Date: 20060901
Docket: T-550-05
Citation: 2006
FC 1051
Ottawa, Ontario, September
1, 2006
PRESENT: The Honourable Mr. Justice Barnes
BETWEEN:
CANADIAN
SUB SEA HYDRAULICS LIMITED
Plaintiff(s)
and
THE OWNERS AND ALL OTHERS
INTERESTED
IN THE SHIP "CORMORANT"
Defendant(s)
REASONS FOR ORDER AND ORDER
[1]
This
proceeding concerns a claim by the Plaintiff, Canadian Sub Sea Hydraulics
Limited, against the Defendant as owner of the ship “Cormorant”, for unpaid
charges arising from the provision of goods, services and materials necessary
for the ship’s protection, wharfage and maintenance.
[2]
It appears
to be the case that the parties entered into an arrangement whereby the
Plaintiff was to look after the Cormorant on behalf of the Defendant from early
2002 to late 2004. During most of that time, the Cormorant was berthed at Bridgewater, Nova Scotia at a wharf facility owned by
the Artificial Reef Society. The Plaintiff’s Statement of Claim alleges that
the Defendant’s outstanding obligation is in the amount of $109,209.47 together
with interest of $2,076.95.
[3]
On March
31, 2005, the Cormorant was arrested on behalf of the Plaintiff by the Sheriff
at Bridgewater, Nova Scotia, under a Warrant
issued by this Court on March 23, 2005.
[4]
The
Defendant brought two motions before the Court. It seeks to amend its Defence
by adding a Counterclaim and it requests that the Court set bail to allow for
the eventual release of the ship pursuant to Rule 485 of the Federal Courts
Rules.
[5]
The
Plaintiff has advised the Court by letter from its counsel that it takes no
position with respect to the Defendant’s motion to amend. I am satisfied that
the proposed amendment is appropriate. The Defendant’s new allegations are
said to arise from an investigation carried out on its behalf which, it says,
gave rise to information that was unknown at the time of filing its Defence.
The amendment motion is also brought before the exchange of documents and
examinations for discovery and the Plaintiff does not assert any prejudice.
The Defendant’s motion to amend by adding a proposed Counterclaim to its
Defence is, therefore, allowed without costs.
[6]
The
Defendant’s motion to fix bail for the release of the Cormorant is challenged
by the Plaintiff with respect to quantum. The Defendant asserts that bail
should be set at a nominal amount. The Plaintiff says that bail should be
fixed for the face amount of its claim plus a provision for costs.
[7]
The setting
of bail for the release of a ship under arrest should ordinarily be straightforward.
That is so because the fixing of bail is based upon the principle that a
plaintiff has a right to security measured by its reasonably arguable
best case capped at the value of the vessel: see Striebel v. Sovereign
Yachts (Canada) Inc., 2002 FCT 995; 225 F.T.R. 146, at
para. 14. Because the Court is not in a position on such a motion to try the
merits of the case, the Plaintiff’s reasonably arguable best case will often be
the amount it asserts to be owing in its Statement of Claim: see Striebel,
at para. 15.
[8]
All of
this is not to say that the Court cannot or should not attempt to assess the
reasonableness of the Plaintiff’s claim. In Atlantic Shipping (London) Ltd. v. Ship Captain Forever
et al. (1995),
97 F.T.R. 32, Prothonotary John Hargrave canvassed the relevant authorities and
concluded that, where special circumstances exist (such as a claim with major
uncertainties or which is clearly exorbitant), the amount of bail can be set
for a sum that does not correspond with the plaintiff’s stipulated claim.
[9]
This Court
has, with some frequency, set bail for amounts less than the full face amount
of a plaintiff’s pleaded claim based on a preliminary assessment of the
evidence and law: see Striebel, above; Pan Ocean Shipping Co. v.
Breeze Navigation Ltd., 2003 FCT 56; 120 A.C.W.S. (3d) 7; and Amican
Navigation Inc. v. Densan Shipping Co. et al. (1997), 137 F.T.R. 132.
[10]
The
attachment of a standard of reasonableness to the determination of what will
constitute a plaintiff’s best day in court requires, to the extent that the
evidence allows, that the Court independently evaluate the plaintiff’s claim
and set bail accordingly. It is clear from the authorities that it is open to
the Court to consider any evidence that is available to the parties and bearing
on the merits of the plaintiff’s claim; however, it may be necessary for the
Court to adopt a “rough and ready” approach if the evidence available for
consideration is incomplete: see Striebel, above at para. 19. On the other
hand, the Court should avoid speculation: see Amican, above, at para.
16.
[11]
Ordinarily
in a case like this one involving allegations of unpaid invoices for the
provision of measurable goods and services, bail will be set at or near the
full face amount of a plaintiff’s claim. Here, however, the Defendant has placed
before the Court a detailed Affidavit from its local Nova Scotia agent, John
Kenney, making allegations against the Plaintiff involving overcharging of
wharfage and other fees, inadequate protection and maintenance of the ship and
its components, damaged and missing equipment, unexplained disappearance of fuel,
evidence of an illicit on-board drug laboratory, poor record-keeping and
troubling conversations with witnesses bearing on some aspects of the
Plaintiff’s conduct. These allegations form the basis of the Defendant’s
current Counterclaim against the Plaintiff and, on this motion, they were not challenged
or contradicted by any evidence submitted on behalf of the Plaintiff.
[12]
The
Plaintiff took the position before the Court that it could safely rely upon its
pleadings and elected not to confront the Defendant’s factual allegations at
this stage of the proceeding. The Plaintiff also failed to file a Brief with
the Court to outline its legal position on the motion. This leaves the Court
with a number of very serious allegations of misconduct on the part of the
Plaintiff which stand unchallenged. Given the specificity of Mr. Kenney’s
Affidavit, I have serious reservations about the Plaintiff’s ability to prove
its claim to the full extent pleaded. In circumstances where the Plaintiff
elected not to confront these allegations, the only evidence I have for
consideration is that offered by the Defendant.
[13]
In setting
bail for the release of the Cormorant, I am not prepared to ignore the
Defendant’s allegations in the determination of the Plaintiff’s reasonably
arguable best case. Based on the evidence before me, I think it unlikely that
the Plaintiff will succeed to the full amount of its asserted claim. I will
fix bail for the release of the ship at one half of the amount of the
Plaintiff’s claim as pleaded plus $5,000.00 for costs. With an adjustment for
interest since the Statement of Claim was filed, the amount of bail in
connection with the Plaintiff’s claim against the Defendant is fixed at $65,000.00.
[14]
A number
of third-party caveats remain outstanding in connection with other claims
pertaining to the Cormorant. The vessel remains under arrest in connection
with at least one of those third-party claims. Until all of those claims are
satisfied or released, the Cormorant obviously cannot be released to the
Defendant notwithstanding the posting of bail in conformity with these reasons.
[15]
In as much
as this is a preliminary determination and both parties achieved some success,
I will order costs in the cause.
ORDER
THIS COURT ORDERS that the amount of bail to be
posted by the Defendant for the release of the ship “Cormorant” in connection
with the Plaintiff’s claim herein is fixed in the amount of $65,000.00
THIS FURTHER COURT ORDERS that
the costs of
this motion to fix bail shall be costs in the cause.
THIS FURTHER COURT ORDERS that
the Defendant
shall have leave to file an amended Defence and Counterclaim in the form
annexed hereto as Schedule “A”.
"R.
L. Barnes"
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