Date: 20000211
Docket: T-738-96
BETWEEN:
Holt Cargo Systems Inc.
Plaintiff
and
Messrs. T. Van Dooselare and F. De Roy as Trustees in Bankruptcy of ABC Containerline N.V., the Owners, Charterers and all Others Interested in the Ship "Brussel", and the Ship "Brussel"
Defendants
and
Société Nationale de Crédit à l'Industrie S.A.
Intervenor
REASONS FOR JUDGMENT
MacKAY J.
[1] These proceedings concern applications for orders for payment of claims presented against the proceeds paid into Court following the sale of the ship M/V "Brussel" on July 24, 1996, and interest attributed to those proceeds (the "fund").
[2] For the assistance of counsel and claimants, Annex A to these reasons is a table indicating those claims now ordered to be paid and those now determined to be payable upon a future order of this Court. Annex B provides an index, by paragraph numbers, to these reasons and to individual claims here determined.
Background
[3] The "Brussel" was arrested off the port of Halifax on March 30, 1996 in an action commenced by the plaintiff Holt Cargo Systems Inc. ("Holt"), a New Jersey corporation, whereby it claimed against the vessel for unpaid fees and charges related to stevedoring services provided to the "Brussel" in the United States. Following the arrest of the ship, numerous other parties filed claims against the owners of the ship, its operators and against the ship itself. Soon after the arrest of the "Brussel", Antwerp Bulkcarriers N.V. ("Bulkcarriers"), a Belgian corporation that owned the "Brussel", was declared bankrupt in Belgium, along with ABC Containerline N.V. ("ABC"), another Belgian corporation, that operated the "Brussel" and other ships, some of which were also owned by Bulkcarriers.
[4] Messrs. T. Van Dooselare and F. De Roy, defendants in this matter, were appointed trustees in Belgium to marshall and liquidate the assets of the two bankrupt companies. The trustees obtained an order in the Superior Court of Quebec in Bankruptcy in May 1996, which declared the Belgian bankruptcy order to be executory in Canada. The trustees sought to take possession of the "Brussel" as an asset of Bulkcarriers for liquidation and distribution among its creditors.
[5] In this Court Holt obtained judgment in default in the action in rem against the vessel, a declaration that it should recover the amount claimed from the proceeds of the sale of the vessel and a declaration by this Court that it had a maritime lien to secure the amounts owing, with interest on the outstanding balance at seven percent. Impliedly, the judgment dated May 17, 1996 recognized that the provision of particular services by Holt to the ship in the United States led to a maritime lien under the law of that country. The priority of Holt with regard to other claimants was left to be resolved at a later date. By Order, claimants were required to file their claims against the "Brussel" by July 2, 1996 and by further Order of September 9, 1997, they were required to substantiate their claims by affidavit evidence within sixty days.
[6] The sale of the ship was completed in late July, 1996 and the proceeds, amounting to $5,682,978.00 (Canadian), were paid into Court. The funds created by the sale of the "Brussel" are insufficient to satisfy the claims advanced against her. The mortgagee, Société Nationale de Crédit à l'Industrie S.A., intervenor in these proceedings, claims to be owed in excess of $68,100,000.00 (if expressed in Canadian dollars) under registered mortgages. Only those with secured claims that rank in priority ahead of the mortgagee will be able to recover their claims, and the remainder of the limited fund will go to the mortgagee. In rem claims with priority ranking behind the mortgages will not be satisfied from the fund, nor will unsecured claims, including in personam claims against the owners or operators. A number of claimants who had such claims did not proceed to file proof or make representations at the hearing for distribution of the proceeds. These claims are deemed to have been abandoned, as noted briefly at the end of these Reasons.
[7] The trustees in bankruptcy made an application to this Court for an Order that the proceeds of sale of the "Brussel" be paid out to the trustees, rather than to the creditors who had filed claims against the vessel. In a decision dated April 9, 1997, I declined to grant the application and the Order then issued provided that secured creditors advancing claims against the vessel would rank in accord with maritime law as applied by this Court. That decision was upheld by the Federal Court of Appeal, but the trustees' application for leave to appeal to the Supreme Court of Canada has now been allowed.1
[8] At an earlier stage, while the appeal of the trustees to the Court of Appeal was outstanding, this Court granted a stay of further proceedings. It did so in recognition that the trustees raise an arguable issue concerning the primacy of the jurisdiction of this Court and that of the Bankruptcy Courts in Canada, and that if payment of claims were ordered by this Court the trustees' claim, should their arguable issue be resolved in their favour, would essentially be moot. The proceedings now considered were heard following the decision of the Court of Appeal and prior to the grant of leave to appeal by the Supreme Court of Canada. In the circumstances now prevailing, this Court will set out in Reasons for Judgment the basis on which it will order how the claims will be resolved. At this stage, the Court will order payment out only in relation to claims that would be recognized in any event of the outcome of the proceedings before the Supreme Court. I will not order payment of most claims pending decision by the Supreme Court, or further order of this Court by any Judge of the Court.
[9] Since the time of the arrest and subsequent sale of the vessel, Orders have issued for payment from the proceeds, to meet certain costs associated with the preservation, advertisement and sale of the vessel, and costs of disposal of unclaimed cargo. These were treated as equivalent to Marshall's and Sheriff's expenses, which, in accord with maritime law, have a higher priority than the claim of the mortgagee. Holt advances a claim in these proceedings for solicitor's costs and fees associated with the sale of the vessel, which costs it originally incurred in the expectation these would be deemed necessary costs of the sale, to be paid with priority as if they had been incurred by the Marshall. That claim is here considered with the others submitted by the claimants.
[10] The ranking of claims under Canadian maritime law allows certain classes of claims priority for payment in advance of registered ship's mortgages, as the mortgages of the intervenor here were. Statutory claims arising under Canadian statutes rank according to the provisions of the relevant statutes, e.g., claims by seamen for their wages under the Canada Shipping Act2 rank ahead of all other claims. Claims made by port corporations under the Canada Ports Corporation Act3 rank ahead of all claims except those for seamen's wages. Marshall's expenses also rank ahead of the mortgagee. Claims raising traditional maritime liens will rank ahead of the mortgages. Among the creditors in this case are a number from the United States who claim maritime liens upon the vessel by operation of American law, which claims, it is urged, rank ahead of the mortgages. Some of the claimants assert interests in the fund from sale of the "Brussel" entirely or in part because of services provided to "sister ships". The status of these claims is to be determined in light of subsection 43(8) of the Federal Court Act4. Following the interests of the mortgagee, in rem claims with lesser priority, unsecured and in personam claims rank last. In the circumstances of this case, with a limited fund that is insufficient to meet the mortgagee's claim by itself, those creditors will receive no payment from the fund.
[11] Various claims raise similar issues, and I propose to deal first with the general issues before disposing of the individual claims. For convenience and for the record, Annex A to these Reasons includes a table indicating the claims to be paid from the fund. Annex B serves as an index to these reasons and to the claims perfected, whether ranked in priority to the mortgages or not. Other claims, once advanced but now deemed to be abandoned are also listed, near the end of these reasons.
[12] The general issues raised by various claims include the recognition of Canadian statutory liens, and of maritime liens arising in the United States, determination of what ships are sister ships, the recognition of claims against sister ships and their ranking in priority against the fund, applicable interest rates, and exchange rates. The claims completed and considered at the hearing are next dealt with, first those ranking ahead of the mortgages, second, the claim of the mortgagee, then those claims behind the mortgages, then claims perfected but not pursued at the hearing and finally other claims deemed to be abandoned.
General Issues or Considerations
Statutory liens and priority claims recognized under Canadian maritime law
[13] Any claimant with a Canadian statutory lien is entitled to priority against the fund from the sale of the "Brussel" as provided for under the relevant legislation. For example, the Halifax Port Corporation's claim under the Canada Ports Corporation Act5, at least for the services to the "Brussel", as we have seen, has a statutory priority here ranking first since there are no claims in this case by seamen for wages for services to the "Brussel". Whether that priority of the Port Corporation extends to another claimant is here raised by the claim of Halterm Limited.
[14] A minor claim raising a maritime lien under Canadian maritime law is here raised by Atlantic Pilotage Authority. A third claim by the plaintiff, Holt, to recover solicitor's costs incurred in arranging appraisal and sale of the ship is here raised, a claim akin to Marshall's costs.
Maritime Liens Arising in the United States
[15] Most of the claimants before the Court submit that their claims against the "Brussel" raise American maritime liens by operation of the Commercial Instruments and Maritime Liens Act, 46 U.S.C. " 31342, which provides,
| " 31342. Establishing maritime liens |
| (a) Except as provided in subsection (b) of this section, a person providing necessaries to a vessel on the order of the owner or a person authorized by the owner - |
| (1) has a maritime lien on the vessel; |
| (2) may bring a civil action in rem to enforce the lien; and |
| (3) is not required to allege or prove in the action that credit was given to the vessel. |
| (b) This section does not apply to a public vessel. |
[16] The Supreme Court of Canada has held that maritime liens arising under United States law are recognized and can be enforced by this Court on the same basis accorded to them under American law. The leading cases are The Strandhill v. Walter W. Hodder Co.6 and Todd Shipyards Corp. v. Altema Compania Maritima S.A. (the Ship "Ioannis Daskalelis").7 The defendant trustees contest recognition of priority for maritime liens arising under foreign law where a similar lien is not available for similar services under Canadian maritime law if the claim arose in Canada, notably a claim for necessaries or services rendered in the United States. They object to the ranking of any such claims ahead of the mortgage claim. In their view, such recognition and ranking is not justifiable in the context of an "international bankruptcy" and it is said to be contrary to international practices. The intervenor mortgagee, Société Nationale de Crédit à l'Industrie S.A., supports the trustees and suggests that Canadian cases recognizing maritime liens created under foreign laws ought to be reconsidered on policy grounds. They invited this Court to reconsider the principles underlying the Canadian jurisprudence. I appreciate the position of the intervenor particularly since a claim for necessaries arising under United States law creates a maritime lien, a status not accorded to a similar claim arising in Canada, but a status recognized, nonetheless for a claim arising in the U.S., by the decision in Todd Shipyards. While recognition of such a claim, with priority ahead of that of the mortgagee, reduces the fund available to be paid to the intervenor, it is not the role of this Court to question established Supreme Court authority, unless the circumstances are exceptional. In my opinion, the circumstances here are not so exceptional that I should seek to distinguish the established jurisprudence.
Sister Ships and Claims against Sister Ships
[17] A number of the claims advanced against the fund are based upon the sister ship provision of the Federal Court Act8, subsection 43(8) of which provides:
| (8) The jurisdiction conferred on the Court by section 22 may be exercised in rem against any ship that, at the time the action is brought, is beneficially owned by the person who is the owner of the ship that is the subject of the action.
|
(8) La compétence de la Cour peut, aux termes de l'article 22, être exercée en matière réelle à l'égard de tout navire qui, au moment où l'action est intentée, appartient au véritable propriétaire du navire en cause dans l'action.
|
General maritime jurisdiction is conferred upon this Court by section 22 of the Court's Act, and the jurisdiction invoked by most claimants here is set out by paragraph 22(2)(m), in the following terms:
| (m) any claim in respect of goods, materials or services wherever supplied to a ship for the operation or maintenance of the ship, including, without restricting the generality of the foregoing, claims in respect of stevedoring and lighterage;
|
m) une demande relative à des marchandises, matériels ou services fournis à un navire pour son fonctionnement ou son entretien, notamment en ce qui concerne l'acconage et le gabarage;
|
[18] Among those with claims based on American statutory maritime liens are some with claims against ships that are said to be beneficially owned by the owners of the "Brussel". The priority of these claims, a matter not specifically set by statute, is raised in this case. This matter has received judicial consideration in one recent case: Fraser Shipyard and Industrial Centre Ltd. v. Expedient Maritime Co. (the ship "Atlantis Two"),9 a decision of Prothonotary Hargrave, who held that American statutory maritime liens against one ship do not, by virtue of subsection 43(8) of the Federal Court Act or otherwise, have priority equivalent to that of a claimant with a traditional maritime lien against a sister ship in Canada.
[19] From Professor Tetley's treatise on the subject, Maritime Liens and Claims, the maritime lien is
| a secured right peculiar to maritime law (the lex maritima). It is a privilege against property (a ship) which attaches and gains priority without any court action or any deed or any registration. It passes with the ship when the ship is sold to another owner, who may not know of the existence of the lien. In this sense the maritime lien is a secret lien which has no equivalent in the common law.10 |
The maritime lien is a privileged claim against a particular ship that arises by operation of law. It attaches immediately to the res, i.e. the particular ship that received the benefit upon which the claim is based.
[20] As noted in argument for the intervenor, the United States does not have sister ship legislation akin to s-s. 43(8) of the Federal Court Act. A statutory maritime lien in that country is not one that attaches to sister ships in the United States. The claimant Holt submits that under United States law, maritime liens are transferable to sister ships by the device of admiralty attachment under Supplemental Rule B, 28 U.S. Code, but that is not directly supported by the affidavit of Stephen Simms concerning U.S. law, adduced by Holt. The affidavit of foreign law sworn by Alexander F. Vitale, in support of the position of the defendant, concludes that American maritime liens do not attach to sister ships. I accept that, and that any process of attachment does not provide for the transfer of a maritime lien even if it may provide a remedy for a claim against a sister ship.
[21] The issue is whether the sister ship provision of the Federal Court Act should be construed to allow for an interpretation that would give maritime lien holders with a claim against one ship the same priority as a maritime lien in relation to a sister ship arrested in Canada, regardless of whether the claims originated in Canada or abroad. In the absence of legislation, I cannot conclude that the special priority accorded to maritime liens is portable to sister ships. I agree with Prothonotary Hargrave when he concludes at paragraph 92 of the Atlantis Two:
| . . . the substantive American maritime lien does not fit into the sister ship provision, section 43(8) of the Act, which merely refers to the jurisdiction conferred on the Court by section 22 of the Act, an in personam jurisdiction, as being enforceable against a sister ship, not a right or privilege against one ship being enforced against another ship. If American lien holders wished to use sister ship procedure here in Canada they would need sister ship legislation in the United States to enable them to bring into Canada a full blown maritime lien against the sister ship. |
| Of course, a lien holder, assuming that he or she also has an in personam right against a shipowner and assuming that shipowner was the owner of not only the wrongdoing or debtor ship, but also the sister ship or ships at the relevant time, might bring that in personam right into Canada and enforce it, procedurally, against one or more of the sister ships. However the priority of such a claim would then only be that of a statutory right in rem, of no assistance here, given the limited sale proceeds involved. |
[22] In my opinion the holders of maritime liens against sister ships of the "Brussel" may enforce their claims against the "Brussel" under s-s. 43(8) of this Court's Act, but they do not have the same status as holders of traditional maritime liens against that vessel. They have a statutory right in rem with priority similar to that of any creditor who has an ordinary in rem claim against a sister ship of the "Brussel". Given that such claims rank below the holder of the mortgages, their interests cannot be satisfied from the fund created by the sale of the "Brussel".
[23] As for which vessels are sister ships of the "Brussel", the trustees of ABC and Bulkcarriers acknowledge that Bulkcarriers owned the "Brussel", and it also owned the "Antwerpen", the "Deloris", and the "Helen". Two other ships, the "Cornelis Verolme" and the "Ellen Hudig" were owned, and were also operated, by ABC. This is corroborated by the registrations for the ships, copies of which were provided to the Court. Bulkcarriers and ABC are separate corporations. While all ships in question were operated as part of one fleet by ABC, only those vessels owned beneficially by Bulkcarriers when the action herein commenced by the arrest of the "Brussel", i.e. the "Antwerpen", the "Deloris" and the "Helen", can be characterised as sister ships of the "Brussel" pursuant to s-s. 43(8) of the Federal Court Act.
[24] Another ship, the "Martha II", was the primary subject of certain claims here raised against the "Brussel" as though these two vessels were sister ships. Counsel for Bridge Oil points to affidavit evidence exhibiting a report completed on July 21, 1995 which indicated common ownership of the "Martha II" with the "Antwerpen" and the "Brussel", but there is no evidence of common ownership of the vessels at the relevant time, in April - July 1996. In my opinion, the "Martha II" cannot be considered a sister ship of the "Brussel" under s-s. 43(8) of the Act.
[25] It was argued before me that after appointment of the trustees in bankruptcy of the two Belgian companies, since all the assets of ABC and Bulkcarriers were thereafter in the hands of the same trustees, all the vessels operating in the ABC fleet were beneficially owned by the same person. This was said to be the case in support of the claim of Bridge Oil which filed a separate statement of claim in April 1996 and subsequently arrested the "Brussel" in Halifax, after the trustees had been appointed, a separate action which was later withdrawn. In my opinion, the circumstance of common trustees in bankruptcy for the vessels originally owned by the two Belgian companies does not constitute beneficial ownership, as intended by s-s. 43(8) of the Court's Act. The ABC vessels are in the hands of the trustees in their role as trustees for ABC, its creditors and shareholders. They also hold Bulkcarriers' assets, but do so only in their role as trustees for that company. The two companies were separate in law and the trustees, while the same persons for both companies, have distinct, if similar, duties for the two separate companies. Simply because the trustees are common, it does not follow that there is common beneficial ownership of the vessels at the time action was brought, even at the time of the later action by Bridge Oil, as required by s-s. 43(8) of the Federal Court Act.
Interest Rates Applicable
[26] Various claimants have included pre-judgment interest in the calculation of their claims. Where contracts expressly provided for interest payable on outstanding accounts, this Court will recognize the agreement as applicable up to the date of sale of the "Brussel", i.e. July 24, 1996. In cases where the parties have not agreed on interest provisions, if the cause of action arose in a Canadian jurisdiction, this Court could take cognizance of any provincial laws concerning pre-judgment interest.11 If the cause of action arose outside of Canada, the provisions of the federal Interest Act could be relevant.12 It has been held that the Federal Court in its admiralty jurisdiction has discretion to award pre- and post-judgment interest at a rate which in the view of the Court is most appropriate given the circumstances of the claim and the positions of the claimants.13
[27] In this case, the default judgment awarded to Holt included provisions for interest to the date of judgment at 7% in the absence of any agreed interest rate. That rate, in my opinion would be appropriate, and equitable in the case of the other claims, up to the date of sale of the vessel, and similarly should apply to the claim of Holt up to that date. The fund paid into court has accumulated interest, perhaps not at what may be characterized as "commercial rates". Any award of interest that is higher than that which has accrued to the fund since it was paid into Court would erode the principal, and would create inequities among claimants, including the mortgagee. The equities of the situation demand that all parties be treated similarly in relation to claims for interest applicable after creation of the fund. Interest paid to one claimant should not be to the disadvantage of the remaining creditors. So that the parties are treated equitably with regard to pre-judgment and post-judgment interest, this Court will order that payment to all claimants will include interest on the following bases:
| a) if a rate is set by contract, that rate shall apply from the date of breach to July 24, 1996, when the "Brussel" was sold; or |
| b) if no rate is set by contract, the rate applicable from the date of breach to July 24, 1996, shall be 7%; and |
| c) for all claims, after July 24, 1996, to the date of payment, interest shall be paid at the rate of interest attributed to the fund while held in the court.14 |
Exchange Rates
[28] Many of the claims presented against the fund are expressed in United States dollars or other currency. The Court, of course, is concerned with the fund constituted in Canadian dollars. Since the "Brussel" was arrested, and later sold, exchange rates have varied. For example, at the time of default judgment in favour of Holt, its claim of US $414,586.00 was converted to the Canadian dollar equivalent of $572,128.06, which was then set as the amount of the judgment, i.e. the exchange rate of 1.3799 or 1.38 Canadian dollars to the U.S. dollar prevailing at the date of judgment was applied. Upon sale of the ship, the 10% deposit of the sale price to the Court on July 24, 1996 was converted to Canadian funds at the rate of exchange then prevailing of 1.37 and on August 16, 1996 when the balance was paid it was converted to Canadian funds at the rate of 1.3727. When this application was heard for payment out of the proceeds, in July 1999, the exchange rate was approximately 1.45 Canadian dollars per U.S. dollar.
[29] The law seems clear that for claims expressed in foreign currency, the exchange rate applicable is that prevailing at the date of the breach established. In the case of the contract claims here that date would be the date when the invoices underlying the claims were due.15
[30] In an earlier case where the evidence did not clearly show the dates of breach or default, the Court ordered that conversion be made at the rate prevailing at the date of judgment.16 It is urged by counsel for Holt and other claimants that in the circumstances here, the appropriate date for conversion is that on which the amount of the claim is fixed, and payment out of Court is ordered. In my opinion, conversion at rates currently prevailing in February 2000 would significantly affect adversely the position of the mortgagee.
[31] Counsel for the trustees submits that it would be fair to fix the rate of exchange for conversion of claims expressed in foreign currency at 1.3727 Canadian dollars to one U.S. dollar, being the rate of exchange for August 16, 1996, when the substantial portion of the purchase price was paid into Court. In my opinion, the court is bound by precedent to convert claims expressed in foreign currency at the rate of exchange effective on the date of breach, when the account was due, where that date is available in evidence. If it is not available, for convenience, as well as for equity among claimants, claims expressed in foreign currency should be converted to Canadian dollars at the exchange rate prevailing at the date of sale of the vessel, July 24, 1996, the rate then being $1.37 Canadian to $1.00 U.S. All claimants will then be treated in generally the same manner. While it is urged that the claims may be adversely affected by changes in exchange rates since then, claimants will be similarly affected and the equities between them will not be affected by the changes in exchange rates.
[32] I turn to the claims presented to the Court, completed in accord with the Court's Orders. I deal with the claims in turn, first with those which wholly or in part rank in priority ahead of the mortgages, then with those which were completed in accord with the Court's directions but which rank behind the mortgages, and one or two claims that have no priority at all. As earlier noted, a list of claims deemed to be abandoned also is included near the end of these reasons.
Claims ranking wholly or in part in priority to the ship's mortgages
[33] These claims are considered in accord with the basis on which they are here accorded priority, i.e. on the basis of Canadian statutes, in accord with the recognized principles of maritime law and by reason of maritime liens against the "Brussel" recognized by the Court, including foreign liens.
Canadian Statutory Claims
Halifax Port Corporation
[34] The Halifax Port Corporation claims against the fund for the sum of $2448.47 for fees and charges for services levied against the "Brussel" at Halifax, based on a statutory lien under the Canada Ports Corporation Act17, Schedule I, Part II, s-s. 17(5) of which provides, in relation to a local port corporation constituted under that Act:
| (5) In any case mentioned in subsection (1), whether or not the vessel has actually been seized or detained, the local port corporation has at all times a lien on the vessel and on the proceeds of any sale or other disposition thereof for the amount owing to the corporation, which lien has priority over all other rights, interests, claims and demands whatever, excepting only claims for wages of seamen under the Canada Shipping Act.
|
(5) Dans chacun des cas prévus au paragraphe (1), la société portuaire locale est toujours titulaire, indépendamment de la saisie ou rétention du navire, d'un privilège, sur le navire et sur le produit de toute aliénation qui en est faite, pour sa créance; ce privilège a priorité sur tous autres droits et créances, quelle qu'en soit la nature, à la seule exception des créances salariales des marins, visées à la Loi sur la marine marchande du Canada.
|
[35] The Halifax Port Corporation's claim also seeks interest at the rate of 18% per annum from the invoice date of May 13, 1996, before and after the date of judgment. The amount of the claim and appropriate interest raises a statutory lien. In the absence of any claims by seamen for wages, that lien has first priority in any payment from the fund. It would be paid whenever the funds are paid, and regardless of the outcome of the appeal now open for leave to be heard by the Supreme Court of Canada, or further appeals in regard to the Judgment now issued. In these circumstancees, that Judgment directs payment of the amount invoiced, for services and fees in respect of the "Brussel", with interest at 18% per annum to July 24, 1996, and thereafter with interest at the rate attributed to the fund while held in the Court, up to the date of payment.
[36] The Halifax Port Corporation also claims from the fund for amounts owing for services provided to ships said to be sister ships of the "Brussel". For the Corporation, it is urged that since the defendant trustees and the intervenor bank do not object to the total claim it advances, which is modest, the full claim should be allowed. The Court, however, can allow the claim only if it is consistent with the law here applied to all other claims.
[37] The services rendered are set out in invoices in relation to the "Antwerpen", a sister ship, in the amount of $1134.75. Pursuant to s-s. 43(8) of the Federal Court Act, the Port Corporation has a statutory lien but it does not rank ahead of the mortgages. The Canada Ports Corporation Act does not extend the statutory claim to sister ships. The claim against a sister ship under subsection 43(8) of the Federal Court Act has the status of a statutory in rem lien without specified priority. Thus, the Corporation has a claim in rem against the fund, but it ranks behind that of the mortgagee. There will thus be insufficient funds in the proceeds of sale to satisfy this element of the claim of the Halifax Port Corporation.
[38] The Port Corporation also claims for fees and services assessed against the "Cornelis Verolme", the "Ellen Hudig" and the "Martha II", but those are not sister ships and there is no ground to recognize these claims as against the "Brussel" fund.
Atlantic Pilotage Authority
[39] Atlantic Pilotage Authority, as its name suggests, provides pilotage services to vessels in the Port of Halifax and in other Atlantic ports. It provided such services to the "Brussel" and ships alleged to be her sister ships.
[40] The Pilotage Authority claims a preferred maritime lien in the amount of $2197.38 against the "Brussel" for pilotage services rendered to that ship. The Pilotage Act18 does not confer such a lien in favour of the claimant. However, the claimant cites Osborn Refrigeration Sales and Service Inc. v. The Ship "Atlantean I" et al.19 where Mr. Justice Walsh held that the Laurentian Pilotage Authority had a maritime lien for pilotage services actually rendered to the ship in question, in priority to the ship's mortgages. Mr. Justice Mahoney similarly found in Ultramar Canada Inc. v. Pierson Steamships Ltd. et al.20 I note that on the question of whether a pilot's interest would rank ahead of the ship's mortgage, Professor Tetley writes: "With respect to the question of ranking, Osborn Refrigeration would therefore seem to be incorrect."21
[41] In this case the trustees of ABC and Bulkcarriers have represented to this Court that they do not dispute the quantum, status or ranking claimed by the Atlantic Pilotage Authority, based on a maritime lien as acknowledged by jurisprudence of this Court, at least for its services to the "Brussel". The Atlantic Pilotage Authority, under the Order now issued shall be paid from the fund for services provided but not paid for, in regard to the "Brussel" with interest as agreed at 18% per annum to July 24, 1996, and thereafter at the rate attributed to the fund.
[42] The Atlantic Pilotage Authority also argues a claim against the fund for services provided to the "Antwerpen", a sister ship of the "Brussel". Under s-s. 43(8) of the Federal Court Act as applied in relation to claims in this case, the Authority has a statutory in rem claim against the "Brussel" for services provided to the "Antwerpen" in the sum of $1,547.20. This claim, however, ranks behind the ship's mortgages.
[43] Claims of the Authority for services rendered to the "Cornelis Verolme", the "Ellen Hudig" and the "Martha II" are not against sister ships of the "Brussel" and are not claims recognized against the fund.
American Maritime Liens
Holt Cargo Systems, Inc.
[44] The plaintiff in this action, Holt Cargo Systems, has already obtained from this court a judgment in default dated May 14, 1996, entitling it to $527,128.06 (the equivalent of the claim of $414,586.00 in United States dollars), with provision for interest not contracted by the parties, but set by the Court's Order at the rate of 7% per annum. Further, the judgment contained a declaration that the interest of Holt in the "Brussel" is a maritime lien. Payment of that judgment from the proceeds was suspended pending the determination of priorities of various claimants, and the outcome of the appeal from this Court's Order for sale of the ship.
[45] Holt also arranged for the advertisement and the sale of the vessel. As these costs were incurred with benefit not only to itself, but for the general benefit of all the claimants against the "Brussel", $42,365.57 has already been paid to the plaintiff from the fund essentially for disbursements in connection with the sale of the ship. Solicitor's costs associated with the appraisement, advertisement and sale of the vessel have not been taxed or paid. Ultimately, they would be recoverable by solicitors from Holt. In accord with established jurisprudence they should be paid when billed, from the fund, with priority ahead of payment to the mortgagee.22
Ashland Chemical Company
[46] Ashland Chemical Company, through its operating divisions, provided goods and services to seven vessels said to be operated in the ABC fleet. The claims against vessels other than sister ships, i.e. for goods and services to the "Cornelis Verolme", the "Ellen Hudig" and the "Martha II", cannot be advanced against the "Brussel". However, Ashland, via its operating divisions Drew Ameroid and Vecom Marine Safety, provided goods and services to the "Brussel" at Philadelphia, Pennsylvania. The amount owing by the "Brussel" at March 1, 1996 was US $16,178.70, and Ashland claims interest at commercial rates with no rate having been agreed. This was for provision of necessaries in the United States and, therefore, a maritime lien arose in favour of Ashland Chemical Company. This lien has priority to the mortgages and the amount claimed, converted to Canadian dollars at the exchange rate prevailing on March 1, 1996 is payable to Ashland, plus interest at 7% to July 24, 1996, and thereafter at the rate attributed to the fund.
[47] Ashland's claims in relation to goods and services supplied in the United States to sister ships, the "Antwerpen", the "Deloris" and the "Helen", give rise to statutory in rem claims against the "Brussel" in accord with s-s. 43(8) of the Federal Court Act, but without priority ahead of the mortgages.
Cooper/T. Smith Stevedoring
[48] Cooper/T. Smith Stevedoring claims against the fund for services provided to the "Brussel" at the port of New Orleans, Louisiana on March 9, 1996. The amount owing, US $560.00, payable from March 15, 1996, is secured by an American maritime lien. Accordingly, that sum converted at that date to equivalent Canadian funds plus interest at the agreed rate of 18% per annum to July 24, 1996, and thereafter at the rate credited to the fund, is payable from the fund in priority to the ship's mortgages.
[49] Cooper/T. Smith Stevedoring also claims from the fund for services provided to the ships "Antwerpen", "Cornelis Verolme" and "Martha II". Only the "Antwerpen" is a sister ship of the "Brussel", and the debts due by the other vessels cannot be claimed against the "Brussel". As for the claim against the "Antwerpen", this is a sister ship claim that results in a statutory in rem claim against the "Brussel", one that ranks behind the ship's mortgages.
New Orleans Marine Contractors, Port Partners Inc., and Ship Couriers Inc.
[50] These three companies have a common ownership and they advance their claims against the "Brussel" together. All three are based in Louisiana and provided services of various kinds to the "Brussel" in New Orleans. All three are seeking declarations that their interests give rise to maritime liens and that their claims are to be paid from the fund with the corresponding priority. New Orleans Marine Contractors provided cargo and stevedoring services to the "Brussel", for which a balance of US $41,043.14 is outstanding; Port Partners provided similar services to the "Brussel", for which US $5869.68 is unpaid; and similar services were also provided to that ship by Ship Couriers for which US $1860.00 is outstanding. These services are necessaries under the maritime law of the United States and the provision of such necessaries results in a maritime lien against the ship to which the services were provided. These outstanding amounts due to New Orleans Marine Contractors, Port Partners and Ship Couriers are thus secured by maritime liens recognized with priority ahead of the ship's mortgages, in accord with Todd Shipyards. The claimants are entitled to the above amounts converted to Canadian dollars at the due date, April 5, 1996, with interest at 7% per annum to July 24, 1996, since no rate was set by contract, and thereafter at the rate by which interest accrued to the fund. The payment shall be in priority to the ship's mortgages.
[51] New Orleans Marine Contractors and Ship Couriers also claim against the fund for similar services provided in the U.S. to the "Antwerpen", a sister ship. For the reasons discussed earlier, this gives rise to a statutory right in rem against the "Brussel", but this claim ranks behind the mortgages on the ship. Other claims of these two companies arising from services provided to the "Cornelis Verolme" and the "Ellen Hudig", which were not sister ships, cannot be raised against the "Brussel".
Reiter Petroleum Inc.
[52] Reiter Petroleum Inc. claims an American maritime lien to secure sums owing from the owners of the "Brussel" for the supply of bunkers to the vessel at Charleston, South Carolina and at Philadelphia, Pennsylvania. The invoice, dated April 24, 1996, is for US $42,641.98. Reiter seeks a declaration that the amount is secured by a maritime lien and that the sum is payable with interest in priority to the mortgages on the vessel. As bunkers and marine supplies are necessaries under the maritime law of the United States, I acknowledge Reiter Petroleum does have a maritime lien for the amount claimed, US $42,641.98 when converted to Canadian currency at the date of the breach plus interest from April 24, 1996 at 7% until July 24, 1996, in the absence of any agreement, and thereafter at the rate applicable to the accumulation of the fund.
[53] Reiter Petroleum also provided necessaries to the ships "Deloris" and "Helen" at ports in the United States and it advances a claim against the "Brussel" as a sister ship. Both these ships were owned, along with the "Brussel", by Bulkcarriers and the three are sister ships. The claim for services to the sister ships raises a statutory in rem claim against the fund that ranks behind the claim of the mortgagee. Given the limits of the fund, Reiter's claims against the sister ships are not likely to be satisfied.
Ryan-Walsh Inc.
[54] Ryan-Walsh Inc. provided stevedoring and other marine cargo services to the "Brussel" at the port of Charleston, South Carolina. The invoice for these services, for US $88,202.16, remains unpaid from the invoice date of March 29, 1996. Ryan-Walsh Inc. has an American maritime lien on the "Brussel" and the sum claimed, when converted to Canadian funds at the rate prevailing at the date of breach, is payable from the "Brussel" fund in priority to any payment to the mortgagee. The payment to Ryan-Walsh shall include interest calculated at 7% per annum from the date of breach to the date of sale of the "Brussel", after which time interest will be calculated at the rate applicable to the accumulation of the fund.
[55] Ryan-Walsh Inc. also provided similar services to other members of the so-called ABC fleet. It claims US $96,875.93 for the delivery of bunkers to the "Deloris" and the "Helen", both sister ships of the "Brussel". Pursuant to s-s. 43(8) of the Federal Court Act, these claims give rise to statutory in rem claims, which do not have priority over the mortgages on the "Brussel".
South Carolina State Ports Authority
[56] The South Carolina State Ports Authority claims against the proceeds of the sale of the "Brussel" for sums unpaid following the provision of stevedoring and marine cargo services to the vessel at the port of Charleston, South Carolina. The total claimed is US $64,488.70, plus interest payable from the invoice date of April 1, 1996.23 The South Carolina State Ports Authority has an American maritime lien on the "Brussel" and the sum claimed is payable, when converted to Canadian currency, from the proceeds of sale of the "Brussel" in priority to any payment to the mortgagee. Interest shall be in accord with the general principle here applied to all claims at the rate which the fund accumulated after July 24, 1996.
Tricon Steamship Agency, Inc.
[57] Tricon Steamship Agency is a Louisiana corporation that provides a number of services to vessels and their owners in the state of Louisiana. In its claim, Tricon states that it acted as agent for ABC and its vessels from 1989. During that time, Tricon supplied goods and services that are characterised as necessaries to the vessels, which included the "Brussel" and its alleged sister ships. Tricon is claiming the amounts owing for all the vessels from the fund created by the sale of the "Brussel". Of the US $99,998.60 claimed by Tricon, only US $11,971.96 is in relation to the vessel "Brussel". This amount is inclusive of interest at the contract rate of 1.5% per month, until July 1, 1996. This claim raises an American maritime lien, recognised in Canada, and it ranks ahead of the ship's mortgages. The amount claimed for services to the "Brussel", when converted to Canadian currency in accord with these reasons, shall be paid from the fund with interest at 1.5% per month, calculated from the date of conversion until the date of sale of the "Brussel". After this date, interest shall be calculated based upon the rate for interest attributed to the fund.
[58] In addition to the above claim, Tricon is also seeking from the fund payment for services provided to the sister ship "Antwerpen" and the non-sister ships which also form part of the ABC fleet. For the reasons discussed above, it is my opinion that Tricon has an in rem claim against the "Brussel" for services provided to the "Antwerpen". This claim, however, ranks behind the mortgages on the ship and will not be satisfied from the fund. The claims arising from services to the "Cornelis Verolme", the "Ellen Hudig" and the "Martha II" cannot be made against the "Brussel".
Turecamo Maritime, Inc.
[59] Turecamo Maritime Inc. provided docking and other marine services to the "Brussel" at the port of Charleston, South Carolina on March 22 and 23, 1996. Under U.S. law, these are necessaries and thus, the amount outstanding, US $4762.52, is secured by an American maritime lien. That sum, converted to Canadian currency, is payable from the fund, in priority to the ship's mortgages, with interest payable from April 1, 1996 at the contract rate of 1.5% per month to July 24, 1996 and thereafter at the rate for interest attributed to the fund.
[60] Turecamo also claims against the "Brussel" for services rendered to ships that it alleges are sister ships of the "Brussel". The ships in question are the "Ellen Hudig", the "Antwerpen" and the "Cornelis Verolme". Only the "Antwerpen" is a sister ship of the "Brussel". For the reasons discussed above, it is my opinion that the claimant has a statutory in rem claim against the "Brussel" for services provided to the "Antwerpen". This claim, however, ranks behind the mortgages on the ship and is not likely to be satisfied from the fund. Any claim in relation to the "Cornelis Verolme" or the "Ellen Hudig", which were not sister ships have no status in relation to the "Brussel" fund.
White Stack Maritime Corp.
[61] As with Turecamo Maritime, White Stack Maritime Corp. provided docking and marine services to the "Brussel" in Charleston, South Carolina. The invoice amount of US $7,047.94 remains unpaid from April 1, 1996. This claim is secured by an American maritime lien and the amount, converted to Canadian currency, is payable from the fund, in priority to the ship's mortgages, with interest payable from April 1, 1996 at the rate of 7% to July 24, 1996 and thereafter at the rate attributed to interest accumulating in the fund.
[62] In addition to the above claim of White Stack Maritime Corp., the company also has advanced claims on the basis of claims against alleged sister ships, for docking and marine services to the "Ellen Hudig", the "Antwerpen", and the "Cornelis Verolme" at the port of Philadelphia, and for pilot services provided to these ships and the "Martha II". Among these ships, only one is a sister ship: the "Antwerpen". The claim in relation to the services for the "Antwerpen" gives rise to a statutory in rem claim, but not with priority ahead of the ship's mortgages. The claims against the "Ellen Hudig", the "Cornelis Verolme" and the "Martha II" do not attach to the "Brussel".
Claims already paid for unrecovered costs of storage and disposal of unclaimed cargo
Halterm and Seatide Pty.
[63] For the record, I note that certain claims have already been paid. First, payment was made to Halterm Limited on account of outstanding storage and other charges associated with cargo offloaded and later abandoned following the arrest of the "Brussel". A payment of $14,498.00 was made pursuant to the Order of my colleague, Mr. Justice McKeown dated September 10, 1996 and an additionial payment of some $45,000.00 to Halterm for storage costs was also allowed as noted below by Order of October 15, 1996. Second, Seatide Pty. claimed reimbursement of its costs for disposal of cargo that was abandoned when the "Brussel" was arrested and cargo was removed pursuant to the Order of the Court made on April 24, 1996. Dealing with the cargo was accomplished in a very timely and efficient manner. Two Orders were issued, one on September 19, 1996 and the second on October 15, 1996, directing that payment be made from the fund to reimburse Seatide Pty., and also Halterm, for their expenses. These claims have been satisfied as akin to a Marshall's expenses.
Summary Bases of Claims Ranking in Priority to the Mortgages
[64] In summary, of the many claims submitted for payment from the fund only the following grounds lead to claims now ranked in priority to the registered mortgages against the ship:
| 1) a claim with Canadian statutory priority - here the claim of the Halifax Port Corporation; |
| 2) claims based on traditional maritime liens or recognized priority for sale expenses - here the claims of Atlantic Pilotage Authority, and the claim on behalf of Holt for solicitor's costs incurred in the appraisal and sale of the "Brussel"; |
| 3) the Court's judgment allowing the claim of Holt for services to the "Brussel" and recognition of the basis of that claim raising a maritime lien; and |
| 4) maritime liens based on United States' law, for services, supplies and necessaries provided to the "Brussel" in United States ports. |
[65] All other claims, including those for services and supplies to sister ships of the "Brussel" whether provided at the port of Halifax or at other ports abroad which give rise to a statutory claim in rem against the "Brussel" do not rank in priority to the ship's mortgages. In view of the limited fund available none of these claims, or other claims that have standing only as claims in personam against the owners, will be paid from the fund.
The claim of the intervenor, the Mortgagee SNCI
[66] La Société Nationale de Crédit à l'Industrie S.A. ("SNCI") is an intervenor in this action, pursuant to the Court's Order of June 13, 1996. SNCI has a very substantial claim in these proceedings as the mortgagee of the ship "Brussel", under first and second registered ranking mortgages. SNCI seeks to recover as much as possible from the proceeds of sale of the "Brussel". At the date the claim was filed, the mortgages were in default and SNCI was owed approximately 1,600,000,000 Belgian francs. At the exchange rate prevailing at the time the claim was filed, this approximated $68,100,000.00, an amount greatly in excess of the proceeds from the sale of the ship.
[67] Once the claims ranking ahead of the mortgages are settled, the remainder of the limited funds created by the sale of the ship will be for the mortgagee.
Other claims, ranking after the mortgages
[68] A number of other claims were perfected in accord with the Court's Order for proving claims but in my opinion, they do not rank in priority ahead of the mortgagee. I deal first with those for which there was representation at the Court's hearing concerning the claims, before listing for the record other claims filed but not perfected and deemed to be abandoned.
[69] Among those with claims recognized in part, for services and charges attributable to the "Brussel", a number of claimants also claimed against the fund for services rendered to the sister ships of the "Brussel" or to other vessels operated by ABC. Those aspects of their claims have already been discussed in relation to each claimant. In summary, the claims of Halifax Port Corporation, Atlantic Pilotage Authority, Ashland Chemical Company, Cooper/T. Smith Stevedoring, New Orleans Marine Contractors, Reiter Petroleum Inc., Tricon Steamship Agency Inc., and White Stack Maritime Corp. all have claims in relation to services rendered to sister ships which are statutory in rem claims that do not rank in priority to the mortgages. A number of those claimants also claim for services rendered to ships operated by ABC which were not sister ships of the "Brussel" and those claims, at best, raise in personam claims, unsecured, against the owners or ABC. These claims have no priority against the limited funds available to satisfy claims.
Halterm Limited
[70] Halterm is a Nova Scotia company that operates a marine container terminal, vessel berth and container storage facility. In February, 1995, Halterm entered into a contract for the provision of such services to ABC. Under the contract, Halterm provided these to the "Brussel" and to other ships owned by ABC and Bulkcarriers.24 Halterm claims that Deepsea Marine acted as the agent for the ship owners.
[71] For services provided specifically to the "Brussel", Halterm claims $91,464.50 plus contract interest at 1.5% per month. Halterm also claims $92,086.00 for services provided to the "Antwerpen". For a portion of this claim, Halterm argues it is entitled to special priority under subsection 43(5) of the Canada Ports Corporation Act:25
| (5) In any case mentioned in subsection (1), whether or not the vessel has actually been seized or detained, the Corporation has at all times a lien on the vessel and on the proceeds of any sale or other disposition thereof for the amount owing to the Corporation, which lien has priority over all other rights, interests, claims and demands whatever, excepting only claims for wages of seamen under the Canada Shipping Act.
|
(5) Dans chacun des cas prévus au paragraphe (1), la Société est toujours titulaire, indépendamment de la saisie ou rétention du navire, d'un privilège, sur le navire et sur le produit de toute aliénation qui en est faite, pour sa créance; ce privilège a priorité sur tous autres droits et créances, quelle qu'en soit la nature, à la seule exception des créances salariales des marins, visées à la Loi sur la marine marchande du Canada.
|
[72] It must be noted that Halterm is not "the Corporation" covered under the provisions of the above Act. Under the terms of the contract between Halterm and the Halifax Port Corporation, Halterm pays to the Port Corporation fees for wharfage and dockage that are ordinarily owed directly by the vessels to the Port Corporation. The fees paid by Halterm to the Port Corporation are billed by Halterm to the vessels and the vessels pay the amounts billed to Halterm. For the wharfage and dockage charges, Halterm argues that it should enjoy the same priority given to the Port Corporation because Halterm's interest is a subrogated lien. In support of this claim, Halterm points to the case of Metaxas et al. v. Ship "Galaxias" at al. (No. 4).26 In the Galaxias case, Mr. Justice Rouleau recognized the assignment of a maritime lien for seamen's wages, in the case where a Greek seamen's organization paid for the repatriation of Greek sailors from a vessel that was abandoned in Vancouver. The organization sought to enforce the original lien of the seamen against the ship to recover its costs. While recognizing policy considerations that were relied upon traditionally to preclude the assignment of mariners' wages and the associated liens, my colleague Mr. Justice Rouleau held:
| ... it is entirely consistent with the scheme of Canadian maritime law that the court recognizes that monies originally protected by a maritime lien be protected in favour of the party who has actually disbursed them to a seaman in need. Even though it can be seen that the prohibition against the assignment of the right to receive wages on the part of seamen arose for the protection of sailors from creditors, this policy consideration does not apply where funds are disbursed directly to the seaman who is stranded in a foreign port in impecunious circumstances. |
[73] I am urged to recognize that Halterm collects the dockage and wharfage fees essentially on behalf of the Halifax Port Corporation. If this were not the arrangement and if the Port Corporation had not been paid these fees, counsel urged that the Halifax Port Corporation would be before this Court arguing that it had a lien against the vessel for the fees. It is also urged that Halterm's position is akin to that of a guarantor for the obligations of the ships and it should have the benefit of an assigned lien against the vessel. The authority cited was Re Lamplugh Iron Ore Company Limited,27 a case that did not concern maritime law and that turned on the very specific provisions of a statute:
| By s. 5 of the Mercantile Law Amendment Act (19 & 20 Vict c. 97) it is provided that a surety who has paid a debt shall be entitled "to stand in the place of the creditor, and to use all remedies, and, if need be, and upon a proper indemnity, to use the name of the creditor in any action or other proceeding, at law or equity, in order to obtain from the principal debtor" -- I leave out the words which do not apply -- "indemnification for the advances made and loss sustained by the person who shall have so paid such debt ... and such payment ... so made by such surety shall not be pleadable in bar of any action or other proceeding by him ...." ... There is nothing, I think, to preclude Mr. Burnyeat from asserting the right to priority given to particular creditors by the statute, and in my opinion he is entitled to such priority to the amount of 1276l. 2s. 3d. |
[74] In this case, there is no statute that would allow Halterm to stand in the shoes of the Port Corporation with regard to the fees Halterm paid on behalf of the ships to the Corporation. Professor Tetley has suggested in his seminal text that there should be no bar in Canada to the assignment of rights in rem and liens.28 Nevertheless, in my opinion, Halterm does not have the benefit of a Canada Ports Corporation Act lien. There was no evidence before the Court to suggest that there was a guarantee or an explicit assignment of the Port Corporation's right to enforce its claims for fees by lien against the vessels. In addition, that Act is silent regarding whether such an interest can be assigned. While I do not foreclose the possibility that a maritime right in rem or other lien may be assignable, in my opinion no assignment occurred here.
[75] As for Halterm's sister ship claim, stemming from services provided to the "Antwerpen", it does constitute an in rem claim against the "Brussel". However, it does not rank in priority ahead of the ship's mortgages and it will not be satisfied from the fund. Further claims against the ships "Cornelis Verolme", "Ellen Hudig", and "Martha II" cannot be made against the proceeds of sale of the "Brussel", except as in personam claims against the owner and those would have no priority.
Bridge Oil Ltd. (Cayman Islands)
[76] Bridge Oil is a Cayman Islands company that supplied bunkers to the "Brussel" in the Belgian port of Zeebrugge on December 15, 1995. Bridge Oil also supplied bunkers to the "Martha II", a vessel I have determined not to be a sister ship and to the "Antwerpen", a sister ship, both at the port of Philadelphia, Pennsylvania. As discussed above, sister ship claims do not rank ahead of the mortgages. This claim in relation to the "Antwerpen" in the amount of US $2,511.82 plus interest from April 4, 1996, though it raised an American maritime lien against the "Antwerpen", results in a statutory in rem claim against the "Brussel" fund, ranking after the ship's mortgages. The claim in relation to the "Martha II" is not one against the fund.
[77] The supply of bunkers to the "Brussel" is urged by Bridge Oil to have resulted in "preferential rights" under Belgian law. These preferential rights are not a maritime lien, per se, but rank ahead of the ship's mortgages under Belgian law. According to the affidavit of foreign law, sworn by Belgian lawyer Frans Ponet, the preferential right arises in accordance with the International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages, 1926, which has been incorporated into Belgian domestic law. In particular, Article 2(5) of that Convention, which reads
| The following give rise to maritime liens on a vessel ... |
| (5) Claims resulting from contracts entered into or acts done by the master, acting within the scope of his authority, away from the vessel's home port, where such contracts or acts are necessary for the preservation of the vessel or the continuation of its voyage, whether the master is or is not at the same time owner of the vessel, and whether the claim is his own or that of ship-chandlers, repairers, lenders or other contractual creditors. |
[78] On the evidence, the claim of Bridge Oil does not appear to be within this provision because the oil was not supplied on the order of the master of the vessel, though he signed a requisition for it, but it was arranged and provided in response to the order of ABC, placed directly. The amount claimed, US $138,883.24, due on February 15, 1996 plus interest claimed at the contract rate of 1% per month, in my opinion does not rank ahead of the ship's mortgages since it is not established that the claim raised a maritime lien against the "Brussel". The claim would be a claim for necessaries under Canadian maritime law, a claim without priority ahead of the mortgages.
Dixie Machine Welding & Metal Works, Inc.
[79] Dixie Machine Welding and Metal Work, Inc. provided repair work to the "Helen" at Gulfport, Mississippi and now seeks to enforce its claim against the "Brussel". The claim of Dixie may create a maritime lien against the "Helen", but its claim against the "Brussel" constitutes a statutory in rem claim that ranks behind the mortgagee's interest. Given the size of the fund, Dixie's claim will not be satisfied.
Sabine Transportation Company
[80] Sabine Transportation Company claims against the fund for services provided to the "Helen", a sister ship of the "Brussel". It argues that it has a maritime lien against the "Helen" and that it should be transferred to the "Brussel" under the statutory provisions for sister ship arrest. As discussed above, it is my opinion that a preferred claim against one ship does not automatically transfer as a preferred claim against a sister ship. Sabine Transportation Company does have a statutory right in rem against the "Brussel", but it ranks behind the mortgagee and cannot be satisfied from the fund.
Claims by container lessors
[81] A number of claims were filed by the lessors of containers under agreements with ABC. By the terms of at least one such agreement, between Transamerica Leasing Inc. and ABC, the container lessor was given a contractual lien against ABC's vessels in the event of default, but such a lien, by contract, has no special priority as against the claims of a third party, including the mortgagee. None of the other claims of container lessors ranks ahead of the mortgagee. In the case of Genstar Container Corporation, which did complete a claim for containers rented to ABC for use on the "Brussel", on her sister ships the "Deloris" and the "Antwerpen" and on other vessels in the ABC fleet, the "Cornelis Verolme" and the "Ellen Hudig", there is no evidence of the assignment of certain containers to certain vessels and no evidence that they were loaded on certain vessels. These are two requirements considered necessary for the claim by a container lessor to establish a maritime lien under the U.S. statute.29 If these claims arose in Canada, if evidence of the provision and loading of particular containers were available, they could not be more than claims for necessaries under Canadian maritime law. Such claims have no priority ahead of the mortgagee. For the record, the container lessors who filed completed claims are Container Application International Inc., Genstar Container Corp., Primesource Holdings Ltd., and Triton Container International. Other container lessors, Sea Containers Americas Inc., Sea Containers Ltd., Textainer Equipment Management Ltd., and Transamerica Leasing Inc. did not file completed claims and, as noted near the end of these Reasons, they are among claimants whose claims are deemed to be abandoned.
Canadian National Railway Company
[82] Canadian National Railway Company (CN) has entered a claim against the proceeds of sale of the "Brussel" based on an amount outstanding from ABC pursuant to a confidential transportation contract. Under the contract, CN transported containers by rail on ABC's behalf. The amount claimed is $938,562.00. This claim is an in personam claim against ABC and CN is not a secured creditor as far as the "Brussel" is concerned. It was suggested at the hearing that this matter may be outside the jurisdiction of this Court, as a claim arising out of contract which is not related to maritime law. Without determining that issue, it is sufficient for this proceeding to conclude that CN will not recover from the proceeds of sale of the "Brussel".
Galehead Inc.
[83] Galehead Inc. is a corporation based in Portland, Oregon. It has filed a claim against the fund for the sum of US $314,113.07. Galehead did not provide any services to the vessels operated by ABC, but it bases its claim on the assignment of accounts receivable from companies that have claims against the "Brussel". Specifically, Galehead states that it is the assignee of the obligations owing to Turecamo Maritime, White Stack Maritime, Etablissement Asamar, Sabine Transportation Company, Dixie Machine Welding & Metal Works and Cooper/T. Smith Stevedoring. The deeds of assignment, which are attached to the affidavits of Galehead's president, read:
| For valuable consideration, we hereby assign to Galehead, inc. all of our right, title and interest in each and every claim, demand or cause of action we may have arising from our having provided goods and/or services to the vessel shown below, including, without limitation, any and all right we may have to a maritime lien upon the vessel and any freights incident to the vessel. |
I note that Galehead and most of the assignors are represented by the same counsel at the hearing of this matter. No representations were made to the Court at the hearing on behalf of Galehead Inc. Rather, counsel argued for the claims of the respective assignors.
[84] Those claims have been discussed and some of them are accepted as payable, in part at least, ahead of the mortgages. Presumably, Galehead's interests will be resolved between the claimants. Suffice it to say that there is no basis for a separate claim by Galehead against the fund.
Claims perfected but not pursued at the hearing
[85] Many parties claimed against the fund, but did not appear at the hearing to address the Court. I deal briefly with each of these claims in turn.
Ship repair claimants
Antwerp Shiprepair N.V.
[86] Antwerp Shiprepair, based in Belgium, is claiming from the fund for unpaid amounts following the provision of ship repair services to the "Deloris" in September 1995. This claimant has not provided any evidence of foreign law. According to Canadian rules of conflicts of laws, when foreign law is unproven the Court must assume it is the same as the law of the forum. Under Canadian maritime law, ship repairers who are not in possession do not have priority ahead of the holder of the mortgages. For this reason, the claim of Antwerp Shiprepair N.V. will not be satisfied from the fund.
Belgian Ship Service Centre (c.o.b. Köpcke Belgium Supply Services (Belgium))
[87] Belgian Ship Service Centre has entered a claim against the fund for 3,982,514 Belgian Francs for ship repairs and related services to the "Brussel" and alleged sister ships. This claimant did not enter any evidence of foreign law. As with the Antwerp Shiprepair claim, this Court must apply Canadian maritime law. Ship repairers do not have preferred status and neither the claim in relation to the "Brussel" nor the sister ship claims rank ahead of the mortgages. This claim cannot be satisfied from the fund.
Blohm & Voss AG/Blohm & Voss Gmbh (Germany)
[88] Blohm & Voss are claiming 1,471,689 German Marks from the fund for ship repairs to the "Brussel" and to the "Martha II" performed at Hamburg, Germany. The Court has not been provided with proof of foreign law with regard to this claim and it must, therefore, consider it using domestic law. The claim against the "Brussel" does not rank in priority to the mortgages and thus cannot be satisfied from the fund. The claim in relation to the "Martha II", as she was not a sister ship of the "Brussel", is not recognized in considering distribution of the fund.
Other claimants
Eastern Canada Towing Limited
[89] Eastern Canada Towing Limited claims against the proceeds of sale for amounts due from the provision of towing and docking services to the "Antwerpen" and the "Ellen Hudig". The "Ellen Hudig" was not a sister ship of the "Brussel", so that claim cannot be advanced against the fund. The "Antwerpen" was a sister ship, but this claim does not have priority over the mortgages. For these reasons, Eastern Canada Towing will not recover from the fund.
Etablissement Asamar Ltd.
[90] Etablissement Asamar Ltd. has filed a claim against the proceeds of sale of the "Brussel" for the delivery of bunkers to the ship "Cornelis Verolme" at Hamburg, Germany. As discussed above, the "Cornelis Verolme" is not a sister ship of the "Brussel" and, consequently, Etablissement Asamar cannot recover from the fund.
HSS International (Holdings) Ltd.
[91] HSS International (Holdings) Ltd., of Hull, England, has filed a claim against the proceeds of sale in the amount of "11,651.11 for ship stores provided to the "Brussel" and the "Antwerpen". The claim based on the provision of services to the "Antwerpen" is at best a claim for necessaries for a sister ship. As for the claim for "4,877.11 owed by ABC for the provision of ship stores to the "Brussel", no affidavit of foreign law was provided, so the Court must apply the law of the forum. Ship stores are necessaries when provided to a specific ship. Under Canadian maritime law, the provision of necessaries does not give rise to a claim in rem , or in priority to the ship's mortgages. Neither claim of HSS International will be satisfied from the fund.
Lyttelton Port Co. Ltd.
[92] Lyttelton Port Co. Ltd. is a New Zealand company that operates the Port of Lyttelton. The company provided services to the ships "Brussel", "Antwerpen", "Ellen Hudig" and "Martha II". The amounts owed for the services remain unpaid, as are port fees payable. Altogether, Lyttelton Port Co. claims NZ$423,409.93. The amounts for the "Brussel" are NZ$151,494.02 for stevedoring services and NZ$46,125.00 in port fees. No evidence of New Zealand law was adduced, so the Court must use the law of the forum, which is Canadian maritime law. The provision of stevedoring services does not result in a maritime lien by operation of Canadian law. Unpaid port fees may give rise to a preferential right in rem within certain jurisdictions by operation of specific statutory provisions. In the absence of any evidence of such statute in favour of Lyttelton Port Co., and no provision for any recognition of New Zeland law, if there were, under Canadian legislation, the company's claims do not rank ahead of the mortgagee's. For these reasons, Lyttelton Port Co. will not be able to recover from the proceeds of sale of the "Brussel".
MacGregor (NLD) BV
[93] MacGregor (NLD) BV provided goods to a number of the vessels that have been described as part of the ABC fleet. The goods were provided to the vessels at a number of ports world-wide. MacGregor claims that the total indebtedness of all the vessels of 1,788,341 Belgian Francs is secured by a maritime lien against the proceeds of sale of the "Brussel". This is a bare claim without corresponding authority. For the reasons already given, the claims against the sister ships cannot transfer with priority ahead of the mortgagees of the "Brussel", unless the local laws where the transactions take place give them greater priority. No affidavit of foreign law was provided to give priority for any of the claims. MacGregor's claim ranks behind that of the mortgagees. For this reason, the claim by MacGregor will not be satisfied from the proceeds of sale.
Patrick Stevedores No. 1 Ltd.
[94] Patrick Stevedores No. 1 Ltd. carries on business in stevedoring and related marine cargo services at various ports in Australia. The outstanding debt claimed is AUS $1,591,739.22 for services to the "Brussel" and unspecified other vessels of the ABC fleet. No affidavit of foreign law was provided, so the Court must apply the law of the forum to determine the status of this claim. Under Canadian maritime law, the provision of stevedoring and cargo services does not give rise to a claim in rem in priority to the ship's mortgages. Therefore, the claim of Patrick Stevedores No. 1 Ltd. will not be satisfied from the fund.
Ports of Auckland Ltd.
[95] This claimant, Ports of Auckland Ltd., claims against the fund for stevedoring and port services provided to various ships of the ABC fleet. The specific claim against the "Brussel" for services provided to that ship is NZ$182,498.63 (stevedoring) and NZ$23,277.85 (port dues). No affidavit of New Zealand law was provided, so the Court must apply Canadian maritime law to determine the status of this claim. Under Canadian law, the provision of stevedoring services does not give rise to a claim in rem in priority to the ship's mortgages. Unpaid port fees, aside from those dealt with under the Canada Ports Corporation Act, which does not relate to foreign port authorities, do not have any priority ahead of the mortgagees. The company will not be able to recover from the proceeds of sale of the "Brussel".
Claims without proof and deemed abandoned
[96] Many claims were presented and a number of caveat releases filed in relation to them, which claims were not subsequently established in accord with the Court's order dated May 17, 1996, which reserved determination of the priority of Holt's claim to the "Brussel" until the rights of all claimants could be determined by the Court. On July 9, 1996 the Court further ordered that any claimant who had filed a claim against the "Brussel" by Statement of Claim, Caveat Release, Affidavit of Claim or Notice of Claim on or before July 2, 1996 is deemed to meet the requirements for placing a claim before the Court. Claimants were directed by the Court's Order of September 9, 1997 to file affidavits in support of their claims otherwise their claims would be deemed to be abandoned. Claimants who have not complied with the terms of both the above orders are therefore deemed to have abandoned their claims.
[97] For the record, I declare that these claims are deemed to be abandoned, including the claims by Affco New Zeland Ltd., Affco New Zeland (Canada) Ltd., Associated Steamship Agency, Beaufort Shipping Agency (W.A.) Pty. Ltd., Braemar Pest Control Services of Canada, Captain Donald W. Waldeck, Captain Don M. Clanton, Captain T.H. West, Dan-Lachs G.m.b.h., Interocean Trading Company Ltd., Dufferco S.A., Gordon Alison (M & I) Ltd., Grayspur (M & I) Ltd., Interocean Trading Company Ltd., Interpool Ltd., ITC Marine Japan Ltd., ITC Marine Japan (U.K.) Ltd., Les Entreprises Rodmarc Inc., M.O.T. Intermodal Shipping Inc., New Amera Transit Inc., Newcastle Protection & Indemnity Association,30 Partridge Motor Boat Service Inc., Reads Electric Co. Pty. Ltd., Richmond Ltd. and New Zealand Lamb Co. Ltd., Robert A. Dean Ltd. (trading as Joseph P. Lamb & Sons), Rollins Hudig Hall, Sea Containers Ltd. and Sea Containers Americas Inc., Seaway International Foods Ltd. along with Voita International Trading Pty. Ltd. and Qualico Foods Inc., Sogelco International Inc., Sons of George Shukha Ltd., SPM Containerline S.A., Textainer Equipment Management Ltd., Toveroom Pty. Ltd., Transamerica Leasing Inc., Trans-Tec Services Inc.
Conclusion
[98] An order goes which is intended to indicate ultimate disposal of the fund on the basis of the reasons here set out. It provides for payment now of the claims by Halifax Port Corporation and the Atlantic Pilotage Authority in relation to services rendered to the "Brussel". It also allows payment to the plaintiff, Holt, for counsel at solicitor/client rates, for reasonable expenses incurred in the appraisal and sale of the "Brussel", upon presentation of a bill of costs.
[99] For all other claims here allowable, it directs counsel to confirm in writing the amount of the allowable claim by a specified claimant calculated by reference to the date of breach or default, at which time any claim in U.S. dollars, or other foreign currency, is to be converted to Canadian currency by reference to rates provided by the Bank of Canada (a copy of which is circulated to counsel with the Court's Order), plus interest to July 24, 1996, the date of sale of the "Brussel", at a rate fixed by contract between the parties, or absent such agreement then at 7 per cent per annum. Subject to any variations on appeal in relation to any of the claims advanced to the Court, the amount of any specified claim so calculated as at July 24, 1996 shall be increased by the interest rate attributed to earnings of the fund from July 24, 1996 to the date of payment out by the Court. That date will be determined following disposition of any appeals from the Order now issued and the determination of the trustee's appeal to the Supreme Court of Canada, unless there be further Order by a Judge of this Court before those appeals are dealt with.
[100] I acknowledge the assistance of all counsel involved in this matter from the time of the arrest of the "Brussel".
(signed) W. Andrew MacKay
Ottawa, Ontario
February 11, 2000.
ANNEX A
Claimants who shall recover from the fund paid into Court following the sale of the "Brussel"
| Claimant
|
Type of claim
|
Date
|
Canadian $
|
US $
|
Contract interest rate
|
| A. To be paid for services to the "Brussel" only
|
|
|
|
|
|
| Halifax Port Authority
|
Statutory
|
5 April 1996
|
$2448.47
|
|
18% per annum
|
| Atlantic Pilotage Authority
|
Traditional maritime lien
|
|
$2197.38
|
|
18% per annum
|
| Holt Cargo Systems - Solicitor's costs - appraisement and sale.
|
Lien akin to Marshall's costs
|
|
To be determined
|
|
|
| B. Payable upon further order for services to the "Brussel" only, and to mortgagee
|
|
|
|
|
|
| Holt Cargo Systems
|
US maritime lien & Default judgment
|
14 May 1996
|
$527,128.06
|
|
7% per annum - Order - 14 May 1996
|
| SNCI (Intervenor)31
|
Mortgages
|
|
Approx. $68,100,000
|
|
|
| Tricon Steamship Agency
|
US maritime lien
|
|
|
$11,971.96
|
1.5% per month
|
| New Orleans Marine Contractors, Port Partners, Ship Couriers
|
US maritime lien
|
5 April 1996
|
|
$48,772.82
|
|
| Reiter Petroleum
|
US maritime lien
|
24 April 1996
|
|
$42,641.98
|
|
| South Carolina State Ports Authority
|
US maritime lien
|
1 April 1996
|
|
$64,488.70
|
|
| Ryan-Walsh Inc
|
US maritime lien
|
29 March 1996
|
|
$88,202.16
|
|
| Turecamo Maritime
|
US maritime lien
|
1 April 1996
|
|
$4,762.52
|
1.5% per month
|
| White Stack Maritime
|
US maritime lien
|
1 April 1996
|
|
$7,047.94
|
|
| Cooper/T. Smith Stevedoring
|
US maritime lien
|
15 March 1996
|
|
$560.00
|
18% per annum
|
| Ashland Chemical Company
|
US maritime lien
|
|
|
$16,178.70
|
|
| Total - Excluding claim of mortgagee
|
|
|
$531,773.91
|
$284,626.78
|
|
ANNEX B
Table of Contents
Paragraph
Background 3
General Issues or Considerations 13Statutory liens and priority claims recognized under Canadian maritime law 13
| Maritime Liens Arising in the United States 15 |
| Sister Ships and Claims against Sister Ships 17 |
| Interest Rates Applicable 26 |
Claims ranking wholly or in part in priority to the ship's mortgages 33
| Canadian Statutory Claims 34 |
| Halifax Port Corporation 34 |
| Atlantic Pilotage Authority 39 |
| American Maritime Liens 44 |
| Holt Cargo Systems, Inc. 44 |
| Ashland Chemical Company 45 |
| Cooper/T. Smith Stevedoring 48 |
| New Orleans Marine Contractors, Port Partners Inc., and Ship Couriers Inc. 50 |
| South Carolina State Ports Authority 56 |
| Tricon Steamship Agency, Inc. 57 |
| Turecamo Maritime, Inc. 59 |
| White Stack Maritime Corp. 61 |
| Claims already paid for unrecovered costs of storage and disposal of unclaimed cargo 63 |
| Halterm and Seatide Pty. 63 |
| Summary Bases of Claims Ranking in Priority to the Mortgages 64 |
The claim of the intervenor, the Mortgagee SNCI 66
Paragraph
Other claims, ranking after the mortgages 68
| Bridge Oil Ltd. (Cayman Islands) 79 |
| Dixie Machine Welding & Metal Works, Inc. 80 |
| Sabine Transportation Company 81 |
| Claims by container lessors 82 |
| Canadian National Railway Company 83 |
Claims perfected but not pursued at the hearing 85
| Antwerp Shiprepair N.V. 86 |
| Belgian Ship Service Centre (c.o.b. Köpcke Belgium Supply Services (Belgium)) 87 |
| Blohm & Voss AG/Blohm & Voss Gmbh (Germany) 88 |
| Eastern Canada Towing Limited 89 |
| Etablissement Asamar Ltd. 90 |
| HSS International (Holdings) Ltd. 91 |
| Lyttelton Port Co. Ltd. 92 |
| Patrick Stevedores No. 1 Ltd. 94 |
| Ports of Auckland Ltd. 95 |
Claims without proof and deemed abandoned 96
Conclusion 98
__________________
1 See [1997] 3 F.C. 187 (T.D.), aff'd 239 N.R. 114, [1999] F.C.J. No. 337 (C.A.), leave to appeal to S.C.C. granted 9 December 1999 (Bulletin of Proceedings of the Supreme Court of Canada , 10 December 1999).
2 R.S.C. 1985, c. S-9, Part III.
3 R.S.C. 1985, c. C-9, s. 43(5) and Schedule I, s. 17(5).
4 R.S.C. 1985, c. F-7, as am.
5 Supra note 3.
6 [1926] S.C.R. 680">[1926] S.C.R. 680.
7 [1974] S.C.R. 1248">[1974] S.C.R. 1248 ("Todd Shipyards ").
8 Supra note 4.
9 [1999] F.C.J. No. 947, var'd on other grounds [1999] F.C.J. No. 1212 (T.D.).
10 William Tetley, Maritime Liens and Claims , 2d edition (Montréal: Yvon Blais, 1998), at 59-60.
11 Federal Court Act, R.S.C. 1985, c. F-7, s. 36.
12 R.S.C. 1985, c. I-15, s. 11, which fixes the rate of interest at 5 per cent per annum , where the rate is not fixed by agreement or by law. See Lee S. Wilbur & Co. v. The Martha Ingraham, [1989] F.C.J. No. 427 (T.D.).
13 See Alcan Aluminium Ltd. v. Unican International S.A. (1996), 120 F.T.R. 44 (T.D.); Shibamoto & Co. v. Western Fish Producers Inc. (Trustee of) (1991), 48 F.T.R. 176 (T.D.).
14 See Osborn Refrigeration Sales & Service Inc. v. The Ship "Atlantean I" et al. (1982), 52 N.R. 10, 7 D.L.R. (4th) 395 at 406 (F.C.A.)
15 See [1945] S.C.R. 655">Gatineau Power Co. v. Crown Life Ins. Co. , [1945] S.C.R. 655; N.V. Bocimar S.A. v. Century Insurance Co. of Canada (1984), 53 N.R. 383, rev'd on other grounds at [1987] 1 S.C.R. 1247.
16 Lee S. Wilbur & Co. v. The Martha Ingraham, supra note 12.
17 R.S.C. 1985, c. C-9, Sched. I, Part II, s. 17(5).
18 R.S.C. 1985, c. P-14. The claimant Atlantic Pilotage Authority referred to s. 45 of this Act to urge priority for amounts owing to a pilotage authority. The section reads:
| 45. No customs officer at any port in Canada shall grant a clearance to a ship if the officer is informed by an Authority that pilotage charges in respect of the ship are outstanding and unpaid. |
45. Il est interdit à l'agent des douanes qui est de service dans un port canadien de donner congé à un navire s'il est informé par une Administration que des droits de pilotage concernant le navire sont exigibles et impayés. |
19 [1979] 2 F.C. 661 (T.D.) var'd on other grounds 7 D.L.R. (4th) 395 (F.C.A.).
20 (1982), 43 C.B.R. (N.S.) 9 (F.C.T.D.).
21 Tetley, supra note 10 at 463.
22 See The Comet , [1965] 1 W.L.R. 479 at 482; The Leoborg No. 2, [1964] 1 Lloyd's Rep. 380 at 384; Osborn Refrigeration v. The Ship "Atlantean I", supra note 14.
23 April 1, 1996 is the date of the last of four invoices. The other three are dated November 11, 1995, March 20, 1996, and December 4, 1995. All the invoices became due thirty days following the respective dates. As April 1, 1996 was the basis for the claim by counsel in written submissions to the Court, I will use this date for determining when interest will run.
24 Specifically, the claimant Halterm says it provided services to "Cornelis Verolme", "Ellen Hudig", "Antwerpen", and "Martha II".
25 R.S.C. 1985, c. C-9. While this is the section relied upon by Halterm, it should have argued Sched. I, Part II, s. 17(5) of that Act . Subsection 43(5) a lien for the Canada Ports Corporation and Sched. I, Part II, s-s. 17(5), which is similarly worded as s-s. 443(5), provides a lien for the local Ports Corporation, in this case, the Halifax Port Corporation.
26 (1988), 24 F.T.R. 243, [1988] F.C.J. No. 967.
27 [1927] 1 Ch. 308.
28 Tetley, Maritime Liens and Claims , supra note 10 at 1230.
29 Tetley, supra note 10 at 609-613.
30 Newcastle's claim is based on unpaid premiums for insurance, for both the "Brussel" and the "Antwerpen". While an affidavit was filed in time to support the claim, it lacked any particulars regarding the break-down of the amount owing between the two vessels. In addition, the affidavit was of advice and belief and did not include any invoices or other evidence. That local counsel did not make any representations regarding this claim leads the Court to conclude that the claim has been abandoned, and it is deemed so.
31 Receives the remainder of the fund.
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