronics Ltd. et.al.,(April 30, 1996) No. T-1577-95 (F.C.T.D.)

This was an appeal from a decision of the Prothonotary in which the Defendant was ordered to produce three adjuster's reports. The Defendant had claimed privilege over the reports arguing they were made in contemplation of litigation. On appeal, the Defendant argued that as the adjusters were appointed by the liability insurer of the Defendant, the only possible purpose for the preparation of the reports could be litigation. The Court disagreed. The appeal was dismissed and the Defendant was ordered to produce the reports. Both the Prothonotary's decision and that of the Justice on appeal contain some useful discussion concerning whose intention is relevant in determining claims for privilege (the author or the person who commissions the report).

Service

Extension of Time – Service – Substitutional Service

Arrow Corporation Inc. v The “Sea Tiger” et al., 2004 FC 1502

This was an application to extend time for service of a Statement of Claim on one of the Defendants. The facts were that the Plaintiff had provided the Defendant with a copy of the Statement of Claim shortly after it was issued and later asked the Defendant to acknowledge service. The Defendant did not acknowledge service so the Plaintiff arranged to have it served but the service occurred out of time. The Plaintiff then indicated it would bring a motion to extend the time for service but delayed some six months in bringing the application. The Prothonotary noted that the test to apply was whether there was a continuing intent to pursue the claim, whether there is an arguable case and whether there would be prejudice to the proposed defendant should the extension be granted. The underlying consideration or general principal is to do justice between the parties. Applying this test the Prothonotary found that the explanation for the delay and the demonstration of a continuing intent were weak. He further found there was an arguable case and no prejudice. The important factor, however, was that the Defendant had acknowledged receipt of the Statement of Claim the day after it was issued. The Prothonotary suggested that this might have been sufficient to support a motion under Rule 147 validating the service noting that good service merely required proof that a legible copy of the document came into the hands of the Defendant. Under these circumstances the Prothonotary considered it would be an injustice to not allow the extension of time.

Service ex juris - In Rem action

McCain Produce Inc. v Visser Potato Ltd., 2001 FCT 994

This was an ex parte motion by the Plaintiff for judgment in default of defence against the Defendant ship and her owners. The Defendants, including the ship, were apparently served in the Netherlands and a certificate of the Government of the Netherlands was offered in proof of service. Although the certificate did not indicate what was served or where the Prothonotary was prepared to assume the document served was the Statement of Claim. Nevertheless, the Prothonotary denied the motion on the grounds that there is no authority for the service on a ship outside of Canada nor for the service on a ship other than in an action in rem and the action was not styled in rem.

Personal Service on Solicitors as Business Agents

North Shore Health Region v Cosmos Shipping Lines,(November 17, 1998) No. T-1743-98 (F.C.T.D.)

This was an appeal of a decision by the Prothonotary in which the Prothonotary upheld personal service of a Statement of Claim on solicitors as business agents for the Defendant. The facts were that a crew member of one of the Defendant's vessels was seriously injured at Vancouver. The crew member was hospitalized. His medical bills were sent to the offices of the solicitors for the vessel's P&I Club. The solicitors paid four of the bills. Thereafter, no payments were made and the hospital commenced proceedings against the shipowner for payment of the ongoing medical costs pursuant to section 285 of the Canada Shipping Act. The hospital served the Defendant by delivering a copy of the Statement of Claim to the solicitors who had paid the bills. The Hospital argued that the service was valid pursuant to Rule 135 which authorizes personal service on an agent where the Defendant "in the ordinary course of business, enters into contracts or business transactions in Canada" through an agent in Canada and who actually used the agent in respect of the contract or transaction giving rise to the action. The Prothonotary and the appeal judge agreed and upheld the service. The appeal judge further held that, if the requirements of Rule 135 had not been complied with, he would have validated service pursuant to Rule 147.

Substitutional Service of in rem Statement of Claim and Warrant

458093 B.C. Ltd. v The "Zomby Woof",(January 26, 1998) No. T-2587-94 (F.C.T.D.)

It is generally thought that there can not be substitutional service on a ship of an in rem Statement of Claim or Warrant for arrest. However, there are exceptions to even the most steadfast rules, as this case demonstrates. We can do no better but to introduce this case using the words of Prothonotary Hargrave.

The Plaintiff applies, ex parte, for an order for substitutional service on the Defendant, Roger Hills, not an unusual application and one easily obtained on the material filed. However, the Plaintiff goes further and seeks an order for substitutional service of both the Statement of Claim and of the warrant for arrest on the Defendant vessel, for the "Zomby Woof" is apparently in the possession of a large and powerful animal, having short coarse hair, a broad head and pendant ears, namely a Rottweiler.

It seems the subject ship, a small fishing, vessel was on land on a trailer and was jealously guarded by a Rottweiler. Thus, access to the ship to serve the Statement of Claim or Warrant was impossible. Under these circumstances the Court ordered substitutional service by leaving copies in the Defendant's mailbox. The Prothonotary concluded: "In this way... the Sheriff will stand a sporting chance of staying beyond of the reach of the jaws of Mr. Hills' Rottweiler."

Service of Defective Statement of Claim

Reano v The "Jennie W", (December 11, 1997) No. 1719 (F.C.A.)

This was an appeal from the dismissal of a motion to set aside a default judgement. The action was for wages and expenses. The action was commenced in May 1996. The Statement of Claim did not contain the required endorsement in Form 4. The Statement of Claim and Warrant of arrest were served on the ship on May 28, 1996. In August 1996 an Amended Statement of Claim including Form 4 was filed and served. Default judgment was obtained against the ship in October, 1996. A motion to set aside the default judgment was brought in March, 1997. The shipowner argued the default judgment should be set aside because the original Statement of Claim did not include the endorsement in Form 4. The Court of Appeal held that service of the defective Statement of Claim did not render the action a nullity or the arrest invalid since the defect had been remedied by the subsequent filing and serving of the Amended Statement of Claim. Further, the Court of Appeal held that there had been an unreasonable delay in filing the motion to set aside the default judgement. The Court of Appeal agreed with the Defendant, however, that in the particular circumstances of the case the claims for wages and expenses were claims for unliquidated damages rather than liquidated damages and the Court ordered that there be a reference to determine the amounts owing.

Service on Ship

Elders Grain Company Limited v. The "Ralph Misener" et.al.,(January 17, 1997), No. T-1836-90 (F.C.T.D.)

In this matter an In Rem Statement of Claim was served upon a ship by delivering a copy of the Statement of Claim to the Master on board the ship. The issue was whether such service was valid service under Rule 1002 which specifically provides that service on a ship is to be effected by attaching a copy of the Statement of Claim to the mast or some other conspicuous part of the ship. The Court reasoned that the Rules should be given a flexible, liberal interpretation and held that service on the Master was sufficient.

Service Ex Juris

Valmet Paper Machinery Inc. v Hapag-Lloyd AG et.al.,(December 23, 1996) Vancouver Reg. C960793 (B.C.S.C.)

This was an application by the Defendant freight forwarder to set aside service ex juris of the Statement of Claim and for an order staying the action on the basis of a jurisdiction clause. On the first point the Court found that the Plaintiff had established a good arguable case that the Defendant's contractual obligation was as a common carrier and therefore that there was a breach of contract in British Columbia. Under the Rules of the Supreme Court of British Columbia service ex juris was allowed where there was a breach of contract committed within the province. On the jurisdiction clause issue the Court found that the clause did not apply as it related to forwarding activities and the Plaintiff had established a good arguable case that the Defendant was a carrier. Further, the Defendant's standard conditions, including the jurisdiction clause, did not apply to "bulky loads" and the Court held the cargo in question was a bulky load. The Court then went on to consider the various factors affecting forum conveniens and determined that British Columbia was an appropriate forum.

Service on Agent

Portbec Forest Products Ltd. v The "Bosporus",(February 22, 1996) No. T-556-92 (F.C.T.D.)

This case concerned Rule 310(2) of the Federal Court Rules which permits a non-resident to be served by serving an agent within the jurisdiction. The Plaintiff served the Defendant shipping line and shipowner by serving a local port agent who had been authorized to sign bills of lading and to attend to the Defendant ships husbandry. The Defendants led evidence to the effect that the local agent had only been used in respect of this one single charter party. The Court held that this was insufficient to support service under Rule 310.

Extension of Time For Service

Companhia Siderurgica Nacional v The "Imperial Confidence" et.al.,(April 23, 1996) No.T-3083-94 (F.C.T.D.)

This was an ex parte motion by the Plaintiff to extend the time for service of the Statement of Claim. The Prothonotary extended the time for service in rem as the Defendant vessel had not been in the jurisdiction since the Statement of Claim was issued. However, the Court refused to extend the time for service in personam. The Prothonotary held that inadvertence or a mere slip in practice was not a sufficient reason to extend the time for service.

Delay - Time Extensions

Dismissal for Delay

Putjotik Fisheries Ltd. v The “Mersey Viking”, 2006 FC 491

In this matter the Court dismissed the action of the Plaintiff for undue delay. In dismissing the action the Court agreed with the Defendant that the Plaintiff had demonstrated a lack of interest in advancing the claim both prior to and subsequent to a status review. In particular, the Plaintiff failed to produce a meaningful affidavit of documents as required by the status review order and failed to make arrangements for examinations for discovery by the date specified in the status review order.

Extension of time for Service and Arrest – Order for Sale Pendente Lite

Franklin Lumber Ltd. v. The “Essington II” et al., 2005 FC 95

See summary below under "Judicial Sales".

Dismissal for Delay – Appeal – Standard or Review

Precision Drilling International B.V. v The “BBC Japan” et al., 2004 FC 701

This was an appeal from an order of a Prothonotary dismissing the action for delay after a status review. The only explanation for the delay was that the Plaintiff had been negotiating a settlement with one of the Defendants. The appeal Judge considered first whether discretion should be exercised de novo on the appeal and held that it should since the Prothonotary's decision was final. The appeal Judge then considered the proper test to be applied and noted that the questions to ask were: 1) What are the reasons for the delay and do they justify the delay? and, 2) What steps are proposed to move the matter forward? The appeal Judge further noted that the overarching concern should be whether the Plaintiffs recognize their responsibility to move the action along and are taking steps to do so. Applying this “liberal” approach the Judge held that although the Plaintiff might have provided a better explanation for the delay it had justifiably explained the delay. The Judge further found that although the Plaintiff had failed to propose a time table they did ask that the matter be set over for a few months to allow the settlement to be finalized. The Judge considered this a reasonable response and queried why the court should insist on litigants preparing an artificial timetable when the parties are involved in meaningful negotiations. In the result, the appeal was allowed and the order dismissing the action set aside.

Dismissal for Delay – Security for Costs

Intertech Marine Limited v The “Nautica” et al., 2004 FC 1456

This was an application by the Defendant to dismiss the Plaintiff's action for delay or alternatively for security for costs. The motions Judge noted that there had been significant delay in moving the action forward and further noted that the Plaintiff had failed to comply with a number of court orders and directions. She referred to the decision of the Federal Court of Appeal in Sokolowska v Canada, [2004] FCJ No. 570, in which that court said; “Failure to comply with Orders or Directions from this Court and with the Rules of procedure as well as omission to provide a good justification for the delays and an action plan to speedily move the appeal forward justifies a dismissal of the appeal”. (Note the absence of a reference to “prejudice” in this test.) Notwithstanding this fairly strict test, the motions Judge did not dismiss the case but imposed very stringent conditions on the Plaintiff. The Judge then turned to the motion for security for costs. She noted that the Defendant had provided evidence of a number of outstanding judgements against the Plaintiff. She held however that this was not sufficient to obtain an order for security for costs. In addition, evidence was needed as to the assets of the Plaintiff.

Dismissal for Delay

Haylock et al. v Norwegian Cruise Lines, 2005 FC 501

This was an application by the Defendants to dismiss the actions of several of the Plaintiffs for failure to deliver written answers to examination questions on the date specified in the case management schedule. The answers were to be delivered by 1 November 2004 but by 1 April 2005 they still had not been delivered and the Plaintiffs had taken no steps to obtain an extension of time. Moreover, at the hearing the Plaintiffs were unable to provide any assurances to the Court as to when the answers might be provided. The Prothonotary noted that although time limits are not absolute, they are more than mere targets and, subject to uncontrollable events, must be obeyed. The Prothonotary also noted that commonplace missing of deadlines can be an abuse of process which can be dealt with by an order of dismissal. The Prothonotary concluded that in the absence of evidence explaining the delay and in the absence of assurances the answers would be provided by a specified date the appropriate remedy was to dismiss the claims.

Extension of Time – Service – Substitutional Service

Arrow Corporation Inc. v The “Sea Tiger” et al., 2004 FC 1502

Counterclaim – Extension of time to file defence

Budget Steel Ltd. v Seaspan International Ltd., 2003 FCT 610

This was an appeal to the Federal Court of a Prothonotary’s order granting the Plaintiffs an extension of time to file a defence to counterclaim. The Plaintiffs claimed damages for the loss of a cargo of scrap steel when the Defendant’s barge capsized. The Defendant filed a defence and counterclaimed for loss of freight and damage to the barge as a constructive total loss. Plaintiff’s counsel could not obtain instructions to defend the counterclaim and wrote to Defendant’s counsel asking that they not take default judgment without prior notice. Defendant’s counsel did not respond to that letter. The Prothonotary granted the application applying the test in Canada (Attorney General) v. Hennelly (1999), 244 N.R. 399. Although finding that there was not a particularly strong continuing intention to defend and the reasons for delay were weak, there appeared to be possible defences and there was no prejudice to the Defendant in granting the extension. The Prothonotary on these factors alone considered the issue balanced, but on the basis that the Plaintiffs' counsel had written at the outset explaining the need for time to obtain instructions and that the Defendants had not responded and had not taken steps to advance the counterclaim along, the Prothonotary held it would be unjust not to grant the time extension. The decision was upheld on appeal. The appeal Judge held that this was a discretionary matter and that the discretion had been properly exercised.

Service – Extension of Time

Finlandia Cheese Inc. v Shoreline Shipping SA et al., 2003 FC 969

In this matter the Prothonotary granted the Plaintiff an extension of time within which to serve its Statement of Claim and validated service by mail. The facts were that the Plaintiff had mailed the Statement of Claim to the Defendant but the Defendant had changed its address without advising the Plaintiff. When the Plaintiff became aware of the change of address it immediately re-mailed the Statement of Claim. The Court validated this second mailing.

Time - Extension - Late Expert’s Reports

Armonikos Corporation Ltd. v Saskatchewan Wheat Pool, 2002 FCT 526

This was an application by the Defendant for an extension of time to file rebuttal expert evidence. The primary ground argued was that the report had not been filed in time because of the illness of Defendant’s counsel. The Prothonotary allowed the application and in doing so identified the applicable test as being: a continuing intention to pursue the application; that the application has some merit; lack of prejudice; and that a reasonable explanation exists for the delay. The Prothonotary further noted that in applying the test there was a balancing of factors with the objective being that justice is done. The Prothonotary further noted that a party must not be deprived of his rights on account of an error of counsel where it is possible to rectify the consequences of the error without injustice to the opposing party.

Appeals - Dismissal for Delay

Korea Heavy Industries & Const. Co. Ltd. v Polar Steamship Line, 2002 FCA 173

This was an application to dismiss an appeal for delay in failing to file appeal books within the prescribed time. The facts were that the Plaintiffs had notified the Defendants of their intention to examine representatives of the Defendants for discovery but failed to do so and failed to move their case forward. As a consequence, a Prothonotary ordered that the Plaintiffs were precluded from examining the Defendants and set down guidelines for the continuation of the action. The Prothonotary’s order was affirmed on appeal to a Judge of the Court. The Plaintiffs further appealed to the Federal Court of Appeal but failed to file the Appeal Books in time. The Defendants then brought this motion to dismiss the appeal for delay. The Plaintiffs did not appear on the motion and the Court of Appeal granted the order dismissing the appeal with costs.

Extension of time

Global Enterprises International v The “Aquarius”, “Sagran” and “Admiral Arciszewski”, 2002 FCT 193

This was an application by the Polish trustee in bankruptcy of the Defendant shipowner for an extension of time in which to file appeal of an order striking the trustee’s affidavit of claim and of an order refusing the appointment of pro bono counsel. The Prothonotary dismissed the application on the grounds that there was not a continuing intention to appeal (as evidenced by the lack of effort put into the filing of materials), that the appeals were without merit, and that the reason given for the delay (the absence of the trustee from his office) was not an adequate explanation.

Dismissal For Delay

Ferrostaal Metals Ltd. v The “Herakles” et al., 2001 FCA 297

This was an appeal from an order made by the Prothonotary and affirmed by the Motions Judge dismissing the action for delay. The facts were that the Statement of Claim was filed on December 12, 1995 but was not served until a year later. The Plaintiff further delayed in waiting almost one year to file a Reply to a Statement of Defence. With the introduction of the Case Management Rules, an order was made on March 16, 1999 requiring the parties to file Affidavits of Documents by May 10, 1999. The Plaintiff failed to file its Affidavit of Documents by May 10, 1999 and made application on January 25, 2000 for an additional 30 days to complete this step. At first instance, the Prothonotary declined the extension of time and struck the claim for delay. In doing so the Prothonotary noted that unjustified non-compliance with a court order is a serious matter which is even more so when the order is made pursuant to a Notice of Status Review. The Prothonotary further noted that prejudice to a party is not a factor to be taken into account in such applications. On appeal, the Motions Judge agreed with the reasons given by the Prothonotary. The Motions Judge dealt with an additional submission not made before the Prothonotary, i.e. that the delay was due to the fault of counsel and not the fault of the party. However, the Motions Judge found that the Plaintiff was itself partly responsible for the delay. On further appeal, the Federal Court of Appeal held the Motions Judge had considered the relevant principles and committed no error of law.

Dismissal For Delay

Baldwin v The "Jennifer Martha",(March 19, 1997) No. T-1327-90 (F.C.T.D.)

This was an application to dismiss the underlying action for want of prosecution. The action involved a collision which had occurred on May 15, 1989, and the action was commenced on May 11, 1990. The Court cited the applicable test as being threefold: whether there has been inordinate delay, whether the delay is inexcusable, and whether the defendants are likely to be seriously prejudiced by the delay. The Court easily found that the first two parts of the test had been established but did not dismiss the action as there was no evidence of prejudice.

Dismissal For Delay

Quinlan Brothers Limited v The "Tricon Commander" et.al., (May 23, 1996) No. T-2690-94 (F.C.T.D.)

In this matter the surety of a bail bond brought an application for their bond to be released. The action had been commenced and the Defendant ship arrested in November, 1984. Bail was posted in January 1986 and the ship was released from arrest the following month. Nine years then passed without any significant action being taken by either party. The Court ordered that the Plaintiff show cause why the action should not be dismissed for delay.

Dismissal For Delay

Pennecon v The "Jean Raymond", (January 12, 1996), No T-1877-85 (F.C.T.D.)

This was a motion to dismiss a claim for want of prosecution. The claim had been filed in August, 1985. The Statement of Defence was not filed until November 1, 1989. On November 15, 1991, the Plaintiff filed a Notice of Intention to Proceed but no steps were taken. Various minor notices were sent over the next 4 years. In July, 1995, the Plaintiff filed a further Notice of Intent to Proceed and the Defendant responded with the motion for dismissal. The Court held that the appropriate test in a motion to dismiss for want of prosecution is that there has been inordinate delay, that the delay is not excusable, and that the delay is likely to cause serious prejudice to the Defendant. The Court held this test had been met and allowed the motion. On the key question of prejudice, the Defendant led affidavit evidence establishing that during the ten year delay it had lost contact with two important witnesses.

Costs- Security for Costs

Practice - Formal Offer to Settle

More Marine Ltd. v The "Western King", 2009 BCSC 504

In this matter the plaintiff made an offer to settle and the defendants subsequently made a number of counter-offers, none of which were accepted. The defendants then purported to accept the plaintiff‟s first offer. The issue was whether the counter-offers extinguished the plaintiff‟s initial offer. The Court held that Rule 37B of the British Columbia Supreme Court Rules (which merely gives the court discretion to consider offers of settlement when deciding costs) did not alter the common law rule that a counter-offer extinguishes an offer.

Pleadings – Reasonable Cause of Action – Security for Costs – Solicitor's Affidavits

Addo v OT Africa Line et al., 2006 FC 1099

See the summary above under “Pleadings”

Costs – Offers to Settle

Francosteel Canada Inc. v The “African Cape” et al., 2003 FCA 119

This matter concerned an action for damages to cargo in the alleged amount of $500,000. Early in the proceedings the Defendants offered to settle the Plaintiff's claim for $125,000. The offer was not accepted and the case proceeded to arbitration. The Defendants' offer of settlement was withdrawn on the fourth day of the arbitration. The arbitrator subsequently rendered an award in the total amount of $108,000, inclusive of interest. A hearing was subsequently held to decide the issue of costs. The Plaintiff argued that it was the successful party and was entitled to its costs. The Defendants argued that their settlement offer should be taken into account and they should be entitled to costs. At first instance, the Prothonotary agreed with the Plaintiff and held that as the Defendants' settlement offer had been revoked it could only be taken into account in determining the amount of costs not the entitlement to costs. The Prothonotary awarded the Plaintiff costs of $40,000. On appeal, the Prothonotary's Order was upheld. On further appeal, the Federal Court of Appeal held that the Prothonotary and the Judge on appeal misapplied Rule 400 in that they had failed to take into account the offer of settlement in determining entitlement to costs. The appeal was allowed and the Defendants were awarded their costs. (Note: In separate Reasons Letourneau J.A. was very critical of the present Rule 420 and suggested that it is in dire need of revision. This is something that is currently being undertaken.)

Costs – Offer to Settle – Double Costs

Elders Grain Company Limited v “Ralph Misener”, 2003 FC 1163

The Defendant, who was successful on the main action and counterclaim, sought an order directing the taxing officer to tax its costs in accordance with the high side of Column V of Part II of Tariff B and doubling their costs after the date of their offer to settle the case on a “drop hands” basis. The judge exercised his discretion and held that the Defendant's costs should be taxed in accordance with the high side of Column IV and not Column V and that the Defendant was entitled to double costs from the date of the offer.

Costs – Double Costs – Offer to Settle – Increased Costs

Strachan v Constant Craving, 2003 FC 1175

This was a judgment dealing with costs of the trial in a simplified action where the Defendants were substantially successful on their counterclaim against the Plaintiff. The Court refused to award the Defendants solicitor-client costs as such costs are awarded only in rare circumstances where conduct in the proceeding is scandalous or outrageous or deserving of reproof or rebuke. The Defendants were entitled to double costs from the date of the offer whereby the Defendants offered to settle for less than the amount awarded at trial. Further, costs were awarded above the mid range of Column III of Tariff B because of rejection of the offer referred to above and the Plaintiff's late decision not to call an expert witness.

Practice – Security for Costs

Goodman Yachts LLC v The “Gertrude Oldendorff” et al., 2004 FC 40

This was a motion by the Plaintiff for additional security for costs. The underlying action involved damage to a yacht carried as deck cargo from Singapore to Vancouver. The Plaintiff was not a resident of Canada and had no Canadian assets. The Defendants had been previously granted security for costs in the amount of $50,000 with leave to apply for further security. The Defendants now applied for additional security of $100,000 and prepared a draft bill of costs supporting this amount. The Plaintiff contested the application arguing that the court should carefully scrutinise the draft bill submitted and should only allow those items that were firm and definite. The Prothonotary declined this approach in a case where the Plaintiff was a non-resident and had no Canadian assets. The Prothonotary also refused to disallow travel expenses for out-of-town counsel. The Prothonotary noted that the Federal Court is a Canadian and international court and litigants had the right to use counsel from anywhere in Canada but subject to a test of reasonableness. In the result the Prothonotary allowed the motion but ordered that the additional security be delivered in two stages.

Security for Costs – Nominal Plaintiff – Subrogated Action

Offrey v Ryan, 2003 FCT 35

This was an application to require the Plaintiff to post security for costs. The underlying action was for damages allegedly suffered in a collision between two fishing vessels. The action was a subrogated action brought by the Plaintiff's insurers, although the Plaintiff did have an interest in his deductible. The Court held that the Plaintiff was a nominal Plaintiff and, in the absence of any evidence that the Plaintiff had assets to satisfy a judgment in costs, ordered that security for costs be posted. The Court further noted that it might have been inclined to not make the order if the Plaintiff's insurers had undertaken to pay any costs.

Security for Costs – Time Extension

Fish Maker LLC v The “Zodiak” et al., 2004 FC 1057

The Plaintiff in this matter had been ordered to post security for costs within a specified time. It failed to do so and the Defendant brought an application to dismiss the action for delay. The Plaintiff also brought an application for a 60 day extension of time within which to post the security. The Court set out the test for a time extension being: a continuing intention to pursue the application; that the application has some merit; that there is no prejudice to the other party; and that a reasonable explanation for the delay exists. The Court further noted that whether a reasonable explanation for granting the extension of time exists will depend on the facts of each case and that it was required to balance the elements bearing on a time extension to do justice between the parties. Applying these factors and considerations the Court denied the time extension. In reaching this conclusion the Court was influenced by the fact that the Plaintiff had not moved the action forward and by the fact that the Plaintiff had not attempted to cure the failure to post security in a timely manner.

Dismissal for Delay – Security for Costs

Intertech Marine Limited v The “Nautica” et al., 2004 FC 1456

Security For Costs - Priorities claimant

Nedship Bank N.V. v The “Zoodotis”, 2001 FCT 706

This was an application by the Plaintiff mortgagee for an order that one of the claimants to a priorities action be required to post security for costs. The Plaintiff argued that the claimant was a foreign corporation and that it was participating in the proceedings more as a party than a traditional lien claimant. Specifically, the claimant was challenging various aspects of the mortgagee’s claim. The Prothonotary declined the motion holding that there was no authority for ordering security for costs against a claimant. However, the Prothonotary noted such a claimant might be joined as a Defendant to the action and as a Defendant it would then be liable for security for costs.

Costs - Offer to Settle

Barzelex v The "EBN Al Waleed", (December 30, 1999) No. T-38-96 (F.C.T.D.)

In this matter the Defendant had delivered two offers of settlement. The first was lower than the amount the Plaintiff was later awarded. The second was higher. The court held that the Plaintiff was entitled to normal costs up to the time of the second offer and the Defendant was entitled to double costs pursuant to Rule 420 from the date of the second offer. The court refused to take into account the first offer of the Defendant. The court further refused a request by the Defendant that the costs be calculated according to Column V of Tariff B. The court considered the point raised in the case, while novel, did not justify more than the normal costs. The court did, however, direct the taxing officer that when exercising his discretion as to the number of units to allow to choose at the higher end of the range allowed by Column III.

Security For Costs - Bail

Richardson International Ltd. v The "MYS Chikhacheva", (1999), 166 F.T.R. 146, (F.C.T.D.)

In this case the court held that the cost of posting bail is an appropriate matter to factor into an award of security for costs. The court noted that local bonding costs might be a guide to the amount of security. The court reviewed the evidence as to the actual cost of posting the bail and ordered security for bail at 3.125% of the amount of the bail per year for two years. The court disallowed a request for 20% of the amount of the bail. This was the amount the Plaintiff's managers purported to charge the Plaintiff for arranging bail. The court considered this unreasonable.

Costs - Lump Sum

Bow Valley Husky (Bermuda) Ltd. v Saint John Shipbuilding Ltd., (1999) 181 Nfld. & P.E.I.R. 94, (Nfld. S.C.)

This was an application to determine the costs to be awarded the successful Defendant. The case is important because it illustrates how significant a cost award can be in a difficult and complex case. The action arose out of a fire on an oil rig. The trial of the action took 53 days and was followed by an appeal to the Newfoundland Court of Appeal and a further appeal to the Supreme Court of Canada. The case was a difficult and complex one. There were 26 applications and 13 pre-trial conferences. The successful Defendant asked for lump sum costs in excess of $3 million. The Plaintiff argued that the costs should be in the amount of approximately $500,000.00. The court ultimately awarded the Defendant $1.45 million. (Note: This award was not enhanced as a result of any double costs or enhanced costs rule based on a settlement offer.)

Solicitor Client Costs

Jean v The "Capitaine Duval", (September 15, 1998) No.T-536-98 (F.C.T.D.)

This was a motion for solicitor client costs. The applicants had been successful in a prior motion to strike the Statement of Claim on the grounds that it was outside the jurisdiction of the court. The motions judge granted increased costs in the amount of $20,000.00. The motions judge said he was satisfied that there had been misconduct on the part of the Plaintiff justifying an increased award of costs. The misconduct consisted of commencing the action prior to the date set for payment in a demand letter sent to the Defendants. Further, the court was satisfied that the arrest of the Defendant vessel was done solely to cause the Defendants embarrassment.

Security For Costs - New Trial- Standard of review on Appeals From Prothonotary

Porto Seguro Companhia De Seguros Gerais v Belcan S.A. et.al.,(August 11, 1998) No. T-2057-85 (F.C.T.D.)

This was an appeal from a decision of the Prothonotary in which the Prothonotary refused to pay out money paid into court as security for costs. The Plaintiff's action against the Defendant had been dismissed at trial. The Plaintiff appealed to the Federal Court of Appeal and the appeal was dismissed. The Plaintiff further appealed to the Supreme Court of Canada. The Supreme Court allowed the appeal, ordered a new trial and awarded the Plaintiff its costs before the Court of Appeal and Supreme Court. The Plaintiff and Defendant each subsequently brought motions to be paid the amount posted as security. The Prothonotary ruled that the security should be kept in court pending the ultimate disposition of the new trial. On appeal, the appeal judge noted that a discretionary order of a Prothonotary should not be disturbed unless it was clearly wrong or raised issues vital to the final issue of the case. The appeal judge held that the Prothonotary's decision in the present case did not meet this test.

Increased Costs

Kajat v. The "Arctic Taglu" et.al.,(December 4, 1997) No. T-1724-94 (F.C.T.D.)

This case concerned a collision between a fishing vessel and a tug and tow combination. The full facts of the case are summarized under Collisions. This application was to determine costs, amongst other issues. The Plaintiff applied for increased costs on the grounds that the Defendant had taken extreme positions and that some of the Defendants had been less than candid. The Court agreed that the conduct of the Defendants, other than the Crown, merited an award of increased costs. The Defendants also applied for an order that since the Plaintiff's husband was found 15% at fault for the accident the Plaintiff's costs should likewise be reduced by this amount. The Defendants relied on the British Columbia Negligence Act for this proposition. The Court, however, held that costs was a matter within the court's discretion pursuant to the Federal Court Rules and that, accordingly, the Negligence Act did not apply. The Court refused to exercise the discretion as requested by the Defendants and gave the Plaintiff her full costs. (Note: The Trial Judgment of the court holding the Defendants liable was set aside on appeal and a new trial ordered.)

Practice - Increased Costs

CSL Group Inc. v. Canada, (October 17, 1997) No.T-1307-90 (F.C.T.D.)

This was an application by the Defendant for increased costs. The Defendant had been successful in its defence of an action brought by the Plaintiff. The action had been a test case in which the Plaintiff sought to recover substantial damages for delays experienced by its ships in the transit of the St. Lawrence Seaway during November and December, 1989. The delays were caused by a public service strike. The Court agreed with the Defendant that the case was unusual in that the issues of both liability and quantum were complex. The Court ordered that the Defendant's costs should be taxed under Column V of Tariff B.

Practice - Costs - Offers to Settle

Canadian Pacific Forest Products v Termar Navigation Co. Inc., (March 23, 1998), No.T-1719-91 (F.C.T.D.)

This was a motion for costs by the successful Plaintiff. The Plaintiff sought costs assessed on a solicitor - client basis or, in the alternative in accordance with the maximum number of units under Column IV of Part II Tariff B and a doubling of the counsel fee as a result of offers to settle. The claim for solicitor client costs was disallowed on the grounds that there was no misconduct on the part of the Defendant. The claim for costs under Column IV was also disallowed on the grounds that both parties had made a relatively simple case complex. With respect to the request for a doubling of the counsel fee the Court noted that a number of offers had been made by the Plaintiff and that the only revocation of the prior offers was by the making of subsequent offers. Each of the offers was more favorable to the Defendants than the judgement at trial. Accordingly, the Plaintiff was entitled to a double counsel fee. The Court did, however, disallow disbursements of payments made to foreign counsel and of travel expenses of Plaintiff's representatives at trial.

Offers to Settle

Shorworld International Inc. et.al. v. Fednav Ltd. et.al., (January 13, 1997), No. T-989-92 (F.C.T.D.)

In this carriage of goods case the Defendant delivered a formal offer to settle pursuant to Rule 344.1. The offer did not provide for costs but the Plaintiff accepted it and demanded costs up to the date of the offer based on column III of Part I of Tariff B. The Court held that the Plaintiff was entitled to the costs demanded.

Enforcement of Judgments, Orders and Awards

Judgement - Collection - Garnishment

Morgan v. Guimond Boats Limited, 2008 FC 1004

In a judgment rendered December 2006 the Federal Court of Appeal upheld an award recognizing a foreign judgement against the Defendant. At a judgment debtor examination it was learned that the Defendant owned real property which was leased and generated a monthly rent. In fact, there was both a head lease and a sub-lease. An order was sought garnishing the amounts owed under the leases. The lessees put forward three arguments as to why the rent payment could not be subject to garnishment. First, they said that rent was never paid. Instead the lessees simply paid the debts of the lessor. Not surprisingly, the Court did not accept this argument. Second, it was argued that the rent payments were subject to a trust in favour of a mortgagee. The Court held, however, that a trust was only created if the mortgagee made such a request which had not occurred. Finally, it was argued that there was an outstanding debenture in favour of one of the lessees. However, the Court held that the debenture had not crystallized and so did not impede the garnishment of the rent payments.

Federal Court Jurisdiction – Enforcement of Foreign Arbitration Awards – Piercing Corporate Veil

Trans-Pacific Shipping Co. v Atlantic & Orient Trust Co. Ltd. et al., 2005 FC 311

In this matter the Plaintiff shipowner had obtained an arbitration award against one of the Defendants in London for breach of a charterparty. The Plaintiff subsequently registered the award in the Federal Court and then brought this action against the charterer and against various related companies and the individual alleged to have effective control of all of the Defendants. The relief claimed by the Plaintiff was a declaration that the debts of the charterer were the debts of all of the Defendants and a declaration that the assets of one of the Defendants were the assets of the charterer. The Defendants brought this application challenging the jurisdiction of the Federal Court arguing that the declarations sought were matters of Property and Civil Rights and therefore within provincial jurisdiction. The Prothonotary, however, held that enforcement of foreign arbitral awards had long been considered within Federal Court jurisdiction. Further, the Federal Court had the implied jurisdiction necessary to enforce its judgments, including the recognition of the foreign arbitral award. The Prothonotary next considered the issue of the piercing of the corporate veil and concluded that it was arguable that the various Defendants were for many purposes one and the same entity and thus should not be entitled to the protection of incorporation as separate entities. The Prothonotary expressly did not decide this issue but merely decided that it was not plain and obvious the Plaintiff could not succeed. (Note: This case should be compared with that of the British Columbia Court of Appeal in Pan Liberty Navigation Co. Ltd. v World Link (HK) Resources Ltd., 2005 BCCA 206, and TMR Energy Limited v. State Property Fund of Ukraine et al., 2005 FCA 28, both of which are summarized below.)

Enforcement of Arbitration Award – Related Companies – Stay of Proceedings

Pan Liberty Navigation Co. Ltd. v World Link (HK) Resources Ltd., 2005 BCCA 206

In this matter the Plaintiff had obtained an arbitration award in London against a defaulting charterer under a charter party that required English law and arbitration. The Plaintiff commenced this action against the defaulting charterer to enforce the award but also included as Defendants various other corporate entities. The Plaintiff alleged that the corporate entities were one and the same and that their separate existence was a fraud. One of the entities, World Link (HK) was the charterer of the ship “Eirini” which had called at Vancouver. The Plaintiff obtained an ex parte Mareva Injunction against the ship's fuel and bunkers. The injunction was lifted when World Link (HK) paid the value of the fuel and bunkers into court. World Link (HK) then brought this application for a stay of proceedings. At first instance the stay was refused but on appeal to the Court of Appeal of British Columbia the stay was granted. The Court of Appeal held that the allegations of the Plaintiff fell squarely within the arbitration provision of the charter party because the real issue was whether World Link (HK), although not named in the charter party, was the defaulting charterer. These were matters that were properly to be heard and decided by the arbitrator according to English law. The Court of Appeal further indicated that it agreed with the approach taken by the English High Court in Norsk Hydro ASA v State Property Fund of Ukraine, [2002] EWHC 2120, that when enforcing arbitration awards the enforcing court is neither entitled nor bound to go behind the award in question. (Note: This case should be compared with Trans-Pacific Shipping Co. v Atlantic & Orient Trust Co. Ltd. et al., 2005 FC 311.)

Arbitration– Enforcement of Foreign Arbitration Awards – Whether Enforcing Court Could Determine Identity of Respondent – Sovereign Immunity

TMR Energy Limited v. State Property Fund of Ukraine et al., 2005 FCA 28 overruling 2003 FC 1517

This case concerned the validity of the seizure of an Anatov aircraft owned by the State of Ukraine which had landed in Newfoundland. The Plaintiff had obtained an ex parte order recognizing and enforcing a Swedish arbitration award in its favour against “State Property Fund of Ukraine”. In its Federal Court pleadings the Plaintiff described the Defendant as “State Property Fund, an Organ of the State of Ukraine”. The State of Ukraine had initially been served in the Swedish arbitration proceedings but the arbitration had been discontinued against it. In a lengthy judgment at first instance the Prothonotary considered whether an enforcing court could determine the identity of the judgment debtor (the respondent) under the arbitration award. She also considered issues of state immunity and the jurisdiction of the Federal Court. She held that the enforcing court could determine the identity of the judgment debtor and after hearing expert evidence with respect to Ukrainian law determined that the State of Ukraine was the judgment debtor. Following this Order there were various motions and counter-motions all of which found their way to the Federal Court of Appeal. (Companion enforcement proceedings were also brought in the Newfoundland courts which were ultimately rejected because the requirements of the State Immunity Act were not followed and for failure on the part of the Plaintiff to provide full and fair disclosure.) At the Federal Court of Appeal, the enforcement proceedings were declared null and void on the primary basis that the Prothonotary lacked jurisdiction to register and enforce an award over $50,000. In its judgment, the Federal Court of Appeal also adopted the statement from the English High Court in Norsk Hydro ASA v. State Property Fund of Ukraine [2002] EWHC 2120 “that the enforcing court is neither entitled nor bound to go behind the award in question, explore the reasoning of the arbitration tribunal or second-guess its intentions”. (Note: See also Pan Liberty Navigation Co. Ltd. v World Link (HK) Resources Ltd., 2005 BCCA 206, summarized above, where the British Columbia Court of Appeal ordered a stay in a similar proceeding and also indicated that the approach taken by the English High Court in Norsk Hydro ASA v. State Property Fund of Ukraine [2002] EWHC 2120 was the correct approach.)

Foreign Sovereign Immunity – Writ of Seizure and Sale – Setting Aside

Roxford Enterprises SA v. Cuba et al., 2003 FCT 763

The issue in this case was whether the assets of Cubana de Aviacion S.A. (“Cubana”) were available for seizure to satisfy a judgment obtained by default against the government of Cuba. Cubana was not a party to the original action but, according to the Plaintiff, the government of Cuba was the true owner of Cubana’s shares and assets such that the property of Cubana should be liable to seizure to satisfy Cuba’s debts. Having first determined that the Federal Court had jurisdiction to hear the case, the Prothonotary answered the narrow question: were the assets of Cubana liable to seizure for a debt owed by Cuba in respect of litigation unrelated to Cubana’s affairs? This was the opposite of the usual question asked in sovereign immunity cases, that is, is a particular state entity entitled to the benefit of sovereign immunity in respect of its activities? There apparently being no Canadian case law addressing the issue, the Prothonotary adopted the principles set out by the United States Supreme Court, these being: duly created instrumentalities of a foreign state are entitled to be accorded a presumption of independent status, however, where a corporate entity is so extensively controlled by its owner such that a relationship of principal and agent is created, one may be held liable for the actions of the other. The Prothonotary held that the facts did not support the conclusion that Cubana’s business, income, undertaking and assets were controlled or even owned by Cuba, and thus concluded that the Plaintiff had not dislodged the presumption that Cubana was a separate juridical entity. Cubana could therefore not be liable for the debts of Cuba.

Seizure – Setting Aside – Corporate Veil – Appeals – Standard of Review

Foresight Shipping Co. Ltd. v Union of India et al., 2004 FC 1501

This was an appeal from an Order of a Prothonotary in which the Prothonotary had set aside the seizure of the ship. The facts were that the Plaintiff had obtained an arbitral award against the Union of India and the Food Corporation of India and registered the judgment in the Federal Court. The award/judgment was not paid and in an effort to obtain payment the Plaintiff seized the ship “Lok Rajeshwari” at Sorel, Quebec. The owner of the ship, the Shipping Company of India Ltd., brought an application to set aside the seizure, which was granted by the Prothonotary. On appeal, the appeal Judge initially addressed the question of the standard of review from orders of Prothonotaries. She referred to the test enunciated in Canada v Aqua-Gem Investments, [1993] 2 F.C. 425 where it was held that discretionary orders of Prothonotaries should not be disturbed unless they are clearly wrong or raise questions vital to the final issue of the case. She also referred to the more recent formulation of this test in Merck & Co. Inc. v Apotex, [2004] 2 F.C. R. 459 where it was said that the first inquiry now concerns whether questions vital to the final issue of the case are raised. It was on this basis that the appeal Judge determined her discretion should be exercised de novo. The appeal Judge reviewed conflict of laws principles and determined that the law of India, not the law of Canada, should be applied to determine whether the ship was an asset of the Union of India subject to execution proceedings. She then reviewed the affidavits of foreign law and held that the law of India regarded the Shipping Company of India as having a distinct legal personality separate and apart from its major shareholders and that under the law of India the lifting of the corporate veil was allowed only in exceptional cases such as fraud. The appeal Judge was not prepared to disregard the distinct legal personality of the ship owner and dismissed the appeal.

Dismissal - Breach of Peremptory Orders

Angloflora Ltd. v The “Cast Elk”, 2002 FCT 1230

This was an appeal from an order of a Prothonotary dismissing the Plaintiff’s claim for failure to comply with a peremptory order that required the Plaintiff to pay costs. The appeal Judge dismissed the appeal and upheld the order striking the Plaintiff’s claim. The appeal Judge noted that the only relevant consideration on such a motion is whether there was justification for the non-compliance. The standard of justification was whether the party had clearly demonstrated that there was no intention to ignore or flout the order and that the failure to obey was due to extraneous circumstances. The failure to comply must be beyond the party’s control. Moreover, prejudice to the party that failed to comply is not a consideration in determining if the standard of justification is met.

Writ of Seizure and Sale - Setting Aside - Stay

Joy Shipping Inc. v Empressa Cubana Des Fletes of Cuba et al., (June 20, 2000) No. T-221-99 (F.C.T.D.), [2000] F.C.J. No. 945

This was an application to set aside a Writ of Seizure and Sale directing the Sheriff to seize the ship "Rio Cuyaguateje". The Writ was issued to enforce a judgment of the Superior Court of England and Wales which had been registered previously with the Federal Court. The Applicant brought this application to set aside the Writ and seizure on the grounds that it was not given notice of the requisition for the Writ and that the judgment debtors were not the owners of the ship. The Court held that there was no requirement that the Applicant be given notice of the requisition for the Writ. The Court further held that it did not have authority to set aside the Writ under Rule 399 as the Writ was not an order of the Court. Finally, the Court held that, pursuant to Rule 448, the issue of ownership should be resolved according to the laws of Newfoundland, where the ship was seized. The Court declined to adjudicate the ownership issue without a full record. In result, the Court refused to set aside the Writ but it did order a stay on condition that the Applicant file security for the entire amount of the judgment.

Examination in Aid of Execution

James Fisher & Sons PLC v Pegasus Lines Limited S.A., (August 13, 1999) No.T-2161-98 (F.C.T.D.)

In this matter the court ordered that a representative of the general agent of the Defendant shipping line could be examined in aid of execution as an "officer" of the Defendant within the meaning of Rule 426. The court held that the term "officer" should not be restricted to the president, vice president and secretary. The term should be broadly defined and included anyone in positions of authority at the senior management level.

Non-Compliance With Orders

Margem Chartering Co. Inc. v Cosena SRL and The "Bocsa",(June 30, 1997) No. T-2418-96 (F.C.T.D.)

This was an application by the Defendant to have the Plaintiff's action dismissed for failing to provide security for costs as required by a previous peremptory order. The Court considered the test to be applied when a party fails to comply with a peremptory order (also referred to as an "unless" order). The Court noted that there were two different principles of law at issue. First, a litigant ought not to be deprived of a right to have its case heard, so long as any damage to other parties is compensable. Second, a litigant who fails to comply with a peremptory order will not normally be permitted to continue the action. The Court noted that to overcome the presumption the party who failed to comply with the order must demonstrate that the failure to comply was not intentional or contumelious. In the case before it the Court found that the Plaintiff's failure to post security was due to circumstances beyond its control and therefore refused to dismiss the action.

Appeals

Stay Pending Appeal

Alpha Trading v Sarah Desgagnés (Ship), 2010 FCA 209

In this matter the respondent had obtained an anti-suit injunction and an order requiring the appellant to release the defendant ship from arrest in proceedings in Belgium. The appellant sought a stay of the order pending the hearing of the appeal. The application was granted. The Court noted that the test for granting a stay required: that there is a serious question to be decided on appeal (a relatively easy condition to satisfy); refusing the stay is likely to cause irreparable harm; and, the balance of convenience favours granting the stay. The fact that the release of the vessel from arrest would result in the loss of the appellant’s security was a paramount consideration. A request by the respondent for counter-security was also refused on the grounds that there was no basis for such a condition in the circumstances.

Appeals – Overruling Prior Panels – Appeals to Supreme Court

Kremikovtzi Trade v Phoenix Bulk Carriers Limited, 2006 FCA 1

See the full summary of this case above where it was held that a panel of the Federal Court of Appeal could not overrule a prior decision of another panel unless the prior decision was manifestly wrong in the sense that the other panel had overlooked a relevant statutory provision or a case that ought to have been followed.

Appeals to the Supreme Court

Kremikovtzi Trade v phoenix Bulk Carriers Limited, 2006 FCA 240

In an application under section 37.1 of the Supreme Court Act for leave to appeal to the Supreme Court of Canada, the Federal Court of Appeal, although noting that the Supreme Court should be allowed to set its own agenda and that it should rarely grant leave, nevertheless granted leave reasoning that the issue was one of considerable importance to the maritime Bar. In a dissent, the dissenting Justice held that the mere fact of conflicting decisions should not be a sufficient reason for granting leave and that the Supreme Court should determine itself whether to grant leave.

Jurisdiction Clause – MLA s.46 – Parallel Proceedings – Appeal – Standard of Review

Ford Aquitaine Industries SAS et al. v The “Canmar Pride” et al., 2005 FC 431 affirming 2004 CF 1437

This action concerned the loss of or damage to several containers carried from LeHavre to Montreal. The damages were estimated at $6 million. The carriage was pursuant to a transportation services agreement which provided for American law and jurisdiction. The carrier under the transportation services agreement was OOCL but OOCL was expressly permitted to subcontract the carriage, which it did, to CP Ships. The Plaintiff originally commenced proceedings against only OOCL in a U.S. District Court. The Plaintiff attempted to discontinue those proceedings but was not allowed to do so. The Plaintiff also commenced this proceeding in the Federal Court against both OOCL and CP Ships. The Defendants brought this application to stay the Canadian proceedings. At first instance, the Prothonotary granted the application for a stay. He held that section 46 of the Marine Liability Act did not oust the court's jurisdiction under section 50 of the Federal Court Act to grant a stay on grounds other than a forum selection clause. He then applied the test from the decision of the British Columbia Court of Appeal in Westec Aerospace v Raytheon Aircraft Co., (1999) 173 DLR (4^th) 498. That test was: 1) Are there parallel proceedings underway?; 2) If so, is the other jurisdiction an appropriate forum?; and, 3) Has the Plaintiff established by cogent evidence that there is some personal or juridical advantage available to him in the British Columbia action that is of such importance that it would be unjust to deprive him of it? The Prothonotary held that the Plaintiff had failed to meet the third element of that test. In this regard a main point argued by the Plaintiff was that a U.S. Court would apply the COGSA limit which was substantially lower than the limitation that would apply in a Canadian court applying the Hague-Visby Rules. The Prothonotary, however, considered that the issue of the applicable limitation would be argued in either court. On appeal, the appeal Judge first considered the appropriate standard of review from a discretionary order of a Prothonotary and noted that the test had been recently reformulated to require the reviewing judge to first determine whether the questions raised are vital to the final issue in the case. If so, the discretion should be exercised de novo and the reviewing judge need not consider the second branch of the test (whether the orders were clearly wrong). The appeal Judge considered the Prothonotary's decision final and thus proceeded to exercise her discretion de novo. The appeal Judge held that the Prothonotary had erred in applying the test from Westec. She considered that the Westec approach was incorrect in that it set up “loss of juridical advantage” as a separate test or step rather than weighing it with the other usual factors to be taken into account. Moreover, she considered that the objective was not just to determine if the foreign forum was equally appropriate to the domestic forum but whether it was more appropriate than the domestic forum. Nevertheless, weighing the relevant factors she concluded that the U.S District Court was a more appropriate forum and upheld the decision of the Prothonotary.

Seizure – Setting Aside – Corporate Veil – Appeals – Standard of Review

Foresight Shipping Co. Ltd. v Union of India et al., 2004 FC 1501

Appeal – Finding of Fact – Contract

Sabina A.G. v Carisbrooke Shipping Limited, 2003 FCA 366

This was an appeal by the Defendant from the judgment of the trial Judge who found there was a contract between the parties on the basis of documents, conversations and the evidence as a whole. The appeal was dismissed because the appellate Court would not interfere with the trial Judge's findings of fact unless there was an overriding and palpable error.

Dismissal for Delay – Appeal – Standard of Review

Precision Drilling International B.V. v The “BBC Japan” et al., 2004 FC 701

Appeals - Stay Pending Appeal

Saskatchewan Wheat Pool v Armonikos Corp. Ltd., 2002 FCA 444

In this matter the Appellant applied for a stay of a judgement pending appeal. The judgement appealed from had ordered that the Federal Court proceedings be stayed in favour of London arbitration pursuant to an arbitration clause in a charter party. The court noted that the test to be applied was three-fold: (a) there must be a serious issue to be tried; (b) the applicant must show irreparable harm will result if a stay is not granted; and, (c) that the balance of convenience favours granting a stay. The court held that the first part of the test had been met as the appeal was not frivolous or vexatious. The court held the second part of the test had also been met in that the London arbitration had already and prematurely been commenced and the Appellant had lost its right to appoint an arbitrator. Moreover, if the Respondent obtained and collected an award, the Appellant would not be able to recover the payment, if successful on the appeal, as the Respondent had no Canadian assets. Finally, on the question of balance of convenience, the court held that the balance favoured granting the stay to avoid the costs and effort of the arbitration and because the Appellant was prepared to post security.

Stays of Proceedings

Please note that cases involving stays of proceedings and arbitration or jurisdiction clauses are summarized separately on the page entitled Arbitration/Jurisdiction Clauses.

Practice - Stay of Proceedings - Supreme Court and Federal Court

Labki Finance Inc. v. Glovertown Shipyards Limited, 2010 NLTD 71

The underlying proceedings in this matter were commenced in the Supreme Court of Newfoundland by the defendant shipbuilder for an order requiring the owner of the vessel to remove the vessel from its shipyard and for storage fees of $1,000 per day. A second proceeding had also been commenced by the mortgagee of the vessel in Federal Court in which the mortgagee obtained judgment. The mortgagee brought this application in the Newfoundland proceedings for an order staying the proceedings. The application was refused. In reaching its conclusion the Court reviewed the authorities peculiar to the admiralty jurisdiction of the Newfoundland Supreme Court and concluded that the Newfoundland Supreme Court had concurrent admiralty jurisdiction with the Federal Court. The Court then questioned, without deciding, whether the Federal Court would have the jurisdiction to grant the relief sought in the Newfoundland proceedings. In any event, the Court held that the applicant had not established that the Federal Court was necessarily the more appropriate forum. The Court further found that there was little likelihood of conflicting orders affecting the vessel.

Motion – Jurisdiction – Stay Proceedings

DSL Corporation v Bulk Atlantic Inc., 2003 FC 1061

The Plaintiff claimed against the Defendant for damage to steel pipe carried from Turkey to Houston. The Defendant applied to set aside the ex juris service of the Statement of Claim or stay the proceedings on the grounds there was no real and substantial connection between the matter and Canada. The Plaintiff was an American company, one of the Defendants was a Maltese company, the carrying vessel, which had not been arrested, was registered in Malta, the time charterer of the vessel was a Marshall Islands Company, and neither the actual nor intended ports of loading or discharge were in Canada. The ships agent in Houston had however advised the Plaintiff that their principals were Atlantic Maritime Inc. of Montreal. The Prothonotary held that the latter advice created a connection with Canada and relied upon United Nations v. Atlantic Seaways Corporation [1979] 2 F.C. 541 for the proposition that the court's jurisdiction in respect of cargo claims extended beyond Canada. The Prothonotary did indicate that he might have considered ordering a stay in favour of Texas if the Defendants had been willing to waive the time bar defence.

Application to Strike – Lis Pendens – Stay of Proceedings – Forum non conveniens – Arrest – Amount of Security

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.

Motion to Dismiss – Stay – Parallel Proceedings

Vilhena Shipping Ltd. v Aro-hall Ltd., 2003 FCT 756

This was an application by the Defendant to dismiss the proceedings or, alternatively, for a stay of proceedings. The ground for the application was that the Plaintiff had commenced parallel proceedings for the same relief in France. The Plaintiff had attempted to withdraw those proceedings but this was not allowed by the French Tribunal. Under the circumstances the Prothonotary declined to dismiss the Plaintiff's action since it was possible that the Plaintiff's application to withdraw the French proceedings would be allowed on appeal. However, the Prothonotary did order that the action be stayed to avoid duplication of costs and the risk of conflicting judgements.

Stay of Proceedings - Insurance

Royal & Sun Alliance v The “Renegade III”, 2001 FCT 1050

This was an application for a stay of proceedings. The applicant was the owner of the Defendant yacht which had been damaged during the 2000 Victoria-Maui race. The applicant made a claim under his insurance policy for approximately $122,000 which was paid except for the sum of approximately $12,000. Subsequent to the payment the underwriters learned of circumstances which might void the policy and advised the applicant of this. On the same day the applicant commenced proceedings in the British Columbia Supreme Court for payment of the $12,000 he alleged was owing under the policy. Underwriters later did purport to void the policy for material non-disclosure and commenced in rem and in personam proceedings in the Federal Court claiming the return of the moneys paid. The applicant then brought this motion to stay the Federal Court proceedings. The application for a stay was denied. The Prothonotary noted that the Court would grant a stay only in the clearest of cases. The onus was on the applicant to prove (1) the continuation of the action would cause prejudice or injustice, not merely inconvenience or additional expense and (2) the stay would not be unjust to the Plaintiff. The Prothonotary held that although the British Columbia Supreme Court was a convenient forum it was not clearly the more appropriate forum. The Prothonotary noted that if underwriters were forced to bring their claim in the British Columbia Supreme Court they could not bring an in rem action by way of counterclaim and would have to start new proceedings and arrest the vessel for a second time. Further, the Prothonotary noted, without deciding, that there might be an issue as to whether the British Columbia Supreme Court had in rem jurisdiction. The Prothonotary concluded that there was no real prejudice or injustice to the applicant and that to allow the stay would deprive the underwriter of a legitimate juridical advantage. It is noteworthy that during the course of his reasons the Prothonotary considered whether a claim by the assured against his broker could be properly brought in the Federal Court. The Prothonotary seemed to suggest that Canadian maritime law had developed to the point where claims against brokers in a marine insurance context might be within the jurisdiction of the Federal Court.

Stay of Proceedings - Convenient Forum

Nissho Iwai Company Limited et al. v Shanghai Ocean Shipping Company, (June 20, 2000) No. T-2039-98 (F.C.T.D.), [2000] F.C.J. No. 1100

This was an application to stay proceedings on the grounds that Canada was not the convenient forum. The action arose out of the grounding of the "Ning Hai" in the Kurile Islands and the consequent loss of the Plaintiff’s cargo. The Plaintiff alleged that the Defendant, as provider of the officers and crew of the "Ning Hai", owed it a duty of care to provide competent and qualified officers and crew and that it breached this duty. The Defendant argued that the Peoples Republic of China was a more convenient forum for the dispute because the officers and crew were Chinese nationals and were trained in China, the Defendant was a Chinese corporation and the grounding occurred far away from Canada. The Plaintiff argued that Canada was a convenient forum because the cargo was loaded in Canada, the charterer was Canadian, and there were a number of witnesses in Canada who had the opportunity to observe the competence of the crew before it left on the fateful voyage. The Plaintiff further argued that there would be no discovery of documents or examinations for discovery in China. The Court held that the fundamental issue in the dispute was the competence of the crew and that most, if not all, of the evidence on this issue was in China. In result, the Court allowed the motion and stayed the proceedings.

Stay of Proceedings

Humble v The "Queen of Alberni", (October 19,1995), Vancouver Reg. No.C940031, (B.C.S.C.)

This was an application by the Defendant for a stay of the Plaintiff's action on the grounds that there were similar actions pending in the Federal Court of Canada. The Defendant wanted all actions consolidated. The British Columbia Supreme Court refused the application on the basis that the Plaintiff's claim might be time barred in the Federal Court and the Federal Court actions concerned some matters which were not relevant to the Plaintiff.

Other

Anti-Suit Injunction - Bunker Supplies

Alpha Trading Monaco Sam v. Sarah Desgagnés (Ship), 2010 FC 695, affd. 2011 FCA 41

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.

Injunctions – Security for Release from Arrest – Letters of Credit – Fraud

Olsen v. The Bank of Nova Scotia, 2011 BCSC 111

This was an application for an injunction restraining payment under a letter of credit. The letter of credit had been issued to obtain the release of a vessel from arrest and to secure claims that were the subject of arbitration. The arbitrations were decided in favour of the defendant ship builders and applications to review the arbitration awards were later dismissed. In this action the plaintiff alleged that the letter of credit was obtained by fraud. The plaintiff was not a party to the ship building contract but was to be the ultimate purchaser and had supplied the letter of credit as well as the funds to finance the construction. The Court dismissed the application holding that the plaintiff had failed to make out a strong prima facie case of fraud. The Court also disagreed with the plaintiff that an injunction was necessary to preserve the status quo. The Court noted that the defendants had the security of the vessel and agreed to release the vessel in substitution for the security of the letter of credit. The Court said that by seeking to invalidate the letter of credit and not returning the vessel the plaintiff “will have significantly altered the position of” the defendants. The Court was finally concerned that the action was simply a collateral attack on the arbitration awards.

Mareva Injunction – Charters

Aosta Shipping Co. v. Gulf Overseas General Trading LLC, 2007 BCSC 354

This was an application to set aside a mareva injunction that had been granted ex parte. The injunction seized bunker fuel on board a ship that was chartered by the Defendant. The Plaintiff’s claim against the Defendant was in relation to a freight dispute in an earlier unrelated charter and which had been submitted to arbitration in England. The Court noted that mareva injunctions are “extraordinary orders” and their granting is discretionary. In particular, it noted that in British Columbia the authorities indicated a more relaxed approach to mareva injunctions with a movement “to a somewhat unfettered exercise of discretion”. Nevertheless, the two necessary conditions for the granting of an injunction are that the Plaintiff must show a strong prima facie or good arguable case and that the balance of justice and convenience favours the granting of the injunction. Although it was apparently clear that the Defendant owed the Plaintiff the money, the Court set aside the injunction on the grounds that neither party had a substantial connection to the jurisdiction and the seizure had negative consequences for the ship, which was owned by a third party, and her crew.

Practice - Collisions - Expert Reports – Admissibility

Laudon v. Roberts, 2007 CanLII 12208

The issue in this application was the admissibility of an expert report. The reports were challenged, inter alia, on the grounds that they were not necessary, that they usurped the function of the judge or jury, and that they contained opinions on matters of law. The Court reviewed both reports which contained assessments of negligence, interpreted and applied the Collision Regulations to the facts of the case, and rendered opinions on contributory negligence. The Court concluded that these reports went beyond the function of an expert and intruded into the exclusive roles of the judge and jury.

Interlocutory Injunctions – Mareva Injunction – Breach of Charter Party

Front Carriers Ltd. v Atlantic & Orient Shipping Corporation, 2006 FC 18

This was an application for a Mareva injunction to freeze the assets of the Defendant within British Columbia pending arbitration in London. The underlying action concerned an alleged repudiation of a charter party agreement between the parties. The motions Judge set out the applicable tri-partite test for an interlocutory injunction, being: 1. a preliminary assessment of the merits to ensure that there is a serious issue to be tried; 2. a determination that the applicant would suffer irreparable harm if the application is refused; and 3. an assessment as to which party would suffer greater harm from the granting or refusal of the injunction. Regarding the “serious issue” branch of the test, the motions Judge noted that the threshold for normal injunctive relief is that the issue is not frivolous or vexatious, however, the threshold for a Mareva injunction is more stringent, being, “a strong prima facie case”. The motions Judge then set out the specific criteria for a Mareva injunction, being: 1. the Plaintiff must make full and frank disclosure of all material matters; 2. the Plaintiff must give particulars of the claim including the points made against it by the Defendant; 3. the Plaintiff should give some grounds for believing the Defendant has assets in the jurisdiction; 4. the Plaintiff should give some grounds for believing that there is a risk of the assets being removed from the jurisdiction; and 5. the Plaintiff must give an undertaking in damages, which in suitable cases should be supported by a bond or other security. The motions Judge noted that the requirement of full and frank disclosure is flexible in that mere imperfections in affidavits or the non-disclosure of inconsequential or immaterial facts will not be fatal. The Judge applied these tests and ultimately granted the order requested. Appeals – Overruling Prior Panels – Appeals to Supreme Court

Summary judgment – Genuine Issue

Cores Worldwide Inc. v The “Camilla” et al., 2004 FC 1160

This was an application for summary judgment to recover outstanding payments allegedly owed on the sale and purchase of a generator and pump. The application was denied on the grounds that there were a number of key facts upon which the parties did not agree. The motions Judge noted that for a summary trial the Applicant must present evidence showing there is no factual issue for which a trial is necessary and the Respondent must put its best foot forward in the sense that it must present evidence and cannot simply deny the claim or rely upon the pleadings.

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.

Trial – Adjournment

Parrish & Heimbecker Limited v The “Mapleglen” et al., 2004 FC 1197

This was an application by the Plaintiff to adjourn the trial which was scheduled to commence in approximately two months time. The underlying action concerned short delivery of a cargo of grain. The reason for the requested adjournment was that the Plaintiff had recently obtained scale tickets from the discharging terminal which indicated that the discharging terminal might be responsible for the shortage and should be added as a Defendant. The Prothonotary refused the request for the adjournment noting that an adjournment in the Federal Court required exceptional circumstances. The Prothonotary did not consider the circumstances exceptional since the Defendants had repeatedly asked for the scale tickets from the discharge terminal and the Plaintiff had refused to obtain and provide them. The Prothonotary considered that the Plaintiff had brought the present difficulties upon itself.

Simplified Action Procedures – Pleadings – Amendment – Evidence

Valentino Gennarini SRL v. Andromeda Navigation Inc., 2003 FCT 567

Motions – Foreign Affidavits – Not Properly Taken according to Local Law

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

As a preliminary motion to an 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.

Expert Evidence

Continental Insurance Co. v Almassa International Inc., 2003 ONSC 10422

This case reminds lawyers that undue interference in the preparation of an expert's reports can have adverse consequences for clients. In this matter the evidence of a surveyor appointed by underwriters was seriously discounted because of the involvement of counsel and “input” from another surveyor.

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.

Simplified Action - Striking of Affidavits Contradicting Interrogatories

Tempo Marble & Granite Ltd. v The “Mecklenburg I”, 2002 FCT 1190

This was an application by the Defendants to strike two affidavits containing the evidence in chief of the Plaintiff in this simplified action. The basis for the application was that the evidence in the affidavits contradicted earlier evidence given at the discovery phase in answers to interrogatories. The Prothonotary found that the evidence did, in fact, contradict the earlier evidence and further found that the Defendants were prejudiced by the affidavits in that they did not have sufficient time to mount a proper defence. The Prothonotary noted that the policy today is to provide evidence in advance so each party knows the case it has to meet and is not taken by surprise. In result, the Prothonotary ordered that the affidavits be struck.

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”.

Summary Judgment - Agreement to Insure - Waiver of Subrogation

Pacifica Papers Inc. v The “Haida Monarch”, 2002 FCT 676

This was a motion for summary judgment by the Plaintiff. The case concerned the partial loss of a cargo of logs being carried from Alaska to Powell River. It was common ground that the action by the Plaintiff was a subrogated action brought by the Plaintiff’s insurer. The Defendants alleged, inter alia, that the Plaintiff’s insurer was precluded from bringing the action because the Defendants were an “insured” under the policy and because of the waiver of subrogation clause contained in the policy. The motions Judge reviewed and summarized the principles applicable to motions for summary judgment and noted particularly that summary judgment was not appropriate where there was conflicting evidence or issues of credibility. The motions Judge then concluded that the issue of whether the Defendant was an insured was too complex for summary judgment and dismissed the motion.

Default Judgment - Requirement for Affidavit Evidence

249387 BC Ltd. v The “Edith Cavell”, 2002 FCT 798

This was an application for in rem judgment in default of a defence. The Prothonotary granted the judgment but adjourned the balance of the motion to set the amount of the judgment pending the filing of proper affidavit evidence. The Prothonotary reviewed the authorities and held that the amount of the default judgment could not be based simply on allegations in the Statement of Claim but needed to be proved by proper affidavit evidence.

Default Judgment - Reference

Island Tug & Barge Ltd. v Haedon Co. Ltd. et al, 2002 FCT 250

This was an application by the Plaintiff for judgment in default of defence. Although the motion was not opposed, the court considered whether a reference to determine damages was necessary given that the action was in rem. The Prothonotary held that he had the discretion to give default judgment without a reference provided the claim was well founded, which he found it was.

Solicitor’s Affidavits

Shipdock Amsterdam B.V. v Cast Group Inc., (2000) 179 F.T.R. 292 (F.C.T.D.)

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.

Third Parties

I. Deveau Fisheries Ltd. v Cummins Americas, Inc.,(June 17, 1996) No. T-1312-95 (F.C.T.D.)

This case concerned a claim by the Plaintiff against the Defendant for negligent repair of a ship's engine. The Defendant in turn commenced Third Party proceedings against a sub-contractor for contribution and indemnity in respect of work done by the sub-contractor to the cylinder heads of the engine. The sub-contractor brought a motion to strike the Third Party action on the grounds that it was not within the jurisdiction of the Federal Court. The sub-contractor argued that all of the work that it did was done in its own shop. It did not do any work to the ship or on the ship. The Court, however, held the work done was necessary to enable the ship to carry out its operations and was therefore governed by maritime law and within the admiralty jurisdiction of the Court.

Discontinuance by Plaintiff

Olbert Metal Sales Limited v. The "Harmac Dawn" et.al.,(December 5, 1996), No. T-539-92 (F.C.T.D.)

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.

Ex Parte Injunctions - Picketing by Water - Jurisdiction

Corner Brook Pulp & Paper Ltd. v Comm. Energy & Paper Workers Union, (July 23, 1999) No.T-1326-99 (F.C.T.D.)

This was an ex parte application for an injunction to restrain the Defendants from picketing the Plaintiff's wharf. The Defendants had erected a rope fence in the water opposite the Plaintiff's wharf and used small boats to allegedly interfere with vessels intending to dock at the wharf. The court noted that only in the most exceptional circumstances will an ex parte injunction be granted. There must be evidence that unlawful conduct created a situation of urgency. The court declined the order sought. First, the court considered that the Plaintiff had not made out a case of sufficient urgency. Second, although the court accepted that the matter fell within the maritime jurisdiction of the Federal Court, it was thought that the Provincial superior court was a more appropriate forum as the substance of the dispute was a labour matter.

Injunctions - Damages

Ordina Ship Management Ltd. v Unispeed,(November 20, 1998) No.T-1721-98 (F.C.T.D.)

This was an action was for non-payment of charter hire. The Plaintiff obtained an ex parte mareva injunction which was later continued. The Plaintiff subsequently brought a motion to stay the action in favour of arbitration pursuant to the terms of the charter party and abandoned its injunction. The Defendant thereafter brought this application for assessment of damages suffered as a consequence of the injunction. The Defendant's application was dismissed. The Court held that it was not appropriate to assess damages until the matter was disposed of on its merits following the arbitration.

Injunctions

Navi Mont Inc. v Rigel Shipping Canada Inc., (May 28, 1997) No. T-966-97 & T-961-97(F.C.T.D.)

This was an application for an interlocutory injunction directing the Defendant to continue to operate various ships in accordance with a contract of affreightment. The underlying issue in the action was whether one of the Plaintiffs was entitled to assign its interest in the contract of affreightment to the other Plaintiff that was specifically created for that purpose. The Court referred to the three stage test for granting an injunction: that there be a serious question to be tried; that the applicant would suffer irreparable harm if the injunction is refused; and, that the balance of convenience favours granting the injunction. Although the Court held that there was a serious question to be tried concerning the assignment, it was not satisfied that any harm suffered by the Plaintiffs could not be adequately compensated by an award of damages. In the result, therefore , the injunction was refused.

Failure to Attend Examination

Westwood Shipping Lines v Geo International et.al, (September 9, 1998) No. T-359-98 (F.C.T.D.)

In this matter the Defendant was found to have converted three containers of hikers shoes and was ordered to pay into court a substantial sum. When the Defendant failed to pay the money into court, the Plaintiff brought a motion for a writ of sequestration against the property of the President of the Defendant. The Plaintiff's initial motion was refused as premature but the court order that the President of the Defendant attend an examination in aid of execution. The President did not appear and, in fact, appeared to have left the country. The Plaintiff brought a further motion for a bench warrant against the President of the Defendant, a writ of sequestration against his property and an order requiring him to show cause why he should not be found in contempt of court. The Plaintiff's motion was granted.

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 (F.C.T.D.)

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.,(December 18, 1997) No. 25340 (S.C.C.)

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.

Workers Compensation

Tan v The "Pacific Brilliance" et.al., (October 21, 1996) No. T-1325-95(F.C.T.D.)

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.

Summary Judgment - Stay of Proceedings

Granville Shipping Co. v Pegasus Lines Ltd., (February 21, 1996) No. T-293-91 (F.C.T.D.)

This case involved a claim by the Plaintiff for unpaid hire under a charterparty and a counterclaim by the Defendant for damages for delay. The Plaintiff brought a motion for summary judgment on the main claim and a motion for an order staying the counterclaim and referring it to arbitration pursuant to the arbitration clause in the charterparty. The Court declined the request for summary judgment finding there were genuine issues of fact and credibility. With respect to the stay application, the Court held the request for a stay had not been made in a timely manner and further held the Plaintiff had waived its right to a stay of the counterclaim by commencing the main action in the Federal Court.

Inspection

Valley Towing Ltd. v Celtic Shipyards (1988) Ltd.,(August 22, 1995) No. T-1492-95 (F.C.T.D.)

This was an application in limitation proceedings for inspection of a ship's steering system. The shipowner contested the application arguing that it would be inconvenient and that it should not be done until all claimants in the limitation proceedings were known. The Court acknowledged that the inconvenience of the shipowner was a matter to take into account but held that early inspection and discovery were preferable in limitation proceedings. In result the inspection was ordered.

Expert Evidence

Fraser River Pile & Dredge Ltd. v Empire Tug Boats Ltd.,(March 20, 1995), No.T-11631-93 (F.C.T.D.)

The issue considered in this decision is the proper subject matter for expert opinions and the form such opinions should take. The Court rejected an expert's affidavit relating to navigational and managerial practices on the grounds that the report did not adequately distinguish facts from opinions. Further, the Court relied on other jurisprudence and held that evidence relating to the standard of care to which a tug company is to be held is not expert evidence. The expert's evidence of his own experiences were admitted, but not as expert evidence.

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