Date: 20091222
Docket: T-1362-09
Citation: 2009 FC 1307
BETWEEN:
AOZORA
BANK, LTD.
Plaintiff
and
YOSEMITE LTD.,
THE OWNERS AND ALL OTHERS
INTERESTED IN THE SHIP YOSEMITE,
AND THE SHIP YOSEMITE
Defendants
ASSESSMENT OF
SHERIFF’S COSTS - REASONS
Charles E. Stinson
Assessment Officer
[1]
The
Plaintiff, a Japanese banking corporation, claimed as mortgagee (first
preferred mortgage) of the Ship “Yosemite”, a Liberian flagged bulk carrier of
approximately 167.64 metres in length, US$77,181,367.54 plus contractual
interest, costs and disbursements and effected arrest of said ship.
[2]
The
Affidavit of Bill O’Dell, affirmed August 25, 2009 in support of the
Plaintiff’s motion for relief, indicated in paragraph 1 that he is “the
Operations Manager for National Maritime Services Inc.” and in paragraph 3 that
“National Maritime Services Inc. is based in Fort Lauderdale, Florida, U.S.A.
and is in the business of providing ship management services, including
international vessel arrest, custody, and sale services” and otherwise set out
the circumstances for the urged sale of the Ship “Yosemite”.
[3]
The
ex parte Order dated August 26, 2009, provided that:
…
2. National Maritime
Services Inc. is hereby appointed as Sheriff in this action for the safety and
preservation of the in rem Defendant Ship YOSEMITE (the Vessel)
while under arrest until further order of the Court. The Plaintiff shall
assume responsibility for any costs or fees incurred or payable in carrying out
this Order, as required by Rule 483(2) of the Federal Courts Rules.
3. The Plaintiff,
Aozora Bank Ltd., is hereby authorized, but not obligated, to advance funds for
the payment of the wages and other sums outstanding and due to the master,
officers and crew with respect to their service on board the in rem Defendant
Vessel YOSEMITE and their costs of repatriation, relief and replacement as
required. Any such payments shall rank without any precedence with liens for
seamen’s and master’s wages and upon payment be deemed to be assigned to the
Plaintiff without any need to take specific assignment of such claims.
4. The Plaintiff,
Aozora Bank Ltd., is hereby authorized, but not obligated, to advance
funds for the payment of other expenses applicable to the in rem
Defendant Vessel YOSEMITE and its maintenance and protection while under
arrest, including, without limitation of the foregoing, agency fees and
disbursements, port fees and dues, crew to maintain and protect the Vessel
while under arrest, insurance on and with respect to the Vessel, bunkers to
fuel on board heating, generating equipment and electrical systems, garbage
removal, launch services, crew wages and provisions. Any such payments
shall rank without any precedence with liens for the costs of the arrest and
costs custodia legis.
5. The Plaintiff shall
have its taxable costs of this motion paid out of the fund created on the sale
of the in rem Defendant Vessel YOSEMITE.
[4]
The
ex parte default judgment dated October 5, 2009 awarded US$77,181,367.54
(CAN$83,023.997.06 further to the rate of exchange of the Bank of Canada of an
even date) to the Plaintiff together with taxable costs of the motion
payable out of the sale proceeds of the Ship “Yosemite” and permitted the
Plaintiff to prove within the creditors’ scheme its additional claims and
protective disbursements.
[5]
The
ex parte order dated October 5, 2009 (the Sale Order) provided that:
…
1. The Vessel, including its bunkers and
appurtenances, which shall be separately appraised and sold as set out below in
Paragraph 4 below (collectively referred to as the Vessel), now under arrest at
Ladysmith, British Columbia, shall be appraised and sold by public
auction to be arranged in accordance with the terms of this Order.
2. The Vessel shall be sold, as
set out below, in its present state, after the removal of any cargo on board,
on an “as-is, where-is” basis, with all existing faults, without any allowances
for deficiencies or errors of description whatsoever and without any legal or
contractual representations or warranties whatsoever, but free and clear of all
liens and encumbrances as provided in Rule 490(3) of the Federal Courts
Rules. Prospective purchasers shall satisfy themselves as to the condition
of the Vessel, the quantity of bunkers on board and the currency of her
certificates. The bunker fuel and diesel oil on board the Vessel shall be taken
and paid for by the purchaser of the Vessel as a separate item together with
the Vessel. The quantities of bunker fuel and diesel oil shall be determined
and valued by the Sheriff on the basis of market prices in effect at the Port
of Vancouver, British Columbia, on the day before the sale.
3. Mr. Bill O’Dell of National
Maritime Services Inc. (National Maritime), shall be appointed as an
acting Sheriff of this Court (hereinafter the Sheriff). The Sheriff’s commission
on sale shall be three percent of the total sale price, which shall include
payment for any brokering services provided by National Maritime or other
agency for sale. The Sheriff may, in the event a situation arises in which
he reasonably feels in need of independent legal advice, retain legal counsel,
the cost of which shall be included as a Sheriff’s cost, payable from the sale
proceeds. Included in the aforesaid commission shall be the services of
the Sheriff in contacting any prospective or potential purchasers, in arranging
ship-board attendances by potential purchasers, the scheduling of the
auction, dealing with the auction, dealing with the deposit and the purchase
price, instructing lawyers and taxing costs. In the event that the Sheriff has
any uncertainty as to what items are covered by the commission, he has
liberty to apply to the Court on short notice for directions in that regard.
4. … The bunker fuel and diesel
fuel aboard shall be sold to the purchaser of the Vessel as a separate item
on the basis of the amount aboard and at the Port of Vancouver, British
Columbia, market price thereof, as determined by the Sheriff on the day before
the auction sale. The sale of the Vessel shall be subject to the approval of
the Court, which approval may be granted forthwith following the sale, before a
Judge or Prothonotary of the Court present in person or by telephone conference
call.
5. The Sheriff shall obtain an
appraisal of the Vessel to be carried out by a recognized ship broker or marine
surveyor other than the Sheriff and acceptable to the Sheriff and to the Solicitor
for the Plaintiff herein. A sealed copy of the appraisal and appraisal
certificate, if any, shall be filed in the Registry of the Court by the Sheriff
forthwith upon its receipt by the Sheriff prior to the sale and shall not be
unsealed until after the first round of bidding in the auction, as set out in
Paragraph 12 below. The costs of appraisal shall be treated as Sheriff’s
costs payable out of the proceeds of the sale. The quantities of bunker
fuel and diesel oil shall be determined and valued by the Sheriff on the basis
of market prices in effect at the Port of Vancouver, British Columbia on the
day before the sale, as provided in Paragraph 4 above, and the costs of that
determination shall be a Sheriff’s cost payable out of the proceeds of the
sale.
6. The Sheriff shall be required
to promote the sale of the Vessel and seek out potential purchasers, and for
such purposes to utilize the services of his own brokerage firm, or an
agent.
7. The Vessel’s Master, any
Keeper of the Vessel, the Owner of the Vessel, and the Trustee in
Bankruptcy of the Owner of the Vessel, shall provide to the Sheriff copies
of any of the following documents in their possession or control, if any,
of the Vessel’s general arrangement plans, capacity plans, technical
documentation concerning the Vessel’s main machinery and auxiliaries and
classification society certificates, with the costs of reproduction of same
being a Sheriff’s cost payable out of the proceeds of the sale, and they
and each of them shall provide and/or not impede access to the Vessel and such
documents to any ship broker, appraiser, surveyor, prospective purchaser or
other person authorized by or on behalf of the Plaintiff or the Sheriff to
inspect, appraise and show the Vessel to prospective purchasers, their
inspectors, surveyors or agents, at any time of day and on any day of the week.
8. The Sheriff shall advertise
the sale of the Vessel in the following publications: Lloyd’s List and
the Vancouver Sun, by October 16, 2009. Such advertisement shall include
the following information concerning the sale process and the terms of sale:
…
(b) The Vessel shall be sold by
public auction to be held in the Vancouver Registry Office of the Federal Court,
701 West Georgia Street, … Vancouver, British
Columbia, … on October
30, 2009, commencing at 2:00 p.m. (Pacific Standard Time)….
(c) In order to bid, a potential
bidder must register with the Sheriff by telephone or fax, no later than
9:00 a.m. (Pacific Standard Time), and shall provide to the Sheriff the
following information:
(i) the full name (including
contact person), address, telephone and facsimile numbers, and email address of
the bidder;
(ii) the full name and address,
telephone and facsimile numbers, and email address of the company that the
bidder is representing, if any;
(iii) the full name and address,
telephone and facsimile numbers, and email address of an agent resident in
Canada, appointed by the bidder, to whom the Sheriff may deliver the bill
of sale in due course, if the bid is accepted; and
(iv) a deposit of $300,000 in
United States dollars by irrevocable certified cheque or bank draft drawn on or
issued by a Canadian chartered bank and made payable to “Borden Ladner Gervais
LLP, Barristers and Solicitors, in Trust.”
(d) The Sheriff shall be at
liberty to sell the Vessel to the bidder present in person, or with an
agent present in person, with the highest bid at or in excess of the appraised
value. Should the highest bid be less than the appraised value, the Sheriff
shall adopt a procedure calling for further bids, by sealed bid, from among
those bidders present in person, or by agent present in person, to be held
immediately.
(e) In the event that no bid equal
to or higher than the appraised value of the Vessel is received after the
process referred to in the preceding paragraph, the solicitors for the
Plaintiff may verbally apply immediately to the Court for an order that the
Vessel be sold to the highest bidder or for an order that the Vessel be sold by
a further auction or by such other alternative method of sale and upon such
other terms or conditions as the Court may deem fit to impose.
(f) The Sheriff shall have the
right to adjourn or postpone the auction for a period of up to 24 hours, in his
sole discretion.
(g) Once the sale of the Vessel
and its bunkers and diesel oil is approved by the Court, the purchaser
shall remit and pay the balance of the purchase price of the Vessel and payment
for the bunkers and other fuel aboard, as established by the Sheriff; within
seven (7) days of the date of the Court’s approval, of the purchaser’s
bid, failing which the purchaser’s deposit shall be forfeited. Payment of the
balance of the purchase price and for the bunkers shall be made in United
States dollars, by way of irrevocable certified cheque or bank draft drawn on
or issued by a Canadian chartered bank and made payable to “Borden Ladner
Gervais LLP, Barristers and Solicitors, in Trust.”
(h) If the purchaser’s deposit is
forfeited by reason of failure to pay the balance of the purchase
price when due, then the Sheriff may communicate the amount of the highest
offer to other bidders with the view of obtaining a higher offer, or,
alternatively, the Solicitors for the Plaintiff or any interested party may
request that the Court approve the sale of the Vessel to the second highest
bidder should he or she still be willing, and failing same, then the Court may
order another alternative method of sale upon such other terms and conditions
as the Court may deem fit to impose.
(i) In the event that the sale of
the Vessel is approved by the Court, the Sheriff shall be vested and
is hereby vested with the right to sign, a bill of sale or bills of sale
transferring to the purchaser the ownership of the Vessel in the same manner
and to the same extent as though he were the registered owner thereof but free
and clear of any liens or encumbrances. Similarly, the Sheriff shall have the
right to transfer title to bunkers and fuel on board the Vessel by a bill of
sale. The Sheriff shall be entitled to deliver such bill or bills of sale to
the purchaser by delivery thereof to the purchaser’s nominated agent at Vancouver, British Columbia.
(j) Possession, risk and title to
the Vessel, including its bunkers and fuel, shall pass to the purchaser on
delivery by or on behalf of the Sheriff of an executed bill of sale to the
purchaser or the purchaser’s nominated agent in Canada.
(k) Any deposits made by bidders
whose bids are not accepted shall be promptly returned to such bidders at the
address provided in their bid.
9. The Sheriff shall include in
the advertisement for sale a notice to creditors to the effect that:
(a) The Vessel “YOSEMITE” (the
Vessel) is under arrest at Ladysmith, British
Columbia, Canada; and
(b) Any claim against the Vessel
or the proceeds of its sale by in rem creditors and mortgagees must be
filed by Affidavit in any Registry Office of the Federal Court on or
before November 20, 2009, failing which the claim shall be barred. Such
Affidavit shall provide full particulars of the claim, its basis and
alleged status. The time for filing any additional Affidavit evidence such
as that required for the proof of foreign law shall be reserved for the
further direction of the Court.
10. The Plaintiff is and shall be
entitled to participate in the auction.
…
21. All reasonable expenses of
advertisement of the sale, agency fees, insurances and all other costs,
disbursements, commissions and other expenses such as costs of berthage,
security, reproduction of plans, photographs, courier services, survey reports,
appraisal etc. necessary or inherent to giving effect to this order and the
commission of sale and for the preservation, safekeeping or maintenance of the
Vessel incurred by the Sheriff and/or funded by or on behalf of the Plaintiff
shall be treated as Sheriff’s costs payable immediately after taxation by an
assessment officer in priority from the proceeds of the sale. Notwithstanding
Federal Courts Rules 490(5) and 490(6), the Sheriff’s account shall be
submitted directly to the assessment officer who shall promptly examine it and
who shall issue a certificate, authorizing all or such portion of the account
as he or she deems appropriate, whereupon the amount set out in the certificate
shall be paid out to the Sheriff or as the Sheriff shall direct, out of the
proceeds of sale. [Emphasis added]
22. The proceeds from the sale of
the Vessel, bunkers and fuel which are paid directly to Borden Ladner Gervais
LLP in trust in United States dollars shall be held in a United States dollar
interest bearing trust account and the funds so deposited shall be deemed for
all purposes to be monies paid into this Court to the credit of all in
rem claims against the Vessel and shall not be disbursed except in
accordance with the further order of the Court.
23. All questions relating to the
right of any claimant in rem against the Vessel or the proceeds of sale
of the Vessel and all questions respecting the priority of all in rem
creditors shall be reserved until further order of the Court.
24. Without prejudice to any other
claims for costs, the Plaintiff shall have their taxable costs of this motion
for default judgment and sale to be paid out of the fund created on the sale of
the Vessel.
25. Liberty
to apply to the Court to vary or set aside this Order is granted to all
interested parties.
[6]
My
decision on the assessment of the Sheriff’s costs in Fraser Shipyard and
Industrial Centre Ltd. v. the Ship “Atlantis Two”, [1998] F.C.J. No. 1676
(A.O.) (the “Atlantis Two”) read in part:
1 STINSON, ASSESSMENT OFFICER
(Reasons for Assessment of Sheriff’s Costs):-- By Order dated May 27,
1998, the Prothonotary, John A. Hargrave, directed that Mr. Bernard T. Jones, a
Ship Broker of C.T.L. Westrans, be appointed as Acting Sheriff of this Court
(hereafter the “Sheriff”) with authority for appraisal and sale of the
ship “ATLANTIS TWO”. The Order, which was not appealed, directed that the
costs of the appraisal be treated as Sheriff’s costs payable out of the
proceeds of the sale and that the Sheriff’s commission be set at 1% of the
total sale price. Ultimately, the vessel sold for US$1,100,000.
2 Paragraph nos. 19, 20 and 23 of
the sale order read:
19. Following the successful sale the
Sheriff shall deposit the proceeds into Court and produce his account together
with his bill of costs and expenses supported with vouchers to be taxed;
20. All reasonable expenses of
advertisement of the sale, agency fees, insurance and all other costs,
disbursements, commissions and other expenses necessary or inherent to giving
effect to this order and the commission of appraisement and sale and for the
preservation, safekeeping or maintenance of the ship, incurred by the
Sheriff, shall be treated as Sheriff’s costs payable immediately from the
proceeds of the sale, upon taxation;
23. Liberty to apply is granted to the Sheriff and
to all interested parties.
The Sheriff produced his account by way
of Bill of Costs and the Affidavit of Mr. Jones sworn August 20, 1998, in support
and filed (as specified in the Commission of Appraisal and Sale) August 21, and
the Affidavit of Mr. Jones sworn September 16, 1998, and filed on September 17,
in support of his Supplemental Bill of Costs exhibited thereto.
3 Throughout, the Sheriff pressed
the Registry and myself for early settlement of the account and suggested that
the reputation of the Court and his reputation suffered because of the delay.
He had incurred bills on behalf of the Court and was being pressed for
settlement of these accounts. His letter dated September 17, 1998 to the
Registry was indicative of his various communications to this effect. In part,
it urged us “to deal with this matter soonest so that we can place these people
in funds” and to settle the Compass Marine disbursement account as a first
priority. There is no question that the Admiralty Court for Canada and the claimants were well served in
this matter by Mr. Jones. As well, I recognize and accept that delays in
settling accounts are to be avoided. However, the Sheriff’s communications may
have misconstrued the authority of the Registry and, in particular, of an
Assessment Officer in this area. Rules 490(5) and (6) provide for the
assessment of the Sheriff’s accounts including the participation of any party
or caveator who is interested in the proceeds of sale. Those proceeds are
held in trust accounts governed by strict regulations concerning access.
Therefore, it was never open to me to settle accounts except further to formal
notice to interested parties giving them a reasonable opportunity to
participate. The sale Order did not exempt the Sheriff from giving notice of
his accounts. He did not, however, do so. The Registry and an Assessment
Officer did not have authority under paragraph 23 of the sale Order.
4 In Court file No. T-76-93, Luis Ricardo Almeida Gomez et al. v.
The Ship “M.V. Rio Mafil”, similar concerns for the timely payment of
sale-related accounts occurred before the sale Order was issued. On August 25,
1993, the Honourable Mr. Justice Rothstein ordered:
…
3. The Vessel shall be appraised and
sold pursuant to Rule 1007 and under authority of a commission
addressed to a Deputy Marshal of this Honourable Court in the form
attached as Schedule “A” hereto, and the price and terms of such sale to
be subject to the approval of this Court.
4. The Plaintiffs shall have joint
conduct with the Deputy Marshal of the sale of the Vessel and the Plaintiffs
shall be at liberty to list it for sale as aforesaid by engaging a ship
broker or a ship brokeraging firm, acceptable to the Deputy Marshal and be at
liberty to pay any ship broker or firm who may arrange a sale of the Vessel a
commission not to exceed 1% of the gross selling price of the Vessel. Such
commission and the expenses of the ship broker or firm in connection with
services in promoting the sale, including the costs of advertising, shall
be paid from the proceeds of the sale and shall be submitted directly to a
Taxing Officer who shall forthwith examine said account. The Taxing Officer
shall issue a Certificate ex parte to the ship broker authorizing all or
such portions of the account as he deems appropriate. The ship broker is
hereby authorized to keep such monies, out of the proceeds of sale,
as are authorized by the Certificate of the Taxing Officer and shall pay the
net proceeds from the sale into Court to the credit of all claimants in rem
against the Defendant vessel and the Plaintiffs shall be at liberty to seek
payment out thereafter. The Taxing Officer shall file a report as to that
portion of the account not certified for further Order of the Court.
…
7. After the deduction of the said
commission and the said expenses as described in Paragraph 4 above, the net
proceeds from the sal[e] shall be paid into court to the credit of all
claimants in rem against the Defendant vessel and the Plaintiffs shall
be at liberty to seek payment thereafter….
As
it happened, it was Mr. Jones who was engaged as the Ship Broker in that
matter. He filed his account on October 22, 1993 and I issued the
appropriate Certificate of Ship Broker’s account that same day. Here, the
Registry had no authority to apply for similar directions….
The Court in Gomez v. M.V. “Rio Mafil”,
[1994] F.C.J. No. 824 (F.C.) (P.) disposed of the Marshall’s account separately on
May 30, 1994: see [1994] F.C.J. No. 824 (F.C.T.D.).
[7]
In
the circumstances of concern for delay and of several identified claimants to
the sale proceeds of the “Atlantis Two”, I directed the Registry to circulate
the ship broker’s account as contemplated by Rule 490(6). Four claimants filed
an objection to certain costs, but with the stipulation that the balance of the
Sheriff’s costs not in issue could immediately be assessed and paid out of the
sale proceeds. I issued a Certificate of Assessment accordingly for these
latter costs and a second Certificate of Assessment on a later date reducing
the disputed costs of $14,096 to $3,289. I noted in paragraph 9 of the
“Atlantis Two” that if “I had had directions comparable to the “Rio Mafil”, supra, or some
other directions waiving the full effect of Rule 490(6) relative to a trust
fund, I would have cut short the period of circulation.”
[8]
The
highlighted portion of the Sale Order permits me to waive circulation among the
creditors of the Sheriff’s account, but does not require that I do so. The
period for creditors to file claims is over. The Plaintiff is the only creditor
of record. I could certify the Sheriff’s account in part only and hold back
those costs considered doubtful for further consideration. The latter process
could include circulation of the Sheriff’s account if other creditors had
appeared. I did not have to do that for the assessment of the Sheriff’s costs
on March 30, 1999, in Federal Court file T-32-99, The Royal Bank of Scotland
plc. v. The Ship “Golden Trinity” et al., in which I effected minimal
reductions. Counsel for the Plaintiff here presented the Sheriff’s sale account
for assessment and requested that I certify it accordingly. I would have found,
if necessary, that I did not have to circulate the Sheriff’s account.
[9]
This
matter was instituted on August 17, 2009. The warrant for arrest of the
defendant vessel was issued that same day. The Sheriff’s bill of costs includes
claims of US$1,725 and $5,750 billed for July 31 and August 17, 2009 respectively
for port entry and transit requirements at Long Beach, California. The vessel was in Ladysmith, British Columbia. The relevance of these
amounts for preservation or the sale is not clear, but the Plaintiff apparently
does not oppose them and no other interested party, including the former owner,
is present to raise concerns.
[10]
The
Sheriff’s bill of costs includes several claims for repatriation airfare for
the crew. It could be argued that these charges were essential to remove
the crew as part of readying the vessel for sale and therefore were
sale-related. Paragraph 3 of the Order dated August 26, 2009 linked such costs
to the Plaintiff. However, crew claims generally rank very high in the
hierarchy of liens and I find it reasonable to certify them as part of the
sale expenses.
[11]
The
Sheriff’s bill of costs contains many other items such as P&I coverage,
crew wages, garbage inspection, immigration clearance for the crew, overtime,
crew medical fees etc., all of which I find relevant and essential. I am satisfied
that the bill of costs does not improperly include brokering services beyond
the limit in paragraph 3 of the Sale Order making such services part of the
Sheriff’s commission on sale.
[12]
Paragraphs
9 and 10 of the affidavit of Bill O’Dell affirmed December 10, 2009 in support
of the bill of costs read:
9. The total amount of Sheriff’s
Account is $955,954.32 USD. Of this, $378,048.09 USD has been paid in advance
by the plaintiff, Aozora Bank Ltd., leaving a balance of $577,906.23 USD due
and owing.
10. I make this affidavit in
support of the Plaintiff’s application for a certificate authorizing the
remaining balance of the Sheriff’s Account, being $577,906.23 USD to be paid
out in full to National Maritime, out of the proceeds of the sale of the
YOSEMITE, pursuant to the terms of the Order for Sale.
[13]
The
payment (US$378,048.09) in advance by the Plaintiff represents ordinary
admiralty law practice. Although the materials request only certification of US$577,906.23,
I think that my assessment should address the entirety of the Sheriff’s account
and leave it to the Sheriff and the Plaintiff to identify in any
representations which amounts should be paid out of the sale proceeds. The
Certificate of Assessment will state that the costs of the Sheriff in effecting
preservation and sale of the Defendant Ship “Yosemite” are assessed and allowed
as presented at US$955,954.32, an amount which includes US$378,048.09 paid
in advance by the Plaintiff, Aozora Bank, Ltd.
“Charles E.
Stinson”
Vancouver,
BC
December
22, 2009
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