Date: 20131113
Docket: T-1625-12
Citation: 2013 FC 899
Vancouver, British Columbia, November 13, 2013
PRESENT: Roger R. Lafrenière, Esquire
Prothonotary
ADMIRALTY
ACTION IN REM AGAINST
THE SAILING
VESSEL “AESTIVAL” AND IN PERSONAM
BETWEEN:
|
|
0871768 B.C.
LTD.
|
|
|
|
Plaintiff
|
|
and
|
|
|
THE OWNERS
AND
ALL OTHERS
INTERESTED IN
THE SAILING
VESSEL “AESTIVAL”,
THE VESSEL
“AESTIVAL”,
ISLAND-SEA
MARINE LTD.,
KENNETH W.
HIGGS,
EXECUTIVE
YACHT SERVICES LTD.
AND MICHAEL
GUY COLBECK,
DOING
BUSINESS AS
EXECUTIVE YACHT
SERVICES AND/OR
EXECUTIVE
YACHT SERVICES LTD.
|
|
|
|
Defendants
|
REASONS
FOR ORDER AND ORDER
[1] This is a motion on behalf of Island-Sea Marine Ltd.
(Island-Sea), its president, Kenneth W. Higgs, and the sailing vessel “Aestival”
(collectively “the Moving Defendants”) for an order pursuant to Rule 488 of the
Federal Courts Rules setting aside the arrest of the “Aestival” on the
grounds that the Plaintiff’s claim does not disclose an in rem cause of
action. In the alternative, the Moving Defendants seek an order pursuant to
Rule 485 setting a nominal amount of bail to be given for the release of the
arrested vessel.
[2] The Plaintiff, 0871768 B.C. Ltd., submits that the
“Aestival” was properly and validly arrested and that the arrest should not be
set aside. The Plaintiff further submits that if the Court decides to fix the
amount of bail for the release of the vessel, the security should be fixed in
an amount not less than $58,000.00. The Defendants, Executive Yacht Services Ltd.
(Executive Yacht) and Michael Guy Colbeck, take no position on the motion.
Claim against
the Defendants
[3] The Plaintiff is the owner of the sailing vessel “Ain’t
Life Grand”. In July 2012, the Plaintiff’s vessel was hauled out onto land for
maintenance at Lynnwood Marina in North Vancouver, British Columbia.
[4] Based on the allegations made in the Statement of Claim and
in the Affidavit to Lead Warrant, on or about July 27, 2012, grinding work was
performed on the “Aestival” while the “Aestival” was situated next to the
Plaintiff’s vessel. The work caused particulate matter, including metal
particles, paint and rust, to emanate from the “Aestival” and settle onto the
Plaintiff’s vessel. The Plaintiff claims that it suffered damage as a result of
the Defendants’ negligence, including the cost of cleaning the hull, deck and
sails, and loss of use of its vessel.
[5] The Plaintiff filed its Statement of Claim on August 31,
2012 seeking damages in the amount of $50,000.00. The “Aestival” was arrested
in September 2012. None of the Defendants have posted bail and the “Aestival”
remains under arrest.
[6] On August 2, 2013, the Moving Defendants brought the
present motion for an order setting aside the arrest of the “Aestival”.
Evidence on
the Motion
[7] The Moving Defendants filed the affidavit of Mr. Higgs in
support of their motion to set aside the arrest of the “Aestival”. According to
Mr. Higgs, the “Aestival” was brought to the Lynnwood Marina in order that work
could be undertaken by Mr. Colbeck of Executive Yacht, to refinish the exterior
hull of the vessel. Mr. Higgs boarded the “Aestival” on July 26, 2012. While
Mr. Colbeck was called away on another matter, Mr. Higgs used a hand-held
grinder “for 11 minutes” to assist in the proper fitting of the hull. Mr. Higgs
denies that there was any damage to the Plaintiff’s vessel as a result of the
grinding work. Mr. Higgs states that if there was any damage to the Plaintiff’s
vessel, it was caused by the actions of Mr. Colbeck, who did not erect the required
framing or maintain tarping of the work area on the “Aestival”.
[8] The Plaintiff submits that the certain portions of the
affidavit of Mr. Higgs should be struck out because it consists of personal
opinion. By way of example, at paragraph 7 of his affidavit, Mr. Higgs states
that: “I verily believe that the alleged damage to the Plaintiff’s vessel did
not occur.” In addition, at paragraph 11, Mr, Higgs declares that: “I very
believe that it is impossible for there to be any connection to this
allegation”, in reference to the allegation by the Plaintiff that rust damage
was viewed aboard the stern of the Plaintiff’s vessel nearly two months after
the grinding work was performed.
[9] Counsel for the Moving Defendants conceded at the hearing
of the motion that Mr. Higgs’ statements constitute inadmissible opinion
evidence and should be disregarded. I agree. The impugned statements
clearly lack objectivity and impartiality.
[10]
The Plaintiff filed three affidavits in response to the
Moving Defendants’ motion. The first affidavit is by Mr. Philip O’Donoghue, one
of the owners and a director of Fraser Fibreglass Ltd. (Fraser). The
second affidavit is by Mr. F.I. Hopkinson, a marine surveyor. The third is by
Mr. Matt Neilson, a director of the Plaintiff.
[11]
Mr. O’Donoghue states that in July 2012 Fraser completed
repair work on the Plaintiff’s vessel. On July 26, 2012, the Plaintiff’s vessel
was clean, polished and in pristine condition and ready to be launched.
[12]
In the afternoon of July 26, 2012, Mr. O’Donoghue was
notified by his foreman that there was steel grinding being undertaken next to the
Plaintiff’s vessel and that grinding debris and sparks could be seen depositing
onto the Plaintiff’s vessel. Mr. O’Donoghue went to the yard work area and
observed Mr. Colbeck standing on the forward port bow of the “Aestival”
overseeing some grinding work by Mr. Higgs with a mini grinder.
[13]
Mr. O’Donoghue observed a cloud of dust and debris settling
on the Plaintiff’s vessel, and noticed that there was no plastic, tarp or other
precautionary measures put down to contain the grinding debris. He asked Mr. Colbeck
to stop the grinding work, but his request was ignored. He then offered to give
Mr. Colbeck a roll of plastic sheeting to protect the Plaintiff’s vessel. Mr.
Colbeck continued to ignore Mr. O’Donoghue. Mr. Higgs then responded that he
would spray the Plaintiff’s vessel down with water. Despite Mr. O’Donoghue’s
protest that this would only worsen the problem, Mr. Higgs kept on grinding.
[14]
Mr. O’Donoghue left the work area and went to his office to
retrieve a camera. Upon his return, he observed that grinding work was still underway
on the “Aestival”. He could also see dust and debris still landing on the
Plaintiff’s vessel. Mr. O’Donoghue heard Mr. Colbeck say: “The asshole has a
camera”. Apparently undeterred, Mr. Higgs and Mr. Colbeck continued with the
grinding work, while Mr. O’Donoghue took some photographs.
[15]
The following day, Mr. O’Donoghue witnessed employees of
Executive Yacht onboard the “Aestival” sanding the top sides of the hull and
observed dust and debris emanating from the “Aestival” onto the Plaintiff’s
vessel.
[16]
On July 28, 2012, Mr. O’Donoghue conducted a thorough
inspection of the hull and deck of the Plaintiff’s vessel. He discovered damage
to the vessel’s gel coat on the deck as well as other damage from the grinding
debris. He subsequently recommended to Mr. Matt Neilson, a director of the Plaintiff,
that the vessel be thoroughly cleaned.
[17]
Mr. F.I. Hopkinson was retained by Navis Marine Insurance
Brokers to prepare a report pertaining to the contamination of the decks, upper
works and sails of the Plaintiff’s vessel. By letter dated July 31, 2012, Mr.
Hopkinson informed Mr. Higgs that he had recommended that remedial action be
carried out as soon as possible to minimize the damage caused by the work carried
out on the “Aestival”, which resulted in metal particles and other debris
contacting the Plaintiff’s vessel. At page 2 of his letter, Mr. Hopkinson wrote:
“We expect that the hull and machinery underwriters who we represent will hold
you fully responsible for the costs involved in the clean up.” Attached to Mr.
Hopkinson’s affidavit is a copy of his report of survey dated September 15, 2012
setting out the approved cost of repairs to the Plaintiff’s vessel.
[18]
Mr. Neilson states that repairs and cleaning of the
Plaintiff’s vessel were ultimately completed by Fraser on or about October 6,
2012, and the vessel was then re-launched. Attached to Mr. Neilson’s affidavit
are copies of the invoices pertaining to the repairs, survey and storage of the
Vessel totalling $42,765.74. The Plaintiff also seeks damages for the loss of
use of its vessel during the repair period.
[19]
There was no cross-examination of the affidavits filed by
the parties.
Argument and
Analysis
[20]
The warrant of arrest was issued based on the facts alleged
in the Affidavit to Lead Warrant which purport to give rise to an in
rem claim under section 22(2)(d) of the Federal Courts Act, RSC
1985, c. F-7 [the Act], which reads as follows:
|
22.(2) Without limiting the generality of subsection (1),
for greater certainty, the Federal Court has jurisdiction with respect to all
of the following:
. . .
(d) any claim for damage or for loss of life or personal
injury caused by a ship other in collision or otherwise;
|
22.(2) Il
demeure entendu que, sans préjudice de la portée générale du paragraphe (1),
elle a compétence dans les cas suivants:
. . .
d) une
demande d’indemnisation pour décès, dommages corporels ou matériels causés
par un navire, notamment par collision;
|
[21]
The Moving Defendants submit that, while the Plaintiff’s
claim may be subject to Canadian maritime law, it is not one that gives rise to
an in rem claim. In support of their position, they rely on a recent decision of Mr. Justice Roger Hughes in Wells Fargo Equipment Finance
Company v Barge “MLT-3”, 2012 FC 738 [Wells Fargo]. In determining
whether there was an in rem claim against the defendant barge, Justice
Hughes held that the phrase “damage caused by a ship” is a term of art in
maritime law. At paragraph 65 of his decision, Justice Hughes concluded,
based on a passage of Lord Diplock’s reasons in the House of Lords decision in The
Eschersheim, 1 [1976] WLR
430, that the damage “must be a direct result or
natural consequence of something done by those engaged in the navigation of the
ship but the ship itself must be the actual instrument by which the damage
was done.”
[22]
The Moving Defendants submit that section 22(2)(d) requires
that a claim for damages requires some physical contact or some action caused
by the navigation of the vessel. Since there was no direct causation or causal
link between the “Aestival” and the damage allegedly sustained by the
Plaintiff’s vessel, there can be no in rem action. I disagree.
[23]
Justice Hughes did not purport in Wells Fargo to circumscribe, limit or restrict
the scope of in rem claims that can be brought in this Court. He
simply concluded, in the particular circumstances of the case before him,
that no action in rem arose against the barge MLT-3.
[24]
Section 22(2) of the Act sets out certain heads of
maritime law falling under the maritime law jurisdiction of the Federal Court.
The Plaintiff’s claim in this instance appears to fall under section 22(2)(d) –
any claim for damages or for loss of life or personal injury caused by a ship
either in collision or otherwise. The word “otherwise” lends to a broader
interpretation of when and how damage is caused, rather than solely while the
ship is moving.
[25]
In Newterm Ltd v Mys Budyonnogo (The) [1992] 3 FC
255, FCJ No 454 (Fed TD), a ship was being spray-painted by her crew while
moored at dock and damage was caused by drifting paint which landed on
approximately 400 cars stored nearby. The defendants alleged that the
plaintiffs’ claim did not fall under the scope of the Court’s maritime
jurisdiction under section 22 of the Act.
[26]
The argument advanced by the defendants was the same as
that advanced by the Moving Defendants here; namely that the damage caused by
the spray paint was not damage “caused by a ship”. Counsel also argued that in
order for there to be “damage caused by a ship”, the ship must be the
instrument of the damage and there must be some act or maneuver of navigation
involved.
[27]
Madam Justice Barbara Reed discounted these arguments and
held that the plaintiff’s claim did fall under section 22 jurisdiction. She
stated as follows at pages 8 to 9:
“The ITO case
involved the negligence of a stevedore-terminal operator in the short-term
storing of goods within the port area pending delivery to the consignee. It was
held that this was an integral part of carrying on the activity of shipping and
had a "close, practical relationship" to the performance of the
"contract of carriage". Similarly in this case the activity which
allegedly gave rise to damage is an integral part of the activity of shipping
and has a close, practical relationship to the navigation of the vessel and
shipping.”
[28]
Further, in assessing claims under section 22, Justice Reed
stated:
In
any event, it seems to me that counsel for the plaintiff and the second
defendant are right in suggesting that one should adopt a functional or
operational test in determining when damage can be said to be "caused by a
ship" for maritime law purposes. When the ship is afloat, the damage is
the result of actions of the crew acting under directions of its master and those
actions are integrally related to the operation of the ship, then the damage
should be classified as "damage caused by a ship". This is an
attractive formulation of the appropriate distinction."
[29]
This approach was also recognized by the Court as the correct
approach in Ship-Source Oil Pollution Fund v British Columbia (Minister of
Finance) [2012] FCJ No 1590 at para 34.
[30]
The Moving Defendants submit that there is no in rem
claim because the “Aestival” was not engaged in navigation when the damage it
is alleged to have caused occurred. Moreover, they claim that the ship itself
was not the actual instrument by which the alleged damage was done. However, this is contrary to the functional or operational test adopted in
Newterm and in direct contrast to decisions where in rem jurisdiction
was found despite the fact the vessel was not actively moving: see The
Minerva [1933] P. 224, involving cargo that fell from the Minerva’s hoist
and damaged an adjacent vessel, and Outhouse v Thorshavn [1935] Ex CR 120
[Outhouse], where oil was pumped overboard and caused damage. Moreover, in Outhouse, it was held
that “damage by a ship” includes damage done by those in charge of a ship
with the ship as the noxious instrument.
[31]
The maintenance of a vessel is an integral part of carrying
on the activity of shipping. It is irrelevant whether such maintenance
is done while the vessel is moored in the water, while the vessel is in
drydock, or while the vessel is blocked out of the water. The broad language of
section 22(2)(d) is sufficient to cover damage caused anywhere the vessel is
located so long as the damage done is by those in charge of the vessel to some
third party or piece of property.
[32]
In
the case at hand, the “Aestival” itself is alleged to be the noxious instrument
of the damage as portions of the “Aestival” were sanded and ground off
and it was that solid particulate (actual pieces of the “Aestival” itself)
which was allowed to escape that caused the damage to the Plaintiff’s vessel. Using the functional operational test and based on the
facts as pleaded in this matter, I conclude that the Plaintiff's claim
falls under section 22(2)(d) of the Act.
[33]
Section
43(2) of the Act provides that section 22 jurisdiction may be exercised in
rem against the
offending vessel. Further, the Plaintiff's claim under section 22(2)(d) is not
excluded from in rem enforcement by way of section 43(3).
[34]
Although
the Moving Defendants may ultimately be vindicated in their position that no
damage occurred, it remains that the present motion is not the proper forum to
adjudicate the merits of the Plaintiff’s claim. The parties’ affidavit evidence
on matters relating to liability is of little value on this motion as I am
required to take the facts stated in the Affidavit of Lead Warrant, as well as
the allegations made in the Statement of Claim, as proven.
[35]
Assuming
those facts to be true, I find that the Plaintiff’s claim is one that falls
under Canadian Maritime Law and under this Court’s section 22(1) jurisdiction. With a valid in rem claim against the “Aestival”, the
Plaintiff was entitled to arrest it pursuant to section 43(8). The
arrest should accordingly stand.
Amount
of Bail
[36]
Pursuant
to Rule 485, the Court may fix the amount of bail to be given for the release
of arrested property. The general rule which
governs the amount of bail to be provided in order to obtain the release
of a ship or prevent its arrest is that bail must be sufficient to cover the plaintiff’s reasonably
arguable best case, including interest and costs, but limited by the value of
the arrested vessel: see Calogeras & Master Supplies Inc v Ceres
Hellenic Shipping Enterprises Ltd [2006] FCJ No 952, 2006 FC 764 at para 3.
[37]
The
Plaintiff's claim is for the sum of $42,765.74, plus damages for loss of use of the
Vessel, and interest and costs. The Moving
Defendants properly conceded at the hearing that if the Court decides to set
bail, that it should be set in the amount of $58,000.00.
ORDER
THIS COURT ORDERS that:
1.
The bail for the release of the sailing vessel “Aestival”
is hereby fixed in the amount of $58,000.00, to be paid into court or to
Bernard LLP in trust.
2.
The motion is otherwise dismissed.
3.
Costs of the motion, hereby fixed in the amount of $750.00,
inclusive of disbursements and taxes, shall be paid by the Defendants,
Island-Sea Marine Ltd., Kenneth W. Higgs, and the sailing vessel “Aestival”, in
any event of the cause.
“Roger R. Lafrenière”
Email this Content