Date: 20130529
Docket:
T-774-13
Citation:
2013 FC 575
Montréal, Quebec,
May 29, 2013
PRESENT: The
Honourable Mr. Justice Harrington
ADMIRALTY
ACTION IN REM
AGAINST
THE SHIP M/v “broadbill I”
Admiralty
action in personam against
William
KEVIN ANDREWS AND LEONA MARY ANDREWS
BETWEEN:
|
|
QUIN-SEA FISHERIES LIMITED
|
|
|
|
Plaintiff
|
|
and
|
|
|
THE SHIP "BROADBILL
I",
WILLIAM KEVIN ANDREWS AND
LEONA MARY ANDREWS AND
ALL OTHERS INTERESTED IN THE
SHIP
|
|
|
|
Defendants
|
|
|
|
|
REASONS
FOR ORDER AND ORDER
[1]
The
ship MV Broadbill I is under arrest in this Court. Bail was fixed by
Prothonotary Morneau in the amount of $100,000. Bail has not been furnished.
The delays to appeal his order have not expired.
[2]
The
defendants now move for an order staying the Federal Court action in favour of
a parallel action in the Supreme Court of Newfoundland and Labrador, and that
the arrest of the Broadbill I be vacated. Although the written motion seeks
these remedies in the alternative, during oral argument it became clear that
both remedies are being sought. The plaintiff and Mr. and Mrs. Andrews had
entered into an agreement entitled “Loan Agreement” wherein the Andrews, in
consideration of the loan, granted a mortgage over the Broadbill I, and
undertook to make available to Quin-Sea its fish catch for a minimum of one
full fishing season following the year in which the loan was repaid. The loan
was paid earlier this year, but the Andrews are selling to another company.
[3]
The
plaintiff, Quin-Sea, first took action in the Supreme Court of Newfoundland and
Labrador in which it sought interlocutory relief in the form of a mandatory
injunction requiring the Andrews to sell their fish to it. The motion was
dismissed on the grounds that there was no irreparable harm as damages would be
an adequate remedy should the case be well founded.
[4]
Quin-Sea
then took action in this Court. The only difference is that this action is
framed both in rem and in personam and the ship has been
arrested.
[5]
There
are a number of remedies available to a shipowner whose ship has been arrested.
One, if commercially feasible, is to post bail, without prejudice to
subsequently arguing that the arrest was without merit.
[6]
In
terms of setting aside an arrest, the shipowner might assert:
a. the
claim is beyond the scope of the legislative class of subject of navigation and
shipping, so that the Federal Court is without jurisdiction;
b. the
property arrested is not the subject of the action;
c. it is
not personally liable;
d. the
arrest should be set aside and the action either dismissed under rule 221 of
the Federal Courts Rules as disclosing no reasonable cause of action, or
because it is frivolous or vexatious;
e. the
action should be stayed on the grounds of forum non conveniens.
[7]
The
defendants have been proceeding in stages. They first moved to have bail set.
Counsel seemed to assume, for the purpose of that motion, that the plaintiff
had a reasonable cause of action. It should come as no surprise that
Prothonotary Morneau held, based on jurisprudence of this Court, that a
plaintiff is entitled to security on its best reasonably arguable case in
principal, interest and costs up to the value of the ship. He fixed bail at
$100,000.
[8]
In
the motion before me, the defendants deplore the plaintiff’s actions. They
claim that the Federal Court proceedings are vexatious, in that it is
inappropriate to arrest the ship after their motion in the Supreme Court of
Newfoundland and Labrador for an interlocutory injunction was dismissed. The
plaintiff, having chosen that forum, should be required to live with it.
[9]
They
also argue that there is no need to arrest the ship because their claim is
already secured by a mortgage. I can dismiss this point out of hand. A mortgage
creditor is entitled to arrest the ship for alleged breach of the mortgage
agreement. The defendants cannot dictate to the plaintiff how it should run its
case.
[10]
Another
inchoate argument, inconsistent with their pretension that the mortgage,
without arrest, is adequate security, which just seems to have percolated to
the surface is that the mortgage only covered the loan, and not the covenant to
sell the catch. This submission cannot be considered at this stage because
inadequate notice was given.
DECISION
[11]
While
the dispute cannot proceed to trial in two jurisdictions, it would be inappropriate
to stay the Federal Court proceedings at this time.
[12]
The
defendants argue that the Newfoundland and Labrador Supreme Court has
concurrent jurisdiction in admiralty and in rem jurisdiction which would
have allowed for the arrest of the Broadbill I.
[13]
The
plaintiff does not dispute that the Supreme Court of Newfoundland and Labrador has concurrent jurisdiction in admiralty matters. Indeed, section 22 of the Federal
Courts Act makes that perfectly clear. The question, however, is whether
that Court has in rem jurisdiction. I am told by counsel for both
parties there are no specific admiralty rules of practice; not a whiff of an
“affidavit to lead warrant”, “warrant for arrest”, “bail” and the like, as set
forth in Part 13 of the Federal Courts Rules. However, there are general
rules dealing with the seizure and sale of property.
[14]
There
is no need for me to get into a fascinating discussion of what Newfoundland and Labrador brought into Confederation in 1949 through the Colonial Courts
of Admiralty Act. The fact of the matter is that an injunction, and the
action in rem, are two separate procedures (Armada Lines Ltd v
Chaleur Fertilizers Ltd, [1997] 2 S.C.R. 617, [1997] SCJ No 67 (QL)).
[15]
Nevertheless,
I cannot resist raising the possibility that the action in rem is not a
mere matter of procedure, but rather is a matter of substance which goes to the
very essence of admiralty law. Distinctions among claimants to the proceeds of
the sale of a ship in an admiralty court, such as ranking based on maritime
liens, possessory liens, mortgages and ordinary rights in rem are at the
very essence of admiralty law. A fundamental distinction between the sale of
maritime property by an admiralty court, and a sale in a common law court is
that an admiralty sale gives title free and clear while the sale in a common
law court is only a sale of the defendant’s interest in the res. See The
Development of Admiralty Jurisdiction and Practice since 1800 by F.L.
Wiswall Jr. (Cambridge: Cambridge University Press, 1970), especially chapter
6: “The Evolution of the Action in Rem [an example of the effect of the
historical development of the Court upon the substantive Law of Admiralty]”.
[16]
The
question therefore is whether the action in rem is part of the ordinary
law of the province, which can be altered by the province, or part of “navigation
and shipping”, a legislative class of subject over which Parliament has
exclusive authority in virtue of section 91(10) of the Constitution Act,
1867. See Associated Metals & Minerals Corporation, et al. v The
Ship Evie W Aris Steamship Company, Inc. and Worldwide Carriers Limited, [1978]
2 FC 710, affirmed [1980] 2 S.C.R. 322 and favourably referred in the seminal
decision dealing with the jurisdiction of the Federal Court, ITO Terminal
Operators Ltd v Miida Electronics Inc., [1986] 1 S.C.R. 752, [1986] SCJ No 38
(QL) (Buenos Aires Maru).
[17]
Suffice
it to say, for present purposes, that the plaintiff did not seek to arrest the
Broadbill I in Newfoundland and Labrador. I do not consider that it was acting
in a vexatious manner by arresting the ship after it failed to obtain the
injunction. Obviously, it could not have obtained an injunction and then
arrested the ship so as to prevent the plaintiff from making any catch.
[18]
An
interesting case, which is distinguishable, is Alpha Trading Monaco SAM v
Sarah Desgagnés (The), 2010 FC 695, [2010] FCJ No 833 (QL). The plaintiff
had arrested the Sarah Desgagnés in Canada and had agreed to accept security
here. It then withdrew its claim in order to arrest in a forum considered more
convenient. Having agreed to accept security, it made its election and was
bound by it.
[19]
As
aforesaid, neither Prothonotary Morneau’s decision with respect to bail nor
this decision deals with the argument that the mortgage does not cover the covenants
in the loan agreement other than the repayment of money.
[20]
At
some point in time either this action or the proceedings in the Supreme Court
of Newfoundland and Labrador will have to be stayed. Given the volatility of the
moment, and the fact that the defendants may not have exhausted their recourses
to have the arrest set aside, I will not grant a stay at this time.
[21]
However,
it is not unusual for a party to take action in this Court simply to obtain
security, while the matter proceeds on the merits in another jurisdiction. This
is specifically contemplated in the Commercial Arbitration Act. In
addition, depending on the language of the contract of affreightment, and
whether a bill of lading was issued, the maritime property, or hopefully bail
in lieu thereof, will remain under this Court’s control while the merits are
dealt with elsewhere.
ORDER
FOR
REASONS GIVEN, THIS COURT ORDERS that:
1. The
motion is dismissed.
2. Costs
in the cause.
“Sean Harrington”
Email this Content