In Rem Actions and Arrest - Case Summaries
The database contains 73 case summaries relating to In Rem Actions and Arrest. The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
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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 - Release - Security - Arbitration - Jurisdiction - Meaning of Ship
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.
Another issue was whether a submersible device used to cut trees in a flooded but unlogged reservoir was a ship so as to attract the admiralty jurisdiction of the Federal Court. The Prothonotary referred to the definition of ship in the Federal Court Act, being, “any vessel or craft designed, used or capable of being used solely or partly for navigation, without regard to the method or lack of propulsion...”. The Prothonotary noted that this was a very general and broad definition that seemed to encompass anything on or in the water and ultimately concluded that the submersible was, in all probability, a ship and that the Federal Court therefore had jurisdiction.
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.
In Rem Actions - Arrest - Dispensing with Service
Brooks Aviation Inc. v. Wrecked and Abandoned Boeing Sb-17g Aircraft, 2002 FCT 503 (CanLII)
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.
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 - 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.
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.
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.
Action In Rem - Striking out
Paramount Enterprises International Inc. v. The "An Xin Jiang" et al., 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 et al v. Owner & Farquharson et al, 2000 BCSC 1621
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.
Arrest of Freight
Third Ocean Marine Navigation LLC v. The "GTS Katie", 2000 CanLII 16327
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.
Release from Arrest
Ed Wahl Boat Builders and Repairs Ltd. v. Holm, 2000 CanLII 16069
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. The Defendants brought this motion for the release of the ship from arrest without posting security. The Release was granted.
Arrest of Cargo - Setting Aside
Campbell’s Meat Market Ltd. v. The "Merak", 2000 CanLII 15892
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., 2000 CanLII 16551
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.
Stay of Proceedings - In Rem Proceedings - Change of Ownership
Fibreco Pulp Inc. v. Star Shipping A/S et.al., 1998 CanLII 7356 2000 CanLII 15323
This was an appeal from the order of a Motions Judge upholding the decision of a Prothonotary in which the Prothonotary ordered that the action be stayed not only against parties to an arbitration agreement but also against Defendants not parties to the agreement. The case involved two shipments of pulp from Squamish, British Columbia to Finland via Rotterdam. The Plaintiffs were the vendor of the pulp, the buyer of the pulp for resale, and the ultimate buyer/consignee of the pulp. The Defendants were the Squamish terminal, the charterers, Star Shipping A/S, and the owners of the various ships that carried the pulp. The buyer of the pulp and Star Shipping had entered into a contract of affreightment that contained an arbitration agreement in favour of London arbitration. The Prothonotary held that pursuant to the Commercial Arbitration Act he had no alternative but to grant a stay of proceedings against Star Shipping. The Prothonotary noted that the more interesting question was whether the action ought to be stayed against the other Defendants who were not parties to the agreement. The Prothonotary referred to Nanisivik Mines Ltd. v Canarctic Shipping Co. Ltd., (1994), 113 D.L.R. (4th) 536, where the Federal Court of Appeal ordered a stay against persons not parties to an arbitration agreement on the grounds that "disposing of the issues between the two parties to the arbitration agreement might, more likely than not, resolve the entire litigation". In reliance on this decision, the Prothonotary noted that London arbitration "may well resolve the whole claim" and consequently ordered that the entire action be stayed.
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.
On appeal, the Motions Judge noted that the Prothonotary's reasons were detailed and sound and the appeal was dismissed. On further appeal, the Federal Court of Appeal noted that there were multiple competing jurisdictions none of which were ideal. Nevertheless, the Court of Appeal found no error on the part of the Prothonotary and dismissed the appeal. In the result, the action was stayed.
Sister Ships - Action In Rem - Striking Out
Roxford Enterprises S.A. v. The Calix, 2000 CanLII 15474
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.
Quashing Warrants to Arrest - In Rem Claims
Trade Arbed Inc. v. Toles Limited et al., 1999 CanLii 8912
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.
Quashing Warrants to Arrest - In Rem Claims
Cold Ocean Inc. v. The Gornostaevka , 1999 CanLII 8047
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.
Arrest Warrants - Setting Aside - Extension of Time for Service
Abitibi-Price Sales v. C.V. The "Bontegracht", 1998 CanLII 8562
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.