Franklin Lumber Ltd. v. The “Essington II” et al.

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.