Date: 20100811
Docket: A-253-10
Citation: 2010 FCA 209
Present: EVANS
J.A.
BETWEEN:
ALPHA TRADING
MONACO SAM
Appellant
and
THE SHIP
“SARAH DESGAGNES” and
THE OWNERS OF
ALL OTHERS INTERESTED IN THE SHIP
“SARAH
DESGAGNES” and TRANSPORT DESGAGNES INC. and PETRO-NAV INC.
Respondents
REASONS FOR ORDER
EVANS J.A.
[1]
I have
before me a motion in writing by the Appellant pursuant to rule 369 of the Federal
Courts Rules seeking a stay of execution of a Federal Court judgment
pending the disposition by this Court of an appeal from that judgment.
[2]
In the
judgment under appeal, Justice Harrington (Judge) ordered the Appellant to
cause the release of the Respondent vessel, “Sarah Degagnés”, from conservatory
arrest in Belgium, where it is being held to secure a claim by the Appellant in
a proceeding in Italy against the vessel’s subtime
charterer, an Italian company (MFN), for unpaid invoices for bunkering services
provided to the “Sarah Degagnés” at various locations at the request of MFN.
[3]
MFN
subsequently became bankrupt. The law of Belgium appears to permit the arrest of a ship
to secure a debt for supplies ordered by a time-charterer in circumstances that
the law of Canada does not.
[4]
The Judge
granted the order at the instance of the Respondents, the vessel, its owners,
and its long-term time charterer, who requested an anti-suit interlocutory
injunction to obtain the vessel’s release. He held that the Appellant’s action
was vexatious and oppressive because the ship had previously been released from
arrest in Canada on an undertaking by the Respondents to post bail; the
Appellant had unilaterally amended its statement of claim in its Canadian
action by limiting it to one of the eleven invoices for bunkering services
previously relied on; and the Appellant had re-arrested the ship in Belgium as
security for its claim on the other ten invoices.
[5]
In view of
the urgency of this matter, my reasons will be brief. In my opinion, a stay is
appropriate on the facts of this case; in order to minimise harm to the
Respondents, the appeal from the Federal Court’s judgment will proceed on an
expedited basis.
[6]
In order
to obtain the stay, the Appellant must satisfy the three-pronged test
formulated in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1
S.C.R. 311: that there is a serious question to be decided on the appeal, refusing
the stay is likely to cause irreparable harm to the Appellant, and the balance
of convenience favours staying the order pending the disposition of the appeal.
[7]
The existence
of a serious question is a relatively easy condition to satisfy. The central
issue in the appeal will be whether the Judge erred in concluding that that the
Appellant’s arrest of the “Sarah Desgagnés” in Belgium was vexatious and oppressive so as to
warrant the order that it be released.
[8]
In support
of its position that the Judge’s conclusion is erroneous, the Appellant says,
among other things, that: it was entitled to take advantage of a legal remedy
available to it under Belgian law in order to obtain security for the claim that
it was properly pursuing against MFN in an Italian court; the Judge erred in
finding that the Appellant had attorned to the jurisdiction of the Federal
Court by serving an in rem statement of claim against the “Sarah Desgagnés”
and by arresting her in connection with the eleven invoices for bunkering
services when it had already commenced proceedings against MFN and the vessel
in Italy; and the Judge should have conducted a forum non conveniens
analysis before reaching his conclusion.
.
[9]
Whether any
or all of the Appellant’s arguments will prevail when the appeal against the
anti-suit interlocutory injunction is heard I do not, of course, know. However,
on the basis of the Appellant’s submissions and the Respondents’ very brief response
on this aspect of the RJR-MacDonald test, I conclude that there is a
serious question to be tried on the appeal, and that the first prong of the
test is therefore satisfied.
[10]
The
Appellant relies principally on two considerations to establish that it will
likely suffer irreparable harm if no stay is granted. First, if the “Sarah
Desgagnés” is released from arrest it will leave Belgium, and not return there. In the absence of
the deposit of bail in a Belgian court by the Respondents, the Appellant would
thus lose its security in the event that its claim in Italy against MFN succeeds. Further, since MFN
is bankrupt, any judgment against it obtained by the Appellant would not
otherwise be satisfied. Second, if the ship is released now, the Appellant’s
appeal against the Judge’s order will be rendered nugatory. It will, in effect,
have been denied its right to appeal.
[11]
In my
opinion, this is sufficient to establish that the Appellant will likely suffer
irreparable harm if the “Sarah Desgagnés” is released before the determination
of the appeal. The fact that the Respondents have posted bail in the Federal
Court in respect of their potential liability is immaterial.
[12]
As for the
balance of convenience, the Appellant says that it would suffer greater harm if
a stay were refused than the Respondents would if it were granted. This is
because, the Appellant submits, any financial and reputational harm that the
Respondents may suffer as a result of the continued arrest of their vessel can
be compensated for in damages should they prevail on the merits of the
Appellant’s claim against them.
[13]
The
Respondents make several points in reply. First, they allege that the Appellant
is already in breach of the Judge’s order to cause the release of the vessel “forthwith”.
I do not agree. A judgment of the Federal Court should not be interpreted, or
regarded, as denying a party an effective opportunity to exercise its right of
appeal to this Court. Second, the Respondents are concerned that the Appellant
will use the appeal as a delaying device. This concern can be met by ordering
that the hearing of the appeal be expedited. Third, the Respondents submit that
it is in some way improper for the Appellant to seek to take advantage of what
they describe as “an anomaly” in Belgian law. However, that is a matter more
properly investigated in the appeal from the Judge’s order.
[14]
The
Respondents submit in the alternative that if a stay is granted, it should be
conditional on the Appellant’s depositing $2.5 million into Court as
counter-security for damages suffered by the Respondents as a result of their
failure to cause the release of the “Sarah Desgagnés” from conservatory arrest
in Belgium. I agree with the Appellant
that there is no basis for such a condition in this case.
[15]
For these
reasons, I would grant the stay requested by the Appellant and order that the
appeal proceed on an expedited basis.
“John M. Evans”
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