Précis: The Federal Court held that an in rem action was available whenever damage was done by those in charge of a ship with the ship as the instrument.
The plaintiff’s vessel was allegedly damaged by grinding dust that emanated from the defendant vessel while it was undergoing repairs. Both vessels had been hauled out of the water and were on land. The plaintiff commenced in rem proceedings and arrested the defendant vessel. The defendant brought this motion to set aside the arrest on the ground the plaintiff’s claim did not disclose an in rem cause of action in that the damage was not “caused by a ship” as required by section 22(2)(d) of the Federal Courts Act. In the alternative, the defendant asked the court to set bail.
Decision: Bail fixed in the amount of $58,000.
Held: Section 22(2)(d) (which refers to “damage caused by a ship either in collision or otherwise”) is to be interpreted using a functional and operational test. It is not necessary that the ship be engaged in navigation when the damage is done. It is also irrelevant if the ship is in the water, in dry-dock or on land. “Damage caused by a ship” includes damage done by those in charge of a ship with the ship as the noxious instrument. The language of s. 22(2)(d) is broad enough to cover any damage done to a third party by those in charge of the vessel. Pursuant to ss. 43(2) and 22(2)(d) of the Federal Courts Act, the plaintiff’s claim is a valid claim in rem. With respect to bail, the general rule is that bail must be sufficient to cover the plaintiff’s reasonably arguable best case, including interest and costs, but limited by the value of the arrested vessel.
Comment: This decision is in line with previous authority that has generally given a broad interpretation to the term “damage caused by a ship” and a corresponding wider scope for in rem actions.