Judgments and Enforcement of Judgments - Case Summaries
The database contains 28 case summaries relating to Judgments and Enforcement of Judgments. 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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Default Judgment - Pollution
Administrator of the Ship-Source Oil Pollution Fund v. Wilson, 2017 FC 796
Précis: The Federal Court granted default judgement to the Ship-Source Oil Pollution Fund against the owners of a barge for expenses incurred to clean up and mitigate pollution.
Facts: A barge was found adrift in high winds and in danger of sinking. The Canadian Coast Guard contacted one of the two owners of the barge about the situation, but the owner advised they were unable to rescue the barge. The Coast Guard retained a contractor to tow the barge to a safe moorage. The Coast Guard subsequently submitted a claim under the Marine Liability Act to the plaintiff, the Administrator of the Ship-Source Oil Pollution Fund, for the costs incurred to salvage the barge. The claim was accepted and paid by the plaintiff after a small reduction. The plaintiff then demanded payment of the amount paid to the Coast Guard from the defendant owners of the barge. The defendants refused to pay. The plaintiff then commenced this action. The defendants failed to appear. The plaintiff brought this ex parte motion for default judgment.
Decision: Default judgment granted.
Held: The defendants were properly served and as owners of the barge they are liable under s. 77 of the Marine Liability Act for the reasonable expenses incurred by the Canadian Coast Guard to prevent, repair, remedy or minimize the oil pollution associated with the barge.
Carriage of Goods - Is Transportation Services Contract a Charter? - Application of Hague-Visby Rules - Agreements to insure
AGF Steel Inc. v. Miller Shipping Limited, 2016 FC 461
Précis: The court held that a transportation services contract between the parties was, in fact, a contract for the charter of a ship and the Hague-Visby Rules did not apply.
Facts:The plaintiff and the defendant, Miller Shipping (“Miller”), entered into a contract for the transportation of 43,000 metric tonnes of steel rebar over 8 voyages by tug and barge. The contract was called a “Time Charter Party”, identified the plaintiff as “charterer” and referred to “Employment of the Vessel” and “Hire”. The contract contained a so-called “knock for knock” clause stipulating, inter alia, that each party would be liable for all losses, costs, damages and expenses incurred by the party on account of loss of or damage to its property. The contract also contained insurance clauses requiring the plaintiff to obtain cargo insurance and Miller to obtain Hull and Machinery insurance and protection and indemnity insurance. The first two voyages were completed without incident. During the third voyage on 10 May 2013 the barge capsized with the loss of the entire cargo. The plaintiff commenced suit for the value of the lost cargo (in excess of $8 million) against Miller and its various subcontractors including the actual owner of the tug and barge and the surveyor that surveyed and approved the stowage of the barge. Miller brought this summary judgment application for a declaration that it was not liable. The plaintiff opposed the application.
Decision: The application is allowed, in part.
Held: The test on a summary judgment application is that there is no genuine issue for trial. The onus is high and is on the party bringing the application. Summary judgment should be granted only in the clearest of cases.
Miller argues that the contract between the parties is a charterparty and that the contract excludes the liability of Miller and the other defendants. The plaintiff, on the other hand, argues that the contract is one for the carriage of goods by water, that the Hague-Visby Rules apply, that any exclusion or limitation clauses in the contract are rendered invalid by article III, r.8 of those rules and that, in any event, on a proper interpretation, the contract does not exclude the liability of Miller and the other defendants. Thus, there are two issues: first, is the contract governed by the Hague Visby Rules; and, second, if the contract is not governed by the Hague Visby Rules, do the “knock for knock” and insurance clauses exclude the liability of Miller and the other defendants.
The nature of the contract between the parties is a discrete issue that is capable of being determined by summary judgment as the principal evidence required to assess its nature is the contract itself. The contract is entitled “Time Charter Party”, describes the plaintiff as “charterer” and refers to “Employment of the Vessel” and to “Hire”. This is sufficient to find the contract is a charterparty and not covered by the Hague-Visby Rules. Accordingly, the parties were free to negotiate their own terms concerning liability. However, the contractual interpretation of the “knock for Knock” and insurance clauses is an issue of mixed fact and law which is not appropriate for summary judgment. These issues will proceed to trial.
Summary Judgment - Sufficiency of Evidence - Damages - Pure Economic Loss
Leo Ocean S.A. v. Westshore Terminals Limited Partnership, 2015 FC 130 2015 FCA 282
Précis: The Federal Court of Appeal held that there was sufficient evidence to determine if the claim was one of pure economic loss and referred the matter back to the trial division for a decision.
Facts: On 7 December 2012 the “Cape Apricot” collided with and destroyed part of a trestle holding the conveyor system at the terminal leased and operated by the plaintiff. As a consequence, terminal operations were shut down for a period of time. The plaintiff commenced proceedings and arrested the vessel. The owner of the “Cape Apricot” subsequently brought limitation proceedings and the Federal Court ordered that all claims against the limitation fund were to be filed by 8 November 2013. A claim was filed by the Vancouver Fraser Port Authority, the owner and lessor of the lands on which the terminal was constructed. It claimed that as a consequence of the temporary shutdown of the terminal it suffered losses in excess of $1 million. The Port Authority’s claim was premised on the terms of a lease between it and the plaintiff whereby it received “participation rent” based on the tonnage shipped through the terminal. The plaintiff, with the support of the defendant ship owner, brought this summary trial application for an order dismissing the claim of the Port Authority on the basis that it was a claim for pure economic loss and not recoverable.
At first instance (2015 FC 130), the motions Judge refused to dispose of the matter by way of summary trial. She noted that as a general rule there is a bar against recovery of pure economic loss but that there were exceptions to the rule, notably: (1) where the claimant has a proprietary or possessory interest in the damaged property, (2) maritime general average cases, and (3) cases of a joint or common venture. She was not convinced that the Port Authority did not have a proprietary or possessory interest under the lease and specifically considered it arguable that the Port Authority had a proprietary or possessory interest in the trestle. She therefore held that there was a genuine issue as to whether the Port Authority had a sufficient proprietary or possessory interest and dismissed the motion for summary trial. The plaintiff and ship owner appealed.
Decision: Appeal allowed.
Held: It is clear that the decision of the motions Judge was not based on credibility. The principal issue to be decided was whether the Port Authority had a proprietary or possessory interest in the property damaged and, once that issue was decided, whether the claim fell within one of the exceptions to the rule against recovery of economic loss. These issues depended on the construction of the lease. The parties agree that credibility is not an issue and further agree that additional discovery will not lead to additional evidence relevant to the interpretation of the lease. As set out in Teva Canada Ltd. v. Wyeth LLC, 2001 FC 1169, summary judgment is appropriate when: the issues are well defined; the facts necessary to resolve the issues are already in the evidence; the evidence is not controversial and there are no issues of credibility; and the questions of law, although far from simple, can be dealt with as easily now as after a full trial. This test is met in this case and motions Judge was in error in failing to decide the matter by way of summary trial. The matter is to be returned to the Federal Court for determination of the issues.
Mortgages - Default - Summary Judgement
National Bank of Canada v. Rogers, 2015 FC 1207
Précis: The bank/mortgagee was granted summary judgement upon the default of the debtor in advance of the sale of the ship.
Facts: In February 2010 the defendants purchased a yacht for $924,000 of which approximately $675,000 had to be financed. The defendants obtained the financing through a facility the vendor had with the plaintiff bank. The transaction was recorded in a conditional sales contract on the plaintiff’s form which showed the vendor and the defendants as buyers. The vessel and a mortgage in favour of the plaintiff were subsequently registered on 16 November 2010. Meanwhile, the defendants took possession of the yacht in May 2010 but were not happy with it and complained to the vendor but not the plaintiff. In August 2010 the vendor agreed to replace the yacht with delivery of the new vessel to be in April 2011. In October of 2010, the yacht was returned to the vendor and it was further agreed that the vendor would provide cash for the mortgage payments on the yacht which were drawn from the defendants’ account. The yacht was resold by the vendor on 26 October 2011.The plaintiff was unaware of the resale which was never registered. The plaintiff was also unaware that the vendor was providing the mortgage payments to the defendants. The defendants never received the replacement vessel nor did they receive any part of the proceeds from the resale of the yacht. The vendor went bankrupt in early 2015 and the defendants ceased making mortgage payments in February 2015. The plaintiff commenced this action for the balance owing in rem and in personam against the defendants and brought this application for summary judgment. The defendants contested the application. At the time the application was heard, the yacht had been arrested and was subject to an order of judicial sale.
Decision: Judgment for the plaintiff.
Held: The defendants argue that this summary judgment motion is premature as the plaintiff has not yet sold the yacht. They rely on case law relating to real estate which says a mortgage in possession is obliged to sell at the best possible price. However, a ship is not real estate. A mortgagee of a ship is under no obligation to commence an action in rem or to arrest the vessel and, in any event, an arrest does not put the mortgagee in possession of the vessel. It is the court that will sell the vessel and the proceeds from the sale will be distributed between the claimants thereto who, at present, comprise only the plaintiff and the purchaser of the yacht on resale.
With respect to the merits, the defendants argue that the plaintiff as assignee of the conditional sales contract is liable for the many deficiencies in the vessel and for the actions of the vendor who, they say, was the agent of the plaintiff. But, the vendor did not have any authority to represent the plaintiff and no reasonable person could reasonably believe the vendor had ostensible authority. From the evidence it is perfectly clear that the defendants knew the vendor was not an agent for the plaintiff.
Carriage by Sea - Dead Freight - Practice - Summary Judgment
Asia Ocean Services, Inc. (UPS Asia Group Pte Ltd) v. Belair Fabrication Ltd, 2015 FC 1141
Précis: The shipper was required to pay dead freight pursuant to the terms of a booking note.
Facts: The plaintiff, a logistics company, entered into an agreement with the defendant to carry the defendant’s cargo from China to Vancouver. The agreement was contained in a booking note that contained an estimated shipping date of 23 May 2013 and a “dead freight” clause requiring the defendant to pay the full amount of the freight if the booking was cancelled. The plaintiff subsequently sub-contracted the carriage by entering into a booking note with another carrier. This contract also contained a dead freight clause. The cargo was not ready to be shipped on 23 May and the vessel sailed without the cargo. The parties attempted to come to an agreement to ship the cargo on another vessel but were unsuccessful. The defendant ultimately shipped the cargo with another carrier. The plaintiff was required to pay dead freight to the carrier with whom it had sub-contracted and now claimed dead freight from the defendant. The defendant filed a counterclaim. The plaintiff brought this application for summary judgment.
Decision: The plaintiff’s motion for summary judgment is allowed. The defendant’s counterclaim is dismissed.
Held: The defendant argues that this matter is not suitable for summary judgment as the affidavit evidence is contradictory and disputed and a full trial is required to adequately address the issues. However, conflicting affidavits and disputed evidence do not necessarily render a matter inappropriate for summary judgment. The conflicting evidence can be tested against the documentary evidence and the cross-examinations. Other factors to consider include the amounts involved, the complexity of the matter, its urgency, any prejudice likely to arise by reason of delay, the cost of taking the case forward to a conventional trial in relation to the amount involved, and proportionality. Proportionality and the other factors support a disposition by way of summary trial.
The defendant seeks to avoid liability under the dead freight clause of the booking note by first arguing that the corporate entity that paid dead freight to the other carrier was not the plaintiff but a related company. There is no evidence of how or why the plaintiff accounted for the dead freight payment within its group of companies but this is not relevant. The issue is whether the defendant is required to pay dead freight to the plaintiff under the booking note as between them.
The defendant next argues it should not be required to pay dead freight because such a clause is a penalty clause or, alternatively, that the amount it should pay should be limited to the amount the plaintiff paid to the other carrier. The dead freight clause is, however, a reasonable attempt to estimate the damages and is not a penalty clause. Such clauses are to be assessed at the time they were made and are enforceable whether or not the actual damages are less than the estimated amount. It is therefore not relevant that the plaintiff may have paid less in dead freight to the other carrier than is owed by the defendant.
Finally, the defendant argues that at the time the booking note was entered into the plaintiff agreed to communicate with the defendant’s supplier and to ensure that the cargo would be at the port when required. The defendant says the plaintiff failed to do this and that it is therefore not liable to pay dead freight. But, the evidence does not support the defendant’s arguments in this regard. The booking note contains no such term and the extensive correspondence does not support such a term.
Summary Judgment - Foreign Judgment - Sufficiency of Evidence - Mortgage Enforcement
Lakeland Bank v. The Ship Never E Nuff, 2013 FC 864
The plaintiff was the mortgagee of the defendant vessel and brought this motion for summary judgment to sell the vessel promptly. In support of its motion the plaintiff filed an affidavit which apparently attached a judgment of the United States District Court of Northern New York in which the plaintiff was awarded US$190,000 and given the right to take possession and dispose of the vessel. The motion was opposed by the defendants who claimed to be the owners.
Decision: Application dismissed.
Held: A motion for summary judgment requires that there be no genuine issue for trial. The evidence is insufficient to meet this threshold. Section 23 of the Canada Evidence Act requires that the US judgment be proven by certified copies not by affidavit. Further, the foreign judgment could not be the basis for execution without more. A full hearing is required.
Judgments - Stay of Execution - Set-off
Calogeras & Master Supplies Inc. v. Ceres Hellenic Shipping Enterprises Ltd., 2012 FCA 79
The plaintiff had obtained a judgment against the defendant for $100,000 plus interest and a costs award of approximately $35,000. The defendant had also been awarded costs in the amount of approximately $160,000 from the date of an offer it had made and had been given the right to set-off its costs award against amounts owing to the plaintiff. The defendant now applied for a partial stay of execution of the judgment to protect its right of set-off.
Decision: Application dismissed.
Held: The Court rejected the defendant's application on the grounds that it could have exercised its right of set-off earlier but did not do so.
Freight – Demurrage - Arbitration Awards – Enforcement – Appeals for Arbitrators
Orient Overseas Container Line Limited v. Sogelco International, 2011 FC 1466
This was an appeal from a decision of a Prothonotary granting recognition and enforcement of a New York arbitration award. The appellant argued that the Prothonotary had erred in finding that there was a written arbitration agreement, a requirement of recognition and enforcement. The Appeal Judge, however, agreed with the Prothonotary. He found the undisputed evidence was that a services contract containing an arbitration provision had been signed. The appellant’s argument that it had only been given one page of the agreement was not considered germane as that one page referred to the other pages and the appellant never asked for the other pages. The Appeal Judge did not agree with the Prothonotary that the appellant’s participation at the arbitration was relevant since that participation was done under protest. The Appeal Judge also did not agree that there was a three month time period within which to appeal the award as the three month time period under the Commercial Arbitration Code applies only to Canadian arbitrations not foreign arbitrations. Having found that there was an agreement to arbitrate, the Appeal Judge refused to consider the appellant’s arguments that the arbitrator erred on the merits. The Judge said: “If one agrees to arbitrate, one accepts the possibility that the arbitrator may get it wrong. This is not a jurisdiction in which one may go to court on a point of law, but only on whether there was an agreement to arbitrate and what I would broadly call principles of natural justice”.
Arbitration – Application to Set Aside Award – Bias
New World Expedition Yachts LLC v. P.R. Yacht Builders Ltd., 2010 BCSC 1496
This was an application under the International Commercial Arbitration Act to set aside an award of an arbitrator relating to the construction of a ship. The applicant argued, inter alia, that the award should be set aside on the grounds that the arbitrator was biased. The bias allegations included that there were private communications with the arbitrator and that there was a close and familiar relationship between counsel and the arbitrator. With respect to the issue of private communications, the Court noted that the arbitrator was asked to act as both mediator and arbitrator and that any private communications took place in the context of the mediation. With respect to the relationship between the arbitrator and counsel, the Court noted that arbitrators are often chosen from practicing lawyers in a specialized area who know one another. The Court considered the fact that first names were used did not give rise to a reasonable apprehension of bias.
Arbitration - Appeal of Arbitral Award - Factors to be Considered
Lafarge Canada Inc. v. JJM Construction Ltd., 2010 BCSC 1168
The parties entered into four identical charter parties which required that disputes be settled by arbitration. Pursuant to the charter parties the charterer was to be liable for damage to the barges except for normal wear and tear and was also responsible for obtaining hull and machinery insurance naming the owner as an additional insured. The barges were returned with damage but not all of the damage was covered by the insurance that had been obtained by the charterer. At the arbitration the charterer argued that the agreement to insure relieved it of liability to pay the repair costs for the uninsured damage. The arbitrator disagreed, ruled in favour of the owner and ordered the charterer to pay damages of $650,000. The charterer then brought this application under the Commercial Arbitration Act of British Columbia for leave to appeal the arbitrator's decision. The Motions Judge considered the various factors relevant to an application for leave to appeal an arbitral award, namely, whether the issue was question of law and the importance of the issue to the parties or public. The Motions Judge held that the issue on appeal was a question of law that raised an important matter of principle and was of considerable financial consequence to the parties. The Judge further held it was not necessary for the applicant to show the arbitrator was "obviously in error". The test is whether there is sufficient substance to the proposed appeal to warrant its proceeding. In result, the Motions Judge allowed the application.
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.
Enforcement of Foreign Judgements – Proper Test – Attornment – Application of Provincial Statutes
Morgan v. Guimond Boats Ltd., 2006 FCA 401
In this matter the Plaintiff, a resident of Hawaii, commenced proceedings against the Defendant, a New Brunswick company, in Hawaii in relation to a contract for the design, manufacture and sale of a boat. The Defendant unsuccessfully contested the jurisdiction of the Hawaiian courts, filed a Statement of Defence to the action and participated in a pre-trial conference before withdrawing from the action. The Plaintiff subsequently obtained a default judgment against the Defendant and then brought this action and motion for summary judgement to enforce of the U.S. judgment. The Defendant contested the motion on the ground, inter alia, that the U.S. Court was without jurisdiction. At first instance, the motions Judge held that the appropriate test was whether there was a “real and substantial connection” with the foreign jurisdiction and noted that a fleeting or relatively unimportant connection will not be enough. The motions Judge further held that the connection with Hawaii was such a fleeting or unimportant connection given that the preliminary contract negotiations between the parties, the execution of the work, the delivery of the boat and the payment for the boat all occurred in New Brunswick and the contract was governed by the law of New Brunswick. The Plaintiff's main argument was that the Defendant had attorned to the jurisdiction of the Hawaiian courts. On this issue the motions Judge said that the law of attornment was in a state of flux and suggested that attornment could only bolster an otherwise real and substantial connection. In result, the motion for summary judgment was dismissed. On appeal to the Federal Court of Appeal, however, the Court of Appeal held that attornment to a foreign court was not simply a factor to take into account in determining whether there was a real and substantial connection with the foreign court but was determinative. The Court of Appeal further held that the Defendant had attorned to the Hawaiian courts by filing a defence and participating in settlement conferences. Accordingly, the Court of Appeal allowed the appeal and recognized the foreign judgment. (A noteworthy issue dealt with by the motions Judge but not addressed in the Court of Appeal was whether the Foreign Judgments Act of New Brunswick had any application. The motions Judge held that the statute, being a provincial statute, can have no application to Canadian maritime law, even in the absence of applicable federal legislation.)
Registration of Foreign Judgments – Antedating Orders
Trans-Pacific Shipping Co. v. Atlantic & Orient Trust Co. Ltd. et al., 2005 FC 566
In this unique matter a foreign arbitration award had been ordered to be registered by a Prothonotary. Subsequently, in another proceeding, it was determined by the Federal Court of Appeal that Prothonotaries did not have jurisdiction to register such awards. Accordingly, a motion was brought to re-register the award nunc pro tunc. The Defendant challenged the registration and the antedating of the order. The challenge to the registration was based upon the fact that the affidavit in support of registration merely attached a copy of the award and contained a statement by the affiant, based on information and belief, that no impediment to registration was known. It was argued that this material was not in compliance with the requirements of Rule 329 (which requires “an exemplified or certified copy of the foreign judgment” and a statement that the applicant “knows of no impediment to registration”). The motions Judge noted that there was an apparent departure from the requirements of Rule 329 but held that “in the unique circumstances” there was sufficient evidence to comply with the rule. Regarding the antedating of the order, the motions Judge noted that there was a power to antedate orders to avoid injury to a litigant by an act of or delay by the court. The motion Judge held that this test had been met as it was the court that had initially assigned the matter to the Prothonotary.
Enforcement of Arbitration Award – Related Companies – Stay of Proceedings - Arbitration Clause
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,  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.)
Federal Court Jurisdiction – Enforcement of Foreign Arbitration Awards – Piercing Corp
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.)
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
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  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  EWHC 2120 was the correct approach.)
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,  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,  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.
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.
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.
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.