Date: 20061023
Docket: T-1155-06
Citation: 2006
FC 1259
Ottawa, Ontario,
October 23, 2006
Present:
The Honourable Mr. Justice Blanchard
BETWEEN:
BOULET LEMELIN YACHT INC.
Plaintiff
and
THE PACESHIP SAILBOAT
LICENSED AS 13D 6732
and THE OWNERS AND ALL OTHERS
INTERESTED IN THE SAILBOAT
LICENSED AS 13D 6732
and JOHANNE CARON
Defendants
AND
BETWEEN:
JOHANNE CARON
Plaintiff by Counterclaim
and
BOULET LEMELIN YACHT INC.,
LOMBARD INSURANCE COMPANY
Defendants by Counterclaim
REASONS FOR ORDER AND ORDER
1. Introduction
[1]
This is a motion
by Johanne Caron, defendant in the main action, for an order:
-
staying the main
action brought by Boulet Lemelin Yacht Inc. (hereinafter Boulet Lemelin)
on the ground of lis pendens with an action in the Court of Québec;
-
exempting this
proceeding from the application of sections 294 to 299 of the Federal Courts
Rules (the Rules);
-
for preservation.
2. Factual context
[2]
On August 8, 2002,
the defendant’s boat suffered serious damage when the defendant’s spouse, Yves
Ste-Marie, struck a rock, which caused a sizeable leak.
[3]
The boat was
insured at that time by Lombard Insurance Company (hereinafter Lombard), the
co-defendant by counterclaim. The estimated value of the boat was $28,500.
[4]
The defendant’s
spouse reported the accident to Lombard on August 9, 2002.
[5]
On August 28,
2002, the sailboat was left at the boatyard owned by the plaintiff, Boulet
Lemelin.
[6]
The defendant gave
the plaintiff a mandate to restore the sailboat, and once that was completed,
to improve its appearance by repainting the non-submerged part of the hull.
This mandate was performed at the end of July 2003, and an invoice for
$4,025.88 was sent to the defendant. This sum remains unpaid.
[7]
In 2004, more work
was done by the plaintiff on the submerged part of the boat.
[8]
The work was
completed by the end of 2004, but the defendant has continually refused to take
possession of her boat, because she believes that delays in restoring the boat
as well as improperly storing it have destroyed its market value.
[9]
Lombard paid the
plaintiff $22,000 for work done relating to the accident.
[10]
On February 7,
2005, the defendant gave the plaintiff a copy of a notice of default that she
had sent to Lombard. This document set out the defendant’s intention to abandon
her boat, as the Court understands at this stage, either to Boulet Lemelin or
to Boulet Lemelin in conjunction with Lombard. The notice of default also
demanded that they pay the invoice issued by the plaintiff for the painting it
had done.
[11]
On August 17,
2005, the defendant brought an action in the Court of Québec, District of
Chicoutimi, against Lombard Insurance Company, seeking payment of $32,500 in
insurance proceeds for the damage to her boat.
[12]
On November 30,
2005, Lombard impleaded the plaintiff.
[13]
On April 7, 2006,
an examination of the plaintiff was held, and an excerpt from the examination
is filed in support of this motion, as Exhibit R-2. According to the defendant
Caron, this excerpt contains an admission by the plaintiff that there was more
damage under the paint.
[14]
On July 7, 2006,
the plaintiff, Boulet Lemelin, brought a simplified action in rem in
this Court against the sailboat and its owner, Johanne Caron. Essentially, the
plaintiff is claiming $4,025.88 plus interest against the defendant for the
work involved in painting her boat.
[15]
On August 17,
2006, the defendant brought a motion in the Court of Québec for leave to amend,
which was scheduled to be heard on September 18, 2006, but was adjourned. The
amendments sought by the defendant would make Boulet Lemelin the co-defendant
with Lombard. From this perspective, the defendant imputes certain faults and
damages to Lombard, including faults in preserving the boat.
[16]
On August 23,
2006, the defendant brought a counterclaim in this Court, claiming monetary
relief, damages and exemplary damages from the plaintiff. It should be noted
that the counterclaim involves not only the plaintiff in this Court, but also
the defendant in the Court of Québec, i.e. Lombard. The counterclaim
essentially seeks:
-
$7,200 from
Lombard for failing to provide a rented sailboat as set out in the contract of
insurance;
-
$5,000 from the
co-defendants for unnecessary travel expenses and expert fees incurred because
of their recklessness;
-
$28,500 from
Lombard as payment in full of the insured value;
-
$10,000 from the
co-defendants for moral damages and various troubles; and
-
$10,000 in
exemplary damages from the co-defendants for unlawfully and intentionally
infringing her right to enjoy her property within a reasonable time frame.
[17]
Thus, the
defendant is claiming a total of $60,700 in her counterclaim.
[18]
As of this date,
the defendant boat remains in the plaintiff’s boatyard.
3. Jurisdiction
of the Court
[19]
In this Court, the defendant argues that she
abandoned her property and, therefore, under subsection 43(3) of the Federal
Courts Act (the Act), the Court lacks jurisdiction over the plaintiff’s
action in rem.
|
43. (1) Subject to
subsection (4), the jurisdiction conferred on the Federal Court by section 22
may in all cases be exercised in personam.
|
43. (1) Sous réserve
du paragraphe (4), la Cour fédérale peut, aux termes de l’article 22,
avoir compétence en matière personnelle dans tous les cas.
|
|
(2) Subject to
subsection (3), the jurisdiction conferred on the Federal Court by section 22
may be exercised in rem against the ship, aircraft or other property
that is the subject of the action, or against any proceeds from its sale that
have been paid into court.
|
(2) Sous réserve du
paragraphe (3), elle peut, aux termes de l’article 22, avoir compétence en
matière réelle dans toute action portant sur un navire, un aéronef ou
d’autres biens, ou sur le produit de leur vente consigné au tribunal.
|
|
(3) Despite
subsection (2), the jurisdiction conferred on the Federal Court by section 22
shall not be exercised in rem with respect to a claim mentioned in
paragraph 22(2)(e), (f), (g), (h), (i), (k),
(m), (n), (p) or (r) unless, at the time of the
commencement of the action, the ship, aircraft or other property that is the
subject of the action is beneficially owned by the person who was the
beneficial owner at the time when the cause of action arose.
|
(3) Malgré le
paragraphe (2), elle ne peut exercer la compétence en matière réelle prévue à
l’article 22, dans le cas des demandes visées aux alinéas 22(2)e), f),
g), h), i), k), m), n), p)
ou r), que si, au moment où l’action est intentée, le véritable
propriétaire du navire, de l’aéronef ou des autres biens en cause est le même
qu’au moment du fait générateur.
|
[20]
Without ruling on
the ownership of the boat, the Court rejects this argument on the ground that
subsection 43(3) of the Act does not oust the Court’s jurisdiction under
paragraph 22(2)(c) of the Act in claims in respect of hypothecations or
charges, as is the case here.
4. Issues
[21]
In order to
dispose of the motion brought by the defendant Caron, the Court must determine:
-
whether an order
of preservation is warranted;
-
whether, in this
case, there is lis pendens between the action in Federal Court and the
action in the Court of Québec; and
-
whether this
action should be exempt from the application of sections 294 to 299 of the
Rules.
5. Analysis
A. The
preservation order
[23]
Section 377 of the
Rules sets out the general power of the Court to make an order of preservation.
It provides as follows:
|
Preservation of property
377. (1) On
motion, the Court may make an order for the custody or preservation of
property that is, or will be, the subject-matter of a proceeding or as to
which a question may arise therein.
|
Conservation des biens
377. (1) La Cour peut,
sur requête, rendre une ordonnance pour la garde ou la conservation de biens
qui font ou feront l’objet d’une instance ou au sujet desquels une question
peut y être soulevée.
|
|
Interim order
(2) Rule 374 applies to
interim orders for the custody or preservation of property referred to in
subsection (1), with such modifications as the circumstances require.
|
Ordonnances provisoires
(2) La règle 374 s’applique,
avec les adaptations nécessaires, aux ordonnances provisoires pour la garde
ou la conservation de biens.
|
[24]
It has been established that the applicable test
in making an order under section 377 is the same test used in granting an
interlocutory injunction (Société pour l’administration du droit de
reproduction mécanique des auteurs, compositeurs et éditeurs v. Trans
World Record Corp., [1977] 2 F.C. 602).
(a)
has the applicant demonstrated a prima facie
case, or at least a serious question to be tried?
(b)
has the applicant demonstrated that unless the
injunction is granted, it will suffer irreparable harm that is not susceptible
to, or is difficult to compensate in damages?
(c)
with which party does the balance of convenience
lie? (Perini America Inc. v. Alberto Consani North Aneruica Inc.
[1992] F.C.J. No. 908)
[26]
Essentially, under
the first criterion, the applicant must establish that there is a serious
question to be tried in the main action. The second criterion will be met if
the applicant establishes that an award of damages will not compensate him
adequately. Finally, the third criterion considers the balance of convenience.
It must be noted that these three conditions are cumulative.
[27]
The evidence
before the Court concerning the boat’s condition can be summarized from the
affidavits of Ms. Caron and her spouse. Ms. Caron states in her affidavit that:
-
the value of her
boat, the main evidence in both the Federal Court and the Court of Québec
actions, is in jeopardy, without providing particulars;
-
it is natural to
protect whatever the market value of the sailboat might be;
-
the experts who
inspected the boat found several inches of water inside, but she does not
describe the consequences this might have;
-
certain
components, such as the anchor, were not put away, and are therefore at risk of
being stolen, but she does not give sufficient details for an assessment of the
risks associated with this fact; and
-
the boat continues
to deteriorate every day.
[28]
For his part, Yves
Ste-Marie states that:
-
before the winter
of 2004-2005, he saw three or four inches of water in the boat, which is very
damaging; and
-
the defendant
Caron sent a notice of abandonment to the insurer, since the boat could no
longer be repaired without incurring huge expenses.
B. Staying the action on
the ground of lis pendens
[30]
The defendant
contends that this Court should make an order suspending the main action until
the Court of Québec delivers its judgment, in order to avoid the risk of
inconsistent judgments. The statutory basis of this motion is subsection 50(1)
of the Act, which provides that the Court may stay an action on the ground that
the claim is being proceeded with in another court or jurisdiction.
This subsection reads as follows:
|
Stay of proceedings authorized
50. (1) The Federal
Court of Appeal or the Federal Court may, in its discretion, stay proceedings
in any cause or matter
|
50. (1) La Cour
d’appel fédérale et la Cour fédérale ont le pouvoir discrétionnaire de
suspendre les procédures dans toute affaire:
|
|
(a) on the ground
that the claim is being proceeded with in another court or jurisdiction; or
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a) au motif que la demande est en instance devant
un autre tribunal;
|
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(b) where for any
other reason it is in the interest of justice that the proceedings be stayed.
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b) lorsque, pour quelque autre raison, l’intérêt
de la justice l’exige.
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[31]
In White v. E.B.F.
Manufacturing Ltd., [2001] F.C.J. No 1073, Mr. Justice Jean-Eudes Dubé of
the Federal Court reviewed the criteria for exercising the discretionary power
under paragraph 50(1)(a) of the Act. He identified the following:
1. Would the continuation of the
action cause prejudice or injustice (not merely inconvenience or extra
expense) to the defendant?
2. Would the stay work an injustice
to the plaintiff?
3. The onus is on the party which seeks a
stay to establish that these two conditions are met.
4. The grant or refusal of the stay is
within the discretionary power of the judge.
5. The power to grant a stay may only be
exercised sparingly and in the clearest of cases.
6. Are the facts alleged, the legal
issues involved and the relief sought similar in both actions?
7. What are the possibilities of inconsistent
findings in both Courts?
8. Until there is a risk of imminent
adjudication in the two different forums, the Court should be very reluctant to
interfere with any litigant’s right of access to another jurisdiction.
9. Priority ought not necessarily be given
to the first proceeding over the second one or, vice versa. (Emphasis added)
[32]
The grounds for
the stay motion are based essentially on the fact that should the Court of
Québec grant Ms. Caron’s motion to amend, there is likely to be lis pendens
between it and certain parts of the action before this Court.
[33]
The Court cannot
speculate on the possible outcome of a motion before a provincial court. The
Court must determine whether there is, in fact, lis pendens in the
current situation, that is, without considering the amendments that the
defendant wants to make in her proceeding in the Court of Québec.
[34]
The main action commenced by the plaintiff is an
action in rem, which falls within the exclusive jurisdiction of the
Federal Court. Although the Federal Court shares its maritime law jurisdiction
with the provincial courts, British Columbia is the only province whose
superior court can hear an action in rem. An action in rem is distinguished from an action in personam in
that it enables a claimant to proceed against the ship, which can be considered
a debtor, and this type of action may also result in a judicial sale of the
ship. (See Edgard Gold, Aldo Chircop and Hugh Kindred, Maritime Law,
Toronto, Irwin Law, 2003, pages 9 and 754.)
[35]
Since the
proceeding that was commenced in the Federal Court is not available in the
Court of Québec, I am of the view that there is no lis pendens regarding
the main action. Moreover, the plaintiff is not a party to the provincial court
action at this time.
[36]
The counterclaim
essentially seeks damages against Lombard and Boulet Lemelin on the ground that
the latter was negligent in its work on, and preservation of, the boat. The
motion initiating the proceedings in the Court of Québec, on the other hand,
seeks performance of the contract of insurance between Lombard and the
plaintiff by counterclaim.
[37]
Accordingly, I am
of the view that the pending action, as it stands, in the Court of Québec does
not create lis pendens with the action before this Court.
C.
Exempting the
application of sections 294 to 299 of the Rules
[38]
The parties agree
that sections 292 and following should not apply to this case. However, it is
clear from section 292 that this regime is mandatory, and therefore the parties
cannot avoid its operation on consent. This section reads as follows:
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292. Unless the Court
orders otherwise, rules 294 to 299 apply to any action in which
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292. Sauf ordonnance
contraire de la Cour, les règles 294 à 299 s’appliquent à toute action dans
laquelle:
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(a) each
claim is exclusively for monetary relief in an amount not exceeding $50,000,
exclusive of interest and costs;
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a) chaque
réclamation vise exclusivement une réparation pécuniaire d’au plus
50 000 $, intérêts et dépens non compris;
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(b) in
respect of an action in rem claiming monetary relief, no amount
claimed, exclusive of interest and costs, exceeds $50,000;
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b) s’il s’agit
d’une action réelle visant en outre une réparation pécuniaire, chaque
réclamation est d’au plus 50 000 $, intérêts et dépens non compris;
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(c) the
parties agree that the action is to be conducted as a simplified action; or
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c) les parties
conviennent de procéder par voie d’action simplifiée;
|
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(d) on
motion, the Court orders that the action be conducted as a simplified action.
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d) la Cour, sur
requête, ordonne de procéder par voie d’action simplifiée.
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-
The plaintiff’s
action in rem in this Court seeks payment of an account in the amount of
$4,025.88. Its claim thus meets the requirements of paragraph (b).
-
In her
counterclaim, the defendant Caron seeks payment in the amount of $25,000
against the plaintiff and the co-defendant. This claim thus meets the
requirements of paragraph (a).
-
The defendant
Caron also seeks the sum of $60,700 against the co-defendant, jointly or
otherwise with the defendant, which is $10,700 more than the limit specified in
paragraph (a).
[40]
To the extent that
the requirements of section 292 are not met, I am of the view that the motion
should be granted, and that this case should be exempt from the application of
sections 294 to 299 of the Rules.
[41]
When the motion
was heard, the plaintiff asked the Court to order costs in the amount of $770
payable forthwith, arguing that this matter was an abuse of process. In my view,
this request should not be granted, given the circumstances and the evidence
that has been adduced.
[42]
Accordingly, the
motion will be granted in part. This case will be exempt from the application
of sections 294 to 299 of the Rules. In all other aspects, the motion will be
dismissed with costs payable by the defendant, Johanne Caron. Costs will be in
the cause and are fixed in the amount of $500.
ORDER
THE COURT ORDERS THAT:
1.
The motion is
granted in part, in that this matter is exempt from the application of sections
294 to 299 of the Rules.
2.
In all other
aspects, the motion is dismissed.
3.
Costs are fixed in
the amount of $500 and will be in the cause.
“Edmond P. Blanchard”
Mary Jo Egan, LLB
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